Armenian economy to get back on full recovery track in 2012

26.01.2010 12:19
Armenian economy to get back on full recovery track in 2012

Interview of Anelik Bank chairman Samvel Chzmachian to ARKA news agency

ARKA –Mr. Chzmachian how would you describe the strategic alliance of your bank with Lebanese Credit Bank and what steps are being undertaken within this alliance?

S. Chzmachian- Currently we are working to consolidate our relationships and our approaches with the focus on deepening mutual understanding. This is very important because I have always believed that relationships between people, both at work and in life are key to achieving success in business. Speaking frankly, the management of the Lebanese bank and its owners are a people that we have no difficulties in understanding one another and there is a lot of similarities between us.

ARKA- What can you say about Anelik Bank’s indices?

S. Chzmachian – Despite the heavy fallout from the global economic crisis that hit our country severely rebounding also on the banking system, Armenian banks, including our bank, has moved a step forward. Our main problem is the outstanding credits which triggered a big percentage of defaulted payments.

I would like to commend the government and the Central Bank for designing and implementing a correct policy. Once the banking system was criticized for excessive liquidity, but as you can see, it appeared to be instrumental in helping us avoid imminent collapse. Besides, almost all banks saw growth of their major indices. Particularly, our assets rose from 36 billion Drams in 2008 to 49 billion Drams ( 45% growth) and credit investments rose from 19.3 billion Drams to 24.5 billion Drams (27% growth). Our investments in securities rose by 71%, from 1.4 billion Drams in 2008 to 2.4 billion Drams in 2009. The bank’s equity capital rose from 5.6 billion Drams to 15 billion Drams. Time individual deposits rose by 10%, from 6.7 billion Drams to 7.4 billion Drams. This is a very important index, an indication of our clients’ trust in our bank, not shattered by the crisis, even after we have slightly lowered the interest rate.

ARKA- What can you say about the bank’s profits?

S. Chzmachian– Naturally, we could not increase our profits, however, all banks have a good profitability rate, but these profits were used as a safeguard against bad credits. Nonetheless all credits, at least 90% are repayable. Besides, the credits were secured by property that will cover all expenses, even if its market price falls. According to our balance, we had a 101 million Drams net profit last year, down from 470 million Drams in 2008.

ARKA- What is the situation with money transfers?

S. Chzmachian- The amount of individual remittances has contracted by almost 40 percent, down from 1.6 billion Drams in 2008 to a little over 1 billion Drams. The drop was due to global financial and economic crisis. Anelik Bank money transfer system operates in about 100 countries with 200 banks and 63,000 agent offices.

ARKA- How would you assess the results of 2009s? Do you think the banking system is coping with the global crisis fallout?

S. Chzmachian- It is somewhat difficult to make assessments now because although our assets grew last year by 35%, credits investments by 27% and our investments in securities by 70%, we earned only 101 million Drams in net profits. Nevertheless, no Armenian bank blew as was the case in the United States, Europe and Russia. This is also true of Anelik Bank.

All Armenian banks are closely interrelated and a negative development in one affects others. In my opinion, having 22 large and small commercial banks is quite normal, even for such a small country as Armenia. Now after launching a partnership with the Lebanese bank we have a banking-financial axis stretching from Beirut to Yerevan and further to Moscow and we want to take advantage of it.

ARKA- What are your plans for 2010 and do you have joint projects with your partners?

S. Chzmachian – We are considering some with our major partner, the European Bank for Reconstruction and Development (EBRD). We hope to get a $20 million from it this year and would seek also to get a loan from KfW, our longtime partner. We would to extend our money transfer system across the Arab world through the Credit Bank of Lebanon and further to India and China. We also plan to open several branches this year, both in Yerevan and outside it.

ARKA- How would you asses the situation at Armenia’s forex market? What is you forecast about Dram’s behavior?

S. Chzmachian - Frankly speaking, I avoid answering such questions, because there is no one who could give an correct answer. I would paraphrase your question by asking would I like the Armenian Dram to gain strength and trade at 330 Drams per one USD? When it depreciated all banks sustained serious losses and all would like to regain them. We receive funds from our partners in USD, converted them to Dram and lost.

ARKA- How would describe the overall economic situation in Armenia?

S. Chzmachian- I think we have hit the bottom and will remain there for some time, maybe until May. Armenia’s economy has seasonal elements, like any other economy. This is why a time span from January to May will be difficult. Then we shall start recovering, slowly but steadily and that will continue up to 2102 when we shall have fully recovered.  -0-


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