YEREVAN, November 30. /ARKA/. Armenian banks are gradually lowering their capital adequacy H1, and this may hobble development of the country’s banking sector already in 2013, according to Delovoy Express weekly.

The Central Bank of Armenia says capital adequacy of Armenian banks averaged 17.2 in late September 2012 – 2.4% year-on-year decline, nut not a single bank crossed 12%, the benchmark capital adequacy standard set by the regulator, though some of the banks came close to it.

The newspaper says that in the past few years the country’s banks ensured their capital adequacy rate without additional injections, and given the considerable growth of banking business seen in the recent time, their profits lagged behind the fast-growing assets.

That is why the gap between the banks’ aggregate assets and the accumulated capital is increasingly widening from year to year and banks can’t stop their capital adequacy indicator’s downward motion.

According to the central bank, Armenian banks’ assets totaled AMD 2.337 trillion in late September 2012 against AMD 1.884 trillion one year ago and their total capital amounted to AMD 381.3 billion against AMD 343.1 billion a year earlier.

“Therefore, it is getting more and more difficult to banks to build up their assets,” the weekly says.
Stricter regulation, too, drives capital adequacy rates down. Some banks may have their capital adequacy indicators fallen below 12% also because of new approaches to assessment of risks and capital quality by Basel -3.

Bankers now admit that new requirements will force them to slow down development of their businesses.

To ensure their further development banks will have to search sources for developing their capital and to use the existing capital more effectively choosing the best ratio between returns and risks. -0--