Armenian banks’ capital adequacy ratio grew last year to 16.2%

18.02.2016 18:54
Armenian banks’ capital adequacy ratio grew last year to 16.2%

YEREVAN, February 18. /ARKA/. Armenian banks’ capital adequacy ratio (the ratio of a bank’s capital and assets to its risks) in December 2015 increased to 16.2% due to active increase in their capital, as is evidenced by the data of the Central Bank.

The banks’ capital adequacy ratio began to drop in late 2014 November due to the dramatic devaluation of the Armenian dram and resulting financial shocks. Thus, in 2014 November the ratio declined by 0.3 percentage points to 16.1%; in December it fell further to 14.5%, and to 14.3% in January 2015.

However, in February 2015, the figure began to rise amounting to 14.6%; it rose further to 15.1% in March and April. The growth was prompted by a decrease in the total assets and a simultaneous capital growth. Thus, in the first half of the year the banks assets decreased by 3.6%, while their capital increased by 5.4%.

The growth of capital adequacy at the end of 2015 was prompted by a slowdown in the rate of growth of banks’ assets and a high rate of their capital growth. Thus, in 2015 the assets of Armenian banks grew by only 4.67%, while their capital surged by 17.8%.

Besides, prompted by the Central Bank’s decision that from January 1, 2017, the minimum total capital of commercial banks should not be below 30 billion drams (the current minimum is 5 billion drams) some banks began replenishing their authorized capital. Thus, in 2015 the authorized capital of banks increased by 25.6%.

According to an ARKA study, the capital adequacy ratio of Unibank is 12.13%; that of Armbusinessbank is now 12.6%. The ratio of Anelik Bank is 13.03%; that of Ardshinbank is 13.25%; the figure for VTB Bank (Armenia) is 13.44%; for Converse Bank it is 13.47%; for the Armenian Development Bank the figure is 14.06% and for HSBC Bank Armenia it is 14.53%.

The capital adequacy ratio for Ameriabank is 15.07%; for ACBA-CREDIT AGRICOLE BANK the figure is 16.20%; for Armeconombank - 16.20%; for Inecobank - 16.88%; for ProCredit Bank-18, 44%; for ArmSwissbank - 19.16%; for Artsakh Bank - 19.76% and for Araratbank - 19.86%.
The figure for Byblos Bank Armenia, Areximbank-Gazprombank Group, Prometey Bank, BTA Bank and Bank Mellat is above the level of 20%.

Capital Adequacy Ratio (CAR), also known as Capital to Risk (Weighted) Assets Ratio (CRAR) is the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory capital requirements. This ratio is used to protect depositors and promote the stability and efficiency of financial systems. The minimum ceiling set by Armenia’s Central bank is 12%.-0-


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