YEREVAN, July 21. /ARKA/. Armenia’s commercial banks ended the first half of this year with a slight growth of assets and with decline in liabilities, ARKA News Agency says in a fresh issue of its ‘Banks of Armenia’ financial and economic bulletin.

As many as 20 banks operate in Armenia now after Inecobank bought 100% of ProCredit Bank’s hares in 2015.

According to this quarterly report, the aggregate assets of Armenia’s commercial banks have grown 0.59% since the beginning of this year to AMD 3 496.8 billion in late June.

The assets of top five banks amounted to AMD 1 855.2 billion after growing 2.6% and made up 53% of the country’s banking sector.

Banks’ credit exposure grew 3.4% to AMD 2 194.1 billion. Five biggest lenders built up their volumes 6.3% to AMD 1 238.6 billion.

Armenian banks’ aggregate liabilities shrank 0.8% to AMD 2 908.9 billion, while their aggregate liabilities to clients grew 2% to AMD 1 914.7 billion and total capital grew 8.5% to AMD 587.9 billion.

Commercial banks’ net profits totaled AMD 12.3 billion in the first half of this year against AMD 7.8 billion at the same period a year before showing a 56.1% year-on-year decline.

Fifteen of Armenian banks were profitable in the first half of 2016 as five sustained losses (AMD 8.9 billion in Jan-June 2016 against AMD 8.9 billion in Jan-June 2015).

It is worth to be remembered that Armenia’s banking sector faced major challenges in 2015. In particular, economic growth slowed down, business activity fell and the population’s solvency weakened. This had impacts on banks’ general indicators. As a result, the usual two-digit increase in general indicators was followed by a modest 1-2 percent growth.

In 2015, Fitch Ratings downgraded its outlook for Armenian banks in 2016 to negative.

The rating agency says this negative outlook is driven by the weaker operating environment in Armenia, with an economic slowdown, depreciation pressures and higher interest rates.

The agency thinks a revision of the sector outlook to stable would require a stabilization of the country’s economic prospects, driving a stabilization of asset quality and easing pressures on the capital, liquidity and performance of the sector. M.V.---0---