Armenian banks’ capital adequacy ratio in 2016 September was the highest over the last five years

10.11.2016 16:04
Armenian banks’ capital adequacy ratio in 2016 September was the highest over the last five years

YEREVAN, November 10. /ARKA/. Armenian banks’ capital adequacy ratio (the ratio of a bank’s capital to its risks) in 2016 September was the highest over the last five years rising to 18.4%, the Central Bank of Armenia said.

According to the regulator, the banks’ capital adequacy ratio grew by 1.3 percentage points from the beginning of the year due to the drop in economic growth rate and high growth rate of capital. Thus, in 2015 the banks’ combined assets grew by 4.67%, while their capital surged by 17.8%. In the first nine months of 2016 the assets upped by 4.2% while the capital grew by 12.8%.

The growth of capital is taking place against the background of active replenishment of capital by the banks and merger processes, prompted by the decision of the Central Bank to raise from  January 1, 2017 the minimum total capital to 30 billion drams from the current 5 billion drams.

According to an ARKA study, the capital adequacy ratio of 4 banks was within 14%. They are Anelik Bank – 12.05%, Armbusinessbank - 12.93%, VTB Bank (Armenia) - 13.22% and Ardshinbank-13.24%.
Seven other banks’ ratio was within 14-20%. They are HSBC Bank Armenia – 15.86%, Unibank – 15.87 %, Inecobank – 15.97%, Armenian Development Bank – 16.84%, Ameriabank– 17.04%, ACBA CREDIT AGRICOLE BANK – 17.96% and Araratbank – 19.19%.
Five other banks’ capital adequacy ration was within 20-30%. They are Conversebank – 20.44%, Areximbank Gazprombank Group – 22.10%, Armeconombank – 22.67%, Artsakhbank – 28.07% and ArmSwissbank. The capital adequacy ratio of Prometey bank, Byblos Bank Armenia  and Mellat Bank was above 30%.

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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