Fitch expects moderate recovery in domestic credit demand in Armenia in 2017

13.12.2016 15:28
Fitch expects moderate recovery in domestic credit demand in Armenia in 2017

YEREVAN, December 13. /ARKA/. Fitch international rating agency expects a moderate recovery in domestic credit demand in Armenia in 2017.

In its ‘2017 Outlook: CIS and Georgian Banks’ report, it has revised outlooks for Armenian banking system to Stable for 2017 from Negative in 2016.

“Credit growth was moderate at 6% in 2016, following contraction by 4% in 2015. We expect a moderate recovery in credit demand over 2017, supported by favorable macro trends, decreased pressure on the Armenian dram and a downward adjustment of market interest rates,” Fitch says in its report.

However, Fitch analysts think loan growth is likely to stay at single-digit level, constrained by weak asset quality, subdued household consumption affected by still falling remittances and high Central Bank mandatory reserve requirements.

They expect some stabilization of asset-quality trends in 2017, as spill-over effects from external shocks have faded.

The long-term maturity profile of external borrowing, mainly raised from IFIs and nonresident related parties, limits refinancing risk.

According to the analysts, outlook for Armenian banks is sensitive to the performance of the domestic economy and the stability of the dram. --0----


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