YEREVAN, December 25. /ARKA/. The outgoing year was marked with political events, particularly with change of power – heads of governing agencies and ministers, including the ministers of the economic sector, were replaced by new persons.

Nevertheless, ARKA News Agency has singled out top ten events of 2018.

1. New Money

On November 22, the Central Bank of Armenia put in circulation banknotes with face value of 10 thousand, 20 thousand and 50 thousand drams, and banknotes with face value of 1000 drams, 2000 drams and 5,000 drams put into circulation on December 25.

The new banknotes with advanced anti-counterfeiting features are hybrid, made from paper and polymers.

Great Armenia poet Paruyr Sevak is depicted on banknotes with face value of 1,000 drams, world chess champion Tigran Petrosyan is depicted on banknotes with face value of 2,000 drams, American Armenian writer William Saroyan on banknotes with face value of 5,000 drams, great Armenian composer Komitas on banknotes with face value of 10,000 drams, great Armenian painter Hovhannes Aivazovsky on banknotes with face value of 20,000 drams and Saint Gregory the Illuminator, the founder of the Armenian Apostolic Church, on banknotes with face value of 50,000 drams.

The tender announced for printing the new banknotes was won by German company Giesecke & Devrient.

2. Banks Forgive Fines

On June 21, the Armenian parliament passed a set of amendments to the Tax Code, allowing local commercial banks to "forgive" citizens fines and penalties for delinquencies in unpaid loans.

The move does not mean that borrowers may not repay the principal amount.

Under the amended Tax Code, borrowers are forgiven penalties and fines only if the principal amount is paid within 90 days.

Following this amendment, banks started forgiving fines and penalties.

3. Full-extent Introduction of Полноценный старт накопительной пенсионной системы

On June 21, the Armenian parliament has approved today a set of amendments to the law on funded pension, which call for a cut in monthly financial contributions made by Armenian citizens born after 1973 to one of two private pension funds operating in the country.

Armenia's new pension system that took force on January 1, 2014 required that all Armenian citizens born after 1973 pay social security taxes equivalent to 5 percent of their monthly wages, which was to be matched and doubled by the government. Under the latest government-designed bill, citizens will have to pay social security taxes equivalent to 2.5% of their monthly income, down from 5%.

It was mandatory for public sector employees only. The law became mandatory for private sector too starting from July 2018.

4. Preferential Mortgage Loans

The Armenian government made some changes in the scheme of subsidizing the mortgage loans that are being provided under the program Available Housing for Young Families.

Unprecedented terms were offered to young families, particularly mortgage loans at a 7.5% interest rate to residents of Yerevan and up to 5.5% to residents of provinces.

Besides, the aggregate age of a couple of spouses was raised from 65 to 70.

This prompted banks to down interest rates on all mortgage loans.

5. New Strategy of Stock Exchange

In July 2018, NASDAQ OMX Armenia Stock Exchange and the Depository worked out a new strategy for 2018-2020 to enhance the effectiveness of using business prospects at capital market in Armenia and the region.

It includes the schedule of the work and a new management system.

In particular, organization of stock exchange trading will be renovated to make Armenia’s market available (without mediators) to local and foreign investors.

A crowd-funding platform will be created, and startups will be able to attract debt capital.

Besides, a B2B platform will be created for large companies for attraction and placement of financial resources.

It is also planned to work out a mobile application for the Depository-provided services as well as many other novelties and services for capital market participants.

6. Central Bank of Armenia Expands Range of its Objectives

On April 9, the Central Bank of Armenia has embarked on ensuring price and financial system’s stability

In accordance with the amendments and additions approved by the parliament last December to the Law on the Central Bank in the second and final reading, the regulator’s major functions are to ensure financial stability, while the monetary policy will be determined not for 12 months, but for three years, which will make it more predictable.

7. Record Profits of Banks

Net profits of Armenia’s banking sector for the first nine months of 2018 totaled AMD 51.6 billion against the AMD 28.5 billion gained over the same period a year earlier.

This is the best profit result after 2013.

Besides, banks accounted for a two-digit growth of lending in Jan-Sept 2018. Their lending has grown 10.2% since the beginning of the year to AMD 2 910.8 billion.

Banks’ liabilities totaled AMD 3 990.2 billion in late September showing a 9-percent growth.

Liabilities to clients here amounted to AMD 2 709.4 billion (6% growth) and total capital to AMD 748.6 billion (8% growth).

8. Digital Banking Services Trend

In 2018, online and digital banking services stared developing vigorously.

In particular, Ameriabank introduced an automated scoring system for providing individual loans in the beginning of the year, and in November it introduced the same already for small and mind-scale businesses. In fact, the bank offered online lending to companies.

In December, Ameriabank introduced for the first time a service allowing contactless payments on shopping via Visa Pay Sticker and initiated the service of distant opening of SMART account.

Inecobank, another player at online banking services market, launched in October InecoPay innovative and modern payment system, which allows carrying out contactless payments via smartphones.

The bank also expanded InecoMobile application opportunities.

Ardshinbank, on its side, was vigorously boosting its mobile banking at online services market offering new online lending opportunities and new ways for formalizing mandatory car insurance.

Anelik Bank, too, took the way of its business digitalization. In late May, the bank carried out a full re-branding changing its name, logotype, brand colors and graphic elements. Now the bank's name is IDBank.

9. New Shareholders

Two Armenian banks replenished their shareholder capital in 2018 by attracting new shareholders. In particular, Ameriabank sold in May 13.98% of its shares to Asian Development Bank for $30 million.

As a result, the bank's shareholders today are Ameria Group (CY) Limited with 56.60%, ESPS Holding Limited with 11.62%, EBRD with 17.80% and Asian Development Bank with 13.98%.

In the same month, the Netherlands' financial company agRIF Coopeartief U.A acquired 10% of Inecobank's shares. The bank's 22.7% shares belong to the European Bank for Reconstruction and Development, and the remaining owners are individuals.

10. International Organizations' Forecasts

Fitch Ratings has affirmed Armenia's Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'B+' with a Positive Outlook, saying in a press release that Armenia's ratings balance a credible monetary policy framework and stronger income per capita and governance indicators relative to peers against high public and external debt and tense relations with some neighboring countries.

In March, Moody's Investors Service ("Moody's") has changed the outlook on Armenia's rating to Positive from Stable and affirmed the B1 long-term issuer and senior unsecured debt ratings.

The reputable US-based S&P Global Ratings has assigned Ameriabank 'B+/B' long- and short-term issuer credit ratings with stable outlook. Ameriabank is the first Armenian company rated by S&P Global Ratings.

Within the Financial Sector Assessment Program (FSAP) 2018, the Executive Council of the International Monetary Fund (IMF) has assessed the financial system in Armenia to be stable.

The Executive Board of the International Monetary Fund (IMF) assessed Armenia’s financial system and the compliance with the Basel Core Principles for Banking Supervision. --0---