YEREVAN, August 28. /ARKA/. Armenia's banking sector appears well capitalized, profitable, and liquid, S&P Global Ratings said.

According to the agency, the banking sector’s direct exposure to Russia and Ukraine is relatively moderate, and nonperforming loans remain low at 2.6% as of May 2023.

‘Risks remain around the mortgage market, which has grown by roughly 30% over the last year, alongside rising house prices,’ it said.

In response to potential pain points, the authorities increased the countercyclical capital buffer and introduced loan-to-value ratios. Another macroprudential tool set to be used is a draft law restricting U.S. dollar mortgage lending.

It said also that overall, the risk to the government of contingent liabilities from the banking sector remains limited. -0-