HERE AND BEYOND
Artak Hanesyan: Banks Are Showing a Certain Amount of Caution While Lending
Media Room

Banks are showing a certain amount of caution while lending these days, said today Ameriabank CEO Artak Hanesyan during press conference.

“Generally this has much to do with creditworthiness assessment. In light of recent exchange rate upheavals servicing of foreign currency loans becomes more difficult. On the other hand, I believe that we are not the only bank to develop various mechanisms to mitigate this burden and protect individual clients having foreign currency loans from adverse effects of exchange rate fluctuations. According to our specialists, extending the terms of loans and thus allowing borrowers to continue to repay each month the same amount in AMD expression which they were paying before the rise in exchange rate can to a certain extend mitigate the credit burden of clients”, said Hanesyan.

According to him, banks are now assessing their clients’ creditworthiness more scrupulously to make sure that all possible risks are properly hedged. As for the volume of lending in general, CEO announced on behalf of Ameriabank that they would by all means continue to provide loans to clients. Moreover, this year the bank is planning to increase its loan portfolio, if not at the rate reported last year. All the same, the bank intends to grow.

Hanesyan also spoke about CBA’s tightening of refinancing rate policy and its influence on loan rates.
“Certainly, increase of refinancing rate has affected banks’ lending activities”, said CEO, “ but I think it is temporary and cannot continue for long. Reserving for funds attracted in foreign currency is done by banks in AMD at the new (increased) rate, which, naturally, has produced upward pressure on foreign currency deposit costs. This means that publicly declared interest rates actually cost the bank higher due to a number of other factors”. 

According to Hanesyan, due to these reasons a rise in loan rates is in order, too, so as the banks are able to retain the minimum efficiency level. “Therefore a small increase in interest rates on foreign currency loans is to be expected”, he said, “but on the other hand, as compared with the minor increase in AMD loan rates, the increase in interest rates on AMD deposits (both short and long-term) is much more tangible, in fact, if I am not mistaken, 4-5% Y-o-Y. So this actually compensates for any further increases in AMD loan rates”. 

Updated 24.02.2015, 17:36
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