When you are at the bottom, you strive to grow but when you are on top your main task is to keep being a leader
Media Room

Currently the banking system of Armenia is demonstrating the most aggressive growth. Given this and serious competition it is not that easy to position yourself among the leaders. Ameriabank managed to pull ahead and currently is among the fastest developing banks (if not the fastest developing one).
In his interview with the AZG weekly Gevorg Tarumyan, Ameriabank’s Management Board Member, Deputy Director and CFO highlighted the path of the bank, its future plans and his opinion of the previous fiscal year.

- Mr. Tarumyan, how do you assess the previous year for the banking system of Armenia?

- The previous year was good enough for the banking system in terms of growth by all key indicators. It was perhaps the most successful year for the RA banks after the global financial and economic collapse. Total assets of the banking system grew by 32% which is rather impressive. Liabilities and total capital grew by 35% and 12% respectively. These indicators are considerable and few countries have managed to achieve them.
The only negative factor I can mention is the increase of the share of NPLs in the total volume of the loan portfolio along with the registered growth by the main indicators of the banking system. According to statistical data of the last five years, now it is the highest and makes about 5%. In terms of the rest of the indicators last year can be assessed as quite positive.

- What do you think the growth is triggered by - governance model of specific banks or the banking policy lead by the country?

- I think it is triggered by not only the banks, but also the situation in the real economy sector for in post crisis period business entities and banks made quick adjustments to avoid possible problems and restrain risks. But when the economy somewhat recovered, competition intensified and the banks increased their risk appetite thus triggering increase of NPLs in the total loan portfolio. But to me this is normal given that banking business is inclined to risks.

- Do you see any risks for our financial system?

- First of all, I would like to say that all risks typical to other financial systems are present also in the RA financial system. The main problem, as I already said, is NPLs, i.e. the credit risk. The second major problem is capital adequacy. The dynamics of the last 3-4 years show that capital adequacy of almost all banks decreased for the following reasons: firstly the normative requirements were toughened in 2010. At the same time loan investments grew by 37% while the capital growth totaled just 12%.
The third problem are the market risks, which are usually underestimated despite their heavy influence on the banking systems firstly because of the presence of currency risk to which both the banks and the population are very sensitive, and secondly because of the interest risk which is underestimated, too, but which actually has a large share in banking and financial risks. The reason behind these risks is that liabilities in our banking system are currently short-term and the funds raised from external sources are considerable. Our borrowings are mainly from international financial institutions and have floating interest rates. In view of this, risk management mostly depends on the skills of the bank’s managing personnel.

- Mr. Tarumyan, what is the position of Ameriabank in the banking system of Armenia and what results did your bank demonstrate during Q1, Q2, and Q3 2012?

- Let’s start with the first question. Ameriabank had demonstrated interesting behavior during the previous 3-4 years. In 2007, Ameriabank was among the last 5 banks (21st place by capital) while now we are the second. Our current indicators prove our aggressive and dynamic growth during the last 4 years. For instance, during the 9 months of this year we demonstrated 60% growth as compared with the same period of the last year. Assets and liabilities grew by 20% and 24% respectively. So, as you can see, we demonstrate fast and dynamic growth by key indicators and even surpass the banking system of the RA by growth rate of almost all indicators. But this growth of course is not an end in itself. This year the total number of legal entities who are our clients grew by 10% while of the total number of individual clients grew by 20%. This is quite important for us and is the best proof of positive attitude and trust to us.

- What are your plans and projects for the coming year?

- Of course, the coming year will be full of surprises, I mean in the form of new products and campaigns. I cannot go into details since otherwise they will no longer be a surprise. I can only say that recently we conducted an interesting survey to determine our geographic coverage for the next year. We plan to launch 3 branches, including in regions of Armenia. By the way, we have also analyzed development indicators and the specifics of economic development of the regions.
We also made forecasts on banking system growth. So according to our estimates, next year the growth will make 15-20%. In view of this we should strive to ensure minimum 20% growth to retain our position. When you are at the bottom, you strive to grow but when you are on top your main task is to keep being a leader. In our case we should battle in the banking system which is the most competitive industry of the RA economy.


Updated 03.12.2012, 13:04
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