UBA Head: Armenian banking system RoE became comparable to countries  with similar economies

ArmInfo.The profit of the Armenian banking system in 2023 was 230 billion drams, which is 12.5% lower than the year-ago figure. Chairman of the Union of Banks of Armenia Daniel Azatyan stated during a press conference on February 20. He noted that the decline is due to both objective and subjective factors.

Azatyan drew attention to the fact that according to the results of 9  months of 2023, the profit of the banking system was 215 billion  drams. In Q4, due to the situation in Artsakh, the banking system  incurred large expenses associated with written-off assets in the  Republic of Artsakh. The head of the Union of Banks recalled that at  the end of last year the government and the Central Bank decided to  waive individuals and legal entities loans. The government waives 70%  of losses, and banks - 30%.

He also noted that over the past 10 years, the profit of the Armenian  banking system averaged from 30 to 80 billion drams, and in 2022, a  significant increase in profits (263 billion drams) was provoked  primarily by geopolitical developments.

Secondly, Azatyan emphasized that in previous years banks spent large  amounts of money on infrastructure development, made investments in  risk management systems, and also made large expenses for integration  in international markets. "And it so happened that in 2022 and 2023,  these infrastructure expenses made it possible for our banks to make  transactions on the international market and ensure similar  indicators of profit," he said.

At the same time, the head of the Union considers the use of the term  "surplus profit" in relation to the banking system incorrect. In this  regard, he paid attention to the RoE indicator (Return on Equity ).  "Over the past 10 years, the highest RoE was 9.7% in 2013. In 2022,  this figure increased to 22.05%, and at the end of 2023 it was  13.50%. This means that such growth was achieved through capital  investments from the owners," he noted. In this regard, Azatyan  wondered how high or low this indicator is. He compared Armenia's RoE  over the past 20 years with a number of other countries. Azatyan  noted that in the period from 2000 to 2021 RoE in Armenia was 10.5%,  in Georgia - 14.5%, Kazakhstan - 24%, Moldova - 15.8%, Hungary 13%,  USA about 10%.

Moreover, in 2021 alone, before the well-known geopolitical  developments, the RoE of the banking system of Armenia was 5.5%,  Georgia - 23.5%, Kazakhstan - 30%, USA - 12.5%, Hungary - 10.1%. "The  RoE of the Armenian banking system became comparable to the RoE of  countries with similar economies and financial systems in 2022-2023  alone," he said.