ArmInfo. The Armenian banking system is experiencing unprecedented growth. This was stated by Sevak Mikaelyan, a candidate for membership in the Board of the Central Bank of the Republic of Armenia, from the podium of the National Assembly of the Republic of Armenia on October 29.
According to him, the country's banking system's loan portfolio is currently approaching 9 trillion drams. This figure includes consumer loans (just over 2 trillion drams) and mortgages (just under 2 trillion drams). The country's banking system is demonstrating 20% annual growth.
Sevak Mikaelyan also touched on non-performing loans, which, however, according to him, are at a historically low level, accounting for only 1.3% of the banking system's total loan portfolio. This figure is constantly declining. The candidate for the Central Bank Board recalled that several amnesties on loans taken out by citizens had been implemented, but they had not produced the desired results. Just six months later, 65% of citizens covered by the amnesty had accumulated new debt.
According to the Financial Rating of Armenian Banks as of June 30, 2026, prepared by ArmInfo Investment Company, the volume of non-performing loans (NPLs, including bad loans) as of that date reached almost 505 billion drams (approximately $1.4 billion, with a year-on-year increase of 32%), with their share of the loan portfolio increasing from 5% to 5.1% and of assets from 3.3% to 3.6%. Moreover, 57% of overdue loans were concentrated in high-risk groups—doubtful and bad loans—the total volume of which increased by 49% year-on-year, primarily due to the increased burden of bad loans. Notably, consumer loans, while continuing to dominate the loan portfolio, also retained the lead in terms of the share of delinquencies, increasing from 38% to 42% of the total volume of overdue loans over the year. Specifically, within the consumer loan portfolio, the total volume of risky groups jumped by 45%, primarily due to a significant 61% increase in bad loans, while standard (healthy) loans grew by 21%. Given this picture, it's easy to assume that newly issued loans are largely refinancing of existing debt, which has historically proven the fragility of loan portfolio recovery—it only allows for the short-term return of overdue loans to the standard group to salvage profits from write-offs.
In mortgage loans, delinquency increased by 40% over the year, accounting for 7% of the total volume of overdue loans. Specifically, the volume of all risk groups in the mortgage portfolio increased year-on-year, but bad loans increased significantly. It's noteworthy that this picture in the mortgage market began to emerge after the abolition of the income tax refund mechanism, currently applicable to real estate in the capital (in the regions, this mechanism will be abolished starting in 2029, with the exception of border settlements). The abolition of this mechanism slowed the annual growth of mortgage loans from 33% to 16%, and reduced their share of the total loan portfolio from 21% to 18.5%.
The total loan portfolio continued to accelerate, reaching 30%, but corporate and retail lending within it began to grow more slowly, at 23-24% (versus 28-29% a year ago). At the same time, interbank lending jumped significantly, almost threefold. For the recipient, this indicates a lack of funds to meet current obligations, i.e., maintain current liquidity, and for the lender, it indicates a rational allocation of temporarily available funds. As a result, the loan portfolio reached 9.9 trillion drams ($26.8 billion) by July 1, 2026, including The volume of corporate loans was 4.9 trillion drams ($13.5 billion), retail loans - 4.1 trillion drams ($11.1 billion), interbank loans - 551.2 billion drams ($1.5 billion). Net profit for the first half of 2023 amounted to 214.3 billion drams ($582.5 million), slowing down in annual growth from 17% to 7%.
