By Atom Markarian
Armenia’s two dozen commercial banks have seen their profits soar by nearly a third and attracted considerably more cash deposits this year on the back of robust economic growth, official figures show. According to the country’s Central Bank (CBA), the banks’ combined pre-tax earnings rose by 27 percent to 6.7 billion drams ($12 million) amid a similarly strong growth in their assets that are now worth 278 billion drams in total. This is about 15 percent more than had been reported by the CBA in late 2002.
“The year has seen quite a development,” said Stepan Gishian, chief executive of the Agricultural Cooperative Bank of Armenia (ACBA), one of the country’s largest credit institutions.
Speaking to RFE/RL, Gishian said the dramatic political developments in the country engendered by the 2003 presidential and parliamentary elections had little negative impact on overall economic activity and banking in particular. “Customer caution was weaker than one would expect ahead of the elections,” he said.
The CBA chairman, Tigran Sarkisian, announced late last week that the local banks now hold 135 billion drams ($240 million) worth of deposits from some 357,000 private individuals. This is almost 20 percent up from last year’s level. Sarkisian said the increase testifies to Armenians’ growing confidence in the banking sector.
Gishian, whose bank specializes in extending credit to farmers, shared the CBA chief’s optimism. “We have had a lot more customers than we expected,” he said. “There is a lot of activity now.”
The latest banking data is in tune with the Armenian government’s macroeconomic statistics which is dismissed as fraudulent by the opposition but is regarded as largely credible by Western lending institutions. Meeting with the country’s leading businesspeople on Friday, President Robert Kocharian said that the growth of Armenia’s Gross Domestic Product will hit a record-high 15 percent this year. He admitted that a large part of it resulted from multimillion-dollar infrastructure projects financed by Kirk Kerkorian, a U.S. billionaire of Armenian descent.
Kerkorian’s Lincy Foundation has spent about $80 million this year on the construction and repair of highways, streets and residential areas across the impoverished country. Kocharian said that injection alone pushed the GDP up by 6 percent.
The rise in the modest profits of the Armenian commercial banks is accompanied by a steady decrease in their number which is still regarded as too high by many economists. Last November saw a mysterious self-liquidation of Agrobank, one of Armenia’s oldest and largest banks. Most of its assets were taken over by another bank.
Agrobank ceased to exist just as it seemed to be recovering from a serious financial crisis that plagued it in 2001. Its owner, Hakob Hakobian, blamed the collapse on unfair competition from unspecified powerful government-connected tycoons. He claimed that they enjoy privileged treatment by the CBA.