Emil Soghomonian: If a second stage of the crisis begins in
the world economy, Armenian banking system will not be shattered
26-08-2009 19:00:00 | Armenia | Economy
YEREVAN, AUGUST 26, NOYAN TAPAN. The Armenian banking
system will end this year by making a profit, Chairman of the
Union of Armenian Banks, Chairman of Prometey Bank's Board Emil
Soghomonian expressed an opinion. According to him, the March 3
sharp depreciation of the Armenian dram (by almost 20%) will not
happen again and there will be no sharp fluctuations of the
dram's exchange rate because the measures being taken by the
government and the Central Bank of Armenia (CBA) are aimed at
ruling out that. He forecast that the recession will make about
10% in Armenia, while next year this decline will stop and a
zero percent growth will be recorded.
At the same time, at the August 25 press conference E.
Soghomonian announced that the nonrepayment of credits currently
amounts to 5-6% in Armenia as compared to 1% in 2008. He added
that an index of 5-6% is quite high for a country like Armenia
with an overall capital of 30-40 million USD.
In his words, in the first half of 2009 the banks made a
profit of 4 billion 300 million drams, which was lower than last
year's index. 16 out of the 22 banks made a profit, while 6
banks suffered losses. In the opinion of E. Soghomonian, the
major cause of losses was the return to a floating exchange rate
on March 3.
E. Soghomonian expressed conviction that if a second stage
of the crisis begins in the world economy, the Armenian banking
system will not be shattered.
In response to the question about why the government and
CBA allocate the financial resources attracted from outside to
the banking sector as well, in case of the banks' being so
stable, E. Soghomonian replied that they are behaving correctly.
"In other countries, governments also provide financial
assistance to banks, feed the banking systems to avoid worse
situations. Our purpose is to develop small and medium
business," he underlined. According to him, the interest rates
of credits are not so high in Armenia as in conditions of a
crisis, the risks increase and the interest rates rise.
The chairman of the Union of Armenian Banks told the
reporters about his concern. In his words, the Armenians have
become dollar sellers: many people get into a panic and start
exchanging their drams for dollars, while later they suffer
losses when selling these dollars, even though they initially
intended to make a profit. "If this mentality does not change,
negative developments are not ruled out," E. Soghomonian said.