Given the volatility that has characterised markets over the past few years, how has the bank worked to mitigate the risks and continue to thrive?
Ameriabank has enjoyed a steadily successful trajectory over the past few years. In a challenging environment marked by geopolitical tension and market volatility, the Bank has demonstrated resilience and outperformed the market benchmarks across several key financial indicators. This is founded on strong fundamentals with an effectively diversified balance sheet, a sound corporate governance and a clear vision for the future.
We have been able to apply a balanced risk management mechanism and an enhanced liquidity management framework to improve financial efficiency and deliver solid risk-adjusted profitability. Total assets reached AMD 1.33 trillion as of September 2023 with 12% compound annual growth rate since 2019. Ameriabank is the largest lender in the market with AMD 902 bn loan portfolio and 19.1% market share as of 3Q 2023. In line with our universal banking model we continued to diversify our loan book further, with strong double digit growth of Retail and SME loans portfolio over the recent years, contributing to a loan distribution where Retail and SME loans comprise 61.2% of the total loan book.
The quality of the Bank’s loan portfolio has also continuously improved starting from 2020. Non-performing loans stood at 2.16% (vs 2․97% Market).As of September 2023 continuing a downward trend, while maintaining a level below the long-term average and pre-pandemic level (2.87%). Total deposits and bonds, have registered a 14.2% growth year-to-date and a 27% year over year surge, primarily driven by time deposits. Both the Corporate and Retail segments expanded their account holder base and effectively augmented their deposit portfolios, despite the uncertain external environment.
Our total equity increased by 10.1% in the first three quarters of 2023, reaching 190 billion drams, underpinned by a 17% CAGR since 2019 fuelled by robust profit generation. In fact our net profit has been growing in double digits for the recent years due to both net interest and non-interest income, proving the sustainability of the bank’s profit generation. As a result, the profitability indicators are at historically high levels (NIM stood at 6.4%, ROE at 26% and ROA at 3.6%), significantly outperforming the market average as well.
This dynamic performance has driven impressive investor interest and ensures that Ameriabank will continue on its transformational journey. In fact in this respect, the bank’s success reflects the positive macroeconomic environment: Armenia’s economy demonstrated resilience and high growth potential with 12.6% GDP growth in 2022 at the same time managing to maintain the lowest inflation rate and most stable currency in the region.
Are there any specific measures or instruments that have been put in place to protect the bank’s fundamentals?
Ameriabank has always taken care to see that its corporate governance aligns with the best international financial and institutional practices. This has proven essential to protect the bank’s fundamentals and its credibility. The absolute majority of the Board of Directors, who are responsible for the Bank’s overall management, are independent non-executive directors, with diverse international background and profound experience in the financial world. The Bank has also drawn strength from its diverse and dedicated shareholder base, having also international development finance institutions as shareholders (EBRD & ADB). Ameriabank has made its commitment to the highest ethical standards and rigorous compliance with international requirements the hallmark of its operations.
Financial soundness indicators have remained at a prudent level even during most challenging times and continuously improving profitability metrics demonstrate the bank’s financial health. In particular, the bank was fully comfortable in meeting the increased Basel 3 buffer requirements, having built the necessary cushions in advance.
ESG and corporate responsibility have become ever more important in recent years. What measures have you taken to ensure that the organisation meets its responsibilities in these areas? Again, are there specific challenges you have faced and, if so, how have you met them?
We have always been a trend setter in our market in terms of best practice ESG standards implementation. Our commitment to sustainability and to the entire ESG agenda has been one of the cornerstones of our long-term successful growth. The imperative of sustainability, of investing in a future which safeguards our planet and protects future generations, demands that financial institutions play a key role. We at Ameria have been embedding responsible business practices and consistently prioritizing sustainability in investment decisions. Green investing, renewable energy and sustainability considerations offer opportunities as much as challenges, opportunities which Ameria is committed to take full advantage of. We were the first issuer of Green bonds in Armenia back in 2020 and remain focused on expanding our green assets portfolio further.
Given our status as a leading bank in Armenia, we have also shouldered our responsibilities to our own communities and taken care to support those most in need, including those recently displaced. We have made major investments in our communities’ futures.
In light of these challenges and given the changing environment in terms of AI, digital currencies and the like, what work have you done to future-proof the institution and continue to deliver for clients?
Imagination and creativity at all levels of the Bank have ensured our ability to adapt to changing circumstances. We have been one of the region’s foremost institutions in promoting digital transformation, achieving a 69% online banking penetration rate and an 84% cash offloading rate, reflecting significant strides in its strategic development.
We see this digital transformation as opening up new horizons beyond banking: we can offer these empowering platforms to a wide range of sectors, markets and potential customers. From healthcare to travel to fintech education, where an integrated application of data and opportunity can open new vistas and clarify options, we are partnering with key players to leverage our technological expertise and take it to market.
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