YEREVAN

Moody’s Investors Service has changed Ameriabank’s rating outlook to stable from negative and re-approved the bank’s long-term ratings of deposits in national and foreign currencies at Ba3, move experts will see as a sign of the banking sector’s recovery.

Ameriabank is one of the largest banks in the country, with assets exceeding 1 trillion drams ($2.019 billion). As the first investment bank in Armenia, Ameriabank provides a wide range of innovative banking services and has a defined digital agenda.

Despite the economic disruption in 2020, Ameriabank’s asset quality deterioration was relatively moderate, with problem loans increasing to 4.2 percent from 2.9 percent of gross loans and stabilising at around 4 percent of gross loans in the first quarter of 2021.

Moody’s expects Ameriabank’s asset quality to remain generally stable in the next 12-18 months, supported by improving economic conditions, good diversification of the bank’s loan portfolio and reduced exposure to foreign currency loans.

Following the pandemic-induced temporary decline in profitability in 2020, Ameriabank reported a net profit of 3.97 billion drams for the first quarter of this year, a 33 percent up increase from the same period a year ago.

Moody’s expects improving profitability trends to sustain over the next 12-18 months as credit costs normalise, and business activity recovers in 2021.

“The approval of the bank deposit ratings along with the change in the outlook reflects the bank’s flexibility and efficiency in difficult times, stable asset quality and a base for attracting financial resources, increased profitability and fairly high liquidity,” Moody’s said in a statement.

Moody’s said it was convinced that the quality of Ameriabank’s assets would remain stable due to the diversification of the loan portfolio and the reduction of the risk on loans in foreign currency. The rating agency expects Ameriabank’s profitability indicators to improve further, while the ability to absorb losses will remain stable.

It is expected that the level of liquidity and the structure of raising funds for the bank will remain stable due to the diversification of funding sources, sufficiently high liquidity and access to alternative sources of liquidity.

The stable outlook reflects Moody’s expectations that Ameriabank will maintain improved solvency indicators while asset quality and capital will remain stable, the agency said.