Best bank: Ameriabank
A spike in Armenian bank M&A this year has underscored the growth opportunity for banks in the local market. The country’s best bank, Ameriabank, was bought by Bank of Georgia earlier this year, and Ardshinbank is in the process of acquiring HSBC Armenia.
Both banks have strong growth stories, made more compelling over the past two years by record profits driven by remittances from Russian immigrants and a sharp rise in interest rates.
Ameriabank has seen strong growth and development across its banking businesses and generated a record Dram46 billion ($119 million) in net profit – 4% higher than the year before – on record operating income of Dram106 billion, up from around Dram97 billion in 2022.
All of its main banking businesses contributed to this performance, especially its retail and corporate and investment banking divisions.
The bank’s retail loan portfolio grew 27% to Dram419 billion, with retail deposits up 29% to Dram629 billion. Alongside this business growth, the bank innovated in digital banking for its retail customers, a standout being the launch of its online investment platform, MyInvest.
In addition to retail lending growth, Ameriabank’s corporate loan book grew 38% to Dram530 billion, split between loans to large corporates (Dram368 billion) and small and medium-sized enterprises (Dram162 billion).
Its strength in lending supports its capital markets business, which had a stellar year in 2023.
The bank not only lead arranged a Dram32 billion bond issue for Electric Networks of Armenia – the largest corporate bond sale on the domestic market – but was also sole arranger for Team Telecom Armenia’s Dram8.24 billion IPO, Armenia’s first from the technology, media and telecoms sector.
Best digital bank: Ameriabank
Ameriabank introduced of an end-to-end solution for automated customer identification during online onboarding last year, which resulted in a 66% increase in new client registrations through digital channels. This secured a 47% share of digitally onboarded customers. Enhancements in its CRM Dynamics platform, meanwhile, improved customer service efficiency, achieving a 72% increase in system performance and reducing client service time by 9.5%.
It launched MyInvest, an online investment platform integrated into its mobile banking app, MyAmeria, providing access to over 20,000 securities across more than 30 markets. The addition of a remote brokerage account opening feature saw a 237.5% year-on-year increase in brokerage account holders.
In efforts to promote non-cash and electronic payments, the lender introduced Ameria PhonePOS, enabling companies to accept non-cash payments using smartphones equipped with near-field communication technology. Additionally, the bank expanded its point-of-sale service to cash registers, facilitating non-cash transactions for small business owners directly through their existing devices.
Nearly 95% of loans to individuals and small and medium-sized enterprises are now automated. New machine learning models enhanced product offerings such as buy now, pay later with personalized limits, doubling the probability of loan uptake, while reducing sales team calls by 35%.
The bank’s digital channels saw substantial growth, with 98% of transactions conducted outside the branch network and the MyAmeria app experiencing significant increases in monthly activity.
The bank expanded its digital mortgage offerings, increasing the share of these transactions to 45%, reaching a peak of 51% in December, through its innovative Mortgage Ecosystem.
Best bank for SMEs: Ameriabank
In 2023, Ameriabank continued to strengthen its position in small and medium-sized enterprise financing. The bank’s total SME loan portfolio surged to Dram224 billion ($577 million), marking a 33.4% increase year on year and reflecting a five-year compound annual growth rate of 19%.
Partnering with Dutch development bank FMO, Ameriabank secured a $50 million NASIRA portfolio guarantee during the awards period. Managed by FMO and backed by the European Commission, NASIRA plays a crucial role in mitigating credit risks for partner financial institutions.
Ameriabank has also pioneered online business loan applications. It reported a notable 21% year-on-year increase in assets extended to SMEs, while liabilities grew by 22%. The SME client base expanded by 19%. The bank recorded a 53% increase in environmental, social and governance-compliant loans compared to 2022, particularly in the green loan category tailored for SME customers.
Best bank for ESG: Acba Bank
Acba Bank has established a framework for green lending in Armenia, underscoring its commitment to global sustainability objectives by aligning with the United Nation’s sustainable development goals. This initiative provides essential financial support to green projects aimed at promoting resource conservation and environmental sustainability.
It will publish its sustainability report in 2024, following the guidelines of the Global Reporting Initiative Standards 2021. This report will provide insights into the bank’s environmental, social and governance performance.
Best bank for corporates: Ardshinbank
Ardshinbank’s strong performance in recent years has been largely due to the impact of migrants moving into the country since 2022, particularly from Russia. This has driven an unprecedented flow of deposits into the country, and Ardshinbank has benefitted handsomely from higher income from money transfers and currency-conversion operations, in addition to the wider margins that come from higher interest rates. The bank has used this to build up robust capital and liquidity buffers.
The five largest banks in Armenia (Ameriabank, Ardshinbank, Acba Bank, Amio Bank and Inecobank) hold 60.2% of total loans outstanding in the country.
The announced acquisition of HSBC Armenia, which should be finalised by the end of 2024, will further strengthen Ardshinbank’s domestic franchise.
The bank held 17% of system assets at the end of the third quarter of 2023. Some 41% of gross loans are in dollars, which Fitch says is broadly in line with the sector average, but the ratings agency points out that the portfolio is relatively concentrated. Impaired and Stage-2 loans stood at 5% of loans outstanding by the end of 2023.
The bank improved its digital offering for corporate clients last year. It added SoftPos to its app for its business clients, enabling businesses to accept card payments using smartphones or tablets. This reduces upfront costs associated with acquiring and maintaining traditional point-of-sale equipment and offers faster transaction processing times. The bank also launched a new customer relationship-management system for business customers.
Ardshinbank reported a record operating profit of Dram63 billion ($160 million) in 2023, resulting in a return on equity of 37.2%.
