AEB Remains Well-Capitalized with 21.54% Stake Held by Small Shareholders

Armenian Economic Bank (AEB) Overview

As of 2011, Armenian Economic Bank (AEB) held a significant stake in its capital structure, with various small shareholders holding onto their shares. The bank boasts 38 full-service branches and one mini-branch, solidifying its position as the 14th largest bank by total assets, loans, and deposits.

MSME Lending Portfolio

According to recent data, AEB’s micro, small, and medium-sized enterprise (MSME) lending portfolio accounted for a substantial 51.44% of its total loan portfolio, with MSME loans totaling AMD15.046 billion.

Capital Adequacy Ratio (CAR)

Despite experiencing a slight decline in capital adequacy ratio (CAR) from 20.97% at the end of 2008 to 15.5% as of 2011, AEB remains well-capitalized, exceeding the Central Bank of Armenia’s minimum CAR requirement of 12%.

Loan Maturity Dates and Non-Performing Loans

The bank’s loan maturity dates are evenly distributed, easing liquidity pressure and reducing its non-performing loan (NPL) ratio to a commendable 2.8%, lower than the peer group average of 15.3%. In FY2011, AEB’s NPL ratio decreased by 3.9 percentage points, primarily due to reductions in restructured loans and loans considered doubtful.

Exposure to Other Financial Institutions

AEB’s exposure to other financial institutions and related credit risk is significant, calculated at 10.1% of total credit exposure and 67.5% of common equity. However, its gross loan portfolio, totaling $77.4 million as of 2011, has only seen a modest growth of 4.2% compared to the previous year.

Deposit Base

The bank’s deposit base has been growing steadily since 2009, but contracted by 10.1% in FY2008 due to the withdrawal of deposits from state-owned enterprises following the Armenian tax authority’s decision to end AEB’s exclusive privilege to collect and hold customers’ tax dues.

Credit Ratings

Moody’s assigned AEB an E+ financial strength rating and B1 long-term dram and foreign currency deposit ratings, both with a stable outlook. The bank’s geographically diverse branch network allows it to reach a large number of retail and SME customers, ensuring higher diversification of assets and liabilities and larger interest margins.

Conclusion

As AEB continues to navigate the competitive Armenian banking landscape, its small shareholders hold onto their 21.54% stake, confident in the bank’s ability to maintain its position as one of the country’s leading financial institutions.