Ararat Ghukasyan, Head of Armenian Union of Banks, believes that the obvious dram depreciation towards the dollar within the recent two weeks (one dollar gradually rose from 375 drams reaching 407 drams, and the dollar exchange rate is now 401 drams), will not seriously affect the banking system activity.

Ghukasyan, however, could not forecast exactly how much more will the value of Armenian dram fall in the future, but based to preliminary calculations, he believes that the inflation will be mild and gradual; rising only for 6-7 percent by the end of the year, and the dollar-dram exchange rate will vary from 380 to 400 drams.

All those citizens who took long-term loans in foreign currency will have to pay more money because of the inflation, but Ghukasyan does not think that it is profitable for banks.

“Banks are interested in having a stable national currency, and long-term loan responsibilities; and if the service of foreign currency loans is at risk, it does not help to reach their targeted long-term outcome,” Ghukasyan adds.

Speaking about banking activities after the economic crisis, Ghukasyan says that even though in 2009 the gross revenue was 46 percent less than in 2008, however, it did not have a negative impact.

“Anyway, no bank questioned any client’s right to administer their deposits. Stockholders increased the total capital by 48 billion drams ($120 million), which is a sign of the stockholders’ trust. More restrained loaning policy was applied in order to defend depositors’ interests, which is quite natural under the circumstances of economic crisis,” Ghukasyan explains.

Two of 22 trade banks in Armenia – Ameria and Cascade will merge until the end of the year. Ghukasyan believes this initiative will not hinder bank-client relations, but rather make the bank’s activity more trustworthy.