Central Bank of Armenia raises countercyclical capital buffer to 2.25%
The Central Bank of Armenia (CBA) has raised the countercyclical capital buffer for banks by 0.25 percentage points to 2.25% of risk-weighted assets. The Board’s decision No. 282-N of October 20, published on October 26, takes effect on May 1, 2027.
The countercyclical buffer is additional capital that banks build up above minimum requirements during periods of rapid credit growth and that can be released if risks materialize. The CBA reviews its level every quarter. In April the Board left the rate at 1.75%, and in July it raised it to 2%, a requirement banks must meet from February 1, 2027.
Credit gap keeps widening
According to the rationale, the credit-to-GDP ratio continued to rise in the second quarter of 2026 and reached about 87% at the end of the quarter. The credit-to-GDP gap, the deviation of the ratio from its long-term trend, widened to about 6.6 percentage points. The financial cycle index also rose, driven mainly by real estate market activity and high lending growth.
The strong credit activity recorded since the start of the year continued in the third quarter. Consumer lending is still growing fast, though it has slowed somewhat since January, while mortgage growth has accelerated after a long downward trend. Loans to the construction sector exceeded AMD 1 trillion as of August. Household debt and debt-service burdens continued to rise.
Signals from the property market
The CBA points to a significant rise in average property prices since the start of the year. This may reflect both stronger external demand and growing domestic interest in real estate as an investment asset. In Yerevan, the average price per square meter in apartment buildings was 23.5% higher than a year earlier and 20.3% higher than at the end of 2025; annual growth across the city’s districts ranged from 12.7% to 29.2%. Combined with the revival of mortgage lending and high credit activity in construction, these developments may, in the CBA’s view, signal a new phase of acceleration in the property market and a possible build-up of related risks.
The regulator is monitoring the market and assessing whether its measures should be revised. Future changes to the buffer, whether up or down, will depend on macro-financial conditions, uncertainties and the evolution of systemic risks.
Banking system in August
| Indicator | August 2026 | 12-month change |
|---|---|---|
| Assets, AMD trillion | 13.77 | +18.94% |
| Loans, AMD trillion | 8.44 | +23.39% |
| Non-performing loans, share | 1.5% | +0.25 pp |
| Liabilities, AMD trillion | 11.69 | +19.95% |
| Deposits, AMD trillion | 7.35 | +20.83% |
| Equity capital, AMD trillion | 2.08 | +13.58% |
| Total capital adequacy ratio | 20.4% | +0.17 pp |
| Liquidity coverage ratio | 200.8% | +0.01 pp |
| Return on equity | 18.29% | −2.5 pp |
| Return on assets | 2.9% | −0.45 pp |
Source: Central Bank of Armenia, Board decision No. 282-N of October 20, 2026 and the presentation Key financial stability indicators and risks, Q3 2026. Banking data as of August 2026.
