Armenia’s financial system continued to grow throughout 2025, maintaining a high capacity to withstand shocks, Central Bank Governor Martin Galstyan has said.

Presenting the 2025 Financial Stability Report, Galstyan said growth was recorded across all sectors of the system.

According to him, the assets of the banking system continue to account for the majority of the financial system’s total assets—around 82%.

Galstyan added that pension funds rank second in terms of asset size, with a 9.3% share, and their assets have grown faster than those of all other segments.

In 2025, the banking system’s loan portfolio to the economy grew by about 23%, while deposits in the banking system increased by 13%.

Over the past three years, loan growth has almost twice exceeded annual deposit growth. This means that the high demand for credit in the economy has also been financed using the banking system’s capital, Galstyan said.

He noted that high growth rates were recorded in both household and business lending.

According to the Central Bank Governor, the strong expansion of lending has mainly been driven by robust income growth in the economy. In the case of mortgage lending, a natural slowdown in growth rates has been observed, while the volume of new disbursements has continued to remain high.

The Central Bank chief emphasized that in the lending process, it is important to properly assess borrowers’ debt burden and their ability to service it. This assessment should take into account not only the current macroeconomic environment but also risk estimates derived from potential pessimistic scenarios.

He added that amid economic income growth and high lending activity, the share of non-performing loans and credit losses has remained at a low level.

Speaking about the real estate market, Galstyan noted that in 2025 there has been a relative stabilization in demand, as well as a slowdown in price growth trends.

He also stated that the price-to-rent ratio for residential real estate in Armenia has increased, which could reduce the investment attractiveness of real estate. In recent years, there has been some slight growth in prices, while rental rates have declined.

Galstyan said that in recent years, the strong growth in lending to the construction sector and the continuous increase in the area of residential buildings commissioned could, in the context of a gradual saturation of real estate demand, create risks of excess supply and an increase in credit losses on construction loans.

He added that, by year-end, the banking system recorded high profitability, mainly driven by the growth of net interest income, which is largely the result of increased volumes amid expanding financial intermediation. The banking system’s capital adequacy ratio remained at a high level.

Galstyan also emphasized that in 2025, among financial stability risks, those stemming from high global political and economic uncertainty continue to be dominant.

He noted that in 2026, the ongoing conflict in the Middle East has caused a significant negative supply shock to the global economy, leading to a sharp rise in energy prices and increased volatility in financial markets. According to assessments, even if the conflict ends, the world will continue to feel its effects for several months.

Among domestic risks, he stressed that the potential accumulation of credit risks due to high growth rates in lending remains a key concern.