AraratBank and FMO unlock funding for underserved entrepreneurs

FMO and AraratBank today announce the signing of a USD 10mln NASIRA loan portfolio guarantee. This innovative risk sharing program will make it easier for AraratBank to provide funding to youth, migrant, women and COVID-19 affected entrepreneurs, as losses on the loan portfolio will be carried by both parties.

The NASIRA program is a risk sharing facility for local financial institutions, supported by the European Union and MASSIF, the financial inclusion fund FMO manages on behalf of the Dutch government. It is a new way of unlocking support to underserved segments, specifically young, female, COVID-19 affected and migrant entrepreneurs.

“In the longstanding relationship with FMO, AraratBank has proven to be a socially engaged bank, also demonstrated by their interest in the Nasira target customers. Especially in Armenia, with a large diaspora, this will also include returnees. These groups often remain underbanked due to high risks - both perceived and real - involved in lending to them, due to absence of collateral and credit history, among others. The guarantee program takes away this hurdle, by agreeing in advance to share possible credit losses. A technical assistance program is ready to support AraratBank in their plans to reach out to NASIRA target segments”,  stated by FMO press service.

"I am delighted that the years of eraned trust has today led to the signing of one-of-a-kind agreement. The NASIRA program stands out for its risk sharing where   AraratBank and FMO will jointly bear the risk of default on the loans to financially vulnerable businesses, enabling beneficiaries to establish and grow their businesses in Armenia. Another noteworthy feature of this program is that it is unprecedented also in the whole region․It’s no secret that banks avoid financing financially vulnerable and high-risk businesses. We are happy that AraratBank comes up with such an offer, as we highlight the importance of providing access to finance and equal terms for all borrowers,” said Mher Ananyan, Chairman of the Executive Board of AraratBank.

"In our longstanding relationship with AraratBank, signing the NASIRA loan portfolio guarantee is an exciting next step. By reducing the perceived and actual risk of financially underserved groups and COVID-19 affected businesses, FMO aims to contribute to reducing inequalities within Armenia and enhancing financial support to small businesses during the COVID-19 crisis and its recovery period," said Huib-Jan de Ruijter, Chief Investment Officer a.i. of FMO.

About AraratBank

AraratBank open joint-stock company was founded in 1991, providing the latest and highest quality banking services to both individuals and legal entities, applying modern technologies to develop banking services and creating a special business culture in bank-client relations.

With the innovative banking technologies and best practices of corporate governance, the bank has 53 branches across the country. AraratBank actively participates in the real sector of the Armenian economy, particularly in SME lending. AraratBank cooperates with 17 reputable international financial institutions.

By reporting a stable growth of financial indicators year on year, AraratBank takes its unique position in the banking sector of the Republic of Armenia. Thus, as of the performance indicators in Quarter 1, 2021, total assets stood at USD 501.8 million. Loan portfolio stood at USD 281.2 million, with the share of corporate loans totaling 54․8% (USD 154.1 million) and the share of retail loans totaling 47.7% (USD 134.1 million) in the loan portfolio.

Total liabilities in the reporting period stood at USD 426.3 million. The share of borrowings from IFIs in total liabilities stood at around 30.0% or USD 127.8 million, the share of term deposits stood at 23.5% or USD 100.3 million, while the share of demand deposits stood at 22.4% or USD 95.3 million. In Quarter 1, 2021, the Bank succeeded in reporting growth of term deposits by USD 12.9 million (14.8%).

Total capital reported growth of USD 75.5 million as compared to the indicator of the previous year – USD 73.2 million. In Quarter 1, 2021, net profit stood at USD 3.4 million. In Quarter 1, AraratBank provided capital adequacy of 14.73% and total liquidity of 27.49%. For more information please visit araratbank.am

About FMO

FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50-year proven track-record of empowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions, energy, and agribusiness, food & water. With a committed portfolio of EUR 9.7 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. For more