DIMENSIONInvestments

Annual Report2019

2

Established in 2018

State registration and license Central Bank of Armenia, license No. 0014

Other memberships Account operator at the Central Depository of Armenia, member of Armenia Securities Exchange

Main activities

Manages investment portfolio on its behalf and its own account, distribution of securities, registry keeping and custody services,market making, advisory, financial reporting

Number of shareholders 3

Shareholders’ residency Armenia, Netherlands, USA

Number of employees 6

Address RA, Yerevan 0010, Movses Khorenatsi 15, Elite Plaza Business Center, 4th floor, office A5

Audit (external) «PKF audit service» LLC

About Dimension

Financial Highlights

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HIGHLIGHTS

• Launched in September 2018 and within 2019 made othercomprehensive Income of AMD 71 million;

• Generated financial leverage of 3.51x in collaboration with 3 partnerbanks;

• Became profitable since the first year of establishment;• Strategically allocated the portfolio among long-term and short-term

assets;• Hedged the portfolio for exchange rate fluctuations by investing in bonds

denominated in various currencies.

57,675 59,525

70,894

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Net interest income Operating income Other comprehensive incomethrough profit or loss

Profitability Performance in '000 AMD

1,516,779

1,085,581

431,198

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

TOTAL ASSETS TOTAL LIABILITIES TOTAL EQUITY

Balance Sheet Performance '000 AMD as of 2019

1,104,559

382,442

1,516,779

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

Available-for-sale financial assets Financial assets held-to-maturity TOTAL ASSETS

Bonds classification in '000 AMD as of 2019

Macro and Political Update: 2019

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Armenia’s political and economic developments were full of events in 2019. The leaderships of big IT companies such asGoogle, Amazon and Facebook participated in the World Congress on Information Technology (WCIT), which took place inArmenia on October 6-9, 2019. The World Congress on Information Technology (WCIT) is considered to be the largest andthe most reputable international event among worldwide IT leaders. It brought together high-level officials from differentcountries, heads of multinational organizations, universities and non-governmental organizations' representatives. The eventwas an important milestone for developing the IT sector in Armenia.

According to the International Monetary Fund (IMF), the country’s GDP grew by 7.6% in 2019 compared to the same periodin the previous year, mainly due to an increase in trade & services and mining sectors by 9.3% and 21.3% respectivelycompared to the same period in 2018. On the other hand, agricultural sector declined by 4% compared to same period in2018. However, construction and manufacturing sectors demonstrated a solid growth by 4.2% and 12% respectivelycompared to the same period in the previous year.

The macroeconomic situation in Armenia was stable in 2019. Inflation rate was stated at 1.2% as of the end of 2019compared to the same period in 2018. The target inflation rate is stated at 4.0%. Monetary policy demonstrated a stimulatingactivity towards encouraging the economic growth. The Central Bank cut the refinancing rate twice per 25 basis points inJanuary and in September 2019 to 5.5% from 6.0%, which is an encouraging step towards easing the monetary policy andboosting economic activity. Easing the monetary policy would facilitate higher volume of lending leading to the increase ofthe inflation rate, which is relatively low at 1.2% compared to the target rate at 4.0%.

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Macro and Political Update: 2019

Moreover, the Central Bank of Armenia’s net international reserves increased by 46.93% to AMD 1.07 tln. equivalent of USD2.03 Billion as of the end of 2019 compared to the same period in 2018. The policy of increasing reserves means that theCentral Bank buys dollars from the market in order to keep the dram depreciated against dollar, which is beneficial for theSMEs exporting to foreign countries. Depreciated dram and potential relatively higher inflation rate would benefit thecompanies, which focus on production of goods.

On the other hand, currencies demonstrated slight fluctuation in 2019. USD and EUR appreciated by 0.96% and 3.12%against AMD respectively as of the end of 2019 compared to the same period in 2018. However, Russian Ruble depreciatedby 7.62% against dram as of the end of 2019. Appreciated dollar and depreciated Ruble would imply Central Bank’s buyingmore treasuries in order to impose exchange rate stability in the market.

Earlier on August 27, Moody's Investors Service ("Moody's") has upgraded the Government of Armenia's local and foreigncurrency long-term issuer and foreign currency senior unsecured debt ratings to Ba3 from B1. Also, the long-term foreigncurrency bond ceiling and long-term foreign currency deposit ceiling have been raised to Ba1 from Ba2 and B1 from B2,respectively.

The decision to upgrade the rating is driven by Moody's assessment that the increasing diversification of growth drivers,coupled with a lengthening track record of stabilizing macroeconomic policy, raises Armenia's economic resiliency.Overall, Armenia’s internal political and economic forecast for the country is positive.

Financial Ratios

HIGHLIGHTS

• Within the first year of business, Dimension Investments achievedcompetitive performance ratios with regard to ROA and ROE at 4.93%and 17.36% respectively;

• Interest earning assets encompass more than 98% of the total assets,indicating of company’s strategic asset allocation;

• Cost to income ratio is about the third of the revenues, due to low yieldrepo deals with partner banks benefiting Dimension Investments.

4.93%

17.36%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

20.00%

ROA ROE

ROA & ROE in 2019

35.77%

98.04%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%

Cost to income

Interest earning assets/Total Assets

Interest Earning Assets, Cost to Income in 2019

9.49%

4.91%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

Net fee and commission income/Totaloperating income

Net fee and commission expense/Totaloperating income

Net Fee & commission income and expense

Investment Portfolio

HIGHLIGHTS

• Government & Corporate bonds represent about 99% of the total assets,indicating Dimension Investment’s core investment asset classes;

• Dimension Investment’s leverage reached to 3.51 in 2019;

• Having about 19.41% of unpledged bonds and 80.59% pledged bonds,indicates the company’s effective risk management strategies.

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Պետ․ և կորպ․ պարտատոմսեր Ընդամենը ակտիվներ

1,487,001 1,516,779

157,000

357,000

557,000

757,000

957,000

1,157,000

1,357,000

1,557,000

1,757,000

Government andCorporate Bonds

Total Assets

Num

bers

are

in t

hs. A

MD

Bonds Allocation in Total Assets

0.87%

2.65%

96.48%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Cash

Corporate bonds

Government bonds

Investment Portfolio Allocation

80.59%

19.41%

Portfolio of G-Bonds and C-Bonds

Pledged under repos Unpledged

Macroeconomic Overview (GDP)

Highlights

• A 7.6% GDP growth was recorded in 2019;

• GDP in 2019 reached to AMD 6.5 tln., increasing aboutAMD 500 bln. Compared to 2018;

• Beginning from 2017, Armenia had a spike in GDPgrowth mainly due to the lengthening track record ofstabilizing macroeconomic policy.

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1,031,338 1,175,877

1,362,472

1,624,643 1,907,945

2,242,881 2,656,190

3,149,283 3,568,228

3,141,651 3,460,203

3,777,946 4,266,461

4,555,638 4,828,626

5,043,633 5,067,294

5,564,493 6,005,058

6,551,850

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NU

MBE

RS A

RE IN

MIL

LIO

N A

MD

YEARS

GDP in absolute values

5.9%9.6%

13.2% 14.0%10.5%

13.9% 13.2% 13.7%

6.9%

-14.1%

2.2%4.7%

7.2%

3.3%3.6%

3.2%0.2%

7.5%5.2%

7.6%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Years

GDP growth rates

Macroeconomic Overview (Economic Activity)

Highlights

• Economic activity in Armenia was relatively high in 2019 by havingan average of 7.0%;

• The 7.6% growth in GDP is mainly attributed to expansion of“Accommodation and food services”, “Financial services” and“Mining” sectors respectively by 27.2%, 22.0% and 21.3% in 2019compared to 2018;

• Exports and imports grew by 9.4% and 10.8% respectively, which isrelatively higher results compared to the net exports position in2018.

5.8%6.8% 6.5%

7.3% 7.3%6.5% 6.9% 7.0% 7.1% 7.2% 7.5% 7.8%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

Janu

ary

Febr

uary

Mar

ch

April

May

June July

Augu

st

Sept

embe

r

Oct

ober

Nove

mbe

r

Dece

mbe

r

Index of Economic Activity in 2019 (y-o-y)

29.7%

47.8%

1.1%

-32.8%

46.6%

28.2%

7.1%

24.9%

9.1%-0.8%

12.5%5.6%

33.4%

21.6%

49.1%

35.4%

9.4%

12.9%

0.9%

-26.8%

21.4%

10.8%

-40.0%-30.0%-20.0%-10.0%

0.0%10.0%20.0%30.0%40.0%50.0%60.0%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Exports & Imports

Export Import

27.2%22.0%

21.3%12.0%

11.1%9.3%

7.0%5.7%

4.2%1.6%

-1.3%-4.0%

-11.6%

-20.0% -10.0% 0.0% 10.0% 20.0% 30.0%

Accommodation and food serviceFinancial sevices

MiningManufacturing

Information and communicationWholesale and retail trade

Тransportations and warehouse Real estate activities

ConstructionOther service activities

Electricity & gasAgriculture

Water supply

Growth of economy sectors in 2019

Macroeconomic Overview (Government Debt)

Highlights

• Both external debt and domestic debt grew by 9.9% and 5.4%respectively;

• AMD, USD and EUR denominated government debt amount grewby 15.8%, 7.1% and 22.9% respectively;

• Long-term debt and short-term debt grew by 12.9% and 76.3% in2019, however medium-term debt declined by 23.1% in 2019compared to the same period in 2018.

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280 312 368 550 620 671 737

1,375 1,589

1,858 2,081

2,369 2,412 2,542

-

500

1,000

1,500

2,000

2,500

3,000

2013 2014 2015 2016 2017 2018 2019

Num

bers

are

in b

illio

n AM

D

Government debt - Structure by Residency

Domestic debt External debt

75 61 55 116 90 81 143 185 195

486 567 701 701 539

1,396 1,645 1,686

1,948 2,198 2,301

2,597

-

500

1,000

1,500

2,000

2,500

3,000

2013

2014

2015

2016

2017

2018

2019

Num

bers

are

in b

illio

n AM

D

Government debt - Structure by time to maturity

Short-term debt Mid-term debt Long-term debt

274 290 321 508 550 588 681 444 574

835 1,039 1,256 1,344 1,439

116 137

146

184 261 283

347

821 900

923

900 922 868

811

-

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 2015 2016 2017 2018 2019

Government debt - Structure by Currencies

AMD USD EUR Other

Income Statement (audited)

Income Statement 2019 2018Interest income 115,256 4,168 Interest expenses -57,581 -Net interest income 57,675.0 4,168.0

Fee and commission income 5,647 808 Fee and commission expense -2,923 -148 Net fee and commission income 2,724 660

Dividend income - -Net trade income - -128 Other operating income -874 -Operating income 59,525 4,700

Provisions for Impairment losses -7,045 -Administrative expenses -40,450 -3,905 Other operating expenses -6,168 -436 Net gain from investment in statutory capital of other entities - -

Income before taxes 5,862 359 Profit tax charges -1,906 -84 Net income 3,956 275

Other comprehensive income Other comprehensive income through profit or loss 70,894 -127 Revaluation income (loss) on available-for-sale financial assets 70,894 -127 Total comprehensive income 74,850 148

(Num

bers

are

in th

ousa

nds)

Inco

me

Stat

emen

t 20

19

Balance Sheet (audited)ASSETS 2019 2018Cash & cash balances with CBA - -Claims on banks & other fin. institutions 12,449 9,239 Claims on customers - -Financial instruments at fair value through profit or loss - -Available‐for‐sale financial assets 1,104,559 301,116 Financial assets held‐to‐maturity 382,442 -Investment in other legal entities - -PP&E and intangibles 13,570 8,801 Deferred tax assets - 42 Other assets 3,759 1,352 TOTAL ASSETS 1,516,779 320,550

LIABILITIES Due to banks and other financial institutions 1,060,648 -Due to customers - -Securities issued - -Deferred tax liabilities 12,970 -Reserves 1,067 51 Other liabilities 10,896 351 TOTAL LIABILITIES 1,085,581 402

EQUITY Chartered capital 356,200 320,000 Share premium - -General reserve - -Revaluation reserve - -Retained earnings (loss) 4,231 275 Other comprehensive income 70,767 -127 TOTAL EQUITY 431,198 320,148 TOTAL EQUITY AND LIABILITIES 1,516,779 320,550

Bala

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Contact usDo not hesitate to contact us regarding any inquiry.

Working days and hours: Monday-Friday, 9:00-18:00

Address. Yerevan 0010, Movses Khorenatsi 15, Elite Plaza Business Center, 4th floor, office A5

Tel: (010) 54 56 70E-mail: info@dimension.amWebsite: www.dimension.am

«Dimension» CJSC is under the Central Bank of Armenia’s supervision.