Banks Allocated $27b of Loans in Q1
EghtesadOnline: The Iranian banking system paid out 1.01 quadrillion rials ($27 billion) worth of loans to nearly 1.4 million applicants in the first three months of the new Iranian year to June 21, marking an 8.5% growth compared with the same period of last year.
According to the latest data made available by the Central Bank of Iran, the services sector grabbed the lion’s share of the bank loans both in terms of number and volume.
More than 780,000 applicants in the sector received loans worth more than 413 trillion rials ($11 billion) during the first quarter of the Iranian year to June 21, accounting for 40.8% of all the offered credits.
The industries and mining sector with loans amounting to 327.6 trillion rials ($8.7 billion) and the business sector getting 125.5 trillion rials ($3.3 billion) were the next major recipients of the credits accounting for 23.4% and 12.3% of the total loans, respectively, Financial Tribune reported.
After the services sector, the agriculture and housing sectors with 235,300 and 165,650 loan applicants received the largest number of allocated credits.
The housing sector, which has not yet fully recovered from its long-lasting recession, only bagged 71.3 trillion rials ($1.9 billion) or 7.3% of the total amount of loans, which is considerably low, considering the size and value of the key sector.
As noted by CBI, care should be taken to ensure the growth in banks’ loan portfolios does not raise inflationary pressure, since demand for credit is particularly high.
Thus, recapitalization of banks, improvement of efficiency in allocating working capital loans to productive activities, reduction of bad debt and navigation of firms to the capital market are recommended.
As the report indicates, the share of working capital loans for all economic sectors in the period stood at 662.7 trillion rials ($17.6 billion), which account for 65.4% of all loans during the period.
The share of working capital loans to stimulate industries and mines was 285.1 trillion rials ($7.6 billion), which equal 43% of all the credits extended to meet the working capital needs of businesses.
Industries and mines received 87% of their credits as working capital while they garnered a significant share of all loans offered by the banking system to business sectors.
The services sector was the runner-up, grabbing 219.8 trillion rials ($5.8 billion), or 33% of the entire working capital loans. More than half of its credit was allocated to meet working capital needs.
A study of the report reveals that the average value of each loan that went to the industrial and mining sector was considerably higher than that extended to other sectors, standing at 6.65 billion rials ($177,000).
The figure for trade loans, which had the second highest average value, was about 777 million rials ($20,500) while loans allocated to agriculture sector held the lowest average value at 303 million rials ($8,000) during the first three months of the current Iranian year.