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EghtesadOnline: Banks customers had 23,725.6 trillion rials ($182.5 billion) in deposits with banks and credit institutions by the end of the seventh month of the current fiscal year (October 22), according to the Central Bank of Iran.

The figure indicates an increase of 5,356.2 trillion rials ($41.2 billion) during one year, also showing 29.2% growth compared to the end of corresponding month last year, the bank said in a report.

Deposits rose 14.8% compared to the end of the last fiscal year (March 2019), when the amount was 20,673.4 trillion rials ($159 billion) in banks, Financial Tribune reported.

The report covered deposits both in rials and foreign currency.

As usual the majority of deposits were in banks in Tehran Province. Banks in the capital had 12,843.4 trillion rials ($98.72 billion) in deposits during the mentioned period or more than half the total deposits. 

Kohgilouyeh-Boyerahmad Province was at the bottom end of the list with 63 trillion rials ($484.61 million).


Outstanding Loans

The report said during the period outstanding loans reached 16,947.8 trillion rials ($130.36 billion), indicating a 22.3% growth on y/y basis.

During the period last year total outstanding loans stood at 13,853.98 trillion rials ($106.57 billion).

Since the end of last fiscal year, total unpaid loans rose 1,857.6 trillion rials ($14.28 billion), or 12.3%.

Tehran again accounted for most of the loans in the month with 10,946.3 trillion rials ($84.20 billion) worth of outstanding loans. 

As often, Kohgilouyeh-Boyerahmad Province was at the bottom end of the list with 60.03 trillion rials ($461.77 million) worth of outstanding loans. 


LDR at 79.6% 

The loan-to-deposit ratio (LDR) declined 4.5% by the end of seventh calendar month on Oct. 22 (y/y basis) to reach 79.6%. 

This was a 1.7% decline since the end of last fiscal year.  

The ratio for Tehran Province was 94% and for Kohgilouyeh-Boyerahmad Province 107.8%.


Exercising Caution  

The ratio has been of the declining order since the beginning of fiscal 2018-19, which can be interpreted as the lenders’ increasing unwillingness to lend to companies. 

According to a report by the Tehran Chamber of Commerce, Industries, Mines and Agriculture, the ratio was 85.7% in 2018-19 fiscal year and dropped to current 79.6%. 

While the decline has not been consistent over two and a half years and has fluctuated, the ratio shows an overall 6.4% fall during the period.

The decline in LDR could be ascribed to lenders’ increasing tendency to err on the side of caution in lending given the piling up of non-performing loans, bad debts and future of the economy riddled with uncertainty.

As per acceptable norms, the ideal loan-to-deposit ratio is typically 80% to 90%. A loan-to-deposit ratio of 100% means a bank lent the same amount it received in deposits. It also means the bank will not have enough reserves for contingencies. 

However, banking experts believe the LDR ratio of 65% would be still acceptable for the banks given the unhealthy state of the banking industry.    


Iran bank Central Bank of Iran Credit Institutions Customers Rise deposits Banks Deposits