EghtesadOnline: Loan-to-deposit ratio increased to 81.8% by the end of the sixth month in this fiscal year – up 3.3% percentage points compared to the corresponding period last year.
The ratio was up 0.6 percentage points on the preceding month and 1.8 percentage points higher in the six months since the beginning the fiscal year on March 21, the Central Bank of Iran said.
LDR is used to assess a bank's liquidity by comparing the total loans to total deposits for a specific period and is expressed in percentage.
If the ratio is too high, the bank may not have enough liquidity to cover unforeseen funding requirements. Conversely, if the ratio is too low, the bank may not be earning as much as it should be.
Increase in LDR also is an indication of banks willingness to lend. An ideal LDR ratio is typically 80% to 90%. A ratio of 100% means the bank loaned the same amount it received in deposits, which means the bank will not have enough reserves for contingencies.
However, due to poor financial status of some Iranian banks and low Capital Adequacy Ratios, lenders have been recommended to keep LDR as low as possible.
The ratio for Tehran Province, where the capital, is located was 96%. In deprived Kohgilouyeh-Boyerahmad Provinces it was 105.9%.
A review earlier by the Economy Ministry showed that loans are unevenly (unfairly) distributed across provinces.
It said the LDR of specialized lenders owned by the government was higher and private lenders underperformed in giving loans.
Accordingly, the ratio of specialized state banks on average as 126% by end of the fourth calendar month to July 22. This is while average LDR of private banks and credit institutions was 63%.
Outstanding Loans, Deposits
According to CBI data, total outstanding loans, including performing and NPLs, rose from 11,800.9 trillion rials ($40.7 billion) to 34,554 trillion rials ($119b) or 51.9% higher on the corresponding period last year.
Reaching 22,319.3 trillion rials ($77b), Tehran Province topped the list with the highest unpaid loans. As always, Kohgilouyeh-Boyerahmad Province was at the bottom end with total outstanding loans at 112 trillion rials ($400 million).
Deposits with banks and credit institutions posted 46.6% annual rise to reach 46,838.7 trillion rials ($161.5b).
Bank customers had 31,954.4 trillion rials ($110b) in deposits during the corresponding period last year.
As always, the majority of deposits were in banks in Tehran Province with 25,437.6 trillion rials ($87b) in the mentioned period or more than half the total deposits.
With 2,455 trillion rials ($8.4b) Isfahan Province was next and Kohgilouyeh-Boyerahmad Province was at the bottom end with 119.2 trillion rials ($420m).