Page 31 - IRANRptSep18

Government and non-government actors owed IRR901.9tn ($20.1bn) and more than IRR6.34 quadrillion ($141.1bn), indicating year on year rises of 42.8% and 17.4% respectively, to commercial banks in the period.
The CBI said it held more than IRR3.8 quadrillion ($84.57bn) in foreign assets by the end of the 10th month, which indicates an annual increase of 13.5%.
8.1.3 Loans
CBI pushing for loan-friendly banking
Iranian regulators seem likely to force banks to lower interest rates in coming months in line with the re-elected Rouhani administration’s plan to switch the banking system from savings-based to loan-friendly. Peyman Ghorbani, CBI Vice Governor for Economic Affairs, said that commercial loans must be set from 18 to 19% from September 2. Loans were locked at 20% and above before the proposal to cut rates.
As it is, the banks are struggling with the current rates forced on them by the CBI as their business plans were previously based on high-interest savings accounts.
The lowering of interest rates is also set to come into direct conflict with the upgraded capital adequacy ratio lately outlined by the CBI. Banks that do not meet the ratio are at risk of losing their licence, the central bank says.
8.1.4 Deposits
Saving rates fall to 15%
Deposit rates on Iranian bank accounts were lowered to 15% with daily short-term interest rates fixed at 10% since last September in accordance with the plan set out by the CBI, Banker.ir reported.
During the past decade, interest rates have historically been above 20% with some credit institutions in Iran offering over 30% for savers. The average loan rate at its highest was 33% in 2009.
Peyman Ghorbani, CBI Vice Governor for Economic Affairs, said of the measure, “all banks must offer this new lower interest rate for deposits from Shahrivar.” He added that any new savings packages offered by banks and credit institutions must now be given to the CBI before being offered to customers.
8.1.5 NPLs
CBI gives Iran’s NPL rate as 10%
The Central Bank of Iran (CBI) calculates that Iran’s overall bad debt now stands at 10% of the total debt market in the country, CBI director Valillolah Seif says, according to a late May Iranian Banker Journal report.
Around IRR1 trillion of bad debt existed in Iran, according to Seif; however other figures suggest the figure of non-performing loans is higher, with banks struggling to retrieve assets due to old-fashioned regulations which mean it takes a very long time to clear debts.
Iran’s overall NPL figure stood at 18%, according to prior CBI statistical
31 IRAN Country Report September 2018 www.intellinews.com