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8.1.2 Loans
Iran’s banks ‘lent IRR9,750 trillion to businesses in 2019-2020 Persian year’
Iran’s banks lent Iranian rial (IRR) 9,750 trillion ($62.9bn at the free market rate, $232bn at the official rate) to businesses in the 2019-2020 Persian year (ended March 19), marking a rise of IRR2,012tn or 26% y/y, according to Central Bank of Iran (CBI) data published by DEN Group on April 30.
Companies across the board in Iran suffered significant losses during the Iranian calendar year, with the severe US-sanctions-triggered depreciation of the rial against hard currencies and other market impacts of the sanctions making life very tough for the business world.
The CBI said in its annual report on the performance of the country’s banks that the services sector received IRR3,285tn, or 34%, of the awarded loans. The industries and mining sector was the next biggest beneficiary, accounting for IRR3,172tn, while companies in commerce received 19% of the total. Looking at loan amounts and destinations, the CBI said companies in services received an average $5,300 at the free market exchange rate, while the average for other sectors was $3,000.
8.1.3 Deposits
8.1.4 NPLs
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.
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, according to a late May Iranian Banker Journal report.
Around IRR1 trillion of bad debt existed in Iran; 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 releases. The reason behind the supposed improvement in NPL clearance is the Rouhani cabinet's move in February to approve the penalty waiver for loans amounting to IRR1bn.
8.1.5 Bank merger
Merger expected to produce Iranian “megabank” by end of May
The merger of five government and military-owned banks into Iran’s oldest financial institution, Bank Sepah, is expected to take place at the end of the current Persian calendar month (May 20), the Financial Tribune reported on April 25. The “mega-bank” is to include Ansar Bank, Bank Hekmat Iranian, Mehr Eqtesad Bank, Ghavamin Bank and Kosar Credit Institution, owned by different branches of the country’s police and military.
Not to be confused with Iran’s Islamic Revolutionary Guard Corps (IRGC), or
31 IRAN Country Report May 2020 www.intellinews.com
