Page 26 - IRANRptJun18

Also, the report notes that the overall volume of liquidity was more than IRR12.53 quadrillion ($278.88bn) by the end of the previous Iranian year (ended March 20, 2017).
In total, the banking system held the bulk of liquidity in the period to the end of the 10th month of the 2017/2018 Iranian year with some IRR6.8 quadrillion ($153.13bn) in holdings indicating a 21.5% y/y growth. This is while the volume of government and non-government debts to both public and private banks exceeded over IRR2.55 quadrillion ($65.75bn) and IRR10.27 quadrillion ($228.58bn). indicating increases of 22.5% and 17% y/y, respectively.
All banknotes and coins in circulation registered IRR535.7tn ($11.93bn), of which IRR358.1tn ($7.97bn) was held by citizens of Iran, while IRR106.7tn ($2.38bn) and IRR70.9tn ($1.58bn) were held by the CBI and private banks, respectively.
8.1.2 Foreign assets
Commercial banks’ foreign assets grow by 44.5% y/y
Foreign assets of commercial banks registered a significant increase, with some IRR466.8tn ($10.39bn) held in the 10th month, signalling 44.5% y/y growth. Liabilities of government and non-government entities reached IRR508.6tn ($11.32bn) and IRR1.65 quadrillion ($36.73bn), respectively, indicating a 32.2% and 22.2% growth y/y.
Non-government banks and non-bank credit institutions held more than IRR1.88 quadrillion ($41.85bn) in foreign assets during the 10th month, marking a 30.1% increase y/y.
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.
26 IRAN Country Report June 2018 www.intellinews.com