Total deposits with banks and credit institutions reached 24,242.5 trillion rials ($157 billion as per Tuesday’s forex rates) up until Nov 21.
The value of bank deposits increased by 5,147.4 trillion rials ($33.5 billion) compared to the corresponding period of last year, indicating 27% growth year-on-year, according to data by Central Bank of Iran.
Data also showed 17.3% hike in deposits since the end of last fiscal year (March-Nov. 2019), when banks customers had 20,673.36 trillion rials ($135.12 billion) in deposits.
The report covered deposits in rial and foreign currencies.
Banks in Tehran Province held more than half of the total deposits (53.91%). About 13,070.2 trillion rials ($85.42 billion) in deposits were with banks in the capital.
Next was Isfahan Province with 1,292.66 trillion rials ($8.44 billion) followed by Khorasan Razavi Province with 1,136.72 trillion rials ($7.43 billion).
At the lowest end were banks in Kohgilouyeh-Boyerahmad Province with 64.7 trillion rials ($422.87 million).
Loans
Outstanding loans rose 3,118.7 trillion rials ($20 billion to reach 17,128.6 trillion rials ($111.2 billion) by Nov.21 showing 22.3% hike on an annual basis. Compared to the end of last year, outstanding loans registered 13.5% rise.
Unpaid loans in Tehran Province amounted to 11,040.2 trillion rials ($72.15 billion) – almost 65% of the total outstanding loans.
Isfahan Province was next with 616.21 trillion rials ($4.02 billion). In addition, about 524.92 trillion rials ($3.43 billion) worth of unpaid loans was registered in Khorasan Razavi Province.
As ususal, Kohgilouyeh-Boyerahmad Province was at the bottom of the list with 61.3 trillion rials ($400.6 million) worth of outstanding loans.
LDR at 78.8%
The loan-to-deposit ratio (LDR) was 78.8% in the month to Nov.21, down 2.9% year-on-year and 2.5% lower compared to the end of last fiscal year.
The ratio for Tehran Province was 93.2% and for Kohgilouyeh-Boyerahmad Province 106.9%.
LDR is used to assess a bank's liquidity by comparing 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 fund requirements. Conversely, if the ratio is too low, the bank may not be earning as much as it should be.
LDR has been of the declining order since the beginning of fiscal 2018-19, which is often interpreted as the lenders’ increasing unwillingness to lend.
According to a report by the Tehran Chamber of Commerce, Industries, Mines and Agriculture, the ratio was 85.7% in fiscal 2018-19.
While the decline has not been consistent over two and a half years and has fluctuated, the ratio on Nov.21 indicates near 8% decline 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 economic 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 say the LDR ratio of 65% would be acceptable for banks due to the unhealthy state of the banking industry.
