Bank Mellat topped the list of banks listed with the Tehran Stock Exchange in terms of outstanding loans and deposits, in the past fiscal year that ended in March.
Electronic Banking Magazine reviewed the financial performance of listed banks, namely their deposits and loans. The review is based on publicly available annual financial report of 12 major banks: Bank Mellat, Tejarat Bank, Bank Saderat, ENbank, Bank Pasargad, Parsian Bank, Dey Bank, Karafarin Bank, Sina Bank, Middle East Bank, Post Bank Iran and Melal Credit Institution.
Bank Mellat was in the lead in terms of total deposits with 6,729 trillion rials ($21 billion) followed by Tejarat Bank 4,500 trillion rials ($14.1b) and Bank Saderat 4,300 trillion rials ($13.4b). Bank Pasargad Iran, Parsian Bank and ENbank ranked after.
Bank Pasargad had the highest growth in deposits (65%) compared to March 2021. Post Bank, Middle East Bank, ENbank and Melal Credit Institution were the other listed banks with significant growth in deposits year-on-year.
The average annual growth in total deposits of the banks was about 40%.
The Money and Credit Council (MCC) has allowed lenders to raise interest on term deposits, apparently to help curb the scale and scope of money flooding into selected financial markets and avoid further depreciation of the national currency.
MCC decided to raise interest rates on one-year maturity deposits by 1 percentage point to 16%. Likewise, interest on two-year deposits is 18%. For short-term deposits with 3-month maturity, the rate increased by 2 percentage points to 12%. It approved 14% interest for six-month deposits, up 3 percentage points.
Loans
The journal also reviewed the lending performance of banks. Bank Mellat topped the list in terms of outstanding loans with 7,970 trillion rials ($24.98b) by March 2022. Tejarat Bank and Bank Saderat ranked after with 3,591 trillion rials ($11.25b) and 3,313 trillion rials ($10.38b), respectively.
Bank Mellat was again first in terms of annual growth in outstanding loans, recording 61.4% y/y. Melal was next with 60%. Dey Bank recorded the lowest growth in outstanding loans at 18.6%.
Bank Mellat was the only listed bank with outstanding loans higher than total deposits.
Increase in Deposits
The Central Bank of Iran said earlier that by the end of the last fiscal year total deposits with banks and credit institutions jumped 42.7% annually to reach 55,315.6 trillion rials ($173.4 billion).
Total outstanding loans (performing and non-performing) rose 13,495.6 trillion rials ($42.8b) to reach 41,418.2 trillion rials ($131.4b) -- up 48.3% on the corresponding period last year.
The loan-to-deposit ratio (LDR) of banks and credit institutions was 83.2% by end of the last fiscal year, rising 3 percentage points on the year.
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 fund requirements. Conversely, if the ratio is too low, the bank may not be earning as much as it should be.
Due to the weak financial status of some banks and low capital adequacy ratios, Iranian lenders have been recommended to keep LDRs to the lowest possible.
