Listed banks paid an estimated 730 trillion rials ($1.46 billion) interest on deposits in first three months of the current fiscal year (March 22-June 21).
According to the financial statements of 12 banks listed in the capital market, Bank Pasargad topped the list in terms of the paid returns, followed by Bank Mellat and Bank Tejarat with 145 trillion rials ($290 million) and 115 trillion rials ($230 million), respectively, banker.ir reported.
Of the 29 banks in the country, only Pasargad, Mellat, ENBank, Post Bank of Iran, Export Development Bank of Iran, Karafarin Bank, Sina Bank, Day Bank, Middle East Bank, Saman Bank, Parsian Bank, and Tejarat Bank publish monthly reports on the Codal website.
Despite Tejarat being one that have paid considerably high returns it has also seen the highest withdrawals in the three months under review.
The least profit paid on deposits was Post Bank -- 4.73 trillion rials ($9.46 million). Income from loans paid by Post Bank during the period exceeded the profit it paid to savers.
Back in January, the Money and Credit Council allowed banks and credit institutions to raise interest on deposits and loans. The top monetary decision-making body decided to raise interest on one-year maturity deposits by 4.5 percentage points to 20.5%.
Interest on two-year deposits was set at 21.5%, 3.5 percentage points higher. The MCC imposed a cap of 22.5% for three-year deposits. On short-term deposits with 3-month maturity the rate remained unchanged at 12%.
MCC approved 17% for six-month deposits, up 3 percentage points. The latest move apparently was in tandem with efforts to protect the value of the national currency and diversify deposits”.
Apart from raising rates, what is new is the revival of three-year deposits. Banks for years were not allowed to keep people’s money for more than two years and long-term deposit contracts had two-year maturity.
The central bank increased interest on bank loans from 18% to 23%. Per the CBI announcement, if a client wants to withdraw before the maturity of the contract the rate would be reduced as penalty.
The CBI has warned banks against unscrupulous means and ways to offer higher interest or charge higher rates on loans saying that doing so undermines national monetary policy and leads to higher cost of money for banks.
Iranian banks have come under increasing censure across the sociopolitical and economic spectrum for their sheer lack of transparency, inefficiency, mismanagement and failure to put public money where the mouth is -- lending to cash-strapped SMEs and manufactures and underpin production.
Near Permanent Disagreement
However, regarding rates banks keep arguing that they “must rise in tandem” with the high and rising inflation to make it attractive to savers.
With consumer price inflation galloping at full speed, interest that banks offered so far (at best) was far less than half the annual inflation and in many cases much lower.
Among the 12 listed banks three reported withdrawals while nine had deposit inflows.
During the first three months of this year, Pasargad, Mellat, ENBank, Post Bank, Export Development Bank of Iran, Karafarin Bank, Sina Bank, Day Bank, and Saman Bank all saw deposit inflows.
Mellat had the highest deposit inflow during the period with over 660 trillion rials ($1.32b) added to its balance. Bank Mellat deposits reached 10,230 trillion rials ($20.46b) by the end of fiscal Q1.
Following Mellat, lenders with the highest deposit inflows in Q1 were ENBank and Pasargad – combined deposits of the two increased by over 220 trillion rials ($440m) during the period.
Among them, Bank Day saw the lowest cash inflow, with its deposit balance increasing by only 17 trillion rials ($34m) during the three months.
Figures indicate that in Q1 withdrawals exceeded the deposits in Tejarat, Parsian and Middle East Bank. Tejarat had the highest deposit outflow at over 80 trillion rials ($160m) reduced in Q1.
