The loan-to-deposit ratio (LDR) increased slightly at the end of sixth calendar month (Sept. 21) posting two straight growth periods after extended declines.
LDR was 78.5% in the reviewed month up 0.8 percentage points compared to the preceding month and 2 percentage points higher than two months earlier.
In comparison to the end of last fiscal year, however, LDR was down 0.9%, indicating 1.3% decline on an annualized basis, according to a report published by the Central Bank of Iran.
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.
LDR started declining from the beginning of fiscal 2018-19, dropping 7.2 percentage points from 85.7% then. The fact that the ratio has improved in two months indicates lenders are more inclined to lend.
As per the CBI report, the ratio was different across provinces -- from as low as 39.5% for Bushehr Province to the highest for Kohgilouyeh-Boyerahmad Province at 113.6%. Tehran’s ratio was 91.5%. Ilam and North Khorasan were among provinces with highest LDRs at 110% and 103.5%. Alborz and Khuzestan ranked second and third with the lowest LDR.
Loans and Deposits
Total outstanding loans rose 5,928.6 trillion rials ($21.9 billion) during a course of year ending Sept. 21 to reach 22,753.2 trillion rials ($89.98b) showing 35.2% rise. Total loans registered 17.6% increase during the first half of current fiscal year (March 20-Sept.21).
With 14,478.7 trillion rials ($55.68b), Tehran Province topped the list of provinces with the highest outstanding loans. At the bottom end was Kohgilouyeh-Boyerahmad Province with total outstanding loans reaching 80.2 trillion rials ($308.46 million).
By the end of the month to Sept. 21, customers held 31,954.4 trillion rials ($122.9b) in deposits with banks and credit institutions. This was up 36% compared to the same period last year when deposits reached 23,493.93 trillion rials ($94.63b).
Deposits rose 17.6% compared to the end of the last fiscal year at 27,162.84 trillion rials ($104.47b) in banks. As usual the majority of deposits (54.07%) were in Tehran Province. Banks in province held 17,278.7 trillion rials ($66.45b) in deposits during the period.
Isfahan Province was next with more than 1,732.75 trillion rials ($6.66b) while Kohgilouyeh-Boyerahmad Province was last with 78.9 trillion rials ($303.46m).
