Data released by the Central Bank of Iran show total loans given by banks outpaced deposits in the month to October 21.
Inclination of banks to lend is shown in the subtle, but steady, increase in loan-to-deposit ratio (LDR), which grew for the third time in a row after months of decline.
With a 0.2% annual rise, the LDR stood at 79.8% indicating a 0.4% rise compared to the end of the last fiscal year (March 2020).
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 six percentage points from 85.7% at that time. The fact that the ratio has improved in the past three months indicates lenders are more willing to lend.
Tehran province registered LDR ratio of 93.4% while Kohgilouyeh-Boyerahmad Province was at 112.4%.
As per the CBI report published on its website, total loans exceeded 24,196.2 trillion rials ($100.8 billion) in the month, indicating a 42.8% year-on-year growth. During the same period last year total outstanding loans stood at 16,947.8 trillion rials ($70.61b).
Loans grew 4,840.4 trillion rials ($20.16b) or 25% during the seven months since the beginning of the fiscal year.
As always Tehran Province took first place crossing 15,575.3 trillion rials ($64.9b). Isfahan Province was next with 932.55 trillion rials ($3.88b) followed by Khorasan Razavi Province with 763.91 trillion rials ($3.18b).
Likewise, with 82.9 trillion rials ($345.41 million) in outstanding loans, Kohgilouyeh-Boyerahmad Province was at the bottom end.
With regard to deposits, the CBI said about 33,380.5 trillion rials ($139.08b) was held by banks and credit institutions in the mentioned month.
Total bank deposits increased by 9,654.9 trillion rials ($40.22 b), indicating a 40.7% growth compared to the corresponding period last year. The report also indicated 22.9% increase in bank deposits since the beginning of the current fiscal year.
Tehran Province topped the list of provinces with the highest deposits -- more than 18,139.9 trillion rials ($75.58b), accounting for 54.34% of the total deposits.
