The state-owned Bank Maskan - the main housing lender - is coming out of the red and poised to make a profit fiscal 2022-23, a board member said.
On its financial performance, Mohsen Fazelian said that the bank’s financial status has been improving slowly but steadily after 2020, HIBNA, the news portal of Bank Maskan, reported.
“Net loss of the bank declined from 10.5 trillion rials [$40 million] in March 2020 to 8 trillion rials [$30m] in March 2021,” Fazelian said.
Total income of the bank rose from 125 trillion rials ($480m) in 2019-20 to 153 trillion rials ($588m) in the last fiscal year (ended March 2021).
Operating profit increased from 44 trillion rials ($170m) in fiscal 2019-20 to 62 trillion rials ($238m) by end of the last fiscal year.
A company's operating profit is its total earnings from its core business functions for a given period, excluding the deduction of interest and taxes.
“Given the financial improvement, we expect to cut losses to zero next year,” he said.
As a specialized lender owned by the government, a big part of its losses apparently are due to its obligations to fund state-initiated housing projects.
For instance, the bank incurred losses after soliciting loans from the CBI to help fund the costly and controversial Mehr Housing Project (aka Maskan Mehr).
The huge low-cost housing project, under the auspices of former president Mahmoud Ahmadinejad, borrowed 450 trillion rials ($1.7 billion), according to the available data. The project was launched in 2007 to build two million low-cost homes income.
Most Iranian banks, especially those affiliated to the government, are struggling with weak balance sheets, due in part to huge lending obligations imposed by the parliament and governments.
The financial records of lenders show almost all are struggling with capital adequacy ratios (CARs) below global norms.
The Majlis Research Center said earlier that CAR in Iranian banks and credit institutions must be at least 8%, citing guidelines issued by the Central Bank of Iran.
“This is while the CAR in eight state banks on average is -1.12%,” the research center said.
It is a similar situation with private and semi-private lenders. Out of the 23 reviewed banks, CAR in eight was below zero, six banks had a ratio between 0-4% and four were between 4-8%.
