The loan-to-deposit ratio (LDR) of banks and credit institutions increased for five consecutive months, indicating the penchant for higher lending.
LDR was 83.2% by end of the last fiscal year (March 20) rising 3 percentage points on the year. The ratio was up 0.4 percentage points from the month to Feb.19
The ratio has been rising slowly since October 2021, when it stood at 81.4%, according to data seen on the Central Bank of Iran website.
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.
Increase in LDR is an indication of banks willingness to lend. As per acceptable norms, the ideal LDR ratio is typically 80% to 90%. A ratio of 100% means a bank loaned the same amount it received in deposits and would not have enough reserves for contingencies.
However, 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.
The ratio for Tehran Province, where the capital is located was 94.3%, up over the 93.3% a month before. It was 107% in the less privileged Kohgilouyeh-Boyerahmad Province as of March 20.
By the end of the last fiscal year deposits with banks and credit institutions jumped 42.7% annually to reach 55,315.6 trillion rials ($175.6 billion).
Bank customers had 38,754.62 trillion rials ($123b) in deposits during the corresponding period last year.
As usual the majority of deposits were in banks in Tehran Province at 29,987 trillion rials ($95b) in deposits during the period, accounting for more than half the total.
With more than 2,899.64 trillion rials ($9.2b) Isfahan Province was next. Kohgilouyeh-Boyerahmad Province was at the bottom end with 155.6 trillion rials ($536 million).
Outstanding Loans
Total outstanding loans, including performing and non-performing loans, 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.
With 25,765.2 trillion rials ($81.7b), Tehran Province topped the list with the highest number of loan defaults. At the bottom end again was Kohgilouyeh-Boyerahmad Province with total outstanding loans reaching 148.6 trillion rials ($512.4m).
