The ratio of loans to deposits has declined for three months until June 21.
It was 81.7% at the end of Q1, which was 1.6 percentage points lower on mid-April when it stood at 83.3%, the Central Bank of Iran reported Monday.
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.
The CBI, however, noted that LDR was not consistent across provinces. For example, in Tehran Province it was 91.1% and in Kohgilouyeh-Boyerahmad Province 110.5%.
Consecutive decline in LDR either indicates bank unwillingness to lend or restrictions imposed by the central bank.
Earlier in the week the Economy Ministry concurred that the regulator had imposed limits on lending by dysfunctional banks.
The new limits were described as punitive policy to punish weak banks plus a cautionary move by the regulator to curb unbridled issuance of money by unhealthy banks.
In a press release seen on its website, the ministry said outstanding loans increased by 3.6% in the first quarter of current fiscal year (ended June 21). This was down compared to the 13.6% rise in the corresponding period last year.
According to the CBI data, outstanding loans (performing and non-performing) exceeded 42,927.1 trillion rials ($138 billion) -- up 35.2% y/y.
During the same period last year total outstanding loans stood at 31,755.8 trillion rials ($102.4b).
Again, Tehran Province topped the list with the highest number of loans, crossing 26,263.5 trillion rials ($84b).
Isfahan Province was next with 1,792.2 trillion rials ($5.7b) and 1,438.6 trillion rials ($4.6b) in outstanding loans were in banks in Khorasan Razavi Province.
With 155.1 trillion rials ($500 million) in outstanding loans, Kohgilouyeh-Boyerahmad Province was at the bottom end of the list.
As for deposits, data show 58,417.2 trillion rials ($188.4b) was held by banks and credit institutions during the month to June 21.
Total deposits increased by 15,267.7 trillion rials ($49b), indicating a 35.4% growth on the same period last year.
As always, Tehran Province topped the list with the highest deposits at 31,640.4 trillion rials ($102b), accounting for 54.16% of the total.
At the bottom end was Kohgilouyeh-Boyerahmad Province with 158.3 trillion rials ($510 million).
