Following measures announced to improve the performance and transparency of government and affiliated organizations, 396 state-owned companies released their financial statements.
They include state-controlled holdings, parent companies and subsidiaries, including six banks, two insurance firms and four firms affiliated to the Economy Ministry, the Economy Minister Ehsan Khandouzi said, IRNA reported.
"The list includes financial statements of two free trade zones, and 11 companies affiliated to FTZs, 27 companies owned by banks and insurance companies, five by Social Security Organization and 30 sport federations," Khandouzi said.
State companies published numbers for fiscal years ending March 2022 on the Codal website, an information platform on which stock market companies publish corporate information.
Earlier in March, 313 state companies published their financial statements for fiscal years ending March 2020 and March 2021, after Khandouzi spoke about “developments regarding economic transparency”.
The minister has said that improving transparency and accountability is a key priority of the ministry. “Releasing financial statements audited by independent companies and legal inspectors indeed shows to the public the strength and weaknesses of state companies.”
Obliging companies to regularly publish reports is paramount to assessing the performance (or lack of it) of managers of the army of state-owned companies.
Performance of Banks
Six state banks, namely Bank Melli Iran, Bank Keshavarzi, Bank Maskan, Export Development Bank of Iran, Bank of Industry and Mine, and Cooperatives Development Bank, were among those that released their financial statements this week.
A review of the lenders' performance, published by Fars News Agency, indicates that BMI posted 26.76 trillion rials ($84.4 million) in losses in the year to March 2022. This, however, was 60.3% less than the year before when it showed 67.52 trillion rials ($213 million) loss.
The other five banks made 1,780 billion rials ($5.61m) profit. The six banks' accumulated losses increased by 3.1% last year to 867.36 trillion rials ($2.73 billion), the largest portion of which, 695.35 trillion rials, was of BMI.
The Capital Adequacy Ratio of BMI was 8.7 based on the last financial statement – the year before it was 11.29. The Export Development Bank of Iran had the highest CAR among the six leders with 12.7, followed by Bank Maskan 8.7 and BIM 2.8.
Listed companies usually account for a significant part of government resources in fiscal budgets. The Economy Ministry website said “they account for more than half the total budget”.
According to a report by the Supreme Audit Court (SAC), the supervisory arm of the parliament, the Planning and Budget Organization allocated 21,120 trillion rials ($78 billion) in the 2022-23 budget to government-controlled companies and banks. This is 34.4% higher from the 15,710 trillion rials ($58 billion) last year.
The figures also show that Bank Maskan, Bank Keshavarzi and Cooperatives Development Bank raised capital during the year to March 2022.
The six bank collectively generated 543.84 trillion rials ($1.71 billion) from banking operations, posting a year-on-year growth of 51%.
Budget Consumers
The SAC said funding for 377 state-run companies, for-profit organizations and government-owned banks is mentioned in the current budget. Almost 60% of the budget will go to ten state-run companies and banks, the ombudsman said.
It said of the 377 companies, nine banks and one for-profit organization, 154 are expected to make profit, 199 will breakeven and 24 will be in the red this year.
On why state companies fail to make profit, the report pointed to years-long burden of selling goods based on mandatory prices set by the government, expanding payrolls, old and ageing machinery and equipment, systemic failures to realize projected income, US economic sanctions and forcing banks to give loans beyond their ability and capacity.
