The loan to deposit ratio (LDR) declined for eight months to November 22 by 82.4%, which was 1.1 percentage points lower than the beginning of the fiscal year in March at 83.2%, the Central Bank of Iran reported Thursday.
The ratio also was 1.3 percentage points higher from the same period of last year. 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 the LDR was not consistent across provinces. In Tehran Province it was 90.6% and in Kohgilouyeh-Boyerahmad Province 115.4%.
Consecutive declines in LDR either indicate bank unwillingness to lend or restrictions imposed by the CBI.
Earlier, the Economy Ministry announced that the regulator had imposed limits on lending by dysfunctional banks. The limits were described as corrective policy to tame weak banks plus a cautionary move by the regulator to curb unbridled issuance of money by troubled lenders.
In a press release seen on its website, the ministry also said that outstanding loans increased by 12.1% in the first half of current fiscal year (ended Sep 22).
Outstanding loans (performing and non-performing) exceeded 46,425.1 trillion rials ($141.4 billion) -- up 14.4% y/y, it said.
During the same period last year total outstanding loans were reported in the region of 34,554.1 trillion rials ($105.2b).
Again, Tehran Province topped the list with the highest number of loans, crossing 27,702.2 trillion rials ($84.4b).
Isfahan Province was next with 2,002.4 trillion rials ($6.1b) and 1,608.6 trillion rials ($4.9b) in outstanding loans were reported by banks in Khorasan Razavi Province.
With 176.1 trillion rials ($536.5 million) in outstanding loans, Kohgilouyeh-Boyerahmad Province was at the bottom end of the list.
As for deposits, data show 65,317 trillion rials ($185.3b) was held by banks and credit institutions in the month to November 22.
Total deposits increased by 15,840 trillion rials ($44.8b), indicating a 32% growth on the same period last year. The figure grew by 18.1% during the first eight months of the fiscal year.
As always Tehran Province topped the list with the highest deposits at 34,699.3 trillion rials ($98.2b), accounting for 52 % of the total.
At the bottom end was Kohgilouyeh-Boyerahmad Province with 180.9 trillion rials ($512.4 million).
