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Bank Mellat Becomes Top Lender
Economy, Business And Markets

Bank Mellat Becomes Top Lender

L ender Mellat has the lowest ratio of non-performing loans among Iran’s largest banks, state-owned IRNA reported.
Mellat Bank has the top spot in terms of lending efficiency and salvaging its bad loans.
A non-performing loan is in default or close to being in default. Many loans become non-performing after being in default for 90 days, but this can depend on the contract terms.
Iranian banks have over $30 billion as non-performing loans on their balance sheets. But, the economy minister and top presidential advisors estimate the loans to be near $60 billion, if we account for loans whose maturity dates are rescheduled by banks to show healthier records.
Bank Mellat is one of the few lenders that have lowered their NPL ratio below distress levels, though the bank is not yet in the clear. The Tehran-based company’s bad debt was 7.5% of all its outstanding credit, while the world average stands near 3%.
The bank, which provides services to over 16 million customers nationwide, outdid its rivals, having a 5.1 percentage point lower NPL ratio than the average NPL ratio of large Iranian banks. Major banks’ bad debt stood at 12.6% of their total outstanding loans.
The amount of bad debt held by major banks is at an alarming level. A higher than 10% NPL ratio signifies that the bank is in distress. These levels of bad debt with regard to their equity make most of them technically insolvent.
 But the Central Bank of Iran is supporting the banks to avoid an outright banking crisis. The central bank is also pushing the banks to offload their bad debt and improve their financial status.
Despite central bank’s efforts, the banking system remains in distress. The NPL ratio for the entire banking system is a shocking 14.2%
 Outperforming Peers
Mellat managed to reign in its bad loans, while taking the spot of top lender in Iran, showing the bank’s relatively better lending practices.
The bank has the largest amount of loans, having a 14.5% share of all outstanding credit in Iran.
Mellat is a private Iranian bank, established in 1980, as a merger of 10 pre-revolution private banks. It is one of the largest commercial banks in the Islamic Republic of Iran, ranking among the top 1,000 banks of the world.
The lender has a habit of competing for the top spot. Mellat ranked first among Iranian lenders in the Iranian year that ended on March 20, 2014, according to the Industrial Management Institute.
The bank had 1.39 quadrillion rials ($40.6 billion at market exchange rate) of assets at the end of the period, highest among Iranian companies. It also came sixth in sales and fifth in terms of generating added value on the IMI100 list. IMI publishes the IMI100 company rankings, using Fortune 500 criteria, on an annual basis.

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