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Bank Deposits Grow

Bank Deposits GrowBank Deposits Grow

Bank deposits grew by 1 quadrillion rials ($33.4 billion at the official exchange rate) in the first half of the current Iranian year (ends March 20, 2016).

Private deposits in the period between August 23, 2013-September 22, 2015 also increased by 4 quadrillion rials from 4.7 quadrillion rials ($157.2 billion) to 8.4 quadrillion rials ($281 billion).

The growing trend, however, was not at a steady pace throughout the review period. The highest growth was registered between August 23, 2013- March 20, 2014 when over 1.2 quadrillion rials ($40 billion) were added to banks' coffers -- the highest half-year increase in two years

The next highest growth in deposits was registered during the first half of the current fiscal Iranian year when deposits grew by 950 trillion rials ($31.7 billion) from 7.4 quadrillion rials ($247 billion) in March to 8.4 quadrillion rials ($281 billion) by September 22.

According to balance sheets of commercial banks as published by the Central Bank of Iran, one-year deposits top the savings list by accounting for 83% of total deposits at 7 quadrillion rials ($234.2 billion) and followed by sight deposits and interest-free savings.

In the first half of the current Iranian year, one-year deposits grew at a faster pace from 6.1 quadrillion rials ($204 billion) in the second half of the previous Iranian year (ended March 20, 2015) to 7 quadrillion rials ($247 billion). During the same period, sight deposits increased from 8.5 quadrillion rials ($284.4 billion) to 8.7 quadrillion rials ($291.1 billion) and interest-free deposits picked up slightly from 390 trillion rials ($13 billion) to 396 trillion rials ($13.25 billion) during the said period.

Despite a 12.7% growth in deposits following two interest rate cuts in the past two years, the prospect of further cuts has triggered strong opinions both for and against the measure. A group of analysts have warned that lower rates could lead to capital flight from banks causing instability in other markets. Other experts are of the opinion that lower deposit rates could redirect accumulated resources in banks to other markets facing a credit crunch, namely the housing and capital markets.

Caption: Enthusiasm for bank deposits has not decreased despite rate cuts. 

Financialtribune.com