Economy, Business And Markets

Banks Stay Behind at End of Earnings Season

Banks Stay Behind at End of Earnings Season
Banks Stay Behind at End of Earnings Season

The annual earnings season for Iran’s exchange-listed companies ended on Thursday, while 10 major commercial lenders’ shares remained closed for trading, as they failed to hold their general meetings on time.

Companies hold their annual shareholder meetings in spring, as the Iranian calendar year ends in March. Shareholders decide on dividend payouts and executives deliver their annual reports.

The last financial year (ended March 19, 2016) “was one of the worst for shareholder meetings for companies,” Shahin Cheraghi, chairman of Mehrafarin Brokerage, told Boursepress.

“Petrochemical producers had a better situation because of generating higher cash flows,” he said.

Around 70 companies will resume open-market trading on Tehran Stock Exchange and Iran Fara Bourse.

However, out of 25 listed lenders, 10 failed to hold general shareholder meetings mainly over regulatory disputes with the Central Bank of Iran and Audit Organization over their financial statements and incompatibility with International Financial Reporting Standards.

State-owned lenders Bank Mellat, Tejarat Bank, Bank Saderat Iran, Post Bank of Iran, and Shahr Bank, along with quasi-state lenders Sina Bank, Kosar Finance and Credit Institution, Resalat Qarzolhasaneh Bank and private lenders, Iran Zamin Bank, Sarmayeh Bank and Caspian Credit Institution postponed their general shareholder meetings.

Other banks like Parsian, Middle East, Ansar and Day remain under central bank review and must meet undisclosed conditions put forth by the regulator.

 Bank Controversy

Iranian lenders have been dealing with limited liquidity and bad bank loans, and the reluctance of their foreign counterparts to do business with them, despite the lifting of sanctions against them.

However, their poor financial state has moved out of public awareness, as Iranian lenders found themselves at the center of scandals about executive pay and fraud.

The chief executives of four public banks in Iran were sacked amid widespread criticism of their salaries in June, IRNA reported. An official was quoted as saying the economy minister had replaced the heads of Mellat, Refah and Saderat at President Hassan Rouhani’s behest.

Safdar Hosseini, the head of National Development Fund, the country’s sovereign wealth fund, and its entire board also resigned.

The scandal erupted two months ago when the pay-slips of top officials at state-owned companies surfaced online. It emerged that many were earning dozens of times more than the average Iranian. They were also being given large bonuses, interest-free loans and, in some cases, tax breaks.

Leaked documents also showed that Ali Rastegar, managing director of Bank Mellat, earned around $12,000 per month and an annual bonus of $454,000. Rastegar’s plight did not end with losing his job.

The Islamic Revolution Guards Corps forces arrested the former banker and one of his deputies over a massive fraud on July 19. The two former bankers were detained upon a judiciary order due to their broad activities in an organized banking scam.