The Banker Names Top Iranian Lender

The Banker magazine, affiliated with the Financial Times Group, has selected Bank Pasargad Iran as the best Iranian bank for 2016.

As the publication reported on its website, the private lender has had an uphill battle to meet the standards required to win the coveted title.

"Cooling growth, high inflation and liquidity pressures in the banking sector have all taken their toll on Iran’s economic trajectory. The winner of this year’s country award has weathered the worst of these difficulties," the Banker said.

Encouragingly, the bank’s Tier 1 capital and total assets increased by about 23% and 17%, respectively, in local currency terms. However, net profits and return on equity both fell over the course of the year.

“Our biggest challenge in 2015 was the very tough economic conditions of Iran, which flirted with economic recession and only posted a 0.5% gross domestic product growth. High inflation also continued to put pressure on the economy. As a result, the banking sector faced a credit crunch and liquidity was a major issue,” says Majid Qasemi, chief executive and vice chairman of Bank Pasargad.

In response, the bank devised a five-pillar strategy that involves diversifying its revenue base, reducing non-performing facilities and loans, increasing its share of the deposit market, growing Tier 1 capital and cutting expenses.

It is also working to develop new products and services to bolster its leading position in the market. This includes the launch of "Green Deposit Account", in which depositors can transfer all or part of any funds that are generated through the account to environmental protection causes.

“Our main focus will be to grow globally by creating our own international network composed of branches, representative offices and subsidiary banks. Domestically, we intend to increase our market share in all sectors, especially in terms of deposits, loans and trade finance,” he said.

“The biggest opportunity is to return to international debt markets to sign financing agreements with large international banks and broaden our correspondent banking relations.”

Global politics may be uncertain and economic growth lackluster, but that does not detract from an excellent banking performance. In fact, banks that thrive in difficult circumstances are the ones Banker judges are likely to favor in picking the winners.

As always, The Banker’s Bank of the Year awards attracted high-quality entries from countries that are developed, emerging, politically troubled and economically challenged.

"The challenge for our judging committee is to weigh up the various factors that impact on bank performance and decide whose track record and strategy come out on top," the Banker said.   

"This year we made awards in 149 countries together with five regional awards, an award for the best bank at financial inclusion and the global bank of the year award."

There are many factors to consider when deciding an award. Financial performance is important but does not win by itself.

To really impress the judges, banks must also score highly in articulating the strategy that drove their financial performance and how they overcame regulatory, competitive and economic hurdles.

Then there is digital strategy to be considered as well as the use of new technology. However, none of this makes any sense unless it delivers benefits for customers.

The London-based Banker provides economic and financial intelligence for the world's financial sector and has built a reputation for objective and incisive reporting.