CBI: 12.8% Growth in Term Deposits

The total value of term deposits in the Iranian banking system grew by 12.8% to reach 9.23 quadrillion rials ($236.5 billion at the official exchange rate) during the seven-month period ending Oct. 21.

The latest statistics released by the Central Bank of Iran also indicates a 17% growth in the value of short-term bank deposits and a 9.3% surge in the value of long-term (one-year) deposits, both subcategories of term depsits. However, long-term deposits still account for 53% of total term deposits.

Term deposits have registered a 5% growth, compared with the fourth month of the fiscal year ending  July 21 when the deposit rates were lowered to 15%.

Back in July, bank CEOs agreed to implement a 3% cut in the interest rate of one-year deposits. Back in February, the CBI had implemented another cut in deposit rates, bringing it down from 20% to 18%.

Last week, the Central Bank of Iran announced that it has no plans for further cuts in deposit rates, though it targets single-digit interest rates approximately 3% higher than the rate of inflation that hovers around 8%.

According to CBI’s data, private banks held 72.1% of total term deposits by August 21. Three state-owned commercial banks and five state-owned specialized banks accounted for 17.6% and 10.2% of the total respectively.

Bank Melli Iran, Bank Sepah and Post Bank of Iran were more successful in attracting deposits, by registering a combined growth of 14.7% in total term deposits during the period–higher than private lenders and specialized banks.

The CBI also detailed the performance of lenders in attracting Qarzol-Hassaneh (interest-free) deposits, posting an 11.9% growth during the seven-month period. The amount has surged by 32.6% compared with the same period of last year.

By Oct. 21, about 525.7 trillion rials ($13.4 billion) were being kept at banks in the form of zero-interest accounts. Banks usually offer incentives to persuade depositors to put their money in Qarzol-Hassaneh accounts, namely interest-free loans and awards (like cars, or cash).

These days, most lenders offer debit cards and e-banking services on interest-free accounts. Bank Pasargad Iran, in cooperation with its subsidiary insurance firm Pasargad Insurance, offers discount on insurance policies of those who hold interest-free accounts with the bank and purchase Pasargad’s insurance policies.

Data also show that the total amount of government deposits in the banking sector has dropped by 20.3% during the period to stand at 237.5 trillion rials ($7.3 billion).

The CBI noted that the National Development Fund of Iran’s forex resources (allocated to the banks for lending businesses) accounted for a majority of these deposits.