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Bank Lending Up 17 Percent

Bank Lending Up 17 PercentBank Lending Up 17 Percent

Iranian banks allocated loans worth 2.08 quadrillion rials ($53.3 billion) to various economic sectors in the first five months of the current Iranian year ending August 22, 2017, registering a growth of 308.8 trillion rials ($7.9 billion) or 17.4% compared with the previous year’s corresponding period.

In the latest report published on the Central Bank of Iran’s official website, which contains data useful to monetary policymakers and analysts, the central bank has detailed the credits doled out by banks during the period.

According to the report, the service sector took the lion’s share of all the offered loans at 848.5 trillion rials ($21.7 billion), accounting for 40.75% of the credits extended to economic sectors.

Industries and mining sector, which received 627.6 trillion rials ($16.1 billion), and the trade sector, bagging 300 trillion rials ($7.7 billion), were the next major recipients of credits during the five-month period, accounting for 30.1% and 14.3% of the total loans, respectively.

This is while housing and agriculture sectors respectively pocketed 7.3% and 7% of allocated loans, the amount of which stood at 153.8 trillion rials ($3.94 billion) and 151.3 trillion rials ($3.87 billion).

The CBI report reveals that by the end of the fifth month on Aug. 22, banks had offered a total of 3,103,596 loans to all economic sectors.

As cited in the report, 1,792,859 loans were allocated to the services sector, which are relatively huge compared to the 104,479 loans extended to industries and mines. However, the latter benefited more in terms of value by receiving an average of almost 6 billion rials ($154,000) per loan.

The agriculture sector pocketed 511,625 loans, but the amount only reached 151 trillion rials ($3.87 billion), or 7% of the total, whereas the value of 261,842 loans extended to industries and mines were about four times that of the agriculture sector.

The amount of loans extended to the housing sector was relatively low in comparison with services or industries sector, which is reflective of the recession plaguing the key sector.

 Working Capital Tops Demand

During the five months, the biggest share of the banking system’s business lending–at 64.1%–went to meet the working capital demands of enterprises.

The CBI report indicates that industries and mines invigorated their sector by allotting 85.6% of their credits amounting to 537.4 trillion rials ($13.77 billion) as working capital while they received a significant share of all loans offered by the banking system to various business sectors.

Services sector also spent more than half of its received credits, around 430 trillion rials ($11 billion), for addressing the working capital needs. This is while working capital loans accounted for 77.2% and 68.1% of the entire credits allocated to trade and agriculture sectors, respectively.

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