Bank Sepah NPL Ratio Reaches 10%

Bank Sepah, the oldest Iranian lender, has managed to lower its ratio of non-performing loans close to 10% and boost its capital adequacy ratio to over 11%, which are both better than the national average.

The figures were announced during the bank’s annual general meeting held late Tuesday with top economic officials in attendance.

“Bank Sepah’s ratio of non-performing loans to total loans has dropped by 1.8% from the 12.1% registered on March 20, 2016, to reach 10.3% at the end of the previous fiscal year (March 20, 2017),” Kazem Choghazardi, CEO of the state-owned bank, was quoted as saying by IRNA.

He was speaking at the belated annual general meeting of the bank, which was attended by Economy Minister Masoud Karbasian, deputy economy minister for banking and insurance affairs, Abdolrahman Nadimi Bushehri, deputy head of the Planning and Budget Organization, Hamid Pour-Mohammadi, and deputy for supervisory affairs at the Central Bank of Iran, Farshad Heydari, among others.

Bank Sepah has become the first state-owned commercial bank to finally hold its annual general meeting to approve its balance sheets belonging to the previous fiscal year.

A disagreement between the central bank and the Audit Organization had hindered the general meetings of banks, but they are expected to hold their meetings soon following the accord reached between Karbasian and CBI Governor Valiollah Seif.

“Capital adequacy ratio of Bank Sepah has reached 11.4% from the negative 0.2% registered five years ago,” Pour-Mohammadi announced at the meeting.

At the meeting, Bank Sepah’s CEO vowed that his bank will move in line with the macro policies of the administration and provide performance reports.

According to Choghazardi, the volume of the bank’s deposits reached 647.349 trillion rials ($15.8 billion) by the end of the previous fiscal year from 501.306 trillion rials ($12.25 billion) at the end of the year before.

The bank’s allocated loans also increased to 407.713 trillion rials ($9.96 billion) from the previous 350.184 trillion rials ($8.56 billion) in that same period.

“In line with implementing the policies of the central bank, Bank Sepah decreased its interest rates from 21.3% two years ago to an average of 18.3% last year,” said Choghazardi, who also chairs the board of the bank.

Within the aforementioned period, the state-owned lender has reported a re-capitalization of 47% as part of the government’s plan, whereby its capital was boosted to 111.032 trillion rials ($2.71 billion) from the previous 75.532 trillion rials ($1.84 billion). The entire boost was in cash, meaning that the cash capital of the bank was increased to 40.638 trillion rials ($993.5 million).

The CEO noted that Bank Sepah’s foreign exchange activities jumped by 74% and their volume equaled $6.6 billion during the previous fiscal year.

“As part of the government’s plan that requires banks to shed their excess assets mostly held in the housing sector, the bank sold 185 counts of real-estate worth about 500 trillion rials ($12.22 billion) last year,” Choghazardi concluded.