Economy, Business And Markets

Banking Goes Macro

Banking Goes MacroBanking Goes Macro

The Central Bank of Iran (CBI) published a summary of its “General Report of Economic Developments in 1392” (ending March 20, 2014). The published report is considered to be the most comprehensive overall data about changes and trends in the economic system over the past year.

Experts believe this report is the most reliable document regarding the actual economic trends as it has been written in a more professional environment. Following is analysis of some simple but significant data about banking and finance sector.

 Cash Payments

The total available notes and coins (including CBI’s Iran-checks) are expected to amount to 391.9 trillion rials by March 20, indicating a 5.5 percent increase compared to the previous year. The total circulated currency was 335.3 trillion rials that shows 1.6 percent growth compared to last years’ 330.2 trillion rials.  By analyzing these figures we can expect growth in the monetary base through the specified period. However, the monetary base showed 17.8 percent increase over the past fiscal year which suggests a different overall path.

 Private Sector Deposits

Based on this report, the total amount of the private sector’s deposits in the banks and financial institutions was 5.6 trillion rials ($160 billion at market rate), which shows 31.2 percent increase compared to the previous year. The growth in amount of the private sector’s deposits is considered to be a constructive economic indicator that can help with the economic development.

 Payment Systems

The CBI has focused on developing the infrastructure of e-banking and electronic payments, which could reduce the operational costs in banking system as well as having a broader effect on social and economic environment. The outstanding developments in this field are: forming the Central Database of Banking Network, issuing the first version of electronic bonds, designing the SEPAS (mobile payment system) and KIWA (the e-wallet) network and running the beta version of Chekavak (electronic check management system).Over the year, the number of e-payment machines within the banking system increased. The number of bank cards was 227 million that shows 22.7 percent growth compared to previous year. The number of Sharia compliant credit cards issued by the commercial banks was as low as 0.8, however, given the general feeling about this method of payment, it isn’t entirely surprising they are so difficult to acquire.

 Trade and Transactions

The frequency of electronic banking transactions has increased 41.2 percent compared to the previous year while the value of these transactions shows 34.3 percent growth. Accordingly, both the frequency and value of transactions by cash machines, POS terminals, online and smartphone apps was increasing.

When one takes into account that the vast majority of e-banking transactions belongs to inter-bank trades, the significant growth in new electronic payment systems like online payments have begun to have an impact on the daily lives of ordinary Iranians.