Loans to deposit ratio stood at 80.2% at the end of first calendar month on April 21, up 1.7 percentage points compared to the same period last year.
The ratio, however, was unchanged compared to the preceding month. LDR in Tehran Province was higher than the average at 94.3%, according to data released by the Central Bank of Iran.
LDR is used to assess a bank's liquidity by comparing total loans to total deposits for a specific period and is expressed in percentage.
If the ratio is too high, the bank may not have enough liquidity to cover unforeseen fund requirements. Conversely, if it is too low, the bank may not be earning as much as it should be.
The ideal loan-to-deposit ratio is typically 80% to 90%. A loan-to-deposit ratio of 100% means a bank gave away all its deposits in loans. It also means the bank will not have enough reserves for contingencies.
However, banking and monetary experts opine that a LDR ratio of 65% would be acceptable given the unhealthy state of the Iranian banking industry.
The general LDR ratio reached its highest level in fiscal 2018-19 when it was 85.7%. It declined to 76.5% in the month ending July 21, 2020 and thereafter grew steadily to reach 81.3% in November 2020 before declining again.
According to CBI data, total outstanding loans, including both non-performing and performing loans, rose 8,465.1 trillion rials ($33.8 billion) to reach 28,033.7 trillion rials ($112b) in the mentioned month. That was 43.3% higher compared with the corresponding period last year.
Compared to the month ending March 21, total unpaid loans registered a 0.4% rise.
Reaching 17,844.4 trillion rials ($71b), Tehran Province topped the list in terms of outstanding loans. At the bottom end of the list was Kohgilouyeh-Boyerahmad Province with total outstanding loans reaching 95.2 trillion rials ($381 million).
By the end of the first month of the current fiscal year deposits with banks and credit institutions shot up 40.1% annually to reach 38,904.8 trillion rials ($155b).
Bank customers had 27,766.74 trillion rials ($111b) worth of deposits during the corresponding period last year. Deposits rose 0.4% compared to the end of the last fiscal year, when it was 38,754.62 trillion rials ($155b) in banks.
As usual the majority of deposits were in banks in Tehran Province. Banks in the capital had 20,815.9 trillion rials ($83.3b) in deposits or more than half the total deposits.
Kohgilouyeh-Boyerahmad Province was at the bottom end with 99.1 trillion rials ($396m).
Highlight: Total outstanding loans, including non-performing and performing loans, rose 8,465.1 trillion rials ($33.8 billion) to reach 28,033.7 trillion rials ($112b) in the month. That was 43.3% higher compared to the corresponding period last year
