Bank Melli Iran’s NPL Ratio at 7.7%

Bank Melli Iran's ratio of non-performing loans to total loans currently stands at 7.7%, about 3% lower than the average ratio for the domestic banking system, announced the chief executive of the largest Iranian bank.

In a conference on BMI credit policies, Mohammad Reza Hosseinzadeh said the bank's capital used to stand at 100 trillion rials ($2.6 billion), "only 20% of which were in cash", reports Banker.ir.

He added that this level of capital was not a positive indicator for BMI, "but the government decided to add an additional 100 trillion rials to the capital cushion of the bank in cash, which will improve our financial statements immensely".

CEO of Export Development Bank of Iran Ali Salehabadi claimed last week that the NPL ratio of Iranian banks is now closer to international standards and reached 6% while "it stood at 18% just a few years ago".

Hosseinzadeh underscored the importance of banks receiving fees to account for a significant portion of their income, which has recently widely touted by many banking officials and pundits.

According to the BMI chief, a study of 200 international banks has shown that they earn half their income and revenues from fees, "while bank fees in our country is around zero".

Referring to Bank Melli's electronic banking platform (BAM), Hosseinzadeh said it will be updated with a new version every fortnight and help the bank move toward its goal of offering 97% of services through mobile phones.

In early January, BAM, which offers a wide range of services in a user-friendly and highly-customizable environment, won the Nourbakhsh Banking Innovation Award in the category of banks.

The general loan allocation system of BMI will also reportedly be connected to BAM so that clients can file for loans without having to go to bank branches.

In the meeting, Mahmoud Shayan, a BMI board member, announced that the bank had absorbed a record 34% of resources in the previous fiscal year that ended in March and added that the bank's operating expense ratio stood at 98.5% in the same period.

Shedding Excess Assets

In line with shedding excess assets and reducing speculative activities, Bank Melli Iran is to divest its factories to the private sector, announced the bank's CEO.

Hosseinzadeh attended a joint meeting with Khuzestan Province's Governor General Gholamreza Shariati. He was accompanied by a number of board and staff members, as well as provincial branch managers.

"BMI has specifically reviewed and bankrolled economic and manufacturing projects of Khuzestan Province and in line with promoting business growth in that region, the bank is ready to divest its factories to the private sector," he said.

Hosseinzadeh stressed that his bank is not eager to engage in speculative activities and will work with indebted manufacturing and industrial units of the province to clear their debts and revive their factories to help businesses and foster employment.

"BMI can also provide foreign exchange services to companies and exporters of the province," he said, adding that it is ready to establish correspondent relations with banks of other nations in this regard.

Iranian lenders have been urged to reduce their non-banking activities and shed excess assets to raise funds for struggling businesses.

BMI held an event last year to auction a portion of its bullion.