Iranian Bank Deposits Up 30%

Financial Tribune- The Iranian private sector’s deposits in banks and non-bank financial institutions reached 10.46 quadrillion rials ($333.8 billion at market exchange rate) by July 21, marking a 30.9% growth at an annualized rate.

Private lenders accounted for 72.1% of the savings, according to a Central Bank of Iran’s report published on Monday.

Commercial state-owned bank and specialized banks accounted for 17.7% and 10.2% of the total deposits, respectively.

However, the government’s total deposits in the banking sector dropped by 8.4% during the year ending July 21, standing at 287.7 trillion rials ($9.15 billion). The reduction in governmental deposits was more significant in private banks, declining 29.7% compared with the previous year.

Successive cuts in interest rates have not yet resulted in a significant drop in the total amount of term deposits kept in the banks. The amount stood at 8.7 quadrillion rials ($276.8 billion), growing by 31.5% in the same period, slightly higher than the previous year’s growth of 29.8%.

The value of term deposits grew by 7.3% during the four months to July 21, whereas the figure had recorded a 9.5% growth during the same period year-on-year. 

The total amount of Qarzol-Hassaneh (interest-free) deposits also increased by 24% year-on-year, as most lenders have taken to attracting cheap resources.

The private sector’s debts to the banking system reached 7 quadrillion rials ($224 billion) during the four months ending July 21, registering an annual growth of 20.5%. Private banks solely accounted for 63.3% of private sector’s total debts to the banking sector.

CBI’s data indicate that lenders owed a sum of 909 trillion rials ($8.9 billion) to the central bank by the end of the fourth Iranian fiscal month, up by 9.1% compared with last year’s 833 trillion rials.

Specialized banks accounted for the largest portion of banks’ total debts to CBI during the period. Private lenders’ debts to CBI increased by 14.2% during the 12 months ending July 21, though they had managed to considerably reduce it during the previous Iranian year (ended March 19, 2016).

According to CBI’s report, the money supply reached 10.818 quadrillion rials ($344.1 billion) by July 21, indicating a 30% growth year-on-year. The liquidity grew by 6.4% since the beginning of the Iranian year on March 20.

The growth in broad money supply has prompted fears about a recurrence of double-digit inflation after the country achieved single-digit inflation in June after nearly three decades.

CBI, however, reported earlier this week that inflation had reached 8.8% by September 21, which still showed a decline. It had put the inflation rate for the preceding month, which ended August 21, at 8.9%.

CBI’s report came after the Statistical Center of Iran put the  inflation rate for the same period at 8.3%.

Banks’ total foreign assets were worth 2.3 quadrillion rials ($73.1billion) by July 21, marking a 3.3% growth compared with the same period of last year.

The three public-sector commercial banks recorded 20.8% growth in the value of their foreign assets, but they still account for the smallest portion of foreign assets at 352 trillion rials.

The five specialized banks, owned by the government, experienced a 18.8% surge in their foreign assets, whereas private banks recorded a 4.4% drop in foreign assets.

Figures also show that banks were keeping 1.114 quadrillion rials ($35.4 billion) with CBI in reserve requirement. The amount grew by 23.3% compared with the previous year’s 903.4 trillion rials.