Iran Interbank Market Worth $1.5 Trillion in 2017-18

EghtesadOnline: A total of 38,101 deals worth more than 64.05 quadrillion rials ($1.51 trillion) were conducted in Iran's interbank market during the previous fiscal year that ended on March 20, 2018, the Central Bank of Iran's data showed.

News ID: ۷۸۳۱۴۴

03 July 2018

The report published by CBI on its website said deals were conducted with interest rates ranging from 16-25% and an overall average of 18.69%.

This is while 31,403 interbank deals worth more than 30.95 quadrillion rials ($726.01 billion) were registered during the whole of the fiscal 2016-17, indicating that the value of deals in the growing market experienced a year-on-year surge of 106.92%. The number of deals conducted between lenders also grew by 21.33%.

The interbank interest rates averaged at 18.62% in 2016-17, almost equal to the final average interest rate of the current fiscal year and registering a slight increase of 0.38%, Financial Tribune reported.

A monthly analysis of the average value of deals on a daily basis indicates that the first quarter of the previous fiscal year saw a sub-par performance by the interbank market when compared with the first three months of the fiscal 2016-17. However, the interbank market started registering notable hikes in terms of the average value of deals when compared with the previous year from the second quarter of 2017-18.

This growth continued to expand until the average value of daily deals in the interbank market doubled during the seventh month of the fiscal 2017-18 when compared with the same month of the year before.

The trend persevered and the ninth month of the fiscal 2017-18 registered a threefold increase when compared with the similar month of the year before. But peak performance came during the final month of last year when the average daily value of interbank transactions exceeded 373.32 trillion rials ($8.75 billion) compared to more than 65.79 trillion rials ($1.54 billion) of the fiscal 2016-17.

Highlights

The average daily value of Iran's interbank transactions stood at more than 220.12 trillion rials ($5.16 billion) in the fiscal 2017-18 whereas the figure for the previous year was registered at more than 106.74 trillion rials ($2.51 billion).

In terms of weighted interest rates, the fiscal 2016-17 had begun with a downward trajectory based on which the 18.88% rate slid to 17.7%, but the trend was reversed from the middle of the second quarter and reached 19.24% by the end of the year.

In the fiscal 2017-18, however, the rate came down to 18% after reaching a high of 20.3%. The rising trajectory by the end of the year reached 18.87% in the final month.

In 2008 when the interbank market was established, its average weighted interest rate stood at 15.5% and went down to 14.4% in the year after, but then continuously kept rising until it reached a high of 27% four years ago. It reached a five-year low of 18.62% in the fiscal 2016-17 and rose slightly to 18.69% last year.

In terms of making deposits with other banks, last year state-owned banks grabbed the lion's share of interbank deals at 61.99% with an average interest rate of 18.46%. They were followed by private banks that constituted 20.44% of all deals with an average interest rate of 19.31%.

Privatized lenders held a 17.23% share with an average interest rate of 18.81% and credit institutions had a meager share of 0.33% with an average interest rate of 19.13%. State-owned lender mostly chipped away at the share of privatized lenders, as they held respective shares of 52.47% and 25.04% of all deals in the fiscal 2016-17.

In terms of accepting deposits, private lenders had the highest share at 51.52% and were followed by privatized lenders at 26.64% and state-run lenders at 13.72%. Credit institutions had an 8.12% share.

CBI also participates in the market to implement monetary policies. It makes deposits in one- to nine-month periods with banks. CBI gave 141.6 trillion rials ($3.32 billion) to banks and credit institutions in 2017-18.

In this respect, private lenders accepted the majority of deposits from the monetary regulator at 62 trillion rials ($1.45 billion) or 43.79% of all deals in the fiscal 2017-18. Privatized lenders came second with 39.6 trillion rials ($929.03 million) or 27.97%, and the respective shares of state-owned lenders and credit institutions were 24.5 trillion rials ($574.78 million) or 17.30% and 15.5 trillion rials ($363.63 million) or 10.95%.