60% Growth in Lending in Q1-Q3

EghtesadOnline: Loans by banks and credit institutions increased 59.5% in the first nine months of current fiscal year (March 21-Dec. 21).

News ID: ۷۸۷۶۵۵

19 January 2022

Banks lent 20,195 trillion rials ($74 billion) to various economic sectors in the nine months, which was 7,562 trillion rials ($28b) higher than the corresponding period last year.

According to data published by the Central Bank of Iran, working capital loans accounted for main segment of loans. Businesses took out 13,424 trillion rials ($49.7b) in loans to boost working capital, accounting for 66.5% of the total lending.

The CBI said the substantial rise in lending indicates that lenders are giving priority to businesses’ need for liquidity under the difficult economic environment made worse by the brutal coronavirus. It also reflects the concerns of financial institutions about the viability and solvency of manufactures facing enormous challenges and struggling to remain afloat.

The mining and industrial sectors were the main recipients of working capital loans with 4,834.8 trillion rials ($17.9b), which was 36% of the total given to all economic sectors.

Mineral and industrial companies borrowed 6,108 trillion rials ($22.6b) in the nine months and working capital loans represented 79.2% of the total monies given to the sector.

Apart from working capital, other loans were to help set up  and expand businesses, repairs/renovation and buying homes.

Banks gave 2,252.6 trillion rials ($8.3b) for setting up new companies, 1,577.9 trillion rials ($5.8b) to expand businesses, 439.3 trillion rials ($1.6b) for repair and renovation, 1,378.1 trillion rials ($5.1b) for purchasing goods and 287.6 trillion rials ($1.06b) to homebuyers. Miscellaneous loans were in the region of 826.3 trillion rials ($3.06b).

In terms of overall economic sectors, the services sector as usual topped the list with loans to the tune of 8,436.8 trillion rials ($31.2b).

The next were industries and mining (6,108 trillion rials) followed by trading companies at 3,112.8 trillion rials ($11.5b).

As always, agriculture and housing were at the bottom end. Loans to farmers stood at 1,470.5 trillion rials ($5.4b) and people and businesses active in construction sector got 1,059 trillion rials ($3.9b).

The CBI said despite the rise in lending it is crucial to create the conditions to effectively curb the inflationary impact of the rising demand for goods.

Banks are expected to concentrate on meeting the funding needs of companies as the government struggles to save jobs, mitigate the destructive impact of Covid, improve domestic production and cut imports.