Foreign Assets of Banks Rise 46%

EghtesadOnline: Foreign assets of Iranian banks reached $80 billion by the end of the tenth calendar month to Jan. 20.

News ID: ۷۸۷۷۶۲

14 March 2022

The Central Bank of Iran in a report said the assets were 46.1% higher compared to the same period last year and 33% higher since the beginning of the fiscal year that ends on March 20.

As per CBI data, foreign assets owned by the CBI stood at 6,884.6 trillion rials ($26.5b) in this period, indicating 18.7% growth on an annualized basis and 6.7% higher in the first ten months of the present fiscal year.

The increasing trend in the CBI’s foreign assets has further expanded the monetary base. The monetary base stood at 5,679.2 trillion rials ($21.8 billion) in the 12 months to Jan. 20, indicating 35.5% growth on the same period last year.

The norm is that the CBI buys the government’s revenue from oil export and gives it the equivalent in rials. This causes expansion of money supply because of most of the assets owned by the CBI and commercial banks are locked overseas and are not accessible due to the US economic sanctions. Therefore, the CBI continues to print money and issued new money to pay the rial equivalent of the government’s currency income.

Data show that the CBI’s foreign assets alone accounted for 23.9 percentage points of the monetary base growth in the said period.

Status of Commercial Banks

Commercial banks held 1,992.7 trillion rials ($7.6b) in overseas assets – up 50.1% year-on year and 47.5% higher over ten months.

Specialized banks had 3,401.3 trillion rials ($13b) in foreign assets, indicating 45.2% rise Y/Y and up 50.8% in the course of ten months.

Likewise, foreign assets held by private banks and credit institutions were in the range of 8,530.7 trillion rials ($32.8b), indicating 52.6% growth annually and 52.7% rise over ten months.

The report includes data on the CBI’s other assets, including banknotes and debt owed by the government and other lenders.

Total assets owned by the CBI amounted to 12,132.5 trillion rials ($46.6b) in the said period. The bank had banknotes and coins worth 13.4 trillion rials ($51 million), which is 168% higher on the earlier year.

Government and state-owned companies held 2,108.4 trillion rials ($8.1b) in debt to the CBI, which was 41.9% higher on the corresponding period last year.

Debt of banks to the CBI accounted for 1,752.2 trillion rials ($6.7b) of CBI assets in the 12 months, indicating 46.1% growth.  Banks’ debt to the CBI increased 49.6% in the ten months.

Banks and credit institutions had 4,841.3 trillion rials ($18.6b) in deposits with the CBI in the mentioned period, posting 39.6% annualized growth.

Reserve requirement accounted for 4,757.7 trillion rials ($18.3b) of the total deposits of lenders with the CBI, indicating 37.2% growth y/y.

Reserve requirements not only guarantee deposits, but also serve as a CBI tool for controlling money circulation, inflation and money supply growth.

As per rules of the Money and Credit Council, the top monetary and policymaking body, the central bank is allowed to set this rate between 10% to 13%.