Compared with loans in the first three quarters of previous year, the figure increased by 5,936.7 trillion rials ($25.8b) or a whopping 94.8%, according to data released by the Central Bank of Iran.
As is the norm, loans disbursed to boost working capital of manufactures accounted for the lion’s share with 7,214.7 trillion rials ($31.3b) including mines, industries, housing, agriculture and the services sector. Loans in this category accounted for 59.1% of the total.
Working capital credit to business increased by 3,806.4 trillion rials ($16.5b) or 111.7% on an annualized basis. Mines and industries were the main recipients at 2,704.4 trillion rials ($11.7b) or 37.5% of total working capital loans.
The nearly double total disbursement could be ascribed to expansionary monetary policies adopted by the CBI to inject money into the economy at the beginning of the fiscal year to mitigate the devastating impact of the coronavirus.
It can also be due to "a general increase in banking resources and loans to brokerage companies in the stock market," the report said.
Central bank was instructed by the government last April to help businesses impacted by the deadly plague. The government had approved 750 trillion rials ($3.2b) in financial aid from which 500 trillion rials was in loans to SMEs and the remaining to needy families in the form of interest-free micro credit.
"Factoring out the covid crisis loans, annual growth in lending could be reduced to 62.9%," the CBI said.
Sectoral Breakdown
Apart from working capital, loans were given for creating and expanding businesses, repair and renovation and buying homes.
Banks loaned 1,541.6 trillion rials for setting up new businesses, 1,418.5 trillion rials for developing (business units), 305 trillion rials for repair and renovation, 1,076 trillion rials for purchasing goods and 209 trillion rials to first-time homebuyers. Miscellaneous loans amounted to 433 trillion rials during the nine months.
After working capital credit, establishing new businesses was the second priority with 12.6% and business expansion third at 11.6%.
In terms of overall economic sectors, the services sector outperformed others qualifying for 4,813.4 trillion rials.
The next major loan recipients were industrial/mining and the commercial sector with 3,621.1 trillion rials and 2,216 trillion rials, respectively.
Agriculture and housing were at the bottom end. Farmers took out 841.3 trillion rials in loans while homebuyers borrowed 701.6 trillion rials.