Bank deposits flourish in Iran with private banks amassing over $8bn in 7 months - led by Pasargad

Bank deposits flourish in Iran with private banks amassing over $8bn in 7 months - led by Pasargad
/ bne IntelliNews
By bne IntelliNews November 12, 2023

A recent analysis of the financial statements of 13 private banks listed on the Tehran Stock Exchange (TSE) shows these lenders attracted IRR4,240 trillion ($8.11bn) in deposits over the seven months leading up to October 22, as reported by EcoIran on November 12.

Bank deposits have regained popularity among Iranians as a safe haven due to higher interest rates, especially amid uncertainties and risks in parallel markets. 

In January, the Money and Credit Council approved an increase in interest rates for one-year maturity deposits by 4.5 percentage points to 20.5%. The interest on two-year deposits was set at 21.5%, a 3.5 percentage point increase. The MCC imposed a cap of 22.5% for three-year deposits. The rates for short-term deposits with a 3-month maturity and six-month deposits were also adjusted to 12% and 17%, respectively.

A notable change is the reintroduction of three-year deposits, overturning previous restrictions that limited deposit contracts to a two-year maturity. Regulations prohibit banks from offering interest rates higher than the approved rates to prevent unhealthy competition in the market.

The report covers 13 out of 27 banks in the country, with the remaining banks either state-owned or not having released their monthly financial statements. Bank Pasargad Iran led the list, attracting IRR877 trillion ($1.68bn) in deposits during the seven-month period, reaching a total of IRR5,770 trillion ($11.09bn) by October 22. 

Tejarat Bank and Bank Mellat followed, attracting IRR620 trillion ($1.28bn) and IRR580 trillion ($1.11bn), respectively.

Melal Credit Institution and ENbank exhibited the highest year-on-year deposit growth during the period, with increases of 53.1% and 25.7%, respectively.