Banking imbalance refers to a mismatch between the assets and liabilities of banks, which can lead to financial and economic crises. In Iran, this phenomenon has become one of the most critical structural challenges within the banking system. Various studies indicate that the imbalance of Iranian banks stems from multiple interrelated factors, discussed below.

Causes of Banking Imbalance in Iran

1. Government-Mandated Lending Policies

Government-imposed lending requirements without proper risk assessment have led to an increase in non-performing loans (NPLs) and a decline in the quality of banks’ assets. These policies have forced banks to allocate funds to low-yield and high-risk projects, weakening their financial health.

2. Frozen and Unrealizable Assets

A significant portion of banks’ assets—such as real estate and fixed properties—have lost their real value, especially under recessionary conditions. Although these assets appear as receivable items in bank balance sheets, their actual market value is often significantly lower.

3. Weak Capital Adequacy

The capital adequacy ratio (CAR) of Iranian banks remains below international standards. This capital weakness reduces banks’ ability to absorb losses and withstand financial shocks.

4. Administered Interest Rates

Government-imposed interest rates on deposits and loans, set without consideration of market conditions, have created a structural mismatch between banks’ resources and uses. These policies have increased banking costs and reduced profitability.

Consequences of Banking Imbalance

  • Increased Systemic Risk: Banking imbalances can trigger financial crises and amplify systemic risk across the financial system.
  • Erosion of Public Trust: Persistent imbalances undermine public confidence in banks and encourage capital flight.
  • Weakened Monetary Policy: Banking imbalance limits the effectiveness of central bank policies and monetary transmission mechanisms.

Reform Strategies

1. Enhancing Transparency and Supervision

Strengthening central bank oversight and improving financial disclosure are key to addressing imbalances. This includes rigorous review of audited financial statements and continuous monitoring of banks’ financial positions.

2. Reforming Monetary and Fiscal Policies

Adjusting monetary and fiscal frameworks to reduce administered interest rates and restore equilibrium between bank resources and uses is essential. These reforms must be tailored to Iran’s economic conditions and market realities.

3. Promoting Investment in Productive Sectors

Banks should redirect their resources from speculative or low-yield projects toward productive, high-return sectors. This shift would improve profitability and reduce structural imbalances.

4. Alignment with International Standards

Iranian banks must align with international regulatory frameworks—particularly Basel III—by improving capital adequacy, liquidity ratios, and leverage standards.

The Role of Abtin Consulting Group in Reducing Banking Imbalances

1. Structural Analysis and Root Cause Identification

  • Abtin’s team of economists and financial analysts conducts in-depth balance sheet assessments and scenario simulations to identify the root causes of imbalances.
  • Focus areas include non-performing loans, non-productive assets, liquidity flow, and dependence on government resources—providing banks with a clear picture of their financial challenges.

2. Designing and Implementing Corrective Strategies

  • Risk Management and Asset Reconstruction: Abtin’s risk management team develops programs to mitigate credit, operational, and market risks.
  • Optimization of Lending Portfolios: Through data analytics, Abtin helps banks allocate capital efficiently toward productive and balanced lending portfolios.
  • Digital Financial Systems Development: The firm’s fintech experts design real-time monitoring tools for balance sheets and risk assessment.

3. Basel III Compliance and International Alignment

  • Abtin provides phased programs to align banks’ capital adequacy, liquidity, and leverage ratios with Basel III standards.
  • It also offers training and capacity-building programs for bank staff to ensure effective implementation of global regulatory frameworks.

4. Continuous Monitoring and Reporting

  • Using customized management dashboards and key performance indicators (KPIs), Abtin enables ongoing monitoring of banks’ financial stability.
  • Monthly analytical reports and actionable recommendations support banks in their path toward long-term financial sustainability.

Conclusion

Banking imbalance in Iran is a structural and systemic challenge requiring comprehensive reforms within the national financial system. Alignment with international standards, enhanced transparency, and stronger supervision can significantly reduce imbalances and improve banking resilience.

Moreover, reforming monetary and fiscal policies and strengthening investments in productive sectors are vital to restoring balance and sustainable growth.

Abtin Consulting Group, leveraging its expertise in macroeconomics, risk management, financial analysis, and fintech, acts as a strategic advisory partner for Iranian banks. Through rigorous diagnostics, actionable solutions, international compliance strategies, and ongoing performance monitoring, Abtin plays a crucial role in reducing banking imbalance and enhancing financial stability across the sector.

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گزارش ویژه: تحولات فناوری مالی و بانکداری دیجیتال در ایران
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قدیمی تر گزارش ویژه: ناترازی بانک‌ها در ایران؛ چالش‌ها، علل و راهکارهای اصلاحی

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