There is little hope of progress regarding Iran's ability to recapitalise and restructure its battered banking sector as bad loans continue to mount in the wake of tightening US sanctions that take their toll on the economy.
“Many Iranian banks are in need of recapitalisation and restructuring, having accumulated high levels of non-performing loans,” Fitch Solutions, a unit of Fitch Group said on Tuesday in its latest report on the country's banking sector. “We see little scope for meaningful progress.”
Although an outright collapse of the Iran’s financial sector is unlikely in the near term, consolidation is eventually needed in the sector, according to the survey. The weakness in the sector is largely the result of years of interference with lending practices by government and government-linked entities, coupled with a weak regulatory environment, the report said. During the previous sanctions that preceded the 2015 nuclear agreement known as the Joint Comprehensive Plan of Action, Iranian banks offered interest rates as high as 30 per cent on deposits.
“We therefore expect bank lending standards to remain weak, and this – coupled with deteriorating macroeconomic conditions – will likely cause non-performing loans to increase further,” Fitch said.
Iran's economy entered into recession in 2018 as the reimposition of US sanctions spurred investment outflows, oil export reductions and stoked inflation. This slowdown is likely to deepen in 2019 as sanctions remain in place and may tighten further.
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Read more:
Sanctions-hit Iranian banks have little scope of international business
Iran to face recession as US sanctions bite
Iranian inflation set to rise sharply as US sanctions deadline approaches
Iran central bank authorised to intervene in foreign exchange market to defend rial
Iranians are under no illusions about a regime that has squandered its resources to spread terror
_______________
However, even before the US sanctions in November, Iran's economy was struggling with the rial hitting multiple record lows against the US dollar, as investors feared that a reduction in oil exports will drastically affect all segments of the economy. The rial lost as much as 70 per cent of its value against the green back last year. Lenders continued to increase interest rates to attract deposits but many are now in trouble because of the weak economy.
“That said, amid the reimposition of US sanctions and restrictions on Iranian trade, the [Hassan] Rouhani administration appears to be shifting away from its initial focus on pro-market and banking sector reforms, towards the development of a ‘resistance economy’,” Fitch said. “Many hardliners are fundamentally opposed to opening up the banking sector to international scrutiny, arguing that this would limit Iran’s ability to maintain strategic depth via ties to non-state actors and increase its dependence on external actors.”
More importantly, government revenues are falling rapidly as a result of the sanctions-induced drop in Iranian oil exports, limiting funding available for recapitalisation – particularly as the maintenance of import subsidies and welfare programmes take priority.
“Banks look set to continue to fund lending activities by borrowing from the central bank, which in turn will result in persistently high money supply growth and inflation,” Fitch said.
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
'Nope'
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
UAE currency: the story behind the money in your pockets
More from Rashmee Roshan Lall
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
ICC T20 Team of 2021
Jos Buttler, Mohammad Rizwan, Babar Azam, Aiden Markram, Mitchell Marsh, David Miller, Tabraiz Shamsi, Josh Hazlewood, Wanindu Hasaranga, Mustafizur Rahman, Shaheen Afridi
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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Global state-owned investor ranking by size
1.
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United States
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2.
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China
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3.
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UAE
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4.
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Japan
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5
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Norway
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6.
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Canada
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7.
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Singapore
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8.
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Australia
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9.
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Saudi Arabia
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10.
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South Korea
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UAE currency: the story behind the money in your pockets
Six pitfalls to avoid when trading company stocks
Following fashion
Investing is cyclical, buying last year's winners often means holding this year's losers.
Losing your balance
You end up with too much exposure to an individual company or sector that has taken your fancy.
Being over active
If you chop and change your portfolio too often, dealing charges will eat up your gains.
Running your losers
Investors hate admitting mistakes and hold onto bad stocks hoping they will come good.
Selling in a panic
If you sell up when the market drops, you have locked yourself out of the recovery.
Timing the market
Even the best investor in the world cannot consistently call market movements.
2017%20RESULTS%3A%20FRENCH%20VOTERS%20IN%20UK
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ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Manchester City transfers:
OUTS
Pablo Zabaleta, Bacary Sagna, Gael Clichy, Willy Caballero and Jesus Navas (all released)
INS
Ederson (Benfica) £34.7m, Bernardo Silva (Monaco) £43m
ON THEIR WAY OUT?
Joe Hart, Eliaquim Mangala, Samir Nasri, Wilfried Bony, Fabian Delph, Nolito and Kelechi Iheanacho
ON THEIR WAY IN?
Dani Alves (Juventus), Alexis Sanchez (Arsenal)