Bank Tejarat Makes Significant Leap with Change in Banking Direction

Bank Tejarat's first-half 1405 report points to simultaneous growth in operating income, a rising share of fee-based income, and expansion of credit resources and lending activities.

According to Ambassador Arjan, citing the public relations of Bank Tejarat, the six-month report of the beginning of this year Bank Tejarat has a clear message for shareholders, customers and bank analysts; "Leap in key and operational indicators" which shows that the bank's change of path towards modern banking has made the bank's income generation perspective more transparent by relying on improving the quality of income sources.

More weight of fees in the basket of Bank Tejarat

One of the most important changes in the performance of "Votjarat" symbol in the first half of this year is the increase in income from providing banking services. The bank's fee income increased from about 17 thousand billion tomans in the first six months of last year to more than 28 thousand 600 billion tomans and recorded a growth of 69%. This is despite the fact that the income of the facility has increased by 54% in the same period; A difference that indicates a greater acceleration in the development of fee income.

The net fee income, after deducting fee expenses, has increased from about 15,300 billion tomans to nearly 23,900 billion tomans and has grown by 56%. In other words, about 8,600 billion Tomans have been added to the bank's net fee income; An increase that shows that the growth of this sector is not limited to gross income.

Fee income from payment services, guarantees, letters of credit and other financial services increase the bank's capacity to generate income beyond granting facilities. According to the bank's performance figures, the share of fee income from the total operating income has reached about 24% in the first half of this year; This means that almost a quarter of the bank's operating income is provided from the commission.

59% growth in the operating income of "Vetjarat" symbol

The total operating income of Tejarat Bank in the first six months of 1405 has reached more than 120,600 billion tomans from about 75,600 billion tomans. The increase of about 45 thousand billion tomans of this index is equivalent to 59% growth.

Facility income with more than 80 thousand billion tomans is still the biggest income of the bank. This income has increased by 54% from around 52,200 billion tomans in the same period last year. In other headings, the income from deposits increased by 126% and reached about 5 thousand billion tomans, and the income from debt securities increased by 266% and exceeded 4,500 billion tomans.

The bank's net operating income has also increased from about 22,600 billion tomans to more than 32,200 billion tomans and has increased by 43%. However, the bank's expenses increased by 67% in the same period and reached about 88,400 billion tomans. The cost of interest on deposits has also increased by 61% to about 79 thousand 100 billion tomans.

Also, the surplus of the facility's income compared to the interest cost of deposits has decreased from about 3,100 billion tomans to nearly 1,100 billion tomans. These figures show that the development of incomes to become sustainable profitability should be accompanied by controlling the cost of resources and improving the distance between the return on assets and the cost of money.

Improving customer confidence with the growth of resources

In the first half of 1405, the balance of deposits of Tejarat Bank has reached 1832 hemats with a growth of 69% from about 1082 hemats.

In the composition of sources, foreign currency deposits have reached more than 318 thousand 100 billion tomans with a growth of 211% from about 102 thousand 500 billion tomans. As a result, the share of foreign currency deposits from the total resources has increased from 9% to 17%.

In the rial resources sector, Qarz Al-Hosna's current deposits increased by 59% and reached about 439 thousand 300 billion tomans. Non-fee-bearing Rial deposits have also reached nearly 507,900 billion Tomans with a growth of 56%. The development of non-cost-generating resources can help reduce the cost of financing compared to interest-bearing deposits; An advantage that depends on the combination of resources and how they are used.

Credits and facilities at the service of the economy

The balance of Bank Tejarat facilities in the first half of 1405 has grown by 67% from about 921 hemats to more than 1538 hemats. This growth, along with the increase in deposit resources, shows the simultaneous expansion of resource mobilization and credit allocation.

In the composition of the facility portfolio, Murabaha reached more than 531 thousand billion Tomans with a growth of 75% and made up about 35% of the balance of the facility. The balance of foreign currency facilities also exceeded 466 thousand billion tomans with an increase of 151% and accounted for about 30% of the bank's credit portfolio. In total, these two headings constitute about 65% of the balance of Bank Tejarat's facilities.

The closeness of the growth rate of resources and facilities indicates that credit development is accompanied by an increase in deposits. However, the evaluation of the economic effect of this development requires the destination of the facility, the quality of repayment, the rate of return of each sector and the proportion of return on assets to the cost of resources.

Change in revenue mix; The new advantage of Tejarat Bank

The record of the first half of 1405 of the symbol "Votjarat" shows that the operating income of this bank has grown by 59%, fee income by 69%, net fee income by 56%, deposit resources by 69% and facility balance by 67%. Meanwhile, increasing the share of fees to about 24% of operating income is one of the most important changes in the bank's income composition.

These figures indicate the expansion of the scale of the bank's activity and the increase in the role of fee-based services in addition to the facility income. However, the growth of expenses and the reduction of excess income of facilities compared to the cost of interest on deposits show that the next stage of this path is to transform the growth of resources and incomes into higher quality income and sustainable profitability through cost control, increasing productivity and maintaining the quality of assets.