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The expected lifting of trade and financial sanctions on Iran would be credit positive for Iranian banks, Moody’s Investors Service said in a report published this week.
“Increased trade and investment could
boost growth in Iran’s banking sector and support asset quality of domestic banks, although such improvements would depend on the strengthening of banks’ capital levels and the implementation of structural reforms,” Moody’s says, adding that it sees significant upside potential for Iranian banks from increased economic activity if sanctions are lifted and that this could include new regional business opportunities relating to “trade finance, letters of credit and new investments and infrastructure projects.” The ratings agency also notes that with the lifting of sanctions, more than half of the currently frozen official reserves may be used to recapitalize government-owned banks or be invested in the country’s infrastructure. (CONTINUED - 435 WORDS)