Driven by economic recovery 9% GDP growth in Iraq

Driven by economic recovery 9% GDP growth in Iraq






Iraq - the flag: is expected to achieve the Iraqi banking sector significant growth in assets and profits over the next decade as a result of many factors that come in the forefront of a huge economic environment and strong, and the spread of credit, and improvement in the security situation in the country. This is reported by a new report from the banking sector in Iraq issued by the company "Sansar Capital" (Sansar Capital) specializing in asset management in developing countries. While the IMF forecast GDP growth in Iraq, a rate of 9% during the current year, 2013, is expected to keep the banking sector in particular at the level of steady growth over the next few years.

The report pointed to the role of the further spread of credit in promoting the growth of the banking sector.In this regard, the report highlighted what came in the World Bank study, which he explained that domestic credit Iraqi linked to GDP has remained constant at about 9% of GDP by the end of the year 2011, compared to 55% of the average GDP in Middle East and North Africa. Also saw domestic credit associated with GDP growth of almost 89%, according to a compound annual growth rate in the period from 2009 to 2011. In addition, according to data released by the Central Bank of Iraq, the cash credit, such as loans and overdraft facilities has risen dramatically by a compound annual growth rate to reach 50% in the period between 2006 and 2011.

The report analyzes in detail the development of the private banking sector in Iraq through to shed light on the five largest private banks in terms of deposits. The report shows that as a result of support resulting from strong economic growth and higher credit spread, these five banks have experienced a growth in total net income by 207% during 2010 - 2012. The policy not militancy impact on the increase of capital, resulting in the reduction of earnings per share growth, although it still has a strong position, along with the growth of dividends collected to 111% during the period from 2010 to 2012.

The polls report property unusual characteristic of the Iraqi market, clear image in the banks with the highest rates of returns for equity and growth rates; since you are buying goods with the lowest multiples of evaluation, and that's what makes "Sansar Capital" believes that this indicates a lack of market efficiency, which provides an opportunity for people who are interested.

The report also sheds light on the financial situation of the Iraqi banks, and shows high profits equity earnings ratios in Iraqi banks significantly, according to the figures; approached by some banks in the ratio of 60%.

And characterized the performance of the Iraqi Middle East Bank to invest in particular, the third-largest commercial bank in the level of deposits, a good level during the past few years, was able to attract large sums of money for deposit interest rates are very low. The bank received the highest percentage of revenue, and operating profit growth compared Iraq's major banks in 2012. Since 2009, it has grown bank's profit before tax increased by 330%, and the compound annual growth rate of 63%.

According to the report, the growth of the Iraqi banking sector profits and gross domestic product (GDP) will grow by 151% in the period from 2011 to 2020 as expected and the International Energy Agency. And promotes increased oil revenues, which coincides with the improved security situation in the country, as violence has decreased by 80% during the years 2006 and 2012.

In spite of significant growth, but it will have to Iraqi banks to overcome some significant challenges if it wants to continue on the path of growth distinct pace, as happened during the past five years.

On the other hand, access is one of the biggest challenges facing the banking sector in the country, as the access to bank branches or automated teller machines are still largely limited to the general public in Iraq.There are now about 900 bank branch serves 33 million Iraqis; sense that each branch serves 36,000 people.

Among other challenges abnormal environment dealing with government banks, and overall loss of confidence in the banking system. The problem is exacerbated by the absence of private insurance institutions deposits, which ensures customers their deposits in the event of bankruptcy of the bank.

The report also cast a shadow of doubt in part on corporate governance and the degree of transparency in some banks. The report cited the North Bank as an example, where the leading auditing and financial concerns raised by accountants in reports, as pointed to the absence of reports submitted by the bank has been translated from English.

Said Sanji موتواني, president of the "Sansar Capital": "Although the banking sector in Iraq is undoubtedly on the path of growth, but that this path is not without some challenges. Important thing that you should pay attention to is that it is possible to pass all of these challenges and obstacles , especially if combined efforts of the public and private sectors. sector also private banks in particular, can contribute to improving the ease of access to the networks of bank branches and services provided, while the can for the banking sector the government would help in moderating boy balance between banks owned by the government and the banking sector Private. undoubtedly gain the confidence of the general customer requires work and effort on the part of both parties. "

Moreover, the report indicates that the Iraqi banks get majority إيرادتها and earnings from financing activities and trade. The proportion ranged commissions earned from the financial and commercial activities in the year 2011 (wire transfers, letters of credit, and transfers via fax) from 28% to 83% of net revenue for the four largest traditional banks. Came the traditional lending activities such as net interest income on loans as the second largest shareholder in the Margin for the four largest banks, may get through that rotate deposits from 13% to 49% of Net Margin derived from these activities.

In conclusion, the report points to an improvement modes economic and security as components of an attractive investment in Iraq despite the fact that there are many challenges still remain in front of people who are looking to participate in the public markets, where it takes investors caution when doing investment in Iraq, particularly physical presence in the state.


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