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IRAQI BANKS EMBRACING TECHNOLOGY
Iraq’s banking system branching deep into technology
Advancing technology in digital banking to succour clients
The International Development Bank (IDB) was established in 2011 with an initial capital of 100 billion Iraqi Dinars and has now developed to be a paid-up capital of $210 million. IDB has established itself among the leading banks, both locally and regionally, offering commercial banking services to both corporate and retail customers. The Khalaf Abed Kareem family along with several other Iraqi investors were among the bank’s initial investors. While the Khalaf Abed Kareem family remains the biggest shareholder with 61 percent of total equity, the number of shareholders has grown to include more than 100 holders of common shares, which have been listed on the Iraq Stock Exchange since 2018.
Ziad Khalaf Abed Kareem, Chairman of Board of Directors, IDB, institutionalised the firm's foundations and principles for operations. With his leadership, IDB was able to acquire a significant market share of the total corporate, small and medium enterprises (SME), trade finance, retail banking, electronic card issuing and overall local banking market.
The bank has adopted International Financial Reporting Standards (IFRS) since 2017 and is abiding by the norms and regulations relating to Compliance and Anti-Money Laundering. The bank also works with Ernst & Young as external auditors to ensure both accuracy and transparency on all bank levels of operations. IDB was also rated as the Best Bank in Iraq as per the Central Bank of Iraq CAMEL rating for four consecutive years. It is also the first Iraqi Bank to engage and sign a memorandum of understanding (MoU) with the IFC related to the investment side, empowering Iraq’s private sector whilst promoting economic growth.
IDB has succeeded in establishing a wide network of correspondent banks in more than 10 countries around the world to support the bank’s trade finance and external transfers. Its continuous expansion strategy for its local branch network will see the bank expand new branches every year. On the other hand, IDB also expanded its operations internationally by becoming the first Iraqi Bank to establish an official presence in the UAE as well as Lebanon.
IDB playing a leading role in the reconstruction of Iraq
IDB has more than 40 percent market share of the retail banking business in Iraq, more specifically in the Central Bank of Iraq’s initiative, which is targeted at the public sector employees’ salary domiciliation where IDB has more than 250,000 domiciled accounts as of today. IDB also offers a wide range of products and services to satisfy its client’s financial needs such as different types of accounts, loans on housing, personal, travel, wedding, car, medical and education, consumer finance, cards like credit, debit, pre-paid, gift and internet, corporate payroll and cash management, billing and collection services and western union money transfers. Services for the corporate include trade, corporate and SME finance and payroll services.
It is also the first Iraqi Bank to be granted Principal Membership with international companies’ Visa and
MasterCard and issue all types of debit, credit and prepaid electronic cards. IDB holds the largest ATM network with over 300 ATMs and the largest point of sale network with more than 5,000 merchants. It positively contributed to the Iraqi reconstruction phase by facilitating adequate credit lines and financing needs for major multination’s working in Iraq within the construction, telecommunications and infrastructural sectors.
Through IDB’s collaboration and engagement with IFC, it is expected to continue capitalising on its existing market share in the corporate and SME segment with Iraq. This will also help in IDB’s success and being the fastest growing in corporate banking.
Key financial highlights over the last two years
Consecutively for the second year, IDB has achieved the highest earnings amongst all Iraqi private banks. It was also recognised as the fastest growing corporate bank concerning its trade and finance volume in 2020 that helped Iraqi-based import businesses. IDB was rated BB- for Core Financial Strength and B- for Bank Standalone Rating (BSR) by Capital Intelligence.
Additionally, it has contributed to the reconstruction of Iraq through financing mega projects across various sectors with a total lending sum exceeding $445 million. IDB actively participated in the SMEs Financing Initiatives stipulated by the Central Bank of Iraq through financing projects with a total sum exceeding $20 million throughout various provinces in Iraq. The bank has achieved double digits growth in the fiscal year 2020 with a total balance sheet reaching $1 billion. IDB is also one of the three privately owned banks to reach this threshold whilst capital adequacy has been maintained at 38.4 percent with solid liquidity ratios as LCR and NSFR were at 194 percent and 138 percent respectively as of December 2020.
IDB leads in product development and innovation
IDB was the first bank to introduce digital banking services like mobile banking, bill payments whereby clients can perform direct bill payments as well as peer-to-peer payments. It established a high-end and world-class IT infrastructure supporting its competitive advantages in e-services and digitisation. They have been constantly investing in the same which has been a key element to its success in its domination in the Iraqi retail banking sector.
IDB will continue developing bundles of competitive products and services along with adequate e-channels to cater to the needs of its target segments and Iraqi untapped sectors to maintain and provide a wide range of corporate, SME and retail products and services on assets and liabilities based on advance segmentation approach. This proactive segmentation approach will be backboned by a high-end digital platform supporting IDB delivery channels and shortening the distances for its client base to ensure more convenience and access.
