My predictions for the banking sector in 2022

 

Samir Al-Nusairi

12/20/2021

Samir Al-Nusairi*

On the occasion of the end of 2021, and in view of the special and new circumstances that our beloved country is going through due to the interactions with the formation of the new government after the approval of the election results by the Federal Court and the legitimate popular demands for change and economic and financial reform and because our banks are the first basic link in the national economy, we must clarify the results by analysis and evaluation The priority for banking activity in 2021.

That it faced the challenges of an unstable work environment, the non-performing debts reaching more than (6) trillion dinars, the continued decline in the prices of shares traded in the Iraqi stock market by (80%), the decrease in liquidity of some banks to the minimum limits set by the Central Bank, and the decrease in the realized revenues and deposits of some banks and the impact Others delayed approving the 2021 budget, which affected the investment side of development projects and the lack of clarity in financial policies, laws, tax and customs instructions. It should be noted here. To the role played by the Central Bank in 2021 to confront these challenges and to lead and organize the banking sector and reform some of its links towards helping it overcome those challenges. challenges.

Our banks affirmed their sobriety and enhanced the public’s confidence in them during 2021 and the continuation of their daily activities and work despite the administrative, logistical and technical difficulties, which made an effective contribution to the implementation of the Central Bank’s policy in achieving stability in the money market and perpetuating internal and external banking operations, which enhanced international confidence in our international banking transactions. This is evident when comparing the state of our banks with other countries experiencing the same conditions as happened in Lebanon, Syria and Iran, for example, and this confirms that our banks are moving in the right direction.

And its procedures and development towards its establishment and under the supervision of the Central Bank, to set its plans for attracting deposits, granting credit and banking facilities, implementing the Central Bank’s financing and lending initiatives that it launched in 2021, and increasing the rate of financial inclusion by raising the number of open accounts to the equivalent of 12 million issued credit cards, while increasing the number of ATMs to 3000 Automated teller machines, the trend for real banking work, the increase in the cash credit rate, and the activation of the central bank’s lending initiatives, especially the initiative to finance small, medium and housing projects, and the central bank’s assignment of additional funds for the initiative in 2022, especially after the rate of implementation of loans granted by one trillion exceeded more than 85% in 2021 and the expansion in providing Modern systems, programs and technologies in the field of digital transformation. And the implementation of the Payments Department's proposal to expand the provision of banking services and reach the smallest administrative unit at the level of all governorates.

The banks’ completion of their plans for 2022 in accordance with the above visions requires them, under the supervision and control of the Central Bank, to work in quick steps, which is to move the Iraqi banking sector to a sober and developed economic sector that is committed to international regulations, rules and standards for compliance, combating money laundering, financial reporting and risk management, and thus moving from the role of banking to a developmental role Contribute to revitalizing the economic cycle by activating and supporting the financing of small and medium projects and large development projects, through which the building of a solid national economy and sustainable development is achieved, ultimately serving the Iraqi people and their aspirations for a better life.This requires that each bank have a plan with specific goals for 2022 in the areas of technical development and work in accordance with international standards to achieve financial inclusion, attract deposits, work on capacity-building, train and qualify human resources, achieve the goal of investing in human capital and develop the structural structure of the banking sector, in addition to the banks paying attention By applying the financial stability criteria, which are indicators of financial safety such as the capital adequacy ratio, the liquidity ratio, the profitability ratio such as the ratio of profit and net profit to capital, the ratio of return on assets, the ratio of return on shareholders’ equity, the ratio of activity costs, financial leverage and the ratio of investment of funds in addition to the adoption of indicators for measuring performance efficiency and the creation of statistical units Studies, analysis and financial forecasting to indicate monthly, quarterly and annual deviations in the drawn plans.

This requires the government and the Central Bank to support the banks and enable them to continue banking activity, and to implement the decisions of the Council of Ministers and the Economic Affairs Committee related to revitalizing banking work, especially in the field of credit, bank financing, loans and banking facilities, and giving a key role to private banks and their involvement in making central economic decisions.

* Advisor to the Association of Iraqi Private Banks

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