A striking discrepancy in the ratios of credit to deposits in Iraqi banks
A striking discrepancy in the ratios of credit to deposits in Iraqi banks
2025-08-09 03:53
Shafaq News – Baghdad
In a recent analysis of Iraqi banking data for 2025, economic expert Munar Al-Obaidi revealed a striking discrepancy in credit-to-deposit ratios among banks, raising questions about the banking sector’s lending mechanisms.
Al-Obaidi explained, in a statement he made today, Saturday, and received by Shafaq News Agency, that banks can be divided into three categories: the first is the major banks whose assets exceed one trillion Iraqi dinars and maintain a credit-to-deposit ratio of 46%, which is a safe ratio and compatible with international standards, while the ratio for medium-sized banks (500 billion to less than one trillion dinars) reached about 109%.
As for small banks, according to Al-Abidi, whose assets are less than 500 billion dinars, the ratio has jumped to 400%, equivalent to four times the size of their deposits.
He pointed out that some small banks recorded unusual cases, with one bank’s deposits amounting to just 2.2 billion dinars, compared to loans totaling 440 billion dinars, while another bank recorded deposits worth 3 billion dinars, compared to a credit portfolio exceeding 136 billion dinars.
Al-Obaidi explained that most of these loans were financed by the Central Bank’s initiative to finance small and medium-sized enterprises, the total size of which reached 13.5 trillion dinars, according to the latest Central Bank of Iraq reports.
Al-Obaidi explained that these figures raise questions about the suitability of some small banks to manage such large sums, and the extent to which these financings actually reflect on the Iraqi economy and GDP. He emphasized the need to review the loan granting mechanism and reclassify banks according to the size of deposits, number of clients, and quality of services, as well as to support solid banks and review the performance of small banks.
Al-Abidi asked, “The most important question today is: Who is the actual beneficiary of these loans, and has the initiative achieved the economic goal for which it was launched?”
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