The total amount of the Iranian exports to neighboring Iraq during the last Persian calendar year (March 2018- March 2019) hit a record high, the data released by Iran’s Customs Office showed.

During the last Iranian year, the Islamic Republic exported $9 billion worth of products to Iraq, indicating a 36 percent increase comparted to a year earlier, setting a new record in the bilateral trade between the two countries, the Customs Office report said.

The data also showed that the total value of Iran’s non-oil exports over the 12-month period amounted to $44 billion, with petrochemicals accounting for $14 bln of the exports.

The top export destination of Iran was China, according to the report.

Iran and Iraq have stepped up efforts in recent years to develop their ties in different areas, including economy and trade.

Speaking at a joint press conference with Iraqi President Barham Salih in Tehran back in November, Iranian President Hassan Rouhani said the value of trade and economic interaction between Tehran and Baghdad stands at around $12 billion, adding that the two neighbors have the potential for a $20-billion trade target.

In February, the governors of the central banks of Iran and Iraq signed an agreement to develop a payment mechanism aimed at facilitating banking ties between the two neighboring countries.

(Source: Tasnim, under Creative Commons licence)

The IBBC (Iraq Britain Business Council) is launching a Tech Conference in Baghdad on 29th and 30th April.

The Conference is showcasing leading Iraqi and International companies with the intention of building confidence for Tech initiatives within Iraq.

Iraq is at a pivotal point in its development as it revives and rebuilds its infrastructure, so now is an ideal time to review the opportunity that modernisation and tech could bring to the country. IBBC is keen to support modernisation and its benefits, and to share what we have learned in the UK.

With political leadership, a positive investment climate and the talent and interest among young people and the right educational skills, tech can take off in Iraq, in the way it has in the UK.

The conference aims to showcase the best tech companies in Iraq, to give confidence and support to those on the way up and to change perceptions about the country and encourage investment.

IBBC Marketing Consultant Ashley Goodall says:

“We believe that Technological applications can enable Iraq to become more productive and efficient and a drive for transparency, a mechanism for government payments, a means to interact with citizens, and a source of new employment opportunities for young people.”

Christophe Michels Managing Director of IBBC says:

“We are all excited about the prospect of holding this prestigious event for IBBC members, the Tech Community and the wider people of Iraq. We hope and expect it will have an impact on all audiences to encourage a more rapid uptake of technological expertise, skills, and investment in Iraq.”

Leading Iraqi companies include: Almaseer Insurance, Inspire Solutions, Zain Telecom, Careem, Switch, Media World, Zain Pay, National Bank of Iraq, KRG, Onyxes, Re:coded, Five One Labs, Khudairi Group, Iraq Tech ventures, Arabnet, Central Bank of Iraq and many international groups such as BP, PWC, EY Iraq, KPMG, Finastra and many more. The Governor of Central Bank of Iraq kindly confirmed his attendance.

IBBC want to provide a platform and focus for Tech in Iraq and give inspiration and confidence to those building a modern Iraq. Come and join the new wave and help modernise Iraq.

The IBBC Tech Conference is taking place in Baghdad, the Babylon Hotel on 30th April with an Entrepreneurs event on 29th April.

For information and registration https://www.ibbctechconference.org/

To register to Entrepreneurs event on 29th April: https://www.eventbrite.com/e/startup-battle-baghdad-tickets-60109360716

For more information on the Iraq Britain Business Council, visit our website at https://www.iraqbritainbusiness.org/

To contact IBBC for Interviews, registration and sponsorship please contact london@webuildiraq,org

(Source: IBBC)

The IBBC (Iraq Britain Business Council) is launching a Tech Conference in Baghdad on 29th and 30th April.

The Conference is showcasing leading Iraqi and International companies with the intention of building confidence for Tech initiatives within Iraq.

Iraq is at a pivotal point in its development as it revives and rebuilds its infrastructure, so now is an ideal time to review the opportunity that modernisation and tech could bring to the country. IBBC is keen to support modernisation and its benefits, and to share what we have learned in the UK.

With political leadership, a positive investment climate and the talent and interest among young people and the right educational skills, tech can take off in Iraq, in the way it has in the UK.

The conference aims to showcase the best tech companies in Iraq, to give confidence and support to those on the way up and to change perceptions about the country and encourage investment.

IBBC Marketing Consultant Ashley Goodall says:

“We believe that Technological applications can enable Iraq to become more productive and efficient and a drive for transparency, a mechanism for government payments, a means to interact with citizens, and a source of new employment opportunities for young people.”

Christophe Michels Managing Director of IBBC says:

“We are all excited about the prospect of holding this prestigious event for IBBC members, the Tech Community and the wider people of Iraq. We hope and expect it will have an impact on all audiences to encourage a more rapid uptake of technological expertise, skills, and investment in Iraq.”

Leading Iraqi companies include: Almaseer Insurance, Inspire Solutions, Zain Telecom, Careem, Switch, Media World, Zain Pay, National Bank of Iraq, KRG, Onyxes, Re:coded, Five One Labs, Khudairi Group, Iraq Tech ventures, Arabnet, Central Bank of Iraq and many international groups such as BP, PWC, EY Iraq, KPMG, Finastra and many more. The Governor of Central Bank of Iraq kindly confirmed his attendance.

IBBC want to provide a platform and focus for Tech in Iraq and give inspiration and confidence to those building a modern Iraq. Come and join the new wave and help modernise Iraq.

The IBBC Tech Conference is taking place in Baghdad, the Babylon Hotel on 30th April with an Entrepreneurs event on 29th April.

For information and registration https://www.ibbctechconference.org/

To register to Entrepreneurs event on 29th April: https://www.eventbrite.com/e/startup-battle-baghdad-tickets-60109360716

For more information on the Iraq Britain Business Council, visit our website at https://www.iraqbritainbusiness.org/

To contact IBBC for Interviews, registration and sponsorship please contact london@webuildiraq,org

(Source: IBBC)

The Iraq Britain Business Council (IBBC) held its annual Spring Conference at the Mansion House in London on 10 April, hosting officials from the UK and Iraqi Governments and delegates from the major companies operating in Iraq covering all sectors of the economy.

The conference was entitled ‘Iraq – Financing a Modern Economy’ and was organised in conjunction with the Central Bank of Iraq and the Iraq Private Banks League. H.E. Dr Fuad Hussein, Deputy Prime Minister and Minister of Finance lead a high level delegation of Government officials alongside Dr Mehdi Al Alak, Secretary General of the Council of Ministers, Mr Abbas Imran Mousa, DG Technical Department, Ministry of Transport, Dr Falah Al-Amiri, Councillor for Oil & Gas supplies to the Iraqi Minister of Oil,  officials from the Central Bank of Iraq, a delegation from the Union of Private Banks and the Governors of Erbil and Sulamania.

Baroness Nicholson of Winterbourne, President of IBBC and the Prime Minister’s Trade Envoy to Iraq, Azerbaijan, Turkmenistan & Kazakhstan opened the conference alongside Alderman Sir William Russell, H.E. Dr Fuad Hussein, The Rt. Hon. Alistair Burt MP, Graham Stuart MP, Minister for Investment, Department for International Trade and Jon Wilks CMG, Her Majesty’s Ambassador to Iraq.

Dr Mehdi Al Alak presented a paper on ‘Private Sector Development and Investment in Iraq‘. Delegates received an exclusive insight into the Government’s planned measures and strategies to realise this ambition.

The event marked the 10th anniversary of the Iraq Britain Business Council and special awards were presented to Baroness Nicholson of Winterbourne and Eng. Rasmi Al Jabri, Deputy Chairman of IBBC as a token of gratitude for their contribution to the organisation over the last decade.

Dr Renad Mansour of Chatham House, produced a paper on ‘The present situation in Iraq’ which was commissioned especially for the IBBC conference.

Conference Sessions & Speakers

The Banking Sector in Iraq

Chairman: Gavin Wishart, Consultant

Panellists: Dr Mazen Sabeh Ahmed, Central Bank of Iraq; Mohammed Delaimy, Standard Chartered Bank; UK Export Finance (UKEF); Ali Tariq Mostaf, Iraq Private Banking League; Richard Wilkins, JP Morgan

Stock Market & Investment Opportunities

Chairman: John Kemkers, Eversheds Sutherland

Panellists: Shwan Ibrahim Taha, Iraqi Stock Exchange; Dr Alaa Abdel Hussein Al Saadi, Iraqi Securities Commission; Abdulla al Qadi, Crescent Petroleum

Keynote Address: Dr Mehdi Al Alak, Secretary General of the Council of Ministers

Oil & Gas

Chairman: Prof. Frank Gunter, Lehigh University

Panellists: Dr Mark Wharton, Shell; Lawrence Coleman, BP; Bob Dastmalchi, Chevron

Capacity Building in Iraq

Chairman: Ambassador Stuart Jones, Bechtel

Panellists: Dr Renad Mansour, Chatham House; Prof. Mohammed Al-Uzri, University of Leicester; Samer Al Mafraji, AMS Iraq

The IBBC is especially grateful to the sponsors of the event: Shell, the International Islamic Bank, Standard Chartered, Rolls-Royce and Eversheds Sutherland.

Our Partners, Speakers & Contributors

(Source: IBBC)

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

The market, as measured by the Rabee Securities RSISUSD Index, declined by -1.7% in March, bringing the YTD decline to -13.9. Turnover, while up +23% from February’s dismal levels, was still mostly in-line with the historic lows of the last few months. Foreign selling, the cause of the last few weeks’ declines, continued along the recent low levels dragging prices lower given the overall low market liquidity.

The market’s obliviousness to the increasing signs of the return of liquidity to the economy (discussed here over the last few months) has extended into an obliviousness to solid earnings growth for one of the market’s top banks- an earnings growth that has all the characterises of a classic banking recovery after a severe economic contraction.

It was argued here in November, following the earnings recovery of mobile operator AsiaCell, that “The next few quarters should see a similar recovery for the battered banking sector, with probably the first indicator to recover being the quality of loans. A return of liquidity and an economic pick-up should be followed by a recovery in the quality of bad loans and the reversal of NPL’s (non-preforming loans) with past provisions becoming earnings, thus providing the first boost to earnings recovery. This should be followed by growth in loans and deposits …”.

Mansour Bank’s (BMNS) 2018 results provide a textbook example of the above argument in action. BMNS reported revenue and income growth of +28.1% and +42.6% respectively for 2018 over 2017. Both revenues and net income were helped by a reversal of some of the past provisions for NPL’s (non-preforming loans) as some clients, helped by the economic pick-up, began to pay back loans that were classified as non-performing. However, even without this reversal of provisions, both revenues and earnings would have been up +13.1% and +15.5% respectively on the back of strong underlying metrics.

The first of these underlying metrics was deposit growth of +25.8% in 2018 over 2017, driven by the growth in private sector deposits. This lends support to the argument, made here in January,  that the growth in the monetary base M0 is an early indicator of a recovery in private sector deposit growth.  The second and most promising metric is an acceleration of loan growth to +6.1% in 2018 over 2017, after an almost flat trend. BMNS’s management singled its confidence in its future outlook by declaring a 9.7% dividend yield- up 40% in absolute terms over last year’s dividend payment.

BMNS’s financial performance during the years of conflict up to 2017 was reviewed here in October after it was caught in the selloff that engulfed the banks during the second half of 2018. The improvement in 2018 suggest the end of the tough times for the bank, and potentially for other strong banks in general.

BMNS’ financial performance during the years of conflict, the stability of 2017 and the start of the recovery in 2018 can be seen through the two charts below that look at loans/non-performing loans (NPL’s), and deposits and their association with government budget surpluses/deficits given the central role that government spending plays in the economy. BMNS’ loan and NPL data were supplied by the research team at Rabee Securities which is gratefully acknowledged, while other data were taken from the Ministry of Finance, the Central Bank of Iraq, the Iraq Stock Exchange and company reports. Data from 2010-2014 are based on Iraqi accounting standards, while data from 2015-2018 are based on IFRS, and all calculations use the official USD/IQD exchange rate.

BMNS’ loan book growth peaked in 2015 at the same time that NPL’s peaked. Unlike many other banks in the sector, its loan book was almost flat during 2015-2017, and started to pick up in 2018. NPL’s as a percentage of loans declined by over 60% from the peak (chart below).

Mansour Bank: Loans & NPL’s 2011-2018

(Source: Ministry of Finance, Central Bank of Iraq, Iraq Stock Exchange, Rabee Securities, Asia Frontier Capital)

Unlike, almost all other banks in the sector, BMNS experienced deposit growth throughout the crisis, which accelerated during the relative stability in 2017, and continued into 2018. A flat loan book and sharply increasing deposits resulted in a very low loan/deposit ratio allowing BMNS the opportunity to grow its loan book. Moreover, most of these loans are collateralized by property, as most of banks’ loans are in Iraq, and where the norm is for collateral value at 2x the loan. It should be noted, that most of these deposits are in the form of current accounts, followed by on-demand deposits underscoring the nascent nature of the Iraqi banking system and the opportunity for future growth as the society adopts banking culture.

Mansour Bank: Deposits and Loan/Deposit ratio 2011-2018

(Source: Ministry of Finance, Central Bank of Iraq, Iraq Stock Exchange, Rabee Securities, Asia Frontier Capital)

While not all of the other banks enjoy the same financial strength of BMNS, yet the macro forces that contributed to BMNS’s recovery are the same for the sector as a whole and should therefore create the conditions for a recovery in the sector. These macro forces are boosted by the December data from the Ministry of Finance which show that the government recorded a budget surplus of about USD 22.9 bln for 2018, or a two-year surplus of USD 24.4 bln by end of 2018.

The government’s 2019 non-oil investment programme is about USD 12.5 bln, which would be equivalent to about a 7.5% stimulus to the estimated non-oil GDP for 2019. While it is highly unlikely that this would be immediately spent, yet the spending should start with a trickle but grow as investment spending gets underway- and should therefore provide a further boost to the expected banking sector recovery.

The market has made a mockery of expectations, made here over the last few months, that its divergence from its past close relationship with oil revenues (a proxy for the forces driving the economy) should come to an end. Nevertheless, the strong fundamentals of the market’s leading stocks such as Pepsi bottler Baghdad Soft Drinks (IBSD), mobile operator AsiaCell (TASC), and Mansour Bank (BMNS) coupled with resuming growth in oil revenues only add to the unsustainability of this divergence (see chart below).

(Source: Iraq’s Ministry of Oil, Rabee Securities, Asia Frontier Capital)

(Note: Oil revenues as of Mar)

Please click here to download Ahmed Tabaqchali’s full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the CIO of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years’ experience in US and MENA markets. He is a non-resident Fellow at the Institute of Regional and International Studies (IRIS) at the American University of Iraq-Sulaimani (AUIS), and an Adjunct Assistant Professor at AUIS. He is a board member of the Credit Bank of Iraq.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.