In an exclusive interview with Banker Middle East, Faisal Al Haimus, Chairman at Trade Bank of Iraq provides an insight into the bank's growth and its expansion plans for 2017

How has Trade Bank of Iraq shaped the country’s financial landscape?

The Trade Bank of Iraq (TBI) was incorporated by the Iraqi Coalition Provisional Authority on 17 July 2003 as an independent Government entity to facilitate the import and export of goods to and from Iraq. TBI was incorporated with an authorised capital of $100 million in July 2003. Paid-up capital increased to IQD 1.75 trillion ($1.5 billion) as at FYE 2015 by capitalisation of profits earned.

Since inception, the focus of the bank was on building the correspondent banks network and offer trade finance solutions to the public and private sectors. Today we are the leading bank in trade finance in Iraq and strive to give excellence in services to our clients through a 400 correspondent banking network worldwide.

How did the bank perform last year?

Overall, TBI’s performance for 2016 was good despite the economic and security challenges for Iraq. The bank’s operating income increased by six per cent in 2016 reaching $591 million compared to $559 million in 2015. The increase in operating income was attained despite a decrease in assets of 15.7 per cent reaching $19.7 billion by end of 2016.

The main factors of growth in our operating income  are attributed to the increase in our fee and net interest income by 5.1 per cent and six per cent respectively. However, our net profit has increased substantially due to better management of our lending book.

What is in the pipeline for 2017?

TBI’s product offering has spanned across retail, corporate and project finance along with Government enterprise services. Since I took office in June 2016, our focus has been the improvement of our financial performance, inducing a culture to change for the better to improve our business delivery model, to manage the spectrum of risk through adopting best in class practises, to capitalise on our strengths and consolidate our position as a market leader and increase our market shares in other segments of the business and invest in our human resources and systems.

In 2017, we expect that the Government enterprise sector will remain as our main customer contribution accounting for approximately 70 per cent of the revenues, while the corporate and retail sectors are expected to contribute 20 per cent and 10 per cent respectively. We expect to launch at least five new retail products this year in addition to the introduction of priority banking. Moreover, while focusing on trade finance, our aim is to expand our market share in corporate finance in addition to serving the needs of the public sector in trade and project finance.

What kind of challenges do you currently face and do you see this persisting going into 2017?

The main challenge is finding and retaining talent. We do believe that our best asset is our human resources and due to the political and security circumstances that Iraq has undergone over the past two and a half decades, talent in the banking sector in Iraq has dwindled. Accordingly, we are revising our grading and pay scale to attract and retain human resources in addition to the establishment of TBI’s training centre to support our credit, risk and customer services culture.

In 2017, we plan to keep an eye on the price of oil and its effect on the economic growth in Iraq as more than 80 per cent of the GDP is oil-based revenue. However, we believe the outlook is positive for the Iraqi economy based on better oil price forecasts and improved government spending for the reconstruction of Iraqi-liberated areas.

What are the bank’s areas of focus and what can the market expect from TBI in 2017?

2016 was the year of paving the path to transformation by adopting the best in class practices. We have revisited our vision and mission statements, and kick started an organisational culture and value system. We did an in-depth analysis of our environment and completion and prepared our strategy for the years 2017-2019. We have restructured our organisation in order to be more responsive to customer needs by introducing relationship management to serve our corporate and government clients. We also did a rebranding exercise reflecting the aspiration of the bank to induce change for the better.

Many initiatives have commenced and are in different stages of completion. An example of this is the upgrade of our core banking system. The introduction of online banking, ISO 9001 certification of the letter of credit, guarantees and remittances departments, the upgrade of the Anti-Money Laundering system and the re-haul of human resources policies and grading systems.

Accordingly in 2017, we plan to expand our finance activities with more focus on the retail and corporate banking business by increasing our product offering and expanding our delivery channels through an expansion in our branch network domestically and overseas. This includes the introduction of mobile and internet banking services. Moreover, we are undertaking the exercise of the centralisation of our back-office functions to stream-line our business delivery process.

What are the bank’s expansion plans both organically and inorganically?

We will continue to ensure our leadership position as the number one in trade finance institution in Iraq and to be the preferred partner in wholesale and retail banking. We are focusing our efforts on expanding our market share in the corporate sector and launching retail products. Having an improved customer service as an objective, we have restructured our business delivery process by segmenting our customer base into sovereign, corporate and retail. Additionally, we have introduced relationship management to serve our corporate and government clients as well as introduced product management in retail banking.

We are growing our distribution channels through the expansion of our branch, ATM/CDM and point of sale networks. We will also introduce online and mobile banking to serve our customer segments. In addition to this, we also expect to launch a range of retail products in order to expand our retail loan portfolio.

What is your outlook on the financial sector in Iraq this year and over the short term?

The financial sector will continue to be dominated by government-owned banks and the sector will remain with high liquidity. We expect increased lending activity to the SME sector due to the initiative of the Central Bank of Iraq to guarantee/allocate approximately $5 billion to that sector. Due to the positive forecasted economic growth of the Iraqi economy, we also foresee consolidated balance sheets of the Iraqi banks to increase.

© Banker Middle East 2017