Annual Report and Financial Statements for the Year 2024

 

Correspondent Banks

No.	Bank Name	Country
1	Abu Ali Islamic Bank	United Arab Emirates
2	Al-Safwa Islamic Bank	Jordan
3	Arab African Bank	United Arab Emirates
4	Union Bank	Jordan

 

ASIA ALIRAQ Islamic Bank for Investment and Finance

Subsidiaries, Partnerships, and Shareholdings

No.	Company Name	Type	Number of Shares	Shareholding Amount	Ownership Percentage	Notes
1	Al-Kasab Brokerage Company	Subsidiary	100,000,000	300,000,000	100%
2	Asia Gateway Trading Company	Subsidiary	5,000,000,000	4,500,000,000	90%
3	Asia Gateway Real Estate Investments	Subsidiary	10,000,000,000	10,000,000,000	100%
4	Asia Gateway Agricultural Investments	Subsidiary	8,500,000,000	8,500,000,000	100%
5	Partnerships	Partnership	–	80,293,082,000	–	Contradictory Partnership
6	National Takaful Company	–	550,000,000	553,769,000	–
7	Iraqi Deposit Guarantee Company	–	1,539,473,680	1,542,098,680	–

 

Total Cash Transactions of the Retail Banking Department for 2024

Transaction Type	Amount (IQD)	No.
Mortgage Loans	93,000,000	2
Central Bank Initiative – SME Projects	565,000,000	35
Personal Murabaha	22,850,550,000	77
Corporate Murabaha	10,490,000,000	8
Localization Murabaha Contracts	909,000,000	88
Total	34,907,550,000	210

 

 

 

 

 

 

Total Guarantee Transactions of the Credit Department for 2024

Transaction Type	Amount (IQD)	EUR	Count
Bid Bond/Tender Guarantee	67,644,023,543		681
Professional License Guarantee	856,425,000		51
Performance Bond Guarantee	38,566,506,500	1,145,330,590	312
Advance Payment Guarantee	117,400,000		–
Total	107,184,355,043	1,145,330,590	1,044

 

Internal Shariah Audit and Compliance Department Report – Year 2024

Main Functions of the Department:

• The department is responsible for auditing the Bank’s departments and branches from accounting, financial, and Shariah perspectives, as outlined below:
• Auditing entries, statements, various financial balances, payrolls, advances, journal entries, and internal and external bank reconciliations.
• Auditing foreign transfers in all their details, letters of credit, currency auction reports with the Central Bank of Iraq, and supporting documentation of beneficiary companies receiving foreign transfers.
• Auditing files and documentation of credit facilities granted under Islamic Shariah principles, including Murabaha, Musharaka, Ijara, and others, as well as letters of guarantee of all types, and reports on the Central Bank’s initiative for small and medium enterprises and projects exceeding IQD 1 billion.
• Auditing personnel files, managing incoming/outgoing correspondence, miscellaneous files, and open registers from an organizational perspective.
• Auditing the legal department’s documentation, including lawsuits filed by or against the Bank.
• Auditing lists, correspondence, and updates to blacklists and international sanctions lists, using modern technologies integrated into the Bank’s system, with real-time updates.
• Auditing the Bank’s core system (BANKS), including department feedback regarding the system or obstacles encountered, and reviewing system-related needs across departments.

 

• Auditing investment statements and balances, ensuring compliance with Central Bank of Iraq regulations and Islamic Shariah, including the number of shares and certificates allowed for investment.
• Auditing balances and records with the parent company related to electronic withdrawals, and reconciling them with the Accounting Department’s statements.
• Auditing ATM balances, card sales, financial returns, ATM distribution, and the number of sales agents in Baghdad and the provinces.
• Auditing risk ratios and operational risk reports, ensuring alignment with the risk-based audit program, and reviewing reports prepared by the Risk Management Department.
• Auditing daily transaction reports for the RTGS (Real-Time Gross Settlement) and ACH (Automated Clearing House) payment systems.
• Auditing periodic bulletins, banking services posted on social media, and Central Bank and Shariah Board approvals of such materials.
• The department audits all branch activities, including current accounts, savings accounts, deposits, withdrawal and deposit operations, all related statements, account opening files, cash balances, cash inventory, Murabaha financing, and letters of guarantee.
• The department also holds quarterly meetings with the Chairman of the Board of Directors, Al-Baghdadi & Partners Auditing Firm (Joint Liability Company), and the members of the Shariah Supervisory Board to discuss reports, statements, and banking transactions, and to provide Shariah and accounting observations. Additionally, the department prepares quarterly reports according to the template prescribed by the Central Bank of Iraq, and submits them to the Banking Supervision Directorate at the Central Bank.
• The Bank affirms its full compliance with the provisions and principles of noble Islamic Shariah, as well as with the laws governing banking operations and the instructions and regulations of the Central Bank of Iraq.

 

 

MAHMOOD SABRI Khalaf

Director of the Internal Audit Department

 

 

 

 

 

 

 

 

 

 

Shariah Compliance and Regulatory Compliance Officer Report As of 31/12/2024

Greetings,

The function of the Shariah Compliance and Regulatory Compliance Department is an independent function that aims to strengthen Shariah governance within the bank and ensure adherence to applicable laws, regulations, thresholds, and ratios as mandated by the supervisory authority (Central Bank of Iraq). This function is governed by the pillars of Shariah compliance oversight, which include: The Shariah control environment, Risk assessment, Shariah oversight activities, and Information and communication.

 

Summary of the Compliance Function Responsibilities:

• Establishing effective procedures for banking operations to ensure Shariah compliance prior to execution.
• Reviewing and developing policies and procedures related to Shariah compliance management.
• Supporting the enhancement of front office action plans, including providing legal and regulatory advice on implementing new laws or regulations within the existing policies and procedures. Providing regular training to employees on compliance duties, anti-money laundering (AML), and combating the financing of terrorism (CFT). Auditing the “Know Your Customer” (KYC) forms.
• Reviewing the bank’s internal policies and procedures for their compliance with the laws and instructions of the Central Bank of Iraq.
• Attending Board of Directors meetings in the capacity of Compliance Observer.
• Assisting in resolving issues, following up on audit-related matters with internal/external auditors and concerned departments, and supporting the development of preventive control measures to avoid future issues.
• Establishing strong internal working relationships across the bank. Developing a comprehensive Shariah compliance program based on the approved compliance plan. Coordinating with both internal and external Shariah audit teams on matters related to Shariah compliance. Collaborating with the Risk Management Department on issues related to non-compliance risks.

Raising awareness and fostering a strong compliance culture among bank employees regarding relevant laws, instructions, regulations, and policies by means of seminars, training sessions, workshops, publications, and other tools.

 

• Conducting regular reviews and ongoing evaluations of Shariah compliance, with a focus on high-risk operations.

 

• Preparing the Compliance Matrix, which contains comprehensive information on applicable laws, regulatory frameworks, and banking products for which the Compliance Officer is responsible.
• The Shariah Compliance Department escalates matters related to compliance to the senior administrative authorities and the committees responsible for Shariah governance (Governance Committees).
• The department is responsible for identifying, assessing, reporting, monitoring, and preparing reports on the Bank’s Shariah compliance risks, which include the risk of legal penalties, financial losses, or reputational damage resulting from failure to comply with applicable laws, regulations, codes of conduct, and best practice standards in the Islamic financial industry.
• Reviews the Bank’s policies and procedures to ensure their alignment with the laws and instructions of the Central Bank of Iraq.
• Conducts monthly follow-up and audits with the head office and branches regarding opened and closed accounts, rejected or returned payments.
• Performs on-site visits to bank branches to audit “Know Your Customer” (KYC) forms and other financial operations.
• Ensures compliance with the U.S. Foreign Account Tax Compliance Act (FATCA), including submission of the annual declaration.
• Follows up on Central Bank correspondence and ensures timely responses.
• Monitors the AML system and reviews suspicious activity reports related to money laundering and terrorism financing, as submitted by the Bank’s AML Reporting Department.
• Develops and maintains a compliance manual containing Shariah compliance and regulatory compliance guidelines.
• Oversees the Board of Directors’ compliance with the Bank’s internal bylaws, employee training plans, and the application of Islamic banking governance standards, with a particular emphasis on Shariah governance environment.
• Verifies the accuracy of data and information submitted to the Central Bank of Iraq.
• Coordinates with the Risk Management Department to review and classify customer risk ratings on a monthly basis.
• In cooperation with the Risk Management Department, maintains a register of operational risks and retains specific policies and procedures for managing non-compliance risk, based on the compliance matrix and the Bank Board’s risk tolerance.
• The department conducts monthly follow-ups with the Credit Department regarding: Murabaha contracts granted through the Central Bank initiative and the Bank’s own funds. Murabaha contracts granted through salary domiciliation and for individual financing. The number of letters of guarantee issued and canceled. The ratio of cash credit to deposits, and the ratio of cash credit to capital. The number of delinquent clients. Quarterly follow-ups are conducted on the credit files.
• The department also coordinates with the Domiciliation Division to verify the number of Qard Hasan (interest-free loans) granted and the categories of beneficiaries, based on monthly reports received from the division. Monthly follow-ups are also conducted with the Cards Division to review: The number of ATMs. The number of damaged cards. The number of cards sold. The number of sales agents. The number of POS devices distributed. Special scenarios for prepaid cards will be incorporated.
• The department coordinates quarterly with the Legal Department to monitor the number of lawsuits filed by or against the Bank, if any. It verifies the accuracy of the data and information submitted to the Central Bank of Iraq.
• The Bank ensures that Compliance Department staff are enrolled in professional development and training courses, and allocates the necessary funding.

The Central Bank of Iraq’s inspection committees will evaluate the Compliance Department based on its training record.

 

Compliance Reporting Framework

The Compliance Officer at Asia Iraq Islamic Bank enjoys full independence in performing duties and reports directly to the Board of Directors. The officer is responsible for submitting two types of reports:

 

• Monthly Reports – Submitted to the Audit Committee, then forwarded to the Board of Directors, with a copy sent to the Managing Director. These reports include key observations across all departments for the purpose of corrective action.
• Quarterly Reports – Submitted to the Central Bank of Iraq for evaluating the Bank’s financial position and level of regulatory and Shariah compliance.
• In compliance with the regulatory guidelines on Anti-Money Laundering (AML), Counter-Terrorism Financing (CFT), and the Prevention of Weapons Proliferation for the year 2024, the Bank is committed to the following: Submission of semi-annual reports to the Central Bank of Iraq, with a copy provided to the Board of Directors, regarding detected violations. These reports shall include recommendations and corrective measures aimed at preventing recurrence in the future, and a copy shall be retained for review by the Central Bank of Iraq’s field inspection committees.
• Preparation of a periodic report every six months on AML/CFT activities and submission to the Central Bank of Iraq, accompanied by the observations of the Board of Directors.

 

HAREER MUDHAFAR AYOUP

Shariah Compliance and Regulatory Compliance Officer

 

 

Risk Management Department Report – 2024

Definition of Risk in a Financial Institution

Risk refers to the potential exposure of a financial institution to uncertain events that may lead to financial losses. To avoid such occurrences or to minimize their impact, and to respond to, confront, and mitigate these risks, a range of interrelated procedures and policies are implemented across various operational, investment, credit, liquidity, market, legal, and other levels, in order to keep exposure under control, including the use of stress testing.

 

Definition of Risk Management

Risk management includes all measures taken by the institution to reduce the negative effects of risks and to keep them within acceptable limits. The Risk Management Department is responsible for the following:

1. Monitoring the executive departments’ compliance with the approved risk appetite and thresholds.
2. The Risk Management Committee audits the activities and reports of the Risk Management Department and presents all developments to the Bank’s Board of Directors.
3. The Board of Directors ensures the independence of the Risk Management Department by granting it the necessary authority to access information across all bank departments, in cooperation with the Risk Management Committee and oversight departments.
4. The Board of Directors and the Risk Management Committee ensure that the Risk Management Department periodically conducts stress tests to assess the Bank’s capacity to absorb shocks and face high-risk situations. These are conducted based on the scenarios and assumptions used by the Bank, and the results are reviewed to adopt appropriate response measures.
5. Ensuring that the Bank retains sufficient capital to cover all risks it may encounter.
6. Additional Responsibilities of the Risk Management Department

The Board of Directors approves the Bank’s Risk Appetite Matrix, and the Risk Management Department is tasked with:

(a) Reviewing the Risk Management Framework before it is approved by the Board.

(b) Implementing the Risk Management Strategy and updating relevant policies and procedures.

(c) Studying and analyzing all types of risks faced by the Bank.

(d) Providing the necessary information related to the Bank’s risk exposures for disclosure purposes.

(e) Presenting recommendations to the Risk Management Committee, and recording exceptions to the acceptable risk levels.

 

 

 

 

Procedures Adopted by the Risk Management Department to Mitigate Risks

1. Control: Implementing control procedures aimed at preventing risks or minimizing their occurrence as much as possible.
2. Diversification: Diversifying funding sources, investments, and operations to reduce risk exposure.
3. Risk Sharing: Involving third parties in bearing certain risks, such as through insurance or guarantees.
4. Risk Acceptance: Accepting a certain level of risk by the Bank’s management, particularly in cases where the negative effects are minor and the cost of mitigation is high.
5. Risk Avoidance: Designing processes and operations in a way that avoids certain risks, based on predefined risk mitigation plans.

 

Compliance with Central Bank Requirements

The Bank affirms its full compliance with the Supervisory Work Manual and the Islamic Banks’ Risk Management Regulations, issued by the Central Bank of Iraq in August 2024.

 

LAYLA HARITH ASAAD

Director, Risk Management Department

 

Anti-Money Laundering and Counter-Terrorism Financing Department Report – 2024

The AML/CFT Reporting Department at the Bank operates with the objective of reducing money laundering and terrorism financing activities, combating criminal operations, and addressing their methods and schemes, in accordance with the provisions of Law No. (39) of 2015 on Anti-Money Laundering and Counter-Terrorism Financing, as well as the instructions and executive regulations issued by the Central Bank of Iraq.

The department’s main functions and activities carried out during the year 2024 are summarized as follows:

1. Establishing appropriate internal written policies, procedures, and controls for the effective implementation of the AML/CFT Law, its executive regulations, and all related instructions issued by the Central Bank of Iraq.

 

2. The Board of Directors bears primary responsibility for the effectiveness of the policies, procedures, systems, and internal controls related to AML/CFT, including approval of all AML/CFT-related frameworks.
3. Ensuring that the AML/CFT Reporting Department reports to the Board of Directors through the Audit Committee, in line with the Corporate Governance Manual issued by the Central Bank of Iraq. The department is responsible for implementing the Know Your Customer (KYC) policy and all related duties, including the preparation of periodic activity reports.
4. Conducting screening procedures and examining all customer names against local and international sanctions lists using highly accurate electronic systems, updated every 12 hours.
5. Making decisions to archive transactions in cases where no suspicion of money laundering or terrorism financing exists, with such decisions clearly documenting the reasons for non-suspicion.
6. Cooperating with both the Compliance Department and the Risk Management Department on all matters related to money laundering risks, including the preparation of joint reports or action plans.
7. Analyzing customer data to ensure that transaction sizes and account activity are consistent with the customer’s profile.
8. Detailing the efforts made during the reporting period with respect to unusual transactions and suspicious operations, and the measures taken in response.
9. Reporting the results of periodic reviews of the Bank’s AML/CFT systems and procedures, including identified weaknesses and recommendations, as well as internal system-generated alerts regarding unusual transactions.
10. Providing information on the number of alerts generated by the Bank’s AML/CFT systems that were reviewed, whether they warranted reporting, and the reasons behind each determination.
11. Review of AML/CFT Systems: The Bank’s approved digital AML/CFT system must be reviewed to ensure that, at a minimum, it includes:

• The minimum required scenarios.
• Automated and regular updates to blacklists issued by the AML/CFT Office and the Central Bank of Iraq.
• Customer risk classification based on risk levels.
• The system’s capacity to monitor customer compliance, and the ratio of transactions reviewed by the system compared to the Bank’s total transactions.
• A report on the Bank’s compliance with the AML/CFT system and the mechanism for applying the “Know Your Customer (KYC)” principle.

12. Development of a Correspondent Banking Policy: In coordination with the International Department, a policy has been prepared listing the correspondent banks the Bank deals with, along with their classification level based on ratings by global rating agencies, and assessing the AML/CFT risks associated with these banks and the due diligence measures applied.
13. Verification of account opening documentation for individuals and companies, including: Official documents, Proof of activities, Certificates of incorporation, Business licenses, Professional practice licenses, Invoices related to imports, etc.
14. Updating AML/CFT policies and procedures after being approved by the Board of Directors.
15. Adoption of anti-fraud policies and procedures, following Board approval.
16. The AML/CFT Department complies with the powers granted under Law No. (39) of 2015, and is currently working on incorporating new electronic AML system scenarios received from the Central Bank of Iraq and the Office for Combating Money Laundering and Terrorism Financing.

A contract has been signed with Biotech Company in this regard, and the department is in continuous coordination with the company to address any system updates or challenges required by the regulatory authorities.

17. The department complies with the Central Bank of Iraq’s directive No. 599/2/9 dated 24/10/2023 to facilitate account opening procedures. The Bank is currently working on separating KYC forms for: Individual accounts, Merchant accounts, Company accounts, Joint accounts to streamline and simplify the account opening process for customers.
18. The AML/CFT Department has prepared a “Know Your Employee (KYE)” form in accordance with the Central Bank’s directive No. 209/2/9 dated 02/04/2023.
19. The department prepares annual AML/CFT risk self-assessment reports, submits them to the Board of Directors for review, and forwards a copy to the Central Bank of Iraq once annually.
20. Participation with oversight departments in preparing supervisory action plans, based on a team-based approach, by segmenting audit tasks into steps that facilitate the identification of suspicious cases and customer risk classification to enhance monitoring and accelerate search processes. These concepts were programmed into the Bank’s electronic oversight system through the creation of a comprehensive database (manual and electronic) of Bank customers, their business activities, and the banking services provided to them — in coordination with the Risk Management Department.
21. Continued archiving of AML/CFT-related data in both paper and electronic formats for the year 2024.
22. Participation in various banking committees that serve customers, such as the Financial Opinion Committee, the Field Inspection Committee, and the Oversight Departments’ Committee responsible for conducting due diligence procedures for new customers, including preparing recommendations and collaborating with other control departments to investigate and apply enhanced due diligence regarding sources of funds.
23. Continued participation in and preparation of annual training plans, targeting all bank staff and AML/CFT department employees, including internal and online training programs sponsored by the Central Bank of Iraq. Training topics and workshop materials were selected based on the requirements of supervisory work, available services at the Bank, and the annual training plan aimed at enhancing departmental performance.
24. Continued operation and enhancement of the AML electronic system, with the department maintaining ongoing coordination with the system provider to address any issues or updates in line with regulatory authority requirements.
25. Preparation of quarterly reports required by the Central Bank of Iraq, the quarterly self-assessment form required by the AML/CFT Office, and monthly reports that are approved by the Board of Directors, containing recommendations, observations, corrective measures, and performance evaluations.

The department also tracks all circulars and directives from the Central Bank and the AML/CFT Office, especially those related to the department’s core duties, and uploads blacklisting directives to the Bank’s internal electronic sanctions list system.

26. Submitting annual FATCA compliance reports on U.S. accounts to the U.S. Department of the Treasury, in coordination with the Shariah Compliance and Regulatory Compliance Department and the IT Department, along with account verification and preparation of related declarations.
27. Continued annual updates of customer data, and data updates upon any change in customer information, in coordination with branches. The department also monitors update ratios quarterly and tracks dormant accounts.
28. Continued efforts to fulfill all electronic supervisory requirements, including building a regulatory database that integrates with the Bank’s core system and cross-references customer data across all branches, ensuring seamless integration with the core banking system.
29. Preparation of external correspondence for initiating formal business relationships with a number of international banks, rated by recognized global credit rating agencies, to build a robust correspondent banking base for the Bank’s external transactions. Coordination was also made with MOBIC Company for prepaid payment and correspondent banking services.
30. Ongoing operation of the electronic systems used by the department in accordance with work requirements, the instructions of the Central Bank of Iraq, and the Office for Combating Money Laundering and Terrorism Financing.
31. Approval of the revised organizational structure of the Reporting Department, aligned with the organizational structure issued by the Central Bank of Iraq under its regulatory directives.
32. Continued preparation of reports for the Financial Opinion Committee.
33. Immediate reporting and declaration of confirmed suspicious transactions to the Office for Combating Money Laundering and Terrorism Financing.
34. Preparation and implementation of a field visit plan for the Bank’s branches and offices, including auditing of executed transactions in coordination with the AML/CFT Liaison Officer, according to a predefined schedule of field visits.
35. Auditing of designated non-financial businesses and professions (DNFBPs) with open and closed accounts during the reporting period. The department continues to take the necessary measures to comply with AML/CFT regulatory requirements.
36. Continued response to official correspondence related to asset freezes on convicted or fugitive individuals and terrorists, and requests for information, including documentation of names in a dedicated database of domestic and international sanctions lists within the Bank’s system.
37. Continued organization and retention of electronic and paper records for transactions that were subject to “archival decisions,” including analysis of information referenced in each case.
38. The department regularly monitors all shareholders by requesting daily reports from the Bank’s Shareholders Division and implementing enhanced due diligence procedures for investor shareholders.
39. Continued follow-up with the Cards Division regarding: Number of ATM machines, Number of damaged cards, Number of cards sold, Number of agents, Number of POS devices distributed, with ongoing efforts to incorporate new monitoring scenarios specifically related to prepaid cards.

 

MARWA THAIR SAMI

Director, Anti-Money Laundering and Counter-Terrorism Financing Reporting Department

 

 

 

 

 

 

 

 

 

Ref. No.: S.1/39

Date: 20.05.2025

 

To: Esteemed Shareholders of ASIA ALIRAQ Islamic Bank for Investment and Finance (Private Joint Stock Company)

Subject: External Auditors’ Report on the Financial Statements for the Year Ended 31/12/2024

Greetings,

We have audited the consolidated financial statements of ASIA ALIRAQ Islamic Bank for Investment and Finance (P.J.S.C.), which include the consolidated statement of financial position as of December 31, 2024, the consolidated income statement, the consolidated statement of other comprehensive income, the consolidated statement of changes in shareholders’ equity, and the consolidated cash flow statement, in addition to the analytical disclosures and the accompanying explanatory notes, as well as the Bank’s annual report, all of which were prepared in accordance with the provisions of: Companies Law No. (21) of 1997 (as amended), Banking Law No. (94) of 2004, Islamic Banking Law No. (43) of 2015, and The relevant regulations and instructions issued under these laws. We have obtained all the information and clarifications we deemed necessary to perform our audit in accordance with the applicable laws and in conformity with international and local auditing standards and generally accepted audit procedures, which included the necessary tests related to the Bank’s activities falling within our scope of responsibility.

 

1. Management’s Responsibility for the Financial Statements:

The Bank’s management is responsible for the preparation and fair presentation of the consolidated financial statements and their disclosure in accordance with International Financial Reporting Standards (IFRS) and Iraqi legislation. Management is also responsible for the design and implementation of internal controls, particularly those related to the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error. This responsibility includes: Selecting and applying appropriate accounting policies, Making reasonable accounting estimates.

 

1. Auditors’ Responsibility:

Our responsibility is to express an independent professional opinion on the financial statements based on our audit, which was conducted in accordance with international and local auditing standards. These standards require that we: Comply with professional ethical rules, Plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. The audit includes: Performing selected tests of the evidence supporting the amounts and disclosures in the financial statements for the year ended 31/12/2024, Evaluating the appropriateness of accounting policies used and the reasonableness of management’s accounting estimates, Assessing the effectiveness of the internal control system. In our opinion, the audit evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. We note the following observations and disclosures:

 

1. Cash Balances:

In the course of auditing the Bank’s cash holdings, which amounted to a balance of IQD 94,665,969,680, we note the following:

 

1. Foreign currency cash balances as of 31 December 2024 were evaluated based on the following exchange rates:

No.	Foreign Currency	Exchange Rate
1	US Dollar	1,310 IQD per USD
2	Euro	1,394.364 IQD per Euro
3	Emirati Dirham	356.95 IQD per AED
4	Jordanian Dinar	1,848.455 IQD per Jordanian Dinar

 

1. Cash in the Bank’s Vaults:
   The balance of cash on hand as of December 31, 2024 amounted to IQD 33,685,970,000. The cash count results were reconciled with the records in both IQD and USD across all branches. The reconciliation was conducted based on the cash count reports submitted by the inventory committees formed at the General Administration and branch levels.
2. Cash with the Central Bank of Iraq:
   Reconciliations with the Central Bank of Iraq were completed and were in agreement with the records. The balance as of December 31, 2024 amounted to IQD 52,830,159,000.
3. Cash with Local Banks:
   The balance of cash with local banks as of December 31, 2024 amounted to IQD 5,305,731,000. We note the following:

1. We did not obtain balance confirmations from the local banks; reconciliation was based on bank statements only.
2. We did not receive the account statement from Al-Muttahid Bank as of December 31, 2024. The outstanding balance of IQD 5,302,089,000 is a carried-forward balance from the prior year, despite Asia Bank’s repeated requests for the account statement, including their latest letter no. 3/2/5 dated 2025/01/02.

Upon reviewing the audit results conducted in Q1 2024 by the Central Bank of Iraq – Banking Supervision Directorate – Offsite Audit Division, it was observed that the Central Bank instructed Asia Iraq Islamic Bank to form a 100% provision on the aforementioned balance, in accordance with IFRS 9, due to liquidity issues at Al-Muttahid Bank, as referenced in Central Bank Circular no. 149/2/9 dated 2022/04/12.
We recommend full compliance with the Central Bank’s instruction to form the necessary provision.

1. Cash with Foreign Banks:
   The balance of cash with foreign banks as of December 31, 2024, amounted to IQD 2,844,108,000. The reconciliation was performed based on SWIFT confirmations for the accounts held with the foreign banks.

 

2. Credit Facilities

Based on our audit procedures of the Bank’s credit facilities, we observed the following:

1. Direct Credit Facilities – Islamic Financings:

1. The total balance of direct credit facilities (Islamic financings) amounted to IQD 91,149,004,613, compared to IQD 90,108,352,176 in the previous year, indicating a 1% increase, which reflects stable financing activity.
2. The ratio of direct credit facilities (excluding those financed by the Central Bank of Iraq) to total deposits was 183%, for which the Bank obtained an exemption from the Central Bank’s standard limit of 75%, according to letter no. 29533/3/9 dated 2022/11/20.
3. The non-performing Islamic financings (including Murabaha and Qard Hasan that are overdue) amounted to IQD 5,919,143,854, representing 6.5% of the total granted financing.
4. We audited the supporting documentation for the top 20 Murabaha and Ijara financings granted by the Bank. We found that the remaining principal for these top 20 financings was IQD 57,481,650,093, out of a total of IQD 88,623,692,000, which represents 65% of all financing granted by the Bank under Murabaha and Ijara contracts. This indicates a significant credit concentration when compared to the total financing portfolio.

 

Second: Indirect Credit Facilities (Contingent Credit):

1. The balance of contingent credit, represented by letters of guarantee, increased by 101% compared to the previous year, reaching IQD 100,124,399,496 as of December 31, 2024, compared to IQD 42,360,306,492 as of December 31, 2023, indicating a significant expansion in contingent credit.
2. The ratio of contingent credit (issued letters of guarantee) to capital and sound reserves was 39%.
3. Cash collaterals for letters of guarantee as of December 31, 2024, amounted to IQD 20,464,734,163, representing 20.4% of the issued letters of guarantee.
4. The balance of the account “Debtors of Paid Letters of Guarantee” according to the bank’s records was IQD 131,537,500, representing letters of guarantee confiscated and paid by the bank to the beneficiaries and referred to the Legal Department. It is noted that the total amount of letters of guarantee requested for confiscation by beneficiaries during 2024 was IQD 1,131,400,000.
5. The total uncollected commissions on letters of guarantee amounted to IQD 211,820,467 as of December 31, 2024, compared to IQD 120,563,970 as of December 31, 2023, showing a 76% increase.

 

Third: Credit Granted to Related Parties
The total amount of Murabaha financing granted to related parties was IQD 34,332,277 thousand, and the total amount of letters of guarantee granted to related parties was IQD 5,800,100 thousand as of December 31, 2024. It is noted that retroactive approval was obtained from the Central Bank of Iraq under letter No. 9/5/260 dated March 6, 2025, with an emphasis on the importance of obtaining prior approvals in the future.

 

3– Investments
Upon auditing the long-term investments with a balance of IQD 121,464,311,518, we note the following:

1. The total investment revenue for the year 2024 was IQD 9,757,047,286, representing 8% of the total investments for the current year, compared to investment revenue of IQD 2,087,126,339 in 2023, which represented 2% of the total investments for the previous year.
2. Subsidiary Companies:
   • The bank has four limited liability subsidiary companies:
     • Three of them are 100% owned by the bank, with fully paid capital.
     • One company, Asia Gateway for General Trading Ltd., is 90% owned by the bank.
   • These companies appear under the statement of long-term financial investments.

Company Name	Investment Amount (IQD)	Bank’s Ownership Percentage
Asia Gateway Real Estate Investments Company	10,000,000,000	100%
Asia Gateway for General Trading Company	4,500,000,000	90%
Al-Kassab Brokerage Company for Selling and Purchasing Financial Securities	300,000,000	100%
Asia Gateway Agricultural Investments Company	8,500,000,000	100%
Total	23,300,000,000

 

1. The bank did not prepare consolidated financial statements combining the bank’s financial data with that of its subsidiary companies. Instead, it sufficed by presenting the investment amounts in these companies under the bank’s investments and including the profits and losses of these companies within the bank’s income statement.

 

1. Upon reviewing the financial statements for the year ended 2024/12/31, audited by the external auditors and certified by the Board of Accounting and Auditing Profession Oversight, we observed the following:

No.	Company Name	Surplus (Deficit) for the Current Year	Reserves (as of 2024/12/31)	Cash (as of 2024/12/31)
1	Asia Gateway Real Estate Investments Company	10,817,590	11,241,253	2,940,639,221
2	Asia Gateway for General Trading Company	24,134,846	27,663,490	3,785,522,188
3	Al-Kassab Brokerage Company for Buying and Selling Financial Securities	484,925	10,176,047	303,875,165
4	Asia Gateway Agricultural Investments Company	17,713,786	18,553,796	2,912,866,900
	Total	53,151,147	67,634,586	9,942,903,474

We would like to clarify the following:

• The total surplus of the above-mentioned companies for the fiscal year ending on 2024/12/31 amounted to IQD 53,151,147, with a return on investment ratio of 0.23%. Although this percentage increased compared to the previous year’s 0.13%, the activities of the subsidiaries require a study to identify the reasons behind the low return on invested capital.
• The unused cash shown in the accounts of all subsidiaries amounted to IQD 9,942,903,474, representing 43% of the invested capital. This percentage indicates excess liquidity, which requires proper management to mitigate associated risks.
• There is a real estate investment financing contract between the bank and Asia Gateway Company, under which the company receives IQD 58 billion out of a total of IQD 151 billion. The profit distribution is 80% to the bank and 20% to the company from the net profits realized by Asia Gateway from the contract.
• The project was classified in the company’s 2024 year-end accounts under the item “Projects Under Construction” with an amount of IQD 63,695,575,000, even though it is an investment project and cannot later be classified under the company’s fixed assets.
• The balance of creditors / credit current accounts as of 2024/12/31 for Asia Gateway Real Estate Investments Company was IQD 63,600,000,000, exceeding 300% of the company’s capital (IQD 10 billion) and other owner’s equity, contrary to Article (28/2) which stipulates that “the ratio of liabilities to the total of the company’s capital and other owner’s equity shall not exceed 300%.” However, the Central Bank’s approval was obtained for the financing according to its letter No. 6876/3/9 dated 2022/3/27.

3- The balance of Islamic sukuk amounted to IQD 4,929,916,450, representing the market valuation of those sukuk as of 2024/12/31.

4- The balance of Islamic participations amounted to IQD 80,293,082,388. It is noted that the bank did not achieve any revenue during this year. The participations are as follows:

a- An Islamic participation with Asia Gateway Real Estate Investments Company amounted to IQD 58 billion on 2022/3/27. The purpose of the participation contract with Asia Gateway (a 100% owned subsidiary of the bank) is to establish a residential complex (Sky Baghdad Residential) at Al-Muthanna Airport, consisting of a group of residential towers averaging 22 floors each, in addition to the services attached to the project. An additional IQD 22,000,000,000 was added based on the Central Bank’s approval via its letter No. 14749/5/9 dated 2024/12/4. The project has been financed with IQD 4 billion, bringing the total financing to IQD 62 billion as of 2024/12/31.

31. An Islamic participation agreement was made with Golden Iraq Gateway Company for Pharmaceutical Industry in the amount of IQD 23,273,809,000, of which IQD 18,293,082,388 remained as of 2024/12/31. The purpose of the participation contract is to establish a medical supplies factory in Karbala Governorate through a diminishing Musharakah agreement ending in ownership, starting from 2021/1/4 and ending on 2024/3/8 with Golden Iraq Gateway Company. The factory is to be built by the company on land located in Holy Karbala belonging to the Holy Shrine of Imam Hussein (Al-Ataba Al-Hussainiya Al-Muqaddasa).According to the contract, the total participation amount is IQD 23,000,000,000, divided into 84 shares, with each share valued at IQD 273,809,524. The bank owns 83 shares, equivalent to IQD 22,726,190,476, while the company owns one share. One share is sold monthly to the company until the contract ends. Later, an annex was added to the contract with an amount of IQD 273,809,000, bringing the total contract amount to IQD 23,273,809,000.

 

 

4. Application of International Financial Reporting Standards (IFRS):

The bank continues to apply International Financial Reporting Standards (IFRS) and has prepared the consolidated financial statements for the audited year in accordance with these standards and based on the instructions of the Central Bank of Iraq. It adopted the historical cost principle in valuing properties, equipment, and other assets instead of revaluation.

The bank has implemented IFRS 9, calculating the required provisions to address changes in expected credit losses for Islamic financings, participations, and cash, guided by the Central Bank of Iraq’s instructions in its letter No. 466/6/9 dated 2018/12/26 concerning the application of IFRS 9.

The bank assumed a Loss Given Default (LGD) rate of 45% for Stage 1 and 100% for Stage 2 and 3, without considering the risk mitigants (collaterals) — especially since customer guarantees in Stage 1 are in the form of checks and promissory notes, the LGD rate should be 100%, not 45% as assumed in the methodology currently applied in the calculations.

The implementation results of IFRS 9 and the provisions allocated for expected credit losses were as follows: (the continuation likely includes a breakdown of provisions, which was not included in this excerpt).

Details	Current Year	Previous Year
Provision for contingent liabilities	1,640,989,044	671,069,218
Provision for investments (participations)	1,488,633,740	1,679,377,967
Provision for Islamic financings (credit financing)	2,607,319,479	3,329,027,706
Provision for cash	361,067,434	399,584,865
Provision for other assets	212,000,000	0
Total provisions amount	6,310,009,697	6,079,059,756

 

Although the bank is committed to applying International Financial Reporting Standard No. (9), the provisions calculated are not sufficient to cover the expected losses from the financial instruments held by the bank. Therefore, we recommend increasing the amount of provisions to align with the magnitude of these risks.

 

5. Property, Plant, and Equipment

The historical cost principle was adopted in the valuation of property, equipment, and other assets, rather than using revaluation.

Regarding transportation vehicles, the bank did not conduct an inventory count of its vehicles, which are recorded at a cost of IQD 538,888,500, despite the issuance of Administrative Order No. 287 by the bank’s management on 2024/12/16, forming committees to carry out the annual inventory of fixed assets. This directive was based on the Bank Board of Directors’ decision as stated in the minutes of meeting No. 19 held on 2024/12/16.

 

6. Other Assets and Liabilities

First: Other Assets
a. The balance of other assets for the current year amounted to 2,393,363,580 IQD, compared to 1,717,364,199 IQD in the previous year — an increase of 39%. The ratio of other assets to current assets stood at 3%.
b. The balance of guarantee letters receivables paid was 131,537,500 IQD as of 31/12/2024, while it was 0 IQD in the previous year.
c. The balance of uncollected commissions / guarantee letters was 211,820,467 IQD as of 31/12/2024, compared to 120,563,970 IQD in the previous year.
d. The provision for other assets for the current year was 212,000,000 IQD in accordance with IFRS 9, while it was 0 IQD in the previous year.

 

Second: Other Liabilities
a. The balance of other liabilities increased as of 31/12/2024 to 38,667,635,290 IQD, marking an increase of 14,551,728,826 IQD compared to the previous year’s amount of 24,115,906,464 IQD.
b. It was noted that the balances of provisions were merged with other liabilities in both the current and previous years. We recommend separating these balances to enhance the appropriate presentation of the financial statements.
c. The audit of the balances of the aforementioned items was based on statements provided by the bank, as confirmations of these balances from the concerned parties were not provided.

 

7. Deposits and Current Credit Accounts
8. The balance of current accounts as of 31/12/2024 amounted to 32,466,726,239 IQD, compared to 22,461,329,434 IQD in the previous year — an increase of 45%.
   b. The balance of customers’ credit current accounts for the current year reached 23,281,656,635 IQD, up from 12,529,951,737 IQD the previous year — an increase of 10,751,704,898 IQD, or 86%.
   c. The balance of savings accounts rose to 598,685,111 IQD, an increase of 257,073,378 IQD (or 75%) compared to 341,611,733 IQD the previous year.
   d. The balance of fixed deposits was 7,113,992,650 IQD as of 31/12/2024, compared to 6,536,061,530 IQD the previous year — an increase of 577,931,120 IQD, or 9%.
   e. The above increases in customer credit current accounts and deposits indicate positive performance in attracting and satisfying customers. We recommend intensifying promotional campaigns and offering special deals to expand the customer base and increase deposits.
   f. The audit of the balances of these items relied on the statements provided by the bank.

 

8. Loans Received from the Central Bank
   The balance of loans received from the Central Bank (CBI Initiative) decreased by 5,248,447,856 IQD, reaching 19,758,803,718 IQD as of 31/12/2024, compared to 25,007,251,574 IQD as of 31/12/2023.

 

 

 

9. Shareholders’ Equity
10. Capital Increase

We reviewed the Central Bank’s circular No. 439/2/9 dated 2023/08/02 regarding the requirement for banks to increase their capital to 400 billion IQD by no later than 2024/12/31. This was followed by the Central Bank’s letter No. 31238/2/9 dated 2023/11/07 addressed to Mosul Bank for Development and Investment, with a copy sent to Asia Iraq Islamic Bank for Investment and Finance.

Later, the Central Bank issued letter No. 5229/4/9 dated 2024/04/30, which included a decision to postpone the capital increase for banks currently barred from dealing in U.S. dollars, pending audit procedures by auditing firms.

Subsequently, the Central Bank issued letter No. 7669/4/9 dated 2024/07/02 addressed to Al-Taif Islamic Bank and copied to Asia Iraq Islamic Bank for Investment and Finance, allowing a capital increase if desired.

 

1. Change in Shareholders’ Equity

Shareholders’ equity increased from the beginning of the year by IQD 4,075,563,768, representing the net profit for the year after income tax.

 

10. Profit and Loss Account

The bank recorded a profit of IQD 4,794,781,768 before tax, compared to IQD 1,655,860,420 in the previous year — an increase of 190%. The following points are noted:

2023. Revenues for the current year increased by 93% compared to the previous year, reaching IQD 18,672,283,458 as of 31/12/2024, compared to IQD 9,666,133,647 as of 31/12/2023.
2024. Revenues from domestic financial investments amounted to IQD 9,255,991,561, accounting for 50% of the total revenue for the current year.
2025. Total expenses increased by 73%, reaching IQD 13,877,501,690 in the current year, compared to IQD 8,010,273,226 in the previous year.

A detailed breakdown of total expenses is provided in the following table.

 

 

 

 

Details	2024/12/31 (IQD)	2023/12/31 (IQD)
Salaries and wages	2,094,415,642	1,961,932,686
Operating expenses	8,194,939,138	3,475,050,451
Provisions and write-offs	3,581,496,963	2,565,389,593
Banking operations expenses	6,649,947	7,900,496
Total Expenses	13,877,501,690	8,010,273,226

 

11. Risk Management:
12. The Risk Department confirmed that there is no information that could lead to a material misstatement caused by fraud or error. The department includes a Operational Risk Unit, which prepares a monthly form distributed to all departments and branches of the bank to disclose any operational risks that may occur. These are included in the monthly report, along with recommendations submitted to executive management for the purpose of addressing those risks.
13. Both the Risk Management Department and the Information Systems Department informed us that no cases of fraud or material errors have been identified in any of the bank’s departments or branches.
14. The number of employees in the Risk Management Department was five (5) in the year 2024.
15. The department director obtained the following international certifications:

• Certified Islamic Specialist in Risk Management, issued by the General Council for Islamic Banks and Financial Institutions.
• Certified Risk Expert, issued by the German Academy in Frankfurt.

12. Anti-Money Laundering and Counter-Terrorism Financing Law:

The bank took sufficient measures to prevent money laundering and terrorist financing during the audited year. Through our review of the accounting records and the nature of the banking operations carried out by the bank, no evidence was found indicating that any banking operations were related to money laundering or contributed to terrorist financing. Therefore, the bank is in compliance with Law No. (39) of 2015 on Anti-Money Laundering and Counter-Terrorism Financing and the instructions of the Central Bank of Iraq.

 

1. The bank implemented adequate measures to prevent money laundering and terrorist financing. These measures were executed in accordance with Law No. 39 of 2015 and the regulations and instructions issued by the Central Bank of Iraq. We reviewed the reports of the Anti-Money Laundering and Counter-Terrorism Financing Reporting Department sent to the Central Bank of Iraq, prepared in line with legal and regulatory requirements.

The bank operates the AML system provided by PIOTECH, a customer risk classification system and product risk classification system supplied by Prototype, and the GOAML system from the Anti-Money Laundering Office.

The AML electronic system is linked to the bank’s accounting system (BANKS).

The number of scenarios applied by the system is 139.

The blacklists are updated regularly and automatically.

Some operations were flagged by the AML system and were addressed by the department during the year.

 

1. A manual of policies and procedures for the Anti-Money Laundering and Counter-Terrorism Financing Department has been prepared, covering:

The stages of the money laundering process

The importance of combating money laundering and terrorism financing

The responsibilities of the AML Reporting Department Manager

The department’s responsibilities within the bank

Penalties applicable to the bank

Know Your Customer (KYC) principle

Due diligence procedures

 

2024. The number of employees in the Shariah Compliance Department was five (5) in 2024.

 

1. The Deputy Director of the department obtained the ACAMS certification, issued by the Association of Certified Anti-Money Laundering Specialists.

 

13. Compliance Auditor and Sharia Board Reports

 

First: Compliance Auditor

We reviewed the compliance auditor’s reports for the audited year. These include monthly reports submitted to the Bank’s Board of Directors and quarterly reports submitted to the Central Bank of Iraq, all prepared in accordance with the Central Bank’s regulations.

 

 

 

1. The reports included the following:

• Key indicators regarding the financial position of the bank.
• Indicators of calculated ratios such as capital adequacy ratio, liquidity ratio, cash credit to deposits ratio, in addition to other financial ratios.
• Matters related to the functioning of the Bank’s Board of Directors.
• Legal requirements.

 

1. The mentioned department follows up on the remarks of the Central Bank of Iraq related to business monitoring and the results of the bank’s desk audits, and works to resolve them.

 

2024. The number of employees in the Sharia Compliance Department was three (3) in 2024.

 

1. The number of training courses attended by the Sharia Compliance Department staff was two (2).

 

1. Certifications obtained by the department’s staff:

 

• The Sharia Compliance Officer and his deputy hold the Certified Islamic Specialist in Governance and Compliance certificate issued by the General Council for Islamic Banks and Financial Institutions.

 

• One staff member of the Sharia Compliance Department holds the Certified Compliance Manager (CCM) certificate issued by the Global Compliance Institute.

 

Second: Internal Sharia Audit

1. The Internal Sharia Audit System includes the necessary procedures appropriate to the size and nature of the bank’s operations.
2. The reports of the Internal Sharia Control and Audit Department were reviewed, and they were comprehensive, detailed, and clearly identified the remarks resulting from the audit process.
3. The activities of the Internal Sharia Audit Department included auditing the operations of the following departments:

 

• Financial Operations Department
• Credit Department
• Legal Department
• Administrative Department
• Anti-Money Laundering and Terrorism Financing Department
• Investment Department
• Information Technology Department
• Risk Management Department
• Payments Department
• Financial Inclusion Department
• Branch Operations Department

 

And all other activities of the bank.

 

1. We reviewed the annual plan of the Internal Sharia Audit Department and the reports prepared by the department and submitted to us during the audit year. We note the following:

• In our opinion, the plan and its execution were appropriate and covered all the bank’s operations.
• The number of employees in the Internal Sharia Audit Department was three (3) in the year 2024.
• The number of training courses attended by the Internal Sharia Audit Department staff was three (3), in addition to two (2) workshops.
• The Head of the Internal Sharia Audit Department holds the Certified Sharia Adviser and Auditor (CSSA) certificate issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

 

14. Interim Financial Statements

The condensed interim financial statements of the bank for the first, second, third, and fourth quarters were reviewed in accordance with International Standard on Review Engagements (ISRE 2410) concerning the review of interim financial information, and the quarterly financial statements for the year 2024 were issued accordingly.

 

15. Corporate Governance:

We reviewed the bank’s performance related to the Corporate Governance Manual, and in our opinion, the bank is generally compliant with both quantitative and qualitative requirements through the Balanced Scorecard Model. The Board of Directors and bank management are committed to adhering to the Corporate Governance Manual and implementing its directives concerning disclosure and transparency practices.

 

16. Results of the Central Bank’s Desk Audit:

We reviewed the correspondence from the Central Bank regarding the results of the quarterly budget audits, which are submitted to the Central Bank at the end of each quarter. The bank is following up on the implementation of the Central Bank’s instructions regarding the quarterly budgets and any other operational procedures determined by the Central Bank for the bank.

 

17. Other Disclosures:
18. The bank uses an electronic system to record financial transactions and financial data submitted to the Central Bank, ensuring it matches the contents of its records and books, as well as the systems and instructions of the Central Bank. As for documents, they are maintained in paper form, stored in secure locations, and archived electronically. The bank’s internal control procedures and accounting systems include the necessary actions to ensure the accuracy and integrity of the data in a manner proportionate to the size of the bank’s operations.

 

1. The bank has the ability to meet its obligations to depositors in terms of both solvency and liquidity, as detailed below:

Description	Amount (in Billion Dinars)
Current account balances for companies and individuals as of 31.12.2024	23,282
Savings and fixed deposits as of 31.12.2024	7,713
Total	30,995
Note: Cash in hand with the treasury, central bank, and local and foreign banks	94,666

Also, the bank’s legal liquidity ratio for the audited year was (85%), while the Islamic liquidity ratio