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Annual Report

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Annual Report

Chairman’s Address

In the Name of Allah

 the Most Gracious, the Most Merciful
Peace and blessings be upon our Prophet Muhammad, his family, and all his companions.

Respected Members of the General Assembly,
Honored Guests,
Peace, mercy, and blessings of Allah be upon you.

Welcome, and we are honored by your presence at this meeting. We thank you for your attention and participation in discussing the agenda of the General Assembly, the annual report, and the financial statements of the bank as of December 31, 2023.

The bank, at the level of its Board of Directors and executive management, has diligently worked to fully comply with the laws, regulations, and professional controls governing banking activities at both local and international levels. Additionally, the bank adheres to international standards to strengthen its financial position by avoiding risk concentration and complying with International Financial Reporting Standard (IFRS) 9, which pertains to financial, guarantee, and investment activities. The bank also complies with the Anti-Money Laundering and Counter-Terrorism Financing Law No. (39) of 2015, acquiring advanced electronic systems to enhance compliance and prevent the execution of suspicious financial transactions, as well as combating financial fraud and corruption.

During 2023, the bank witnessed expansion in providing various banking services and made exceptional efforts to overcome the restriction on its inability to deal in US dollars, which significantly and negatively impacted the bank’s aspirations, development, and reputation. Under the supervision of the Central Bank of Iraq, the bank entered into a contract with the American company K2 Integrity, which began actual auditing at the end of 2023. All required information has been provided, and we await the audit results.

We hope the results will be positive and in the interest of the bank. Despite these challenges, the bank continues to deliver and implement the highest levels of compliance in completing its banking transactions. Success is from Allah.

And peace, mercy, and blessings of Allah be upon you

Wisam Abdul-Salam Jaafar
Chairman of the Board of Directors

  1. Respected Shareholders of Asia Iraq Islamic Bank for Investment and Finance,
  2. In accordance with Articles (117) and (134) of the Companies Law No. (21) of 1997, we arpleased to present to you the annual report and the financial statements of the bank as of December 31, 2023General Information about the BankThe bank was established under the founding license issued by the Central Bank of Iraq / Banking Supervision Directorate, numbered 9/3/4935 on March 5, 2018, with a capital of 100 billion Iraqi Dinars (one hundred billion Iraqi Dinars). The license permits banking activities in accordance with applicable laws, including the Central Bank of Iraq Law No. (56) of 2004, the Banking Law No. (94) of 2004, the Islamic Banking Law No. (43) of 2015, and the Anti-Money Laundering and Counter-Terrorism Financing Law No. (39) of 2015. The bank is subject to supervision and monitoring by the Central Bank of Iraq.    The bank was also listed on the Iraq Stock Exchange, and the license was amended to shift from       financial transfer activities to Islamic banking activities. Subsequently, the trade name was changed from United Company for Financial Transfers to Asia Iraq Islamic Bank for Investment and Finance, based on the approval letter issued by the Ministry of Trade / Companies Registration Directorate No. Sh/H/19255 on July 4, 2017.

The bank commenced its banking operations on April 15, 2018, as per the Central Bank of Iraq’s directive in letter 9/3/7882 dated April 5, 2018.

The bank’s capital was later increased to 250 billion Iraqi Dinars (two hundred and fifty billion Iraqi Dinars), based on the Companies Registration Directorate’s letter No. 33281 dated November 17, 2021.

The bank’s goals and ambitions

The bank aims to achieve developmental, economic, and social goals for which it was established, in accordance with the relevant banking laws and the principles of Islamic Sharia in conducting financial transactions. It seeks to achieve financial inclusion for all members of society (individuals and companies) to develop the funds of shareholders and depositors, deliver reasonable legitimate returns, and contribute to balanced development between liquidity and financing.

The bank has developed advanced human capabilities for its employees by enabling them to obtain specialized certifications in banking and finance, to apply the best local and international standards in conducting transactions. In addition, the bank utilizes the latest technological tools, systems, and modern banking systems, such as advanced programs and systems to curb suspicious financial transactions involving money laundering and terrorism financing.

The bank offers its services to a large segment of society, including individuals and companies, by providing financing based on Islamic principles for small, medium, and large projects to contribute to boosting the national economy and reducing unemployment. Additionally, it provides easy loans to different social segments to improve their financial status, as well as investing in various economic sectors with economic feasibility, whether in commercial, industrial, agricultural, or construction sectors.

The bank also offers various banking services using advanced technology, at the lowest possible cost and with the utmost speed and accuracy. Moreover, the bank aims to expand its banking and financial relationships at both the local and international levels with banks that have an international credit rating. The bank emphasizes compliance with all instructions issued by the Central Bank of Iraq to develop the banking sector. This commitment is demonstrated by its rating of (3A) according to the CAMEL classification issued by the Central Bank of Iraq in 2022, as well as obtaining a (B-Positive) rating in 2022 from the International Islamic Credit Rating Agency, accredited by the Central Bank of Iraq.

Core Values, Vision, and Mission

Core Values:

Emphasizing cooperation and strengthening the role of ethical values in accomplishing tasks.

Promoting job discipline and ensuring it is dedicated to the services provided.

Commitment and dedication to improving the professional and service environment, offering the best services, and ensuring the integrity of the work and its outputs.

Fostering the development of employee expertise.

Emphasizing transparency and focusing on customer service, recognizing that the customer is the most important.

Providing services that satisfy the customer and completing their tasks quickly, fairly, and with equality.

Adhering to laws and regulations in conducting transactions, while ensuring compliance with Islamic Sharia principles and provisions.

Ensuring job stability, security, and responsibility.

Adhering to corporate governance principles in setting and achieving goals, advancing banking operations, and considering the social work environment.

Respecting the rights of depositors and shareholders.

Focusing on the development of compliance capabilities, strengthening anti-money laundering and counter-terrorism financing efforts, and combating fraud and organized crime.

Enhancing the role of risk management in overcoming or minimizing risks and monitoring and achieving the goals set by the bank’s risk management department and the risk management committee.

Vision:

Achieving customer satisfaction by providing the best services that meet their needs, whether the customer is an individual or a company.

Acquiring advanced electronic devices and programs to facilitate the completion of banking services.

Expanding the provision of various banking services across different regions of Iraq to achieve the principle of financial inclusion.

Developing the expertise of employees so that their performance is reflected in the provision of faster, better services at lower costs.

Creating clear policies, programs, and strategies that are easy to apply, track, and correct as necessary.

Promoting healthy competition based on customer service, earning their satisfaction through best practices, practical methods, advanced technological tools, and providing services at the lowest prices and fastest delivery.

Mission:

  1. Emphasizing teamwork at all levels to overcome obstacles and challenges facing future banking operations in order to enhance the delivery of the best and most diversified banking services.
  2. Continuing efforts to provide various electronic services, such as issuing electronic payment cards in different forms and types, and delivering them as quickly as possible and at the lowest costs, in response to recent government directions and those issued by the Central Bank of Iraq to expand the use of electronic payment in monetary transactions, financial settlements, and raising community awareness on this matter.
  3. Focusing on financial literacy and combating financial crimes, fraud, and corruption to ensure the execution of sound financial transactions, while communicating with the public—whether individuals or companies—via publications, social media, and easy and fast explanations of the bank’s diverse services.
  4. Continuing to expand and provide the best services in financing and investment across various economic, social, and environmental sectors to meet public demand and contribute to national development.
  5. Maximizing financial resources, strengthening the financial position, and achieving attractive returns for depositors and investors.

Original Board Members

No. Full Name Position Number of Shares Owned
1 Wissam Abdulsalam Jafar Chairman of the Board 4,900,000,000
2 Hussain Taleb Ali Vice Chairman of the Board 6,574,440,000
3 Mohammad Abduljabar Abdulhamid Member/Authorized Manager 5,000,000
4 Ahmad Suleiman Saleh Member 1,000,000
5 Aziz Saleh Mahdi Member 2,110,000,000
6 Ali Mohammed Ali Member 50,000
7 Adnan Zidan Abdulaziz Member 30,000

Reserve Board Members

No. Full Name Position Number of Shares Owned
1 Atheer Mohammed Jwad Member 10,000
2 Jassim Mohammed Rahman Member 7,680,000,000
3 Dr. Saad Abdul Mohammed Hwas Member 50,000
4 Sarah Adel Mukhlef Member 10,000
5 Gaith Arkan Abdullah Mohammed Member 10,000
6 Taybah Majid Hamid Ahmed Member 10,000
7 Atheer Abdulkhaleq Mohammed Saleh Member 10,000

 
Shariah Board Members
No.
Full Name
Position
1
Dr. Raghad Hassan Ali
Head of the Board
2
Faiq Fakhri Ahmed
Member
3
Mohammed Abdul Salam Ahmed
Member
4
Osama Mahdi Mazal
Member
5
Ahmed Ibrahim Haza’a
Member
 
 
 
 
 
 
 
 
Full Name
Nationality
Date of Birth
Percentage of Contribution
Abdul Salam Jaafar Mahdi
Iraqi
15/03/1957
7.18%
Khaldoun Rateb Mahmoud Asmar
Jordanian
02/11/1964
9.976%
Sura Imad Jawad Al-Obeidi
Iraqi
13/09/1987
9.99%
Haider Talib Ali Al-Jubouri
Iraqi
28/10/1972
7.197%
Huda Abdul Jabbar Abdul Hamid
Iraqi
20/05/1964
8.968%
Farhan Abdul Jabbar Abdul Hamid
Iraqi
25/05/1957
5.218%
Duaa Abdul Amir Baqir Al-Asadi
Iraqi
04/01/1985
5.034%
Shareholders with 5% or more contribution
 
 
 
Board of Directors
First: Responsibilities and Duties of the Board of Directors:
Setting comprehensive policies for the bank, including clear objectives and goals, outlining the institution’s core objectives.
Supervising the executive management, monitoring their performance, and ensuring the financial health and solvency of the bank.
Reviewing the performance of the executive management, defining, measuring, and monitoring performance and progress toward achieving objectives.
Bearing responsibility for the soundness of all banking procedures.
Fostering a culture of ethical standards, integrity, and professional conduct.
Monitoring the implementation of decisions made by the General Assembly and ensuring compliance with laws, regulations, standards, and instructions governing banking operations.
Maintaining good relations between the board, executive management, and stakeholders.
Encouraging cooperation, mutual understanding, and the exchange of ideas and suggestions that serve the banking business and enhance the knowledge and experience of board members.
Ensuring that members sign the meeting minutes and informing the Central Bank of Iraq about any significant information.
Inviting relevant parties, as required by law, to attend the bank’s General Assembly meetings.
Following up on the implementation of the General Assembly’s decisions.
Implementing the provisions of Article (6) of the Corporate Governance Guide for Banks issued by the Central Bank of Iraq, in addition to the tasks and responsibilities mentioned above.
 
 
Second: Committees Emerging from the Board of Directors
 
Based on the Corporate Governance Guide for Banks issued by the Central Bank of Iraq, Article (12) thereof, and in reference to the Circular of the Central Bank of Iraq – Currency Control Department No. 9/3/386 dated 6/10/2022, which includes the formation of committees emerging from the Board of Directors with only original members, and in accordance with the Board of Directors’ decision No. (23) dated 20/12/2022, it was decided to re-establish the committees as follows
 
1- Corporate Governance Committee:
Wissam Abdul Salam Jaafar – Chairman
B. Dr. Adnan Zidan Abdul Aziz – Member
C. Ahmed Suleiman Saleh – Member
 
 
 
2- Audit Committee:
A. Ali Mohammed Ali Al-Bazi – Chairman
B. Hussein Taleb Ali – Member
C. Aziz Saleh Mahdi – Member
 
 
3- Risk Management Committee:
A. Dr. Adnan Zidan Abdulaziz – Chairman
B. Hussein Taleb Ali – Member
C. Ahmed Suleiman Saleh – Member
 
4- Nomination and Remuneration Committee:
A. Aziz Saleh Mahdi – Chairman
B. Hussein Taleb Ali – Member
C. Ahmed Suleiman Saleh – Member
 
With the guarantee of easy access for the committees under paragraph (2, 1) of Article (12) of the Corporate Governance Guide for Banks, which ensures transparency in performance, ease of access to information, while considering specialization, experience, neutrality, and the absence of conflicts of interest.
Third: Information about the Board Members:
Wissam Abdul Salam Jafar Al-Azzawi
Date and Place of Birth: Baghdad / 7/9/1985
Educational Qualifications: Bachelor’s in Business Administration (American University / Dubai)
Shares Owned: 4,900,000,000 shares
Experience:
Extensive financial and banking experience through leadership positions in various financial and commercial institutions.
Provides financial and banking consultancy due to accumulated expertise.
Holds a Certified Islamic Bank Manager certificate and has attended several financial and banking workshops, conferences, and seminars.
Businessman.
Currently holds the position of Chairman of the Board of Directors of the bank.
 
Hussein Taleb Ali Al-Jubouri
Date and Place of Birth: Baghdad / 28/9/1966
Educational Qualifications: Bachelor’s in Agricultural Sciences / Baghdad
Shares Owned: 6,574,440,000 shares
Experience:
Businessman.
Wholesale trader with expertise in economic, commercial, and financial matters.
Attends commercial, financial, and banking conferences organized by the government and civil society organizations.
Currently serves as Vice Chairman of the Board of Directors.
Mohammed Abdul Jabar Abdul Hamid Al-Azzawi
Date and Place of Birth: 22/1/1974 / Baghdad, Al-Hurriya
Educational Qualifications: Bachelor’s in Accounting
Shares Owned: 5,000,000 shares
Experience:
Current position: Member of the Board of Directors and Authorized Manager of the bank.
Member of the Iraqi Association of Accountants and Auditors.
Practices accounting, financial, and banking activities.
Participated in numerous training courses related to Islamic banking.
Aziz Saleh Mahdi Hussein Al-Azzawi
Date and Place of Birth: Basra / 29/8/1961
Educational Qualifications: High School
Shares Owned: 2,110,000,000 shares
Experience:
Trader from the 1990s until 2007.
Managing Director and Commercial Director of several commercial companies.
Former Board Member at Al-Mutahidah Money Transfer Company, which was converted to Asia Iraq Islamic Bank.
Member of the Audit and Risk Committees.
Participated in financial and banking courses, including a course in electronic banking systems, corporate governance, and strategic thinking.
Ahmad Suleiman Saleh Muhammad Al-Jumhur
Date and Place of Birth: Baghdad / 1/7/1951
Educational Qualifications: Bachelor’s in Arts and Islamic Sharia
Shares Owned: 1,000,000 shares
Experience:
Former government employee at State Properties for 22 years.
Vice Chairman of the Board of the United Money Transfer Company, which was converted to Asia Iraq Islamic Bank.
Expertise in finance, banking, real estate, and providing consultation in these fields.
Holds a certificate in Islamic Finance and Corporate Governance.
Adnan Zidan Abdul Aziz Mahmoud Al-Rawi
Date and Place of Birth: Anbar / 2/1/1953
Educational Qualifications: Ph.D. in Economic Statistical Sciences
Shares Owned: 30,000 shares
Experience:
Assistant Professor at the Ministry of Higher Education and Scientific Research for 43 years.
Taught administrative, economic, and statistical subjects.
Member of the Iraqi Economists Association.
Currently a university lecturer in several private colleges.
Conducted financial, economic, and statistical studies related to the Iraqi economy.
Member of the Corporate Governance and Risk Committees.
Ali Mohammed Ali Al-Bazi
Date and Place of Birth: Baghdad / 8/2/1972
Educational Qualifications: Advanced Diploma in Tax Accounting / University of Baghdad, Legal Accounting from the Arab Institute of Certified Accountants
Shares Owned: 50,000 shares
Experience:
University professor at Al-Turath College for ten years.
Member of the Association of Accountants and Auditors.
Member of the Academics Association.
Member of the Economists Association.
Expertise in finance, accounting, and tax fields, and has published research in these areas.
Chairman of the Audit Committee at Asia Iraq Islamic Bank.
Fourth: Board of Directors Meetings:
A total of 20 meetings of the Board of Directors were held in 2023 with the attendance of all members, with no absences by any of the Board members.
The Board committees, as well as the executive committees, held several meetings throughout 2023, and they submitted their reports with recommendations to the Board of Directors for appropriate decisions.
Fifth:
The Board of Directors is responsible for the accuracy and adequacy of the bank’s financial statements and for ensuring the sufficiency of internal control and supervision systems.
Sixth:
Board members did not receive any cash bonuses in 2023.
Seventh:
Board members did not receive any credit facilities, either cash or contingent, during 2023.
Eighth:
The Board of Directors continued to monitor the activation of corporate governance controls in information technology and communications within the banking sector and stayed informed about the Information Technology Governance Committee and the Information Technology Steering Committee.
Ninth:
The continued implementation of corporate performance card standards for environmental, social, and governance (ESG) criteria, in accordance with the instructions and guidelines set by the Central Bank of Iraq.
Relation of the Board with Stakeholders:
Based on Article (22) of the Corporate Governance Guide for Banks regarding the Board’s relationship with stakeholders, the bank’s management has taken the following actions:
A written invitation was sent to shareholders to attend the General Assembly meeting of the bank.
Transparency in reviewing the annual report, financial statements, quarterly financial data, and stock trading movements.
Allowing access to all information, data, and reports related to the bank through the bank’s website.
Enabling access to the bank’s strategies and work mechanisms, in addition to holding meetings with major shareholders.
Access through the annual report and financial statements to the reports from the regulatory departments and the committees of the bank derived from the Board of Directors.
 
Development of Bank Activities in 2023:
Focused on compliance with local and international standards, anti-money laundering, counter-terrorism financing, combating organized crime, fraud, and corruption, as well as acquiring advanced technological means to achieve these goals.
Continued expansion in providing the best banking services for all financing and investment activities, including financing small, medium, and large projects using the bank’s own funds as well as the initiative from the Central Bank of Iraq. The bank also invested in Islamic certificates of deposit to enhance returns and achieve a solid financial position.
Continued financing of developmental, service, industrial, agricultural, and real estate projects.
Expansion in issuing credit guarantees represented by letters of guarantee according to the instructions and regulations of the electronic platform approved by the Central Bank of Iraq.
Expansion in providing the best electronic banking services through the deployment of ATMs and (POS) and (POC) devices, as well as expanding the issuance of electronic payment cards.
The bank relied on generating returns from various banking activities throughout 2023, especially after being prohibited from dealing in US dollars based on a letter from the Central Bank of Iraq / Currency Control Department on 9/2/3040, dated 3/11/2022.
Sustainability Policy for Asia Iraq Islamic Bank in 2023:
In accordance with Article (23), Paragraph (8) of the Corporate Governance Guide related to disclosure and transparency, a sustainability report was prepared according to the basic level of the Global Reporting Initiative (GRI) guidelines.
The bank today, more than ever, strives to integrate sustainability considerations into its disclosures and core activities, which in turn enhances its banking business, builds successful business relationships, and aligns with the bank’s values and mission. Sustainability represents an opportunity to use our skills, expertise, and relationships to create positive change for individuals, communities, and the environment. Building trust through transparency and acting effectively and energetically to achieve this goal is a key element. Based on this, the bank has identified the material issues related to sustainability, which represent the main focus areas, including:
 
Combatting financial crimes.
Governance, work ethics, and compliance.
Financial performance.
Acquiring and satisfying customers.
Disclosure and transparency.
Financial stability and risk management.
Information security.
Attracting and developing talent.
Investment and community engagement.
Environmental impact.
 
 
Sustainability Policy of Asia Iraq Islamic Bank:
The sustainability policy of Asia Iraq Islamic Bank includes the following:
Developing and enhancing the capabilities of employees.
Ensuring sustainable environmental protection.
Offering banking products that meet the needs of individuals and businesses.
Encouraging and financing projects that support the community.
Effectively applying risk management to minimize negative impacts on business outcomes.
Strategic Goals for Social Responsibility and Sustainability:
Continuing to rely on renewable energy for a high percentage of the bank’s consumption.
Protecting the environment and reducing its negative impact.
Promoting a culture of sustainability and social responsibility among relevant stakeholders.
Providing professional development for employees and offering training courses.
Continuing to support and finance small and medium-sized projects.
Enhancing financial inclusion.
Key Standards in the Sustainability Policy at Our Bank:
Sustainability Policy Statement: This focuses on reviewing decisions related to our long-term operations to ensure that our future operational activities do not negatively affect the business. It aims to balance the needs of human resources, society, the environment, and profits, ensuring the continued success of operations.
Economy: We aim to maintain long-term financial profitability, offering benefits to our shareholders, customers, and employees by creating job opportunities. We also focus on ensuring that our operations contribute to financial stability and the economic development of the community.
Transparency and Accountability: We are committed to establishing strong governance frameworks for disclosure and data transparency, reinforcing trust in the financial sector, and earning the trust of stakeholders and the community.
Human Resources: We treat all our employees fairly and with respect, striving to provide a safe working environment. We also provide fair opportunities for career development and skill enhancement, ensuring they receive their full entitlements and compensations without discrimination.
Products: We sell products according to customer needs and in a manner that suits the market, taking into account the risks they can bear. We offer advanced and innovative products that support the financial stability of our clients and help them avoid risks.
Environment: We apply the best practices and standards recognized both locally and internationally to ensure sound management and reduce the impact of operational activities. We do not compromise on long-term environmental safety in the communities where we operate, aiming to achieve short-term benefits while preserving the environment.
 
 
Mohammed abduljabar abdulhamed                                             wisam Abdulsalam jaafer
                  Commissioner Director                                                                                                                                         chairman of the bord directors 
                                                                                         
                                                                                                                     
 
The Sharia Supervisory Board in the Bank:
The Sharia Supervisory and Audit Regulations issued by the Central Bank of Iraq define the Sharia Supervisory Board as follows:
The Sharia Supervisory Board is an independent entity consisting of specialists in Islamic jurisprudence, Islamic finance, and individuals with experience in banking, finance, and legal affairs. It is composed of at least five members, of whom three are experts in Islamic jurisprudence, its principles, Islamic economics, and Islamic financial and banking transactions, while two have expertise in banking, financial, and legal matters with knowledge of the Sharia requirements for Islamic banking.
Duties and Responsibilities of the Sharia Supervisory Board in Islamic Banks
The duties and responsibilities of the Sharia Supervisory Board are specified in Paragraph (4), Article (10) of the Corporate Governance Guide for Banks issued by the Central Bank of Iraq, which include:
Monitoring the bank’s operations and activities to ensure their compliance with Islamic Sharia principles and that they are free from any prohibited practices.
Preparing Sharia opinions for all contracts, transactions, agreements, products, and investment policies.
Providing guidance to the bank’s employees and raising awareness of Islamic Sharia principles.
Proposing Sharia training courses for the bank’s employees.
Attending the bank’s general assembly meetings and presenting their annual report.
Submitting quarterly and semi-annual reports.
The Sharia Supervisory Board held 24 meetings in 2023, with all members present.
        Sharia Supervisory Board Report for 2023:
In the name of Allah, the Most Gracious, the Most Merciful
Praise be to Allah, Lord of all worlds, and peace and blessings be upon our Prophet Muhammad, his family, and his companions.
Ladies and Gentlemen, Members of the General Assembly of Asia Iraq Islamic Bank for Investment and Finance,
Peace, mercy, and blessings of Allah be upon you.
We are pleased to present the following report to you:
We have reviewed the principles applied, the contracts related to transactions, and the practices implemented by the bank during the period from January 1, 2023, to December 31, 2023. We have conducted the necessary monitoring to express an opinion on whether the bank has adhered to Islamic Sharia principles in its operations and banking services. Our responsibility is limited to providing an independent opinion based on our monitoring of the bank’s activities and preparing this report for you.
Our monitoring included examining and documenting the procedures adopted by the bank based on testing each type of banking operation.
We planned and executed our monitoring to obtain all the information and explanations we considered necessary to provide sufficient evidence for reasonable assurance that the bank has not violated the principles of Islamic Sharia.
Quarterly meetings were held with the Chairman of the Board, Salah Al-Baghdadi Company for auditing the financial statements, and the internal auditor to discuss audit reports and provide comments that would ensure the bank’s compliance with Islamic Sharia principles.
Issuing Sharia rulings for matters that required fatwas.

Governance Committee Report as of 31/12/2023
In accordance with Article (12), Clauses (6,3) regarding the preparation of the governance report and its inclusion in the bank’s annual report, we summarize the following:
The Committee pays significant attention to compliance with laws and regulations related to financial and banking operations by monitoring reports from the Compliance and Sharia Compliance departments, discussing the observations noted in these reports, and finding solutions to achieve compliance effectively.
Monitoring the work and activities of regulatory departments, reviewing their monthly and quarterly reports, and discussing their contents to ensure transparency, financial transaction integrity, and error mitigation.
Reviewing reports from the Anti-Money Laundering and Counter-Terrorism Financing Department, discussing any observations, addressing necessary corrections, and equipping the department with advanced electronic tools. Furthermore, the Committee focuses on enhancing staff capabilities to combat various financial and terrorist crimes, prevent money laundering or terrorism financing activities, and ensure adherence to the Anti-Money Laundering and Counter-Terrorism Financing Law by auditing local and international sanction lists, combating financial fraud, and addressing corruption.
Discussing quarterly and annual financial reports with the Managing Director, the Finance Department, and the external auditor, while emphasizing disclosure and transparency in preparing financial statements.
Ensuring customer satisfaction and meeting their needs by developing products that fulfill their requirements, enhancing staff skills and capabilities, and introducing advanced technical tools to improve banking operations locally and internationally.
Promoting a sense of responsibility, integrity, professional behavior, and customer satisfaction while safeguarding stakeholder rights.
Approving the 2023 policies and procedures prepared by the bank’s departments and branches after review by subcommittees. The Committee follows up on the timely execution of these policies and works on their continuous development.
Strengthening the role of the Risk Management Department at both the operational and field levels for all financial transactions, including credit, investment, electronic payment services, and other banking services.
 
 
 
Ahmed sulieman salih                 Abdulsalam jaafer          D. adnan zedan Abdulazeez                                                                                                                                                   wisam
 
Cherman of the board directors    Member of the Board of                member of the Board ofDirectors                                                           Directors                                                                                         
 
 
Annual Report of the Nomination and Remuneration Policy Committee:
For the year ending 31/12/2023
In accordance with Article (23), Clauses (9,6), below is a summary of the Nomination and Remuneration Policy for the year ending 31/12/2023:
Nominations for Administrative Positions:
Competent candidates were nominated for administrative positions in accordance with the relevant regulations and instructions. The selection process considered experience, competence, and the number of training hours. After conducting interviews and ensuring the candidates met the requirements, a number of administrative appointments were proposed and submitted to the Board of Directors for appropriate decisions.
In line with the principle of staff training to enhance skills and capabilities, several bank employees were nominated for participation in various financial and banking training programs tailored to different administrative levels.
Granting of Rewards:
A number of bank employees were nominated to receive letters of appreciation in recognition of their efforts and dedication to their work.
A recommendation was made to grant a financial reward on the occasion of Eid Al-Adha, which was distributed to all employees of the bank.
It was proposed to grant financial bonuses to employees on the occasion of the conclusion of the fiscal year 2023.
The Committee continues to oversee the process of evaluating job performance to contribute to improving efficiency, enhancing employee skills, and ensuring continued growth in performance levels.
 
And with God’s guidance and success.
 
 
 
 
 
 
 
 
Ahmed Suleiman Saleh                Hussein Talib Ali                    Aziz Saleh Mahdi
Board Member                          Vice Chairman of the Board                        bord member                 
Committee Member                         Committee Member                          Committee Chairman       
 
 
 
Audit Committee
Subject: Annual Report
Esteemed Members of the General Assembly of Asia Iraq Islamic Bank for Investment and Finance,
Greetings and appreciation…
The Committee is pleased to present its annual report for the fiscal year ending on December 31, 2023, in compliance with paragraph (T) of Article (24) of the Banking Law No. 94 of 2004 and the Corporate Governance Guidelines for Banks issued by the Central Bank of Iraq:
First: The Committee reviewed the monthly reports issued by the Compliance and Sharia Audit Department, the Risk Management Department, and the Anti-Money Laundering and Terrorism Financing Department. These reports were discussed, and necessary directions were issued to mitigate potential risks. The Committee ensured that all activities comply with the Anti-Money Laundering and Terrorism Financing Law No. 39 of 2015 and verified that the relevant departments apply and update procedures under the Know Your Customer (KYC) principle.
Second: The Committee confirmed the bank’s adherence to the disclosures required by international standards, financial reporting, and compliance with the instructions issued by the Central Bank of Iraq. The bank remains committed to applying international standards across all its activities and operations.
Third: The Committee reviewed the annual audit plan and the annual training and development plan, made necessary recommendations, and submitted them to the Bank’s Board of Directors for approval and ratification.
Fourth: The Committee ensured the bank’s compliance with the disclosures outlined by international financial reporting standards, the Central Bank of Iraq’s instructions, and relevant legislation. It confirmed that the bank is fully aware of these standards and any amendments thereto and adheres to international standards in all its banking operations and activities.
Fifth: The Committee reviewed the bank’s quarterly financial statements and the financial statements for the year ending on December 31, 2023. It also reviewed the external auditor’s report as of December 31, 2023, confirming the accuracy of the information provided. The financial statements comply with international standards, applicable laws, and regulations, and they provide a clear and fair representation of the bank’s consolidated financial position as of December 31, 2023, its performance, and cash flows.
Sixth: The Committee held several meetings with the external auditor, the Head of Compliance and Sharia Audit, the Head of the Anti-Money Laundering Department, and the Head of Compliance. Relevant matters were discussed, and appropriate actions were recommended. These meetings were conducted without the presence of any members of the executive management.
Seventh: The Committee confirmed the bank’s implementation of IFRS 9 for the recognition of expected credit losses, reflecting the credit risks for the fiscal year ending on December 31, 2023.
For your kind review… With appreciation
 
Aziz Saleh Mahdi                             Hussein Talib Ali                                            Ali Mohammed Ali
Board Member                                  Board Member                                                   Board Member
Committee Member                     Committee Member                                   Committee Chairman

 
 
 
 
 
Capital Adequacy:
Article (16) of the Banks Law No. (94) of 2004, as well as Article (17) of Instruction No. (4) of 2010, define the required capital adequacy ratio for the bank. This ratio must not be less than 12% of the total assets, weighted by risk both on and off the balance sheet, plus market risk * 100%.
As of 31/12/2023, the bank’s capital adequacy ratio has reached 196%.
Liquidity Ratio:
The cash liquidity ratio to total deposits was 85% as of 31/12/2023, reflecting the bank’s strong liquidity position.
 
 
Real Estate Owned by the Bank as of 31/12/2023
Property No. 1/298, District No. (15), Jurf Al-Naddaf:
Area: 5 Dunams (with factory and warehouses)
Market Value: 2,245,000,000 Iraqi Dinars (2.245 Billion Dinars)
Purpose: Investment
 
 
Property No. 6/88, Al-Zawiya (Plot of Land):
Area: 1395 square meters
Market Value: 5,407,480,000 Iraqi Dinars (5.407 Billion Dinars)
Purpose: Investment
Share of Property No. 323/69, Al-Karada, Salman Faiq Street:
Area: 904 square meters
Market Value: 2,260,648,000 Iraqi Dinars (2.260 Billion Dinars)
The bank’s share: 249,994 shares out of the total 665,280 shares
Purpose: Bank Branch (Al-Karada Branch) with additional retail spaces for investment
Property No. 75/397, Al-Soufiya Al-Janoubiya, Ramadi Governorate:
Area: 421 square meters
Market Value: 709,304,000 Iraqi Dinars (709 Million Dinars)
Purpose: To establish a new branch in Anbar Governorate and part of the property is for investment
Property No. 8/1794, Al-Dawoodi, District (20):
Area: 560 square meters
Market Value: 5,128,575,000 Iraqi Dinars (5.129 Billion Dinars)
Purpose: To serve as the General Administration Building and the Main Branch (completed and moved in)
Property No. 3244/100, Erbil Governorate:
Area: 261 square meters
Market Value: 903,589,500 Iraqi Dinars (903 Million Dinars)
Purpose: To establish a branch
Property No. 3/28, Al-Jazeera, Karbala Governorate:
Area: 276 square meters
Market Value: 1,035,000,000 Iraqi Dinars (1.035 Billion Dinars)
Purpose: To establish a branch
Property No. 1798/3188, Al-Saad, Najaf Governorate:
Area: 286 square meters
Market Value: 1,029,600,000 Iraqi Dinars (1.030 Billion Dinars)
Purpose: To establish a branch
Property No. 18/306, Al-Batawin, Baghdad Governorate:
Area: 912 square meters
Market Value: 2,796,192,000 Iraqi Dinars (2.796 Billion Dinars)
Purpose: Warehouses
Property No. 37/113, Al-Atifiya, Baghdad Governorate:
Area: 854 square meters
Market Value: 5,124,000,000 Iraqi Dinars (5.124 Billion Dinars)
Purpose: To establish a branch
Property No. 5659/1, Al-Amiriya, Baghdad Governorate:
Area: 300 square meters
Market Value: 960,000,000 Iraqi Dinars (960 Million Dinars)
Purpose: To establish a branch
Important Note:
The properties listed above were approved for purchase by the Central Bank of Iraq, Banking Supervision Department. The market values provided are based on the Central Bank’s appraisal. The bank holds real estate title deeds (Form No. 25) issued by the Real Estate Registration Authorities.
Correspondent Banks
No.
Bank Name
Country
1
Bank of Egypt
United Arab Emirates
2
Abu Dhabi Islamic Bank
United Arab Emirates
3
Al-Safwa Islamic Bank
Jordan
4
Arab African International Bank
United Arab Emirates
5
Union Bank
Jordan
 
Investments:
Companies Established or Participated in by the Bank as of 31/12/2023:
Asia Gate Real Estate Investments LLC
Capital: IQD 10,000,000,000 (10 billion dinars)
Establishment Date: 13/05/2019
Certificate No.: 02-9689
Ownership: 100%
Headquarters: Baghdad
Authorized Manager: Ala Hassan Jafar
Company Purpose: Real estate investment, including purchasing land and constructing residential, tourism, or commercial units as per the base design.
Asia Gate General Trading LLC
Capital: IQD 5,000,000,000 (5 billion dinars)
Ownership: 90% (IQD 4,500,000,000)
Establishment Date: 24/03/2019
Certificate No.: 02-9356
Headquarters: Baghdad
Authorized Manager: Salam Mahmoud Karam
Company Purpose: Investment in commercial business, creating opportunities, and transferring expertise and technology to develop the commercial sector and ensure food security.
Asia Gate Agricultural Investments LLC
Capital: IQD 8,500,000,000 (8.5 billion dinars)
Ownership: 100%
Establishment Date: 24/02/2021
Certificate No.: 02-12354
Headquarters: Baghdad
Authorized Manager: Aqeel Abdulaziz Majid
Company Purpose: Investment in the agricultural and animal husbandry sectors.
Al-Kassab Financial Brokerage LLC
Capital: IQD 100,000,000 (100 million dinars)
Ownership: 100%
Headquarters: Baghdad
Authorized Manager: Khaloud Rady Mohamed
Company Purpose: Brokerage for buying and selling securities.

  1. The Iraqi Company for Deposit Guarantee
    1. Investment: IQD 1,539,473,680
    1. Certificate No.: 58
    1. Investment Date: 04/07/2022
    1. Company Capital: IQD 100,000,000,000
    1. Purpose: Deposit guarantee services.
  2. National Takaful Insurance Company (Sharia-Compliant Insurance)
    1. Investment: IQD 550,000,000
    1. Investment Date: 16/08/2021
    1. Purpose: Sharia-compliant insurance services (Takaful).

Total Cash Transactions for the Credit Department in 2023:

Type Amount (IQD) Number of Transactions
Collateral Pledges 1,408,500,000 2
Individual Murabaha 19,566,750,000 54
Corporate Murabaha 8,300,000,000 5
Individual Lease Contracts 0 –
Corporate Lease Contracts 169,250,000 2
Murabaha Contracts for Localization 3,740,500,000 262
Total 33,185,000,000 325

 

Total Guaranteed Transactions for the Credit Department in 2023:

Type Amount (IQD) Number of Transactions
Guarantee Letter / Tender Entry 34,069,417,320 564
Guarantee Letter / Operational Advance 98,729,100 6
Guarantee Letter / Good Performance + Professional License 15,655,352,150 381
Total 49,823,498,570 951

Contracts Signed by the Bank with External Entities for the Period from 1/1/2023 to 31/12/2023:

  1. Contract with Mantira Company for Electronic Design and Marketing
    • Responsibility: Management of the bank’s page on Facebook for social media engagement.
  2. Contract with Connected Solutions Company for Financial, Banking Services, and Administrative Financial Development
    • Responsibility: Providing IT audit services.
    • Contract Date: 30/1/2023.
  3. Contract with ICS Financial Limited (ICSFS)
    • Responsibility: Sale of systems for calculating expected losses according to IFRS standard 9, liquidity coverage ratio, and net stable funding ratio.
    • Contract Date: 26/2/2023.
  4. Contract for Issuance of International Quality Certification (ISO)
    • Company: Fursan Al-Jawda for Training and Development.
  5. Contract for Renewal of Risk Profile with the First Model Information Technology Company
    • Contract Date: 8/8/2023.
  6. Contract for Security Protection with Jannah Iraq Company
    • Contract Date: 19/9/2023.

Internal Sharia Audit Department Report for the Year 2023:

Main Responsibilities of the Department: The department is responsible for auditing the bank’s departments and branches in terms of accounting, financial, and Sharia compliance. Below are the details:

General Administration: The department audits the following departments:

  1. Financial Department:
    • Auditing of accounting entries, various financial statements, budgets, salaries, advances, journal entries, and reconciliations with both internal and external banks.
  2. International Department:
    • Auditing of foreign transfers in detail, including documentary credits, currency window statements with the Central Bank of Iraq, and primary statements of companies benefiting from the transfers.
  3. Credit Department:
    • Auditing of credit files and the underlying documents for loans granted according to Islamic Sharia, such as Murabaha, Mudarabah, Ijara, etc. This also includes auditing of types of guarantees and credit letters, as well as statements related to the Central Bank’s initiative for small and medium-sized projects and projects over one billion.
  4. Administrative Department:
    • Auditing of employee files, incoming and outgoing correspondence, miscellaneous files, and open records from an organizational perspective.
  5. Legal Department:
    • Auditing of the department’s files and records, as well as lawsuits filed by or against the bank.
  6. Anti-Money Laundering Department:
    • Auditing of reports and communications, updating blacklists and international sanction lists, which are integrated into the bank’s system and updated in real-time.
  7. Information Technology Department:
    • Auditing the bank’s system applications, reviewing issues raised by departments related to the system or any operational hurdles.
  8. Investment Department:
    • Auditing investment reports, balances, and investment entities according to the instructions of the Central Bank of Iraq and Islamic Sharia, including the number of shares and certificates allowed for investment.
  9. Credit Cards Department (MasterCard):
    • Auditing balances in ATMs, card sales, financial returns, and the distribution of ATMs and sales agents in Baghdad and other governorates.

Risk Department:

Payment Systems Department:

Awareness Department:

Branches and Al-Mansour Office Audits:

Sharia Compliance and Compliance Monitoring Report as of 31/12/2023

Dear Sir/Madam,

The Compliance and Sharia Compliance Monitoring Department is an independent function that strengthens the Sharia governance of the bank and ensures adherence to laws, regulations, limits, and ratios set by the supervisory authority (the Central Bank of Iraq). This function is evaluated based on the established pillars of Sharia governance: Sharia regulatory environment, risk assessment, Sharia audit activities, and information and communication.

The main role of the Compliance Monitoring function can be summarized as follows:

In compliance with the requirements of the Central Bank of Iraq in Circular No. 9/2/209 dated 2/4/2023, the KYE form was prepared by the Anti-Money Laundering and Counter-Terrorism Financing Reporting Department.

Additional Activities of the Department:

  1. Preparation of a Compliance Matrix that includes most of the information on laws, regulatory frameworks, and banking products for which the Compliance Monitor is responsible.
  2. The Sharia Compliance Department escalates compliance-related issues to senior administrative bodies and committees responsible for Sharia governance (corporate governance).
  3. The department identifies, assesses, reports, monitors, and prepares reports on Sharia compliance risks to the bank, such as legal penalties, financial losses, and reputational damage due to non-compliance with applicable laws, regulations, codes of conduct, and standards of good practice in Islamic financial industries.
  4. Reviewing the bank’s policies and procedures for compliance with the Central Bank of Iraq’s instructions and laws.
  5. The department tracks and audits the main branch and branches monthly regarding open and closed accounts, rejected payments, and returned payments.
  6. The department conducts field visits to bank branches to audit KYC forms and other financial operations.
  7. The department monitors the BANKS system.
  8. Ensuring compliance with FATCA (Foreign Account Tax Compliance Act) on an annual basis.
  9. Following up on the Central Bank’s communications and responding within the stipulated time.
  10. The department develops a compliance guide covering Sharia compliance and compliance monitoring.
  11. Monitoring electronic AML system reports, which are submitted daily by the Anti-Money Laundering and Counter-Terrorism Financing Department to the Anti-Money Laundering Office.
  12. The Compliance Monitor supervises the board’s adherence to the bank’s internal regulations, employee training plans, and the implementation of corporate governance standards in Islamic banking. This also includes enhancing Sharia governance within the bank, based on the Sharia regulatory environment.
  13. Verifying the integrity of data and information provided to the Central Bank of Iraq.
  14. The department checks outbound and inbound transactions related to MoneyGram and audits the electronic system and compares it with manual forms.
  15. The department monitors risk classification of clients monthly with the Risk Management Department.
  16. The department, together with the Risk Management Department, prepares an operational risk register and maintains specific policies and procedures for managing non-compliance risks, based on the risk matrix and the Board of Directors’ risk tolerance.
  17. The department monitors credit department activities monthly concerning Murabaha transactions, Central Bank initiatives, credit granted through localization, and the number of issued and canceled Letters of Guarantee, among others. These are followed up on a quarterly basis.
  18. Monitoring localization activities and verifying the number of Murabaha loans granted and the categories of clients eligible for them, with monthly reporting.
  19. Monitoring card services activities such as the number of ATMs, defective cards, sold cards, agents, and distributed devices monthly.
  20. Tracking legal proceedings involving the bank, including lawsuits filed by or against the bank, on a quarterly basis.
  21. Verifying the integrity of data and information provided to the Central Bank of Iraq.
  22. Tracking international transactions, including foreign currency exchange transactions and documentary credits, with correspondent banks on a monthly basis.
  23. Monitoring investment department activities, including subsidiaries and following the trial balance on a quarterly basis, according to the Central Bank’s requirements.
  24. Monitoring compliance with regulatory ratios and penalties or fines imposed by the Central Bank, on a monthly and quarterly basis.
  25. The Compliance Department follows up on the implementation of environmental, social, and governance (ESG) performance standards.
  26. The Compliance Monitor enjoys full independence in their work and directly reports to the Board of Directors. The department submits:

Concept of Risk in Financial Institutions:

The concept of risk in a financial institution refers to the potential for the institution to face risks that could lead to losses. To avoid or minimize these risks, a series of measures and policies are taken to confront, address, and mitigate these risks at various operational, credit, Shariah, market, and legal levels. These measures aim to keep the exposure to risks under control through the preparation of specific scenarios for stress tests that help assess the institution’s ability to withstand crises.

Concept of Risk Management:

Risk management refers to the set of procedures implemented by management to reduce the negative impacts of risks and ensure that they remain within acceptable limits. This involves establishing strategies to mitigate risks and ensuring that potential risks are effectively managed.

Tasks of the Risk Management Department:

  1. Monitoring Executive Departments’ Compliance: The Risk Management Department monitors the compliance of various departments within the bank with the established risk tolerance levels.
  2. Auditing the Work and Reports of the Risk Management Department: The Risk Management Committee audits the activities and reports of the Risk Management Department. All updates mentioned in these reports are presented to the Bank’s Board of Directors.
  3. Independence of the Risk Management Department: The Bank’s Board of Directors ensures the independence of the Risk Management Department by granting it the necessary authority to obtain information from all departments, in cooperation with the Risk Management Committee and the supervisory departments.
  4. Conducting Stress Tests: The Board and the Risk Management Committee ensure that the Risk Management Department regularly conducts stress tests to measure the bank’s ability to absorb shocks and face high-risk situations, based on the assumptions and scenarios used by the bank. The results of these tests are discussed, and actions are taken based on the outcomes.
  5. Ensuring Sufficient Capital: Ensuring that the bank maintains enough capital to cover all potential risks it may face.
  6. Approval of the Risk Matrix: The Bank’s Board of Directors approves the risk matrix for the bank. The tasks of the Risk Management Department in this regard include:
    • Reviewing the Risk Management Framework before its approval by the Board of Directors.
    • Implementing the Risk Management Strategy and updating policies and procedures.
    • Studying and analyzing various types of risks the bank faces.
    • Providing necessary information about the bank’s risks for disclosure purposes.
    • Providing recommendations to the Risk Management Committee and recording any exceptions to the accepted risk levels.

Risk management is crucial for ensuring the stability of the bank and maintaining its ability to face challenges that may threaten its sustainability.

Measures Taken by the Risk Management Department to Mitigate Risks:

  1. Control: This refers to the establishment of control procedures to ensure that risks do not occur or are minimized to the lowest possible level.
  2. Diversification: This means diversifying funding sources, investments, and operations to reduce risks.
  3. Sharing: This refers to involving other parties in bearing the risks, such as through insurance or guarantees.
  4. Risk Acceptance: This refers to the bank’s acceptance of a certain level of risk, typically in cases where the negative impact of the risk is minimal.
  5. Risk Avoidance: This refers to designing operations to avoid risks according to specific plans to reduce them.

Compliance of the Risk Management Department with the Central Bank of Iraq Requirements:

The bank is in compliance with the requirements of the Central Bank of Iraq regarding the third and final phase of the review process for the risk management regulations in Islamic banks. This will be implemented by March 31, 2024, according to the regulations and instructions of the Central Bank of Iraq dated December 27, 2023.

   Laila Harith Asaad     

  Director of the Risk Management Department

2023 Report of the Anti-Money Laundering and Terrorist Financing Department:

The Anti-Money Laundering and Terrorist Financing Department at the bank works to limit money laundering and terrorist financing activities, combat criminal activities, and address various methods used in these illegal practices, in compliance with the provisions of the Anti-Money Laundering and Terrorist Financing Law No. (39) of 2015, as well as the instructions and regulations issued by the Central Bank of Iraq.

The main activities carried out by the department during the year 2023 include:

  1. Updating Policies and Procedures: The department updated the Anti-Money Laundering and Terrorist Financing policies and procedures after approval by the Board of Directors.
  2. Approval of Anti-Fraud Policies: The department adopted anti-fraud policies and procedures following approval from the Board of Directors.
  3. Compliance with AML Law: The department adhered to the powers granted under the Anti-Money Laundering and Terrorist Financing Law No. (39) of 2015. Work is ongoing to integrate new scenarios for the Anti-Money Laundering and Terrorist Financing Electronic System (AML System) as recommended by the Central Bank of Iraq and the Anti-Money Laundering and Terrorist Financing Office. The department has contracted with Biotech for this purpose and continues to coordinate with the company to address any challenges or system updates.
  4. Facilitation of Account Opening Procedures: The department is working on facilitating account opening procedures in line with the Central Bank’s instructions (9/2/599 dated 24/10/2023), including creating separate Know Your Customer (KYC) forms for individual, business, and corporate accounts to make the process smoother for customers.
  5. Screening Customers Against Sanction Lists: The department conducts regular screening and verification of customers’ names against local and international sanction lists using electronic systems that update every 12 hours.
  6. KYE Form Preparation: The department prepared the “Know Your Employee” (KYE) form based on the Central Bank of Iraq’s instruction (9/2/209 dated 2/4/2023).
  7. Self-Assessment Reports: The department prepares self-assessment reports on money laundering and terrorist financing risks and submits them to the Board of Directors for review and to the Central Bank of Iraq annually.
  8. Collaboration in Compliance Plans: The department collaborates with other regulatory departments to create compliance action plans, breaking down tasks to detect suspicious activities and categorize customer risks, which streamlines monitoring and enhances the search process. These ideas have been integrated into the electronic compliance system, creating a comprehensive database for customers, their business activities, and the banking services provided to them.
  9. Archiving Data: The department continues to archive its data both in paper and electronic form for the year 2023.
  10. Participation in Banking Committees: The department participates in various banking committees related to customer services, such as the Financial Opinion Committee, Field Inspection Committee, and relevant regulatory committees, to conduct due diligence on new customers and provide recommendations based on investigations.
  11. Annual Training Plans: The department continues to prepare and participate in annual training plans targeting all bank employees, including those in the reporting department. These training sessions include internal and electronic courses organized under the Central Bank of Iraq’s supervision, with training materials selected based on regulatory requirements and the services offered by the bank.
  12. System Integration and Updates: The department continues to activate and improve the Anti-Money Laundering (AML) electronic system and is working closely with the system provider to address challenges and implement any updates required by regulatory authorities.
  13. Regular Reporting: The department prepares quarterly reports required by the Central Bank of Iraq and the Anti-Money Laundering and Terrorist Financing Office, along with monthly reports that are approved by the Board of Directors. These reports contain recommendations, observations, actions taken, and performance evaluations, as well as updates on circulars from the Central Bank and other relevant authorities.
  14. Compliance Reports on U.S. Accounts: The department submits annual compliance reports on U.S. accounts to the U.S. Department of the Treasury in coordination with the Sharia Compliance and Monitoring Department and the Information Technology Department. These reports include investigations into all U.S. accounts and related memos.
  15. Updating Customer Data: The department ensures that customer data is updated annually and whenever there are changes. This is done in coordination with branches to ensure data accuracy, and quarterly updates are monitored.
  16. Monitoring of Electronic Systems: The department continues to improve the electronic regulatory systems by providing an integrated database that cross-references customer data across the bank’s branches, linking them seamlessly with the banking system.
  17. Establishing Correspondent Banking Relationships: The department works on establishing formal relationships with various banks and correspondent financial institutions classified by global rating agencies, strengthening the bank’s international partnerships, and coordinating with Mobik Company for prepaid services.
  18. System Compliance with Regulatory Requirements: The department continues working with electronic systems according to regulatory requirements set by the Central Bank of Iraq and the Anti-Money Laundering and Terrorist Financing Office.
  19. Approval of Organizational Structure: The department’s organizational structure has been updated to align with the structure recommended by the Central Bank of Iraq in their supervisory guidelines.
  20. Contribution to Financial Opinion Reports: The department continues to contribute to preparing reports for the Financial Opinion Committee.
  21. Reporting Suspicious Transactions: The department reports any suspicious transactions to the Anti-Money Laundering and Terrorist Financing Office upon confirmation.
  22. Field Inspections: The department has planned and conducted field inspections of the bank’s branches, auditing transactions and coordinating with the Anti-Money Laundering Officer as part of the field visit schedule.
  23. Non-Banking Institutions Monitoring: The department conducts audits of non-banking institutions for opened and closed accounts during the report preparation period, ensuring compliance with the regulatory guidelines on anti-money laundering and terrorist financing.
  24. Compliance with Asset Freezing Regulations: The department continues to respond to official requests for freezing the assets of convicted criminals, fugitives, and terrorists, maintaining records in a dedicated database.
  25. Record-Keeping of Transactions: The department organizes and stores electronic and paper records of transactions where a decision to preserve is made, ensuring proper analysis of information for each case.
  26. Monitoring Bank Shareholders: The department regularly monitors the bank’s shareholders by requesting daily reports from the Shareholders Department, performing due diligence on investors.

Marwa Thayer sami   

  Director of the Money Laundering and

 Finance Reporting Department

                                                                     

                                                                        

Number: S.A / 57
Date: 15/4/2024
To: Shareholders of Asia Iraq Islamic Bank for Investment and Finance (S.A) Dear Respected Shareholders,

Subject: Auditor’s Report on the Financial Statements for the Year Ended December 31, 2023

Greetings,

We are pleased to inform you that we have audited the consolidated financial statements of Asia Iraq Islamic Bank for Investment and Finance (S.A), which include the consolidated balance sheet as of December 31, 2023, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement, and the related analytical schedules and accompanying notes, as well as the bank’s annual report for the year mentioned, prepared in accordance with the provisions of the Companies Law No. (21) of 1997, as amended, the regulations and instructions issued under it, the Banks Law No. (94) of 2004, and the Islamic Banks Law No. (43) of 2015.

We have obtained all the information and explanations that, in our opinion, were necessary to perform our task in accordance with the applicable legislation and in compliance with both international and local auditing standards and generally accepted auditing practices, which included necessary tests of the bank’s activities within the scope of our responsibilities.

First: Management’s Responsibility for the Bank’s Financial Statements:

The management is responsible for the preparation of the consolidated financial statements and for presenting them fairly in accordance with international financial reporting standards and relevant legislation. Additionally, the management is responsible for establishing and implementing an internal control system, particularly concerning the preparation and fair presentation of the financial statements free from material misstatement due to fraud or error. This responsibility includes selecting and applying appropriate accounting policies and using reasonable accounting estimates.

Second: Responsibility of the Auditors:

Our responsibility is to express an impartial professional opinion on the consolidated financial statements presented to us, in accordance with international and local auditing standards and guidelines, which require us to adhere to professional conduct rules and plan the audit work to obtain reasonable assurances regarding whether the financial statements are free from any material misstatements. The audit includes testing, on a sample basis, the data and documents supporting the amounts in the balance sheet and other disclosures for the year ended 31/12/2023, and assessing the appropriateness of the accounting policies applied, the reasonableness of the accounting estimates made by the management, and evaluating 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 the opinion we express. We have the following observations and notes:

  1. Cash: We supervised the cash inventory in the safes and boxes at the head office and the main branch as of 31/12/2023, and the balance matched the inventory lists provided to us. All cash balances shown in the records and deposited with the Central Bank of Iraq and local and foreign banks were reconciled with bank statements and confirmations received, and they were in agreement. It should be noted that the balances with foreign banks appeared as (2,267,361,380) dinars, and the foreign currency cash holdings (Emirati Dirham and Jordanian Dinar) were valued based on the exchange rate of the US Dollar for these currencies.
  2. Subsidiaries: The bank has four limited subsidiaries, three of which are fully owned, with 100% of their capital paid by the bank, and one (Asia Gateway for General Trading Limited) with 90% of its capital owned by the bank. The subsidiaries are listed under the long-term financial investments statement, which includes:
Company Name Establishment Cost Bank’s Ownership Percentage
Asia Gateway for Real Estate Investments 10,000,000,000 100%
Asia Gateway for General Trading 4,500,000,000 90%
Al-Kassab Securities Brokerage for Buying and Selling Securities 300,000,000 100%
Asia Gateway for Agricultural Investments 8,500,000,000 100%
Total 23,300,000,000  
       

Upon reviewing the financial stauditloing

Company Name Surplus (Deficit) Reserves 31/12/2023 Cash 31/12/2023
Asia Gateway for Real Estate Investments 8,049,604 (35,773,233) 2,798,615,799
Asia Gateway for General Trading 4,368,212 (14,072,423) 3,503,113,870
Al-Kassab Securities Brokerage for Buying and Selling Securities 1,853,303 11,544,425 311,130,558
Asia Gateway for Agricultural Investments 15,960,196 (21,966,321) 2,892,804,498
Total 30,231,315 (83,356,402) 9,505,664,725

We would like to clarify the following:

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

The bank continues to apply the International Financial Reporting Standards and has prepared the consolidated financial statements for the year subject to audit in accordance with these standards. Based on the instructions of the Central Bank of Iraq, the historical cost method was used in the valuation of properties, equipment, and other assets instead of revaluation.

4. Capital Adequacy:

The Basel Committee on Banking Supervision established a minimum capital adequacy ratio of 8%. The Central Bank of Iraq’s instructions have considered the required minimum at 12%. Upon reviewing the accounting records and the nature of banking operations, we found that the capital adequacy ratio of the bank for the year subject to audit was 196%.

5. Shareholders’ Equity

A. Capital Increase: We reviewed the Central Bank’s memorandum numbered 9/2/439 dated 2/8/2023 regarding the increase of bank capital to 400 billion dinars by no later than 31/12/2024. Then, the Central Bank’s letter numbered 9/2/31238 dated 7/11/2023, addressed to Al-Mansour Bank for Development and Investment with a copy to Asia Iraq Investment and Financing Bank, was received, instructing to delay the capital increase since the bank is prohibited from dealing in U.S. dollars until the auditing procedures by auditing firms are completed.

B. Change in Shareholders’ Equity: Shareholders’ equity increased from the beginning of the year by 1,407,481,357 dinars, which represents the surplus of the year after deducting the income tax provision of 248,379,063 dinars.

6. Credit Facilities and Provisions

A. The bank applied International Standard No. (9), and the total provisions for expected credit facilities reflecting the credit risk as of 31/12/2023 amounted to 6,079,059,756 dinars as detailed below:

Proceeding with details would be provided in the following points)

Provision Type Current Year Previous Year
Commitment Credit Provisions 671,069,218 1,382,367,346
Investment Provisions 1,679,377,967 1,760,260,780
Cash Credit Provisions 3,329,027,706 2,384,759,082
Cash Provisions 399,584,865 551,672,551
Total 6,079,059,756 6,079,059,759
       
Provision Type Current Year Previous Year
Commitment Credit Provisions 671,069,218 1,382,367,346
Investment Provisions 1,679,377,967 1,760,260,780
Cash Credit Provisions 3,329,027,706 2,384,759,082
Cash Provisions 399,584,865 551,672,551
Total 6,079,059,756 6,079,059,759

77- The provision for expected credit losses was calculated in accordance with International Standard No. (9) up to 31/12/2023, and it was found to be lower than the actual provisions calculated in the previous year, meaning no credit losses occurred during the year under review. Therefore, no amount was charged to the credit risk provisions for this year, whereas in the previous year, an amount of (1,231,761,227) dinars was charged.

8- The total credit facilities for financing (Ijara, Murabaha, soft loans) at the end of the year amounted to (90,108,352,176) dinars, and the net facilities for the same year amounted to (86,779,324,470) dinars.

7- Anti-Money Laundering and Terrorist Financing Law
The bank took the necessary measures to prevent money laundering and terrorist financing during the year under review. Based on our examination of the accounting records and our review of the bank’s banking operations, no evidence was found to suggest that any banking transactions related to money laundering or contributed to financing terrorist activities. Therefore, the bank complies with the Anti-Money Laundering and Terrorist Financing Law No. (39) of 2015 and the regulations issued by the Central Bank.

8- Compliance Officer and Shariah Board Reports
We reviewed the reports of the Compliance Officer related to the activity for the year under review. These reports were prepared in accordance with the requirements of the Central Bank of Iraq and Instruction No. (4) of 2010 regarding the implementation of the Banking Law No. (94) of 2004. Additionally, we reviewed the reports issued by the bank’s Shariah Board and confirmed that these reports are consistent with the principles and rulings of Islamic Sharia.

9- Interim Financial Statements
The bank’s summarized interim financial statements for the first, second, third, and fourth quarters were reviewed in accordance with International Auditing Standard (2410) related to the review of interim financial statements. The interim quarterly financial statements for the year 2023 have been issued.

10- Corporate Governance
We reviewed the bank’s performance regarding the corporate governance guidelines. In our opinion, the bank generally complies with both the quantitative and qualitative requirements through the Balanced Scorecard model. The board of directors and the bank’s management are committed to adhering to the corporate governance guidelines and applying its instructions related to disclosure and transparency practices.

11- Central Bank Audit Results
We reviewed the correspondence from the Central Bank regarding the results of the audit of the quarterly balances sent to the Central Bank at the end of each quarter. We also followed up on the implementation of the Central Bank’s instructions regarding the quarterly balances and any other executive measures specified by the Central Bank for the bank.

12- Other Clarifications
a. The bank relies on an electronic system for entering financial transactions and the financial data sent to the bank, ensuring consistency with the content of records, ledgers, and the Central Bank’s systems and instructions. As for the documents, they are recorded on paper, securely stored in safe locations, and electronically archived. The internal control procedures and accounting systems have included the necessary measures to ensure the accuracy and reliability of this data in line with the size of the bank’s operations.

b. The bank has the ability to meet its obligations to depositors in terms of solvency and financial liquidity, as indicated by:

It is worth noting that the cash in the vault, central bank, and local and foreign banks amounts to 92.032 billion dinars.

C. The bank’s liquidity ratio for the year under audit was 85%, while the Islamic liquidity ratio was 97%.
D. The bank disclosed the sales and profits from the foreign currency buying and selling window in the income statement for both the audited year and the previous year separately. The balance was zero as of 6/11/2022, and based on the letter from the Central Bank of Iraq numbered (9/2/446) dated 6/11/2022, dealing in U.S. dollars was suspended. Subsequently, the bank did not participate in the currency auction from the date of the suspension letter until the date of our report.

E. In accordance with the letter from the Central Bank of Iraq numbered (9/3/98) dated 9/2/2023, the condensed interim financial statements for the period ending 8th February 2023 were prepared based on the exchange rate for 8/2/2023 (1310 dinars per U.S. dollar). As a result, the activity showed a deficit of (869,681,346) dinars.

F. The credit portfolio was reviewed, and a sample of credit files was examined. The ratio of the credit portfolio to capital and reserves was found to be less than (22%), and the ratio of other assets to current assets was 1.8%.

G. The financial investments amounted to (104,390) billion dinars, representing the bank’s subsidiaries, the Iraqi Bank Guarantees Company, Islamic bonds, real estate investments, and partnerships.

H. Subsequent events: No subsequent events have occurred as of the balance sheet date that would materially affect the financial statements.

I. All bank accounts were reviewed, and disclosures were included for all attached analytical statements.

J. There were no lawsuits filed by or against the bank during the year.

Conclusion:
Based on the above clarifications and the findings of our examination, according to the bank’s records and the information provided to us, we conclude the following:

  1. The accounting system used by the bank complied with the bookkeeping requirements, and it appears to include all assets, liabilities, uses, and revenues of the bank.
  2. The physical inventory of fixed assets and cash was conducted properly under our supervision, and the results matched the auxiliary records. These assets were evaluated in accordance with the principles and foundations used in the previous year.
  3. The management report, including the financial and accounting information, comprehensively reflects the financial position of the bank for the year under audit. This information is consistent with the accounts and complies with the applicable financial laws and regulations.

Third: Auditor’s Opinion:
Based on the above clarifications and observations, the financial statements and the attached management report were prepared in accordance with International Financial Reporting Standards and applicable regulations. The statements fairly present the consolidated financial position of the bank as of 31st December 2023, as well as its activities and cash flows for the fiscal year ending on that date.

We remain at your service with full respect and appreciation.

 D. Salah, owner of Shaker Al-Baghdadi    

        Chartered accountant and auditor

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Asia Al Iraq Islamic Bank

Committed to Sharia-compliant banking, fostering financial growth, and promoting community development.

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