Iraqi banks see shift in private sector deposits, report shows

Shafaq News/ A new report by Iraq Future for Economic Studies and Consultations revealed a shift in the distribution of private sector deposits among Iraqi banks during the first half of 2024. The study points to a decline in the share held by 12 domestic banks compared to previous years.

According to the report, three Iraqi banks that maintain correspondent relationships with US financial institutions controlled nearly half of all private sector deposits in the first six months of 2024. These banks held 47% of private deposits, an increase from their 34% share in 2019.

The 12 banks capable of international financial transactions, but without US correspondent relationships, saw their share of private sector deposits drop to 36% by mid-2024, down from 42% in 2019.

The report also highlighted that Iraqi banks with restricted international dealings experienced a notable decline in their deposit share, holding just 17% of private sector deposits by mid-2024. This is a decrease from the 25% they held in 2019.

Iraq Future's analysis suggests that the three banks, whose shares are predominantly owned by foreign institutions, are expected to further increase their share of private deposits. By the end of 2024, these banks could surpass 50% of total deposits, the report projected. Meanwhile, deposits in private banks with limited international dealings are likely to continue their decline.

The report further noted that private banks now account for 12% of total deposits in Iraq’s banking sector. This marks an increase from 8% in 2019, indicating a slow but steady rise in the role of private banks within the country's financial landscape.