Fitch Ratings assigned Iraq's Region Trade Bank for Investment and Finance (RTB) a "CCC+" Long-Term Issuer Default Rating, citing its weak operating environment, unstable business model and low profitability.
The coronavirus pandemic, social, economic and political instability, as well as high dependence of the economy on oil and a weak regulatory framework, will also continue to put pressure on the bank's operating environment, the ratings agency said on Thursday.
Iraq, Opec’s second-largest producer, depends on oil revenue to meet 90 per cent of government expenditure.
“RTB's profitability is weak, owing to large non-to-low-interest earning liquid assets, large non-earning fixed assets, the low-yielding loan portfolio and high impairment charges reflecting the constantly high provisioning level,” Fitch said.
The cost-to-income ratio is also reasonably high but has improved since 2018, according to the agency.
RTB is a privately owned bank, in the Kurdistan Region of Iraq, and is regulated by the Central Bank of Iraq.
Non-interest income represents the main operating income source, comprising mainly fees and commissions on international transfers, discounting of bills of exchange and trade finance transactions, as well as fees on credit cards.
Cash lending is minimal and the bank does not have financial investments, Fitch said.
“Operating profit originates mainly from non-interest income, but RTB's profitability is likely to remain volatile, sensitive to the political and economic developments that impact the level of the economic activity and ultimately RTB's business volumes,” it said.
Iraq's economy, which shrank by about 11 per cent last year due to Covid-19 and a sharp decline in oil revenue, is poised to return to pre-pandemic levels by 2024, the International Monetary Fund said earlier this year.
The bank's funding is highly sensitive to government deposits, which have proved volatile in the past five years, according to the Fitch report.
Retail deposits are also small, due to RTB's small branch network and Iraqis' lack of confidence in the banking sector, especially private banks.
The Iraqi banking sector is dominated by three state-owned banks and private banks have small market shares.
Fitch earlier this year revised its outlook on Iraq’s sovereign debt from negative to stable and maintained the country's "B-" credit rating, citing higher oil prices and a smaller-than-expected decline in foreign reserves following devaluation of the Iraqi dinar.
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About RuPay
A homegrown card payment scheme launched by the National Payments Corporation of India and backed by the Reserve Bank of India, the country’s central bank
RuPay process payments between banks and merchants for purchases made with credit or debit cards
It has grown rapidly in India and competes with global payment network firms like MasterCard and Visa.
In India, it can be used at ATMs, for online payments and variations of the card can be used to pay for bus, metro charges, road toll payments
The name blends two words rupee and payment
Some advantages of the network include lower processing fees and transaction costs
Crops that could be introduced to the UAE
1: Quinoa
2. Bathua
3. Amaranth
4. Pearl and finger millet
5. Sorghum
Boulder shooting victims
• Denny Strong, 20
• Neven Stanisic, 23
• Rikki Olds, 25
• Tralona Bartkowiak, 49
• Suzanne Fountain, 59
• Teri Leiker, 51
• Eric Talley, 51
• Kevin Mahoney, 61
• Lynn Murray, 62
• Jody Waters, 65
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
ONCE UPON A TIME IN GAZA
Starring: Nader Abd Alhay, Majd Eid, Ramzi Maqdisi
Directors: Tarzan and Arab Nasser
Rating: 4.5/5
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
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Company profile
Company name: Suraasa
Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
Initial investment: More than $200,000 in seed funding
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
MATCH INFO
Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid
When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid
