By TK Maloy
ERBIL: Founded in 2004, North Bank has faced substantial challenges as both the Iraqi and Kurdistan regional economy has changed at a rapid pace and banking laws have changed in order to keep up with the economies.
North Bank’s case deposits grew a by 45 percent in the first half of 2012 to reach ID917 billion, with customers further attracted by the seven percent return given on their money.
Along with this, the bank has worked toward having the latest in technology – for both the back office and at the customer end. The company has ATMs throughout Iraq and issues a Visa card with a variety of fringe benefits. For Nozad Dawood Fattah Al-Jaff, chairman of North bank, the goal is to be not only the largest bank in Iraq, but to be recognized as a strong regional player as well.
North Bank started off in 2003 as a family business. According to Al-Jaff, "We came from a Kurdish domain family and we had the idea of opening a bank after the changes in Iraq in early 2003. We decided at that time to start this venture and we first licensed and opened North Bank in April 2004."
Since then North Bank has had a very strong record of growth; it has increased the capital by more than 100 times in the past four years. North Bank is today the largest bank in Iraq (private) in terms of total assets, by a far distance from the second closest bank. According to the records for the fourth quarter of 2012, North Bank has more than 1,604 billion Iraqi dinars in assets which are a little more than US $1.37 billion.
In a country where cash has always been king, and most persons – from big business to the individual worker – kept their cash “under the mattress” – the trust in banks and the need to connect to the outside world to do business has increased the confidence of depositors that in North Bank’s case deposits grew a by 45 percent in the first half of 2012 to reach ID917 billion, with customers further attracted by the seven percent return given on their money.
On the loan front, North Bank’s lending saw a marked increase of 27 percent, with corporate loans accounting for around 80 percent of lending.
In September of 2012, North Bank announced that the financial institution had made a profit of 64 billion Iraqi dinars ($51 million) in the first eight months of this year, compared to 24 billion for the same period of of 2011.
Al-Jaff said that in addition to focusing on SME loans that range from $100,000-$500,000, the bank is doing substantial business with multinationals across the board – including the oil sector and a variety of other industries.
He noted that companies such as Samsung, Nokia and Kodak work with North Bank for transferring money in and out of Iraq. North Bank’s services also include accounts in both Iraqi dinars and dollars, loans in both currencies and the issuance of guarantee letters for dinars and dollars.
Currently, North Bank has 17 branches across Iraq, with a main branch in Baghdad and other governorates such as Basra, Najaf, Mosul, Misan, Nasirya and many others. In the Kurdistan region the bank has branches in Erbil, Duhok, Suleymaniyah and Kirkuk.
Though competition is starting to increase, particularly from the strong Lebanese banking sector which is opening branches in Iraq, Al-Jaff notes that he welcomes new banks to the region which a number of analysts have noted is greatly in need of more financial intuitions.
“This market is very new and it is an open market. The size of the economy in Kurdistan in particular and Iraq in general is so big that there is room for another hundred banks to enter the market,” Al-Jaff said, adding, “The foreign banks that are here have very limited effects on the market because they are mostly involved in receiving deposits and limited letters of credit and money transfers.”
Al-Jaff concluded, “So we don't look at these banks as competition at all. Competition comes if you actually get involved in the daily market business, which is the policy that North Bank is following.”
He also noted that “North Bank is the largest bank in Iraq in terms of giving loans and we surpass the second closest bank in this area by at least three times. We welcome any other banks to do business in this area. Every bank has its own specialty and a new variety of expertise would definitely help this important sector to grow, be it in Iraq or particularly in Kurdistan.”
Al Jaff mentioned that North Bank is one of the most diversified banks in Iraq in terms of shareholders, boasting an eight percent shareholder block from the NYSE and also shareholders that include hedge funds from Finland, Egypt, Jordan, Kuwait and the Emirates.