CBI Reports Increase in Credit-to-Deposit Ratio among Iraqi Banks

The Central Bank of Iraq reported an increase in the credit-to-deposit ratio for banks from 51.9% in Q4 2023 to 59.3% in Q4 2024. This ratio is a key indicator of bank liquidity, and the rise suggests improved utilization of deposits for credit generation, potentially linked to increased lending to the government and the central bank.

The Central Bank of Iraq (CBI) has announced an increase in the credit-to-deposit ratio for banks operating within its jurisdiction. This significant measure is crucial as it assesses the liquidity of banks by comparing the volume of credit they extend to their total deposits. As of the fourth quarter of 2024, this ratio reached 59.3%, a notable rise from the previous year’s 51.9%, reflecting a positive trend in banking operations.

The CBI further elaborated that this increase signifies how banks are effectively utilizing customer deposits to generate profits through credit provisioning. It is suggested that part of this growth may stem from enhanced bank credit directed towards governmental needs and the central bank itself. This development highlights the banks’ role in supporting economic activities within the region.

In conclusion, the increase in the credit-to-deposit ratio signifies healthier liquidity management among banks in Iraq, enhancing their capacity to extend credit. The Central Bank’s ongoing assessment indicates a progressive trend that could facilitate further economic growth and stability through effective utilization of customer deposits. Such measures underscore the importance of banks in contributing to the national economy.

Original Source: ina.iq