Al Janoob Islamic Bank – Ratings Affirmed
(MENAFN- Capital Intelligence Ltd) 5 November 2026
Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed the Long-Term Foreign Currency Rating (LT FCR) and Short-Term Foreign Currency Rating (ST FCR) of Al Janoob Islamic Bank (JIB or the Bank) at ‘B-’ and ‘B’, respectively. At the same time, CI Ratings has affirmed JIB’s Bank Standalone Rating (BSR) of ‘b-’, Core Financial Strength (CFS) rating of ‘b+’ and Extraordinary Support Level (ESL) of Uncertain. The Outlook for both the LT FCR and BSR is Stable.
CI has also affirmed JIB’s Long- and Short-Term Ratings on the Iraq National Scale at ‘iqBBB’ and ‘iqA3’, respectively, with a Stable Outlook. These ratings are supported and constrained by the same factors as the CFS, as outlined below.
The Bank’s BSR is derived from a CFS rating of ‘b+’ and an OPERA of ‘c+’. The CFS is supported by JIB’s good balance sheet leverage ratio and capitalisation (after a sizable rights issue in 2023), high liquidity, and satisfactory financing asset quality. The capable management team is also a credit strength. The main constraints on the CFS are the Bank’s high credit risk profile (reflecting an ongoing difficult operating environment), concentrations in assets (including central bank balances) and customer deposits, weakened profitability and a relatively small balance sheet and market share. Though improving, Iraq’s weak regulatory and supervisory framework also remains a credit challenge. JIB (along with many other Iraqi banks) is currently banned by the Central Bank of Iraq (CBI) from transacting in USD, due to alleged irregularities. In partial mitigation, the Bank is able to access other hard currencies in order to fulfil financial commitments. The OPERA is at a level indicative of a high degree of risk and is a key rating constraint on the ratings for JIB (as well as for all other Iraqi banks).
We consider the likelihood of sufficient and timely official extraordinary support being made available to JIB (or any other private sector bank) in the event of financial distress to be uncertain and consequently, do not incorporate such support into the Bank’s LT FCR. Moreover, even if the government may be willing to provide extraordinary support in case of need, its financial capacity to do so is limited, as indicated by our internal assessment of Iraqi sovereign credit risk.
Despite the challenges that persist in the Iraqi operating environment (including the impact of the USD ban on JIB’s business volumes and earnings), the balance sheet has demonstrated a fair degree of resilience. This reflects an effective management team implementing a strategy appropriate for difficult business conditions, despite the impact on earnings. With trade finance activities largely suspended (due to the USD ban), management remains focused on building corporate and retail financing. In time, this will help diversify assets, funding and revenues, while reducing concentration risks. Governance standards are being strengthened, supported by a newly constituted and well qualified board. That said, significant market and regulatory risks prevail in Iraq’s still underdeveloped banking system.
JIB is amongst a handful of Iraqi private-sector banks that have fully complied with the CBI’s revised paid-up capital requirement via a sizeable rights issue (in 2023). The timely injection of fresh equity denotes good capital flexibility and firmly underscores the shareholders’ capacity and willingness to support the Bank throughout the ordinary course of business. We expect this factor, alongside a good capital buffer capable of withstanding significant losses, to remain a credit strength going forward. Although total CAR declined in 2025 due to growth in total risk-weighted assets (RWAs), it remained high and provides ample scope for sustained business expansion over the short to medium term. We note that RWA-based capital ratios are flattered by large holdings of zero-weighted CBI balances. The balance sheet leverage ratio remained conservative at 55%, with capital consisting of high-quality loss-absorbing common equity. This is important given the concentration risk and balance-sheet sensitivity to potential shocks inherent in Iraq’s operating environment.
The asset base remains skewed towards CBI balances, with the resultant concentration risk being a salient feature of all Iraqi banks. Under CI’s rating criteria, central bank balances come firmly under the sovereign risk category. A sovereign credit event could potentially transmit stress to the Bank’s balance sheet including capital, as well as earnings. This is an important risk factor for the ratings.
JIB has a tested lending policy including effective collection processes. This has enabled financing asset quality metrics to remain at a satisfactory level, despite a challenging operating environment and the growth of NPFs (Stage 3) in recent years. While the rapid financing expansion seen in prior periods would normally be a cause for concern, CI notes that growth was from a low base. The provisioning policy is prudent, with financing-loss reserves (FLR) cover for NPFs restored to more than full level (175%) in H1 26. Furthermore, the extended NPF coverage ratio stands at a high multiple, providing significant additional loss-absorption capacity. Stage 2 financings, a forward-looking indicator of future asset quality risks, remained acceptable at 4.1%. While we consider it probable that additional NPFs could emerge over the next 12 months, the magnitude of any increase is likely to be limited.
Notwithstanding the ongoing high systemic liquidity risk in Iraq, JIB’s liquidity position remains good, reflecting a still modest financing portfolio and significant CBI balances. However, liquidity is subject to considerable concentration risk, as the bulk of funds is deployed into CBI balances. Liquidity is thus vulnerable to sovereign risk. Iraqi banks as a group typically channel much of their liquidity into non-remunerative CBI balances, as there are scarce avenues in which to profitably invest surplus liquidity in the banking system. The CBI (in collaboration with the Ministry of Finance) has launched profit-earning treasury instruments for banks to deploy their idle liquidity. This is expected to lift financing income levels, and at the same time activate the secondary market. Following the retirement of expensive time deposits and withdrawals from current accounts, management has launched a new deposit scheme aimed at rebuilding customer deposits. In this regard, JIB has considerable scope to leverage the equity base. However, future deposit growth remains vulnerable to confidence shocks that can periodically impact the banking system; there persists an overall general lack of customer confidence and public trust in private-sector banks, given Iraq’s recent history.
The Bank’s profitability metrics have weakened from the good levels seen in 2022-23, in large part due to the impact of the USD ban on core banking operations. This has translated into lower business volumes (LCs and international transfers) and, in turn, lower levels of operating income. Having posted minor net loss in H1 26, the Bank expects earnings to return to positive territory in full year 2026 and to remain modest over the next twelve months. Although the erosion of risk absorption capacity at operating profit level would normally be a cause for concern, this is more than counterbalanced by a good capital buffer. In common with almost all other Iraqi banks, JIB’s operating income has historically been skewed towards non-FI, given the dearth of avenues in which to profitably invest surplus liquidity in the system. On a positive note, NFM improved significantly in H1 26, and is expected to increase further in the short term as retail lending resumes. This will likely benefit high-quality NFI generation. Non-FI sources remain limited and volatile, due to a relatively narrow product mix and concentrated customer base. Although the cost-to-income ratio weakened in H1 26, this was due to lower operating income (rather than uncontrolled cost growth).
Iraq’s OPERA takes into account economic volatility and underlying structural and fiscal weaknesses, as well as significant socio-economic imbalances and deficiencies in the country’s political and institutional frameworks. Although the Iraqi economy had started to recover starting in 2024, buoyed by favourable oil prices, recent geopolitical events have created difficult economic conditions. In turn, this has elevated systemic credit and liquidity risk. The OPERA also reflects the challenges inherent in a banking sector that is small, underdeveloped and dominated by financially weak state-owned banks. Both the legal system and corporate governance standards are also weak.
Rating Outlook
The Outlook for JIB’s ratings is Stable, indicating that it is unlikely to change over the next 12 months. This reflects our view that the Bank will maintain its current risk profile, including the concentrations in the balance sheet.
Rating Dynamics: Upside Scenario
We do not expect an upward change in the ratings and/or outlook, unless the OPERA improves. This is currently seen as being unlikely to change within a 12-month timeframe. Positive pressure could, however, be exerted on the CFS, were the Bank to be able to increase market share significantly, reduce concentration risks and improve the ROAA.
Rating Dynamics: Downside Scenario
While not our current expectation, JIB’s ratings could be reduced by one notch over the next 12 months, should key credit metrics worsen significantly and/or should the OPERA be revised downwards.
*A National Rating summarises the repayment risk of an entity relative to other entities within the same economy. It is not an absolute measurement of risk. National Ratings are not directly comparable across borders.
Contact
Primary Analyst: Morris Helal, Senior Credit Analyst; E-mail: ...
Secondary Analyst and Committee Chairperson: Rory Keelan, Senior Credit Analyst
About the Ratings
The credit ratings have been issued by Capital Intelligence Ratings Ltd, P.O. Box 53585, Limassol 3303, Cyprus.
The following information sources were used to prepare the credit ratings: public information and information provided by the rated entity. Financial data and metrics have been derived by CI from the rated entity’s financial statements for FY2022-25 and H1 26. CI may also have relied upon non-public financial information provided by the rated entity and may also have used financial information from credible, independent third-party data providers.
CI considers the quality of information available on the rated entity to be satisfactory for the purposes of assigning and maintaining credit ratings. CI does not audit or independently verify information received during the rating process.
The principal methodologies used to determine the ratings are the Bank Rating Methodology (dated 3 April 2019) and the National Scale Ratings Criteria for Iraq, (dated 15 March 2020). For the methodology and our definition of default see Information on rating scales and definitions and the time horizon of rating outlooks can be found at Historical performance data, including default rates, are available from a central repository established by ESMA (CEREP) at
This rating action follows a scheduled periodic (annual) review of the rated entity. International and National ratings on the entity were first released in December 2019 and suspended in April 2024 due to a lack of sufficient information. The ratings have now been reinstated due to the receipt of more up-to-date financial data. The ratings were first released in August 2020 and last updated in November 2025. The ratings and rating outlook were disclosed to the rated entity prior to publication and were not amended following that disclosure. The ratings have been assigned or maintained at the request of the rated entity or a related third party.
Conditions of Use and General Limitations
The information contained in this publication including opinions, views, data, material and ratings may not be copied, distributed, altered or otherwise reproduced, in whole or in part, in any form or manner by any person except with the prior written consent of Capital Intelligence Ratings Ltd (hereinafter “CI”). All information contained herein has been obtained from sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error or other factors by third parties, CI or others, the information is provided “as is” and CI and any third-party providers make no representations, guarantees or warranties whether express or implied regarding the accuracy or completeness of this information.
Without prejudice to the generality of the foregoing, CI and any third-party providers accept no responsibility or liability for any losses, errors or omissions, however caused, or for the results obtained from the use of this information. CI and any third-party providers do not accept any responsibility or liability for any damages, costs, expenses, legal fees or losses or any indirect or consequential loss or damage including, without limitation, loss of business and loss of profits, as a direct or indirect consequence of or in connection with or resulting from any use of this information.
Credit ratings and credit-related analysis issued by CI are current opinions as of the date of publication and not statements of fact. CI’s credit ratings provide a relative ranking of credit risk. They do not indicate a specific probability of default over any given time period. The ratings do not address the risk of loss due to risks other than credit risk, including, but not limited to, market risk and liquidity risk. CI’s ratings are not a recommendation to purchase, sell, or hold any security and do not comment as to market price or suitability of any security for a particular investor. Further information on the attributes and limitations of ratings can be found in the applicable methodology or else at
The information contained in this publication does not constitute investment or financial advice. As the ratings and analysis are opinions of CI they should be relied upon to a limited degree and users of this information should conduct their own risk assessment and due diligence before making any investment or other business decisions.
Copyright © Capital Intelligence Ratings Ltd 2026
Capital Intelligence Ratings (CI Ratings or CI) today announced that it has affirmed the Long-Term Foreign Currency Rating (LT FCR) and Short-Term Foreign Currency Rating (ST FCR) of Al Janoob Islamic Bank (JIB or the Bank) at ‘B-’ and ‘B’, respectively. At the same time, CI Ratings has affirmed JIB’s Bank Standalone Rating (BSR) of ‘b-’, Core Financial Strength (CFS) rating of ‘b+’ and Extraordinary Support Level (ESL) of Uncertain. The Outlook for both the LT FCR and BSR is Stable.
CI has also affirmed JIB’s Long- and Short-Term Ratings on the Iraq National Scale at ‘iqBBB’ and ‘iqA3’, respectively, with a Stable Outlook. These ratings are supported and constrained by the same factors as the CFS, as outlined below.
The Bank’s BSR is derived from a CFS rating of ‘b+’ and an OPERA of ‘c+’. The CFS is supported by JIB’s good balance sheet leverage ratio and capitalisation (after a sizable rights issue in 2023), high liquidity, and satisfactory financing asset quality. The capable management team is also a credit strength. The main constraints on the CFS are the Bank’s high credit risk profile (reflecting an ongoing difficult operating environment), concentrations in assets (including central bank balances) and customer deposits, weakened profitability and a relatively small balance sheet and market share. Though improving, Iraq’s weak regulatory and supervisory framework also remains a credit challenge. JIB (along with many other Iraqi banks) is currently banned by the Central Bank of Iraq (CBI) from transacting in USD, due to alleged irregularities. In partial mitigation, the Bank is able to access other hard currencies in order to fulfil financial commitments. The OPERA is at a level indicative of a high degree of risk and is a key rating constraint on the ratings for JIB (as well as for all other Iraqi banks).
We consider the likelihood of sufficient and timely official extraordinary support being made available to JIB (or any other private sector bank) in the event of financial distress to be uncertain and consequently, do not incorporate such support into the Bank’s LT FCR. Moreover, even if the government may be willing to provide extraordinary support in case of need, its financial capacity to do so is limited, as indicated by our internal assessment of Iraqi sovereign credit risk.
Despite the challenges that persist in the Iraqi operating environment (including the impact of the USD ban on JIB’s business volumes and earnings), the balance sheet has demonstrated a fair degree of resilience. This reflects an effective management team implementing a strategy appropriate for difficult business conditions, despite the impact on earnings. With trade finance activities largely suspended (due to the USD ban), management remains focused on building corporate and retail financing. In time, this will help diversify assets, funding and revenues, while reducing concentration risks. Governance standards are being strengthened, supported by a newly constituted and well qualified board. That said, significant market and regulatory risks prevail in Iraq’s still underdeveloped banking system.
JIB is amongst a handful of Iraqi private-sector banks that have fully complied with the CBI’s revised paid-up capital requirement via a sizeable rights issue (in 2023). The timely injection of fresh equity denotes good capital flexibility and firmly underscores the shareholders’ capacity and willingness to support the Bank throughout the ordinary course of business. We expect this factor, alongside a good capital buffer capable of withstanding significant losses, to remain a credit strength going forward. Although total CAR declined in 2025 due to growth in total risk-weighted assets (RWAs), it remained high and provides ample scope for sustained business expansion over the short to medium term. We note that RWA-based capital ratios are flattered by large holdings of zero-weighted CBI balances. The balance sheet leverage ratio remained conservative at 55%, with capital consisting of high-quality loss-absorbing common equity. This is important given the concentration risk and balance-sheet sensitivity to potential shocks inherent in Iraq’s operating environment.
The asset base remains skewed towards CBI balances, with the resultant concentration risk being a salient feature of all Iraqi banks. Under CI’s rating criteria, central bank balances come firmly under the sovereign risk category. A sovereign credit event could potentially transmit stress to the Bank’s balance sheet including capital, as well as earnings. This is an important risk factor for the ratings.
JIB has a tested lending policy including effective collection processes. This has enabled financing asset quality metrics to remain at a satisfactory level, despite a challenging operating environment and the growth of NPFs (Stage 3) in recent years. While the rapid financing expansion seen in prior periods would normally be a cause for concern, CI notes that growth was from a low base. The provisioning policy is prudent, with financing-loss reserves (FLR) cover for NPFs restored to more than full level (175%) in H1 26. Furthermore, the extended NPF coverage ratio stands at a high multiple, providing significant additional loss-absorption capacity. Stage 2 financings, a forward-looking indicator of future asset quality risks, remained acceptable at 4.1%. While we consider it probable that additional NPFs could emerge over the next 12 months, the magnitude of any increase is likely to be limited.
Notwithstanding the ongoing high systemic liquidity risk in Iraq, JIB’s liquidity position remains good, reflecting a still modest financing portfolio and significant CBI balances. However, liquidity is subject to considerable concentration risk, as the bulk of funds is deployed into CBI balances. Liquidity is thus vulnerable to sovereign risk. Iraqi banks as a group typically channel much of their liquidity into non-remunerative CBI balances, as there are scarce avenues in which to profitably invest surplus liquidity in the banking system. The CBI (in collaboration with the Ministry of Finance) has launched profit-earning treasury instruments for banks to deploy their idle liquidity. This is expected to lift financing income levels, and at the same time activate the secondary market. Following the retirement of expensive time deposits and withdrawals from current accounts, management has launched a new deposit scheme aimed at rebuilding customer deposits. In this regard, JIB has considerable scope to leverage the equity base. However, future deposit growth remains vulnerable to confidence shocks that can periodically impact the banking system; there persists an overall general lack of customer confidence and public trust in private-sector banks, given Iraq’s recent history.
The Bank’s profitability metrics have weakened from the good levels seen in 2022-23, in large part due to the impact of the USD ban on core banking operations. This has translated into lower business volumes (LCs and international transfers) and, in turn, lower levels of operating income. Having posted minor net loss in H1 26, the Bank expects earnings to return to positive territory in full year 2026 and to remain modest over the next twelve months. Although the erosion of risk absorption capacity at operating profit level would normally be a cause for concern, this is more than counterbalanced by a good capital buffer. In common with almost all other Iraqi banks, JIB’s operating income has historically been skewed towards non-FI, given the dearth of avenues in which to profitably invest surplus liquidity in the system. On a positive note, NFM improved significantly in H1 26, and is expected to increase further in the short term as retail lending resumes. This will likely benefit high-quality NFI generation. Non-FI sources remain limited and volatile, due to a relatively narrow product mix and concentrated customer base. Although the cost-to-income ratio weakened in H1 26, this was due to lower operating income (rather than uncontrolled cost growth).
Iraq’s OPERA takes into account economic volatility and underlying structural and fiscal weaknesses, as well as significant socio-economic imbalances and deficiencies in the country’s political and institutional frameworks. Although the Iraqi economy had started to recover starting in 2024, buoyed by favourable oil prices, recent geopolitical events have created difficult economic conditions. In turn, this has elevated systemic credit and liquidity risk. The OPERA also reflects the challenges inherent in a banking sector that is small, underdeveloped and dominated by financially weak state-owned banks. Both the legal system and corporate governance standards are also weak.
Rating Outlook
The Outlook for JIB’s ratings is Stable, indicating that it is unlikely to change over the next 12 months. This reflects our view that the Bank will maintain its current risk profile, including the concentrations in the balance sheet.
Rating Dynamics: Upside Scenario
We do not expect an upward change in the ratings and/or outlook, unless the OPERA improves. This is currently seen as being unlikely to change within a 12-month timeframe. Positive pressure could, however, be exerted on the CFS, were the Bank to be able to increase market share significantly, reduce concentration risks and improve the ROAA.
Rating Dynamics: Downside Scenario
While not our current expectation, JIB’s ratings could be reduced by one notch over the next 12 months, should key credit metrics worsen significantly and/or should the OPERA be revised downwards.
*A National Rating summarises the repayment risk of an entity relative to other entities within the same economy. It is not an absolute measurement of risk. National Ratings are not directly comparable across borders.
Contact
Primary Analyst: Morris Helal, Senior Credit Analyst; E-mail: ...
Secondary Analyst and Committee Chairperson: Rory Keelan, Senior Credit Analyst
About the Ratings
The credit ratings have been issued by Capital Intelligence Ratings Ltd, P.O. Box 53585, Limassol 3303, Cyprus.
The following information sources were used to prepare the credit ratings: public information and information provided by the rated entity. Financial data and metrics have been derived by CI from the rated entity’s financial statements for FY2022-25 and H1 26. CI may also have relied upon non-public financial information provided by the rated entity and may also have used financial information from credible, independent third-party data providers.
CI considers the quality of information available on the rated entity to be satisfactory for the purposes of assigning and maintaining credit ratings. CI does not audit or independently verify information received during the rating process.
The principal methodologies used to determine the ratings are the Bank Rating Methodology (dated 3 April 2019) and the National Scale Ratings Criteria for Iraq, (dated 15 March 2020). For the methodology and our definition of default see Information on rating scales and definitions and the time horizon of rating outlooks can be found at Historical performance data, including default rates, are available from a central repository established by ESMA (CEREP) at
This rating action follows a scheduled periodic (annual) review of the rated entity. International and National ratings on the entity were first released in December 2019 and suspended in April 2024 due to a lack of sufficient information. The ratings have now been reinstated due to the receipt of more up-to-date financial data. The ratings were first released in August 2020 and last updated in November 2025. The ratings and rating outlook were disclosed to the rated entity prior to publication and were not amended following that disclosure. The ratings have been assigned or maintained at the request of the rated entity or a related third party.
Conditions of Use and General Limitations
The information contained in this publication including opinions, views, data, material and ratings may not be copied, distributed, altered or otherwise reproduced, in whole or in part, in any form or manner by any person except with the prior written consent of Capital Intelligence Ratings Ltd (hereinafter “CI”). All information contained herein has been obtained from sources believed to be accurate and reliable. However, because of the possibility of human or mechanical error or other factors by third parties, CI or others, the information is provided “as is” and CI and any third-party providers make no representations, guarantees or warranties whether express or implied regarding the accuracy or completeness of this information.
Without prejudice to the generality of the foregoing, CI and any third-party providers accept no responsibility or liability for any losses, errors or omissions, however caused, or for the results obtained from the use of this information. CI and any third-party providers do not accept any responsibility or liability for any damages, costs, expenses, legal fees or losses or any indirect or consequential loss or damage including, without limitation, loss of business and loss of profits, as a direct or indirect consequence of or in connection with or resulting from any use of this information.
Credit ratings and credit-related analysis issued by CI are current opinions as of the date of publication and not statements of fact. CI’s credit ratings provide a relative ranking of credit risk. They do not indicate a specific probability of default over any given time period. The ratings do not address the risk of loss due to risks other than credit risk, including, but not limited to, market risk and liquidity risk. CI’s ratings are not a recommendation to purchase, sell, or hold any security and do not comment as to market price or suitability of any security for a particular investor. Further information on the attributes and limitations of ratings can be found in the applicable methodology or else at
The information contained in this publication does not constitute investment or financial advice. As the ratings and analysis are opinions of CI they should be relied upon to a limited degree and users of this information should conduct their own risk assessment and due diligence before making any investment or other business decisions.
Copyright © Capital Intelligence Ratings Ltd 2026
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