The efficiency of banking operations is widely recognized as a critical determinant of national economic growth and development. Consequently, fostering a competitive environment to enhance both the qualitative and quantitative performance of banks is essential for achieving macroeconomic objectives. The Iranian banking system currently faces significant challenges, including an elevated level of non-performing loans (NPLs), the presence of fictitious assets, inadequate provisioning, and systemic financial imbalances. This research, employing a descriptive-analytical methodology and relying on secondary data from library resources, proposes a strategic intervention centered on the implementation of a comprehensive asset quality review (AQR) program and the adoption of International Financial Reporting Standards (IFRS). Asset quality, a fundamental indicator of a bank's financial soundness, necessitates a rigorous evaluation of the condition and recoverability of loans, investments, and other assets. This assessment provides critical insights for managers, investors, and regulatory bodies into the inherent risks associated with specific banking institutions. The implementation of a robust AQR program is expected to yield improvements in asset quality, facilitate the removal of impaired assets from bank balance sheets, and ultimately result in smaller, yet higher-quality balance sheets. Enhanced asset quality translates into healthier cash flows, thereby bolstering overall bank performance. To effectively realize these benefits, the central bank must prioritize the harmonization of regulatory frameworks with IFRS and intensify its prudential oversight of the banking sector. Specifically, detailed guidance and enforcement mechanisms regarding AQR processes, provisioning requirements, and asset classification are crucial. Furthermore, the central bank should actively promote transparency and disclosure to enhance market discipline and foster a more stable and resilient banking system.