The Market Share of Direct Credit Facilities of Jordanian National Commercial Banks in 2012 & 2013

Contact Details: 00962 7 9767 7418 - [email protected]

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Commercial Banking Sector’s Direct Credit Facilities as of December 31, 2013

2

Contents Introduction ................................................................................................................................ 4

Direct Credit Facilities ................................................................................................................ 5

Consolidated Jordanian Banking Sector .................................................................................... 6

The Market Share of Net Direct Credit Facilities ......................................................................... 7

Dictionary ..................................................................................................................................15

Banks’ Year of Establishment ...................................................................................................16

References ...............................................................................................................................17

About the Author .......................................................................................................................18


3

﴾ َقاُلوا ُسْبَحاَنَك ََل ِعْلَم َلَنا ِإَلا َما َعلاْمَتَنا ِإناَك َأْنَت اْلَعِليُم اْلَحِكيمُ ﴿ صدق هللا العظيم

23آية –سورة البقرة


4

Introduction

The aim of this study is to report the market share of direct credit facilities of Jordanian national

commercial banks1. Thus, it will firstly offer an explanation of the direct credit facilities.

Secondly, it will also explain how the Central Bank of Jordan (CBJ) categorizes the banks in

Jordan. Thirdly, it will investigate the market share of net direct credit facilities for each of the

banks included in this study.

Moreover, it should be noted that this study excludes Arab Banking Corporation (Jordan) as it

does not disclose in its 2013 annual report its direct credit facilities in Jordan. Likewise, this

study does not also include Jordan Ahli Bank, Jordan Commercial Bank and Société Générale

de Banque – Jordanie as they have not uploaded yet their 2013 annual report in their websites2

in which it should disclose their direct credit facilities.

However, this study will only explore the market share of direct credit facilities of 9 (nine)

national commercial banks that disclosed their direct credit facilities of their 2013 annual reports.

Additionally, the excluded banks of this study will be included as having 0% market share until

they publish their annual report in order to have a comprehensive market share study of direct

credit facilities in Jordan.

1 There are 13 (thirteen) national commercial banks according to CBJ.

2 Each bank’s website as well as CBJ can be found in “Reference” section (page ).


5

Direct Credit Facilities

Direct credit facilities are financial assets with fixed and

determined payments provided or granted by the Bank

and do not have any market value in active market and

measured at amortized cost.

Impairment of direct credit facilities is recognized in the

allowance for credit losses when collection of amounts

due to the banks are not probable and when events

occur after the initial recognition of the facility that have

an impact on the estimated future cash flows of the facilities that can be reliably estimated. The

impairment is recorded in the income statement.

Interest and commission arising on non-performing facilities is suspended when loans become

impaired according to the Central Bank of Jordan‘s regulations.

Loans and the related allowance for credit losses are written off when collection procedures

become ineffective. The excess in the allowance of possible loan losses, if any, is transferred to

the statement of income, and cash recoveries of loans that were previously written off are

credited to the income statement.

Figure 1: Map of Jordan & its Administrative Divisions


6

Consolidated Jordanian Banking Sector

The Central Bank of Jordan (CBJ) classifies the banks into two major categories, namely

national banks and branches of foreign banks. Each of these categories is further divided into

commercial banks and Islamic Banks. Moreover, there are 13 (thirteen) national commercial

banks, 3 (three) national Islamic banks, 8 (eight) branches of foreign commercial banks and 1

(one) branch of foreign Islamic bank as shown in the figure below.

Figure 2: Consolidated Jordanian Banking Sector

Consolidated Banking Sector

National Banks

Commercial Banks

Arab Bank Arab Banking Corporation

(Jordan)

Arab Jordan Investment Bank

Bank al Etihad

Bank of Jordan Cairo Amman

Bank

Capital Bank of Jordan

Housing Bank for Trade & Finance

InvestBank Jordan Ahli Bank

Jordan Commercial Bank

Jordan Kuwait Bank

Société Générale de Banque –

Jordanie

Islamic Banks

Islamic International

Arab Bank

Jordan Islamic Bank

Jordan Dubai Islamic Bank

Branches of Foreign Banks

Commercial Branches

Banque Audi BLOM Bank

Citi Bank Egyptian Arab

Land Bank

National Bank of Abu Dhabi

National Bank of Kuwait

Rafidain Bank Standard Chartered

Islamic Banks

Al Rajhi Bank


7

The Market Share of Net Direct Credit Facilities

It can be seen from the below pie charts and the bar chart (See Figure 3, 4 & 5) that the Arab

Bank Group has maintained its dominance of the net direct credit facilities for the second year in

a row in which it controls more than 55% of the market; lending (accumulative) more than JOD3

10.5 billion. In addition, the Arab Bank Group has increased its market share by 0.86% in 2013

as it controlled more than 54% of the market in 2012 in which it was reported that the Arab Bank

Group lent more than JOD 9.9 billion in 2012.

Furthermore, Bank al Etihad has made a significant increase of 0.74% in the Jordanian net

direct credit facilities’ market share through lending more than JOD 1 billion in 2013 in which it

has increased its market share from 4.59% in 2012 to 5.33% in 2013. In the same time, Bank of

Jordan has made a recognized market share increase of 0.36% in 2013; controlling 5.47% of

the market share as it used to control 5.10% of the market share in 2012. It is worth noting that

the Bank of Jordan’s net direct facilities has crossed JOD 1 billion in 2013.

Similarly, Capital Bank of Jordan has raised slightly its market share from 3.42% to 3.55% in

2013 that is 0.13% in which it has lent cumulatively more than JOD 676 million as of December

31, 2013. Moreover, Invest Bank has enjoyed a conservative raise its market share by 0.05% in

which it has increased to 2.26% lending more than JOD 430 million; comparing with its 2012

market share that was 2.22% in which lending more than JOD 404 million.

On the other hand, Jordan Kuwait Bank has lost 0.79% of net direct facilities market in 2013;

resulting in controlling 6.98% of the market in which it used to control 7.77% in 2013.

Furthermore, the Housing Bank for Trade & Finance has also lost a significant portion of the

market share in which its market share has been declined from 14.72% to 13.99%; losing

0.73%. Likewise, Cairo Amman Bank’s market share declined from 5.53% to 5.07% in 2013.

Consequently, it has resulted in losing 0.46% of the net direct facilities’ market. Lastly, Arab

Jordan Investment Bank has made a slight loss of the market share by losing 0.17% in 2013;

resulting in controlling only 1.98%.

It is worth noting that the total net direct credit facilities of the abovementioned banks were more

than JOD 19 billion in 2013. In other words, there was an increase of 4.40% as the

abovementioned banks’ total net direct credit facilities was more than JOD 18.2 billion in 2012.

In other words, the total net direct credit facilities were increased by more than JOD 800 million.

3 JOD means Jordanian Dinar.


8

Figure 3: Market Share of Net Direct Credit Facilities as of December 31, 2013

55%

0%

2%

5%

6%

5%

4%

2% 0%

0%

7%

0%

14%

Arab Bank Group

Arab Banking Corporation (Jordan)


Bank al Etihad

Bank of Jordan

Cairo Amman Bank


Invest Bank

Jordan Ahli Bank


Jordan Kuwait Bank

Société Générale de Banque – Jordanie

The Housing Bank for Trade & Finance


9

Figure 4: Market Share of Net Direct Credit Facilities as of December 31, 2012

54%

0%

2%

5%

5%

6%

3%

2% 0%

0%

8%

0%

15%

Arab Bank Group

Arab Banking Corporation (Jordan)


Bank al Etihad

Bank of Jordan

Cairo Amman Bank


Invest Bank

Jordan Ahli Bank


Jordan Kuwait Bank

Société Générale de Banque – Jordanie

The Housing Bank for Trade & Finance


10

Figure 5: Increase or Decrease of the Market Share of Net Direct Credit Facilities between 2012 & 2013

-1.00%

-0.80%

-0.60%

-0.40%

-0.20%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00% P

erc

en

tage

Bank


11

Table 1: Direct Credit Facilities of the National Commercial Banks as of December 31, 2013

December 31, 2013 (JOD)

Arab Bank Group Arab

Banking

Corporation

(Jordan)

Arab Jordan

Investment

Bank

Bank al

Etihad

Bank of

Jordan

Cairo Amman

Bank

Capital

Bank of

Jordan

Invest Bank Jordan

Ahli

Bank

Jordan

Commercial

Bank

Jordan

Kuwait Bank

Société

Générale

de

Banque –

Jordanie

The Housing

Bank for

Trade &

Finance

Total

Retail Banking 1,002,041,000 N/A 60,735,059 60,631,995 257,131,496 563,047,399 119,830,038 49,259,620 N/A N/A 67,471,847 N/A 529,080,291 2,709,228,745

Real Estate Loans 722,622,000 N/A 65,483,008 159,512,078 172,920,704 128,484,249 110,724,147 75,654,099 N/A N/A 176,037,893 N/A 762,092,840 2,373,531,018

Small & Medium Enterprises 846,683,000 N/A 34,204,663 40,962,354 125,405,210 49,523,963 39,141,446 34,372,728 N/A N/A 78,502,600 N/A 286,009,786 1,534,805,750

Large Companies 7,982,220,000 N/A 101,260,000 766,582,808 482,167,347 173,165,255 451,940,687 309,620,252 N/A N/A 906,234,208 N/A 1,042,824,843 12,216,015,400

Banks & Financial Institutions 194,610,000 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 194,610,000

Government & Public Sector 627,013,000 N/A 121,990,025 55,837,525 109,062,116 112,914,549 13,681,266 0 N/A N/A 164,651,790 N/A 357,220,533 1,562,370,804

Total 11,375,189,000 N/A 383,672,755 1,083,526,760 1,146,686,873 1,027,135,415 735,317,584 468,906,699 N/A N/A 1,392,898,338 N/A 2,977,228,293 20,590,561,717

Interest & Commission in

Suspense

215,961,000 N/A 834,965 15,503,598 13,502,398 11,387,288 23,731,813 29,841,894 N/A N/A 8,584,421 N/A 82,310,498 401,657,875

Provision for Impairment of

Direct Credit Facilities

619,972,000 N/A 5,522,939 53,199,022 92,837,291 50,960,953 35,219,449 8,181,992 N/A N/A 56,125,578 N/A 232,069,846 1,154,089,070

Total 835,933,000 N/A 6,357,904 68,702,620 106,339,689 62,348,241 58,951,262 38,023,886 N/A N/A 64,709,999 N/A 314,380,344 1,555,746,945

Net Direct Credit Facilities 10,539,256,000 N/A 377,314,851 1,014,824,140 1,040,347,184 964,787,174 676,366,322 430,882,813 N/A N/A 1,328,188,339 N/A 2,662,847,949 19,034,814,772


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Table 2: Direct Credit Facilities of the National Commercial Banks as of December 31, 2012

December 31, 2012

(JOD)

Arab Bank

Group

Arab

Banking

Corporation

(Jordan)

Arab Jordan

Investment

Bank

Bank al

Etihad

Bank of

Jordan

Cairo Amman

Bank

Capital

Bank of

Jordan

Invest Bank Jordan

Ahli

Bank

Jordan

Commercial

Bank

Jordan

Kuwait Bank

Société

Générale

de

Banque –

Jordanie

The Housing

Bank for

Trade &

Finance

Total

Retail Banking 947,145,000 N/A 78,780,093 60,127,279 230,287,521 564,268,543 92,192,035 38,718,197 N/A N/A 58,491,192 N/A 521,624,123 2,591,633,983

Real Estate Loans 643,603,000 N/A 58,438,232 147,520,561 174,818,183 128,094,176 97,073,808 72,299,850 N/A N/A 167,413,652 N/A 663,785,699 2,153,047,161

Small & Medium

Enterprises

694,356,000 N/A 33,221,929 63,906,655 137,619,940 49,734,923 31,306,404 49,686,500 N/A N/A 64,306,449 N/A 283,840,326 1,407,979,126

Large Companies 7,535,486,000 N/A 129,044,260 597,789,433 401,263,334 183,949,711 438,388,003 285,293,727 N/A N/A 1,044,218,684 N/A 1,107,315,957 11,722,749,109

Banks & Financial

Institutions

309,074,000 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 309,074,000

Government & Public

Sector

706,089,000 N/A 118,554,590 42,884,010 84,103,745 138,057,561 14,645,961 0 N/A N/A 158,218,421 N/A 364,464,087 1,627,017,375

Total 10,835,753,000 N/A 418,039,104 912,227,938 1,028,092,723 1,064,104,914 673,606,211 445,998,274 N/A N/A 1,492,648,398 N/A 2,941,030,192 19,811,500,754

Interest & Commission

in Suspense

194,592,000 N/A 8,017,634 19,863,809 12,764,723 10,994,072 16,014,286 33,894,449 N/A N/A 11,140,622 N/A 67,430,092 374,711,687

Provision for

Impairment of Direct

Credit Facilities

703,564,000 N/A 18,087,743 55,835,959 84,700,678 45,774,043 34,281,512 7,792,557 N/A N/A 65,248,254 N/A 189,717,804 1,205,002,550

Total 898,156,000 N/A 26,105,377 75,699,768 97,465,401 56,768,115 50,295,798 41,687,006 N/A N/A 76,388,876 N/A 257,147,896 1,579,714,237

Net Direct Credit

Facilities

9,937,597,000 N/A 391,933,727 836,528,170 930,627,322 1,007,336,799 623,310,413 404,311,268 N/A N/A 1,416,259,522 N/A 2,683,882,296 18,231,786,517


13

Table 3: Changes in Direct Credit Facilities between 2012 & 2013

(JOD) Arab Bank

Group

Arab

Banking

Corporation

(Jordan)

Arab Jordan

Investment

Bank

Bank al

Etihad

Bank of

Jordan

Cairo

Amman Bank

Capital

Bank of

Jordan

Invest Bank Jordan

Ahli

Bank

Jordan

Commercial

Bank

Jordan Kuwait

Bank

Société

Générale

de

Banque –

Jordanie

The Housing

Bank for

Trade &

Finance

Total

Retail Banking 54,896,000 N/A (18,045,034) 504,716 26,843,975 (1,221,144) 27,638,003 10,541,423 N/A N/A 8,980,655 N/A 7,456,168 117,594,762

Real Estate Loans 79,019,000 N/A 7,044,776 11,991,517 (1,897,479) 390,073 13,650,339 3,354,249 N/A N/A 8,624,241 N/A 98,307,141 220,483,857

Small & Medium Companies 152,327,000 N/A 982,734 (22,944,301) (12,214,730) (210,960) 7,835,042 (15,313,772) N/A N/A 14,196,151 N/A 2,169,460 126,826,624

Large Companies 446,734,000 N/A (27,784,260) 168,793,375 80,904,013 (10,784,456) 13,552,684 24,326,525 N/A N/A (137,984,476) N/A (64,491,114) 493,266,291

Banks & Financial Institutions (114,464,000) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (114,464,000)

Government & Public Sector (79,076,000) N/A 3,435,435 12,953,515 24,958,371 (25,143,012) (964,695) 0 N/A N/A 6,433,369 N/A (7,243,554) (64,646,571)

Total 539,436,000 N/A (34,366,349) 171,298,822 118,594,150 (36,969,499) 61,711,373 22,908,425 N/A N/A (99,750,060) N/A 36,198,101 779,060,963

Interest & Commission in

Suspense

21,369,000 N/A (7,182,669) (4,360,211) 737,675 393,216 7,717,527 (4,052,555) N/A N/A (2,556,201) N/A 14,880,406 26,946,188

Provision for Impairment of Direct

Credit Facilities

(83,592,000) N/A (12,564,804) (2,636,937) 8,136,613 5,186,910 937,937 389,435 N/A N/A (9,122,676) N/A 42,352,042 (50,913,480)

Total (62,223,000) N/A (19,747,473) (6,997,148) 8,874,288 5,580,126 8,655,464 (3,663,120) N/A N/A (11,678,877) N/A 57,232,448 (23,967,292)

Net Direct Credit Facilities 601,659,000 N/A (14,618,876) 178,295,970 109,719,862 (42,549,625) 53,055,909 26,571,545 N/A N/A (88,071,183) N/A (21,034,347) 803,028,255


14

Table 4: Changes in Direct Credit Facilities between 2012 & 2013

(%) Arab

Bank

Group

Arab

Banking

Corporation

(Jordan)

Arab

Jordan

Investment

Bank

Bank al

Etihad

Bank

of

Jordan

Cairo

Amman

Bank

Capital

Bank of

Jordan

Invest

Bank

Jordan

Ahli

Bank

Jordan

Commercial

Bank

Jordan

Kuwait

Bank

Société

Générale de

Banque –

Jordanie

The

Housing

Bank for

Trade &

Finance

Total

Retail Banking 5.80% N/A -22.91% 0.84% 11.66% -0.22% 29.98% 27.23% N/A N/A 15.35% N/A 1.43% 4.54%

Real Estate Loans 12.28% N/A 12.06% 8.13% -1.09% 0.30% 14.06% 4.64% N/A N/A 5.15% N/A 14.81% 10.24%

Small & Medium Companies 21.94% N/A 2.96% -35.90% -8.88% -0.42% 25.03% -30.82% N/A N/A 22.08% N/A 0.76% 9.01%

Large Companies 5.93% N/A -21.53% 28.24% 20.16% -5.86% 3.09% 8.53% N/A N/A -13.21% N/A -5.82% 4.21%

Banks & Financial Institutions -37.03% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -37.03%

Government & Public Sector -11.20% N/A 2.90% 30.21% 29.68% -18.21% -6.59% 0% N/A N/A 4.07% N/A -1.99% -3.97%

Total 4.98% N/A -8.22% 18.78% 11.54% -3.47% 9.16% 5.14% N/A N/A -6.68% N/A 1.23% 3.93%

Interest & Commission in Suspense 10.98% N/A -89.59% -21.95% 5.78% 3.58% 48.19% -11.96% N/A N/A -22.94% N/A 22.07% 7.19%

Provision for Impairment of Direct Credit Facilities -11.88% N/A -69.47% -4.72% 9.61% 11.33% 2.74% 5.00% N/A N/A -13.98% N/A 22.32% -4.23%

Total -6.93% N/A -75.65% -9.24% 9.11% 9.83% 17.21% -8.79% N/A N/A -15.29% N/A 22.26% -1.52%

Net Direct Credit Facilities 6.05% N/A -3.73% 21.31% 11.79% -4.22% 8.51% 6.57% N/A N/A -6.22% N/A -0.78% 4.40%


15

Dictionary

English العربية

Amortized cost التكلفة المطفأة

Banks & Financial Institutions المصارف والمؤسسات المالية

Credit Cards بطاقات ائتمان

Direct Credit Facilities تسهيالت ائتمانية مباشرة

Discounted Bills كمبياالت

Government & Public Sector الحكومة والقطاع العام

Interest & Commission in Suspense فوائد وعموالت معلقة

Large Companies الشركات الكبرى

Loans & Advances قروض وسلف

Net Direct Credit Facilities صافي التسهيالت االئتمانية المباشرة

Overdraft حسابات جارية مدينة

Provision for Impairment - Direct Credit Facilities مخصص تدني تسهيالت ائتمانية مباشرة

Real Estate Loans القروض العقارية

Retail Banking (التجزئة)ألفراد ل ةيفرصملا تامدخلا

Small & Medium Companies منشآت صغيرة ومتوسطة


16

Banks’ Year of Establishment

Number Bank Reuters Code Year of Establishment

1 Arab Bank Group ARBK 1930

2 Arab Banking Corporation (Jordan) ABCO 1990

3 Arab Jordan Investment Bank AJIB 1978

4 Bank al Etihad USBI 1978

5 Bank of Jordan BOJX 1960

6 Cairo Amman Bank CABK 1960

7 Capital Bank of Jordan EXFB 1995

8 Invest Bank INVB 1982

9 Jordan Ahli Bank AHLI 1955

10 Jordan Commercial Bank JCBK 1977

11 Jordan Kuwait Bank JOKB 1976

12 Société Générale de Banque – Jordanie SGBJ 1965

13 The Housing Bank for Trade & Finance THBK 1973


17

References [Arab Bank Plc] http://www.arabbank.com.jo/

[Arab Banking Corporation (Jordan)] http://www.arabbanking.com.jo/

[Arab Jordan Investment Bank] http://www.ajib.com/en

[Bank al Etihad] http://www.bankaletihad.com/

[Bank of Jordan] http://www.bankofjordan.com/boj50/index.htm

[Cairo Amman Bank] http://www.cab.jo/

[Capital Bank of Jordan] http://www.capitalbank.jo/

[Central Bank of Jordan] http://www.cbj.gov.jo/

[Companies Control Department] http://www.ccd.gov.jo/english/index.php

[Invest Bank] http://www.investbank.jo/

[Jordan Ahli Bank] http://www.ahli.com/

[Jordan Commercial Bank] http://www.jcbank.com.jo/en

[Jordan Kuwait Bank] http://www.jkb.com/

[Securities Depository Center] http://sdc.com.jo/english/index.php

[Société Générale de Banque – Jordanie] http://www.sgbj.com.jo/sgbj/en/Home

[The Housing Bank for Trade & Finance] http://www.hbtf.com/wps/portal

http://www.arabbank.com.jo/

http://www.arabbanking.com.jo/

http://www.ajib.com/en

http://www.bankaletihad.com/

http://www.bankofjordan.com/boj50/index.htm

http://www.cab.jo/

http://www.capitalbank.jo/

http://www.cbj.gov.jo/

http://www.ccd.gov.jo/english/index.php

http://www.investbank.jo/

http://www.ahli.com/

http://www.jcbank.com.jo/en

http://www.jkb.com/

http://sdc.com.jo/english/index.php

http://www.sgbj.com.jo/sgbj/en/Home

http://www.hbtf.com/wps/portal


18

About the Author

Awarded First Class Honours in Bachelor of Arts

(Honours) Business Management from the

University of Greenwich, London – UK.

Working as a Project Finance Officer for an Iraqi-

owned Group in which representing the CEO and

shareholders' interest in 23 companies,

subsidiaries and affiliates in Iraq, Jordan,

Lebanon and UAE.

Previous works related to the Jordanian Banking

Sector:

1. Jordan's Commercial Banking Sector

Ranking as of June 30, 2013.

2. Are Jordanian Banks Jordanian?

3. The External Auditors' Market Share in

the Jordanian Banking Sector in 2012.

4. Retail Branches per Jordanians: Retail

Banking Statistics in Jordan

5. Jordan’s Commercial Banking Sector

Ranking as of December 31, 2013

Key Skills:

1. Budgeting & Forecasting

2. Business Development, Planning & Troubleshooting

3. Cost Analysis & Cutting

4. Entrepreneurship, SMEs & Local Development

5. Financial Analysis, Modeling & Studies

6. Feasibility & Research Studies

7. Legal Writing


19

Contact Details:

00962 7 9767 7418

[email protected]

mailto:[email protected]

The Market Share of Direct Credit Facilities of Jordanian National Commercial Banks in 2012 & 2013

Economy & Finance