Fitch affirms Bank of Jordan at IDR 'BB-'; Outlook Stable

The IDRs and Individual rating reflect BOJ's good domestic franchise, sound profitability and competent management. The ratings also recognise the improving but potentially volatile operating environment. Although operating conditions are, at present, relatively benign in Jordan, the country is vulnerable to economic and political tensions.

BOJ's strategy is to expand its retail operations and target SMEs to strengthen the bank's domestic franchise and lift profitability. With the third-largest branch network in the kingdom, BOJ should be able to grow in this area, although it will face increasing competition from other banks entering this segment. Recent initiatives have focused on modernising the branch network, and centralising operations and IT systems. This should lead to improvements in cost efficiency and risk management.

Profitability has continued to improve in benign operating conditions. Net interest income typically accounts for about two-thirds of the bank's operating revenues; it increased by 32% during 2006, but by a slower 5% in 9M07. The bank's net interest margin remains strong, supported by a relatively low cost of funds, and compares well with its peers.

BOJ is the fifth-largest commercial bank in Jordan and operates 73 branches in Jordan and seven in the Palestinian Territories. It offers a comprehensive range of retail and corporate banking products, complemented by treasury and investment services.