Fitch rates Jordan Islamic Bank for Finance and Investment IDR 'BB-'

The IDRs and Individual rating of JIB reflect its strong franchise in Islamic banking in Jordan, good profitability and strong funding base. They also reflect fairly basic risk management systems, the risks associated with rapid loan growth and reliance on a small and undiversified economy. The Support rating reflects Fitch's opinion that there is a moderate probability of JIB being supported by the Jordanian authorities, in case of need.

JIB's operating profit increased 44% yoy in 2007, driven by strong growth in Murabaha (purchase and resale) transactions and rising investment revenues. Investment revenues represent a large proportion of total revenues and, although they benefit profitability, they could prove volatile in the medium term. The bank's cost/income ratio decreased to 35% in FY07 (FY06: 40%) and compares well with the peer group.

Funding is one of JIB's strengths, reflecting the bank's strong franchise, with the bulk of its funding coming from its sizeable customer deposit base. Liquidity is good, with a large proportion of assets placed with the Central Bank of Jordan. Fitch considers JIB's capitalisation to be adequate.

JIB is the fifth-largest bank in Jordan by total assets and provides a broad range of retail and corporate financial services in accordance with Shari'ah principles. At end-2007, according to the bank's estimates, it had market shares of 7.2% of system assets and 10.6% of system deposits. Bahrain-based Al-Baraka Banking Group is the largest shareholder in JIB, with a 57% stake at end-2007.