Capital Intelligence affirms Jordan Islamic Bank's ratings

JIB continues to control the lion's share of Islamic banking assets, deposits and capital within the Jordanian banking sector despite the entry of a number of GCC-based Islamic institutions in recent years. Notwithstanding the rise in JIB's problem financings, the quality of the financing portfolio remains satisfactory as evidenced by the comparatively low ratio of non-performing financing facilities together with the good coverage provided by financing-loss reserves and the investment risk fund.

Nonetheless, the visibly slower economic growth in Jordan has heightened credit risks in the local market and created a challenging operating environment. The Bank's liquidity position has consistently been strong, in common with other Jordanian banks, reflecting the significant level of placements with the central bank.

Profitability however declined significantly at both the net and operating profit levels, from a record high in the previous year, due to lower net profit sharing and non profit sharing income. These declines stemmed partly from a reduction in investment revenue attributed to a fall in Jordan's stock market indices and lower trading volumes. JIB's performance as measured by the ROAA ratio nonetheless remained satisfactory and was similar to the Jordanian industry average. Capital adequacy continues to be comfortable and was supported by a reasonable rate of profit retention.

With total assets of JD2.5bn ($3.5bn) at end September 2010, JIB is the largest Islamic bank and a significant institution in the Jordanian banking sector. Some two-thirds of capital is held by Bahrain based Al-Baraka Banking Group (ABG). The latter is owned by Jeddah based Dallah Al-Baraka Group a diversified private business group. JIB's activities are conducted in accordance with Shari'a principles and include the provision of demand and joint investment accounts in addition to financing and investment (namely Murabaha, Mudaraba, Musharaka and Ijara). The Bank operates an extensive network of 57 branches and 76 ATMs.