AMMAN,(Reuters) – Jordan’s Arab Bank reported its 2009 net profit fell 31.4 percent after bad debts ballooned in the wake of the global financial crisis.
Arab Bank, Jordan’s largest lender, said 2009 net profit fell to $575.5 million from $839.8 million a year earlier. The bank put aside $204 million in provisions for non-performing loans in 2009, up from $40.4 million in 2008.
Most Jordanian banks have set aside higher provisions to cover possible defaults and non-performing loans by businesses and real-estate firms hit by the global downturn.
Arab Bank said last June that it was exposed to troubled Saudi Arabian groups Saad and Al Gosaibi but added that it would not affect its financial position. Arab Bank is one of the few Jordanian banks active in global financial markets. Most banks in the family-dominated banking sector have limited exposure to Western markets thanks to their modest risk profiles and their range of simpler financial products.
Bankers said while the credit provisions weighed on profits, Arab Bank is cushioned by a healthy capital base and $8 billion of shareholders equity.
The assets of Arab Bank, which includes Arab Bank Switzerland based in Zurich, rose to $50.6 billion at the end of 2009 from $45.6 billion a year earlier.
Cash and balances with central banks rose to $11.73 billion at end of 2009 against $7.842 billion a year earlier, the statement showed.
Bankers said Arab Bank and other financial institutions in the region will continue to book provisions to cover defaults, though not at the same high levels they have put aside since the start of the year.