Jordan's Arab Bank records 61% surge in 2021 profit amid continued economic recovery

A rise in net interest income drove profitability despite pandemic-driven uncertainties

Arab Bank's headquarters in Amman. Jordan's largest lender reported a 61% rise in 2021 profits. Reuters

Arab Bank, Jordan's biggest lender, reported a 61 per cent surge in its 2021 net profit, as net interest and commission income rose amid continued economic recovery.

Net income after tax jumped to $314.5 million from $195m in 2020, despite pandemic-driven uncertainties, the lender said on Sunday.

“The year 2021 showed a partial recovery of the economic environment, which the bank benefited from” Nemeh Sabbagh, Arab Bank chief executive, said.

The bank recorded a 15 per cent growth in net interest and commission income, with net operating income increasing 8 per cent to reach $1.11 billion.

“The group enjoys high liquidity and a strong capital base with a loan to deposit ratio of 73.4 per cent and a capital adequacy ratio of 16.5 per cent, Mr Sabbagh said.

“The group continues to hold credit provisions against non-performing loans in excess of 100 per cent.”

Banks across the world faced a tougher operating environment amid continued pandemic-driven uncertainties last year. However, the outlook is improving amid as global economic continues to recovery from its worst recession since the 1930s.

Historically low interest rates have made it difficult to boost profits, but central banks across the globe are looking to tighten accommodative monetary policies and raise interest rate to combat inflation, boosting prospects of a further improvement in banks’ net interest income and profitability.

Arab Bank’s 2021 “underlying performance reflects its strategic directive in dealing with the challenging and changing operating environment and its prudent operating policies of maintaining strong liquidity and healthy capital positions”, Sabih Masri, Arab Bank chairman, said.

The lender, which has more than 600 branches across five continents, consolidated the financial statements of Oman Arab Bank under its group accounts, which increased total assets by $8.4bn to reach $63.8bn, compared to $54.4bn for the same period last year.

Customer deposits grew 22 per cent year on year to reach $47.1bn, while loans grew 30 per cent to $34.6bn.

“The consolidation of Oman Arab Bank has materially increased customer deposits and loans by $7.3bn and $7.5bn, respectively,” the bank said.

The bank’s group equity grew to $10.3bn and its board recommended a 20 per cent cash dividends for the 2021 financial year.

Arab Bank remains committed to its digital transformation drive, which is an “integral part” of its growth strategy, it said on Sunday.

Last year, the bank launched Reflect, the first neobank in Jordan, which provides branchless services to millennials through its app.