Arab Bank held its general assembly meeting online on March 30th, 2023. The meeting was headed by Mr. Sabih Masri, Arab Bank’s Chairman in the presence of the board of directors, the Chief Executive Officer, and shareholders (in attendance and by proxy), which make up 77.97% of the bank’s capital. Dr. Wael Armouti, the Companies’ Controller had also attended the meeting along with representatives from the Central Bank of Jordan.
During the meeting, the recommendation by the Board of Directors to distribute a cash dividend of 25% for the year 2022 and all articles on the agenda were endorsed.
Mr. Masri, Chairman of the Board of Directors, highlighted that the global economy faced several challenges in 2022. Global growth slowed down noticeably. At the same time, inflationary momentum built up, spreading globally and reaching high levels in advanced and other countries that were unprecedented in four decades. To slow demand and contain inflation, major central banks embarked on raising interest rates at a rapid pace and started tightening their monetary policies. Further, global geopolitical tensions increased in 2022 with the prolonged conflict in Ukraine, and its ramifications including higher energy and food prices and increased risk-off sentiment toward investment particularly in emerging markets, which was another factor for slowing down the global economy. Toward the end of 2022, the global economy had some promising signs of improvement, including the re-opening of the Chinese economy, moderation in the energy prices, and a slowdown in the inflation rates, prompting central banks to reduce the pace of increases in interest rates.
Mr. Masri noted that the growth of the Arab economies improved. This was driven by the full re-opening of economic activities after the retreat of the COVID-19 pandemic, along with a significant increase in the demand for many sectors including services, especially tourism, and mining activities such as oil, gas, and fertilizers. In addition, ongoing structural reforms in several countries contributed to this growth, albeit to varying degrees.
Mr. Masri noted that Arab central banks raised interest rates to contain inflation and support the attractiveness of their currencies. In light of global and regional economic volatility, and with the support of central banks, the Arab banking sector implemented strategies to mitigate the impact of higher interest rates locally, while adopting prudent policies and measures to ensure the quality of the credit portfolio. Broadly speaking, the Arab banking sector has maintained high levels of capital adequacy and enhanced its profitability and liquidity, while relying on a broad and stable funding base.
Mr. Masri also reaffirmed that despite the challenges that the world and the region witnessed in 2022, Arab Bank continued to achieve positive results through its strategic and institutional focus on utilizing its wide geographical presence and competent business diversity, as well as its own digital transformation strategy to reach strong and sustainable levels of revenue and profits growth. The Group’s operating profits increased by 23% to reach $1.35 billion, and the bank continued to support its capital base and enhance its key performance indicators.
He also noted that Arab Bank continued its pivotal role in supporting the efforts aimed at developing the economies and societies which it operates in and contributing to achieving sustainable development at the economic, social, and environmental levels, locally and regionally. This role is primarily reflected in the bank’s contribution to supporting and financing strategic projects across various vital sectors, financing international trade, supporting start-ups and SMEs, and promoting financial inclusion by providing advanced banking services that meet the needs of various sectors and segments.
In the period ahead, Mr. Masri confirmed that Arab Bank will continue to build on its achievements based on an ambitious future vision and an integrated institutional strategy. Mr. Masri also reaffirmed the Group’s confidence in its ability to consolidate its position as a leading financial institution both locally and regionally, providing the most advanced and innovative banking services and solutions to customers as a trusted banking partner to both the customers and shareholders.
Mr. Masri concluded by thanking the Central Bank of Jordan for its pivotal role in sustaining the resilience and stability of the Jordanian banking system under all circumstances.
Ms. Randa Sadik, CEO of Arab Bank, stated that Arab Bank Group closed 2022 reporting net income after tax of $544.3 million as compared to $314.5 million in 2021. The Group also maintained its solid financial stance with Group equity of $10.4 billion.
Excluding the impact of the devaluation of several currencies against the US dollar, the Group’s loans and deposits grew by 5% to reach $35.4 billion and $ 47.7 billion, respectively, at the end of 2022.
She highlighted that Arab Bank Group continued to deliver sustainable growth rates during 2022 through its branch network and footprint in local and international markets, despite the economic challenges stemming from high inflation, increased interest rates and the devaluation in exchange rates of several currencies against the US dollar. The bank’s net operating profit grew by 23% to reach $1.35 billion, driven by the growth in revenues from its core banking business, its diversified sources of income, with focus on non-interest income, as well as controlling operating expenses in line with the bank’s prudent strategy.
Ms. Sadik also noted that the bank achieved strong performance indicators in line with its business model. The Group’s liquidity and asset quality remains solid where loan-to-deposit ratio stood at 74.2% and credit provisions held against non-performing loans continue to exceed 100%. Arab Bank Group maintains a strong capital base that is predominantly composed of common equity with a capital adequacy ratio of 16.6%, higher than the minimum required by the Central Bank of Jordan according to Basel III regulations.
Ms. Sadik concluded by affirming the bank's digital transformation efforts through its ambitious strategy on this front, noting that during the year the bank launched several digital banking services and solutions across various markets to meet the evolving needs and expectations of the different customer segments, including future generations, in line with the latest trends and developments.
