Bank of Jordan: Annual Report 2017

Transcription

1. Annual Reports Annual Report 2017
2. Annual Reports Our Vision To be a pioneering bank that excels in providing products and services , offers comprehensive financial solutions and acquires an advanced position in the Arab region. Our Mission To build amicable relations with our customers, optimize the returns to shareholders and contribute to social advancement by providing comprehensive financial solutions through high-quality and efficient service channels and a modern business environment that comprises an excelling team of employees. Table of Contents Page Number Board of Directors 8 Chairman’s Letter 9 Board of Directors' Report 2017 11 Consolidated Financial Statements for the Year Ended December 31, 2017 37 Additional Information as Required by the Jordan Securities Commission 2017 113 Corporate Governance 143 Disclosure and Transparency 153 Addresses of Bank of Jordan Branches 155 Bank of Jordan Public Shareholding Limited Company, established in 1960, Commercial Registration No. 13, Paid-up Capital JD 200,000,000 P.O. Box 2140 Amman 11181 Jordan, Tel.: +962 6 5696277 Fax: +962 6 5696291 E-mail: boj@bankofjordan.com.jo Website: bankofjordan.com Call Center: 06 580 77 77
3. Annual Reports His Majesty King Abdullah II Bin Al Hussein
4. Annual Reports His Royal Highness Crown Prince Hussein Bin Abdullah II
5. Annual Reports Board of Directors Chairman of the Board / Dedicated Mr. Shaker Tawfiq Fakhouri/ Representative of Al-Ekbal Jordanian General Trading (LLC). Vice Chairman Mr. Walid Tawfiq Fakhouri/ Representative of Al Tawfiq Investment House - Jordan Members: Dr. Mazen Mohammad Al Basheir / Representative of Arab Gulf General Inv. & Transport Co. Dr. Yanal Mawloud Naghouj / Representative of Al Yamama for General Investments Co. (Limited liability) Mr. "Shadi Ramzi" Abd Al-Salam Al-Majali/ Representative of Al Araka for Investments Co. Mr. Haitham Mohammed Samih Barakat/ Representative of Al Lu’lu’a Trading & Investment Co. Mr. Mohammad Anwar Hamdan Mr. Husam Rashed Manna' Mr. Walid Mohammad Al-Jamal/ Representative of Al Pharaenah Int'l for Industrial Investments Co. Mr. Walid Rafiq Anabtawi Mr. Wissam Rabee’ Saab Acting General Manager Mr. Saleh Rajab Hammad Auditors Kawasmy & Partners Co. (KPMG) 8
6. Annual Reports Chairman ’s Letter This proactive strategy was developed with attention to what we see as the true and emerging challenge posed by the evolving Dear Fellow Shareholders, technologies and methods of payment that can relegate banks to being back-end processors, while elevating technology companies to As we are marching steadily towards our sixtieth anniversary, I am pleased to present you with the Fifty Seventh Annual Report for Bank of Jordan as evidence of the notable progress the Bank has achieved over the years. For 2017, Bank of Jordan comfortably accomplished yet another year of significant growth in all of the important banking metrics: Revenue, Profit, Balance Sheet, Capitalization and Quality of Assets. Further, we reached another milestone in our regional expansion plan by opening a conventional wholesale branch in the Kingdom of Bahrain, providing us access to the entire GCC Market. Our top line revenue in 2017 has grown to JD 155 million, including one-time items, with our core Interest and Commissions revenues growing by 9.4%, year-over-year, to reach JD 127.2 million. Furthermore, our Net Profit attributable to shareholders grew by 13% over the prior year, reaching JD 46.8 million. It is worth noting that our return on average assets for 2017 was 1.86% and the return on average bank shareholders equity reached 11.15%, both continuing to be on the higher end for the banking sector in Jordan. Bank of Jordan’s balance sheet shows healthy 15% growth in deposits, reaching JD 1,845.8 million, with a comparable 18% growth in credit, reaching JD 1,447.2 million, hence reflecting a better utilization of deposits, while not sacrificing quality of assets. This quality of assets is evident from the lower non-performing loan (NPL) ratio, which dropped to 4.5%, while maintaining an NPL coverage ratio above 125%. As such, the Bank is well positioned to weather an unforeseen macroeconomic deterioration in the credit environment, while it demonstrably continues to maintain an improving quality of its clients. To conclude, our shareholders’ equity has grown by 7% to reach JD 433.7 million, while our Capital Adequacy ratio, at 19.08%, continued to be well above the regulatory mandate. As it stands, your bank, Bank of Jordan, is healthy, growing, and ready and able to expand its operations comfortably and profitably. Dear Shareholders, It is our view that the classical lending-borrowing challenges should not be the main challenges that Bank of Jordan needs to be primarily preoccupied with. As we have demonstrated, year after year and in a challenging environment, our bank is capable of comfortably growing its primary classical banking metrics, and we are confident that Bank of Jordan will continue to do so. Some of these classical challenges are the result of the accounting changes implied by the regulatory imposition of IFRS-9 and Basel-III. To this end, our assessment of the impact of the proposed regulatory accounting and business changes, as performed internally with the help of outside specialists, indicates a limited impact on Bank of Jordan finances, when these regulations become effective in the year 2018. There are multiple factors that effectively limit this impact, such as our current reliance on Tier-1 Capital, our healthy General Risk Reserves, our more-than-adequate provisioning (as per stage-3 IFRS-9 rules), and our lack of significant exposure to other financial institutions. These factors, combined with our low NPL ratios and our high quality of assets, are shielding the Bank from any significant impact due to the new regulations. Moreover, our current 19.08% Capital Adequacy Ratio (CAR) is deemed sufficient to offset any potential capital hit, while allowing the Bank to grow its lending base, even under the new rules. Additionally, the Bank has already put in place systems, practices and conducted training to readily incorporate such planned regulatory changes into our business and accounting practices, once imposed by the regulators. To preempt what we see as the real challenge, Bank of Jordan has devised a 3-year, Customer Centric, and strategic plan. The focus of this strategy is to achieve customer service excellence and mobility, while leveraging the abundance of data we have accumulated over the years. This strategic plan, concluding in the year 2020 and coinciding with our sixtieth anniversary, will lead to a leaner, more efficient bank that is more customer focused and service-mobility oriented. 9 technological and technology-related regulations. After all, banking players, worldwide, will be facing a real challenge due to the emerging the forefront. Furthermore, such trends will inevitably result in opening local and regional business to global players, especially when it comes to customer service, electronic payments and transacting. Excellence in service is set as another pillar of our strategy, where excellence for our strategic purposes was defined as excelling in all of the established service parameters: Product, People, Place, Price, Process and Promotion, as well as technology. To reach this strategic goal, the Bank will continue to invest in being a leader in technological infrastructure, especially when such innovations relate to customer service, convenience, and mobility. After all, it is our view that this most important area of excelling in customer experience, and providing choice and convenience, will be crowded with technology players. These technology players do have the potential of outperforming banks that are not ready and able to compete effectively. Thus, our strategy was devised with the view that the emerging FinTech industry here in the region, and a regulatory environment accommodating to such emerging players, should be a primary focus and an active area of investment for us to continue to be ahead of the pack. As a case in point, Bank of Jordan was the first regional bank to implement “Core Banking on the Cloud,” which we rolled out for our operations in Bahrain. We have established a bank services catalogue, prioritized such services, and are already conducting time-motion and workflow analysis on all. We are eyeing advanced next-generation technological solutions for Customer Relationship Management, Talent Management, Reconciliation, Mobility and Content Management, with the goal being to roll out such systems across the whole Bank of Jordan group. A state-of-the-art, fully functional mobile-banking application, and significantly expanding our e-Channels network, with more services, and across the group, add to our ability to serve our clients at their convenience. It is our view that adding to the mobility and convenience of our clients, especially in this evolving service environment, will enhance customer loyalty, reduce churn, and hence allow for more cross-selling opportunities, while reducing operational costs. Furthermore, opening better-targeted branches within our branch network, with the help of our GIS tools, which Bank of Jordan was the first to implement in Jordan, allow us to better penetrate target demographics and conveniently serve our customers wherever they are. In addition, our strategy makes human capital development and management a strategic goal. Intensive, high quality training of people from all business divisions (Corporate, SME and Retail) and the rolling out of a competency-based talent management practice are an integral part of our plans. Several outsourcing initiatives, in the works for 2018, will assure better service to our customers and employees alike, while simultaneously reducing our operational cost. In short, we are taking a holistic view to banking, by undertaking strategic initiatives to not only harness technological advances to achieve service and operational excellence, but also assure that such initiatives contribute to improving both our top and bottom lines. We are excited about what this transformation will bring to all of our stakeholders: customers, employees, and, most importantly, you, our shareholders. Dear Fellow Shareholders, Given our financial performance and prospects, Bank of Jordan intends to distribute 18 piasters per share as dividends, after pending Shareholders General Assembly approval, for an effective dividends yield of 6%, based on end-of-year closing stock price. We assure you that we, as those entrusted by you to conduct the bank, continue to be optimistic about the future. As we have done over the years, we will endeavor to maintain a growing balance sheet, with a strong capital position, efficient liquidity ratios, and comfortable NPL provisions, and to continue to invest in the future of this bank. Your continued support as esteemed shareholders and as clients is greatly valued. As such, our sincerest appreciation, as Chairman, Board of Directors and Executive Management, goes to you and to our staff, who are helping us all continue on our path to excellence. Yours Very Truly Shaker Tawfiq Fakhoury Chairman of the Board 10
7. Annual Reports Board of Directors ' Report 2017 Economic Performance 2017 Achievements in 2017 Analysis of Financial Position and Business Results for the Year 2017 Our Goals for 2018 Additional Information as Required by the Jordan Securities Commission 2017 11 12
8. Annual Reports Economic Performance 2017 Regional geopolitical developments continued to weigh on economic outturn in 2017 , with unemployment and debt hitting record levels. The heavy financial and social burden of hosting over one million registered Syrian refugees also took a toll on the Kingdom’s economy. Trade routes between Jordan and its neighbours were similarly affected by the turbulence, now entering its seventh year. Inflation, in due course, rose by 3.3% in the first eleven months of 2017, against -0.9% registered in the same period in 2016. Main groups of items responsible for the increase include transportation, which accounted for 13% of the increase, followed by rent; at 2.5%. Cigarettes and tobacco accounted for 8%, vegetables and legumes - dried and canned - and health groups contributed 5.2% and 8.7% respectively. Yet, other goods saw a drop in prices: meat and poultry prices declined by 5.5%, while the prices of fruits and nuts went down by 3.2%. Clothing price tags were lower by 2.9%, and cereals and products saw a negligible drop of 0.2%. On a positive note, the re-opening of Tureibil border crossing between Jordan and Iraq - once Jordan’s main export market -at the end Gross Domestic Product (%) 2012 - 2017 of August 2017, was received with much enthusiasm that exports to Baghdad could return to its pre-war level. In another boost to ties, Iraq has exempted a total of 371 Jordanian goods from customs duties, effective 2018. The macroeconomic picture shows that GDP at constant prices grew by 2.1% in the first half of 2017, maintaining the same rate registered during the corresponding half in 2016. At current prices, GDP expanded by 3.6% against 3.5% during the comparison period. 3.5 3.0 2.5 FDI recorded net inflows of JD 782.6 million between January and June 2017, up 29.4% when compared to the same period the year 2.0 of 2016. Remittances saw a minimal increase of 0.4% to JD 2.2 billion at the end of the first ten months of 2017, compared to the 1.5 before. Travel receipts surged by 12.1% to JD 2.5 billion at the end of the first nine months of 2017 compared to the first nine months first ten months of 2016. Inflation, measured against the CPI, rose by 3.3% during the first eleven months of 2017, against -0.9% recorded between January and November 2016. The increase was largely attributed to the hike in international oil prices and its repercussions on prices locally. Unemployment, meanwhile, rose to around 18.5% during the third quarter of 2017 from 15.9% registered in the same quarter of the previous year. Foreign reserves with the Central Bank of Jordan (CBJ) reached JD 11.7 billion at the end of October 2017, a retraction of 9% when compared to the end of 2016. Total public debt continued to rise, hitting JD 27.2 billion at the end of October 2017, or 95.3% of GDP projected for end of that month. This compares with JD 26.1 billion or 95.1% of GDP for 2016. The budget deficit, including foreign grants, ballooned to JD 881.2 million during the first ten months of 2017, representing 3.7% of GDP estimated for end of October 2017 against JD 671.5 million during the corresponding span in 2016, or 2.9% of GDP projected for end of October 2016. It is worth noting that Standard & Poor’s international credit rating agency has downgraded Jordan’s credit rating from BB- to B+, with a stable outlook. The step was taken in light of the surge in the Kingdom’s public debt amid growing financing needs and ongoing borrowing from the local and external markets. The rise in the cost of borrowing amid projections of a retraction in external grants to Jordan was cited as another reason for the downgrade. As for banking indicators, figures reveal that total customer deposits held with banks reached JD 32.9 billion at the end of October 2017. Credit facilities, meanwhile, surged by 7.3% to JD 24.6 billion, while assets of the banking sector clocked in at JD 48.9 billion at the end of October 2017. 1 0.5 0.0 2012 2013 2014 2015 2016 Jun-2016 Jun-2017 Public Finance: Total domestic revenues and foreign grants amounted to JD 5.7 billion at the end of the first ten months of 2017 against JD 5.6 billion recorded in the same period in 2016; up 1.4%. External grants, in the meantime, stood at JD 209.9 million down from JD 346 million. A breakdown of these figures shows that domestic revenues rose by 4.1% to JD 5.5 billion year-to-October, from JD 5.3 billion registered during the corresponding period in 2016. This came on a JD 27.8 million increase in tax revenues, coupled with a JD 191 million rise in other revenues. Against this, total spending soared to JD 6.6 billion against JD 6.3 billion, up 4.6%. The increase came on a 4.2% rise in current spending and a 7.9% rise in capital spending. This left the budget, grants included, with a record deficit of JD 881.2 million. The budgetary shortfall amounted to JD 671.5 million by end of October 2016. As a result, the total public debt reached an unprecedented JD 27.2 billion at the end of October 2017, representing 95.3% of GDP. This compares with 95.1% at the end of 2016. It is worth noting here that the debt of the National Electricity Production Company and the Gross Domestic Product: Water Authority shot to JD 6.7 billion at the end of October 2017. The net public debt (domestic and external), stood at JD 25.7 billion half the year before. The output of economic sectors varied between January and June 2017 when measured against the first half of The Monetary and Banking Sector: GDP at constant prices expanded by 2.1% in the first half of 2017, maintaining the same growth level realized in the corresponding 2016; some activities registered higher growth than others, while others decelerated. “Mining and quarrying” surged by 23.9% against a drop of 18%, while “private non-profit services for households” inched up 4.3% from 4.2%. The “social and personal services ”sector edged up 4% versus 3.5%, while “trade, hotels, and restaurants” grew by 1.3% compared with 1.2%. The "manufacturing industry", meanwhile, rose by 1.1% up from 0.8%. Other activities which posted lower growth rates during the comparison period include the "agriculture" sector, which expanded by 5.9% versus 6.6%, and “finance, insurance, real estate, and business services” where growth decelerated to 3.3% against 3.7%. “Water and electricity” slowed down to 2.8% compared to a growth of 14.1%. “Transport, storage, and communications”, in the meantime, rose by 1.8% against 3.3%, while “producers of government services” sector, expanded by 1.2% versus 1.4%. The “construction” sector retracted or 90.2% of GDP projected for end of October 2017, versus JD 24.1 billion or 87.7% of GDP for 2016. The local banking industry proved resilient once again despite ongoing challenges to economic growth. The sector emerged from a turbulent time robust, profitable, with proper liquidity and capital buffers in place to absorb local and external shocks. Yet, banks across the Kingdom are never lulled into complacency: they continue to apply best internationally-recommended risk management models. With stringent supervision, the CBJ has further bolstered financial and monetary stability. As a counter measure to deposit dollarization, the national regulator also continued to encourage savings in local currency. It also launched the Financial Inclusion Strategy which envisions the execution of comprehensive national growth-enhancing programs. A note to mention here is that Jordan has become the first Arab country to launch the strategy. to 0.4% after seeing an expansion of 1.7%. Growth in “household services” remained unchanged at 0.4% during the period in comparison. 13 14
9. Annual Reports The CBJ has also issued regulations pertaining to “Domestic Systemically Important Banks (D-SIBs)”. The step seeks to help D-SIBs - large banks with sizeable market share and strong interconnectedness – maintain financial soundness and strength. The regulations also aim to help mitigate externalities; negative impacts that can harm financial and economic stability in the country – in accordance with relevant international practices. Amman Stock Exchange (ASE): Unfavorable geopolitical developments that have marred the Arab region - and Jordan’s neighbors specifically - continue to impinge on investor confidence and weigh on the economy at large. Yet the trading value at the ASE saw a rise of 29.9% to JD 2.8 billion in the first eleven months of 2017 compared to the same period in 2016. Market capitalization of listed stocks, in the meantime, dropped D-SIBs have been granted one and a half years to comply with qualitative requirements set by the Basel Committee on Banking Supervision. These cover corporate governance, risk management, and recovery plans. For the additional capital requirements, banks should gradually adhere to the rules as of the end of 2017 until they are fully compliant by 2020. In efforts to reinforce financial and monetary stability pillars, including the stability of the general price index, the CBJ raised interest on monetary instruments four times in 2017 at 125 points. The move is also consistent with interest rate developments in financial markets internationally and regionally. Yet, interest loans granted under the CBJ program for supporting and financing target economic sectors remained unchanged. For financial and banking indicators, statistics unveiled that foreign reserves stood at USD 11.7 billion at the end of October 2017, down by 9% when compared to the end of 2016. Domestic liquidity also dipped 0.22% when compared to its level at the end of 2016 to JD 32.8 billion. Customer deposits held with the banking sector edged up 0.1% to JD 32.9 billion; foreign currency deposits rose by 5.3% to JD 7.3 billion, and dinar-denominated deposits shrank by JD 339.6 million to JD 25.6 billion during the comparison period. Credit facilities, meanwhile, climbed by 7.3% compared to their level at the end of 2016 to JD 24.6 billion. By economic activity, credit to the manufacturing sector saw the highest growth: 22%. Credit to the public services and utilities sector witnessed a growth of 13.6%, while lending to the by 2.8% to JD 16.7 billion. The Share Price Index weighted by market capitalization also retracted by 1.8% to 3,963.8 points compared with 4,037.8 points registered between January and November 2016. Non-Jordanian investments in listed companies stood at 48.5% by end of November 2017 against a share of 49.2% recorded by end of November 2016, according to bourse figures. External Trade: External trade (national exports and imports) increased by 3.9% in the first eight months of 2017, resting at JD 12.4 billion as compared to the corresponding span the year before. National exports, however, declined by JD 19.6 million to JD 2.9 billion during the comparison period. The bulk of national exports - 24.9% - were sold to the US market. Saudi Arabia was Jordan’s second biggest export market, clinching 13.1% of national exports. Imports also rose by 5.3% year-to-August, settling at JD 9.5 billion. Imports from China alone accounted for 14.2% of total imports, while Saudi exports to Jordan constituted 12.1% of the total. Vehicles and spare parts made up 27.6% of total imports, amounting to JD 2.62 billion. Oil, the second biggest imported item, accounted for 15% of total imports equaling JD 1.4 billion. Thus, the trade deficit surged by 10.5% to JD 6.08 billion. construction and agriculture sectors expanded by 12%, and 10.7% respectively. The banking sector’s assets surged to JD 48.9 billion Development of Total Exports, Imports and Trade Balance end of October 2017, up 1.12% when compared to the end of 2016. 18,000 35,000 16,000 30,000 14,000 JD-Millions JD-Millions Development of deposits and credit Facilitiesi in Banking Sector 25,000 20,000 15,000 12,000 10,000 8,000 6,000 4,000 10,000 2,000 0 5,000 2012 2013 2014 2015 2016 0 2012 2013 2014 Credit Facilites 2015 2016 October- 2017 Deposits Total Exports Imports Jan-Aug 2017 Trade Balance Interest on deposits and credit facilities in the banking sector varied in the first ten months of 2017. Yet, the weighted average interest Economic Performance 2018: weighted average interest saw a drop of two percentage points to 0.54%. On time deposits, the weighted average interest stood at The global economy is forecast to grow by 3.5% in 2017 and 3.6% in 2018. Advanced economies are expected to expand by 2% by end of The weighted average interest on credit facilities on overdraft stood at 8.63% at end of October 2017; it went up by 103 percentage In Jordan, IMF reports project that GDP at constant prices will grow by 2.3% in 2017, and 2.5% in 2018. At current prices, growth is on demand deposits stood at 0.27%, a rise of one percentage point when compared to the end of 2016. On savings accounts, the 3.69%, up 65 percentage points compared to its level at the end of 2016. points when compared to the end of 2016. The rate rose by 92 percentage points on loans and advances to 8.75%. On discounted bills, the average dropped by 75 percentage points to 9.67% from its level at the end of 2016. 15 2017 and by 1.9% in 2018. For emerging and developing economies the economic expansion is forecast at 4.6% in 2017 and 4.8% in 2018. projected at 4.6% in 2017 and 5.1% in 2018. Inflation, meanwhile, is forecast to rise by 2.5% in 2018. 16
10. Annual Reports The general budget law for 2018 envisions public revenues of JD 8 .5 billion; JD 7.8 billion in domestic revenues, and JD 700 million in foreign grants. Total spending is estimated at JD 9 billion in 2018, higher by JD 552 million from a year earlier. Current expenditure is expected to eat up JD 7.9 billion of the total, and the remainder will go for capital spending. The budgetary shortfall, grants included, will likely recede to JD 523 million or 1.7% of GDP against a revised shortfall of JD 752 million for 2017, or 2.6% of GDP. When grants are excluded, the deficit is projected at JD 1.2 billion or 4.1% of GDP against a revised JD 1.6 billion for 2017 or 5.5% of GDP for the same year. And for the first time, decentralization was applied in preparing the capital budgets of governorates. The government will continue to execute the IMF financial and structural reforms program aimed at enhancing sustainable economic growth through maintaining macroeconomic stability and a gradual fiscal discipline. The role of the Public Investments Management Unit will also be activated to help manage financial resources to improve the efficiency of capital spending. More focus will be placed this year on improving the investment climate for both local and foreign businesses. Government procedures will be further enhanced and automated in efforts to shift to digital in government services. The Social Safety Net will be strengthened through ensuring that subsidies reach beneficiaries through putting in place proper mechanisms instead of the conventional goods subsidies system. On the monetary and banking front, foreign reserves will likely stay at comfortable levels and dollarization is expected to settle down as well. Further growth and investment enhancing measures are expected this year. More funding will also be made available for the private sector in 2018. Furthermore, the banking sector is expected to show solid financial indicators. It is worth noting that the capital adequacy ratio stood at 18.5% while legal liquidity reached 137.8% as of end of 2016 (based on recent data to date). Achievements in 2017 In 2017, Bank of Jordan fortified its competitive position, delivering strong performance and marked improvements across the board. It continued to roll out tailored offerings and top services that set it apart from peers. It has also made notable strides digitizing banking services and embracing all that is new in the Fintech revolution. Regionally, the Bank pursued its expansion scheme and completed all work needed to establish a wholesale branch in Bahrain. The new branch commenced operations in January 2018, aiming at serving a diverse range of institutions across the MENA region. To ensure steady growth, the Bank has committed to a 2018 – 2020 strategy that will take services to a new level, guaranteeing the provision of highly secure, timely, and intelligent solutions. To drive growth forward, the Bank also made sure it invests in and retains the individuals who can competently execute transactions, lead, and innovate. The research-informed strategy takes into account the economic and political variables that impact markets, as well global and local growth forecasts. These are fundamental to the analysis of the external and internal environment that could affect operations. In recognition of Bank of Jordan’s efforts, BoJ was awarded the Innovation & Excellence Award for 2017 by the Union of Arab Banks. The award was presented during a ceremony organized by the Union in cooperation with Princess Taghreed Institute for Development and Training (PTI). Bank of Jordan also received the Excellence Award for being the first Bank in the Kingdom to offer the One-Time Password (OTP) service to all its credit card holders in 2017. The award was presented during the fifth Payment Conference “Taking e-Payments Forward for a Better Tomorrow” held under the patronage of the Central Bank of Jordan. Financial Results: The Bank continued to deliver in 2017 through operational excellence and embracing the most recent trends in Asset Liability Management. And despite persistent economic challenges, the Bank pursued investment opportunities wherever and whenever they arose. Thus, key financial ratios remained within regulatory limits: capital adequacy stood at 19.08% while legal liquidity reached 115.259%. Non-performing facilities to total facilities (net of suspended interest) did not exceed 4.5% compared to 4.59% in 2016. Another buffer was the increase in the ratio of provisions for non-performing loans to 125.36% against 112.21% in 2016. Financial results for 2017 unveiled that net profit attributable to Bank shareholders continued its upward streak, rising by 13% to JD 46.8 million when compared to a year earlier. Net profit before tax surged by 8.5% to JD 67.6 million, while assets saw a year-on-year growth of 9.7% to JD2,565.1 million. Shareholders’ equity was up 7%, clocking in at JD 433.7 million. Net Profit Before Deducting Taxes 80,000 70,000 JD -Thousand 60,000 50,000 40,000 30,000 20,000 10,000 0 2013 17 2014 2015 2016 2017 18
11. Annual Reports As for sources of funding , the Bank’s statements unveiled that customer deposits amounted to JD 1,845.8 million, up 14.9% the year before. A breakdown of deposits show that savings accounts were up by 10.6%, reaching JD 747.2 million, and time deposits were up by a whopping 54%. Demand deposits, however, shrank by 4.8% to JD 509.4 million, while CDs surged by 26.6%. On the credit side, the Bank continued to fund businesses representing various economic sectors, but ensured lending decisions were guided by proper controls. The net credit portfolio grew by 18% year-on-year reaching JD 1,447.2 million. Loans to the retail sector rose by 14.7% to JD 377.2 million, and lending to the real estate sector rose by 4.1% to JD 234 million. Credit extended to the government and public sector climbed by JD 89.9 million resting at JD 229.4 million, and corporate loans rose by 0.7% to JD 459.9 million. Loans to SMEs witnessed the highest growth of 63%. Bank of Jordan strived to satisfy the evolving needs of its customers, providing essential financing for the retail sector, large corporations, and mid-sized and small businesses. Throughout 2017, more financing programs and campaigns were launched, and competent customer service teams stood ready to deliver. Retail Services: Amid strenuous efforts to grow its retail credit portfolio, Bank of Jordan moved ahead with aggressive marketing campaigns that targeted individual clients. These included a rewards program under which an employee would get half of the amount of salary that he/she transfers to his/her account with BoJ. The extra amount is credited to the employee’s credit card, among other benefits. Moreover, the car, real estate, and The Development of Financial Position personal loans programs saw some features adjusted (i.e. program ceiling, financing ratios, repayment period, required documents). 2,800,000 A real estate loan (Your Full House) for purchasing a new house or renovating existing one was also put on offer. 2,400,000 In Palestine, the personal loan program – the freelance jobs category – was launched and a new mechanism for calculating the income of freelance jobs was adopted. The personal loan against property as collateral was also launched. Further adjustments were 2,000,000 JD - Thousand Products and Services: made to the personal and housing loans programs to make them more lucrative. 1,600,000 Encouraging customers to boost their savings, the Bank added more benefits and rewards to the savings account program, entitling account holders to enter a monthly draw for a JD 250,000 prize, and a daily draw for a JD 1,000 prize. The children’s savings account “Sanabel” was 1,200,000 also re-designed with additional benefits and prizes. A new competitive campaign for savings accounts also started in Palestine. 800,000 As for digital services, the Bank concluded a long-term strategic agreement with Mastercard to encourage customers to use e-payment channels in line with Jordan’s Financial Inclusion Strategy. Under the arrangement, clients are guaranteed highly secure 400,000 Mastercard payment products and services, i.e. issuance of direct discount cards and credit cards. 0 Card members also enjoyed more benefits in 2017, with their credit cards electronically activated to use for online shopping with 2013 Total Assets 2014 2015 Customers' Deposits 2016 2017 Net Credit Facilities their full limit. . The service is supported by “Verified by Visa” application as well as the OTP, and VRM systems – implemented in coordination with Visa International. It is worth noting that BoJ was among the first banks in Jordan to offer the automated service. The Cashback campaign, was still on offer in 2017, whereby clients could claim 5% of the value of their total purchases when using credit cards. According to the consolidated income statement for 2017, the Bank generated JD 155 million in total income, higher by 21.6% from a Corporate Services: from investments in financial assets stood at JD 4.6 million, while foreign currency earnings amounted to JD 2.8 million. Total Throughout 2017, Bank of Jordan offered a host of financing solutions and alternatives to businesse, and was keen to foster client year earlier. Net interest and commission income settled at JD 127.2 million, representing 82.1% of the total income. Cash dividends expenditure increased by 34.2% to JD 87.4 million due a higher provision of JD 14.9 million for impairment of direct credit facilities. Competitive Position: relations. This came despite a year marked by financial challenges: national exports weakened and doing business with Jordan’s turbulent regional markets was a tough task. Yet, the year ended on a positive note with the re-opening of Tureibil border crossing with Iraq. The move is expected to boost transport, import, and export activities with Jordan’s long-standing trade partner. In another milestone this year, Bank of Jordan succeeded in securing a fair market share of deposits and credit facilities in Jordan, Key sectors that were financed by the Bank in 2017 include the carton industry, fodder, pharmaceuticals, energy, and construction. Palestine, BoJ clinched 9.81% of total deposits held by Jordanian banks operating in Palestine and 9.28% of total credit. also received BoJ financing in 2017. The Bank also originated loans to the agriculture sector for date production and maritime logistics Palestine, and Syria. Locally, the Bank’s share stood at 4.47% and 5.22% of total customer deposits and credit facilities respectively. In In war-stricken Syria, the Bank secured 2.21% of total customer deposits and 9.35% of total credit of private banks – based on recent figures. Businesses trading in electric appliances, cars, and heavy machinery were also among the borrowers. Sectors supported by the CBJ services. Added to that, Bank of Jordan participated in syndicated loans with a balance of JD 37.3 million. In efforts to measure customer satisfaction, a survey was conducted through a specialized firm – Ipsos. An analysis of the survey results showed that ratings of respondents, SMEs and Corporate sector, were within goals. The findings also helped the Bank identify weaknesses and room for further improvement. 19 20
12. Annual Reports SMEs Services : Bank of Jordan continued to extend short and long-term lending to mid-sized and small businesses to help them grow and create jobs and economic value. Credit was obtained by SME clients to fund commercial, industrial, and services activities through business development centers spread across the Kingdom. The Bank also continued to implement the Point of Sale program for Visa card holders who pay using EMP and MEPS unified terminal. The websites of branches in Palestine and Bank of Jordan – Syria were also re-launched to facilitate access to products and services and media campaigns. A new system was also installed in the call center in Palestine to enhance efficiency in serving Palestinians inside and outside the Palestinian territories. It is worth noting that the number of ATMs serving clients reached 174 by end of 2017, in Jordan and Palestine. And beginning 2018, clients can use ATMs to pay their bills through E-Fawateercom. As part of the agreement, overdraft is granted in proportion to the annual point of sale turnover. Organizational Structure and Technical Resources: As part of its environmental responsibility, the Bank signed an agreement with the Jordan Renewable Energy and Energy Efficiency Bank of Jordan continued to strive for operational excellence through simplification, digitization, and recalibrating policies to meet individuals, SMEs, and public institutions. A note to mention is that this is the second such arrangement between the two sides continued its IT upgrades. Guarantee Corporation for guaranteeing credit risks associated with these loans. In compliance with corporate governance requirements, the Bank separated the positions of board chairman and director general, and Fund/ Ministry of Energy and Mineral Resources in 2017 for providing financing to the vital energy sector. Beneficiaries include which seeks to help cut the energy bills for both households and businesses. Another agreement was concluded with the Jordan Loan Financial Leasing: Jordan Company for Financial Leasing, a subsidiary of Bank of Jordan, continued to offer financial leasing products to all asset types and sectors. To reach and connect effectively with valuable customers, the Company participated in the Arab Contractors, Real Estate and Banking Investment Conference held in Amman. During the one-day event, customer care officers offered financing solutions directly to property developers. Financial leasing services continued to be promoted, as well as transport vehicles and medical equipment sectors. Network of Branches: The Bank’s distinctive branch design and experience continue to set it apart from competitors. Thus, BoJ continued to open new branches in 2017 and to relocate and renovate others, ensuring the Bank’s corporate identity is seen and felt across its network of 73 branches. Two new branches were added in Irbid governorate and in the capital, and an exchange bureau commenced operations at the King Hussein Bridge/departures terminal. Another branch was relocated in Zarqa, while nine other branches were renovated in the capital Amman. The Bank is also one step away from completing its Corporate Identity re-branding project. A needs assessment was undertaken, and a Brand Health Check was carried out by the global marketing research firm Nielson Company. A manual for developing the Bank’s corporate identity based on the Momentum in two dimensions was also completed. Another milestone in 2017 was the installation of solar photovoltaic cells in the northern and southern parts of Jordan, amid the Bank’s efforts to harness solar power to generate electricity. The step is set to further reduce the Bank’s hefty energy bill on the medium and long terms. Electronic Banking Options: BoJ moved ahead with its system upgrades: launching a new version of BoJ Online. The service allows individual clients to log on and carry out a host of banking transactions swiftly and securely. The Internet Banking service was also launched for use by corporate clients and SMEs. The system allows for dual supervision on financial transactions. The only exception to this is the E-Fawateercom service where only the authorized person can pay bills with an open ceiling. At the same time, the BoJ mobile service is constantly reviewed and upgraded, with more features added to enhance the customer’s digital experience. 21 evolving market and customer needs. It completed major re-structuring schemes, streamlined internal and external processes, and the roles and responsibilities of each have been re-defined accordingly. The Bank has also redesigned its organizational structure at the management as well as branch levels here and in Palestine. Three departments, namely the HR, financial control, treasury and investment underwent massive changes. All executive committees were restructured in line with the new design. In Syria, the Compliance Department at Bank of Jordan – Syria was restructured, and new SOPs were drafted and sent for endorsement by the Central Bank of Syria. Relevant job descriptions were similarly amended. Operating procedures were re-examined to ensure consistency and high quality products and services. On the IT side, the Bank continued to provide highly secure, automated, and intelligent solutions to ensure effective processes and minimum risks. Key projects executed during the course of 2017 include the application of the updated version of I Grafex system and the Customer Relation Management (CRM) software, to be delivered by Oracle. A massive network upgrade was also carried out. Similarly, the ICBS and FICO systems were upgraded. Windows 10 was installed on all PCs in the headquarters and other branches, and the e-mail was upgraded to Cloud. The IP-Telephony system was installed in the headquarters and in Palestine. MXP upgrades were completed for ATMs in accordance with PCI requirements, and ATM access fees are now being charged. The DWH system – first phase – has been built for Palestinian branches to improve the reporting system and keep it aligned with the system applied in Jordan. Preparations are also underway for implementing the Palestinian Monetary Authority’s project aimed at determining the purpose of transfers. Moreover, the EXUS debt collection and management solutions software was installed in Palestine, in addition to the Power Legal system that was installed in Palestine and Bank of Jordan-Syria. The first phase of CRIF credit intelligence system was also launched. Furthermore, the internal communications network - connecting the regional management and the headquarters - was upgraded to 15 MBps. The call center’s software in Jordan was also upgraded, and the system was launched in Palestine. Likewise, the GIS database was updated. On the risk side, the Bank ensured that it has a clear risk framework guided by best international practices. Thus, the operational risk management policy was revised to incorporate recent developments, and the liquidity crisis management and contingency plan was adopted. 22
13. Annual Reports The investment and the operational risk policies were updated to ensure consistency with the COBIT5 framework . Policies relating to the management of market, interest rate, liquidity, data security risks and business continuity plan and crisis management, were also revisited. A fraud risk profile was created at the enterprise level to help identify internal and external fraud risks and the control measures needed. In Bahrain, an operational risk unit was created and the outsourcing policy was updated. As for the Foreign Account Tax Compliance Act (FATCA), the Bank renewed the Foreign Financial Institution (FFI) agreement for the second year for all the BoJ group. Requirements for 2017 were also met. Recommendations pertaining to FICO credit scoring system were implemented, resulting in a comprehensive overhaul of the Credit Portfolio Risk Department. Also in 2017, the PCI-DSS v3.2 certificate was obtained, a security gap analysis was performed, and security measures were tested in order to fend off any cyber-attacks. New Flex servers were also installed to accommodate the volume of the new e-services on offer. A board IT governance committee and an executive COBIT5 committee were set up for the execution of COBIT5 (framework for the management and governance of Information technology). The IT Steering Committee was also restructured, and a COBIT guideline was developed in light of the results of the gap analysis and maturity assessment of all IT operations. The guideline was sent to the Central Bank of Jordan and published on the Bank of Jordan website. The Bank made sure its financial reports were consistent with the IFRS9 requirements. To that end, an agreement was concluded with Moody’s for implementing Moody’s Risk Analyst software across corporate and SMEs portfolios. Data collection and entry have been completed to help determine the risk scoring for large, medium-sized, and small businesses in Jordan and Palestine. Furthermore, Moody’s will advise the Bank on calculating the Expected Credit Loss (ECL) for all credit portfolios, after the Risk Rating (RR) and Potential Default (PD) have been identified for each corporate and SMEs client. Moreover, the Corporate Credit Management (CCM) project was completed for branches in Jordan, with the added value of tracking credit applications submitted to Business Development departments. Stress testing was conducted in accordance with the new CBJ requirements No. (1/2016) and Basel III guidelines. The results proved the Bank’s ability to weather all shocks. The Internal Capital Adequacy Assessment Process (ICAAP) was applied in line with Basel III requirements on the 31/12/2016 financial statements, which verified the Bank’s solid capital position. The ALM Dynamics system Human Resources: The Bank continued to invest in its workforce – a step deemed crucial to sustainable success – and to create an environment where they can thrive. In due course, several initiatives and projects were executed in 2017; chiefly the Core Competencies & Leadership program, which was completed in cooperation with an international consultancy firm. The program, a fundamental building block for improving HR processes, has been incorporated into HR systems (performance, evaluation, recruitment, learning and development) across the board. Intensive training courses will be offered to help employees use the new system, which will help them to carry out their tasks more efficiently. The Bank took another step forward: it set up a Sales Academy to help sales teams reach sales targets. The training facility, run by a specialized training firm, offers modern participative and interactive teaching techniques, including coaching. It is worth noting that the program will be implemented in Jordan and Palestine. The Bank also concluded an agreement with Moody’s Investor’s Service for establishing a Credit Academy. Under the arrangement, a specialized training program has been launched for the Corporate Business Development Department and SMEs to enhance employee basic skills and knowledge related to credit activities. It is also designed to improve understanding of financial ratios and how they should be reflected on credit applications. This is in addition to specialized courses in credit and financial analysis for all business development and credit departments that will be offered for branches here and in Palestine. Furthermore, a program for Accredited Internal Trainers (AIT) continued for Jordan and Palestine staff on how to develop training material and enhance presentation skills. A specialized regional firm was also contracted to design an E-learning program for new and long-tenured staff. Another two-year contract was signed with another firm for the provision of an e-training program on AMLTF, FATCA, and fraud for all employees. In efforts to keep employees happy and motivated, several entertainment activities were organized for staff throughout the year, and those retiring were honored during special events. The BoJ soccer team was also honored after winning the title of the football tournament organized by the General Syndicate for Workers in Banks, Insurance, and Accounting. was applied and a road map for applying the Liquidity Coverage Ratio (LCR), and the Net Stable Funding Ratio (NSFR) was developed. In Jordan, conditions for application of the intelligence analysis system GoAML have been fulfilled, which will allow for the exchange of information between the Bank and the AMLTF Unit. An assessment of AMLTF risks using the Risk-based Approach (RBA) was applied on financial statements as of 31/12/2016 in accordance with CBJ requirements. A further assessment of AMLTF risks was completed. In Palestine, amendments to the AML policy were introduced as per regulatory requirements, pending endorsement. Where mandatory disclosure applies, the Bank continued to provide the Internal Revenue Services (IRS) with the required data on customers in branches in Jordan and Palestine as well data pertaining to Excel for Financial Investments Company. With client satisfaction a top priority, the Bank has set in place an efficient complaints handling mechanism; grievances are tracked Classification Of Bank Employees According to Educational Qualifications For the Year 2017 %8 Postgraduate Training Courses Distribution During 2017 %5 Banking %4 Bachelor Less Than General Secondary %2 %7 Sales & Marketing Skills Diploma General Secondary %6 Compliance & Risk Management %2 Professional Certificates %13 Financial & Auditing, Investments %70 %22 Others %61 from initiation to completion and customers are informed about the findings of inquiries. As per bylaw No. 1/2017 dated 28/8/2017, the mechanism is applied across the Bank’s branches and affiliates here and abroad. The Bank also commits to adhering to rigorous corporate governance standards stated in local and international guidelines and practices; chiefly the CBJ and the Basel Committee corporate governance principles for banks. Added to that, the Bank’s Corporate Governance Guideline was amended, and adopted by the Board of Directors. 23 24
14. Annual Reports Corporate Social Responsibility : Bank of Jordan understands its obligations towards society and its role in enabling growth and progress for the community at large. Thus, it continued to extend cash and other forms of support to various community-based organizations, charities, and voluntary associations. In edutainment, the Bank renewed its partnership agreement with the children’s “Hikayat Simsim”, the local version of the renowned Sesame Street series, for the eighth year in a row. It also remained committed to granting children and their parents free access to the Children’s Museum on the first Friday of each month, under a partnership forged nine years ago. The Bank was also a corporate sponsor of a family house in the SOS children’s village in Irbid government. Additionally, it participated in the INJAZ leadership campaign for public schools, coaching students into success professionally and in real life. The Bank also helped researchers and students access much-needed information to complete their studies. Building on the previous years, Bank of Jordan continued to fund several scholarships in the Faculty of Educational Sciences and Arts /UNRWA, the Ministry of higher education and Scientific research, and Elia Nuqul Institute. For the year 2017, the Bank funded another scholarships program in cooperation with the AMIDEAST. Moreover, the Bank covered the tuition costs of five female students enrolled in a six-month training workshop on healthcare assistance (2017-2018) organized by Princess Taghreed Institute for Development and Training. On another front, Bank of Jordan supported the Community Financial Awareness Project that introduced students to key financial and banking concepts. It also contributed to awareness-raising campaigns to educate citizens on how to manage their savings and personal property. Added to that, assistance was extended to King Abdullah II Center for Excellence, which aims to promote corporate excellence through distinguished performance, innovation, and quality. On the environment front, the Bank supported the National Initiative for Traffic Safety, in addition to co-sponsoring the eighth International Conference on Traffic Safety organized by Jordan Traffic Institute. It also took part in a tree-planting campaign organized by the Arab Group for the Protection of Nature to help impoverished families in the Jordan Valley secure a source of income. Other institutions that received cash assistance in 2017, included the King Hussein Cancer Foundation, Al-Hussein Society, the Society for the Families and Friends of the Disabled, and the Society for the Care of Gifted Autistic Children. This is in addition to supporting MAP solidarity campaign, Al-Karak Reconstruction Association, the Palestine International Institute, and the National Fund for Treating the Poor. The Bank also supported the White Beds Society, helping them to continue to care for senior citizens. Also in 2017, the Bank continued to sponsor families of martyrs from the Jordan Armed Forces and security apparatus who served and died for their country. In Palestine, the Bank took part in a clothes distribution ceremony for underprivileged children in Ramallah. It also took part in the Welfare Association’s tree-planting campaign, aimed at planting 40,000 seedlings in support of farmers in Palestinian territories. Total donations support stood at around JD 736.4 thousand in 2017. 25 26
15. Annual Reports Analysis of Financial Position and Business Results for the Year 2017 Liabilities and Owners ’ Equity     available funds or liquid assets to enable it to meet its obligations. The Bank’s Assests   JD (Millions)   Relative Significance % 2017 2016 2017 2016 659.3 747.6 25.7% 32.0% 1,447.2 1,226.0 56.4% 52.4% Financial Assets Portfolio 334.6 265.0 13.1% 11.3% Property, Equipment and Intangible Assets 36.7 33.3 1.4% 1.4% Deferred Tax Assets and Other Assets 87.3 66.9 3.4% 2.9% 2,565.1 2,338.8 100% 100% Cash, Balances, and Deposits with Banks Direct Credit Facilities - Net Total Assets 2016 2017 2016 1,846.0 1,607.0 72.0% 68.7% Banks and Financial Institutions’ Deposits 64.9 145.6 2.5% 6.2% Cash Margins 149.4 129.3 5.8% 5.5% Income Tax and Sundry Provisions 24.6 21.9 0.9% 1.0% Borrowing Money and Other Liabilities 41.1 22.6 1.6% 1.0% Bank Shareholders’ Equity 433.7 405.4 17.0% 17.3% Non-controllers’ Interest 5.4 7.0 0.2% 0.3% 2,565.1 2,338.8 100% 100% Customers’ Deposits Total Liabilities and Owners’ Equity Relative Significance of the Bank’s Liabilities and Owners’ Equity 2017 17% Relative Significance of the Bank’s Assets 2017 3.4% 1.4% Customers' Deposits 1.6% 0.9% 5.8% Banks and Financial Institutions' Deposits Cash Margins Income Tax and Sundry Provisions Borrowing Money and other Liabilities Cash, Balances, and Deposits With Banks Bank Shareholders' Equity Direct Credit Facilities - Net 13.1% 0.2% 2.5% 25.7% Relative Significance % 2017 Assets increased by 9.7% in 2017 to JD 2,565.1 million when compared to 2016. To maintain its financially strong platform, the Bank continued to grow shareholder equity and to balance business risk versus opportunity. It also ensured it has a sufficient pool of JD (Millions) 72% Financial Assets Portfolio Non-controllers' Interest Property, Equipment and Intangible Assets Deferred Tax Assets and Other Assets 56.4% Direct Credit Facilities: Total credit facilities rose by 18.8% year-on-year, resting at JD 1,541.6 million, thanks to a well-balanced credit policy supervised by the executive committee. For credit decisions, the Bank followed a prudent approach that took into account, among other variables, fluctuations in interest rates yield spread. The collection team also proceeded with collecting loans as they fell due. The ratio of non-performing loans to total credit (net interest in suspense) stood at 4.50% against 4.59% in 2016, still within the benchmark ratio. Once again, the Bank was a major financer for corporations, SMEs, individuals, and the Jordanian government, providing funds for the various sectors and projects. 27 28
16. Annual Reports Financial Assets Portfolio : Total of Credit Facilities Portfolio (After Deducting Interest and Commission Received in Advance) JD (Millions)   Relative Significance % 2017 2016 2017 2016 Retail Loans 377.2 328.8 24.5% 25.3% Real Estate Loans 234.0 224.9 15.0% 17.3% Corporate Loans 459.9 456.8 30.0% 35.2% SMEs Loans 241.1 148.0 15.6% 11.4% Government and Public Sector Loans 229.4 139.3 14.9% 10.8% 1,541.6 1,297.8 100% 100% Total The financial assets portfolio saw a year-on-year growth of 26.3%. Financial assets at fair value through comprehensive income soared by 24.6% representing stock investments in active markets. Financial assets at amortized cost also grew by 27.2%, representing investments in treasury bonds, issued and guaranteed by the government, as well as other bonds and corporate debentures. At the same time, financial assets through profit and loss went down by JD 8.7 thousand. Financial Assets Portfolio JD (Millions) Relative Significance % 2017 2016 2017 2016 0.2 0.2 0.1% 0.1% Financial Assets at Fair Value through Comprehensive Income 114.8 92.1 34.3% 34.8% Financial Assets at Amortized Cost 219.6 172.7 65.6% 65.1% Total 334.6 265.0 100% 100% Financial Assets at Fair Value through Profit or Loss Relative Significance of Credit Facilities Portfolio According to Type 2017 14.9% Relative Significance of Financial Assets Portfolio According to Type 2017 15.6% Retail Loans 24.5% Real Estate Loans Corporate Loans 34.3% SMEs Loans 30% Financial Assets at Fair Value Through Profit or Loss Government and Public Sector Loans Financial Assets at Fair Value Through Comprehensive Income Financial Assets at Amortized Cost 15% 0.1% 65.6% Provision for Impairment of Direct Credit Facilities: To fortify its financial standing, the Bank pursued its long-standing policy of making provisions for uncollected loans and loan payments – as per regulatory and accounting requirements, and audit recommendations. Thus, the coverage ratio of provisions for non-performing loans (net interest in suspense and cash margin) reached 125.36% in 2017 versus 112.21% a year earlier. A total of JD 4.3 million, set aside earlier as a loan-loss provision but not used, were utilized to hedge against other loans. With this addition, total provisions amounted to JD 20.6 million. The fair value of collateral against loans stood at JD 544.4 million compared to JD 485.4 million. 29 30
17. Annual Reports Customer Deposits : Shareholders’ Equity: Customer deposits witnessed a growth of 14.9% in 2017 when compared to the previous year, reaching JD 1,845.8 million. The Bank Shareholder’s equity soared to JD 433.7 million in 2017, rising by 7% from a year earlier. legal reserves jumped by 9.3% to JD 80.8 savings accounts stood at 10.6%, while time deposits and CDs grew by 53.8% and 26.2% respectively. Yet, a decline of 4.5% was reported to receive cash dividends of 18% of capital – equivalent to JD 36 million, and retain the remaining Profits. also continued to attract fixed deposits, and to market its savings account and CDs programs. In due course, the year-on-year growth in in current accounts and demand deposits, and non-interest bearing deposits fell to JD 675.4 million against JD 901.2 million in 2016. Capital Adequacy: The capital adequacy ratio, which saw a slight drop to 19.08% from 20.82% in 2016, exceeded the minimum ratio of 14.125% set by CBJ Customer Deposits According to Type   million, and the fair value reserve was up by 28%. As per the Board’s recommendation to the General Assembly, shareholders are set JD (Millions) Relative Significance % as guided by to the global Basel III. The primary capital for ordinary shareholders (CET1) also slid to 18.32% against 20.06% in 2016. Financial Results: 2017 2016 2017 2016 Current Accounts and Demand Deposits 509.4 535.2 27.6% 33.3% Savings Accounts 747.2 675.8 40.5% 42.1% on-year increase of 21.6%. Net interest and commission income stood at JD 127.2 million, up by 9.4%. Profits before tax and provisions Time Deposits 498.2 323.8 27.0% 20.1% provisions for property foreclosed by the Bank, other provisions, and income tax, net income settled at JD 45.6 million against JD 42.2 Certificates of Deposit 91.0 72.1 4.9% 4.5% 1,845.8 1,606.9 100% 100% Total Total revenues climbed by 26% to JD 181.9 million in 2017, while total income increased to JD 155 million from JD 127.4 million, a yearreached JD 91.6 million when compared to JD 71 million in 2016. Counting in provisions for impairment of direct credit facilities, million in 2016, representing a growth of 8.1%. Net Profit Before and After Taxes and Provisions     Relative Significance of Customers’ Deposits 2017 4.9% 27.6% Current Accounts and Demand Deposits Savings Accounts 27% Difference 2017 2016 2017 Net Profit before Taxes and Provisions 91.6 70.9 20.7 Provision for Impairment of Direct Credit Facilities (20.6) (5.7) (14.9) Provision for assets foreclosed by the Bank (2.9) (2.5) (0.4) Other provisions (0.5) (0.4) (0.1) Net Profit (before Tax) 67.6 62.3 5.3 Income Tax Expenses (22.0) (20.1) (1.9) Net Profit 45.6 42.2 3.4 Time Deposits Certificates of Deposit Total Realized Revenue   40.5% 31 JD (Millions)   JD (Millions) Relative Significance % 2017 2016 2017 2016 Interest Income 129.9 109.9 71.0% 76.0% Net Commission Income 24.3 23.5 13.5% 16.3% Financial Assets (Shares) Profit 4.6 2.8 2.5% 1.9% Foreign Exchange Profit and Other Revenues 23.1 8.4 13.0% 5.8% Total 181.9 144.6 100.0% 100% 32
18. Annual Reports Relative Significance of Expenses and Provisions 2017 Relative Significance of Total Revenues 2017 13 % 5.5% 2.5% Provision for Impairment of Direct Credit Facilities 28.6% Interest Income 13.5% 23.6% Provision for assets foreclosed by the Bank Other provisions 3.3% 0.6% Net Commission Income Financial Assets (Shares) Profit Staff Expenses Other Expenses Foreign Exchange Profit and Other Revenues Depreciation and Amortization 71% 38.4% Expenses and Provisions: Main Financial Ratios 2017 2016 Return on Average Bank Shareholders’ Equity 11.15% 10.78% Return on Capital 22.8% 21.1% Return on Average Assets 1.86% 1.86% JD 22,601 JD 19,647 Interest Income / Average Assets 5.30% 4.84% Interest Expense / Average Assets 1.10% 0.75% Interest Margin / Average Assets 4.20% 4.08% 125.36% 112.21% 4.50% 4.59% The Bank’s expenses and provisions saw an increase of 34%, settling at JD 87.4 million in 2017. An additional JD 14.9 million were set aside as a provision for impairment of direct credit facilities. The depreciation and amortization item also recorded an increase of 4.7%. Employee expenses were also higher by JD 3.2 million. The Bank also paid an additional JD 3.5 million in 2o17 in other expenses related mainly to insurance, hospitality, fees, licenses, taxes, stationary, prints, and donations. Professional and legal fees and maintenance costs were also higher this year. Profitability per Employee (after Tax) The compensation package of the senior executive management totaled JD 1.4 million in 2017. Audit fees stood at JD 78.4 thousand and JD 15 thousand for Bank of Jordan, and Bank of Jordan – Syria, respectively. For Excel for Financial Investments, the audit fees totaled JD 4.06 thousand, and JD 2.9 thousand, for Jordan Leasing Company. Coverage Ratio of Provisions for Non-performing Loans (Net) Expenses and Provisions JD (Millions) Relative Significance % Non-performing Loans / Total Credit Facilities (after deducting interest in suspense) 2017 2016 2017 2016 Provision for Impairment of Direct Credit Facilities 20.6 5.7 23.6% 8.8% Provision for assets foreclosed by the Bank 2.9 2.5 3.3% 3.8% Other provisions 0.5 0.4 0.6% 0.6% Financial Year Staff Expenses 33.6 30.4 38.4% 46.7% Other Expenses 25.0 21.5 28.6% Depreciation and Amortization 4.8 4.6 Total 87.4 65.1 33 Financial indicators for the years (2013 – 2017) Amount in JD Thousand 2013 2014 2015 2016 2017 Total Assets 2,076,937 2,190,187 2,206,222 2,338,839 2,565,132 33.0% Total Credit Facilities 1,146,687 1,196,856 1,221,967 1,297,832 1,541,582 5.5% 7.1% Total Deposits (Customers and Banks) 1,614,125 1,702,899 1,688,476 1,752,603 1,910,697 100% 100% Bank Shareholders’ Equity 316,986 335,746 362,242 405,447 433,665 Non-controllers’ Interest 4,506 4,116 4,703 6,989 5,491 Net Profit Before Tax 50,204 59,999 61,966 62,315 67,583 34
19. Annual Reports Our Goals for 2018 JD-Thousand The Development of Bank Shareholders ’ Equity and Profit 480,000 440,000 400,000 360,000 320,000 280,000 240,000 200,000 160,000 120,000 80,000 40,000 0 Bank of Jordan 2018 goals represent the first phase of the Bank’s ambitious 2020 Vision, which will determine the Banks’s strategic direction during the period extending from 2018 to 2020. To begin with, efforts will be largely focused on enhancing the retail sector level of services. And, at a later stage in 2018, the Corporate and SMEs sectors will be engaged in this process. In parallel, the Bank will continue the usual work of developing its operational, organizational, and technical capabilities. Financial goals: -Ensuring that key financial ratios remain within the limits set by regulatory authorities and consistent with guidelines identified by international standard-setting bodies. -Boosting the Bank’s competitiveness. Market and Customers goals: -Expanding and diversifying the customer base, and improving the quality of products and services. -Acting as a key businesses financier for Corporate, and SMEs, and identifying promising economic sectors. -Providing financial advice and informing clients of the implications of the new international standards. 2013 2014 Bank Shareholders' Equity 2015 2016 2017 -Expanding the Bank’s physical footprint by adding new branches and ATMs, and commencing operations in Bahrain. -Undertaking a more active role in the local community by promoting and executing sustainable development initiatives, in parallel, with other CSR programs. Net Profit Before Tax Operations and IT goals: -Improving business processes and keeping in touch with the latest technological trends to enhance customer experience. To that end, several projects will be executed including: the new mobile and internet banking systems, shifting to MasterCard, the Customer Relationship Management CRM system, and the credit rating systems for Corporate and SMEs. Risk Management and Information Security goals: The Development of Financial Position -Improving the Risk Management and Information Security systems in line with best international practices and ensuring compliance with regulatory requirements. 2,800,000 Learning and Development goals: -Enhancing human resources performance by continually improving the learning, and development processes to reach the level of JD-Thousand 2,400,000 knowledge management. In this course, specialized training programs will be held such as: Sales and Credit Academies, in addition to implementing the behavioral competencies project and incorporating these competencies into HR operations. 2,000,000 1,600,000 1,200,000 800,000 0 Total Assets 35 2013 2014 Total Credit Facilities 2015 2016 2017 Total Deposits (Customers & Banks) 36
20. Annual Reports Consolidated Financial Statements and Independent Auditor ’s Report 2017 Independent Auditor’s Report Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Owners’ Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements 37 38
21. 39 40
22. 41 42
23. CONSOLIDATED STATEMENT OF FINANCIAL POSITION BANK OF JORDAN (PUBLIC SHAREHOLDING LIMITED COMPANY) Statement (A) December 31, Note Assets 2017 2016 JD JD Cash and balances with central banks 4 268,583,151 228,197,814 Balances with banks and financial institutions 5 265,682,212 494,451,425 Deposits with banks and financial institutions 6 125,000,000 25,000,000 Financial assets at fair value through profit or loss 7 196,987 205,719 Financial assets at fair value through comprehensives income 8 114,791,862 92,128,338 Direct credit facilities – Net 9 1,447,227,771 1,226,013,033 Financial assets at amortized cost 10 219,576,390 172,637,680 Property and equipment – Net 11 31,930,233 29,774,830 Intangible assets 12 4,839,231 3,559,146 Deferred tax assets 18 14,683,719 11,926,470 Other assets 13 72,620,383 54,944,609 2,565,131,939 2,338,839,064 Total Assets Liabilities and Owners’ Equity Liabilities: Banks and financial institutions’ deposits 14 64,896,195 145,623,458 Customers’ deposits 15 1,845,800,756 1,606,979,130 Cash margins 16 149,356,693 129,292,102 Financial derivatives 37 178,833 17,655 Other provisions 17 5,006,765 5,015,992 Income tax provision 18 19,602,158 16,872,706 Borrowed Funds 19 2,437,716 424,879 Other liabilities 20 38,696,473 22,176,908 2,125,975,589 1,926,402,830 Total Liabilities Owners’ Equity: Equity attributable to the Bank’s shareholders Paid-up capital 21 200,000,000 200,000,000 Statutory reserve 22 80,820,952 73,917,046 Voluntary reserve 22 134,330 113,124 General banking risks reserve 22 15,128,290 12,996,161 Special reserve 22 4,103,632 3,330,908 Foreign currency translation differences 23 (12,256,254) (12,401,835) Fair value reserve 24 81,288,341 63,565,588 Retained earnings 25 64,446,126 63,926,237 Total Equity attributable to the Bank’s Shareholders 433,665,417 405,447,229 Non-controlling interests 5,490,933 6,989,005 Total Owners’ Equity 439,156,350 412,436,234 Total Liabilities and Owners’ Equity 2,565,131,939 2,338,839,064 The accompanying notes from (1) to (46) constitute an integral part of these consolidated financial statements and should be read with them. 43 44
24. Annual Reports CONSOLIDATED STATEMENT OF PROFIT OR LOSS Statement (B) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Year Ended December 31, BANK OF JORDAN (PUBLIC SHAREHOLDING LIMITED COMPANY) Note 2017 2016 JD JD Ended December 31, BANK OF JORDAN (PUBLIC SHAREHOLDING LIMITED COMPANY) Interest income 27 129,861,236 109,915,974 Less: Interest expense 28 26,919,012 17,153,738 102,942,224 92,762,236 Other comprehensive income items: 24,259,668 23,482,888 Items that may be reclassified subsequently to consolidated statement of profit or loss: 127,201,892 116,245,124 Foreign currencies translation differences Net Interest income Commissions income – Net 29 Net interest and commissions income Statement (C) Profit for the Year 2017 2016 JD JD 45,609,461 42,202,024 )612,098( 2,583,450 )612,098( 2,583,450 - )491,918( 17,722,753 32,217,724 17,722,753 31,725,806 62,720,116 76,511,280 Foreign currencies income 30 2,760,010 2,486,154 Gain (loss) from financial assets at fair value through profit or loss 31 4,217 (54,858) Cash dividends from financial assets at fair value through comprehensive income 8 4,636,746 2,815,647 Gain on sale of financial assets at amortized cost 10 87,724 - Other income 32 20,327,389 5,956,955 155,017,978 127,449,022 33 33,572,988 30,406,781 12,11 4,806,532 4,591,875 Total Comprehensive Income Attributable to: Other expenses 34 25,006,129 21,493,303 The Bank’s Shareholders 64,218,188 74,225,435 Provision for impairment of direct credit facilities 9 20,637,508 5,689,334 Non-controlling Interests )1,498,072( 2,285,845 Provision for assets foreclosed by the Bank 13 2,925,420 2,537,031 Total 62,720,116 76,511,280 Other provisions 17 486,038 415,290 Total Expenses 87,434,615 65,133,614 Profit before Income Tax 67,583,363 62,315,408 21,973,902 20,113,384 45,609,461 42,202,024 Bank’s Shareholders 46,795,537 41,396,285 Non-controlling Interests (1,186,076) 805,739 Profit for the Year 45,609,461 42,202,024 Total Income Employees expenses Depreciation and amortization Less: Income tax expense 18 Profit for the Year Statements (C) and (D) Items that will not be reclassified subsequently to consolidated statement of profit or loss: (Loss) from sales of financial assets at fair value through comprehensive income Change in fair value reserve Total Comprehensive Income-Statement (D) The accompanying notes from (1) to (46) constitute an integral part of these consolidated financial statements and should be read with them. Attributable to: Earnings per share for the year attributable to the Banks’ shareholders Basic/diluted 35 0.234 0.207 The accompanying notes from (1) to (46) constitute an integral part of these consolidated financial statements and should be read with them. 45 46
25. Annual Reports CONSOLIDATED STATEMENT OF CHANGES IN OWNERS › EQUITY Statement (D) Reserves BANK OF JORDAN (PUBLIC SHAREHOLDING LIMITED COMPANY) Reserves Special Foreign Currency Translation Differences Fair Value Reserve Retained Earnings Total equity attributable to the Banks› Shareholders Equity Non-Controlling Interests Total Owners› Equity Paid-up Capital Statutory Voluntary General Banking Risks JD JD JD JD JD JD JD JD JD JD JD 200,000,000 73,917,046 113,124 12,996,161 3,330,908 (12,401,835) 63,565,588 63,926,237 405,447,229 6,989,005 412,436,234 Foreign currency translation differences - 21,206 21,206 4,072 - 145,581 - (492,167) (300,102) (311,996) (612,098) Profit for the year – Statement (B) - - - - - - - 46,795,537 46,795,537 (1,186,076) 45,609,461 Changes in fair value reserve - - - - - - 17,722,753 - 17,722,753 - 17,722,753 Total Comprehensive Income – Statement (C) - 21,206 21,206 4,072 - 145,581 17,722,753 46,303,370 64,218,188 (1,498,072) 62,720,116 Transfer to reserves - 6,882,700 - 2,128,057 772,724 - - (9,783,481) - - - Dividends paid* - - - - - - - (36,000,000) (36,000,000) - (36,000,000) 200,000,000 80,820,952 134,330 15,128,290 4,103,632 (12,256,254) 81,288,341 64,446,126 433,665,417 5,490,933 439,156,350 155,100,000 67,716,833 13,709,740 12,646,252 2,921,601 (11,481,891) 33,186,645 88,442,614 362,241,794 4,703,160 366,944,954 Foreign currency translation differences - (2,401) (2,401) (11,645) - (919,944) - 2,039,735 1,103,344 1,480,106 2,583,450 Profit for the year – Statement (B) - - - - - - - 41,396,285 41,396,285 805,739 42,202,024 (Loss) on sale of financial assets at fair value through comprehensive income - - - - - - (1,838,781) 1,346,863 (491,918) - (491,918) Changes in fair value reserve - - - - - - 32,217,724 - 32,217,724 - 32,217,724 Total Comprehensive Income Statement (C) - (2,401) (2,401) (11,645) - (919,944) 30,378,943 44,782,883 74,225,435 2,285,845 76,511,280 Transfer to reserves - 6,202,614 108,643 361,554 409,307 - - (7,082,118) - - - Dividends paid* - - - - - - - (31,020,000) (31,020,000) - (31,020,000) Increase in paid-up capital** 44,900,000 - (13,702,858) - - - - (31,197,142) - - - Balance – End of the Year 200,000,000 73,917,046 113,124 12,996,161 3,330,908 (12,401,835) 63,565,588 63,926,237 405,447,229 6,989,005 412,436,234 For the Year Ended December 31, 2017 Balance – Beginning of the year Balance – End of the Year For the Year Ended December 31, 2016 Balance – Beginning of the year * According to the resolution of the Bank›s General Assembly in its ordinary meeting held on April 17, 2017, it was approved to distribute 18% of the Bank›s capital in cash to the shareholders which is equivalent to JD 36,000,000 (against 20% of the Bank›s capital in cash to the shareholders which is equivalent to JD 31,020,000 in accordance to the resolution of the general assembly in its ordinary meeting held on April 9, 2016). ** According to the resolution of the Bank General Assembly in its extraordinary meeting held on April 9, 2016, it was approved to increase the Bank›s capital from JD 155,100,000 to JD 200,000,000 by capitalizing a part from the voluntary reserve by JD 13,702,858, and capitalizing JD 31,197,142 from retained earnings and to distribute them as free shares over the shareholders each per ownership, all legal procedures related to the increase of capital completed on April 19, 2016. In Accordance to the instructions of the regulatory bodies: - The general banking risks reserve and the special reserve cannot be utilized without prior approval from the Central Bank of Jordan and Palestine Monetary Authority. - Retained earnings include a restricted amount of JD 14,683,719 against deferred tax benefits as of December 31, 2017. According to the Central Bank of Jordan instructions, this restricted amount cannot be utilized through capitalization or distribution unless actually realized. - Retained earnings include an amount of JD 5,060,455 as of December 31, 2017 which represents the effect of early adoption of IFRS (9). These restricted amounts cannot be utilized unless realized through actual sale. - The fair value reserve cannot be utilized including the capitalization, distribution, write-off losses or any other commercial acts unless realized through actual sale as instructed by Central Bank of Jordan and Jordan Security Commission. The accompanying notes from (1) to (46) constitute an integral part of these consolidated financial statements and should be read with them. 47 The accompanying notes from (1) to (46) constitute an integral part of these consolidated financial statements and should be read with them. 48
26. Annual Reports CONSOLIDATED STATEMENT OF CASH FLOWS BANK OF JORDAN (PUBLIC SHAREHOLDING LIMITED COMPANY) Statement (E) For the Year Ended December 31, Note 2017 2016 JD JD 67,583,363 62,315,408 11 ,12 4,806,532 4,591,875 32 (204,110) (64,547) Cash Flows From Operating Activities: Profit before income tax – Statement (B) Adjustments for Non-cash items: Depreciation and amortization Provision for impairment in direct credit facilities (Gain) from sale of property and equipment Loss from financial assets at fair value through profit or loss – Unrealized Effect of exchange rate fluctuations Other provisions Provisions for assets foreclosed by the Bank Foreign currency exchange differences 9 31 30 17 13 Profit before changes in assets and liabilities (Increase) in restricted balances (Increase) decrease in deposits with banks and financial institutions (maturing over 3 months) Decrease in financial assets at fair value through profit or loss (Increase) in direct credit facilities Increase (decrease) in deposits and financial institutions (maturing over 3 months) 17 18 Cash Flows From Investing Activities: (Purchase) of financial assets at amortized cost Sale and Maturity of financial assets at amortized cost Sale of financial assets at fair value through comprehensive income 12 Cash Flows From Financing Activities: Foreign currency translation differences Dividends distributed to shareholders Net (Decrease) Increase in Cash and Cash Equivalents 30 Cash and cash equivalents - Beginning of the year Cash and Cash Equivalents - End of the Year 36 increase have been completed on April 19, 2016. The Bank provides all financial and banking services within its scope of activities. Those services are offered through its (73) branches in Jordan, (14) branches in Palestine and its subsidiaries in Jordan and Syria (Excel for Financial Investments Company, Jordan Leasing Company and Bank of Jordan – Syria). The consolidated financial statements have been approved by the Board of Directors in its meeting No. 605 held on January 25, 2018. 2. Summary of Significant Accounting Policies Financial Statements Basis of Preparation - The consolidated financial statements for the Bank and its subsidiaries were prepared in accordance with the standards issued 2,077,350 The consolidated financial statements were prepared on the historical cost basis except for financial assets at fair value through profit 42,092,167 date of the consolidated financial statements. Moreover, hedged assets and liabilities are stated at fair value. (89,465,121) (3,159,000) 18,120,950 (76,077) 2,399,248 102,096,567 27,912,536 176,741,811 (533,936) (1,525,128) 5,501,753 158,404,817 (21,876,847) (16,811,866) (85,774,723) (37,503,238) (5,015,771) (2,988,738) 332,735 (2,101,181) (58,976,692) 92,521,265 5,237,547 883,762 (8,895,633) by the International Accounting Standards Board and the interpretations of the International Financial Reporting Interpretation Committee Emanating from the International Accounting Standards Board and in conformity with the applicable laws and regulations of the Central Bank of Jordan. or loss, financial assets at fair value through comprehensive income and financial derivatives which are measured at fair value at the - The consolidated financial statements are presented in Jordanian Dinar “JD”, being the functional currency of the Bank. - The accounting policies adopted for the current year are consistent with those applied in the year ended December 31, 2016 except for the effect of the adoption of new and modified standards as stated in Note (46 - A). Basis of Consolidation - The consolidated financial statements include the financial statements of the Bank and the subsidiaries controlled by the Bank. Control is achieved whereby the Bank has the power to govern the financial and operating policies of the subsidiaries to obtain benefits from their activities. All intra-group transactions, balances, income, and expenses are eliminated in full. - The financial statements of the subsidiary companies are prepared for the same financial year of the Bank using the same accounting policies adopted by the Bank. If the accounting policies adopted by the subsidiary companies are different from those used by the Bank, the necessary adjustments to the financial statements of the subsidiary companies are made so as to comply with the accounting policies used by the Bank. As of December 31, 2017 and 2016, the Bank has the following subsidiary companies: 213,092 (960,792) 48,507,265 Name of Subsidiary Paid-up Capital Bank’s Ownership Percentage % Subsidiary’s Nature Place of Operation of Business Acquisition Date (612,098) 2,583,450 Excel for Financial Investments Company (36,131,416) (28,363,889) Bank of Jordan – Syria* 3,000 Million (Syrian – Lira) 49 Banking Activities Syria May 17, 2008 Jordan Leasing Company JD 20 Million 100 Finance Lease Amman October 24, 2011 (35,519,318) Net Cash Flows (used in) Financing Activities 74,645,244 of JD 13,702,858 from voluntary reserve and JD 31,197,142 from retained earnings. All of the legal procedures related to the capital (21,064,065) (5,489,943) Sale of property and equipment 1,466,147 meeting held on April 9, 2016. Thus, the Bank’s capital was increased from 155/1 million to 200 million through the capitalization 853,758 161,178 (Purchase) of property and equipment and advance payments to acquire property and equipment 2,537,031 was increased in stages, the last of which took place in accordance to the resolution of the general assembly in their extraordinary - 75,000 Maturity (Purchase) of financial derivatives 415,290 of JD 350,000, represented by 70,000 shares at a par value of JD 5 per share. However, the Bank’s authorized and paid-up capital 130,000,000 38,836,013 (Purchase) of financial assets at fair value through comprehensive income (2,341,645) 3, 1960, it was registered under number (1983) according to the Companies Law No. 33 for the year 1962 with an authorized capital (100,000,000) (65,620,573) Net Cash Flows from Operating Activities before paid taxes, end-of-service indemnity provision, and lawsuits provision 36,351 Bank of Jordan was established in 1960 as a public shareholding limited company with headquarters in Amman – Jordan. On March (746,708) 16,038,883 Net Change in Assets and Liabilities 5,689,334 1. General (1,174,192) 2,012,837 Increase in other liabilities Effect of exchange rate fluctuations on cash and cash equivalents (402,831) 20,064,591 Increase (decrease) in borrowed funds Net Cash Flows (Used in) from Investing Activities 2,925,420 238,821,626 Increase in cash margins (Purchase) of intangible assets 486,038 21,531,993 Increase in customer’s deposits Net Cash Flows from Operating Activities (2,307,543) (241,852,246) (Increase) decrease in other assets Taxes paid 8,732 93,533,109 Changes in Assets and Liabilities: End-of-service indemnity and lawsuits provisions paid 20,637,508 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2,307,543 (87,298,812) 564,145,672 476,846,860 (30,947,339) 2,341,645 180,889,838 JD 3.5 Million 100 Financial Brokerage Amman March 23, 2006 383,255,834 564,145,672 The accompanying notes from (1) to (46) constitute an integral part of these consolidated financial statements and should be read with them. 49 50
27. Annual Reports Financial Derivatives and Hedge Accounting The most important information of the subsidiaries for the year 2017 is as follows : December 31, 2017 Name of Subsidiary Financial Derivatives for Trading: For the Year 2017 Total Assets Total Liabilities Total Revenues Total Expenses JD JD JD JD Excel for Financial Investments Company 10,179,364 780,213 1,820,557 624,230 Bank of Jordan – Syria* 47,522,921 35,788,915 2,599,306 4,924,946 Jordan Leasing Company 28,447,312 4,695,335 2,084,798 931,610 - The results of the subsidiaries are incorporated into the consolidated statement of profit or loss from the effective date of acquisition which is the date on which actual control over the subsidiary is assumed by the Bank. Moreover, the operating results of the disposed subsidiaries are incorporated into the consolidated statement of profit or loss up to the effective date of disposal which is the date on which the Bank loses control over the subsidiaries. - Non-controlling interests represents the portion of equity not held by the Bank in the subsidiary company. * The results of Bank of Jordan – Syria have been consolidated in the accompanied consolidated financial statements due to the Bank’s power to govern the financial and operating policies of the subsidiary company. Segmental Information - Business is a group of assets and operations that jointly provide products or services subject to risks and returns different from those of other business segments, to the effect that it is measured according to the reports used by the Executive Directors and the main decision maker at the Bank. The fair value of financial derivatives for trading (such as forward foreign currency contracts, future interest rate contracts, swap agreements, and foreign currency options) is recorded in the consolidated statement of financial position. Fair value is measured according to the prevailing market prices; the change in fair value is recognized in the consolidated statement of profit or loss. Financial Derivatives for Hedging: For hedge accounting purposes, the financial derivatives are stated at fair value. Hedges are classified as follows: •Fair value hedge: Hedge for the change in the fair value exposures of the Bank’s assets and liabilities. When the conditions of an effective fair value hedge are met, the resulting gains and losses from re-measuring the valuation of fair value hedge and the change in the fair value of the hedged assets or liabilities is recognized in the consolidated statement of profit or loss. When the conditions of an effective portfolio hedge are met, the gain or loss resulting from the revaluation of the hedging instrument at fair value as well as the change in the fair value of the assets or liabilities portfolio is recorded in the consolidated statement of profit or loss for the same year. •Cash flow hedge: Hedge for the change in the current and expected cash flows Exposures of the Bank’s assets and liabilities. When the conditions of an effective cash flow hedge are met, the gain or loss of the hedging instruments is recognized in owners’ equity. Such gain or loss is transferred to the consolidated statement of profit or loss in the period in which the hedge transaction impacts the consolidated statement of profit or loss. - Geographical sector relates to providing products or services in an economic environment subject to specific risks and returns - When the conditions of the effective hedge do not apply, the gain or loss resulting from change in the fair value of the hedging Direct Credit Facilities -Profit or loss resulting from the foreign exchange of interest-bearing debt instruments and within financial assets at fair value different from those operating in other sectors of other economic environments. -A provision for the impairment of direct credit facilities is recognized when the Bank cannot obviously recover the overdue amounts, and there is objective evidence that the future cash flows of the direct credit facilities have been negatively impacted by an event as well as the estimation of the impairment loss. The provision amount is charged to in the consolidated statement of profit or loss. -Interest and commission earned on non-performing credit facilities are suspended in accordance with the instructions of the Central Bank of Jordan, and in accordance with the instructions of the regulatory authorities in Syria and the Palestinian Monetary Authority, whichever is more conservative. -Credit facilities are written off against its provision when the procedures to collect these direct credit facilities are not feasible. Any surplus in the gross provision - if any - is reversed through the consolidated statement of profit or loss. Subsequent recoveries of amounts previously written off are credited to revenue. - The credit facilities and their own suspended interests that have been fully provided for with provisions, are transferred to items off the consolidated statement of financial position based on the board of directors’ decisions regarding this issue. - The suspended interests related to accounts which have legal suits are recorded at items off the consolidated statement of financial position based on the board of directors’ decisions with this regards. 51 instrument is recorded in the consolidated statement of profit or loss in the same year. through other comprehensive income is included in the consolidated statement of profit or loss. Differences in the foreign currency translation of equity instruments are included in the cumulative change in fair value reserve within owners’ equity in the consolidated statement of financial position. Financial Assets at Amortized Cost - Financial assets at amortized cost are the financial assets which the Bank management intends, according to its business model, to hold for the purpose of collecting the contractual cash flows to maturity date which comprise the contractual cash flows that are solely payments of principal and interest on the outstanding principal. - Financial assets are recorded at cost upon purchase plus acquisition expenses. Moreover, the issue premium \ discount is amortized using the effective interest rate method, and recorded as debit or credit in the interest account. Provisions associated with the decline in value of these investments leading to the inability to recover the investment or parts thereof are deducted. Any impairment is recorded in the consolidated statement of profit or loss and should be presented subsequently at amortized cost less any impairment losses. - The amount of the impairment loss recognised at amortized cost is the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. 52
28. Annual Reports -It is not allowed to reclassify any financial assets to /from this category except for certain cases specified at the International Financial Reporting Standards (and in the case of selling any of those assets before its maturity date, the results should be recorded in a separate account in the consolidated statement of comprehensive income, disclosures should be made in accordance with the requirements of relevant International Financial Reporting Standards). Financial Assets at Fair Value through Profit or Loss -Financial assets at fair value through profit or loss are the financial assets purchased by the Bank for the purpose of trading in the near future and achieving gains from the fluctuations in the short-term market prices or trading margins. -Financial assets at fair value through profit or loss are initially stated at fair value at acquisition date (purchase costs are recorded in the consolidated statement of profit or loss upon acquisition) and subsequently measured in fair value. Moreover, changes in fair value are recorded in the consolidated statement of profit or loss including the change in fair value resulting from translation of non-monetary assets stated at foreign currency. Gains or losses resulting from the sale of these financial assets or part of them are taken to the consolidated statement of profit or loss. -Dividends and interests from these financial assets are recorded in the consolidated statement of profit or loss. -It is not allowed to reclassify any financial assets to/from this category except for the cases specified in the International Financial Reporting Standards. Financial Assets at Fair Value through Comprehensive Income -These financial assets represent the investments in equity instruments held for long term. -These financial assets are recognized at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and Investments in Associates -An associate is an entity over which the Bank has significant influence on the decisions related to Financial and operating policies (but does not control) and whereby the Bank owns 20% - 50% of its voting rights. Moreover, the Bank recognizes its share in the associate based on the equity method. -Profits and losses resulting from transactions between the Bank and its associates are eliminated according to the Bank’s ownership percentage in these companies. Property and Equipment -Property and equipment are stated at cost less accumulated depreciation and any impairment loss in its value. Moreover, depreciation is calculated (except for lands) when the assets are ready for use on the straight-line basis over the estimated useful lives of these assets as follows: % Buildings 2 – 15 Furniture 9 Equipment and Fixtures 15 Vehicles 15 Improvements and Decorations 15 Computers 15 losses arising from changes in fair value recognized in the consolidated statement of other comprehensive income and within owner’s -When the carrying amounts of Property and Equipment exceed their recoverable values, assets are written down, and impairment from the sale of these investments or part of them should be recognized in the consolidated statement of comprehensive income and -The useful lives of Property and Equipment are reviewed at the end of each year. In case the expected useful life is different from what the retained earnings not through the consolidated statement of profit or loss. -Property and Equipment are derecognized when disposed of or when there is no expected future benefit from their use. equity, including the changes in fair value resulting from translation of non-monetary assets stated in foreign currency. Gain or loss within the consolidated owner’s equity, and the balance of the revaluation reserve for these assets should be transferred directly to - No impairment testing is required for these assets. losses are recorded in the consolidated statement of profit or loss. was determined before, the change in estimate is recorded in the following years. - Dividends are recorded in the consolidated statement of profit or loss. Provisions Fair Value from a past event and the costs to settle the obligation are both probable and can be reliably measured. represents the fair value of financial assets and derivatives that have declared market prices. End-of-Service Indemnity Provision The closing price (Asset Purchase/Liabilities Selling) as of the date of the consolidated financial statements in active markets In case declared market prices do not exist, active trading of some financial assets and derivatives is not available, or the market is Provisions are recognized when the Bank has an obligation on the date of the consolidated statement of financial position arising The annual end-of-service indemnities paid to resigned employees are deducted from the related provision when paid, moreover, the excess in the amounts paid to resigned employees than the booked provision are recorded in the consolidated statement of profit or inactive, fair value is estimated by: loss. Furthermore, provision against commitments of end-of-service indemnity is taken to the consolidated statement of profit or loss. - The estimated future cash flows and discounted cash flows at current rates applicable for items with similar terms. Income Tax -Evaluation of long-term assets and liabilities that bear no interest in accordance with discounted cash flows using effective interest -Income tax expenses are accounted for on the basis of taxable income. Taxable income differs from declared income in the consolidated The evaluation methods aim to obtain a fair value that reflects market expectations and takes into consideration market factors and -Taxes are calculated on the basis of the tax rates according to the prevailing laws, regulations, and instructions enforced in the cannot be measured reliably, it is stated at cost less any impairment. -Deferred taxes are taxes expected to be paid or recovered as a result of temporary timing differences between the value of assets -Comparison with the current market value of a highly similar financial instrument. - Options pricing models. rate. Premiums and discounts are amortized within interest revenues or expense in the consolidated statement of profit or loss. any expected risks or benefits at the time of evaluation of the financial instruments. In case the fair value of a financial instrument Impairment in Financial Assets The Bank reviews the values of financial assets recorded on the date of the consolidated statement of financial position in order to determine if there are any indications of impairment in their value individually or in the form of a portfolio. In case such indication exists, the recoverable value is estimated so as to determine the impairment loss. 53 -Income tax expenses represent accrued taxes and deferred taxes. financial statements because the latter includes non-taxable revenues or disallowed taxable expenses in the current year but deductible in subsequent years, tax acceptable accumulated losses, and items not accepted for tax purposes or subject to tax. countries where the Bank operates. and liabilities in the consolidated financial statements and the value of taxable amounts. Deferred tax is calculated on the basis of liability method in the consolidated statement of financial position according to the rates expected to be applied when the tax liability is settled or deferred tax assets are recognized. -Deferred tax assets and deferred tax liabilities are reviewed as of the date of the consolidated statement of financial position, and reduced in case it is expected that no benefit or need will arise, partially or totally. 54
29. Annual Reports Paid-up Capital Intangible Assets The cost of issuance or purchase of the Bank ’s shares is recognized in the Retained Earnings (net after tax effect if any). If the - Goodwill is recorded at cost which repesents the excess of the acquisition costs or investment costs in a subsidiary over the net assets Cost of issuing or purchasing the Bank’s shares purchase/issue transaction has not been completed, then the cost will be recognized as an expense in the consolidated statement of profit or loss. - Treasury Shares No gain or loss is recognised in the consolidated statement of profit or loss on the sale of treasury shares but recognised in owners’ equity within share premium/discount. Moreover, loss is recorded in retained earnings in case the share premium of treasury shares has been used up. Accounts Managed on Behalf of Customers - These represent the accounts managed by the Bank on behalf of its customers, but do not represent part of the Bank’s assets. - The fees and commissions on such accounts are shown in the consolidated statement of profit or loss. - A provision against the impairment in the capital-guaranteed portfolios managed on behalf of customers is taken. Offsetting A - Goodwill: fair value of the subsidiary as of the acquisition date. Goodwill that arises from the investment in the subsidiary is recognised in a separate item as intangible assets. Later on, goodwill will be reviewed and reduced by any impairment amount. - Goodwill is allocated to cash generating unit(s) to test impairment in its value. - Impairment testing is done on the date of the consolidated financial statements. Goodwill is reduced if the test indicates that there is impairment in its value, and that the estimated recoverable value of the cash generating unit(s) relating to goodwill is less than the book value of the cash generating unit(s). Impairment is recognised in the consolidated statement of profit or loss. B - Other intangible assets: -Intangible assets raised through combination are stated at fair value on the date of acquisition. Other intangible assets raised other than combination are recorded at cost. -Intangible assets are classified on the basis of either a definite or an indefinite useful life. Intangible assets with definite useful economic lives are amortized over their useful lives and recorded as an expense in the consolidated statement of profit or loss. Intangible assets with indefinite lives are reviewed for impairment as of the consolidated financial statements date, and impairment loss is treated in the consolidated statement of profit or loss. Financial assets and financial liabilities are offset, and the net amount is reported in the consolidated statement of financial position -No capitalization of intangible assets resulting from the Bank’s operations is made. They are rather recorded as an expense in the or to realize the asset and settle the liability simultaneously. -Any indications of impairment in the value of intangible assets as of the consolidated financial statements date are reviewed. Furthermore, when there is a legally enforceable right to offset the recognized amounts and the Bank intends to either settle them on a net basis Realization of Income and Recognition of Expenses consolidated statement of profit or loss for the year. the estimated useful lives of the impaired intangible assets are reassessed, and any adjustment is made in the subsequent period. -Interest income is realized by using the effective interest method except for interest and commissions from non-performing credit The accounting policy for the intangible assets of the Bank: -Revenues and expenses are recognised according to the accrual basis. Computer Software facilities, which have not been recognized as income and registered in interest and commissions in suspense. -Commission is recorded as revenue when the related services are provided. Moreover, dividends are recorded when realized (decided upon by the General Assembly of Shareholders). Recognition of Financial Assets Purchase and sale of financial assets is recognized on the trading date (which is the date on which the Bank commits itself to purchase or sell the financial asset). Software is shown at cost at the time of purchase and amortized at an annual rate of 15% - 20%. Foreign Currency -Transactions in foreign currencies during the year are recorded at the exchange rates prevailing on the date of the transaction. -Financial assets and financial liabilities denominated in foreign currencies are translated at the average rates prevailing on the consolidated statement of financial position date as declared by the Central Bank of Jordan, Central Bank of Syria and the Palestinian Monetary Authority. Mortgaged Financial Assets -Non-monetary assets and liabilities denominated in foreign currencies and recorded at fair value are translated on the date when their are continuously evaluated according to the accounting policies designated for each of them and to its original class. -Gains or losses resulting from foreign currency translation are recorded in the consolidated statement of profit or loss. Mortgaged financial assets are assets mortgaged to third parties, which hold the right to sell or refinance the mortgage. Those assets Foreclosed Assets fair value is determined. -Translation differences for non-monetary assets and liabilities denominated in foreign currencies (such as equity securities) are recorded as part of the change in fair value. Assets that have been subjected to foreclosure by the Bank are shown at the consolidated financial position under “other assets” at -When consolidating the financial statements, the assets and liabilities of foreign branches and subsidiary companies are translated individually at fair value. Any decline in their market value is taken to the consolidated statement of profit or loss as a loss whereas statement of financial position date. Income and expense items are translated at the average exchange rates for the year. Any exchange the acquisition value or fair value, whichever is lower. As of the consolidated financial statements date, these assets are re-valued any such increase is not recognized. Subsequent increase is taken to the consolidated statement of profit or loss to the extent that it does not exceed the previously recorded impairment. In accordance with the dissemination of the Central Bank of Jordan No. 10/1/4076 and 10/1/2510 dated on March 27, 2014 and February 14, 2017 respectively, the Bank has started from the beginning of the year 2015 to calculate a gradual provision against the assets foreclosed against debts with periods exceeding 4 years. 55 into the functional currency of each entity at the average exchange rates of the Central Bank of Jordan prevailing on the consolidated differences are taken directly to a foreign currency translation adjustment reserve within owners’ equity. Exchange differences arising from the sale of foreign branches or subsidiaries are recorded as part of the revenues or expenses within the consolidated statement of profit or loss. Cash and Cash Equivalents Cash and cash equivalents comprise cash balances with central banks and balances with banks and financial institutions, less balances due to banks and financial institutions maturing within three months and restricted funds. 56
30. 25 ,000,000 ‫ـ‬ 15,000,000 - 10,000,000 JD 2016 125,000,000 115,000,000 - - 10,000,000 2017 JD Total We believe that the assumptions and estimates with material impacts on the recognition of balances recorded in the consolidated 265,682,212 2017 changes arising from the conditions and circumstances of those assessments in the future. JD factors with varying degrees of consideration and uncertainty.  In addition, actual results may differ from assessments due to the 247,205,384 cash flows amounts and their timing.  Moreover, the beforementioned assessments are necessarily based on assumptions and 18,476,828 reserves. In particular, this requires the Bank’s management to issue significant judgments and assumptions to assess the future Total these assessments and assumptions affect revenues, expenses, provisions and the balance of fair value reserves within capital and 494,451,425 perform assessments and assumptions that affect the amounts of assets, liabilities, disclosures and contingent liabilities. Moreover, 456,017,075 2016 Preparation of the consolidated financial statements and the application of the accounting policies require the Bank’s management to JD 3. Accounting Estimates 38,434,350 Annual Reports 10,626,907 20,400,000 ‫ـ‬ 104,063,859 91,505,691 268,583,151 228,197,814 - Statutory cash reserve Total -Except for the statutory cash reserve, restricted balances amounted to JD 2,443,099 as of December 31, 2017 (JD 2,402,507 as of December 31, 2016). * This balance includes JD 9,358,000 maturing within a period exceeding three months (JD 8,224,400 as of December 31, 2016). 57 - - - - - JD 2016 25,000,000 ‫ـ‬ 15,000,000 - 10,000,000 JD JD JD 2017 2016 2017 Foreign Banks and Financial Institutions Local Banks and Financial Institutions December 31, - There are no restricted deposits as of December 31, 2017 and 2016. 11,801,899 - Certificates of deposit - Term and notice deposits* 125,000,000 64,139,425 Total 60,563,818 115,000,000 - Current accounts and demand deposits Deposits maturing after 1 year 61,925,791 - 71,753,575 Balances at Central Banks: Deposits maturing within 9 months to a year Cash in vaults - JD Deposits maturing within 6 to 9 months JD 2016 10,000,000 2017 December 31, Deposits maturing within 3 to 6 months This item consists of the following: This item consists of the following: 4. Cash and Balances with Central Banks Current accounts and demand deposits evaluation studies. Proper evaluation methods and inputs used in preparing the evaluation are reviewed by the management. This item consists of the following: information when available. In case level 1 inputs are not present, the Bank will deal with independent, qualified parties to prepare 5.Balances with Banks and Financial Institutions of factors specific to the asset or liability. When assessing the financial assets and liabilities’ fair value, the Bank uses market 6. Deposits with Banks and Financial Institutions 177,538,910 Total 390,387,634 177,538,910 - inputs are significant, may require judgement and a careful analysis of the inputs used to measure fair value, including consideration Deposits maturing within 3 months or less between Level 2 and Level 3 fair value measurements, i.e., assessing whether inputs are observable and whether the unobservable JD categorised in their entirety, segregating fair value measurements in accordance with the levels defined in the IFRS. Differentiating JD The Bank is required to determine and disclose the level in the fair value hierarchy into which the fair value measurements are 2016 year in case a final settlement with the Income Tax Department is reached for the prior year. - Fair value hierarchy Local Banks and Financial Institutions Moreover, the study highlights potential risks that the Bank may encounter in the future. Such legal assessments are reviewed periodically. -A provision for income tax is taken on the current year’s profit and for accrued and estimated tax of the deducted provision for the prior 2017 against debts with a period exceeding 4 years. -A provision for lawsuits raised against the Bank is taken. This provision is based on a legal study prepared by the Bank’s legal advisors. 390,387,634 respectively, the Bank has started from the beginning of the year 2015 to calculate a gradual provision against the assets foreclosed -Non-interest bearing balances at banks and financial institutions amounted to JD 15,073,372 as of December 31, 2017 (JD 34,597,230 as of December 31, 2016). -Restricted balances at banks and financial institutions amounted to JD 2,253,202 as of December 31, 2017 and 2016. 65,629,441 38,434,350 2016 with the dissemination of the Central Bank of Jordan No. 10/1/4076 and 10/1/2510 dated on March 27, 2014 and February 14, 2017 88,143,302 evaluators for the purposes of calculating the impairment. The impairment for these assets is reviewed periodically. In accordance 69,666,474 -Impairment of assets foreclosed are recorded based on recent and approved evaluations of these assets performed by approved 18,476,828 lives. Impairment loss is taken to the consolidated statement of profit or loss. JD depreciation and amortization based on the general condition of these assets and the assessment of their expected useful economic 2017 are used for the purpose of determining the provision. -Management periodically reassesses the economic useful lives of tangible and intangible assets for the purpose of calculating annual December 31, instructions of the Central Banks where the Bank branches and subsidiaries operate. The strictest outcomes that conform with the IFRS Foreign Banks and Financial Institutions Reporting Standards (IFRS). The outcomes of these basis and estimates are compared against the adequacy of the provisions as per the JD -A provision for credit facilities is taken on the basis and estimates approved by management in conformity with the International Financial 104,063,791 financial statements are fairly presented. And the details of these assumptions are as follows: 58
31. Annual Reports 7 . Financial Assets at Fair Value through Profit or Loss 9. Direct Credit Facilities - Net December 31, This item consists of the following: This item consists of the following: 2017 2016 JD JD Shares listed in local active markets 112,200 122,600 Individual (Retail Customers): Shares unlisted in local active markets 84,787 83,119 Overdraft accounts Total 196,987 205,719 8. Financial Assets at Fair Value Through Comprehensive Income December 31, This item consists of the following: December 31, 2017 2016 JD JD 377,216,321 328,815,801 9,255,980 10,453,963 Loans and discounted bills* 350,692,614 305,735,908 Credit cards 17,267,727 12,625,930 Real estate loans 234,024,646 224,886,600 Corporate: 700,988,262 604,772,198 Large corporate customers 459,850,066 456,804,426 Overdraft accounts 75,961,510 128,944,650 Loans and discounted bills* 383,888,556 327,859,776 241,138,196 147,967,772 2017 2016 JD JD 100,843,880 79,021,668 Shares unlisted in local active markets* 2,856,601 7,146,541 Shares listed in foreign active markets 9,393,266 4,252,624 Overdraft accounts 56,231,895 39,217,032 Shares unlisted in foreign active markets* 1,698,115 1,707,505 Loans and discounted bills* 184,906,301 108,750,740 114,791,862 92,128,338 229,352,737 139,357,534 1,541,581,966 1,297,832,133 Less: Provision for impairment in direct credit facilities (86,485,514) (64,840,522) Less: Interest in suspense (7,868,681) (6,978,578) Net Direct Credit Facilities 1,447,227,771 1,226,013,033 Shares listed in local active markets Total - Total cash dividends from financial assets at fair value through comprehensive income amounted to JD 4,636,746 for the year ended December 31, 2017 (JD 2,815,647 for the year ended December 31, 2016). * The fair value for unlisted investments had been calculated in accordance with the Bank’s share of the net assets of these Investments based on the lastest audited financial statements for the company in which the Bank invested. SMEs Government and public sector Total *Net of interest and commission received in advance amounting to JD 13,765,564 as of December 31, 2017 (JD 12,623,079 as of December 31, 2016). - Non-performing credit facilities amounted to JD 76,806,921 representing (4.98%) of the direct credit facilities balance for the year (JD 66,206,464 representing (5.1%) for prior year). - Non-performing credit facilities after deducting the suspended interest amounted to JD 68,938,240 representing (4.5%) of direct credit facilities after deducting the suspended interest for the year (JD 59,227,886 representing (4.59%) for prior year). - Credit facilities granted to and guaranteed by the Jordanian Government amounted to JD 78,267,657 representing (5/08%) of total direct credit facilities for the year (JD 87,000,117 representing (6.7%) for the prior year). Moreover, credit facilities granted to the public sector in Palestine amounted to JD 65,823,307 for the year (JD 52,357,417 for the prior year). 59 60
32. 61 Real Estate Loans JD Individual (Retail Customers) JD 1,603,675 Provision for the year taken from revenues 2,785,243 5,394,424 96,163 5,298,261 JD 18,953,345 299,439 18,653,906 JD 2,785,243 72,223 2,713,020 JD Individual (Retail Real Estate Loans Customers) 21,961,829 431,886 21,529,943 JD Individual (Retail Real Estate Loans Customers) 18,953,345 ‫ـ‬ 503,379 (1,196) 2,283,060 11,568,432 4,391,294 41,598 7,135,540 JD SMEs 7,135,540 11,568,432 36,907 11,531,525 JD SMEs 35,966,394 705,003 35,261,391 JD Large Corporate Customers 7,135,540 133,108 7,002,432 JD SMEs Corporate Entities 47,560,829 2,171,792 45,389,037 JD Large Corporate Customers ‫ـ‬ 2,204,372 (74,950) 5,006,118 JD SMEs Corporate Entities 35,966,394 (8,465,215) 1,377,908 (2,890,903) 45,944,604 JD Large Corporate Customers Corporate Entities 47,560,829 10,738,645 855,790 35,966,394 JD Large Corporate Customers Corporate Entities ‫ـ‬ ‫ـ‬ ‫ـ‬ JD Public Sector ‫ـ‬ ‫ـ‬ ‫ـ‬ JD Public Sector ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ JD Public Sector ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ JD Public Sector 64,840,522 1,209,773 63,630,749 JD Total 86,485,514 2,736,748 83,748,766 JD Total 64,840,522 (8,465,215) 5,689,334 (3,089,697) 70,706,100 JD Total 86,485,514 20,637,508 1,007,484 64,840,522 JD Total financial statements. transferred to off- statement of financial position accounts as per the Board of Directors decisions, as these credit facilities are fully provided for as of the date of the consolidated - There are direct credit facilities with a balance of JD 9,920,148, a suspended interest of JD 1,454,933 and a provision of JD 8,465,215 as of December 31, 2016 which have been December 31, 2016). - The provisions no longer needed due to settlements or repayments and transferred against other debts amounted to JD 4,333,080 as of December 31, 2017 (JD 6,714,569 as of Balance – End of the Year On a portfolio basis On a single client basis 2016 Balance – End of the Year On a portfolio basis On a single client basis 2017 The amount of calculated provisions on a single client basis and on a portfolio basis and not reported yet is as follows: Balance – End of the Year ‫ـ‬ (122,648) Foreign currency differences Provisions transferred to off-statement of financia position accounts 17,472,318 Balance – Beginning of the Year 2016 5,394,424 21,961,829 Balance – End of the Year 2,602,326 2,905,243 Provision for the year taken from revenues 6,855 2,785,243 JD Real Estate Loans 103,241 18,953,345 JD Individual (Retail Customers) Foreign currency differences Balance – Beginning of the Year 2017 impairment in direct credit facilities: The following is the movement on the provision for Provision for impairment in direct credit facilities: Annual Reports 62
33. 63 Large corporate customers 136 ,845,715 251,243,359 200,685,900 42,626,267 10,152,199 166,957,646 10,038,543 316,131,941 163,529,430 1,307,222,477 Industrial Trading Real estate Constructions Agriculture Tourism, restaurants and public facilities Shares Individuals Government and public sector Total 234,359,489 65,823,307 71,891,236 - 8,205,559 9,455,179 542,003 3,277,683 48,210,399 26,954,123 - JD JD 9,011,477 Outside Kingdom 2,304,247 (1,454,933) (525,086) (175,346) 4,459,612 JD 2,098,944 - (164,427) 639,862 1,623,509 JD SMEs 1,541,581,966 229,352,737 388,023,177 10,038,543 175,163,205 19,607,378 43,168,270 203,963,583 299,453,758 163,799,838 9,011,477 JD 2017 Total 139,357,534 412,388,037 11,202,167 93,763,837 16,950,200 42,225,300 182,661,300 257,125,407 139,306,956 2,851,395 JD 2016 6,978,578 (1,454,933) (1,636,566) 1,046,796 9,023,281 JD Total 7,868,681 (147,520) (903,979) 1,941,602 6,978,578 JD Total 1,297,832,133 December 31, 1,623,509 ‫ـ‬ (659,720) 838,189 1,445,040 JD SMEs Corporate Entities December 31,2016 2,577,038 - (157,051) 429,842 2,304,247 JD Large corporate customers Corporate Entities December 31,2017 Inside Kingdom 524,594 ‫ـ‬ (221,461) 155,680 590,375 - (148,839) Financial Direct credit facilities are distributed in accordance with geographical distribution and economic sectors as following: 2,526,228 ‫ـ‬ Suspended interest transferred to off-statement of financial position accounts Balance – End of the Year (230,299) Less: Interest in suspense reversed to profit or loss JD 228,273 Individual (retail customers) Add: Interest suspended during the year JD 2,444,746 Balance – End of the Year 2,528,254 Real Estate Loans (147,520) Suspended interest transferred to off-statement of financial position accounts Balance – Beginning of the Year 747,953 (433,662) Less: Interest in suspense reversed to profit or loss 372,198 499,700 Add: Interest suspended during the year 524,594 JD JD 2,526,228 Real Estate Loans Individual (retail customers) Balance – Beginning of the Year The following is the movement on the interest in suspense: Interest in Suspense: Annual Reports 64
34. 65 More Than 1 Year More Than 3 Years Total and Up to 3 Years JD JD JD JD JD JD JD December 31 , 2017 17,000,095 2,141,421 39,280,656 102,938,133 58,216,085 219,576,390 December 31, 2016 5,173,074 4,193,787 1,422,450 14,424,134 71,633,705 75,790,530 172,637,680 - The proceeds of the financial assets at amortized cost are to be paid in semi-annual instalments. - During the first half of 2017 financial assets with amortized cost were sold with a book value of 21,979,000 JD due to the decrease of the credit rating of the majority of those assets, which resulted in a gain amounting to JD 87,724 for the year ended December 31, 2017. 3,671,477 ‫ـ‬ 3,671,477 ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ 7,545,539 77,562 7,467,977 6,015,986 (79,055) - 201,924 5,893,117 (781,030) 13,483,963 (71,497) - 942,048 13,322,945 8,884,453 1,298,106 7,586,347 6,263,580 32,404 - 215,190 6,015,986 13,849,927 3,671,477 - 609,928 3,133,046 4,159,347 ‫ـ‬ 4,159,347 ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ 4,159,347 5,378,361 87,956 5,290,405 14,751,951 (123,956) (1,344,508) 1,311,248 14,909,167 20,042,356 (185,465) (1,432,933) 1,474,646 20,186,108 5,744,111 601,954 5,142,157 15,427,229 50,527 (765,321) 1,390,072 14,751,951 20,569,386 385,315 - 385,315 641,180 (9,699) (243,430) 49,969 844,340 1,026,495 (10,686) (243,448) 315,787 964,842 512,138 - 512,138 380,780 3,661 (343,422) 79,361 641,180 892,918 3,736 (386,896) 249,583 1,026,495 JD 3,594,190 647,362 2,946,828 7,855,568 (51,128) (639,981) 862,352 7,684,325 10,802,396 (65,965) (652,856) 957,731 10,563,486 4,330,511 207,905 4,122,606 7,834,029 19,783 (1,005,622) 964,300 7,855,568 11,956,635 26,030 (1,019,454) 2,147,663 10,802,396 JD 9,199,948 5,168,926 4,031,022 15,341,641 (168,908) (1,912,376) 1,454,822 15,968,103 19,372,663 (205,501) (1,959,603) 1,412,863 20,124,904 8,299,673 4,321,610 3,978,063 16,594,741 69,065 (149,993) 1,334,028 15,341,641 20,572,804 83,481 (185,077) 1,301,737 19,372,663 JD JD 5,505,044 29,774,830 5,981,806 23,793,024 44,606,326 (432,746) (4,140,295) 3,880,315 45,299,052 68,399,350 (1,320,144) (4,288,840) 5,713,003 68,295,331 31,930,233 6,429,575 25,500,658 46,500,359 175,440 (2,264,358) 3,982,951 44,606,326 72,001,017 489,605 (2,392,982) * The financial obligations relating to the acquisition of property and equipment amounted to JD 1,696,882 for the year 2017, and will be settled in accordance with the contractual conditions on the purchase of these assets. - Fully depreciated property and equipment amounted to JD 29,833,847 for the year 2017 (JD 28,745,157 for the year 2016). Net Property and Equipment at the End of the Year Payments on acquisition of property and equipment* Net book value of property and equipment Ending balance Foreign currencies differences (Disposals) Annual depreciation Beginning balance Accumulated depreciation: Ending balance Foreign currencies differences (Disposals) Additions Beginning balance Cost: 2016 The maturities of these assets are as follows: Net Property and Equipment at the End of the Year 172,637,680 Payments on acquisition of property and equipment* 219,576,390 Net book value of property and equipment Up to 1 Year 12,294,304 Ending balance to 6 Months Months and 3,573,918 Foreign currencies differences More Than 6 160,343,376 (Disposals) More Than 3 216,002,472 Annual depreciation and Up to 3 Months Months and Up JD Beginning balance Month More Than 1 Month JD Accumulated depreciation: Total 2016 Ending balance Financial assets with floating interest rate 2017 78,264 172,637,680 273,095 219,576,390 24,999 Net financial assets at amortized cost Foreign currencies differences 30,598,000 (801,555) 35,192,320 - Total financial assets unquoted in the market - 30,598,000 68,399,350 35,192,320 1,250,321 Treasury bills or guaranteed by the government 20,042,356 142,039,680 92,869 184,384,070 13,483,963 - 462,871 2,137,169 3,671,477 Foreign governmental bonds (Disposals) Financial assets with fixed-interest rate Total 10. Financial Assets at Amortized Cost Additions 29,443,668 Beginning balance 35,151,182 Cost: - Analysis of bonds and bills: JD Corporate bonds and debentures JD 112,596,012 Decorations and Improvements 147,095,719 Computers Governmental bonds guaranteed by the government Vehicles JD JD December 31, Equipment Furniture and Fixtures Financial assets unquoted in the market: JD Buildings Total financial assets quoted in the market 2016 Lands Financial assets quoted in the market: 2017 2017 Up to 1 December 31, The details of this item are as follows: This item consists of the following: 11. Property and Equipment ‫ ــ‬Net Annual Reports 66
35. Annual Reports 12 . Intangible Assets This item consists of computer softwares which are amortized at an annual rate ranging from 15% to 20%, the details are as follows: For the year ended December 31, ** The movement on the impairment provision of assets foreclosed by the Bank is as follows: 2017 2016 JD JD Balance ‫ ــ‬Beginning of the Year 6,805,743 4,268,712 Additions 2,925,420 2,537,923 - (892) 9,731,163 6,805,743 2017 2016 JD JD Balance – Beginning of the Year 3,559,146 3,320,303 Additions during the year 2,101,181 960,792 Disposals Amortization for the year (823,581) (711,560) Balance ‫ ــ‬End of the Year 2,485 (10,389) 4,839,231 3,559,146 Foreign currencies differences Balance – End of the Year 14. Banks and Financial Institutions’ Deposits December 31, 2017 13. Other Assets This item consists of the following: 2017 2016 ‫دينار‬ ‫دينار‬ Accrued interest income 8,132,535 4,810,872 Prepaid expenses 3,282,556 2,587,777 Assets foreclosed by the Bank in repayment of debts* 45,050,608 34,705,556 Clearance cheques 3,589,269 1,634,270 699,123 912,360 Prepaid tax expenses 1,101,552 1,970,506 Accounts receivables and other debit balances 10,707,290 8,302,714 57,450 20,554 72,620,383 54,944,609 Advanced payments on the acquisition of lands and real estate Transactions in transit Total * The following is the movement on the assets foreclosed by the Bank in repayment of debts: Total Inside the Kingdom of Jordan Outside the Kingdom of Jordan Total JD JD JD JD JD - 16,109,902 16,109,902 - 43,248,408 43,248,408 Deposits maturing within 3 months - 27,254,300 27,254,300 47,500,000 54,875,050 102,375,050 Deposits maturing within 36- months - 1,063,500 1,063,500 - - - Deposits maturing within 69- months - - - - - - Deposits maturing within 912- months - - - - - - Deposits maturity exceeds one year - 20,468,493 20,468,493 - - - Total - 64,896,195 64,896,195 47,500,000 98,123,458 145,623,458 Inside the Kingdom of Jordan Outside the Kingdom of Jordan JD Current accounts and demand deposits This item consists of the following: December 31, December 31, 2016 Foreclosed Assets 2017 2016 JD JD Balance – Beginning of the Year 41,511,299 41,642,564 Additions 14,968,144 2,430,218 Disposals (1,697,672) (2,561,483) End of the year balance 54,781,771 41,511,299 Impairment provision of assets foreclosed by the Bank** (9,731,163) (6,805,743) Balance – End of the Year 45,050,608 34,705,556 -According to the Jordanian Banks’ Law, buildings and plots of land foreclosed by the Bank against debts due from customers should be sold within two years from the foreclosure date. However, the Central Bank of Jordan may extend this period for a maximum of two more years in exceptional cases. In accordance with the dissemination of the Central Bank No. 10/1/4076 dated on March 27, 2014, the Bank has started to calculate a gradual provision against the assets foreclosed against debts with period exceeding 4 years according to Central Bank of Jordan circular number 10/1/2510 dated February 14, 2017. 67 68
36. Annual Reports 69 December 31 , 2017 2016 JD JD Cash margins on direct credit facilities 106,152,279 111,304,651 Cash margins on indirect credit facilities 43,204,414 17,987,451 Total 149,356,693 129,292,102 The details of this item are as follows: -Deposits of the Jordanian Government and the public sector inside Jordan amounted to JD 90,414,825 equivalent to (4.9%) of total customers’ deposits for the year (JD 16,118,947 equivalent to (1%) for the prior year). - Non-interest bearing deposits amounted to JD 675,443,252 equivalent to (36.59%) of total customers’ deposits for the year (JD 901,249,775 equivalent to (56.08%) of total deposits for the prior year). - Restricted deposits amounted to JD 14,245,341 equivalent to (0.77%) of total customers’ deposits for the year (JD 20,715,053 equivalent to (1.29%) of total deposits for the prior year). - Dormant deposits amounted to JD 82,220,824 for the year (JD 82,178,656 for the prior year). 1,606,979,130 21,757,174 127,423,015 172,611,443 1,285,187,498 Total 72,083,535 5,615,320 570,890 65,897,325 Certificates of deposit 323,842,995 9,860,366 25,621,116 85,959,821 202,401,692 Time and notice deposits 675,843,479 78,767 13,092,843 1,384,695 661,287,174 Saving accounts 535,209,121 11,818,041 83,093,736 84,696,037 355,601,307 Current accounts and demand deposits JD JD JD JD JD Large Corporates Individuals December 31, 2016 SMEs Government and Public Sector Total 1,845,800,756 95,595,655 127,573,436 187,693,432 1,434,938,233 Total 90,968,251 3,822,800 1,157,675 85,987,776 Certificates of deposit 498,228,333 87,296,528 26,440,518 123,126,021 261,365,266 Time and notice deposits 747,232,410 104,141 14,585,865 4,136,458 728,405,946 Saving accounts 509,371,762 8,194,986 82,724,253 59,273,278 359,179,245 Current accounts and demand deposits JD JD JD JD JD SMEs This item consists of the following: 15. Customers’ Deposits Individuals Large Corporates December 31, 2017 Government and Public Sector Total 16. Cash Margins 17. Other Provisions Beginning Balance Provision Created during the Year Provision Used During the Year Foreign Currencies Differences Ending Balance ‫دينار‬ ‫دينار‬ ‫دينار‬ ‫دينار‬ ‫دينار‬ 4,186,235 411,600 (524,426) ‫ـ‬ 4,073,409 Provision for lawsuits raised against the Bank 626,714 53,877 (4,027) ‫ـ‬ 676,564 Other provisions 203,043 20,561 (5,483) 38,671 256,792 5,015,992 486,038 (533,936) 38,671 5,006,765 5,337,873 353,166 (1,504,804) ‫ـ‬ 4,186,235 Provision for lawsuits raised against the Bank 600,801 41,628 (15,715) ‫ـ‬ 626,714 Other provisions 287,491 20,496 (4,609) (100,335) 203,043 6,226,165 415,290 (1,525,128) (100,335) 5,015,992 The details of this item are as follows: 2017 Provision for end-of-service indemnity Total 2016 Provision for end-of-service indemnity Total 18. Income Tax 2017 2016 JD JD Balance – Beginning of the Year 16,872,706 13,197,654 Income tax paid (21,876,847) (16,811,866) Accrued Income tax 24,606,299 20,486,918 Balance – End of the Year 19,602,158 16,872,706 2017 2016 JD JD Income tax on current year’s profit 24,606,299 20,486,918 Deferred tax assets for the year-addition (2,840,086) (1,517,791) 207,689 1,144,257 21,973,902 20,113,384 A. Income tax provision: The movement on the income tax provision is as follows: Income tax in the consolidated statement of profit or loss represents the following: Amortization of deferred tax assets Total L egal income tax rate in Jordan amounts to 35%, whereas the legal income tax rate in Palestine where the Bank has investments and branches amounts to 15%, in Syria (a subsidiary) to 25% and 24% for the subsidiary companies in Jordan. 70
37. Annual Reports 11 ,926,470 (664,637) (1,144,257) JD JD 1,517,791 2016 2017 12,217,573 11,926,470 14,683,719 666,038 21,991 2,219,558 208,612 261,797 1,243,573 objected this assessment and raised a lawsuit against the Income and Sales Tax Department in this regards which the Bank won part 1,082,233 and Sales Tax Department claims the Bank with tax differences against the year 2011 amounting to JD 1.8 Million. The Bank has 6,222,668 2016 the law. However, no final settlement has been reached with the Income and Sales Tax Department for these years yet. The Income JD Moreover, the Bank submitted its tax returns for the years 2011, 2014 and 2016 and has paid the required amounts according to Deferred Tax A final settlement was reached with the Income and Sales Tax Department in Jordan up to the end of the years 2013 and 2015. of the case in the court of first instance and appeal the second part which still at the court of appeal. Furthermore, the Income and 2,840,086 (207,689) 124,852 Added during the year Amortized during the year Foreign currencies differences 14,683,719 11,926,470 Balance – Beginning of the Year 795,901 21,991 3,243,455 225,624 254,360 1,187,361 not entail any obligations in excess of the provision booked in the consolidated financial statements. 1,068,355 Department which still at the court of first instance. In the opinion of the management and its legal and tax consultant, the Bank will JD Deferred Tax Bank objected the assessment made by the Income and Sales Tax Department and raised a lawsuit against the Income and Sales Tax 7,886,672 Sales Tax Department also requested the Bank with tax differences against the year 2014 amounting to JD 2.9 Million at which the 3,183,603 62,831 9,731,163 676,564 998,113 44,965,068 - A final settlement was reached with the Income and Sales Tax Department up to the end of the year 2015 regarding Excel for 4,073,409 Bank’s management and its tax consultant, the allocated provisions are sufficient to meet the tax obligations for the year 2017. 3,706,037 Bank’s results for the year 2017 (JD 819,507 against income tax and JD 1,076,418 against value added tax). In the opinion of the JD Balance – End of the Year the Bank’s operations in Palestine. Moreover, the Bank has allocated an amount of JD 1,895,924 to meet the Tax obligations on the 22,533,348 - The Bank has reached a final settlement up to the end of the year 2016 with the Income Tax and Value added Tax Department on Financial Investments Company (subsidiary). Furthermore, the Company has submitted its tax returns for the year 2016. However, 8,664,645 519,451 - 2,925,420 53,877 - 411,600 - 4,754,297 - Jordan Leasing Company (subsidiary) has reached a final settlement with the Income and Sales Tax Department up to the year 2015. JD 2017 and its tax consultant, the allocated provisions in the financial statements are sufficient to meet any tax obligations. Amounts Added no final settlement has been reviewed by the Income and Sales Tax Department yet. In the opinion of the Company’s management Moreover, the Company has submitted its tax returns for 2016 and paid the declared taxes, however, it has not been reviewed by 71 Balance – End of the Year - The movement on deferred tax assets is as follows: 576,651 36,877,074 Total 2,664,152 Other provisions 62,831 Impairment in assets available for sale 6,805,743 Impairment in assets foreclosed by the Bank - 626,714 Provision for lawsuits raised against the Bank 4,027 998,113 Interest in suspense - 4,186,235 Provision for staff end-of-service indemnity 524,426 3,754,235 Provision for non-performing debts – Prior years 48,198 17,779,051 Deferred Tax Assets Provisions for non-performing debts - JD JD Accounts Included The details of this item are as follows: b. Deferred Tax Assets Balance – Beginning of the Year Amounts Released provisions in the financial statements are sufficient to meet any tax obligations. * The accrued tax ratio used in deferred tax calculation is the effective ratio in these countries. the Income and Sales Tax Department yet. In the opinion of the Company’s management and its tax consultant, the allocated 72
38. Annual Reports December 31 , C. The following is a summary of the reconciliation between accounting profit and taxable profit: 2017 2016 JD JD Accounting profit 67,583,363 62,315,408 Tax-exempt profit (6,898,739) (5,979,800) Tax-unacceptable expenses 11,281,313 7,493,529 Taxable profit 71,965,937 63,829,137 %34,2 %32/1 24,606,299 20,486,918 Income tax rate Total 2017 2017 2016 JD JD Social security deposits 277,056 264,323 Income tax deposits 322,528 283,396 Accrued expenses 4,947,970 3,459,949 Incoming transfers 294,037 231,740 Board of Directors’ members remuneration 55,000 55,000 Other credit balances 765,574 3,078,639 6,662,165 7,373,047 Total 19. Borrowed Funds The details of this item are as follows: * The details of other miscellaneous liabilities are as follows: Number of Installments Amount In Total The Remaining Periodic Installments Maturity Collaterals JD Price of Borrowing Interest JD Borrowing from the Central Bank of Jordan 310,747 60 44 Monthly Treasury Bonds %2,25 Borrowing from the Central Bank of Jordan 258,686 113 107 Monthly Bill %1,75 Borrowing from the Central Bank of Jordan 917,461 60 55 Monthly Bill %1,00 Borrowing from the Central Bank of Jordan 950,822 60 55 Monthly Bill %1,00 Total 2,437,716 2016 JD Borrowing from the Central Bank of Jordan 424,879 Total 424,879 21.Paid‫ ــ‬up Capital - The authorized capital of the Bank is JD 200,000,000 as of December 31, 2017 (JD 200,000,000 as of December 31, 2016) - The authorized capital of the Bank is JD 200,000,000 by year end, divided into 200,000,000 shares at a par value of JD 1 each. 22.Reserves Statutory Reserve The amount accumulated in this account is transferred from the annual net income before tax at 10% during the year and previous years according to the Banks Law and Companies Law. This reserve cannot be distributed to shareholders. Voluntary Reserve The amounts accumulated in this account are transferred from the annual net income before taxes at 10% during the previous years. This reserve will be used for the purposes approved by the Board of Directors. Moreover, the General Assembly of Shareholders has 48 60 Treasury Bonds Monthly %2,25 the right to capitalize or distribute the whole reserve or part thereof as dividends. General Banking Risks Reserve - The above amount has been re-borrowed to one of the Bank’s customers listed under small and medium entities with an interest rate ranging from 3% - 5.25%. - This balance is borrowed at a fixed interest rate, and there is no borrowing at floating interest rates or with zero interest rate as of December 31, 2016 and 2017. This item represents the general banking risks reserve in line with the instructions of the Central Bank of Jordan, and other regulatory bodies. Special Reserve 20. Other Liabilities This reserve represents the periodic fluctuation reserve calculated according to the instructions of the Palestinian Monetary Authority December 31, 2017 2016 JD JD Accrued interest payable 5,079,792 2,748,843 Accepted cheques 6,315,946 7,261,564 Temporary deposits 17,814,290 2,452,353 Dividends payable 2,361,085 1,880,403 Deposits on safe boxes 173,945 169,226 Margins against sold real estate 289,250 291,472 Other miscellaneous liabilities* 6,662,165 7,373,047 Total 38,696,473 22,176,908 The details of this item are as follows: 73 concerning the Bank’s branches operating in Palestine. - The restricted reserves are as follows: Nature of Restriction Amount JD Reserve Legal reserve 80,820,952 Companies and Banks Laws General banking risks reserve 15,128,290 Regulatory bodies requirements Special reserve 4,103,632 Regulatory bodies requirements 74
39. Annual Reports 23 .Foreign Currency Translation Differences This item represents the differences resulting from the translation of net investment in foreign subsidiary (Bank of Jordan – Syria) upon consolidating the financial statements. The movement on this item during the year is as follows: Balance – Beginning of the Year Changes in the translation of net investment in the subsidiary company during the year* Balance – End of the Year 27.Interest Income 2017 2016 JD JD Individual (retail customers): 36,208,858 29,195,069 Overdraft accounts 1,318,994 1,183,948 Loans and discounted bills 32,240,938 25,605,225 Credit cards 2,648,926 2,405,896 Real estate loans 17,310,483 16,089,973 Corporate Entities: 46,339,863 39,361,772 Large corporate customers: 30,423,105 27,137,126 Overdraft accounts 5,705,555 6,032,824 Loans and discounted bills 24,717,550 21,104,302 15,916,758 12,224,646 Overdraft accounts 3,410,265 2,761,334 Loans and discounted bills 12,506,493 9,463,312 The details of this item are as follows: 2017 2016 JD JD (12,401,835) (11,481,891) 145,581 (919,944) (12,256,254) (12,401,835) * This item includes the Bank’s net share of the structural position related to the investment in the capital of Bank of Jordan – Syria for the years 2017 and 2016. 24.Fair Value Reserve Direct Credit Facilities: 2017 2016 JD JD Balance – Beginning of the Year 63,565,588 33,186,645 Unrealized gains 17,722,753 32,217,724 - (1,838,781) Government and public sector 10,433,905 5,909,340 81,288,341 63,565,588 Balances with central banks 1,724,849 891,188 Balances and deposits with banks and financial institutions 9,456,054 10,465,324 Financial assets at amortized cost 8,387,224 8,003,308 129,861,236 109,915,974 2017 2016 JD JD 1,388,386 1,113,990 499,248 198,543 The details of the fair value reserve are as follows: (Transferred) to retained earnings as a result for shares sale recognized Balance – End of the Year 25.Retained Earnings SMEs: Total 2017 2016 JD JD Balance – Beginning of the Year 63,926,237 88,442,614 Dividends distributed to shareholders (36,000,000) (31,020,000) Profit for the year 46,795,537 41,396,285 Transferred to reserves (9,783,481) (7,082,118) - 1,346,863 Customers’ deposits: (492,167) 2,039,735 Current and demand deposits - (31,197,142) Saving accounts 1,901,997 1,217,806 64,446,126 63,926,237 Time and notice deposits 15,530,072 8,133,639 * Retained earnings include an amount of JD 14,683,719 restricted against deferred tax assets as of December 31, 2017 (JD 11,926,470 as of December 31, 2016). - Retained earnings include an amount of JD 5,060,455 as of December 31, 2017 which represents the effect of early adoption of IFRS (9). These restricted amounts cannot be utilized unless realized as instructed by Jordan Securities Commission. Certificates of deposit 2,811,574 2,010,710 68,714 63,168 26.Declared Dividends Cash margins 1,215,514 1,098,867 3,503,507 3,317,015 36,000,000 which remain subject to the approval of the General Assembly (while a dividend of 18% of the capital was distributed Deposits insurance fees Total 26,919,012 17,153,738 The details of this item are as follows: Transferred as a result for sale of financial assets through comprehensive income The currencies translation differences (Transferred) increase in paid-up capital – Note (1) Balance – End of the Year* The Board of Directors recommended the distribution of 18% of capital as cash dividends to the shareholders, equivalent to JD during the year 2017 in the amount of JD 36,000,000 according to the general assembly decision in it’s meeting on April 17, 2017. 75 28.Interest Expense The details of this item are as follows: Banks and financial institution deposits Borrowed funds 76
40. Annual Reports 29 . Commissions Income – Net 32.Other Income The details of this item are as follows: 2017 2016 JD JD Commission’s income: 2017 2016 JD JD Previous years refundable to income 15,247,317 1,192,926 1,251,773 645,607 The details of this item are as follows: Direct credit facilities commissions 5,381,011 5,144,413 Gain from the sale of assets foreclosed by the Bank Indirect credit facilities commissions 5,071,054 5,624,180 Revenue from telephone, post, and swift 552,276 493,111 Other commissions 14,174,321 12,984,290 Real estate rent 505,978 354,793 Total 24,626,386 23,752,883 64,547 269,995 Gain from the sale of property and equipment 204,110 366,718 24,259,668 23,482,888 Interest in suspense reversed to income 903,979 1,636,566 Other income 1,661,956 1,569,405 Total 20,327,389 5,956,955 Less: Commissions expense Net Commissions Income 30. Foreign Currency Income 2017 2016 JD JD 452,467 144,509 From revaluation 2,307,543 2,341,645 Total 2,760,010 2,486,154 The details of this item are as follows: From trading\dealing 31.Gain (Loss) from Financial Assets at Fair Value through Profit or Loss The details of this item are as follows: Realized (Losses) Unrealized (Losses) Shares Returns Total JD JD JD JD Local shares ‫ـ‬ (8,732) 12,949 4,217 Total - (8,732) 12,949 4,217 Realized (Losses) Unrealized (Losses) Shares Returns Total JD JD JD JD ‫ـ‬ (36,351) 6,082 (30,269) Foreign shares (43,841) ‫ـ‬ 19,252 (24,589) Total (43,841) (36,351) 25,334 (54,858) Year 2017 Year 2016 Local shares 77 33.Employees Expenses 2017 2016 JD JD Salaries, bonuses, and employees’ benefits 26,781,918 24,557,697 Bank’s contribution to social security 2,221,077 2,029,156 Bank’s contribution to provident fund 1,651,824 1,549,808 Medical expenses 1,555,588 1,460,682 Staff training expenses 619,331 281,195 Transportation and travel expenses 646,220 430,328 Life insurance 97,030 97,915 33,572,988 30,406,781 The details of this item are as follows: Total 78
41. Annual Reports 34 .Other Expenses 36.Cash and Cash Equivalents 2017 2016 JD JD 3,389,558 3,186,977 955,744 790,281 Telephone, post and swift 1,633,516 1,560,783 Maintenance, repairs, and cleaning 3,553,662 2,898,817 Fees, taxes, and licences 3,050,321 2,769,587 Advertisements and subscriptions 4,958,617 3,397,142 Insurance expenses 2,156,311 1,897,758 Electricity and heating 2,218,021 2,212,085 Donations 689,897 544,925 Hospitality 322,817 245,171 The details of this item are as follows: Rent Printing and stationery Professional, consultancy and legal fees 1,369,315 1,145,878 Board of Directors members remunerations 55,000 55,000 Miscellaneous 653,350 788,899 25,006,129 21,493,303 Total 2017 2016 JD JD Profit for the year (Bank’s shareholders) 46,795,537 41,396,285 Weighted average number of shares* 200,000,000 200,000,000 Basic 0,234 0,207 Diluted 0,234 0,207 Net income for the year/share (Bank’s shareholders) 79 The details of this item are as follows: 2017 2016 Cash and balances with central ‫دينار‬ ‫دينار‬ Banks maturing within 3 months 259,225,151 219,973,414 Add: Balances with banks and other financial institutions maturing within 3 months 265,682,212 494,451,425 Less: Banks and financial institutions’ deposits maturing within 3 months (43,364,202) (145,623,458) Restricted balances (4,696,301) (4,655,709) Total 476,846,860 564,145,672 37.Financial Derivatives Positive Fair Value Negative Fair Value Total Nominal Value JD JD JD Foreign currencies forward contracts (purchase) 17,981 (196,814) Total 17,981 2016 The details of financial derivatives at year-end are as follows: Nominal Value Maturities Within 3 Months From 3 To 12 Months Total 18,904,820 18,904,820 - 18,904,820 (196,814) 18,904,820 18,904,820 - 18,904,820 JD JD JD JD JD JD Foreign currencies forward contracts (purchase) 13,774 (31,429) 3,332,249 3,332,249 ‫ـ‬ 3,332,249 Total 13,774 (31,429) 3,332,249 3,332,249 2017 35.Earnings Per Share The details of this item are as follows: 31 ‫كانون األول‬ 3,332,249 Nominal value indicates the value of transactions at year-end, and does not relate to market risk or credit risk. 80
42. 81 2017 2016 JD JD 1 ,553,451 2,457,340 48,000 48,000 1,601,451 2,505,340 Bank’s Executive Management Salaries and Remunerations summary is as follows: Salaries and benefits Transportation and board secretary Total 39.Risk Management First: Descriptive Disclosures: Balances and Transactions with related parties are eliminated from the consolidated financial statements and only disclosed for clarifications. - Debit interest rates for JOD range from 0.25% to 5%. - Debit interest rates for foreign currency range from 0.01% to 2%. Interest rates: - Credit interest rates against facilities in JOD range from (3.375%) to (13.5%). - Credit interest rate against facilities in foreign currency is 5.186%. 64,011 4,509,055 506,157 46,269 44,765 94,269 3,069,593 748,002 53,515 44,570 152,923 22,037 Credit interest and commission Consolidated Statement of Profit or Loss Items: Debit interest and commission 1,520,445 2,231,401 2,504,446 JD - 2,320 788,412 1,074,000 Letters of guarantee Off-balance sheet items JD 2016 2017 Total For the Year Ended 2,606,355 2,501,111 4,365,843 3,609,725 3,523,235 3,523,235 Borrowed Money 5,357,264 7,973,957 7,973,957 16,374,606 2,879,345 3,694,040 1,501,107 68,288,026 17,960,589 Customer Deposits Liabilities: Bank Deposits 45,243,054 110,697,713 3,982,000 3,982,000 Cash Margins 4,467,345 4,208,460 4,208,460 Deposits 47,153,356 47,647,304 45,908,982 1,500,979 236,060 1,283 - Credit Facilities JD JD JD JD JD JD JD JD Assets: 2016 2017 December 31, Subsidiaries Major Shareholders Directors Members Executives Management Staff Provident Fund Other Parties Total Related Parties Consolidated Statement of Financial Position Items: The following are summaries of balances and transactions with related parties: commercial rates of interest and commission. Moreover, all loans and advances with related parties are performing, and no provision for probable credit losses has been taken thereon. Within its normal activities, the Bank entered into transactions with its major shareholders, members of the Board of Directors, executive management and the associate company at the 38.Related parties transactions Annual Reports The Bank manages banking risks through identifying the risks that it might be exposed to and methods of challenging and mitigating them. This is achieved through implementing a group of restructuring projects using best standards and banking acts that aim at separating risk management activities from those related to development of business and operations (execution). * In this context, the Bank has formed a Risk and compliance Management Committee, derived from the Board of Directors to ensure the presence of an effective internal monitoring function in accordance with the policies and scope of work set for it by the Board of Directors. * Risk management assumes the responsibility of managing the various types of risks through: - Preparing policies and getting them approved by the Board of Directors. - Analysing the risk types (credit, market, liquidity, operations information security). - Developing measurement and control methodologies for each risk type. - Providing the Board of Directors and executive management with reports and information about quantitative and qualitative measurements of the Bank risks. * The Bank has established several systems to control and measure risks like capital adequacy, liquidity risk and ratios (LCR, NSFR) operating risks and events and market risk. Credit Risks Credit risks arise from the probable inability and/or lack of desire of the borrower or third party to fulfill its obligations in a timely manner. These risks include on-consolidated financial statements items such as loans and bonds, and off-consolidated financial statements items such as guarantees and/or documentary credits causing financial losses to the Bank. In this regard, the Bank reinforces institutional frameworks that govern the management of credit through the following: 1. Setting up independent specialized departments for the credit management as follows: - Companies Credit Risk Department (for the management of companies’ credit risks). - Small and Medium Size Enterprises (SMEs) Risk Management Department (for management of SMEs credit risks). - Individuals Credit Risk Department (for management of individuals credit portfolios risks). - Credit Portfolios Risk Management Department: the department focuses on maintaining the quality of credit granted to the Bank’s clients (Corporate, SME & Individual). Studying the Key Risk Indicators (KRI) and Key Performance Indicators (KPI) through preparing studies and reports covering the performance of economic sectors and industries and comparing it with the performance of the Bank’s credit portfolios and associated provisions. Utilizing the aforementioned reports to establish proper recommendations which in turn provide guidance for the business development units to target promising economic sectors/ industries or to avert expansion in the deteriorating ones. In addition to the above, the department of Credit Portfolios Risk Management conducts periodical studies and reports to shed light on the below aspects: • The concentration of credit portfolio on economic activity levels. • The concentration of credit portfolio on product levels. • Reports covering the Bank’s default ratios and coverage ratios compared to the banking sector. 82
43. Annual Reports • Credit portfolios performance reports, conducted on segment basis (Corporate, SME, Government and Individuals) compared to the banking sector in terms of growth and profitability rates. • The preparation for the implementation of IFRS 9 through conducting scenarios and reports required to comply with the IFRS 9 implementation by the beginning of 2018. • Applying a risk rating system through which the clients will be classified to ten stages (ratings) and according to the below factors: - Obligor Risk Rating (economic sector, management, financial standing, experience, etc). - Facility Risk Rating (risk weight will be assigned according to the type and nature of the facility). - Collateral Rating: (risk weight will be assigned according to the type and nature of the collateral), which will directly impact the Recovery Ratio, thus the calculation of Loss Given Default LGD 2. Separating the of Business Development Department from Credit Risk Departments. 3. Implementing a set of approved policies and procedures that outline principles for defining, measuring, and managing the type of risk 4. Determining credit concentrations at the credit type level, economic sector, geographical distribution, and credit portfolios, etc. Credit risks are managed by departments according to their specialization. 5. Implementing an authorization and relationship management system: Bank of Jordan adopts an authorization system that includes authority granting, delegation, monitoring and relationship management of the various credit activities. 6. Determining credit risk mitigation methods: Bank of Jordan adopts various methods to mitigate credit risks such as the following: - Providing the proper credit structure that matches its purpose and repayment period. - Ensuring the completion of all control aspects relating to the utilization of credit and the sources of its payment. - Obtaining proper guarantees to hedge against any risks in this regard. - Analysing and evaluating credit transactions by credit risk departments. - Periodically evaluating guarantees according to the nature, type, and degree of risks to reinforce guarantees and ensure their adequacy constantly. - Setting up specialized committees for approving credit. 7. Controlling credit execution by the credit control department in addition to a unit concerned with documentation, completion of legal audit, and execution. 8. Applying the credit management mechanisms (CREMS and E-loan). 9. Setting up a specialized department to follow up on the collection of dues and non-performing debts. 10.Setting up a committee for risk and compliance management at the Board of Directors level to review policies, credit strategies, investments and risks. 11.Determining the duties of the various credit risk departments concerning the mechanism and periodicity of controls and issuance/submission of reports to the Board of Directors and Executive Management. 12.Analysing economic fluctuations and changes in the structure and quality of credit portfolios. 13.Preparation and implementation of Stress Testing procedures. 14.Control Reports: Operational Risk Operational risks arise from the inefficiency or failure of internal operations, employees, or systems or may stem from external events including legal risks. The Operational Risk Unit was established in 2003 under the Risk Management Department to manage the Operational Risks in the bank where qualified staff were appointed and automated systems were supplied since that date to empower the unit to perform its duties effectively. The Bank manages operational risks through the following process: 1. Setting the operational risks policy, approving it by the Board of Directors, and implementing it across the bank and its affiliates. This includes the standards for defining and measuring risks in addition to the Risk Appetite accepted for these risks. 2. Implementing an operational risk management system (CAREWeb). 3. Creating risk profiles for all Bank entities which include all operational risks that may affect the entity, the related controls to mitigate them and the frequency of their testing to ensure effective and continuous implementation. Reports on risk profiles are submitted to the Risk and Compliance Committee on the Board level for approval. 4. Internal Audit Department evaluates the validity of the monthly self-assessment tests for the Bank’s various units, classifies these units according to the approved classification standards and incorporates them into the internal audit reports it submits to the Audit Committee on a timely basis. The Operational Risk Unit incorporates the self-assessment results in comparison with the internal audit results for all of the Bank’s entities and submits them to the Audit Committee on a quarterly basis. 5. Continuous evaluation of the Risk Profiles: In this regard, a self-assessment tool (Control & Risk Self-Assessment) has been applied to manage operational risks through continuous evaluation of risks to identify new risks, ensure the efficiency of control procedures to mitigate these risks, and update the risk profiles on a timely basis to reflect the actual internal control environment. 6. Setting up a database for operational incidents, analysing them and submitting reports on the concentration and type of these incidents to the Risk and Compliance Committee/Board of Directors. 7. Applying rating standards and evaluating the Bank’s entities according to international classification standards for internal control environment. 8. Setting up and determining key risk indicators (KRIs) at the Bank’s level and provides the related departments within the Bank with the results of these indicators to be monitored as well as applying rating standards and the correction procedures to avoid the risk before its occurrence. The credit risks departments, each according to its specialization, control and evaluate all credit operations through a set of control procedures: 9. Developing and implementing the stress testing scenarios for Operational Risks in the Bank. - Monitoring credit violations, un-renewed due credit ceilings, due accounts, and others. 10. Providing the Risk and Compliance committee on the Board of Directors level with periodic reports (monthly, quarterly) that - Daily control: - Controlling the quality and distribution of the credit portfolio. - Rating credit risks, economic sector, credit type, guarantees, concentration, credit asset quality trends, and others. - Monitoring credit exposure at the customer level (Total Exposure), geographic area, credit type, economic sector, maturity date, guarantee type, and others. These reports are submitted periodically to the risk and compliance management committee at the Board of Directors level. Timely reports on daily operations are submitted to the General Manager. reflect the actual internal control environment for the various units in the Bank. 11. Evaluating the policies and procedures in the Bank to identify any control gaps in these processes and arrange with concerned entities to rectify these gaps. 12. Conducting trainings and awareness sessions for the Bank’s employees on Operational Risk Management to enhance the internal control environment at the Bank. 13. Creating the Corporate Risk Profile to identify risks that may arise on strategic level and affect the achievement of the Bank’s strategy and income targets negatively. The Internal Audit department evaluates the implementation of the corporate controls 83 84
44. Annual Reports on an annual basis and submits a report of their findings to the Audit Committee and the Risk and Compliance Committee . The Corporate Risk Profile is evaluated on an annual basis by the Internal Audit department and the Operational Risk Unit and the - Developing measurement, management, and monitoring liquidity and market risk tools through: • Preparing liquidity risk reports according to the maturity scale. updates are submitted in a report to the Risk and Compliance Committee. • Monitoring ceilings and quality of the investment portfolio. • Identifying sources of funds, and classifying/analysing them according to their nature. 14. The Operational Risk Unit has created an AML Risk profile at the bank level for identifying AML and CTF risks and controls that • Controlling legal liquidity and daily cash liquidity. This means keeping an adequate amount of liquid assets (cash and cash mitigate them. The Internal Audit department evaluates the implementation of these controls on an annual basis and submits equivalents) to meet obligations. a report of their findings to the Audit Committee and the Risk and Compliance Committee. The AML Risk Profile is evaluated on • Matching maturities of assets and liabilities, taking into consideration all internal and external cash flows. Risk and Compliance Committee. • The preparation of a periodic analysis about the developments in local and international markets. an annual basis by the Operational Risk Unit and the Compliance Department and the updates are submitted in a report to the • Performing stress testing. • Monitoring investment tools and analyzing the range of conformity with the issued investment limits in the investment policy Liquidity and Market Risk and the allowed losses limits. Liquidity Risk • Analyzing ceilings and limitations of the investments and providing a recommendation to adjust it according to improvements to finance its activities without incurring high costs or losses. Moreover, liquidity risks are divided into two types: • Analyzing the investment concentrations on the level of each tool. Liquidity risk represents the Bank’s inability to make available the necessary funding to meet its obligations on their maturity dates or and circumstances of international and local markets, and diversifying investment with what achieves best returns and less risks. - Funding Liquidity Risk • Reviewing and assessing the portfolios assets and liabilities. This risk represents the Bank’s inability to change assets into cash - such as the collection of receivables - or to obtain funding to • Analyzing credit rating for international and local banks according to the financial situation and how much it is effected by the meet its obligations. economic crises and the range of its spread globally. • Monitor interest trends on the volume of deposits, Maturity date and its suspended range. - Market Liquidity Risk • The preparation of reports about the exceeding limit in investments tools. This risk represents the Bank’s inability to sell the asset in the market or selling the asset at a huge financial loss due to weak • Monitoring the changes on interest prices in international and local markets. liquidity or demand in the market and includes the following: Market Risk - Market risks: are the risks of exposure of the positions on and off the Bank’s Consolidated Statement of Financial Position to losses as a result of price fluctuations in the market. This includes the risks arising from the volatility of interest rates and stock prices of investment portfolios, both for the purpose of trading or exchange and include the following: • Monitoring the sensitivity of investment tools for changes in interest prices on each investment tool. • Monitoring the pricing process for borrowing and lending/investments ceiling. • Monitoring the concentration on markets/tool and geographical distribution. - Submitting periodic reports to the Investment Committee, Executive Risk Management Committee, and Risk Management Committee/ Board of Directors. - Interest rate risks. Information Security Risk - Fluctuation in shares prices risks. Information security unit has been established to protect the Bank’s information, users and assets by applying high level policies and - Currency exchange rate risks (Dealing with Foreign Currency). - Goods risks. Defined as any potential threat that may lead to a failure in confidentiality, availability, and integration of the Bank’s information. procedures, through specific definitions of mandatory baseline controls. Market risks arise from: - Bank of Jordan adopts the following principles to manage information security risks: - Fluctuations in interest rates. - Comply with PCI-DSS Requirements. - Changes that may occur in the political and economic conditions in markets. - Fluctuations in the prices of financial instruments held for future buying and selling. - Gaps in maturities of assets and liabilities and interest rate re-pricing. - Holding of uncovered positions. The substantial tools used to measure and manage markets risks are as follows: - Review Information Security Policies and update the policies to be in line with international standards. - Monitor all systems, servers, and network component on a regular basis by using special tools to counter any threat. - Review privileges based on job classification and function and restricted to least privileges necessary to perform job responsibilities. - Identify threats and vulnerabilities and identify appropriate controls to mitigate any new risks. - Review and update Business Contingency Plan periodically and periodically perform the necessary tests to check the effectiveness of the plan as well as the Disaster Recovery Plan. - Basis Point Value - Review and evaluate the physical security controls on a regular basis. - Stress Testing - Reporting information security/Communication Progress and related cases to the upper management. - Value at Risk The Bank manages the market and liquidity risk through: - Setting up a liquidity crisis management plan that includes the following: • Specialized procedures for the management of liquidity risk. • Specialized committee to manage liquidity risk. • A liquidity contingency plan. - Coordinate or conduct security orientation and security awareness programs. - Complying with SWIFT _ CSR requirements. - Preparation of IT management Governance guide and related technology and to be published on the Bank’s website. - Applying IT management Governance and related technology COBIT5. Compliance Risks These represent the risks that arise from the probable failure of the Bank to comply with (violate/transgress) the prevailing laws, regulations, instructions, banking laws, and code of ethics issued by the international and local regulatory bodies, including the Bank’s internal policies. The Bank has set up a compliance department, staffed with qualified and trained personnel, equipped with automatic systems, and 85 86
45. Annual Reports assigned with the task of managing this type of risk according to the following criteria : - Preparing the compliance policy, approving it by the Board of Directors, and enforcing it. This policy includes the principles for defining, Second: Quantitative Disclosures: (39/A) Credit Risk measuring, and controlling risks. - Applying an automatic system for managing compliance risks. - Evaluating and adopting all work policies and procedures and ensuring their compliance with laws, regulations, and instructions governing the Bank’s work. - Preparing and applying compliance matrices, which include limiting the violation of laws and regulations and ensuring compliance with them periodically according to the nature and type of the matrix. - Preparing and applying a conflict of interests management mechanism. - Promulgating and applying the code of ethics to all employees of the Bank. - Qualifying and training all employees of the Bank. - Providing the Board of Directors and Executive Management with periodic reports that include violations and non-compliance at the Bank’s unit level. As for Anti-Money Laundering activities, an autonomous unit within the Compliance Department has been set up with appropriate and qualified capabilities and systems. The Bank manages the unit of Anti-money laundering and terrorism finance as follows: 1. Preparing a policy for anti-money laundering and Terrorism Financing Combat approved from the Board of Directors, which is in line with the instruction of Anti-Money Laundering and Terrorism Financing Combat number 51 for the year 2010, and implementing it effectively. 2. The implementation of an automated system to check daily customer’s transactions. 3. Rating of customers in accordance to their risk grade. 4. A periodic automated check to ensure that none of the Bank’s customers are included in prohibited lists. 5. Periodic check for customers with high risks. 6. Awareness of the Bank’s employees, each as per their specialities. The Bank has also established a unit to meet the requirements of tax compliance for foreign accounts (FATCA) and supply them with qualified human resources. The requirements of compliance operation management for FATCA law were prepared within the following basis: - The preparation and adoption of a policy to deal with the FATCA law. - The preparation and adoption of a compliance program with the FATCA law. - Rehabilitation and training of all employees of the Bank to deal with the requirements of the FATCA law. - Contracting with a specialized company to implement an automated system to manage the requirements of FATCA. - Adjusting the application forms for opening new accounts to meet the requirements of the FATCA law. - Developing a mechanism to update customer data on an ongoing basis. - The compliance committee/Board of Directors is responsible for overseeing cases of fraud and suspicion by following up on the periodic reports submitted to the committee. - The unit submits a periodic report on compliance with the FATCA requirements to the compliance committee/Board of Directors. - Based on the transparency instruction for dealing with customer’s No. 66/2012 issued by the Central Bank of Jordan on October 21, 2012 the Bank established a unit to manage and handle customer complaints and provided this unit with a qualified human resources and automated application under the supervision of the Compliance Department. - The Bank manages and handles customer complaints according to the following: - Proportion and adoption of a mechanism to handle and manage customers complaints as appropriate. - Preparation of a policy for the way to fairly and transparently deal with customers, to be approved according to internal instructions and procedures related to the financial and banking services providers customers compliance No. 1/2017 dated august 28, 2017 issued by the Central Bank of Jordan. - Providing different communication channels to receive customer complaints. 87 Exposure to credit risk (after impairment provisions and interest in suspense and before collateral held or other mitigation factors): 2017 2016 JD JD Balances with central banks 196,829,576 166,272,023 Balances with banks and financial institutions 265,682,212 494,451,425 Deposits with banks and financial institutions 125,000,000 25,000,000 1,447,227,771 1,226,013,033 Individual (retail customers) 352,809,746 307,336,228 Real estate loans 227,882,269 221,576,763 Corporate entities 637,183,019 557,742,508 Large corporate customers 409,712,199 418,533,785 SMEs 227,470,820 139,208,723 229,352,737 139,357,534 Financial assets at amortized cost (Bonds & Treasury Bills) 219,576,390 172,637,680 Other assets 25,769,100 17,356,187 2,280,085,049 2,101,730,348 Letters of guarantee 133,848,164 117,565,620 Letters of credit 92,190,075 39,109,648 Acceptances 56,193,136 74,535,617 Un-utilized facilities 108,819,747 86,932,724 2,671,136,171 2,419,873,957 Items On the Consolidated Statement of Financial Position Credit facilities: Government & public sector Total Item on The Consolidated Statement of Financial Position Off-Statement of Financial Position Items Total The guarantees and mitigating credit risk factors against credit exposure mentioned above include the following: - Obtaining suitable guarantees and recording them correctly against any potential risks. These guarantees represent cash guarantees, and non-cash guarantees such as real estate, vehicles, equipment and stock mortgages in addition to guarantees and credit derivatives binding to all parties involved and legally exercisable at all competent courts. - Having a credit rating system for the Bank’s customers and relying on the credit ratings issued by international credit agencies for banks and companies. - Performing periodic evaluations of guarantees according to the nature, type and degree of risk to ensure regularly their adequacy against the credit granted. - Conducting a legal audit of all contracts and documents and their applicability according to the Bank’s system, laws and regulations. - Having financial derivatives that mitigate market risks. 88
46. 89 JD 2 ,361,843 21,400,912 377,216,321 (2,444,746) (21,961,829) 352,809,746 Individual (Retail Customers) JD Doubtful Losses written-off Total Less: Interest in suspense Less: Impairment provision Net 22,741,468 1,000,802 1,733,535 20,007,131 328,815,801 (2,526,228) (18,953,345) 307,336,228 Non-performing: Substandard Doubtful Losses written-off Total Less: Interest in suspense Less: Impairment provision Net 221,576,763 (2,785,243) (524,594) 224,886,600 3,985,016 2,055,218 624,976 6,665,210 4,984,465 81,179 125,998 213,236,925 - (5,394,424) (747,953) 234,024,646 6,832,780 2,875,523 474,682 10,182,985 449,131,785 (35,966,394) (2,304,247) 487,402,426 22,828,704 43,872 310,902 23,183,478 50,594,088 906,972 2,432,768 413,624,860 - JD Large Corporate Customers 25,769,100 - - 25,769,100 - - - - - - - 25,769,100 - JD Other Assets 139,208,723 (7,135,540) (1,623,509) 147,967,772 10,138,140 304,566 3,173,602 13,616,308 6,909,080 535,453 2,200,967 127,442,384 - JD SMEs 17,356,187 - - 17,356,187 - - - - - - - 17,356,187 - JD Other Assets December 31, 2016 227,470,820 (11,568,432) (2,098,944) 241,138,196 13,855,739 405,411 47,184 14,308,334 2,173,692 607,867 4,240,917 224,656,170 - JD SMEs Corporate Entities 474,295,736 (47,560,829) (2,577,038) 524,433,603 22,793,389 560,019 3,477,998 26,831,406 33,243,712 6,569,012 5,049,154 439,378,823 24,979,662 JD Large Corporate Customers 251,953,546 - - 251,953,546 - - - - - - - - 251,953,546 JD Government & Public Sector 353,605,963 - - 353,605,963 - - - - - - - 2,137,169 351,468,794 JD Government & Public Sector -Credit risk exposure includes balances and deposits at banks and financial institutions, treasury bills and any assets which have credit exposure. *All of the loan balance is considered mature if any installment or interest matures for a period that exceeds 90 days, as for the overdraft it is considered mature if it exceeds the 90 days limit. 2,852,675 58,768 3,417,767 303,221,658 Watch list From 31 to 60 days Up to 30 days From which past due*: Accepted grade risk - Real Estate Loans 1,721,441 Substandard Low risk 227,882,269 25,484,196 Non-performing: 6,658,410 4,357,067 Watch list 76,625 573,274 217,183,251 - 816,797 17,954,282 347,375,058 - JD JD From 31 to 60 days Up to 30 days From which past due*: Accepted grade risk Low risk Real Estate Loans Individual (Retail Customers) December 31, 2017 Corporate Entities Credit exposure is distributed according to the degree of risk as follows: 715,167,116 - - 715,167,116 - - - - - - - 548,895,093 166,272,023 JD Banks & other Financial Institutions 618,251,415 - - 618,251,415 - - - - - - - 421,421,839 196,829,576 JD Banks & other Financial Institutions 2,101,730,348 (64,840,522) (6,978,578) 2,173,549,448 56,958,991 4,137,191 5,110,282 66,206,464 65,340,308 1,582,372 8,177,500 1,623,777,107 418,225,569 JD Total 2,280,085,049 (86,485,514) (7,868,681) 2,374,439,244 64,882,820 6,202,796 5,721,305 76,806,921 46,432,881 8,070,301 27,817,627 1,677,921,410 573,278,032 JD Total Annual Reports 90
47. 91 17 ,794,151 34,574,327 11,713,926 2,586,286 20,274,115 544,407,967 Watch list Non-performing: Substandard Doubtful Losses written-off Total Individual (Retail Customers) 34,708,227 11,424,280 Non-performing: Substandard 485,400,102 Total 62,227,780 352,929,068 31,986,354 38,256,900 485,400,102 Cash margins Real estate Listed shares Equipment and vehicles Total Of ‫ ــ‬which: 22,392,989 Losses written-off 890,958 26,921,488 Watch list Doubtful 423,770,387 Standard grade ‫ـ‬ 544,407,967 Total Low grade 36,808,763 Equipment and vehicles JD Real Estate Loans 16,403,629 Listed shares Collaterals: ‫ـ‬ 443,765,718 Real estate ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ - ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ JD ‫ـ‬ ‫ـ‬ ‫ـ‬ 47,429,857 ‫ـ‬ - ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ ‫ـ‬ JD Real Estate Loans Cash margins Of ‫ ــ‬which: 492,039,489 ‫ـ‬ Low grade Standard grade JD Collaterals: Individual (Retail Customers) 88,637,014 7,003,097 321,372 65,765,169 15,547,376 88,637,014 8,606,527 118,472 1,377,611 10,102,610 6,708,232 71,826,172 ‫ـ‬ ‫ـ‬ JD SMEs 142,290,847 7,161,458 31,664,982 70,411,845 33,052,562 142,290,847 9,811,945 11,048 9,136,086 18,959,079 16,785,177 106,546,591 Corporate Entities Large Corporate Customers JD 97,968,749 5,709,626 15,773,583 65,852,155 10,633,385 97,968,749 2,420,088 943,002 138,146 3,501,236 9,295,388 85,172,125 ‫ـ‬ JD SMEs December 31, 2016 152,364,305 2,912,987 630,046 128,897,909 19,923,363 152,364,305 13,975,788 178,333 10,749,822 24,903,943 2,819,136 124,641,226 ‫ـ‬ JD Large Corporate Customers Corporate Entities December 31, 2017 The following table illustrates the fair value of collaterals held as security for credit facilities: 214,201,795 2,247,284 - 210,266,731 1,687,780 214,201,795 3,514,568 758,038 538,286 4,810,892 3,420,881 205,970,022 ‫ـ‬ JD Government and Public Sector 250,180,928 3,140,642 - 240,341,649 6,698,637 250,180,928 3,440,276 1,458,905 399,111 5,298,292 5,494,073 239,388,563 ‫ـ‬ JD Government and Public Sector 40,270,446 21,845,061 - 6,485,323 11,940,062 40,270,446 459,949 3,400 372,297 835,646 7,198 39,427,602 ‫ـ‬ JD Total 43,893,985 25,045,508 - 8,674,005 10,174,472 43,893,985 437,963 6,046 426,847 870,856 185,554 42,837,575 ‫ـ‬ JD Total Annual Reports 92
48. grace period . They are classified as debts under watch list and amounted to JD 6,165,742 as of December 31, 2017 (JD 38,261,806 2,101,730,348 75,960 2,280,085,049 25,769,100 - 219,576,390 - 229,352,737 - 227,470,820 - 409,712,199 - 637,183,019 - 227,882,269 - 1,447,227,771 125,000,000 265,682,212 352,809,746 - 5,431,034 Restructuring means to rearrange facilities installments by increasing their duration, postponing some installments, or increasing their - 2.Restructured Loans - Other Countries This balance represents the rescheduled loans either classified as watch list or returned to performing loans. 5,431,034 (JD 9,162,639 as of December 31, 2016). - scheduling, and reclassified as debts under watch list. Total rescheduled loans amounted to JD 4,742,800 as of December 31, 2017 JD Total These represent loans classified previously as non-performing, removed from non-performing credit facilities according to proper JD 1.Rescheduled Loans 196,829,576 Annual Reports 5,027,919 5,999,267 - - - - - - - - - - 5,999,267 - 3.Bonds, Debentures and Treasury Bills JD America as of December 31, 2016). 93 3,625,398 14,339,649 *Except for Middle East Countries 1,720,852,453 Total for the Year 2016 357,808,969 694,440 36,374,893 352,865,840 1,878,719,575 Total for the Year 2017 25,769,100 Other assets 35,248,711 162,095,719 Financial assets at amortized cost Bonds & Treasury Bills: - 22,231,960 65,823,307 163,529,430 Government & public sector 80,146,911 147,323,909 - - - - - 694,440 - JD 17,840,642 SMEs 391,871,557 219,576,390 Large corporate customers 219,576,390 - Total 97,987,553 35,192,320 539,195,466 35,192,320 Corporate entities Unrated Bonds - 147,095,719 3,069,523 147,095,719 224,812,746 Jordanian Government Bonds Real estate loans 2,137,169 - 2,137,169 46,113,090 Baa2 306,696,656 Moody›s Individual (retail customers) Foreign Government Bonds - 2,141,421 212,993,473 2,141,421 1,234,234,298 Baa1 Credit facilities: Moody›s - Foreign Bank Bonds - 22,231,960 125,000,000 22,231,960 Deposits with banks and financial institutions Ba1 14,142,933 Moody›s 51,875,569 Foreign Bank Bonds 187,538,969 5,802,933 Balances with banks and financial institutions 5,802,933 - A3 52,748,087 Moody›s 144,081,489 Foreign Bank Bonds Balances with central banks 4,974,868 JD 4,974,868 JD A2 JD Moody›s Items Foreign Bank Bonds Europe JD Geographical area JD Other Middle East Countries Total Inside Jordan Rating Grade Within Financial Assets at Amortized Cost Distributed according to the country of residence of the counterparty Classification 4.Concentration in credit exposure according to geographical distribution as follows: Rating Agency Asia* The schedule below shows the distribution of bonds, debentures and bills according to the international agencies’ classification: 94
49. 95 133 ,645,769 261,620,634 223,079,792 43,548,050 88,038,099 11,304,687 policies and procedures through special committees and associated work centres and include the following: - Interest rate risks. - Currency exchange rate risks. - Market risks: are the risks of exposure of the positions on and off the Bank’s Consolidated Statement of Financial Position to losses as a result of price fluctuations in the market. This includes the risks arising from the volatility of interest rates and stock prices of investment portfolios, both for the purpose of trading or exchange. Market risks arises from: - Changes that may occur in the political and economic conditions in markets. - Fluctuations in interest rates. - Fluctuations in the prices of financial instruments held for future buying and selling. - Foreign currency fluctuations. - Gaps in maturities of assets and liabilities and interest rate re-pricing. - Creation of uncovered positions. Interest Rate Risks Interest rate risks arise from the probable impact of changes in interest rates on the value of other financial assets. The Bank is exposed to the risk of interest rates due to a mismatch or a gap in the amounts of assets and liabilities, according to the various time limits or review of interest rates in a certain period. Moreover, the Bank manages these risks through reviewing the interest rates on assets and liabilities based on the risk management strategy undertaken by the Asset and Liability Management Committee. The Bank follows a policy of hedging all financial assets and financial liabilities whenever the need arises. Hedging is against anticipated future risks. The Bank has developed analysis scenarios to measure the sensitivity of interest rate risk in addition to providing a system for controlling the difference in the history of re-pricing. This ensures control, reduces risk, and takes into account acceptable risk and 321,956,302 19,384,626 169,713,968 10,038,543 354,845,682 16,737,743 - Fluctuation in shares prices risks. 160,087,339 280,894,179 market prices such as interest rate, currency exchange rate, and shares prices. Moreover, market risks arise from the existence of 201,080,046 749,845,726 These risks arise from the fluctuations in the fair values or the future cash flows of financial instruments due to the changes in 42,626,267 689,945,605 Descriptive Disclosure: balancing maturities of assets with liabilities, as well as the gaps and benefits of hedging their prices. Total for the Year 2016 2,101,730,348 251,953,546 25,769,100 Other assets 39/b Market Risks: open positions in interest rates, currency exchange rates, and investments in shares. These risks are monitored according to specific Total for the Year 2017 2,280,085,049 351,468,794 25,699,978 24,248 44,579 227 68 4,411,555 24,979,662 122,116,057 219,576,390 Financial assets at amortized cost Bonds & Treasury Bills - 68,069,116 8,664,723 155,651,536 280,849,600 201,079,819 42,626,267 19,384,626 144,734,306 10,038,543 1,447,227,771 229,352,737 Credit facilities: 354,845,614 125,000,000 125,000,000 Deposits with banks and financial institutions - 265,682,212 265,682,212 Balances with banks and financial institutions - 196,829,576 196,829,576 Balances with central banks JD JD JD JD JD JD JD JD JD JD JD Items Economic Sector Financial Industrial Trading Touristic Hotels Real Estate Construction Agriculture Restaurants Public Facilities 5.Concentration in credit exposure according to the economic sector as follows: Stock Government and Individuals Public Sector Total Annual Reports of foreign currencies using good policy to manage its foreign currency positions. Foreign Currency Risks Foreign currency risks are the risks arising from changes in the values of financial instruments as a result of fluctuations in the prices The Bank’s investment policy includes a set of controls that limit this type of risk monitored by a market risk unit such as follows: - Exceeding limits is not allowed, and any currency excess is settled immediately. - Any dealer should close the position immediately when the loss reaches the allowed maximum limit. - The Treasury and Investment Department analyzes and controls open positions daily. It closes the positions in case of excesses of ceiling, loss limits or heightened risks due to market fluctuations. 96
50. Annual Reports Quantitative Disclosures : The following is the net foreign currency positions at the Bank: December 31, 1. Interest rate risks 2017 2016 JD JD USD 4,923,107 (31,027,943) GBP 1,401,199 262,188 Euro 1,410,118 (1,689,464) JPY 9,633,041 8,139 Other currencies (20,876,901) (21,566,026) Total (3,509,436) (54,013,106) Currency Type Increase in Currency Exchange Rate (%) Currency diversifying investments across various geographical areas and economic sectors. Most of the investments held by the Bank are listed in Amman Stock Exchange. Markets Risk Management The Bank follows financial and investment policies for risk management within a specified strategy. Moreover, the Bank has an Asset and Liability Management Committee that supervises and controls risks and performs the optimal strategic distribution of assets and liabilities both on and off the Consolidated Statement of Financial Position. Moreover, a market risk unit was established, staffed with JD JD 98,462 ‫ـ‬ GBP 2٪ 28,024 ‫ـ‬ Euro 2٪ 28,202 ‫ـ‬ JPY 2٪ 192,661 ‫ـ‬ Other Currencies 2٪ (417,538) ‫ـ‬ Decrease in Interest Rate (%) Sensitivity of Interest Revenue Analysis (Profits and Losses) Sensitivity of Equity Analysis JD JD Currency USD 2٪ (98,462) ‫ـ‬ GBP 2٪ (28,024) ‫ـ‬ Euro 2٪ (28,202) ‫ـ‬ JPY 2٪ (192,661) ‫ـ‬ Other Currencies 2٪ 417,538 ‫ـ‬ December 31, 2016 - Preparation and implementation of an investment policy approved by the Board of Directors and the Central Bank of Jordan. - Preparation and application of a market risk management policy approved by the Board of Directors including the criteria for the Increase in Interest Rate (%) definition, measurement, and monitoring of this type of risk. - Implementation of (Reuters) Application to monitor continuity risk in the global capital market, cash markets and currency exchange. - Development of market risk measurement, management, and monitoring tools through: Sensitivity of Equity 2٪ qualified human resources, and equipped with electronic systems. These risk management procedures include the following: - Preparation of a mechanism for management of ceilings of local and foreign investments. Sensitivity of Interest Revenue Analysis (Profits and Losses) USD Shares Prices Risks Shares prices risks result from the changes in the fair values of investments in shares. The Bank manages these risks through December 31, 2017 Currency Sensitivity of Interest Revenue Analysis (Profits and Losses) Sensitivity of Equity Analysis JD JD USD 2٪ (620,559) ‫ـ‬ • Basis point analysis. GBP 2٪ 5,244 ‫ـ‬ • Defining stop loss limit. Euro 2٪ (33,789) ‫ـ‬ JPY 2٪ 163 ‫ـ‬ Other Currencies 2٪ (431,321) ‫ـ‬ Decrease in Interest Rate (%) Sensitivity of Interest Revenue Analysis (Profits and Losses) Sensitivity of Equity Analysis JD JD • Value at risk (VAR). • Stress testing. • Preparation of investment concentration reports (geographical distribution, economic sector, currency, tool, etc.). • Controlling investment ceilings. • Controlling investment operations, open financial positions, local and international stocks. - Preparation of periodic reports, to be presented to the Investment Committee, Executive Risk Management Committee, and Risk Management Committee/ Board of Directors. Currency USD 2٪ 620,559 ‫ـ‬ GBP 2٪ (5,244) ‫ـ‬ Euro 2٪ 33,789 ‫ـ‬ JPY 2٪ (163) ‫ـ‬ 2٪ 431,321 ‫ـ‬ Other Currencies 97 98
51. 99 Indicator Increase in Index Indicator Effect on Gain or Loss Effect on Equity JD JD Amman Stock Exchange %5 5,610 5,042,194 Palestine Stock Exchange %5 276,234 New York Stock Exchange %5 193,429 December 31, 2016 Effect on Gain or Loss Effect on Equity JD JD Amman Stock Exchange %5 6,130 3,951,083 Palestine Stock Exchange %5 88,947 New York Stock Exchange %5 123,684 432,032,549 TOTAL ASSETS 14,518,210 Cash margins 576,855,327 280,853,477 296,001,850 Total Assets Total Liabilities Interest Re-pricing Gap 2016 (21,948,020) Interest Re-pricing Gap 453,980,569 TOTAL LIABILITIES 48,426 Other liabilities - Income tax provision Borrowed money - Sundry provisions 178,833 413,771,600 Customers’ deposits Financial instruments derivative 25,463,500 Banks and financial institutions’ deposits LIABILITIES - Other assets December 31, 2017 46,668,246 94,277,499 140,945,745 102,537,470 128,943,503 - 96,852 - - - 6,426,182 122,420,469 - 231,480,973 - - ‫ـ‬ - (1,078,301) - %5 - Other Currencies Deferred assets ‫ـ‬ - 407 - %5 Intangible assets JPY Property and equipment – Net ‫ـ‬ 17,000,095 (84,473) - %5 Financial assets at amortized cost Euro - ‫ـ‬ 157,760,878 13,109 - %5 166,936,558 GBP - ‫ـ‬ - (1,551,397) Financial assets at fair value through OCI %5 - USD - 86,944,002 101,355,958 188,299,960 39,469,395 136,013,461 - 145,278 - - - 6,145,855 128,658,828 1,063,500 175,482,856 - - - - 2,141,421 163,341,435 - - 10,000,000 217,993,467 63,533,856 281,527,323 12,613,416 231,719,328 - 290,556 - - - 10,151,523 200,808,756 20,468,493 244,332,744 - - - - 39,280,656 205,052,088 - - - JD Financial assets at fair value through profit or loss JD Deposits with banks and financial institutions Effect on Equity Direct credit facilities – Net Increase in Index Effect on Gain or Loss 153,161,169 158,763,963 311,925,132 401,546,008 186,846,895 - 581,112 - - - 15,083,085 171,182,698 - 588,392,903 - - - - 102,938,133 370,454,770 - - 115,000,000 - December 31, 2016 - ‫ـ‬ - (1,043,845) - %5 - Other Currencies - ‫ـ‬ - 481,652 56,720,000 %5 71,207,151 JPY 193,888,840 ‫ـ‬ Balances with banks and financial institutions 70,506 252,306,932 182,517,202 434,824,134 300,006,602 151,250,325 - 1,275,492 - - - 16,459,680 133,515,153 - 451,256,927 - - - - 58,216,085 383,682,042 - - - - 9,358,800 JD (640,639,432) 1,045,100,875 404,461,443 (395,068,521) 837,221,508 38,696,473 - 19,602,158 5,006,765 - 80,572,158 675,443,252 17,900,702 442,152,987 72,620,383 14,683,719 4,839,231 31,930,233 - - 114,791,862 196,987 - 15,073,372 188,017,200 JD 412,436,234 1,926,402,830 2,338,839,064 439,156,350 2,125,975,589 38,696,473 2,437,716 19,602,158 5,006,765 178,833 149,356,693 1,845,800,756 64,896,195 2,565,131,939 72,620,383 14,683,719 4,839,231 31,930,233 219,576,390 1,447,227,771 114,791,862 196,987 125,000,000 265,682,212 268,583,151 JD Total December 31, 2017 Cash and balances with Central Banks %5 Assets Euro JD ‫ـ‬ JD 70,060 JD %5 JD GBP JD ‫ـ‬ Items Without Interests 246,155 More Than 3 Years %5 From 1 to 3 Years USD 2017 3.Fluctuation in Shares Prices Risks JD Rating on basis of re-pricing periods or maturity whichever is nearer Currency JD From 6 Months to 1 Year Increase in Currency Exchange Rate (%) Effect on Equity From 3 to 6 Months Currency Effect on Gain or Loss From 1 to 3 Months Increase in Currency Exchange Rate (%) Less Than 1 Month 2. Foreign Currency Risks - Interest Re-pricing Gap Annual Reports 100
52. 101 176 ,579,089 69,433,733 2,365,487 524,577,161 Direct credit facilities ‫ ــ‬Net Financial assets (at amortized cost and at fair value and associates) Other assets TOTAL ASSETS Within 1 Month 213,969,492 Balances with banks and financial institutions 54,121,118 50,434,132 519,654,054 Cash margins Other liabilities TOTAL LIABILITIES 611,877,766 539,056,293 Total liabilities Total Assets (According to expected maturity) 9,539 203,043 4,218,177 4,618,495 551,794,588 720,352,190 Borrowed money Sundry provision Income tax provision Other liabilities Total liabilities Total Assets (According to expected maturity) 14,229,867 Cash margins 17,655 384,930,854 Customers’ deposits Financial derivatives 143,566,958 Deposits with banks and financial institutions Assets JD 24,929,879 Other liabilities December 31, 2016 3,997,321 - Sundry provision Income tax provision 48,426 Borrowed money 76,310,761 Cash margins 178,833 463,048,344 Customers’ deposits Financial derivatives 43,364,202 Deposits with banks and financial institutions Assets December 31, 2017 First: this table summarizes below the (undiscounted) liabilities on the remaining period for contractual maturities at the date of consolidated financial statements: JD 180,437,285 Commitments and contingent liabilities items off the Statement of Financial Position during the Year 2016 143,308,631 155,022,822 2,996,155 - - 19,078 - 15,077,104 134,873,985 2,056,500 JD 234,376,141 129,144,858 4,261,052 - - 96,852 - 493,071 124,293,883 - JD From 1 to 3 Months (31,027,943) Net concentrations inside financial position for 2016 Liquidity Risk 464,777,346 TOTAL LIABILITIES 199,295,250 148,068,902 3,631,822 12,654,529 - 28,617 - 34,404,081 97,349,853 - JD 184,447,596 177,284,203 3,545,515 15,604,837 - 145,278 - 5,518,359 151,406,714 1,063,500 JD From 3 to 6 Months 41,661 262,188 8,079,281 8,341,469 JD JD 433,749,403 GBP 11,422 1,401,199 8,013,423 13,840 35,911 7,963,596 76 9,414,622 8,413 - - 9,327,722 78,487 JD GBP USD 181,443,132 TOTAL ASSETS Items Currency Commitments and contingent liabilities items off the Statement of Financial Position for the year 2017 4,923,107 397,932,658 Customers’ deposits Net position inside financial position 2017 17,166,146 Banks and financial institutions’ deposits LIABILITIES 62,229,360 JD USD Cash and balances with Central Banks ASSETS Items Currency Concentration of Foreign Currency Risk Euro 290,211,833 239,617,103 9,118,604 - - 57,234 - 28,906,742 201,534,523 - JD 267,439,676 266,071,583 4,864,441 - - 290,556 - 11,945,933 248,970,653 - JD From 6 Months to 1 Year 11,916,436 (1,689,464) 21,867,799 20,178,335 JD 16,652 9,633,041 58,993 - 833 58,160 - 9,692,034 11,419 - 8,996,038 683,728 849 JD JPY 315,527,918 390,915,580 12,611 - - 228,936 - 16,418,373 374,255,660 - JD 634,510,074 404,126,766 3,228 - - 581,112 - 22,366,764 360,707,169 20,468,493 JD From1 to 3 Years 1,058,568 8,139 54,183 62,322 JD JPY December 31, 2016 13,555,639 1,410,118 19,067,232 1,655,081 1,342,900 15,218,895 850,356 20,477,350 11,334 - 2,166,410 16,463,999 1,835,607 JD Euro December 31, 2017 457,805,871 378,763,240 - - - 81,475 - 20,253,129 358,428,636 - JD 407,733,850 476,033,477 - - - 1,275,492 - 32,721,805 442,036,180 - JD More Than 3 Years 212,337,371 62,220,595 1,799,221 - 4,812,949 - - 2,806 55,605,619 - JD 297,568,309 61,436,936 1,092,358 - 5,006,765 - - - 55,337,813 - JD Without Maturity 14,616,326 (21,566,026) 192,785,523 171,219,497 JD Other 14,670,982 (20,876,901) 209,740,622 24,386,093 5,834,514 175,386,862 4,133,153 188,863,721 8,191,533 - 133,508,972 6,237,271 40,925,945 JD Other 2,338,839,064 1,926,402,830 22,176,908 16,872,706 5,015,992 424,879 17,655 129,292,102 1,606,979,130 145,623,458 JD 2,565,131,939 2,125,975,589 38,696,473 19,602,158 5,006,765 2,437,716 178,833 149,356,693 1,845,800,756 64,896,195 JD Totals 208,070,276 (54,013,106) 687,564,132 633,551,026 JD Total 209,697,827 (3,509,436) 756,534,324 76,489,146 61,335,276 596,560,171 22,149,731 753,024,888 10,588,186 69,433,733 321,250,509 246,682,212 105,070,248 JD Total Annual Reports 102
53. JD JD JD Letters of credit and acceptances 155 ,077,768 ‫ـ‬ ‫ـ‬ 155,077,768 Un-utilized facilities 86,932,724 ‫ـ‬ ‫ـ‬ 86,932,724 Letters of guarantee 117,565,620 ‫ـ‬ ‫ـ‬ 117,565,620 Operational lease contracts 12,852,163 1,532,812 8,892,066 2,427,285 Capital commitments 1,701,430 ‫ـ‬ ‫ـ‬ 1,701,430 374,129,705 1,532,812 8,892,066 363,704,827 Total 40. Information on the Bank’s Business Segments 1. The Bank’s business segments are: The Bank is organized for management purposes in a manner that allows measurement of its segments according to reports used by its Chief Executive Officer and main decision-makers through the following main segments: - Retail Banking: includes following up on individual customers’ accounts, granting them loans, credit, credit cards, and other services. - Corporate Banking: includes following up on deposits, credit facilities, and other banking services pertinent to corporate customers. - Treasury: includes providing dealing and treasury services and management of the Bank’s funds. - Financial Brokerage Services: includes providing purchase and sale of customers’ portfolios on their behalf, custody of investments, financial consultations, custody service, and management of initial public offerings. 103 1,926,402,830 2,338,839,064 4,591,875 8,895,633 42,202,024 (20,113,384) 62,315,408 (59,444,280) 2,125,975,589 66,540,239 780,653 4,806,532 2,565,131,939 92,805,412 3,467,327 5,489,943 45,609,461 4,981,411 (21,973,902) (5,261,558) 67,583,363 10,242,969 (66,797,107) (6,456,902) 134,380,470 16,699,871 Other 2,370,773 4,538 1,281,887 992,788,447 66,366,583 533,061,086 JD 1,459,227,028 Total Total Liabilities Over 5 Years 963,844,669 1 to 5 Years 514,411,524 Up to 1 Year Total Assets December 31, 2016 21,162 421,779,861 46,906 7,286,346 2,363,153 1,477,268 Depreciation and amortization 430,543,475 Total 6,515 1,696,882 14,077 ‫ـ‬ 360,697 ‫ـ‬ 1,641,327 1,696,882 Capital Expenditures Capital commitments Other information 3,238,718 1,196,328 7,286,346 17,687,452 1,477,268 16,530,278 12,002,332 5,213,992 Operational lease contracts Net profit for the Year 133,848,164 (377,806) ‫ـ‬ (5,959,867) ‫ـ‬ (8,014,281) 133,848,164 (2,360,390) Letters of guarantee Income tax 108,819,747 1,574,134 ‫ـ‬ 23,647,319 ‫ـ‬ 24,544,559 108,819,747 7,574,382 Un-utilized facilities Profit before tax 174,176,350 (244,174) ‫ـ‬ (3,102,650) ‫ـ‬ (20,414,306) 174,176,350 (36,579,075) Letters of credit and acceptances Other expenses JD JD JD JD JD JD JD JD Total Treasury Over 5 Years Corporation 1 to 5 Years Information for Bank business segments distributed in accordance with the activities: Up to 1 Year Financial Brokerage December 31, 2017 Items off-consolidated statement of financial position: 1,818,308 (17,655) 26,749,969 (17,655) 44,958,865 (178,833) 44,153,457 (178,833) Total Segments operations results 3,314,594 (20,637,508) 3,314,594 - 18,725,987 - 18,725,987 - Inflow (17,365,642) (3,332,249) (3,271,866) (3,332,249) Provision for impairment in direct credit facilities (18,904,820) 155,017,978 (18,904,820) 16,699,871 Outflow Currency Derivative 1,818,308 JD 26,749,969 JD 62,324,507 JD 47,425,323 JD Total Revenues Total JD For 3 Months JD Total 2017 For 3 Months Individual (Retail Customers) Derivative for trading December 31, 2016 Total December 31, 2017 121,759,688 - Financial derivative/Liabilities which have been adjusted to gross which involves: (5,689,334) 2016 the date of the financial statements JD Second: this table summarizes the accrual financial instruments derivative on the remaining period of contractual maturity from 127,449,022 Annual Reports 104
54. Annual Reports 2 . Information about Geographical Distribution: This item represents the geographical distribution of the Bank’s activities. The Bank conducts its activities mainly in Jordan, representing local activities. Additionally, the Bank performs international activities through its branches in Palestine and the subsidiary company Bank of Jordan ‫ ــ‬Syria. The following is the geographical distribution of the Bank’s revenues, assets, and capital expenditures according to geographical location: Inside the Kingdom Total 2017 2016 2017 2016 2017 2016 JD JD JD JD JD JD 159,515,297 126,978,242 22,788,411 17,895,403 182,303,708 144,873,645 1,977,069,000 1,877,659,284 588,062,939 461,179,780 2,565,131,939 2,338,839,064 4,487,797 8,648,725 1,002,146 246,908 5,489,943 8,895,633 Total Revenues Total Assets Outside the Kingdom Capital Expenditures 41. Analysis of Assets and Liabilities Maturities The following table provides analysis of assets and liabilities according to the expected period of its recovery or settlement: December 31, 2017 December 31, 2016 Up to 1 Year Over 1 Year Total JD JD JD Cash and balances with Central Banks 228,197,814 77,810,708 150,387,106 Balances with banks and financial institutions 494,451,425 - 494,451,425 Deposits with banks and financial institutions 25,000,000 - 25,000,000 205,719 205,719 - 92,128,338 92,128,338 - 1,226,013,033 589,452,609 636,560,424 Financial assets at amortized cost 172,637,680 147,424,235 25,213,445 Property and equipment – Net 29,774,830 29,774,830 - Intangible assets 3,559,146 3,559,146 - Deferred tax assets 11,926,470 11,926,470 - Other Assets 54,944,609 33,389,105 21,555,504 Total Assets 2,338,839,064 985,671,160 1,353,167,904 145,623,458 - 145,623,458 1,606,979,130 788,289,915 818,689,215 129,292,102 36,674,308 92,617,794 17,655 - 17,655 Their recoverability or settlement: Assets Financial assets at fair value through profit or loss Financial assets at fair value through comprehensive income Direct credit facilities – Net Up to 1 Year Over 1 Year Total JD JD JD Cash and balances with Central Banks 268,583,151 113,422,659 155,160,492 Balances with banks and financial institutions 265,682,212 2,253,202 263,429,010 Deposits with banks and financial institutions 125,000,000 115,000,000 10,000,000 196,987 196,987 - 114,791,862 114,791,862 - 1,447,227,771 754,110,059 693,117,712 Other provisions 5,015,992 4,812,949 203,043 Financial assets at amortized cost 219,576,390 161,154,218 58,422,172 Income tax provision 16,872,706 - 16,872,706 Property and equipment – Net 31,930,233 31,930,233 - Intangible assets 4,839,231 4,839,231 - Borrowed funds 424,879 310,411 114,468 Deferred tax assets 14,683,719 14,683,719 - Other liabilities 22,176,908 1,811,832 20,365,076 Other Assets 72,620,383 27,430,063 45,190,320 Total Liabilities 1,926,402,830 831,899,415 1,094,503,415 Total Assets 2,565,131,939 1,339,812,233 1,225,319,706 412,436,234 153,771,745 258,664,489 64,896,195 20,468,493 44,427,702 1,845,800,756 858,081,162 987,719,594 149,356,693 55,088,569 94,268,124 178,833 - 178,833 Other provisions 5,006,765 5,006,765 - Income tax provision 19,602,158 - 19,602,158 Borrowed funds 2,437,716 1,856,604 581,112 Other liabilities 38,696,473 1,095,586 37,600,887 Total Liabilities 2,125,975,589 941,597,179 1,184,378,410 439,156,350 398,215,054 40,941,296 Assets Financial assets at fair value through profit or loss Financial assets at fair value through comprehensive income Direct credit facilities – Net Liabilities Banks and financial institutions’ deposits Customers’ deposits Cash margins Financial derivatives Net Liabilities Banks and financial institutions’ deposits Customers’ deposits Cash margins Financial derivatives Net 42.Capital Management Capital Components: - Paid-up Capital: The paid-up capital of Bank of Jordan consists of (200/1) million ordinary shares at a nominal value of JD 1 per share. The Bank maintains capital, statutory reserves, and retained earnings to meet the growth in its operations and the requirements of local and regional expansion. - Regulatory Capital: Regulatory capital is considered a control tool according to the requirements of regulatory authorities and Basel (III) for the purposes of achieving control over the adequacy of capital and the ratio of regulatory capital to risky and weighted assets and market risk. 105 106
55. 1 ,716,372 Capital adequacy ratio (%) %19,08 %20,82 Primary capital for ordinary shareholders (CET 1)% %18,32 %20,06 Capital adequacy for first layer (%) %18,32 %20,06 107 43.Fair Value Hierarchy Does Not Apply Does Not Apply Does Not Apply Does Not Apply Inputs Does Not Apply Does Not Apply Does Not Apply Inputs Fair Value and the Important Intangible Important Intangible Does Not Apply There were no transfers between level 1 and level 2 during the year 2017. 1,998,965 17,655 Total risk weighted assets 178,833 357,343 Total Financial Liabilities at Fair Value 381,341 Stated Rates in financial markets Total regulatory capital Level One 12,996 17,655 15,129 178,833 Total additional capital Forward Contracts (Foreign Currency) 12,996 Financial Liabilities at Fair Value 15,129 92,334,057 General banking risk reserve Additional Capital Items 114,988,849 344,347 Total Financial Assets at Fair Value 366,212 92,128,338 Total Primary Capital 114,791,862 (11,926) Total (14,684) Does Not Apply Deferred tax assets Financial Statements issued by companies (12,402) Level Two (12,256) 8,854,046 Foreign currency translation differences 4,554,716 (3,559) Shares that do not have available market price (4,839) Does Not Apply Less: Intangible assets Stated Rates in financial markets 3,381 Level One 3,198 83,274,292 Non-controlling interest in the capital of subsidiaries 110,237,146 27,926 Shares that have available market price 28,446 Financial Assets at Fair Value through Comprehensive Income Retained earnings Stated Rates in financial markets 63,566 Level One 81,288 - Fair value reserve - 3,331 Forward Contracts (Foreign Currency) 4,104 205,719 Other reserves 196,987 113 Total 134 Financial Statements issued by companies Voluntary reserve Level Two 73,917 83,119 80,821 84,787 Statutory reserve Shares that do not have an available market price 200,000 Stated Rates in financial markets 200,000 Level One Paid-up capital Primary capital items for ordinary shareholders (CET 1): 122,600 JD 112,200 JD Shares that have an available market price 2016 Financial Assets at Fair Value Through Income Statement 2017 Financial Assets at Fair Value In Thousands of JD JD In Thousands of JD The regulatory capital adequacy ratios according to the standard approach are as follows: JD the targeted growth in owners’ equity, reflected in the increase in the reserves and retained earnings. Inputs Used achieving a surplus in operating profits and revenues, and optimally investing available funds. All of this is geared towards reaching Evaluation Method and The Bank’s management aims at achieving the capital management objectives through developing (enhancing) the Bank’s activities, Fair Value - Achieving the Objectives of Capital Management: The Level of of owners’ equity to total assets financial leverage ratios must not be less than 4%. 2016 to increase their capital adequacy ratio to be not less than 14.125% according to the Central Bank of Jordan instructions, and the ratio December 31, The regulatory authorities’ instructions entail that the minimum capital shall be JD 100 million. Moreover, banks have been requested 2017 - Regulatory Authorities’ Requirements: December 31, - Foreign currency translation differences. Financial Assets/Financial Liabilities and deduct regulatory adjustments according to Basel III. Relation Between the - Undisclosed reserves, general banking risks reserve, special reserve subordinated debts, and the positive fair value reserve at 100% Fair Value Regulatory capital according to Basel (III) consists of: - Paid-up capital, legal reserve, voluntary reserve, and retained earnings. A. The fair value of financial assets and financial liabilities of the Bank specified at fair value on an ongoing basis: Some financial assets and liabilities of the Bank are evaluated at fair value at the end of each fiscal period, the following table shows the information about how to determine the fair value of these financial assets and liabilities (evaluation methods and inputs used). Annual Reports 108
56. 109 The fair value for the financial assets and liabilities for the level 2 and level 3 were determined in accordance to agreed pricing models , which reflects the credit risk of the parties that are dealing with it. 1,881,894,690 Total Financial Liabilities of Non-specified Fair Value 2,060,053,644 2,065,129,060 1,884,644,392 Level Two 129,292,102 Cash insurance 149,356,693 149,367,014 129,299,201 Level Two 1,606,979,130 1,850,775,176 Customers› deposits 64,896,195 Deposits at banks and financial institutions Financial Liabilities of non-specified Fair Value 1,845,800,756 145,623,458 64,986,870 1,609,675,022 Level Two 1,999,657,242 Total Financial Assets of non-specified Fair Value 2,235,003,640 2,300,750,394 145,670,169 2,053,255,260 Level Two 34,705,556 Other assets 45,050,608 102,837,646 83,584,255 Level Two 172,637,680 Financial assets at amortized cost 219,576,390 221,758,509 173,980,219 Level Two 1,106,590,558 Loans, bills and other 1,382,864,854 1,385,372,118 1,108,702,501 Level Two 25,000,000 Deposits at banks and financial institutions 125,000,000 127,536,945 25,415,685 Level Two 494,451,425 Balances at banks and financial institutions 265,682,212 266,402,186 495,300,577 Level Two 166,272,023 196,829,576 Balances at central banks Financial Assets of non-specified Fair Value 44.Commitments and Contingent Liabilities 196,842,990 166,272,023 JD JD JD JD JD Fair Value Fair Value Book Value Fair Value Book Value The Level of December 31, 2016 December 31, 2017 B . The fair value of financial assets and financial liabilities of the Bank (non-specific fair value on an ongoing basis): Except as detailed in the table below, we believe that the carrying amount of financial assets and liabilities shown in the financial statements of the Bank approximate their fair value, because the Bank management believes that the carrying value of the items is equilivant to the fair value, and this is due to either maturity or short-term interest rates that have been repriced during the year. Annual Reports 2017 2016 JD JD Letters of credit 117,983,214 80,542,151 Acceptances 56,193,136 74,535,617 Payment 38,782,029 31,659,395 Performance 61,137,598 49,829,921 Other 33,928,537 36,076,304 Un-utilized direct credit facilities limits 108,819,747 86,932,724 Total 416,844,261 359,576,112 2017 2016 JD JD Contracts for purchasing property and equipment* 1,696,882 1,701,430 Contracts for operating and capital lease** 12,002,332 12,852,163 Total 13,699,214 14,553,593 a. Contingent Liabilities: Letters of guarantee: b. Contractual obligations: * These commitments mature in less than 1 year. ** These commitments mature between 1 year to 10 years. 45.Lawsuits against the Bank The Bank is a defendant in lawsuits demanding cancellation of the Bank’s claims against others, lifting of real estate mortgages, compensation for damages, and non-cashing of cheques. These lawsuits amounted to JD 17,056,280 as of December 31st, 2017 (JD 17,585,485 as of December 31st, 2016). In the opinion of the management and legal counsel, no material financial liability is likely to be incurred as a result of these lawsuits in excess of provision recorded which amounted to JD 676,564 as of December 31st, 2017 (JD 626,714 as of December 31st, 2016). However, amounts that will probably be paid by the Bank as a result of dismissal or amicable settlement of these lawsuits will be taken to the consolidated Statement of Profit or loss or against the recorded provision when paid. 46.Adoption of New and Revised International Financial Reporting Standards (IFRSs) A-New and revised IFRSs that have no material impact on the consolidated financial statements: The following new and revised IFRSs have been adopted and are effective for financial periods beginning on or after January 1st, 2017 or later in the preparation of the Bank’s consolidated financial statements that did not materially affect the amounts and disclosures in the consolidated financial statements for the year and prior years, which may have an impact on the accounting treatment of transactions and future arrangements: • IAS 7 Disclosure. • IAS 12 Recognition of deferred tax assets for unrealized losses. • Annual Amendments to IFRSs 2014-2016 (Amendments to IFRS 12 Disclosure of Ownership in Other Entities). B-The new and amended international financial reporting standards issued and not yet effective: The new and revised IFRSs issued below have been issued but are not yet effective. The Bank has not yet adopted these new and amended standards knowing that they are available for early adoption: 110
57. Annual Reports New Standards : - IFRS 9 Financial Instruments (effective January 1st, 2018 with the exception of insurance companies, effective January 1st, 2021 with early adoption). - IFRS 15 Revenue from Contracts with Customers (effective January 1st, 2018 with early application permitted). - IAS 16 Leasing (effective January 1st, 2019 with early application permitted). - IFRS 17 Insurance Contracts (effective January 1st, 2021 with early application permitted). Amendments: - IFRS 2 Classification and Measurement of Share-based Payment Account (effective January 1st, 2018 with early application permitted). - IFRS 10 and IAS 28 Sale or Contribution of Assets between Investor and its Joint Venture Partners (no date specified). - IAS 40 (Clarification of the transfer of investment property (effective January 1st, 2018). - Amendments to IFRS 4 in applying IFRS 9 (effective January 1st, 2018). - IFRIC 23: Uncertainty on Income Tax Processes (effective January 1st, 2018). - Amendments to International Financial Reporting Standards (IFRS) (2014-2016) Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 28 Investments in Associates and Joint Ventures (effective January 1st, 2018). - IFRIC 22: Foreign currency transactions and prepayment allowance. - Management anticipates that these standards and amendments will be applied in the preparation of the consolidated financial statements at the dates set out above, which will have no material impact on the Bank’s consolidated financial statements except for the adoption of IFRS 9: Financial Instruments and below is the expected financial impact from the implementation, and IFRS (16): Leases where the expected impact of its application will be disclosed when the Bank reviews the impact because it is not practicable to provide a reasonable estimate of the implications for the application of this standard in the current period. Effect of the Application of IFRS (9): C- Hedge accounting When initially applying IFRS (9), the Bank has the choice to continue applying the hedge accounting requirements of IAS (39) instead of the requirements of IFRS (9). As the Bank does not make material movements that require the use of hedge accounting, it will continue to use hedge accounting policies based on requirements of IAS (39). D- Impairment of financial assets - IFRS (9) replaces the ‘incurred loss’ model in IAS (39) with a forward-looking ‘expected credit loss’ model. Which requires the use of estimates and judgments to estimate economic factors. The model will be applied to all financial assets - debt instruments which are classified as amortized cost or at fair value through statement of comprehensive income or at fair value through profit or loss. - Impairment losses will be calculated in accordance with the requirements of IFRS (9) in accordance with the following rules: - 12 month impairment loss: The expected impairment will be calculated for the next 12 months from the date of the consolidated financial statements. - Impairment losses for the lifetime of the instrument: The expected impairment of the life of the financial instrument will be calculated until the maturity date from the date of the consolidated financial statements. The expected credit loss mechanism depends on the probability of default (PD), which is calculated according to the credit risk and future economic factors, the loss in default (LGD), which depends on the value of the existing collateral and the exposure at default (EAD). The following table shows the expected value of the effect of applying the new standard compared with what was recorded by the Bank in accordance with the instructions of the Central Bank of Jordan: The Bank is required to apply IFRS 9 starting from January 1st, 2018. Accordingly, the Bank has estimated the expected impact of the adoption of the standard on the consolidated financial statements. The effect may differ from actual application on January1st, 2018 Retail Mortgage Loans Corporate SME and Retail Other Financial Assets Total Stage 1 2,753,958 718,832 760,364 808,813 524,843 5,566,810 - The Bank will book the full-expected impact taking into consideration the full estimates and tests required by the standard when Stage 2 - 6,627 296,580 65,488 - 368,695 - Any matters that may require amendment when issuing Central Bank of Jordan instructions regarding the application of IFRS (9) Stage 3 - - - - - - 2,753,958 725,459 1,056,944 874,301 524,843 5,935,505 for the following reasons: - The expected impact is calculated on balances and information as of November 30, 2017, but the Bank’s management does not expect a material difference for the impact when calculating it on the balances and information as at December 31st, 2017. issuing the Bank’s first consolidated condensed interim financial statements for the period ending March 31st, 2018. finally. The following are the most important aspects of application: A- Classification and measurement of financial assets: The Bank’s management does not expect any material impact from applying this standard; the Bank has already adopted the first phase of IFRS (9) as of January 1st, 2011 based on the request of Central Bank of Jordan and the Jordan Securities Commission. B- Classification and measurement of financial liabilities: IFRS (9) has retained the requirements of IAS (39) regarding the classification of financial liabilities. IAS 39 (Revised) requires recognition of the differences in the assessment of financial liabilities classified as financial liabilities at fair value through profit or loss in the consolidated statement of profit or loss, whereas IFRS (9) requires: - Recognition of differences in the assessment of financial liabilities classified as financial liabilities at fair value through profit or loss as a result of changes in credit risk in the consolidated statement of comprehensive income. - The remaining amount of fair value valuation differences is recognized in the consolidated statement of profit or loss. Classification Credit Faciltities Total The Bank retains additional provisions covering the expected value of the effect of the new standard. Therefore, the application of the standard will have no material impact on the consolidated financial statements. E- Disclosures IFRS (9) requires detailed disclosures, particularly with regard to hedge accounting, credit risk and expected credit losses. The Bank is working to provide all the necessary details for these disclosures to be presented in the subsequent consolidated financial statements after application. F- mplementation The Bank will take advantage of the exception provided by the standard at the implementation on January 1st, 2018 by recording potential effects (if any) on the opening balances of retained earnings, provisions and non-controlling interests rather than restating the figures of the consolidated financial statements for the year ended December 31st, 2017 and earlier. - The Bank has not classified any financial liabilities in financial liabilities at fair value through profit or loss. Moreover, there is no intention by the management to classify any financial liabilities in this category. Therefore, there is no impact from the application of IFRS (9) to the consolidated financial statements. 111 112
58. Annual Reports Additional Information as Required by the Jordan Securities Commission 2017 Names and Brief R ésumés of Board of Directors and Executive Managers Major Shareholders’ Equity Board of Directors’ Equity Executive Managers’ Equity Addresses of Bank of Jordan Branches Organizational Structure 113 114
59. Annual Reports Additional Information as Required by the Jordan Securities Commission 2017 1 . c- Capital Investment Volume: JD 433.7 million as of December 31st, 2017. 2. Subsidiaries: A. Chairman’s Letter B. Board of Directors Report a. Bank of Jordan- Syria / Syrian Arab Republic 1. a- Description of Main Activities: The Bank provides a comprehensive range of banking products and services. These include accepting all types of deposits (demand, savings, and time deposits), and issuing certificates of deposit, letters of credit, as well as letters of guarantee to all clients in the various economic sectors locally and abroad. The Bank also provides financial leasing services and custody services. 1. b- Location of Branches and Number of Employees: The Bank has (73) branches and (3) exchange offices in Jordan, in addition to (14) branches and one office in Palestine. The address of each branch and office is listed at the end of the report under the section “Addresses of Bank of Jordan branches”. Branch Branch No. of Employees Branch No. of Employees Branch No. of Employees 940 Hakama St., Irbid 10 Al Fuheis 9 Abu Nsair 9 175 Zarqa 9 Tareq 10 North Hashmi 8 Shmeisani 22 Faisal St., Zarqa 11 Zarqa Free Zone 9 Sahab 8 Amman 8 New Zarqa 8 Marj Al Hamam 8 Abdali Mall 15 Karak 9 North Shuneh 8 Al Jeezah 8 Madaba 10 Irbid 14 Kufranjah 6 Ras Al Aein 8 First Circle 12 Al Hussun St. 8 Al Qweismeh 11 Al Yasmeen 9 Ramallah 25 Eidoun St. 8 Third Circle 9 Sweifieh 11 Hebron 19 Ma’an 8 Mecca St. 16 Al Wehdat 10 Jenin 21 Rumtha 8 University of Jordan 9 Jabal Shamali 9 Nablus 21 Al Turrah 6 Thirty St. /Irbid 10 Dwrat Khalda 13 Gaza 16 Salt 9 Al Nuzha 8 Al Ruseifa 8 Al Ram 7 9 Al Eizaryeh 7 Industrial Area, Ramallah 5 Head Office Regional Management Jerash 10 Al Mahatta 9 Yarmouk St.– Al Nasser 11 Marka 13 Ajloun 11 Jabal Al Hussein 13 Al Khalidi 7 Al Jubaiha Al Madina Al Monawara Bank of Jordan - Syria Type of Company Joint Stock Company Date of Association 28/5/2008 Core Business All Banking Operations Paid-up Capital SYP 3,000,000,000 Bank’s Ownership Percentage 49% Sabaa Bahrat Square, Baghdad St. - Damascus The total number of the Bank’s employees has reached (2018) The table below illustrates the number of employees in each branch and office. No. of Employees Name of Company P.O. Box 8058 Damascus, Syria Address Tel.: 00963-11-22900000 Fax: 00963-11-2315368 Number of Employees 216 employees Projects Owned by the Bank and their Capitals There are no projects owned 00963-11- 22900229 Branch Location and Number of Employees Branch Address Tel. Fax P.O. Box Number of Employees Baghdad St. Branch Damascus - Sabaa Bahrat Square 00963-11-22900000 00963-11-2317730 P.O. Box 8058 Damascus, Syria 14 Abu Rumaneh Branch Damascus - Arab League Square 00963-11-3354500 00963-11-3354506 P.O. Box 8058 Damascus, Syria 11 Abaseen Branch Damascus - Abaseen Square 00963-11-4645322 00963-11-4645326 P.O. Box 8058 Damascus, Syria 8 Jarmana Branch Al Raees Square - Damascus Suburban 00963-11-5662273 - P.O Box: 8058 Damascus, Syria 7 Harasta Branch (Temporarily closed) Harasta – Damascus Suburban 00963-11-5376711 00963-11-5376717 P.O. Box 8058 Damascus, Syria None Sahnaya Branch (Temporarily closed) Sahnaya – Damascus Suburban 00963-11-63900333 00963-11-8140614 P.O. Box 8058 Damascus, Syria None Al Faisal St. Branch / Aleppo Aleppo - Al Malek Faisal St. 00963-21-2228071 00963-21-2228071 P.O. Box 8058 Aleppo, Syria 7 Baroon Branch / Aleppo Aleppo - Baroon St. 00963-21-2126996 00963-21- 2125985 P.O. Box 8058 Aleppo, Syria 4 Al Hassan Industrial 8 Gardens 20 Abu Alanda 10 8 Khalda 10 Bethlehem 9 Aqaba 15 City Mall 14 Tulkarm 8 Alazeziah Branch / Aleppo Aleppo - Alazeziah Area – Alzahraa Cinema St. 00963-21-2122697 00963-21-2125672 P.O. Box 8058 Aleppo, Syria 5 Al Bayader 9 Um Uthaina 10 Qabatiya 7 9 9 00963-21-5120152 00963-21-5120156 P.O. Box 8058 Aleppo Syria None Rafidia 6 Aleppo – Almartini Hotel Al Rabiyeh Hamdanieh Branch / Aleppo (Temporarily closed) Al Mafraq 11 Abdoun 13 Al Naser 11 Lattakia Branch Lattakia - Al-Korneish Al-Gharbee St. 00963-41-457623 00963-41-456768 P.O. Box 58, Lattakia Syria 13 10 North Azraq 7 Hurrieh St.–Moghablain 10 Al Eersal 6 Commercial Market 9 Jabal Al Weibdeh 9 Al Rawnaq 9 Homs Branch Homs - Square 94, Abou Tammam St. 00963-31-2220603 00963-31-2222305 P.O. Box 3058 Homs, Syria 5 Wadi Al Seer 7 Deir Abi Saeed 8 Sport City 9 Tartous Branch Al Thawra St. - Tartous 00963-43-313733 00963-43-313793 7 Airport 5 P.O. Box 8058 Damascus, Syria Sweileh 11 Taj Mall 14 Al-Swaidaa Branch Qanawat St. - Swaidaa 00963-16-324188 00963-16-324288 P.O. Box 88 Swaidaa, Syria 9 115 Al Madina Al Monawara St. Industrial Area – Al Bayader St. /Tlaa Al Ali 116
60. 117 Financial Dept . IT Dept. Local Central Operations Dept. Central Banking Operations Dept. Central Operations Management Compliance Unit AML & Terrorism Financing Unit Internal Audit Dept. Audit Committee Internal Compliance & Control Unit Management Risk Dept. Provision and Reports Unit Credit Review Unit Credit Review Dept. Customers’ Complaints Unit Compliance & Control Dept. Risk Management Committee Organizational Structure / Bank of Jordan – Syria Treasury and Investment Dept. Shareholders Affairs General Secretary Corporate Communication and Research Dept. Financial Institution Dept. Retail Banking Dept. Corporate Business Dept. Legal Unit Credit Remedial and Collection Department Board of Directors Committee Remedial and Collection Unit Internal Control & Reports General Manager Office Legal Consultant Governance, Nominations and Remunerations Committee Banking Services Management General Manager Chairman Board of Directors Annual Reports b. Jordan Leasing Company - Limited Private Shareholding/ Hashemite Kingdom of Jordan Name of Company Jordan Leasing Company Type of Company Limited Private Shareholding Company Date of Association 24/10/2011 Core Business Financial Leasing Paid-up Capital JD 20,000,000 Bank’s Ownership Percentage 100% Amman - Mecca St. - Al-Husseini Complex - Bldg. No.164 Address P.O. Box 2140 Amman 11181 Jordan Fax: +962 6 5542698 Tel.: +962 6 5542697 Number of Employees 4 employees Branches None Projects Owned by Company and their Capitals There are no projects owned Organizational Structure / Jordan Leasing Company Chairman Checking & Processing Accounting Board of Directors General Manager Internal Auditor Legal Consultant Marketing & Customers Service 118
61. Annual Reports C . Excel for Financial Investments - Limited Private Shareholding Company / Hashemite Kingdom of Jordan 3.a - Names and Resumes of Board of Directors: Name of Company Excel for Financial Investments Company Date of Birth: 14/11/1969 Date of Membership: 14/6/2001 Nature of Membership: Non-Executive / Non-Independent Type of Company Limited Private Shareholding Company Date of Association 23/3/2006 Core Business Brokerage services (Buying and Selling Securities) Educational Background: − M.A. in Business Administration and Professional Accounting from Canisius College, Buffalo/ USA, 1995. − B.A. in Economics from the University of Southern California/ USA, 1990. Paid-up Capital JD 3,500,000 Bank’s Ownership Percentage 100% Amman - Mecca St. - Al-Husseini Complex - Bldg. No. 164 P.O. Box 942453 Amman 11194 Jordan Address Tel: +962 6 5519309 Fax: +962 6 5519567 +962 6 5516809 Mr. Shaker Tawfiq Fakhouri Chairman of the Board/Dedicated Representative of Al-Ekbal Jordanian General Trading (LLC). Number of Employees 8 employees Branches None Projects Owned by Company and their Capitals There are no projects owned Organizational Structure / Excel for Financial Investments Company Educational Background: − M.A. in Business Administration from City University/ UK, 2000. −B.A. in Science Marketing from Western International University/ UK, 1992. Audit Committee Chairman Internal Auditor Mr. Walid Tawfiq Fakhouri Vice Chairman/ Representative of Al Tawfiq Investment House - Jordan Compliance Officer Legal Consultant Executive Manager 119 Other Current Board Memberships: - Chairman of the Board of Directors of Bank of Jordan – Syria. - Chairman of the Board of Directors of Excel for Financial Investments Co. - Member of the Board of Trustees – King Abdullah II Center for Excellence. - Board Member of the Middle East Company for Insurance. Date of Birth: 12/2/1972 Date of Membership: 18/4/2017 Nature of Membership: Non-Executive / Non-Independent Board of Directors Brokerage Department Professional Experience: - Chairman of the Board of Bank of Jordan, as of January 2017 to date. - Chairman & CEO of Bank of Jordan, as of August 2007 until January 2017. - General Manager of Bank of Jordan, as of August 2003 until January 2017. - Deputy General Manager of Bank of Jordan, from December 1996 until August 2003. - Executive Assistant to the General Manager of Bank of Jordan, from January 1995 until December 1996. - Attended several advanced banking and leadership seminars and courses, including: •The “Comprehensive Banking Operations” training program at Bank of Jordan branches, from February 1991 until January 1993. •A specialized credit training course at the Headquarters of Manufacturers/ Hanover Bank, USA, from September 1990 until February 1991. Investment Department Financial Control Department Professional Experience: - Chairman of the Board of Al-Tawfiq Investment House / Jordan, as of 2007. - Board member of Bank of Jordan from 17/02/2005 until 14/06/2015. - Vice Chairman of Al-Ekbal Investment Company from 2009 until 08/2017. - Chairman of Petroeuropa / Spain, as of 2014. - Chief Executive Officer of JABA Inversiones Inmobiliarias / Spain, as of 2014. - Chairman of the Board of the Arab Islamic Bank / Palestine, from 2001 until 04/2016. - Vice Chairman of Excel for Financial Investments Company, from 23/03/2006 until 15/10/2014 and from 19/11/2014 until 18/04/2016. - Member of the Executive Committee of the Islamic Corporation for Development of the Private Sector - Islamic Development Bank / Jeddah, from 9/2009 until 2013. - Assistant General Manager of Bank of Jordan, from 9/2003 until 4/2004. - Managing Director of Arab Islamic Bank / Palestine, from 9/1999 until 6/2001. - Assistant General Manager of Bank of Jordan, from 4/1999 until 9/1999. - Executive Manager of Bank of Jordan, from 7/1995 until 4/1999. Other Current Board Memberships: - Al-Ekbal Investment Company. Former Board Memberships: - Zahrat Al Urdon Real Estate & Hotels Investments Company. - Board Member of Jordan Express Tourist Transportation Company (JETT). - The International Tobacco and Cigarettes Company. - Trust International Transport Company. - Al-Yarmouk Insurance Company. - Arab Union International Insurance Company. - Industrial Development Bank. - Al-Ekbal Printing and Packaging Company. Professional Experience Gained Through Work in Private Business: −A total of 17 years of experience in financial and investment services, including 10 years in the field of Islamic financial and investment services. 120
62. Annual Reports Date of Birth : 6/7/1955 Date of Membership: 22/10/2008 Nature of Membership: Non-Executive/ Non-Independent Date of Birth: 6/7/1962 Date of Membership: 7/3/2009 Nature of Membership: Non-Executive/ Non-Independent Educational Background: −M.Sc. in Family Medicine, London University/ UK, 1990. −Membership of the Royal College of Family Physicians/ UK, 1987. −M.B, B.Ch. in Medicine from Cairo University/ Egypt, 1980. Educational Background: −M.Sc. in Software Engineering (Computer Science/ Systems Analysis) from George Washington University, Washington D.C./ USA, 1985. −B.Sc. in Mathematics & Military Sciences from The Citadel USA – The Military College of South Carolina/ USA, 1983. Professional Experience: - Founder and Director of the Jordan Center of Family Medicine, as of 10/1991. - Family Physician in the private sector, as of 1992. - Part-time Lecturer at Liverpool University, University of Jordan, Jordan University of Science and Technology, during the period between 1987 until 2000. - President of the Jordanian Society of Family Physicians, serving several terms from 7/1993 until 2012. Dr. Mazen Mohammed Al-Bashir Other previous Board Memberships: -Board Chairman and Chief Executive Officer of the Consultant and Investment Group Company (Istishari Hospital) since 6/2007 until 1/2016. Board Member/ Representative of Arab Gulf General Investments and Transport Co. Mr. “Shadi Ramzi” Abd Al-Salam Al- Majali Board Member/ Representative of Al-Araka for Investments Co. Professional Experience: - CEO of New Vision for Electronics as of 3/2015 to date. −CEO of King Abdullah II Design and Development Bureau, from 7/2010 until 5/2014. −CEO of Aqaba Development Corporation, from 1/2010 until 7/2010. −General Manager of Saraya Aqaba, from 2/2007 until 12/2009. −Revenues and Customs Commissioner in Aqaba Special Economic Zone Authority (ASEZA), from 1/2004 until 2/2007. −Gulf Area Manager of Qatar for the Middle East Contracting Company, from 9/2002 until 12/2003. −Tala Bay CEO, from 10/2000 until 9/2002. −General Manager of Trans Jordan for Communications Services Company, from 5/1997 until 9/2000. −General Manager of Al-Nisr for Advanced Telecommunications Company, from 2/1997 until 11/2003. −Vast military experience, serving in the military, from 1985 until 1996. Other Current Board Memberships: - Member of the Board of Trustees - Mutah University, as of 11/2014. - Board Member of Jordan Investment Trust, as of 7/2014. - Member of the Board of Injaz, as of 10/2016. - Member of the Board of Social Security Investment Fund, as of 4/2017. Date of Birth: 13/12 /1956 Date of Membership: 22/10/2008 Nature of Membership: Non-Executive/ Non-Independent Educational Background: −B.A. in Literature/ Philosophy and Social Studies from Beirut Arab University/ Lebanon, 1986. −B.Sc. in Medicine and Surgery from Alexandria University/ Egypt, 1987. Former Board Memberships: - Chairman of the board of the King Abdullah II Design & Development Bureau (KADDB) from 12/2010 until 5/2014. - Member of the Board of Trustees - The Royal Tank Museum. - Member of the Board of Trustees - Jordan University for Science and Technology (JUST). - Member of the Board of Aqaba Water Company, from 1/2010 until 8/2010. - Member of the Board of the Aqaba port and Containers Company, from 1/2010 until 8/2010. - Member of the Board of Directors of Aqaba Airports Company, from 1/2010 until 8/2010. - Member of the Board of Trustees - Mutah University, from 11/2009 until 8/2010. - Member of the Board of Trustees - Applied Sciences University, from 1/2006 until 10/2009. - ASEZA Commissioner, from 1/2004 until 2/2007. - Board Member of Jordan Electricity Distribution Company, from 6/2006 until 3/2007. - Board Chairman of Aqaba International School, from 6/2006 until 2/2007. - Board Member of the Yemeni Payphone Company, from 9/1998 until 9/2000. - Board Member of the Middle East Defense and Security Agency, from 8/1997 until 11/2003. - Vice Chairman of the King Abdullah Special Operation Training Center (KASOTC), from 12/2010 until 2/2013. - Member of Greater Amman Municipality Council, from 8/2010 until 8/2013. Dr. Yanal Mawloud Naghouj Board Member/ Representative of Al-Yamama for General Investments Co. (Limited Liability) 121 122
63. Annual Reports Date of Birth : 9/4/1971 Date of Membership: 12/1/2017 Nature of Membership: Non-Executive/ Non-Independent Date of Birth: 5/12/1949 Date of Membership: 30/7/2015 Nature of Membership: Non-Executive/ Independent Educational Background: - Master of Business Administration in Professional Accounting, from Canisuis College, Buffalo/ USA, 1995. - B.A. in Accounting from the university of Jordan/ Jordan, 1992. Educational Background: −MBA in International Management from Thunderbird University/ USA, 1979. −B.A. in Accounting from the University of Jordan, 1973. Professional Experience: - CEO of Jordan Decapolis Properties Company, as of 9/2014 to date. - Director of Finance and Administration, First Jordan Investment Company, from 2011 until 2013. - Deputy CEO for Finance and Administration/ MGC/ Saudi Arabia, from 2007 until 2011. - Financial Controller and HR Director, Dar Al-Dawa Group, from 2001 until 2007. Mr. Walid Mohammad Al-Jamal Board Member/ Representative of Al Pharaenah Int‘l for Industrial Investments Co. Other Current Board Memberships: - Chairman of the Board of Directors of Jordan Dubai Properties for Land Development Company. - Chairman of the Board of Directors of Jordan Eye for Tourist Resorts Company. - Chairman of the Board of Directors of Jordan Dubai for Specialized Tourist Resorts Company. - Chairman of the Board of Directors of Aman Jordan Decapolis for Tourism Investments Company. - Chairman of the Board of Directors of South Dead Sea Development for Specialized Resorts Company. - Chairman of the Board of Directors of Ahyaa Amman for Hotel Investments Company. - Chairman of the Board of Directors of Ahyaa Al Asimah for Tourist Investments Company. - Chairman of the Board of Directors of Ahyaa Al Asimah for Real Estate Investments Company. - Chairman of the Board of Directors of Ahyaa Al Asimah for Specialized Investments Company. - Chairman of the Board of Directors of Ahyaa Amman Real Estate Development Company. - Chairman of the Board of Directors of Eagle Group International Investment. - Vice Chairman of the Board of Directors of Jordan Decapolis Properties Company. - Chairman of the Board of Directors of Al Rashad Industrial Investments Company. - Board Member of Al Daman Al-Mumayaz Tourism Investments Company. - Board Member of Ma’in Hot Springs Resort Company. Mr. Mohammad Anwar Hamdan Board Member Date of Birth: 6/9/1963 Date of Membership: 30/7/2015 Nature of Membership: Non-Executive/ Independent Educational Background: −B.Sc. in Electrical Engineering from the Portland State University/ USA, 1984. Mr. Haitham Mohammed Samih Barakat Board Member/ Representative of Al-Lu‘lua Trading and Investments Co. Other Current Board Memberships: - Founding Member of the Clean Energy Company/ Jordan. Former Board Memberships: - Board Member of Al-Saqr Insurance Company. - Board Member of the United Cable Industries Company/ Jordan. - Board Member of the Arab Islamic Bank/ Palestine. Professional Experience Acquired from Private Business: −Over 30 years of experience in Jordan, the Gulf, and the USA including founding and managing various engineering companies in several countries. Other Professional Experience: - Experience in project management and development 123 Former Board Memberships: - Board Member in Ready Mix Concrete & Construction Supplies Company - representing Bank of Jordan. - Board Member in Baton for Concrete Blocks and Interlocking Tiles Company representing Bank of Jordan. Other Current Board Memberships: - Membership of Investment Committee of the University of Jordan Fund. Date of Birth: 1/5/1960 Date of Membership: 30/7/2015 Nature of Membership: Non-Executive/ Non-Independent Professional Experience: - General Manager of the Advanced Engineering Group/ Jordan, as of 2007 to date. - Founder and CEO of Quartz Electro Mechanic Company/ Ras Al-Khaima, UAE, as of 2006 to date. - Founder and partner of the Advanced Electrical Engineering Company/ Qatar, as of 2001 to date. - CEO of Kuwait Electrical Poles & Lighting Industries Company WLL (KEPLIC)/ Kuwait, as of 1999 to date. - Founder and CEO of the Qatar Electromechanical Company/ Qatar, as of 1998 to date. - Founder and CEO of Faddan Electromechanical Contracting Company/ Jordan, from 1994 until 1997. - Deputy General Manager of the National Industries Company/ Jordan, from 1/2004 until 7/2004. - Deputy General Manager of Faddan for Trading and Contracting Company/ Kuwait, from 1984 until 1990. Professional Experience: - Deputy General Manager of Bank of Jordan from 1/2007 until 6/2012. - Assistant General Manager/ Credit Management/ Bank of Jordan, from 11/1994 until 1/2007. - Assistant General Manager/ Credit Management/ Cairo Amman Bank, from 1/1990 until 11/1994. - Senior Manager/ Credit Management/ Bank of Jordan, from 8/1985 until 12/1990. - Assistant Manager for Investment & Branches/ Jordan Kuwait Bank, from 7/1979 until 8/1985. - Senior Financial Analyst/ Central Bank of Kuwait, from 5/1976 until 5/1978. - Financial Analyst/ Central Bank of Jordan, from 8/1973 until 5/1976. Educational Background: -Master of Business Administration (MBA) from California State University, Chico 1989. -Bachelor of Science, Business Administration from California State University, Chico 1987. Mr. Husam Rashed Manna‘ Board Member Professional Experience: - Chief Commercial officer of Shams Ma’an Power Generation Co. from 10/2015 until 9/2017. - Portfolio Manager/ Private business, as of 5/2004 to date. - General Manager of Aqaba Manufacturing & Refining Vegetable Oils CO. (AMRV), from 5/2011 until 5/2013. - Member of the Auditing Committee of Al Janoub Filter Manufacturing Company (AJFM), from 5/2008 until 10/2010. - Portfolio Manager at Arab Banking Corporation/ Investment Department, from 3/2002 until 4/2004. - Corporate Head/ Manager at Arab Banking Corporation/ Credit Facilities Department, from 9/2000 until 2/2002. - Senior International Credit Officer/ Supervisor at Arab Bank Plc./ Credit Facilities Division – Int’l Branches & Assoc. Co.’s, from 7/1994 until 5/2000. - Credit Officer/ Section Head at Arab Bank Plc. – Mahatta Branch/ Credit Facilities Dept., from 6/1991 until 6/1994. - Account Executive at Metropolitan Life - San Francisco/ California, USA, from 6/1989 until 6/1990. Former Board Memberships: - Member of the Board of Directors of Al Janoub Filter Manufacturing Company (AJFM) from 5/2008 until 10/2010. - Member of the Board of Directors of Real Estate Investment Compound Company from 3/2002 until 4/2004. 124
64. Annual Reports Mr . Walid Rafiq Anabtawi Board Member Date of Birth: 30/3/1944 Date of Membership: 18/4/2017 Nature of Membership: Non-Executive/ Independent Date of Birth: 5/2/1935 Date of Membership: 31/5/1997 Nature of Membership: Non-Executive/ Non-Independent Educational Background: - B.A. in Accounting, from Alexandria University/ Egypt, 1968. Educational Background: − PhD in Economics from Vanderbilt University/ USA, 1967. − M.A. in Economics from Vanderbilt University/ USA, 1959. −B.A. in Economics from the American University of Beirut/ Lebanon, 1958. Professional Experience: - Assistant General Manager - Investment and Branches Management/ Bank of Jordan/ Jordan, from Apr 2004 until Oct 2005. - Assistant General Manager/ Bank of Jordan/ Jordan - Organization, Operations, and Automation Management, from Oct 2001 until Jun 2003. - Executive Manager/ Bank of Jordan/ Jordan - Organization, Operations, and Automation Management, from Jan. 1992 until Oct. 2001. - Manager of Internal Audit/ Bank of Jordan/ Jordan, from Mar. 1990 until Jan. 1992. - Assistant Head at A department – Banks Supervision Department – Central Bank of Jordan/ Jordan, from Jul. 1986 until Mar. 1990. - Senior Assistant Manager – Internal Audit Department/ Arab National Bank – Saudi Arabia, from Feb. 1983 until Jun. 1986. - Supervisor/ Banking Supervision Department, Central Bank of Jordan/ Jordan, from Jul. 1976 until Feb. 1983. - Division Assistant Head/ Arab Bank/ Amman Branch/ Jordan, from May 1969 until Jul. 1976. - Accountant – Accounting Department/ Royal Jordanian/ Jordan, from Oct. 1968 until May 1969. - Took part in and helped organize over 50 training workshops inside and outside Jordan. Dr. Abdel Rahman Samih Toukan Vice Chairman of the Board of Directors until 17/4/2017 Other professional Experience: Extensive administrative experience in leading financial institutions including: - Developing work procedures and control measure to ensure competence and effectiveness. - Supervising the development and application of E-banking systems. - Diverse experience in internal audit and internal control systems. Mr. Wissam Rabee’ Saab Board Member 125 Professional Experience: - Former Chairman of the Board of Directors of Amman Stock Exchange, from 2000 until 2004. - Former General Manager of Jordan Ahli Bank, from 1976 until 1997. - Former General Manager of the National Real Estate Company in Kuwait, from 1974 until 1976. - Deputy General Manager of Jordan Ahli Bank, from 1971 until 1974. - Former Director General of the Import, Export, and Supply Department/ Government of Jordan, from 1969 until 1970. - Head of Planning Department, in the Jordanian Development Board, from 1961 until 1969. Former Board Memberships: - Former Chairman of the Board of Directors of Amman Stock Exchange. - Board Member of the Jordan Cement Factories Company. - Board Member of the Industrial Development Bank. - Board Member of Jordan Ahli Bank. -Committee Member of Jordan Commercial Bank (previously Jordan Gulf Bank). - Board Member of Jordan Hotels & Tourism Company. Date of Birth: 1/8/1981 Date of Membership: 18/4/2017 Nature of Membership: Non-Executive/ Independent Date of Birth: 1/1/1957 Date of Membership: 7/3/2009 Nature of Membership: Non-Executive/ Non-Independent Educational Background: - B.A. in Business Computer (Minor Mathematics), from Lebanese American University (L.A.U.)/ Beirut, Lebanon, 2005. Educational Background: - B.A. in Business Administration from Minnesota University/ USA, 1979. Professional Experience: - Investment Manager, Zahran Group, Riyadh/KSA, Investment Management Dept., from Jan 2012 to date. - Investment Advisor, DARFIN CAPITAL, Riyadh KSA, International Markets, Asset Management Dept. from Jun. 2009 until Dec. 2011. - Investment Advisor, Abu Dhabi Commercial Bank (ADCB), Dubai, Private Banking & Wealth Management, from Jan. 2008 until Oct. 2008. - Senior Relationship Manager, Abu Dhabi Commercial Bank (ADCB) Abu Dubai/ UAE, Private Banking & Wealth Management, From Apr. 2007 until Dec. 2007. - Relationship Manager, Abu Dhabi Commercial Bank (ADCB), Dubai, private Banking & Wealth Management from Mar. 2005 until Mar. 2007. - Sales Agent, American Life Insurance Company (ALICO), Lebanon, from Jul. 1999 until Jan. 2005. - Insurance Broker, Fidelity General Insurance Co. – Beirut, Lebanon, from Jan. 2001 until Dec. 2003. - Investment Agent, Investa Co. (Agents for Zurich Financial Services) - Beirut, Lebanon, from Jul. 2001 until Dec. 2001. - Computer Assistant, LAU - Beirut, Lebanon, from Oct. 1999 until Jun. 2000. Professional Experience: - Vice Chairman of the Board of Directors of Arab Islamic Bank/ Palestine, as of 1993 until 2016. - Manager of the Holy Lands Tourist Company – General Agents for Alitalia/ Jordan, from 1979 until 2004. Mr. Yahya Zakaryia Al-Kadamani Former Board Memberships: - Vice Chairman of the board of Directors of Arab Islamic Bank/ Palestine. - Board Member of Jordan Express Tourist Transportation Company (JETT), from 1981 until 1999. - Board Member of the International Tobacco and Cigarettes Company. - Board Member of Al-Ekbal Printing & Packaging Company. Board Member until 17/4/2017 126
65. Annual Reports Date of Birth : 16/12/1968 Date of Membership: 16/6/2011 Nature of Membership: Non-Executive/ Non-Independent b- Names and Resumes of Senior Executive Managers Educational Background: − B.A. in Law from the University of Jordan, 1992. Acting General Manager Mr. Saleh Rajab Hammad Professional Experience: − Advocate since 1994 to date. − International Court of Justice – STL./ Member as of 1/2012 to date. − Vast experience in different fields, including: • Local and International Market Mergers and acquisition. • Administration buy-outs and private company sales. • Re-organization of private Equity and venture capital investment. • Joint venture. • International Arbitration. •Dealing and consulting with Swiss private Banking Concerning foreign investment and Family Trust. Mr. Ammar Mahmoud Abu Namous Board Member/ Representative of Al Pharaenah Int’l for Industrial Investment Co. until 11/1/2017 Previous Board Memberships in Other Companies: − Member in the Board of executives/ Raya Jet Aviation. − Board Member / Jordan Decapolis Properties Company. − Board Member / Alsaytara for Investments. − Board Member / Aljuman for Investments. − Chairman of Ahya Amman for rehabilitation and developing the property Representative of Jordan Decapolis Properties Company. − Board Member of Ma’in Hot Spring Resort Company. − Board Member/ Aldaman Al-Mumayaz Tourism Investment. Educational Background: −B.Sc. in Automotive Engineering from the University of Chelsea/ UK, 1975. Professional Experience: - Former Board Chairman of King Abullah II Design and Development Bureau, from 2004 until 2006. Other Current Board Memberships: - Board Member of the International Company of Science and Technology. Former Board Memberships: - Board Member of Alfa for Mining and Technology. - Board Chairman of Al Weibdeh for Tourist Restaurants Co. - Member of the Association Committee of King Abdullah II Design and Development Bureau. Mr. Haitham Abu Nasr Al Mufti - Board Member of the Royal Automobile Museum. Board Member/ Representative of - Vice Chairman of the Special Operations Forces Exhibition and Conference (SOFEX). Al-EKBAL Jordanian General Trading (LLC) - Member of the Royal Commission for Motor Sports. until 17/4/2017 - Board Chairman of CLS Company/ Jordan. - Board Chairman of JoSecure International Company. - Board Chairman of Jordan Electronic Logistics Support. 127 Date of Appointment: 27/7/2015 Educational Background: − B.Sc. in Computer Science from University of Jordan, 1985. Professional Experience: - Acting General Manager as of 13/1/2017 to date. - AGM/ Chief Risk Officer, and Board Secretary, at Bank of Jordan from 27/7/2015 until 12/1/2017 and Board Secretary at Bank of Jordan, until 17/4/2017. - AGM/ Chief Risk Officer, and Board Secretary at Bank of Jordan, from 12/2014 until 5/2015. - Executive Manager/ Compliance and Risk Department, and Board Secretary, at Bank of Jordan, from 1/2009 until 12/2014. - Manager of Compliance and Operational Risk Department at Bank of Jordan, from 12/1994 until 12/2008. - Long-standing experience in auditing and operations. - Attended several courses on risk management and the Basel requirements organized in Jordan and abroad. - Holds several professional certificates including CCO, and CORE certificates. Current Board Memberships in Other Companies: − Board Member/ Jordan Decapolis Properties Company. Date of Birth: 17/9/1950 Date of Membership: 7/3/2009 Nature of Membership: Non-Executive/ Non-Independent Date of Birth: 27/7/1962 Other Current Board Memberships: - Chairman of the Jordan Leasing Company. - Vice Chairman of Excel for Financial Investments Company. - Board Member of Bank of Jordan – Syria. - Board Member of the Association of Banks in Jordan. - Board Member of Al-Ekbal Investment Co. (PLC.). - Board Member of Jordan Payment and Clearing Co. (Jo - PACC). Dr. Nasser Mustafa Khraishi AGM/ Chief Operating Officer Date of Birth: 25/4/1962 Date of Appointment: 9/4/2014 Educational Background: - PhD in Electrical Engineering/ Control Theory/ Stanford University/ USA, 1990. - M.Sc. in Engineering Economic systems/ Stanford University/ USA, 1985. - B.Sc. in Electrical Engineering/ Kuwait University/ Kuwait, 1984. Professional Experience: - AGM/ Chief Operating Officer, as of December 2014 to date. - Executive Manager/ Capital Markets Department, from April 2014 until December 2014 - General Manager/ Monere LLC/ California, from 2011 until 2014. - Assistant General Manager/ Operations and Information Systems/ Bank Al Etihad, from 2009 until 2011. - Assistant General Manager/ Information Systems/ Jordan Kuwait Bank, from 2004 until 2009. - Held several executive/senior positions in several research and consulting firms offering services in Information Systems/ USA, from 1988 until 2004. Other Current Board Memberships: - Board Member of Excel for Financial Investments. Former Board Memberships - Board Member of Al-Ekbal Investment Co. (PLC). 128
66. Annual Reports Mr . Osama Samih Sukkari Legal Advisor Date of Birth: 27/4/1955 Date of Appointment as a Legal Advisor: 28/4/2015 Educational Background: − B.A. in Law from Beirut Arab University/ Lebanon, 1977. Mr. Dumam Mohammad Khraisat Executive Manager/ Central Operations Department Professional Experience: - Legal Advisor, Bank of Jordan as of April 2015 to date. -Legal Advisor & Head of legal Department, Bank of Jordan as of April 1994 to April 2015. - Extensive experience in Legal consultations and lawsuits, as of 1981. Former Board Memberships: - Vice Chairman of the Board of Directors of Jordan Leasing Company. - Member of the Insurance Council of the Social Security Corporation. - Board Member of Excel for Financial Investments Company. - Board Member of Al-Mowahadah for Transportation Company. - Board Member of the National Industries Company. - Board Member of Al-Takamolyeh Investments Company. - Board Member of Al-Shamikha for Real Estate Investments Company. Executive Manager / Human Resources Department. Date of Birth: 10/12/1963 Date of Appointment: 7/9/2015 Educational Background: - MBA - Marketing /Coventry University/UK, 2003. - B.Sc. in Chemical Engineering /Baghdad University/Iraq, 1987. Mr. Hatem Nafi‘ Foqahaa Regional Manager/ Palestine Branches Management Professional Experience: - Executive manager / HR Department/Bank of Jordan, as of 9/2015 to date. - Executive manager / HR Department/Bank of Jordan, from 9/2009 until 7/2015. - Acting manager/ Financial control Department/Bank of Jordan, from 8/2014 until 1/2015. - Head of HR/ Bahrain and Egypt/ Standard Chartered Bank, from 9/2006 until 8/2009. -Head of HR / LEVANT/Standard Chartered Bank, from 9/2004 until 8/2006. - Worked for Great Plains in the Middle East in several positions including HR Products Manager, from 10/2000 until 8/2002. - HR Senior Officer/the American University of Sharjah/UAE, from 7/1999 until 10/2000. - Credit Officer/Bank Al Etihad, from 9/1996 until 5/1999. - Credit Officer/Industrial Development Bank, from 4/1991 until 8/1996. - Chemical Engineer/ Intermediate Petrochemicals Industries (IPI), from 11/1988 until 11/1990. Mr. Turki Yousef Al-Jabour Executive Manager/ Internal Audit Department Date of Birth: 9/10/1952 Date of Appointment: 1/11/1994 Educational Background: − B.A. in Accounting from the University of Jordan, 1976. Professional Experience: − Vast experience in auditing and banking, including: •Executive Manager/ Internal Audit Department, Bank of Jordan as of January 2009 to date. •Manager of Internal Audit Department at Bank of Jordan, from December 2007 until January 2009. • Manager of Bank of Jordan/ Amman Branch, from April 2006 until December 2007. • Manager of Internal Audit Department at Bank of Jordan, from November 1994 until April 2006. • Senior Inspector at Cairo Amman Bank, from January 1987 until October 1994. • Huge experience in auditing and accounting gained through years of work with major auditing firms, including Al-Sha’er Auditing Firm. • Lecturer on Banking Operations and Auditing at training courses organized by Bank of Jordan. − Attended several advanced courses and seminars on administration and banking. 129 Date of Appointment: 1/7/2015 Educational Background: − M.A. in Accounting from University of Jordan/ Jordan, 1996. − B.A. in Accounting from University of Jordan/ Jordan, 1994. Professional Experience: - Executive Manager/ Central Operations Management/ Bank of Jordan as of July 2015 to date. - Executive Manager/ Central Operations Management/ Bank of Jordan from March 2015 until May 2015. - Manager Processes Reengineering Department/ Bank of Jordan, from November 2005 until February 2015. - Manager/ Operations Engineering Department/ Bank of Jordan, from June 2005 until November 2005. - Manager/ Banking Operations Department/ Bank of Jordan, from June 2005 until June 2005. - Head of the Program Testing Unit/ Bank of Jordan, from August 2004 until May 2005. - Branch Assistant Manager/ Bank of Jordan/ Marka Branch, from November 2003 until August 2004. - Supervisor/ the Branches Management Department/ Bank of Jordan, from October 2002 until November 2003. - Internal Auditor/ Internal Audit Department/ Bank of Jordan, from March 1998 until October 2002. - Internal Auditor/ Internal Audit Department/ Cairo Amman Bank, from 1994 until 1998. Other Current Board Memberships: - Board Member of Bank of Jordan – Syria. - Board Member of Pharma International Company. Mrs. Rabab Jamil Abbadi Date of Birth: 20/12/1972 Date of Birth: 4/5/1965 Date of Appointment: 28/1/1992 Educational Background: -M.A. in Accounting/ University of Jordan/ Jordan, 1993. -B.A. in Accounting/ Birzeit University/Palestine, 1989. Professional Experience: - Regional Manager/ Palestine Branches Management/ Bank of Jordan, as of 1/2015 to date. - Acting Regional Manager/ Palestine Branches Management/ Bank of Jordan, from 3/2014 until 12/2014. - Assistant Regional Manager/ Palestine Branches Management/ Bank of Jordan, from 7/2012 until 3/2014. - Credit Manager/ Palestine Branches/ Bank of Jordan, from 8/2010 until 7/2012. - Manager/ Ramallah Branch/ Bank of Jordan, from 9/2001 until 8/2010. - Assistant Manager/ Ramallah Branch/ Bank of Jordan, from 5/1999 until 9/2001. - Supervisor/ the Letters of Credit and Guarantee Department/ Bank of Jordan, from 10/1996 until 5/1999. - Letters of Credit and Guarantee Officer/ Bank of Jordan, from 1/1992 until 10/1996. Mr. Nader Mohammad Sarhan Executive Manager/ Chief Risk Officer Board Secretary as of 18/4/2017 Date of Birth: 7/10/1967 Date of Appointment: 28/10/2007 Educational Background: - M.A. in Accounting from the Arab Academy for Banking and Financial Sciences/Jordan, 2002. - B.A. in Accounting from Mansoura University/ Egypt, 1990. Professional Experience: - FATCA Responsible Officer as of 7/2017 to date. - Acting Manager/ Chief Risk Officer at Bank of Jordan, as of 24/4/2017 to date. - Executive Manager/ Credit Review Management/ Bank of Jordan, as of 12/2014 to date. - Manager/ Credit Department (Corporate, commercial, branches abroad)/ Bank of Jordan, from 4/2013 until 12/2014. - Manager /Credit Department (Corporate and branches abroad)/ Bank of Jordan, from 11/2007 until 4/2013. - Head of Credit Review (specialized Lending)/ The Housing Bank for Trade and Finance, from 6/2005 until 10/2007. - Team Leader/ the Commercial Credit Department/ The Housing Bank for Trade and Finance, from 10/2004 until 6/2005. - Manager/ Commercial Credit/ Commercial Credit Department/ The Housing Bank for Trade and Finance, from 9/2003 until 10/2004. - Head of the Companies Accounts/ Jordan Commercial Bank, from 10/2002 until 9/2003. - Head of Commercial Credit Relations/ the Commercial Credit Department/ The Housing Bank for Trade and Finance, from 1992 until 10/2002. 130
67. 3 .189% 6,379,290 * The status of shares 2017 (fully or partially mortgaged) Saudi Arabia Mr. Rafiq Bin Mohammed Abdul Qadir Himself 1.032% 2,065,738 0.000% Jordanian Mr. Saddiq Omar Abu Seedo 1 Mr. Walid Tawfiq Fakhouri Mr. Samer Tawfiq Fakhouri 1.245% 2,490,648 1.245% Jordanian Al-Yamama For General Investments Co. 2,490,648 Herself 1.500% 3,000,000 1.500% Jordanian Mrs. Maha Nasri Nasser 3,000,000 Himself 1.957% 3,914,653 1.957% Jordanian Mr. Hussni Jalal Al Kurdi 3,914,653 Himself 0.00322% 6,447 2.690% Jordanian Mr. Shaker Tawfiq Fakhouri 5,381,490 Herself 2.801% 5,603,766 2.802% 5,603,838 Jordanian Mrs. Awatef Mohammed Almasri Himself 4.016% 8,033,561 4.016% 8,033,561 Saudi Arabia Mr. Graeme Allah bin Raddad Al-Zahrani 4.545% 9,090,909 4.545% 9,090,909 Libyan Libyan Foreign Bank Mr. Walid Tawfiq Fakhouri Mr. Samer Tawfiq Fakhouri 6.118% 12,236,424 6.118% Jordanian Al Araka for Investments Co. 12,236,424 Mrs. Lana bint Ghait Pharaon Mrs. Hala bint Abdelrahman bin Pharaon - 6,095,860 partially mortgaged Mr. Wael bin Ghaith Pharaon 9.882% 19,765,863 9.882% 19,765,863 Mr. Laith bin Ghaith Pharaon Mrs. Dima bint Ghaith Pharaon Mr. Tawfiq Shaker Fakhouri Mrs. Ni’mat Tawfiq Fakhouri 12.867% 25,735,753 12.867% 15,596,767 Himself Jordanian Other Current Board Memberships: - Board Member of Jordan Leasing Company. - Board Member of Excel for Financial Investments Company. Al Pharaenah Int’l for Industrial Investments Co. Other Professional Experience: - Financial Consultant – Binladin Holding Company, Jeddah/ Saudi Arabia from 2014 until 2015. 25,735,753 Educational Background: −Bachelor degree in Accounting, Applied Sciences University, 2005, Amman, Jordan. Professional Experience: -Manager/ Financial Control Department/ Bank of Jordan as of March 2016 to date. -Acting manager/ Financial Control Department/ Bank of Jordan as of February 2015 to February 2016. -Manager – External Audit Division – Deloitte & Touche M.E, Amman/ Jordan from June 2012 until 2014. -Assistant manager - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from December 2011 until May 2012. -Supervisor - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from December 2010 until November 2011. -Senior 2 - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from June 2010 until November 2010. -Senior 1 Auditor - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from June 2009 until May 2010. -Acting Senior Auditor - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from June 2008 until May 2009. -Semi Senior Auditor - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from June 2007 until May 2008. -Junior level - External Audit Division - Deloitte & Touche M.E, Amman/ Jordan from December 2005 until May 2007. 131 No. of Shares 2016 Date of Appointment: 1/2/2015 Jordanian Date of Birth: 30/6/1981 Al-Ekbal Jordanian General Trading (LLC) Manager/ Financial Control Department 4. Shareholders who own 1% or more of the Bank’s shares (2016 & 2017): Mr. Hani Hasan Mansi Percentage 2016 Professional Experience: - Manager/ Compliance Department/ Bank of Jordan, as of November 2015 to date. - Officer/ Corporate Governance/ Bank of Jordan. - Manager/ Compliance Department/ Bank of Jordan, from June 2014 until September 2015. - Head of the Anti-Money Laundering and Combating Financing Terrorism Unit/ Bank of Jordan, from 2011 until May 2014. - Officer/ the Anti-Money Laundering and Terror Financing Unit/ Cairo-Amman Bank, from 2009 until 2011. - Customer Service Officer/ Cairo Amman Bank, from 2002 until 2009. - Certified Anti-Money Laundering specialist CAMS. - Certified Anti-Corruption Manager CACM. - (ICA) certified form International Compliance Association. 23.245% Educational Background: - B.A. in Business Administration/ University of Jordan/ Jordan, 2002. 46,490,820 Date of Appointment: 29/11/2015 20.557% Date of Birth: 30/7/1980 41,115,777 Manager/ Compliance Department Percentage 2017 Ms. Lana Fayez Al-Barrishi The ultimate beneficiary of shares 2017 Professional Experience: - Treasurer/ Treasury and Investment Department/ Bank of Jordan, as of 3/2016 to date. - Treasurer/ Treasury and Investment Department/ Bank of Jordan, as of 3/2014 to 1/2016. - Chief Dealer/ Treasury and Investment Department/ Bank of Jordan, from 2007 until 2/2014. - Dealer/ Treasury and Investment Department/ Cairo Amman Bank, from 2002 until 2007. Jordanian Educational Background: − B.A. in Accounting/Al Zaytoonah University/ Jordan, 2002. Mr. Tawfiq Shaker Fakhouri The status of shares 2017* Date of Appointment: 31/3/2016 No. of Shares 2017 Date of Birth: 13/2/1980 Nationality Treasurer/ Treasury & Investment Department Name Mr. Mousa Yousef Mousa Partially mortgaged Annual Reports 132
68. Annual Reports 5 . Competitive Position of the Bank and its Market Share: Areas of Training: Mentioned within the Bank’s achievements in 2017 (page 19). Topic 6. Dependence on Specific Suppliers or Key Clients (Locally or Abroad): No. Name of Suppliers Percentage of Total Supplies 1 Arab Orient Insurance Co. 10.36% There is no dependence on specific key clients (whether locally or abroad), who account for 10% or more of the Bank’s total sales. 7. - The Bank does not have any governmental protection, or any privileges, nor do any of its products or services, as stated by laws and regulations or others. - The Bank has not obtained any patents or concession rights. 8. - There are no decisions issued by the government or international organizations or any other entity that would have any material effect on the Bank’s operations, products, or competitive capabilities. - International Quality Standards do not apply to the Bank. 1,859 Sales and Marketing Skills 25 489 Professional Certificates 10 36 Financial & Audit and Investment 7 9 Others 31 126 Total 425 5,007 10. Description of Risks: This risk arises from the inefficiency or failure of internal operations, employees, or systems or may stem from external events including legal risks. B. Number of Employees and Educational Qualifications: No. of Employees/ Jordan Leasing Co. No. of Employees/ Excel for Financial Investments Co. PhD 2 - - - Master’s Degree 91 9 1 2 Higher Diploma 6 1 - - 1,406 144 2 5 Diploma 261 34 - - General Secondary Education 79 11 - - Pre-Secondary Education 173 17 1 1 2,018 216 4 8 Liquidity risk: represents the Bank’s inability to make available the necessary funding to meet its obligations on their maturity dates or to finance its activities without incurring high costs or losses. Moreover, liquidity risks are divided into two types: •Funding Liquidity Risk This risk represents the Bank’s inability to change assets into cash – such as the collection of receivables – or to obtain funding to meet its obligations. •Market Liquidity Risk This risk represents the Bank’s inability to sell the asset in the market or selling the asset at a huge financial loss due to weak liquidity or demand in the market. Market risks: These risks represent the exposure of the positions on and off the Bank’s Consolidated Statement of Financial Position to losses as a result of price fluctuations in the market. This includes the risks arising from the volatility of interest rates and stock prices of investment portfolios, both for the purpose of trading or exchange and include the following: • Interest rate risks •Currency exchange rate risks (Dealing with Foreign Currency) C. Details of Training Programs in 2017: •Fluctuation in share price risks No. of Courses No. of Participants In-house Courses (organized by the Bank’s Training Department) 358 4,863 External Courses 67 144 Total 425 5,007 133 93 Operational Risk: • Excel Company Organizational Structure can be found on (page 119). Description Compliance and Risk Management statements items such as guarantees and/or documentary credits causing financial losses to the bank. • Jordan Leasing Company Organizational Structure can be found on (page 118). Total 2,488 manner. These risks include on-consolidated financial statements items such as loans and bonds, and off-consolidated financial • Bank of Jordan – Syria Organizational Structure can be found on (page 117). Bachelor’s Degree 259 This risk arises from the probable inability and/or lack of desire of the borrower or third party to fulfill its obligations in a timely • Bank of Jordan Organizational Structure can be found on the last page, number (159). Academic Qualification Banking Credit Risk: 9. A- An Organizational Structure of the Bank and its Subsidiaries: No. of Employees/ Bank of Jordan – Syria No. of Participants Mentioned within the corporate government on (page 150). These risks include: - The Bank adheres to all laws, regulations, and international standards that are related to its business. No. of Employees/ Bank of Jordan No. of Courses •Goods Risks •Market risks arise from: - Changes that may occur in the political and economic conditions in the markets. - Fluctuations in interest rates. - Fluctuations in the prices of financial instruments, held for future buying and selling. - Gaps in the maturities of assets and liabilities and interest rate re-pricing. - Holding of uncovered positions. 134
69. Annual Reports Information Security Risk : Defined as any potential threat that may lead to failure in confidentiality, availability, and integration of the Bank’s information. 13. Realized Profits/Losses, Dividends, Bank Shareholders’ Equity, and the Closing Price of Shares 2013-2017: Financial Indicators for the past five years (2013-2017) Compliance Risk: This arises from the probable failure of the Bank to comply with (violate/transgress) the prevailing laws, regulations, instructions, banking laws and code of ethics issued by the international and local regulatory bodies, including the Bank's internal policies. Fiscal Year Bank Shareholders’ Equity NonControllers‘ Interest Net Profit Before Tax Interest Rate Risk: 2013 316,986 4,506 the interest rates due to a mismatch or a gap in the amounts of assets and liabilities, according to the various time limits or review of 2014 335,746 interest rates in a certain period. 2015 Foreign Currency Risks: This risk arises from the probable impact of changes in interest rates on the value of other financial assets. The Bank is exposed to These risks arise from changes in the values of financial instruments as a result of fluctuations in the prices of foreign currencies using good policy to manage its foreign currency positions. Share Price Risks: These risks result from the changes in the fair values of investments in shares. 11. Bank Achievements in 2017: Mentioned in the Board of Directors’ Report under a separate section (page 18), supported with figures and a description of the Bank’s main events in 2017. 12. There is no financial impact of non-recurring operations during 2017 and no intervention in the Bank’s main activities. In JD (Thousand) Cash Dividends Amount % Distribution of Bonus Shares 50,204 23,265 15% - 2.50 4,116 59,999 31,020 20% - 2.65 362,242 4,703 61,966 31,020 20% 44,900 2.60 2016 405,447 6,989 62,315 36,000 18% - 2.88 2017 433,665 5,491 67,583 36,000 18% - 3.00 2015 Closing Price of Share (JD) Recommendation to distribute JD 44.9 million/share in 19/4/2016 14. Analysis of Bank’s Financial Position and Business Results for the Year 2017: Mentioned in the Board of Directors’ Report, under a separate section (page 27). Below are the main financial ratios: No. Financial Ratios 2017 2016 1 Return on Average Shareholders’ Equity 11.15% 10.78% 2 Return on Capital 22.8% 21.1% 3 Return on Average Assets 1.86% 1.86% 4 Profitability per Employee (After tax) JD 22,601 JD 19,647 5 Interest Income to Average Assets 5.30% 4.84% 6 Interest Expense to Average Assets 1.10% 0.75% 7 Interest Margin to Average Assets 4.20% 4.08% 8 Non-Performing Loans to Total Credit Facilities 4.50% 4.59% 15. The Bank’s Future Plans The Bank’s strategic future plans, projects, and the Board of Directors’ projections, are all mentioned within Bank of Jordan’s Goals for 2018, listed under a separate section (page 36). 16. Auditors’ Remuneration (for Bank of Jordan and its Subsidiaries): Statement Auditors’ Remuneration (JD) Bank of Jordan 78,400 Bank of Jordan – Syria 15,000 Excel For Financial Investments Company 4,060 Jordan Leasing Company 2,900 Total 100,360 Auditors were paid an amount of (JD 13,920) in 2017, against Tax consulting services. 135 136
70. Annual Reports B . Number of Shares Owned by the Executive Managers and/or their Relatives: 17. Statement of the Number of Financial Securities Issued by the Bank: A. Number of Shares Owned by Members of the Board of Directors and/or their relatives: Name Al-Ekbal Jordanian General Trading (LLC) Mr. Shaker Tawfiq Fakhouri Mrs. Suha Faisal Sroor Status Nationality Board Member No. of Shares 2017 2016 Jordanian 25,735,753 25,735,753 Chairman Of The Board/ Dedicated Representative of the company Jordanian 5,381,490 6,447 Wife Jordanian 150,000 133,658 Name Mr. Saleh Rajab Hammad Dr. Nasser Mustafa Khraishi Status Nationality Acting General Manager 2017 2016 Jordanian 42,079 42,079 AGM/ Chief Operating Officer Jordanian - 1,000 Saleen Nasser Khraishi Mr. Osama Samih Sukkari No. of Shares Daughter Jordanian - 2,500 Legal Advisor Jordanian 148,670 106,950 Wife Jordanian 117,267 116,267 Executive Manager/ Human Resources Department Jordanian - - Executive Manager/ Internal Audit Department Jordanian 70,000 61,000 Executive Manager/ Central Operations Department Jordanian - - Sarah Shaker Fakhouri Daughter Jordanian 200 - Tawfiq Shaker Fakhouri Son Jordanian 352,000 351,000 Mrs. Najwa Mohammad Manku Board Member Jordanian 149,964 11,574 Vice Chairman of the Board/ Representative of the Company Mrs. Rabab Jamil Abbadi Jordanian - 11,342 Wife Jordanian 368 368 Son Jordanian 37,212 34,622 Mr. Dumam Mohammad Khraisat Mariam Walid Fakhouri Daughter Jordanian 67,199 62,656 Mr. Hatem Nafi’ Foqahaa Regional Manager/ Palestine Branches Palestinian - - A`esha Walid Fakhouri Daughter Jordanian 16,051 14,749 Ahmad Walid Fakhouri Son Jordanian 13,845 12,780 Mr. Nader Mohammad Sarhan Executive Manager/ Chief Risk Officer Board Secretary as of 18/4/2017 Jordanian 34,500 41,500 Board Member Jordanian 10,569 10,569 Mrs. Nida’a Hasan Abu Zahra Wife Jordanian 9,000 9,000 Board Member/ Representative of the Company Jordanian 138,039 138,039 Shaker Nader Sarhan Son Jordanian 5,000 2,952 Wife Jordanian 51,579 51,579 Treasurer/ Treasury & Investment Department Jordanian - - Board Member Jordanian 2,490,648 2,490,648 Manager/ Compliance Department Jordanian - - Board Member Representative of the Company Jordanian 6,447 6,447 Manager/ Financial Control Department Jordanian - - Wife Jordanian 775,970 724,585 Board Member Jordanian 12,236,424 12,236,424 Board Member/ Representative of the Company Jordanian 8,446 10,000 Board Member Jordanian 19,765,863 19,765,863 Board Member/ Representative of the Company Jordanian - - Board Member Jordanian 12,131 Board Member/ Representative of the Company Jordanian 6,615 Al Tawfiq Investment House - Jordan Mr. Walid Tawfiq Fakhouri Mrs. Shatha Abdelmajid Al-Dabbas Rakan Walid Fakhouri Arab Gulf General Inv. & Transport Co. Dr. Mazen Mohammad Al Bashir Dr. Farihan Fakhri Al Barghouti Al Yamama for General Investments Co. (Limited liability) Dr. Yanal Mawloud Naghouj Mrs. Dana Kayd Zagha Al Araka for Investments Co. Mr. “Shadi Ramzi” Abd Al-Salam Al-Majali Al Pharaenah Int’l for Industrial Investments Co. Mr. Walid Mohammad Al Jamal Al Lu’lu’a Trading & Investment Co. Mr. Haitham Mohammad Samih Barakat Position Company Apollo Trading Industrial Co. - - 6,615 Middle East Specialized Cables - - - - - Board Member Jordanian 6,447 6,447 Mr. Walid Rafiq Anabtawi Board Member Jordanian 5,000 - Board Member Lebanese 5,000 - Dr. Abdel Rahman Samih Toukan Vice Chairman of the Board until 17/4/2017 Jordanian 169,091 117,383 Mr. Yahya Zakariya Al-Kadamani Board Member until 17/4/2017 Jordanian 1,325,000 1,300,000 Wife Jordanian 300,000 300,000 Board Member Jordanian 25,735,753 25,735,753 Representative of the Company until 17/4/2017 Jordanian - - Board Member Jordanian 19,765,863 19,765,863 Representative of the Company until 11/1/2017 Jordanian - - 137 Name Equity Share in Bank of Jordan 12,131 Mr. Husam Rashed Manna’ Mr. Ammar Mahmoud Abu Namous Shares Held by Those Companies in Bank of Jordan for the Years 2017 and 2016: 32,529 31,447 Al Pharaenah Int’l for Industrial Investments Co. C. Companies Controlled by the Chairman, Board Members, the Executive Managers and/or their Relatives, and the Number of 32,529 6,447 Mr. Haitham Abu Nasr Al Mufti Mr. Hani Hasan Mansi Shaker Fakhouri & Associates Co. Jordanian Al-Ekbal Jordanian General Trading (LLC) Mrs. Lana Fayez Al Braishi 2016 Board Member Mrs. Amaal Amin Al-Turk Mr. Mousa Yousef Mousa 2017 Mr. Mohammad Anwar Hamdan Mr. Wissam Rabee’ Saab Mr. Turki Yousef Al-Jabour Mr. Shaker Tawfiq Fakhouri Mr. “Shadi Ramzi” Abd Al-Salam Al- Majali Chairman of the Board/ Dedicated Board Member Jordan (JNCC) Arabia Insurance Company Members Of Board Of Trustees at Mutah University Mr. Haitham Mohammed Barakat  Mr. Osama Samih Sukkari Mr. Haitham Abu Nasr Al Mufti Mr. Ammar Mahmoud Abu Namous Board Member Legal Advisor Board Member until 17/4/2017 Board Member until 11/1/2017 (KEPLIC) Co. / Kuwait - - - - Alfa for Mining and Technology Co. - - Tryada For international Investment - - Osama Sukkari & Associates – Attorneys at Law There are no companies controlled by other Board Members and/or their relatives nor by the Executive Managers and/or their relatives. 138
71. Annual Reports B . Benefits and Remuneration of the Executive Managers for the Year 2017 18. The Benefits and Remuneration of the Board Chairman, Board Members, and Executive Managers: A. Benefits and Remuneration of the Chairman and Board Members for the Year 2017: Transport Allowance Remuneration Total JD JD JD Mr. Shaker Tawfiq Fakhouri Chairman of the Board/ Dedicated Representative of Al-Ekbal Jordanian General Trading (LLC) 30,000 5,000 35,000 Mr. Walid Tawfiq Fakhouri Vice Chairman of the Board Representative of Al Tawfiq Investment House - Jordan 21,083 - 21,083 Dr. Nasser Mustafa Khraishi Dr. Mazen Mohammed Al Bashir Board Member/ Representative of Arab Gulf General Inv. & Transport 30,000 5,000 35,000 Mr. Osama Samih Sukkari Name Mr. Haitham Mohammed Samih Barakat Position Board Member/ Representative of Al Lu’lu’a Trading & Investment Co. 30,000 5,000 35,000 Dr. Yanal Mawloud Naghouj Board Member/ Representative of Al Yamama for General Investments Co. (Limited liability) 30,000 5,000 35,000 Mr. "Shadi Ramzi" Abd Al-Salam Al-Majali Board Member/ Representative of Al Araka for Investments Co. 30,000 5,000 35,000 Mr. Walid Mohammed AL Jamal Board Member/ Representative of Al Pharaenah Int‘l for Industrial Investments Co. 29,032 - 29,032 Mr. Mohammad Anwar Hamdan Board Member 30,000 Mr. Husam Rashed Manna’ Board Member 30,000 5,000 5,000 35,000 35,000 Mr. Walid Rafiq Anabtawi Board Member 21,083 - 21,083 Mr. Wissam Rabee’ Saab Board Member 21,083 - 21,083 Vice Chairman of the Board until 17/4/2017 8,917 5,000 13,917 Board Member until 17/4/2017 8,917 5,000 13,917 Mr. Haitham Abu Nasr Al Mufti Board Member / Representative of Al-Ekbal Jordanian General Trading (LLC) until 17/4/2017 8,917 5,000 13,917 Mr. Ammar Mahmoud Abu Namous Board Member/ Representative of Al Pharaenah Int‘l for Industrial Investments Co. until 11/1/2017 968 5,000 5,968 330,000 55,000 385,000 Dr. Abdel Rahman Samih Toukan Mr. Yahya Zakariya Al- Kadamani Total Name Position Allowance for Transportation & Assuming Annual Salary Remuneration Board Secretary Position JD JD JD Total JD Acting General Manager Board secretary until 17/4/2017 242,176 51,712 AGM/ Chief Operating Officer 145,491 32,304 177,795 Legal Advisor 204,248 73,505 277,753 Mrs. Rabab Jamil Abbadi Executive Manager/ Human Resources Department 107,480 26,155 133,635 Mr. Turki Yousef Al-Jabour Executive Manager/ Internal Audit Department 80,924 20,598 101,522 Mr. Dumam Mohammad Khraisat Executive Manager/ Central Operations Department 65,871 18,088 83,959 Mr. Hatem Nafi’ Foqahaa Regional Manager/ Palestine Branches 105,344 5,965 111,309 Executive Manager/ Chief Risk Officer Board Secretary as of 18/4/2017 81,285 - Mr. Mousa Yousef Mousa Treasurer/ Treasury & Investment Department 50,386 7,044 57,430 Mrs. Lana Fayez Al Braishi Manager/ Compliance Department 54,143 9,148 63,291 Manager/ Financial Control Department 39,348 4,963 44,311 1,176,696 249,482 Mr. Saleh Rajab Hammad Mr. Nader Mohammad Sarhan Mr. Hani Hasan Mansi Total 5,350 12,650 18,000 299,238 93,935 1,444,178 The Board of Directors acknowledge that they did not receive any benefits or remunerations either personally or from related parties whether cash or in kind other than mentioned above. 139 140
72. Annual Reports 19 . Donations, Grants, and Contribution to the Local Community: 21. Bank’s Contribution to Environmental Protection and Corporate Social Responsibility: The Bank’s donations and support of activities related to the protection of the environment and the local community stood at JD 736.4 A. Bank’s Contribution to the Protection of Environment: thousand, as detailed below: The Bank’s donations and sponsorships in 2017 supported environmental projects ranging from road safety to greening initiatives. Activity Amount (JD) On road safety, a priority area for intervention, BoJ extended support to the National Initiative for Traffic Safety, in addition to cosponsoring the eighth International Conference on Traffic Safety organized by the Jordan Traffic Institute. It also took part in a tree- Supporting the Martyrs’ Families of the Armed Forces and Security Services Fund 83,333 Supporting the Children’s Museum 54,167 Supporting the National Financial and Social Education Program 51,700 Supporting the King Abdullah II Center for Excellence 35,000 Supporting the Taawon Foundation 31,942 Scholarship / Student at the King's Academy 28,360 Supporting the families and Friends Society of persons with Disabilities 25,500 Supporting the Senior Citizens Forum / White Beds Society 25,300 Support the King Hussein Cancer Center 25,000 Supporting The Jordanian Hashemite Fund For Human Development 25,000 Building on the previous years, Bank of Jordan continued to fund several scholarships in the Faculty of Educational Sciences and Bank of Jordan University Scholarships Fund / Ministry of Higher Education and Scientific Research 25,000 Arts/UNRWA, the Ministry of Higher Education and Scientific Research, and Elia Nuqul Institute. For the year 2017, the Bank funded Supporting social and charitable organizations and activities 135,576 Supporting educational activities 83,715 Supporting cultural activities 29,036 Supporting environmental activities 23,333 Supporting sports activities 10,550 Miscellaneous 43,897 Total 736,409 planting campaign organized by the Arab Group for the Protection of Nature to help impoverished families in the Jordan Valley secure a source of income. B. Bank’s Corporate Social Responsibility To enable the progress of society, BoJ was committed to supporting various societies and initiatives with a focus on sustainabledevelopment programs – consistent with its corporate governance principles as well as its vision and values. In education, the Bank remained committed to granting children and their parents free access to the Children’s Museum on the first Friday of each month, under a partnership forged nine years ago. In addition to that, assistance was extended to King Abdullah II Center for Excellence, which aims to promote corporate excellence through distinguished performance, innovation, and quality. another scholarship program in cooperation with the AMIDEAST. Mentioned within the Bank’s Achievements in 2017 (page 25) C. Annual Financial Statements - 2017 The Bank’s annual financial statements, audited by the Bank’s auditors Kawasmy & Partners Co. (KPMG) Jordan and a comparison with the previous year (2017), can be found in the second part of the report (Page 44). D. Report of the Bank’s Auditors The report from the Bank’s auditors, KPMG Jordan, which include the Bank’s annual financial statements, reveals that the audit 20. Contracts, Projects and Commitments Signed Between the Bank and its Subsidiaries, Affiliates, Chairman, Board Members, the General Manager, Employees in the Bank or their Relatives: process was conducted in accordance with international auditing standards. It can be found at the beginning of the 2017 annual financial statements (Page 39). The Bank has assigned “Excel for Financial Investments Company” to manage the Bank’s investment portfolio against annual management fees. No other contracts have been signed between the Bank and any of its subsidiaries or affiliates or with the E. Acknowledgment Board Chairman or General Manager or board members or with any bank employee or their relatives. This is with the exception As per paragraph (E)/ Article (4) of Disclosure and Accounting Standards Instructions issued by the Jordan Securities Commission Board of the normal banking transactions - disclosed in note No. (38) on the financial statements - to which commercial interest and of Commissioners: commission rates apply. All credit facilities granted to the concerned entities are classified as performing loans against which no 1. The Board of Directors of Bank of Jordan acknowledges, in accordance with its knowledge and belief, that there are no material matters provisions have been allocated. that may affect the continuity of the Bank's operations during the financial year 2018. 2. The Board of Directors of Bank of Jordan acknowledges its responsibility for the preparation of the financial statements for 2017 and that the Bank has an effective control system. 3. The Chairman of the Board, General Manager and the Financial Control Manager acknowledge that the information and data mentioned in the Bank of Jordan 2017 Annual Report are true, accurate and complete. 141 142
73. Annual Reports Corporate Governance 143 144
74. Annual Reports BANK OF JORDAN COMMITMENT TO THE CORPORATE GOVERNANCE GUIDE Names of the Board Members as of 18 /4/2017 Name Status No. of Attendance Realizing that good corporate governance is a key to success, the Bank’s Board of Directors is keen on applying corporate governance JD practices that comply with the regulations issued by the Central Bank of Jordan and the Corporate Governance Guide for banks in Jordan. These practices, which have been incorporated into the Bank of Jordan Corporate Governance Guide, also comply with the best international practices recommended by the Basel Committee. It is worth noting that Bank of Jordan also adheres to regulatory requirements and guidelines in other countries where it operates. It is worth noting that the Bank conducts periodic reviews of this Guide, and whenever the need arises, to ensure that it captures the Bank’s changing needs as well as developments in the banking industry. The Corporate Governance Guide is included in the annual report (Arabic version), alongside a separate report for the general public (shareholders) on the Bank’s compliance with provisions of the Guide. COMPONENT ONE (BOARD OF DIRECTORS) - Chairman of the Board: In line with best managerial practices, the Chairman and General Manager positions were kept seperate. The duties and responsibilities of each post have also been identified. - Board of Directors: Mr. Shaker Tawfiq Fakhouri Chairman of the Board/ Dedicated 10 4,928 Mr. Walid Tawfiq Fakhouri Vice Chairman of the Board 5 150 Dr. Mazen Mohammed Al-Bashir Member 10 18,865 Dr. Yanal Mawloud Naghouj Member 9 - Mr. “Shadi Ramzi” Abd Al-Salam Al-Majali Member 9 66,782 Mr. Haitham Mohammed Samih Barakat Member 8 647 Mr. Husam Rashed Manna’ Member 10 3,152 Mr. Mohammad Anwar Hamdan Member 10 59 Mr. Walid Mohammad Al-Jamal Member 10 138,245 Mr. Walid Rafiq Anabtawi Member 7 3,232 Mr. Wissam Rabee’ Saab Member 4 - Board Secretary/ Committee Rapporteur 7 - Mr. Nader Mohammad Sarhan While the Executive Management is responsible for running the daily operations of the Bank, the Board is in charge of drawing Dr. Abdel Rahman Samih Toukan/ Vice Chairman of the Board until 17/4/2017 regulations. Mr. Haitham Abu Nasr Al Mufti/ Member until 17/4/2017 up strategies that best serve the interests of the Bank, and its shareholders and clients, in accordance with respective laws and The board shall consist of 11 members who will be elected by the general assembly to a four-year term. The members shall have the expertise and qualifications that shall enable each of them to voice his/her opinion independently during board discussions. The Loan Balance for the Board Member Mr. Yahya Zakaryia Al-Kadamani/ Member until 17/4/2017 Mr. Ammar Mahmoud Abu Namous/ Member until 11/1/2017 Mr. Saleh Rajab Hammad/ Board Secretary until 17/4/2017 suitability of board members has been assessed against the policy related to board members’ suitability in line with the requirements - The Committees of the Board: by the board members. The committees are as follows: the Audit Committee, the Corporate Governance and Strategy Committee, the Nominations and The Board convened (10) times during 2017. The Board has a specific agenda in each meeting, and the minutes of meetings and Technology Governance Committee. of the Corporate Governance Guide, and adjustments/corrections have been made accordingly. The Board Chairman shall be elected decisions are officially documented by the Board Secretary. As per the Corporate Governance Guide, Seven committees stem from the Board of Directors to ease implementation of responsibilities. Remunerations Committee, the Risk Management Committee, the Executive Committee, the Compliance Committee, and Information - The Audit Committee: The audit committee comprises three qualified board members who enjoy adequate experience in accounting, finance, or any other relevant field. The majority of the Committee members, including the head, must be independent. The board chairman cannot serve as head of the committee. The committee’s head may not head any other board committee. The Audit Committee consists of the following: Status No. of Attendance Head of the Committee 9 Mr. “Shadi Ramzi“ Abd Al-Salam Al-Majali Member 8 Mr. Walid Rafiq Anabtawi Member 7 Board Secretary/ Committee Rapporteur 7 Mr. Mohammad Anwar Hamdan Mr. Nader Mohammad Sarhan The Audit Committee held (9) meetings in 2017. However, the Audit Committee does not substitute for the responsibilities of the Board of Directors or the Bank’s Executive Management for the supervision and adequacy of the Bank’s internal control system. The Audit Committee met with the External Auditor (4) times during 2017. 145 146
75. Annual Reports - The Corporate Governance and Strategy Committee : - The Nominations and Remunerations Committee: Committee. The committee provides guidance and feedback on the development of the Corporate Governance Guide. It also ensures the head, independent members. The board chairman and two independent members as a minimum were elected to the Corporate Governance and Strategies the guide is updated and properly implemented. The Corporate Governance and Strategy Committee consists of the following: Status No. of Attendance Mr. Shaker Tawfiq Fakhouri Head of the Committee 3 Mr. Husam Rashed Manna’ Member 3 Mr. Walid Rafiq Anabtawi Member 2 Board Secretary/ Committee Rapporteur 2 Mr. Nader Mohammad Sarhan - The Risk Management Committee: The Risk Management Committee comprises three board members, one of whom is independent. Members of the senior executive management can also join the committee. The committee deals with all types of risks facing the bank. Mr. Shaker Tawfiq Fakhouri Member 7 Mr. Mohammad Anwar Hamdan Member 7 Board Secretary/ Committee Rapporteur 5 Mr. Nader Mohammad Sarhan - Information Technology Governance committee: Three board members were elected to the IT Governance Committee who enjoy vast experience and/or knowledge in IT. The Information Technology Governance committee consists of the following: Mr. Husam Rashed Manna’ Member 3 7 Mr. Walid Rafiq Anabtawi Member 1 Member 7 Mr. Nader Mohammad Sarhan Board Secretary/ Committee Rapporteur 1 Member 6 Member / Board Secretary / Committee Rapporteur 7 Mr. Shaker Tawfiq Fakhouri Member 7 Mr. Mohammad Anwar Hamdan Member Mr. Saleh Rajab Hammad Dr. Nasser Mustafa Khraishi Mr. “Shadi Ramzi“ Abd Al-Salam Al-Majali The Information Technology Governance committee held (3) meetings in 2017. - Compliance Committee: The compliance committee comprises three board members, mostly independent. The committee meets regularly and upon need. The Risk Management Committee held (7 ) meetings during 2017. - The Executive Committee: Five board members were elected to the Executive Committee, one of whom may be independent provided that he/she is not a member of the Audit Committee. Other members of the senior executive management may join the committee’s meetings to present their recommendations. Status No. of Attendance Head of the Committee 49 Dr. Mazen Mohammed Al-Bashir Member 51 Dr. Yanal Mawloud Naghouj Member 45 Mr. Haitham Mohammed Samih Barakat Member 32 Mr. Husam Rashed Manna’ Member 51 Facilities Committee’s Rapporteur/ Committee’s Rapporteur 5 3 7 Mr. Shaker Tawfiq Fakhouri Head of the Committee Mr. Walid Rafiq Anabtawi Head of the Committee Head of the Committee The Executive Committee consists of the following: No. of Attendance No. of Attendance No. of Attendance Mr. Nader Mohammad Sarhan Status Status Status Dr. Mazen Mohammed Al-Bashir The Nominations and Remunerations Committee consists of: The Nominations and Remunerations Committee held (8 ) meetings in 2017. The Corporate Governance and Strategy Committee held (3) meetings during 2017. The Risk Management Committee consists of the following: The Nominations and Remunerations Committee committee was elected and consists of three members, with at least two, including The Compliance Committee consists of the following: Status No. of Attendance Mr. Husam Rashed Manna’ Head of the Committee - Mr. Shaker Tawfiq Fakhouri Member - Mr. Walid Rafiq Anabtawi Member - Board Secretary/ Committee Rapporteur - Mr. Nader Mohammad Sarhan The compliance committee, formed at the end of 2017, did not hold any meetings during the year. 51 The Executive Committee held (51) meetings in 2017. 147 148
76. Annual Reports - The Board Secretary : h. Keeping audit reports and sheets in a safe and organized manner for a period that conforms to applicable laws and regulations so that demonstrate the Board’s activities and deliverables, Board of Director’s decisions and any other decisions made by committees i. Reviewing the reporting procedures in the Bank to ensure key information about financial, administrative, and operational matters Executive Manager / Chief Risk Officer, as Board Secretary. Duties and responsibilities of the Board Secretary are incorporated in the j. Ensuring compliance with the Bank’s internal policies, the international standards as well as related laws and regulations. Corporate Governance Guide of the Bank. k. Submitting reports to the Head of the Audit Committee. - The Senior Executive Management 2.External Audit: the Bank’s Corporate Governance Guide. information systems. In particular, this entails expressing clear and honest opinions about the fairness of these statements and the - Conflict of Interests: consider the Bank’s interest and professionalism of the auditing firms, keeping in mind the importance of regular audit rotations and Minutes of meetings are significant for the Bank, shareholders, and supervisory agencies because they are a permanent register operating under the Board. Given the vital role of the Board Secretary, it has been decided to appoint Mr. Nader Mohammad Sarhan Members of the senior executive management, including the general manager, must have the attributes and qualifications stated in The Board of Directors emphasized in the Bank’s Corporate Governance Guide that all members of the Board must specify their that they can be examined by the regulatory authorities and the external auditor. are accurate, reliable and timely. The External Auditor represents another level of control on the credibility of financial data issued by the Bank’s accounting and extent to which they mirror actual reality during a certain period. When dealing with external audit firms, the Board of Directors has to previous experiences with such offices. relationships with the Bank, disclose the nature of this connection, avoid conflicts of interest, and abide by the substance of the Code of Conduct in this regard. A written disclosure must be given on an annual basis or in case of any development that so requires. Component Two (Planning and Policy Formulation) The Board of Directors undertakes responsibility for devising the Bank’s general strategy and its strategic course of action as well as defining the general objectives for the executive management and supervising their achievements. Component Three (Control Environment) The Board of Directors undertakes responsibility to adopt a general framework for internal control in order to achieve the following: • Effectiveness and efficiency of operations. • Credibility of financial reports. • Adherence to laws and regulations in force. The Board hereby affirms the existence of a general framework for internal control that enables it to follow up on its tasks and take whatever measures are necessary within the following framework: 1.Internal Audit: The Bank realizes that having an effective internal audit department would fundamentally enhance the internal control systems and the general framework for managing risks related to the Bank’s various activities. The internal audit administration performs its tasks within the following specifics: a. Preparing the Internal Audit Charter and sanctioning it by the Board of Directors. The charter details the functions of the audit administration including its responsibilities, authorities, and work methodology. b. Preparing internal auditing procedures that conform to the new organization of the Bank. c. Ensuring the preparation of an annual audit plan to be approved by the Audit Committee. The plan should cover most of the Bank’s activities as well as organizational units based on risks associated with its activities. d. Preparing an annual report about the adequacy of internal control and audit systems in order to eliminate risks and provide suitable recommendations to remove weaknesses. e. Ensuring the recruitment and appointment of employees possessing high academic qualifications and appropriate practical experience to audit all activities and operations. This process should include qualified staff to assess data security and IT risks. f. Following up on violations and remarks stated in the reports of supervisory agencies and the external auditor; ensuring that they are addressed and that the executive management has adequate controls to ensure such violations are not repeated. g. Ensuring that necessary procedures are in place to receive, process, and keep customer complaints as well as remarks related to the accounting system, internal control, and audit processes. Periodic reports concerning these matters have to be submitted. 149 3.Risk Management: The management of Bank of Jordan paid special attention to Basel III requirements as a framework to reinforce and enhance the Bank’s capability to upgrade the control environment and challenge various types of risks. To implement these requirements, practical steps were taken such as establishing administrations in the Bank specialized in managing different risks (credit, operations, and market) and manning them with qualified staff and systems. The Bank has also worked on enhancing credit risk management practices through setting up specialized departments (including Corporate Credit Review Department, SME Credit Review Department, Retail Credit Review Department, Credit Review Department for branches in Palestine, and Credit Portfolios Risk department). Furthermore, the Bank has updated and developed policies and procedures related to risk management aimed at ensuring credit quality. In addition, the Bank implemented the “Reveleus System” for calculating the capital adequacy ratio. As for operational risks, the Bank has been implementing the CAREweb system since 2003 and a Risk Profile has been created for each of the Bank’s departments in addition to a database for operational errors. As for market risks, the Bank has set up a risk management unit comprised of qualified employees. The Risk Management functions in line with the following general framework: A. The Risk Management Department shall submit its reports to the Risk Management Committee on regular basis. As for daily operations, the Department shall report directly to the General Manager. B. The Risk Management undertakes the following responsibilities: -Preparing risk policies for all types of risks and sanctioning them from the Board of Directors. -Analyzing all risks including credit, market, liquidity and operational risks. -Developing methodologies for measuring and controlling all types of risks. -The Department shall recommend to the Risk Management Committee risk ceilings and related approvals. It shall also submit reports and record any exceptions from the risk management policy. -Providing the Board and the Executive Management with information about risk assessment and risk profile at the Bank. The Board regularly reviews the Bank’s qualitative and quantitative risk statistics. -Approving the means that help risk management, such as: •Self-assessment of risks and setting risk indicators. •Preparation of a historical database of the losses in terms of their sources and classification according to type of risk. •Provision of the necessary systems suitable for risk management at the Bank. C. Committees such as Credit, Assets, and Liabilities’ Management/Treasury,In performing its tasks, helps the Risk Management to implement its duties, in accordance with the authorizations defined for these committees. 150
77. Annual Reports D . Incorporating information about risk management in terms of its structure, nature of operations, and progress in the Bank’s annual report. E. Conducting stress tests regularly in order to assess the Bank’s ability to deal with risks and financial stressors. The Board plays a significant role in deciding on the assumptions and scenarios used in this simulation technique. The test results are later examined and thoroughly discussed by the board. In light of these results, the Risk Management Committee approves measures needed to manage potential risks and mitigate losses. F. Conducting Internal Capital Adequacy Assessment Process (ICAAP), which helps identify all potential risks through an effective methodology that takes into account the Bank’s strategy and capital adequacy. The methodology is regularly reviewed to ensure that the Bank keeps sufficient capital buffers to shield it against potential losses. G. Providing information about risks facing the Bank for the purposes of disclosure and publication to the public. 4.Compliance: In accordance with the Bank’s commitment with the Regulators’ requirements, the Compliance Department was established to ensure compliance with laws, ethical regulations, legislation, and standards, defined by different supervisory bodies and the Bank’s internal policies. Qualified human resources and automatic systems were provided to the Department. On the Compliance Department level, all laws and regulations regulating the Bank’s operations were gathered, and compliance awareness was spread among employees through booklets and training courses. An anti-money laundering policy was developed to comply with the instruction of Anti-Money Laundering and Terrorist Finance No. (51/2010) date 23/11/2010. An independent Financial Crime Unit responsible for carrying out financial and tax audit. The unit, to which FATCA is affiliated, Customer complaints are handled by an independent unit affiliated with the Compliance Department the Compliance Department has the following responsibilities: a. Drawing up the compliance policy as well as improving and reviewing it regularly (at least once a year) and whenever necessary. b. Applying the compliance policy at the Bank. c. Preparing an efficient methodology to ensure the Bank’s compliance with effective laws and legislation in addition to any related regulations. d. Submitting its periodic reports on its work and on the compliance of the Bank’s departments and employees to Compliance Management Committee/ Board of Directors. e. Special policies pertaining to anti money laundering and terrorism financing were drafted and implemented. Other policies related to implementing financial and tax audit, FATCA requirements, and to managing customer complaints were also formulated and implemented. Component Four (Treatment of Shareholders) Under the law, each shareholder has the right to vote during the General Assembly meetings and the right to discuss issues placed on the General Assembly’s ordinary and extraordinary agendas. Added to that, shareholders enjoy the right to suggest any other topics to be added for discussion on the General Assembly’s ordinary agenda, after obtaining the approval of a number of shareholders (representing at least 10% of stocks recorded) in the meeting. In order to foster this relationship, the Bank works on encouraging shareholders, mainly minority shareholders, to attend the annual General Assembly meetings and to vote in person or in their absence by proxy. The Board shall provide shareholders with the following: • A copy of the Annual Report mailed to their respective mailing addresses. • An invitation to the General Assembly meeting and its agenda. • All of the information and publicity items addressed to the shareholders in general. Furthermore, each shareholder has the right to get acquainted with the shareholders’ register to get to know his/her own share. The Board shall be keen on the fair distribution of profits, which should be based on the number of stocks held by each shareholder. Component Five (Transparency and Disclosure) Bank of Jordan Corporate Governance Guidelines are based on the principles of integrity, objectivity, transparency, disclosure, openness, and accountability for decisions adopted by the Bank. This stems from the Bank’s belief that disclosure offers the only means to provide transparent, accurate, comprehensive, and timely information. This helps users assess the Bank’s financial position, its achievements, activities, as well as risks facing the Bank and the risk management policies. The Bank disclosed all required information from different regulatory institution. It also published the Corporate Governess Guide to the public and the extent of the management adheres to it. In accordance with the instructions of dealing with customers fairly and transparently No. (56/2012) date 31/10/2012 the Bank established a dedicated unit to manage and address customers’ complaints. The unit was equipped with qualified human resources and automated systems and all necessary means available to accommodate and resolve complaints. This unit was administratively subordinated to the compliance department in the Bank. 5.Financial Reports The Executive Management of the Bank shall undertake the following tasks: a. Preparing financial reports according to International Accounting Standards. b. Presenting the reports to the Board members at each regular meeting. c. Publishing financial data every three months. d. Sending financial reports and full reports to the shareholders annually. 6.Code of Conduct: The Bank has a Code of Conduct that was approved by the Board and circulated to all employees. Several training courses were organized to educate the Bank’s employees on the concept of the Code. The compliance department ensures compliance with these concepts. 151 152
78. Annual Reports Disclosure and Transparency Based on the instructions of dealing with customers fairly and transparently No . (56/2012) issued by the Central Bank of Jordan on 31/10/2012, a unit was established to manage and address customer complaints. The unit was equipped with qualified human resources and automated systems to be controlled and managed administratively by the compliance department. The Bank addresses and manages customer complaints within the following principles: • Preparation of a mechanism to manage and address customer complaints that is then generalized to the whole Bank. • Preparation of a policy to deal with customers fairly and transparently that is then adopted and disseminated to the whole Bank. • The provision of different communication channels for receiving customer complaints through the following ways: - Direct call to the unit dialing (06-5692572) or a toll-free number (080 022 335). - Email complainthandling@bankofjordan.com.jo - Fax to 06-5600918. - Telephone complaints allotted to the Bank’s branches in times of official business. - Personal visit to the General Administration Building. - Call Center for complaints made after official hours. • Adoption of Service Level Agreement (SLA) and escalation procedures in the event of delay to respond to customer complaints from Disclosure and Transparency various units of the Bank in order to meet customer requirements within the specied time frame. • Study and evaluation of customer complaints to find out actual facts of these complaints and concentration, classification and impact. • Provision of the Board of Directors and senior management with periodic disclosures including a summary of complaints by the degree of risk concentration and classified according to the degree of risk and the actions taken to reduce their recurrence in the future. • Provision of Central Bank of Jordan with the statistics periodically (quarterly) of complaints received by the unit. Following is the statistical report of the complaints that were received from customers in 2017 through various channels distributed according to Electronic Services, (Interest Rates, commissions, and fees), Professional Conduct, (Credit Cards and Remittances), and (Contracts, Terms and Conditions). Electronic Services Interest Rates, commissions, and fees Professional Conduct Credit Cards and Remittances Contracts, Terms and Conditions Total 86 45 431 81 385 1,028 These complaints were resolved within the following framework: • Complaints were given a reference number which was also provided to customers with the aim of follow-up. • Complaints were studied, analyzed and responded to within the time frame specified by the degree and nature of complaints classification. • Recommendation of the following proposed actions to reduce the recurrence of such complaints in the future: - Modify work procedures, if necessary. - Taking disciplinary measures against underperforming employees. - Rehabilitation and training of staff on working procedures, products, communication skills with customers, etc. - Development of the Bank’s various sites to receive customers and improve the service provided to them. 153 154
79. Annual Reports Addresses of Bank of Jordan Branches Jordan Branch Network Head Office – Al Shmeisani Website: www.bankofjordan.com Tel.: 5696277 Fax: 5696291 P.O.Box 2140 Amman 11181 Jordan Abu Alanda Branch Tel.: 4164204 Fax: 4162697 P.O.Box 2140 Amman 11181 Jordan Al Bayader Branch Amman Area Al Shmeisani - Main Branch Industrial Area – Al Bayader Branch Amman – Downtown Branch Sweileh Branch Commercial Market Branch Al Fuheis Branch Al Mahatta Branch Abu Nusair Branch Yarmouk St./Al Nasser Branch Jabal Al Nuzha Branch First Circle Branch Wadi Al Seer Branch Third Circle Branch Ras Al Ain Branch Al Khalidi Branch Al Yasmine Branch Jabal Al Hussein Branch Marj Al Hamam Branch Gardens Branch Sweifieh Branch Al Madina Al Monawara St. Branch Al Wehdat Branch Jabal Al Weibdeh Branch Mecca St. Branch Tareq Branch Khalda Branch Marka Branch Al Jubaiha Branch Al Qweismeh Branch University of Jordan Branch Tel.: 5696329 Fax: 5696092 P.O.Box 2140 Amman 11181 Jordan Tel.: 4624348 Fax: 4657431 P.O.Box 2140 Amman 11181 Jordan Tel.: 4617003 Fax: 4624498 P.O.Box 2140 Amman 11181 Jordan Addresses of Bank of Jordan Branch Network Tel.: 4655707 Fax: 4651728 P.O.Box 2140 Amman 11181 Jordan Tel.: 4910037 Fax: 4910038 P.O.Box 2140 Amman 11181 Jordan Tel.: 4625131 Fax: 4653914 P.O.Box 2140 Amman 11181 Jordan Tel.: 4616528 Fax: 4656632 P.O.Box 2140 Amman 11181 Jordan Tel.: 4680025/7 Fax: 4680028 P.O.Box 2140 Amman 11181 Jordan Tel.: 4656004 Fax: 4653403 P.O.Box 2140 Amman 11181 Jordan Tel.: 5688391/2 Fax: 5688416 P.O.Box 2140 Amman 11181 Jordan Tel.: 5513953 Fax: 5514938 P.O.Box 2140 Amman 11181 Jordan Tel.: 4646980 Fax: 4615605 P.O.Box 2140 Amman 11181 Jordan Tel.: 5053898 Fax: 5053908 P.O.Box 2140 Amman 11181 Jordan Tel.: 4893581/2 Fax: 4894341 P.O.Box 2140 Amman 11181 Jordan Tel.: 4778626 Fax: 4745301 P.O.Box 2140 Amman 11181 Jordan 155 Tel.: 5852009 Fax: 5815391 P.O.Box 2140 Amman 11181 Jordan Tel.: 5861057 Fax: 5813642 P.O.Box 2140 Amman 11181 Jordan Tel.: 5349823 Fax: 5342318 P.O.Box 2140 Amman 11181 Jordan Tel.: 4720832 Fax: 4720831 P.O.Box 2140 Amman 11181 Jordan Tel.: 5237481 Fax: 5249080 P.O.Box 2140 Amman 11181 Jordan Tel.: 4645933 Fax: 4645934 P.O.Box 2140 Amman 11181 Jordan Tel.: 5814255 Fax: 5816552 P.O.Box 2140 Amman 11181 Jordan Tel.: 4748314 Fax: 4786311 P.O.Box 2140 Amman 11181 Jordan Tel.: 4392693 Fax: 4391242 P.O.Box 2140 Amman 11181 Jordan Tel.: 5713568 Fax: 5713569 P.O.Box 2140 Amman 11181 Jordan Tel.: 5861235/6 Fax: 5861237 P.O.Box 2140 Amman 11181 Jordan Tel.: 4780281 Fax 4778982 P.O.Box 2140 Amman 11181 Jordan Tel.: 5826647/38 Fax: 5826649 P.O.Box 2140 Amman 11181 Jordan Tel.: 5534367 Fax: 5534593 P.O.Box 2140 Amman 11181 Jordan Tel.: 5357189 Fax: 5354739 P.O.Box 2140 Amman 11181 Jordan Tel.: 5355975 Fax: 5355974 P.O.Box 2140 Amman 11181 Jordan 156
80. Annual Reports City Mall Branch New Zarqa Branch Tel .: 05-3862581 Fax: 05-3862583 P.O.Box 2140 Amman 11181 Jordan Tel.: 02-6420039 Fax: 02-6420841 P.O.Box 2140 Amman 11181 Jordan Ajlun Branch Nablus Branch Al Rabieh Branch Zarqa Free Zone Branch Kufranjah Branch Jenin Branch Abdoun Branch Al Rusaifa Branch Jerash Branch Al-Rawnaq Branch Airport Branch Al Mafraq Branch Hurrieh St. Mogablain Branch Geezah Branch North Shuneh Branch Tel.: 5823512 Fax 5857684 P.O.Box 2140 Amman 11181 Jordan Tel.: 5523195 Fax: 5521653 P.O.Box 2140 Amman 11181 Jordan Tel.: 5929860 Fax: 5929872 P.O.Box 2140 Amman 11181 Jordan Tel.: 5829503 Fax: 5829042 P.O.Box 2140 Amman 11181 Jordan Tel.: 4203178 Fax: 4203376 P.O.Box 2140 Amman 11181 Jordan Sport City Branch Tel.: 5159214 Fax: 5159304 P.O.Box 2140 Amman 11181 Jordan Taj Mall Branch Tel.: 5930241 Fax: 5930517 P.O.Box 2140 Amman 11181 Jordan Tel.: 05-3826193 Fax: 05-3826194 P.O.Box 2140 Amman 11181 Jordan Tel.: 05-3746923 Fax: 05-3746913 P.O.Box 2140 Amman 11181 Jordan Tel.: 4451155 Fax: 4451156 P.O.Box 2140 Amman 11181 Jordan Tel.: 4460179 Fax: 4460133 P.O.Box 2140 Amman 11181 Jordan Madaba Branch Tel.: 05-3244081 Fax: 05-3244723 P.O.Box 2140 Amman 11181 Jordan Tel.: 05-3744038 Fax: 05-3744029 P.O.Box 2140 Amman 11181 Jordan Durret Khalda Branch Tel.: 5510825 Fax: 5510948 P.O.Box 2140 Amman 11181 Jordan Irbid Branch Tel.: 02-7242347 Fax: 02-7276760 P.O.Box 2140 Amman 11181 Jordan Al Madina Al Monawara /Tla’a Al Ali Branch Al Hussun St. Branch Sahab Branch Eidoun St. Branch Tel.: 5513208 Fax: 5513029 P.O.Box 2140 Amman 11181 Jordan Tel.: 4025694 Fax: 4025693 P.O.Box 2140 Amman 11181 Jordan Abdali Mall Branch Tel.: 4011420 Fax: 4011425 P.O.Box 2140 Amman 11181 Jordan Um Uthaina Branch Tel.: 5505450 Fax: 5560258 P.O.Box 2140 Amman 11181 Jordan Tel.: 02-7279066 Fax: 02-7270496 P.O.Box 2140 Amman 11181 Jordan Tel.: 02-7276403 Fax: 02-7276504 P.O.Box 2140 Amman 11181 Jordan Thirty St. Branch Tel.: 02-7246636 Fax: 02-7248772 P.O.Box 2140 Amman 11181 Jordan Hakama St. Branch Tel.: 02-7400018 Fax: 02-7406375 P.O.Box 2140 Amman 11181 Jordan Deir Abi Saeed Branch Central Jordan Salt Branch Tel.: 05-3554901 Fax: 05-3554902 P.O.Box 2140 Amman 11181 Jordan Hassan Industrial City Branch Tel.: 06-5609200 Fax: 02-7395445 P.O.Box 2140 Amman 11181 Jorda Ramtha Branch Faisal St. Branch – Zarqa Al Turrah Branch Tel.: 05-3936725 Fax: 05-3936728 P.O.Box 2140 Amman 11181 Jordan 157 Tel.: 02-7383706 Fax: 02-7381388 P.O.Box 2140 Amman 11181 Jordan Tel.: +970 42505233 Qabatiya Branch Tel.: 02-6233317 Fax: 02-6233316 P.O.Box 2140 Amman 11181 Jordan Tel.: +970 42512482 Gaza Branch Tel.: 02-6587177 Fax: 02-6587377 P.O.Box 2140 Amman 11181 Jordan North Azraq Branch Tel.: 05-3834308 Fax: 05-3834307 P.O.Box 2140 Amman 11181 Jordan Tel.: +970 82865281 Al-Naser Branch Tel.: +970 82857230 Hebron Branch Tel.: +970 22224351 Al Ram Branch South Jordan Tel.: +970 22343840 Tel.: 03-2351043 Fax: 03-2353451 P.O.Box 2140 Amman 11181 Jordan Al Eizaryah Branch Tel.: +970 22790243 Ma’an Branch Tel.: 03-2132090 Fax: 03-2131855 P.O.Box 2140 Amman 11181 Jordan Tel.: 03-2013118 Fax: 03-2014733 P.O.Box 2140 Amman 11181 Jordan Tulkarm Branch Tel.: +970 92687882 Bethlehem Branch Exchange Offices King Hussein Bridge – Arrivals Office Tel.: 05-3581146 Fax: 05-3581147 King Hussein Bridge – Departures Office Tel.: 05-3539138 Fax: 05-3581147 King Hussein Bridge - Arab Departures Office Tel.: 05-5609200 Regional Management Ramallah Branch Tel.: +970 22411475 Fax: +970 42505231 P.O. Box 183 Fax: +970 42512483 P.O. Box 183 Fax: +970 82824341 P.O. Box 528 Fax: +970 82859258 P.O. Box 528 Fax: +970 22224350 P.O. Box 494 Fax: +970 22343842 P.O. Box 1328 Fax: +970 22790245 P.O. Box 148 Tel.: +970 22749938 Rafidia Branch Tel.: +970 92343647 Al Eersal Branch Tel.: +970 22976315 Fax: +970 22963788 P.O. Box 1484 Fax: +970 92687884 P.O. Box 18 Fax: +970 22749941 P.O. Box 207 Fax: +970 92343747 P.O. Box 107 Fax: +970 22976320 P.O. Box 1328 Fax: 05-3581147 Palestine Branch Network Tel.: +970 22411466 Fax: +970 42505402 P.O. Box 183 Industrial Area Branch/ Ramallah Tel.: +970 22963785 Aqaba Branch Tel.: 02-6521351 Fax: 02-6521350 P.O.Box 2140 Amman 11181 Jordan Zarqa Branch Tel.: 05-3985091 Fax: 05-3984741 P.O.Box 2140 Amman 11181 Jordan Tel.: 02-6351453 Fax: 02-6351433 P.O.Box 2140 Amman 11181 Jordan Kerak Branch North Jordan Tel.: +970 42505403 Fax: +970 92381126 P.O. Box 107 Jenin Municipality Office Jabal Shamali Branch North Hashmi Branch Tel.: 5051398 Fax: 5051648 P.O.Box 2140 Amman 11181 Jordan Tel.: 02-6454973 Fax: 02-6454053 P.O.Box 2140 Amman 11181 Jordan Tel.: +970 92381120/5 Fax: +970 22952705 P.O. Box 1328 Bahrain Branch Bahrain Financial Harbour/ West Tower Tel.: +973 17503051 Fax: +973 17503030 P.O. Box 20705 Manama Bahrain Fax: +970 22958684 P.O. Box 1829 Tel.: 02-7360011 Fax: 02-7360200 P.O.Box 2140 Amman 11181 Jordan 158
81. 159 Compliance Dept . Credit Portfolios Risk Dept. Credit Remedial Dept. Insurance Unit Corporate Credit Review Dept. Foreign Branches Credit Review Dept. Commercial Credit Review Dept. Retail Credit Review Dept. AGM / Chief Risk Officer Market & Operational Risk Dept. General Manager Jordan Leasing Co. General Manager Excel for Financial Investment General Manager Bank of Jordan / Syria Compliance Committee Risk Management Committee Credit Review Management CEO - Jordan Leasing Co. Chairman - Excel for Financial Investment Chairman Bank of Jordan / Syria Board of Directors Jordan Leasing Co. Board of Directors Excel for Financial Investment Board of Directors Bank of Jordan / Syria Organizational Structure / Bank of Jordan - Head Office Chief Executive Officer/ Bank of JordanBahrain Branch Foreign Branching Leasing Dept. Planning & Research Dept. Legal Dept. Human Resources Dept. Head Quarter Committees General Manager Chairman Financial Control Dept. General Secretary Regional Management for Palestine Branches Internal Audit Dept. Audit Committee Branches Support Dept. Central Operations Management Administration & Procurement Dept. Engineering Services Dept. Real Estate Dept. Centralized Clearing Cheques & Filing Dept. Programs Development Unit Input / Output Processing Unit Project Management Dept. Credit Cards Processing Dept. (Corporate & Commercial) Credit Processing Administration dept. Central Loans Processing Dept. (Retail) Central Deposit Processing Dept. IT Dept. Central Trade Services Dept. Organization Dept. Information Technology Governance Committee Collection Dept. Retail Banking Dept. Sales & Services Branches Retail Banking Management Market Studies Unit Financial Institutions Unit Commercial Business Development Centers Commercial Business Development Dept. Securities Services Dept. Treasury & Investment Dept. Corporate Business Development Dept. Business Sector Nominations and Remunerations Committee Legal Consultant Strategies & Corporate Governance Committee AGM / Chief Operating Officer Executive Committee Central Remittances & Back Office Treasury Board of Directors Annual Reports 160
82. Annual Reports 161 162