I am honoured to present the Group’s 39th annual report that outlines our achievements, financial results and future plans.
Operating Environment
2012 was another eventful year.With problems in the Euro zone, the turbulence in the immediate Arab region and the rise in oil prices resulted in significant uncertainties which did not help in improving the overall performance of the Jordanian economy.
As a result real GDP grew only by 2.7% in 2012, chronic budget deficit was still burdensome, sovereign debt rose to new levels and Central Bank foreign currency reserves declined.
Financial Performance
HBTF achieved better financial results in 2012. Pretax net profit grew to JD142.2 million (US$200.5 million) whereas after tax net profit grew to JD104.5 million (US$147.4 million). The Bank continued improving credit portfolio asset quality by provisioning a further JD64.8 million (US$91.4 million) against non-performing loans.
The balance sheet shows our strong and sound financial position. Total assets increased to JD7.09 billion (US$10 billion), total deposits increased to JD5.6 billion (US$7.9 billion), net credit portfolio grew to JD2.7 billion (US$3.8 billion) and total equity was JD1.05 billion (US$1.5 billion).These results were achieved despite the 28% devaluation of the Syrian Lira which affected the group's financial statements after consolidating with the International Bank for Trade and Finance (IBTF) our subsidiary in Syria.
HBTF’s performance reflected positively on the financial indicators. Capital Adequacy ratio stood at 19% (Central Bank of Jordan’s minimum requirement is 12% and BIS Tier 1 capital minimum is 8%), return on assets was 1.5%, return on equity grew to 10%, loan to deposit ratio was 56.8%, and cost to income ratio dropped to 36.1%(one of the best in Jordan’s banking sector).
HBTF’s branches in Palestine and Bahrain, and subsidiaries in Algeria and the UK achieved good results.IBTF, our Syrian subsidiary, was impacted by the events in Syria, but managed to maintain a strong financial position and adequate level of liquidity.
Representative offices in Iraq, Libya and UAE continued their marketing role which resulted in enhancing relations with banks and customers.
Five new branches were opened in 2012, bringing the number of branches to 116. HBTF has the largest branch and ATM networks in Jordan.
The Bank has the largest market share of savings accounts in local currency 42.2% and the second largest market share of total assets 15.5%, deposits 15.8% and credit facilities 12.2%.
Based on the good results achieved, the Board of Directors will recommend to the Shareholders’ Ordinary General Assembly a dividend of 25% of the nominal share value.
Governance
The Bank is committed to the principles of its Corporate Governance Convention, which are based on the Corporate Governance Guidelines issued by the Central Bank of Jordan and Jordan Securities Commission.HBTF adopts prudent risk management and internal control policies; it also implements anti-money laundering and anti-terrorism financing principles that are in line with local and international regulations.
Corporate Social Responsibility
We are proud of our social responsibility initiatives. In 2012, we supported and donated to a number of healthcare, educational, cultural, art, social, humanitarian, sport and environmental entities. We also sponsored and supported scientific and intellectual events that service and help develop local communities.
I would like to seize this opportunity to thank the Central Bank of Jordan for their support of the banking sector and Jordan Securities Commission for their role in managing the capital market.
I would also like to thank our shareholders and customers for their continuous support.Special thanks to the members of the Board and the entire Bank’s staff for their hard work and dedication, without which the Bank could not have achieved these results.
May God bless and protect Jordan under the leadership of His Majesty King Abdullah II.
