Financial Crime World

Jordan’s Banking Sector Stays Resilient Amid Global Headwinds

KPMG Report Highlights Sector’s Consolidated Financial Performance

Amman - Despite global economic challenges, Jordan’s banking sector has shown remarkable resilience in 2022, with net profits increasing by approximately 42 percent compared to the previous year, according to a report released by KPMG, a leading provider of audit, tax, and advisory services.

  • Total assets grew by 5.9 percent since December 31, 2021
  • Customer deposits increased by 7 percent
  • Rising market interest rates had a significant impact on loan duration and expected credit loss coverage ratio
  • Non-performing loans (NPLs) remained relatively stable in 2022 compared to the previous year

Sector’s Performance Amid Global Headwinds

“The beginning of 2023 presented widespread challenges for the global banking industry, but Jordan’s sector has demonstrated remarkable stability,” said Rabih Shalabi, head of Audit at KPMG in Jordan. “Macroeconomic indicators are supportive of further growth, and market participants should focus on competition based on individual strengths and closely monitor capital adequacy and liquidity positions.”

Fintech Integration and Sustainability Reporting

  • The report highlights the importance of fintech integration into traditional financial systems
  • Significant investments in technology and regulatory support required to achieve this goal
  • Some banks in Jordan have already invested in fintech entities, while others have innovated mobile applications to enhance convenience, personalization, and data-driven services
  • Jordan is committed to integrating sustainability into its banking and finance sector, driven by government initiatives and the growing need for disclosure on sustainability reporting and implementation

Sustainability Reporting: A Complex Challenge

The report notes that the main challenge for sustainability reporting is the complexity of sustainability, which includes a variety of topics that make data collection and coordination challenging. “ESG agenda in the Middle East is gaining momentum due to government initiatives and the growing need for disclosure on sustainability reporting and implementations,” said Ovais Shahab, Head of Financial Services at KPMG in Saudi Arabia and Levant. “Disruptive or progressive, innovative solutions developed by fintech will drive change everywhere.”

Conclusion

Jordan’s banking sector has shown remarkable resilience amid global headwinds, with a strong performance in 2022. The sector is expected to continue growing, driven by macroeconomic indicators and the need for fintech integration and sustainability reporting. As market participants focus on competition based on individual strengths and closely monitor capital adequacy and liquidity positions, they should also prioritize investments in technology and regulatory support to achieve these goals.