Jordan’s Financial Crime Trends 2022/2023: A Mixed Bag Amidst Global Challenges
Despite the global economy showing signs of instability, Jordan’s banking sector has demonstrated remarkable resilience in 2022, according to KPMG’s latest Banking Perspectives report. The report highlights key trends and themes that emerged in the financial services industry last year.
Strong Net Profits and Growth
Net profits in the banking sector surged by a whopping 42% in FY2022 compared to FY2021, while total assets grew by 5.9% since December 31, 2021. Customer deposits also increased by 7%, aligning with the Central Bank of Jordan’s financial inclusion programme.
Challenges Ahead
However, rising market interest rates have had an impact on loan duration and expected credit loss coverage ratio for non-performing loans (NPLs). The NPL coverage ratio has increased, but the sector remains vigilant against potential challenges.
Fintech and ESG Initiatives
The report notes that the banking industry has continued to benefit from economic expansion, with an increase in lending and a loan-to-deposit ratio of around 73% at the end of December 2022. Lending and customer deposits have also seen significant growth, up by 8% and 7%, respectively.
Fintech and Environmental, Social, and Governance (ESG) initiatives are gaining traction in Jordan’s financial sector. Banks have invested in fintech entities and mobile applications to enhance convenience, personalization, and data-driven services. The next wave of fintech innovation is expected to focus on solving major global transitions such as:
- Demographic impact
- Low carbon economy
- Emerging markets integration
- Automation
Sustainability Reporting Challenges
Jordan has also made significant strides in integrating sustainability into the banking and finance sector, with a commitment to ESG reporting and implementation. However, the report notes that the main challenge for sustainability reporting is the complexity of sustainability data collection and coordination.
Expert Insights
Commenting on the report, Rabih Shalabi, head of Audit at KPMG in Jordan, said:
“The beginning of 2023 presented widespread challenges for the global banking industry, but macroeconomic indicators are supportive of further growth. Market participants should pursue competition based on individual strengths and keep a close eye on capital adequacy and liquidity position.”
Ovais Shahab, Head of Financial Services at KPMG in Saudi Arabia and Levant, added:
“The next wave of fintech innovation will drive change everywhere, focusing on solving major global transitions.”