Jordan's Housing Bank profits lower, ups provisions

PROFITS HALVED: Jordan's Housing Bank for Trade and Finance sees H1 net profit impacted by higher provisions. (Getty Images)

Jordan's Housing Bank for Trade and Finance's first-half net profit has more than halved on lower margins, weaker investment returns and increased provisions.

Net profit fell 57 percent from a year earlier to 29.2 million dinars ($41.2 million), as the country's second-largest lender was hit by the global financial crisis, unaudited results obtained by Reuters showed on Tuesday.

The financial statements, which still need approval from the Central Bank of Jordan, also showed the bank had put aside 31.64 million dinars as of June 30 in provisions for non-performing loans.

The bank's total assets rose 2.3 percent to 5.553 billion dinars ($7.8 billion) at the end of June 2009 against 5.43 billion dinars at end of 2008.

Housing Bank's total voluntary provisions now stand at 68 million dinars ($95 million), the income statement showed.

The bank's cash reserves fell to 310.7 million dinars at the end of June from 369.94 million dinars six months earlier.

Industry analysts say the hefty provisions, by far the largest by a Jordanian bank so far, are to cover non-performing loans by businesses and real-estate firms reeling from the impact of the global downturn on the aid-dependent economy.

The income statement showed the bank, which posted 68.251 million dinars net profits in the first six months of last year, had set aside just 810,460 dinars in provisions for direct credit facilities in the first half of 2008.

After provisions, Housing Bank's total outstanding loan portfolio, which includes credit to government bodies, fell to 2.336 billion dinars from 2.341 billion dinars at end-2008.

Outstanding real estate loans stood at 486 million dinars, up from 462 million dinars.

Reflecting cautious lending by most Jordanian banks, the financial statements showed direct credit facilities rose just 26.4 million dinars in the first half, compared with 236 million dinars in the year-earlier period.

Housing Bank is one of the few Jordanian banks active in global financial markets in an otherwise family dominated banking scene that was shielded by modest risk profiles from exposure to Western markets through offering relatively plain products.

The bank has a presence in Syria, the Palestinian territories and Algeria, where it has a joint venture bank, and a branch in Bahrain. It also has representative offices in Iraq, Libya and the UAE.

Housing Bank's main shareholders are Qatar National Bank with over 35 percent followed by Libya's Foreign Bank with a 15 percent shareholding and Kuwait's Real Estate Investment Consortium with over 10 percent.

Jordan's state pension fund also has a 15.4 percent shareholding.

Gulf Arab investors along with Jordanian businessmen own the remaining shares of the bank, which has the largest branch network in the country. (Reuters)

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