Arab Bank held its general assembly meeting online on March 28th, 2024. The meeting was headed by Mr. Sabih Masri, Arab Bank’s Chairman in the presence of the board of directors, the Chief Executive Officer, and shareholders (in attendance and by proxy), which make up 78.17% of the bank’s capital. Dr. Wael Armouti, the Companies’ Controller had also attended the meeting along with representatives from the Central Bank of Jordan.
During the meeting, the recommendation by the Board of Directors to distribute a cash dividend of 30% for the year 2023 and all articles on the agenda were endorsed.
Mr. Masri, Chairman of the Board of Directors, highlighted that the global economy faced further challenges and pressures in 2023, leading to a slowdown in growth rates in most regions of the world. The tight monetary policy approach that began in 2022 to combat the highest inflationary wave in four decades persisted this year, deepening its negative impact across most economic sectors. However, this impact was relatively mitigated by strong consumption spending, especially in the United States. Additionally, the global economy experienced declines in trade, investment, and credit demand. Conversely, global inflation rates declined due to falling fuel and food prices, improved supply chains, and rising interest rates. Meanwhile, geopolitical tensions deepened in 2023, further pressuring the economies of the world and the region.
Mr. Masri noted that the non-oil sector across oil-exporting Arab countries continued its strong growth momentum, supported by economic reform programs and high government spending. As for oil-importing Arab countries, he highlighted that there was a tangible improvement in their current account deficit, supported by a decrease in the trade deficit, strong flows of tourism revenues and remittances from expatriate workers.
Mr. Masri further added that during 2023, many banks in the region continued their flexible policies towards their customers, especially those related to the rise in interest rates, in order to support individuals and corporates in facing the unfavorable circumstances resulting from economic developments. Banks did not fully pass on the sharp increase in interest rates to customers, thus also contributing to maintaining the quality of their credit portfolios. The Arab banking sector, generally, was able to maintain high levels of capital adequacy, liquidity, profitability, and rely on a broad and stable funding base, alongside adopting wise credit policies that enabled them to mitigate the negative repercussions of economic challenges and prepare to capitalize on available growth opportunities. Additionally, the banking sector witnessed an increase in the adoption of digital and Fintech solutions throughout the year, which are continuously gaining significance among various customer bases, especially the youth.
Mr. Masri also reaffirmed that despite the challenges that the world and the region witnessed in 2023, Arab Bank continued to achieve positive results and strong performance driven by its presence across the different markets, especially in the GCC region, as net profit improved by 34% to reach $1.81 billion. The Bank's strong underlying performance reflects the successful execution of its strategy which focuses on delivering sustainable growth and building a resilient business model capable of dealing with the regional and international challenges. This reinforces the Group’s leading position and its ability to move forward in line with its shareholders’ expectations and the needs of its customers.
He also noted that Arab Bank continued to leverage its extensive expertise in regional markets and its globally and regionally extended network, supported by an advanced system of services and digital channels, to provide integrated banking and financing solutions to its customers, including corporates, institutions, and individuals across various sectors and segments. Additionally, the Bank took part in financing infrastructure projects, vital initiatives, and intra-regional trade in a manner that reflects its active contribution to driving sustainable economic development locally and regionally.
Mr. Masri added that throughout the year, Arab Bank continued to enhance its community investments through its responsibility towards the communities in which it operates, by providing support in various forms to purposeful community initiatives and activities as part of its CSR and sustainability program, "Together". The Bank's contributions in this regard included areas such as health, poverty alleviation, education, environmental protection, orphan support, and women empowerment. This is in addition to the vital role played by the Abdul Hameed Shoman Foundation, Arab Bank’s social and cultural responsibility arm, in the fields of scientific research, cultural enlightenment, innovation, and encouraging reading. Furthermore, the year witnessed Arab Bank’s adoption of its Environmental, Social, and Governance (“ESG”) strategy, which outlines a detailed approach for managing these issues and integrating them into the Bank's business model.
He also noted that as part of Arab Bank’s expansion strategy, and in line with its continuous efforts to expand its footprint in promising markets, the Bank is in the process of launching its operations in the Iraqi market during the year 2024, providing comprehensive banking solutions and services to its current and future customers. And in line with the group’s focus on expanding its wealth management and private banking business, during 2023, Arab Bank Switzerland acquired the majority stake in Swiss bank "Gonet & Cie SA". The new banking group will be a major actor in the Swiss wealth management industry.
In the period ahead, Mr. Masri confirmed that the Bank will continue to build upon the achievements of the past nine decades, grounded in its strong institutional approach, prudent banking policies, and an extensive interconnected banking network, prioritizing the interests of its customer, shareholders, and the communities in which it operates.
Mr. Masri concluded by thanking the Central Bank of Jordan for its pivotal role in sustaining the resilience and stability of the Jordanian banking system under all circumstances.
Ms. Randa Sadik, CEO of Arab Bank, stated that Arab Bank Group closed 2023 reporting a net income after tax of US$829.6 million as compared to US$544.3 million in 2022 with an increase of 52%. The Group also maintained its solid financial position with Group equity of $11.4 billion, and an increased net profit of 34% to reach US$1.81 billion.
By the end of 2023, the Group’s total assets grew by 6% to reach US$68.3 billion, and loans increased by 5% to reach US$37.1 billion, compared to US$ 35.4 billion last year. The Group’s deposits also witnessed 6% growth, reaching $50.6 billion compared to US$ 47.7 billion last year.
She highlighted that Arab Bank delivered robust results during 2023 where the Bank’s net operating profit grew, driven by increase in core banking income across various sectors and markets in the region with a clear focus on enhancing non-interest income contribution and revenue diversification. The Group’s liquidity and asset quality remain solid where the loan-to-deposit ratio stood at 73.2% and credit provisions held against non-performing loans continue to exceed 100%. Arab Bank Group maintains a strong capital base that is predominantly composed of common equity with a capital adequacy ratio of 17.5%, which is higher than the minimum required by the Central Bank of Jordan according to Basel III regulations.
Ms. Sadik also noted that Arab Bank remained committed to sustainability and its Environmental, Social and Governance (“ESG”) priorities, successfully issuing $250 million in sustainable Additional Tier 1 (AT1) Capital Securities. The issuance marks the first and largest sustainable perpetual AT1 issue in Jordan and was listed on the International Securities Market (ISM) and the Sustainable Bond Market of the London Stock Exchange.
With regard to Arab Bank's digital transformation efforts, Ms. Sadik concluded by reaffirming the bank’s commitment to providing value for its customers through the establishment of "Acabes International Pvt Ltd", Arab Bank’s technology arm, as a global capability center, supporting the bank’s businesses worldwide and providing a seamless digital experience to customers.
