CBJ: 90% of Companies Can Take Financial Shock, Real Estate Most Affected by Interest Hikes

AMMAN —AlGhad— Analysis of the corporate and business sector records at the Central Bank of Jordan (CBJ) indicates that 90 per cent of the sector can actually withstand shocks caused by increase in interest rates or declined profitability.

However, data also indicates that the real estate sector will take the biggest hit if CBJ pushes interest hikes at this point.

The Central Bank’s report shows that service and industrial businesses have succeeded in maintaining and retaining profitability despite the economic and political situation.

Credit facilitated to the real estate sector, nonetheless, comprised nearly 33.3 per cent of total credit facilitated in 2016, down from 35.6 per cent in 2015.

On the other hand, credit facilitated to the retail sector, for residential and commercial real estate purposes, has increased to JOD4.96 billion in 2016, from JOD4.53 billion in 2015. It comprised 21.8 per cent of total credit facilitated by banks in Jordan, up nearly 9.6 per cent, compared to 2015.

The capital adequacy for the banking sector in Jordan will decline over the next two years, from an estimated 17.9 per cent in 2017, to 16.8 and 15.3 per cent in 2018 and 2019, respectively.

Nevertheless, it will remain above the minimum requirement of 12 per cent, which is already 1.5 per cent higher than the Basel Committee on Banking’s 10.5 per cent.

The sector’s operational efficiency has increased on the average to 55 per cent in 2016, compared to 50.6 per cent in 2015.

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