Banks' consolidated balance sheet in 2020

The data published for the consolidated balance sheet of banks operating in Jordan at the end of 2020 indicate that the volume of bank assets grew by 6.4 per cent compared with 5.4 per cent at the end of 2019, bringing the balance to about JD57.04 billion dinars at the end of 2020. These developments came despite the exceptional circumstances that the Kingdom went through, as a result of the repercussions of the Corona pandemic, to reflect the volume, quality and structure of the cumulative banking activity in the Kingdom in 2020.

The increase in the volume of banks’ assets came as a result of an increase in domestic assets by 5.6 per cent to reach JD 50.7 billion on the one hand, and an increase in foreign assets by 12.6 per cent to reach the equivalent of 6.3 billion dinars at the end of 2020 compared with the end of 2019, on the other.

The increase in domestic assets in 2020 is mainly due to the increase in the debt owed to the private sector (resident) by 6 per cent and the debt to the central government by 4.9 per cent, compared with 4.4 per cent and 10.2 per cent in 2019, respectively.

The increase in bank assets is also due to a rise in reserves by 8.5 per cent at the end of 2020 compared with 11.7 per cent at the end of 2019, and an increase in the balances of the Central Bank in Jordanian dinars by 8.9 per cent at the end of 2020 compared with 11.7 per cent in 2019.

It is clear that the financing activity of banks for the public and private sectors continued to grow during the year 2020, albeit at a slower pace compared with the previous year. The ratio of the increase in the balance of bank debts to the central government was 4.9 per cent or about JD562.1 million at the end of 2020, compared with 10.2 per cent, or JD1062.9 million, in 2019. This increase brought the balance of central government debt to about JD12 billion at the end of 2020. It reflects the continued increase in the volume of bank debts to the central government through its ownership of government bonds, despite the government's tendency to borrow from global markets by issuing international bonds.

As for the balance of bank debts on the private sector (resident), it increased by 6 per cent, or the equivalent of JD1491.2 million, and this reflects the increase in credit facilities for the private sector in its various components. Most of them are due to the programs implemented by the Central Bank of Jordan through banks to support various economic sectors and meet their needs for liquidity during the closure period, bringing the balance of debts on the private sector (resident) to 26.2 billion dinars by the end of 2020.

On the liabilities side, the data indicates a growth in demand deposits by 10.2 per cent during the year 2020, compared to a decline in savings and time deposits by 0.4 per cent. The decline in the balance of savings deposits was due to the fact that citizens withdrew part of their deposits to meet their liquidity requirements during periods of closure, which is evident in the increase in the item of cash in circulation by the public by 28.3 per cent or by JD1308.4 million in 2020 compared to 2019, which is evident in the monetary survey tables.

The item of borrowing from the Central Bank grew by 84.4 per cent during 2020 to reach JD1.6 billion. With regard to banks’ capital, reserves and allowances, it increased from about JD8.2 billion at the end of 2019 to about JD8.8 billion the end of 2020. This supports the financial prudential’s of the Jordanian banking sector, and its ability to deal with various shocks and crises.