The Association of Banks in Jordan (ABJ) has recently released a report highlighting the significant contribution of the banking sector to the national economy. According to the report, the banking system added value of 84 per cent to the gross domestic product (GDP) in 2023, compared to 77 per cent in 2022. The report also revealed that the banking sector employed more than 25,000 people, representing 1.8 per cent of the total workforce in the country.
Banking sector performance amid COVID-19 pandemic
The report attributed the remarkable performance of the banking sector to its resilience and adaptability amid the COVID-19 pandemic, which posed unprecedented challenges to the global and local economies. The report stated that the banking sector managed to maintain its profitability, liquidity, solvency and operational efficiency despite the adverse impact of the pandemic on various economic sectors and activities.
The report also praised the proactive measures taken by the Central Bank of Jordan (CBJ) and the ABJ to support the banking sector and its clients during the pandemic. These measures included reducing the interest rates, extending the grace period and rescheduling the loans, providing concessional financing to the affected sectors, and facilitating the digital transformation and financial inclusion initiatives.
Banking sector contribution to economic development and social responsibility
The report highlighted the vital role of the banking sector in supporting the economic development and social responsibility in Jordan. The report stated that the banking sector provided more than 60 per cent of the total credit facilities to the private sector, which amounted to JD 24.7 billion by the end of 2023. The report also noted that the banking sector allocated JD 1.2 billion for green financing, JD 1.1 billion for small and medium enterprises (SMEs), and JD 700 million for microfinance.
The report also emphasized the social responsibility of the banking sector, which was reflected in its contribution to various humanitarian, educational, health, environmental and cultural initiatives. The report stated that the banking sector donated JD 35 million to the Himmat Watan Fund, which was established by the government to combat the COVID-19 pandemic. The report also mentioned that the banking sector spent JD 15 million on corporate social responsibility (CSR) programs and projects in 2023.
Banking sector outlook and challenges
The report concluded with an optimistic outlook for the banking sector in 2024, expecting it to continue its growth and development in line with the national vision and the economic recovery plan. The report also identified some of the main challenges facing the banking sector, such as the high level of public debt, the low level of economic growth, the regional instability, and the cyber security risks. The report called for enhancing the coordination and cooperation between the banking sector and the government, the CBJ, and the ABJ to overcome these challenges and to achieve the common goals of financial stability and economic prosperity.
