Capital Intelligence affirms Jordan Islamic Bank's ratings 

(MENAFN Press) Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Jordan Islamic Bank (JIB)s Foreign Currency Long and Short-term Ratings of BB and B respectively. These ratings are constrained by Jordans sovereign ratings. The Banks Financial Strength Rating of BBB- was also maintained reflecting its satisfactory asset quality, comfortable capital adequacy and high level of liquidity. Although profitability has slipped, returns remained acceptable. The Outlook for the ratings was Stable. JIBs support level of 3 was affirmed.

JIB continues to control the lions share of Islamic banking assets, deposits and capital within the Jordanian banking sector despite the entry of a number of GCC-based Islamic institutions in recent years. Notwithstanding the rise in JIBs problem financings, the quality of the financing portfolio remains satisfactory as evidenced by the comparatively low ratio of non-performing financing facilities together with the good coverage provided by financing-loss reserves and the investment risk fund. Nonetheless, the visibly slower economic growth in Jordan has heightened credit risks in the local market and created a challenging operating environment. The Banks liquidity position has consistently been strong, in common with other Jordanian banks, reflecting the significant level of placements with the central bank.

Profitability however declined significantly at both the net and operating profit levels, from a record high in the previous year, due to lower net profit sharing and non profit sharing income. These declines stemmed partly from a reduction in investment revenue attributed to a fall in Jordans stock market indices and lower trading volumes. JIBs performance as measured by the ROAA ratio nonetheless remained satisfactory and was similar to the Jordanian industry average. Capital adequacy continues to be comfortable and was supported by a reasonable rate of profit retention.

With total assets of JOD2.5 billion (USD3.5 billion) at end September 2010, JIB is the largest Islamic bank and a significant institution in the Jordanian banking sector. Some two-thirds of capital is held by Bahrain based Al-Baraka Banking Group (ABG). The latter is owned by Jeddah based Dallah Al-Baraka Group a diversified private business group. JIBs activities are conducted in accordance with Sharia principles and include the provision of demand and joint investment accounts in addition to financing and investment (namely Murabaha, Mudaraba, Musharaka and Ijara). The Bank operates an extensive network of 57 branches and 76 ATMs.

The information sources used to prepare the credit ratings are the rated entity and public information. Capital Intelligence had access to the accounts and other relevant internal documents of the issuer for the purpose of the rating and considers the quality of information available on the issuer to be satisfactory for the purposes of assigning and maintaining credit ratings. Capital Intelligence does not audit or independently verify information received during the rating process.

The rating has been disclosed to the rated entity and released with no amendment following that disclosure. Ratings on the issuer were first released in February 1995. The ratings were last updated in November 2009.

The principal methodology used in determining the ratings is Bank Rating Methodology. The methodology and the meaning of each rating category and definition of default can be found at www.ciratings.com