Investbank ratings

Published March 9th, 2010 - 01:06 GMT
Capital Intelligence (CI), the international credit rating agency, today announced that it
has affirmed Investbank’s Foreign Currency Long and Short-Term Ratings at BB and B
respectively. These ratings are constrained by Jordan’s sovereign ratings. CI also
maintained Investbank’s Financial Strength Rating at BB+ as well as the Support level
of 3. All the ratings carry a Stable Outlook.
Investbank is the name adopted for the former Jordan Investment and Finance Bank
following a re-branding exercise in 2008. The Bank ranks among the small to mediumsized
institutions in the Jordanian banking system by most measures. Investbank’s
better than sector average liquidity coupled with the comparatively low share of loans in
total assets underscores its relative conservatism. Although liquidity has become leaner
in recent years due to credit expansion, the Bank’s key liquidity ratios remain very
comfortable. Investbank’s capital adequacy is solid reflecting a conservative dividend
policy and a satisfactory rate of internal capital generation.
Despite the moderate increase in non-performing loans (NPLs) during the first nine
months of 2009 in the face of Jordan’s economic slowdown, the NPL to gross loans
ratio remains manageable and the Bank has the capacity to set aside additional loanloss
provisions if necessary. Net profit and returns have continued to improve in large
part due to lower provisioning. Although Jordan’s economic growth is expected to
recover moderately in 2010, credit risks in the local market have increased.
Investbank was established in 1982 and operates as a commercial bank. In 2007, and
in accordance with the corporate governance directives of the Central Bank of Jordan
and best banking practices, Investbank’s board decided to clearly identify the role of the
board versus that of executive management. The new CEO, with the support of the
board, has since embarked on a major transformation plan for the Bank which included
the implementation of a three-year strategy, a new core banking system and a full rebranding
exercise. Investbank’s focus on SMEs and retail banking has grown in
importance over the years driven by a previously buoyant domestic economy and
rising household incomes. Management is aware of the limitations posed by its small
branch network and has therefore chosen to develop a relationship-based banking
model focused on delivering enhanced customer service quality.

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