"It was the [central bank's] view that we do not broaden our dividend distribution, but rather concentrate on building up a strong capital base and maintain a 14 per cent capital adequacy ratio for Jordan branches as a kind of safeguard," the chairman indicated.
He mentioned several past and present challenges in the Iraqi market such as liquidity shortage due the security situation, government decisions and the halt to opening letters of credit, but he still stressed that the country remained promising with big opportunities, especially in the south of the country where the volume of different investments is very large and where many companies from various countries are operating.
Noting that Capital Bank was the only Jordanian bank that owns a local bank in Iraq, Salem pointed to companies operating in the oil and gas sector in south Iraq as examples of such opportunities.
He also pointed to the relationship that was established with Citibank through NBI, noting that when the transfer business started with it two years ago, the amount was $3 million but last month exceeded $50 million.
The chairman noted that Capital Bank, whose workforce comprises 557 employees, was taking all the necessary precautions to protect its interests and keep risks to a minimum, indicating that it focuses mainly on transfers, letters of credit, and letters of guarantee, and on working with major corporations, and international banks, such as Citibank.
The bank also supervises a number of investment projects, he remarked.
"Iraq is going through a transitory period that will pass away, and this investment will bring forth its aspired yield," the chairman said.
Salem added that Capital Bank will continue to build a base in Iraq through NBI and its branches in Basra, Um Qasr, Najaf, Karbala, Baghdad, Al Mansour, Erbil and Al Suleiymaniyeh, and through focusing on building a solid base of clientele.
He responded to shareholders' questions indicating that Dunes Club was expropriated as a result of around JD5 million lawsuit and that the home of Hussein Kubbah, a former chairman of Capital Bank who was ousted for misconduct after six months in the position, was also expropriated.
The chairman said that Kubbah's indebtedness at a certain stage about JD35 million, JD11 million of which was not covered with guarantees.
Noting that the bank was able to place a lien on a factory owned by Kubbah, Salem expected this issue to be settled before the end of this year.
According to the notes attached to the bank's financial statements as of December 31, 2014, the balance of assets under the bank's possession in settlement of overdue loans amounted to JD64.5 million. Other impounded real estate was valued at JD16.1 million.
In the 2014 annual report, Salem wrote in a foreword that the rate of non-performing loans to the total portfolio of credit facilities dropped to 5.8 per cent from 6.7 per cent at the end of 2013.
However, at the end of the first quarter of this year, the rate rises again to 6.1 per cent, or JD54.7 million after deducting suspended interest.
The balance sheet at the end of March 2015 shows non-performing loans at JD81.4 million, 8.7 per cent of total direct credit facilities, before deducting suspended interest.
Net credit facilities amounted to JD870.2 million on March 31, 2015 compared to JD794.4 million at the end of March 2014.
A breakdown of the lending, before deducting suspended interest and an impairment provision related to direct credit facilities, indicated that JD110.9 were credits to government and public sector, JD525.4 million to corporations, JD116.8 million to individuals (retail), JD55.2 million to small- and medium-sized enterprises, and JD128.8 million were classified as real estate loans.
By type of credit, real estate and construction accounted for JD210.9 million, trade JD125 million and industry JD116 million.
Total liabilities at the end of this year's first quarter stood at JD1.7 billion, JD1.2 billion of which were customer deposits.
Time deposits totaled JD760.9 million, savings JD60.5 million, JD374 million current accounts, and JD52.1 million were certificates of deposit.
Non-interest bearing deposits amounted to JD284.9 million or 22.8 per cent of the total, down from JD403 million or 32.7 per cent at the end of 2014.
The deposits of the Jordanian government and public sector came at JD84.4 million or 6.8 per cent of total deposits.
The chairman indicated in the foreword that last year's net profit before tax reached JD50.1 million, compared to JD48.7 million in 2013.
Net profit after tax came at JD36.3 million, down from JD37 million.
During the general assembly meeting, attended by eight board members out of 11 and 111 shareholders out of 2,218, Omar Akram Emran Al Bitar and Reem Haitham Jamil Qussous joined the board of directors after the number was expanded to 13 members.
© Jordan Times 2015