Jordan Ahli Bank targets retail, smaller

Jordan's third-largest lender, Ahli Bank, is targeting retail customers and smaller businesses in an effort to boost profits, saying their profits are higher and the investment risk is lower than for larger companies.

The bank's chief executive, Marwan Awad, said a wholly owned unit had been set up with a 20 million dinar capital ($28 million) to provide financial leasing to the country's retail and small and medium sized enterprises (SMEs) to boost their share of the bank's 1.5 billion dinar ($2.1 billion) lending portfolio.

"Within the next three years we will see retail and SMEs forming at least 60 percent of our lending portfolio from a current 50 percent," Awad told Reuters.

Currently Jordan Ahli Bank is primarily focused on top tier corporates.

"We are pushing towards retail and small and medium sized firms. This is what you can depend on because its diversified and their risks are less and their profits higher," Awad said.

"Corporates usually have a higher negotiating power and they tend to impose tighter conditions on banks," Awad added.

Despite tougher market conditions, the bank targeted a better performance in 2010 that consolidates last year's steady growth in deposits, loans, assets and profits, Awad said.

Net profits rose by 7.5 per cent to 18.65 million dinars in 2009 while assets stood at 2.256 billion at end of 2009, a 7 percent increase from the previous year.

"We hope this year to keep the same pace of growth and even better. Q1 results were in the same positive trend," Awad said.

But it was too early to tell whether the Jordanian banking sector as a whole was showing signs of recovery, Awad said.

"The indicators from the start of the year and in Q1 were better than last year and we hope this will continue but we need to look at the Q2. There is still uncertainty," said Awad, who is also head of the Association of Jordanian Banks.

Most Jordanian banks are making higher provisions to cover possible defaults and non-performing loans by businesses and real estate firms reeling from the impact of the global downturn on its aid-dependent economy.

Awad said the bank was focused now on expanding its local presence where the bulk of its 60 branches exist.

The bank is owned by some of the country's leading business groups and financial institutions, including the influential Muasher family who have extensive business interests.