jordan pulse -
Issam Qadmani
Jordanian banks have announced their profits for the first quarter of this year, and except for limited cases, this year’s profits exceed last year’s by a margin of around 20%.
In the previous period, banks raised the interest rates they pay on deposits and loans, in response to the decision of the Central Bank of Jordan to raise interest rates, influenced by what the American Federal Reserve is doing to combat inflation.
This means that the increase in profits is due to the banks’ operations in managing the increased deposits and facilities.
The performance of banks varied; some achieved significant increases in profits, while others saw a noticeable decline.
The performance of banks is a strong indicator of the overall economic performance, as they provide us with indicators of the improvement or decline of the economic performance, not only because they finance economic activity but also because they reflect the standard of optimism and pessimism.
There is no doubt that the economic activity, which began to recover after a slowdown witnessed by the economy due to the coronavirus pandemic, has returned to decline due to the continued Israeli aggression on Gaza and the West Bank.
The economic slowdown does not have local causes, and although addressing it requires local decisions, it is due to regional circumstances and a comprehensive global crisis that began with the Russia-Ukraine war, with the world’s major economies tending to spend more on defense at the expense of economic projects.
The Jordanian banking system, headed by the Central Bank, is the beating heart of the national economy, as it provides the economy with the liquidity it demands and determines it according to its assessment of risk levels, which are high today.
Some look at bank profits with envy and demand that they reduce interest rates and tax opportunities simply because they are profitable, not knowing that bank profits indicate the activity and rise of the general sectors of the Jordanian economy, and their decline begins with the decline of this activity, and this decline harms the banks and is reflected in difficulties that force them to take provisions as a hedge against this difficulty at the expense of their profits.
Jordanian banks are wise and operate under the direct supervision of the Central Bank of Jordan, which makes them adopt sound economic and financial policies, unlike what the foreign (or local) investor does to face risks or decline in economic activity, and the easy way for them is to withdraw!.