Net profit at Jordan's Arab Bank fell 31.4 percent in 2009, it reported on Tuesday, after bad debts ballooned in the wake of the global financial crisis.

Jordan's largest lender said its net profit last year fell to $575.5 million as it set aside $204 million in provisions for non-performing loans, up from $40.4 million in 2008.

Most Jordanian banks have made higher provisions to cover for possible defaults and non-performing loans by businesses and real-estate firms hit by the global downturn. 

Arab Bank said last June that it was exposed to troubled Saudi Arabian groups Saad and Al Gosaibi but that it would not affect its overall financial position.

Arab Bank is one of the few Jordanian banks active in global financial markets. Most banks in the family-dominated banking sector have limited exposure to Western markets thanks to their modest risk profiles and their range of simpler financial products.   

Bankers said while the credit provisions weighed on profits, Arab Bank was cushioned by a capital base with $8 billion of shareholders equity.

The firm is one of the Arab world's largest privately owned banks, with nearly 20 percent owned by the family of Lebanon's former prime minister, Rafik Al-Hariri, who was assassinated in 2005, and a similar size stake held by Jordan's social pension fund. The rest is mainly held by long-term investors.

The assets of Arab Bank, which includes Arab Bank Switzerland based in Zurich, rose to $50.6 billion at the end of 2009 from $45.6 billion a year earlier.   

Cash and balances with central banks rose to $11.73 billion at the end of 2009 from $7.842 billion a year ago, the statement showed.

Bankers said Arab Bank and other financial institutions in the region will continue to book provisions to cover defaults, though not at the same high levels.

The bank's total outstanding loan portfolio fell to $22.02 billion at the end of 2009 from $22.5 billion a year ago.   

Customer deposits rose to $31.47 billion from $28.58 billion a year ago. Banks and financial institutions' deposits rose to $5.79 billion from $4.74 billion.

The bank, whose geographic diversification has helped it weather turmoil in the past, saw its net revenue drop to $1.774 billion in 2009 from $1.866 billion the previous year. Arab Bank owns 40 percent of Saudi Arabia's Arab National Bank (ANB). -Reuters