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Jordan private sector loans hit $17.4bn in May

Amman, June 30, 2010

Private loans extended by Jordan's banks reached JD12.330 billion ($17.4 billion) at end of May, up 2.4 per cent since the end of December with signs of eased credit by risk averse banks, central bank data showed on Wednesday.

Outstanding private sector loans made by the country's 23 commercial banks stood at JD12.041 billion at the end of December 2009, Central Bank of Jordan (CBJ) data obtained by Reuters showed.

They rose 5.4 per cent year-on-year at the end of May compared with JD11.697 billion in the same period last year.

Banks have become more cautious about extending new loans since last year as the global downturn's impact on the Jordanian economy continues to slow growth and domestic consumption.

But some banks have eased tight credit terms to top tier corporates after months of slow lending has begun to hurt bottom line of banks, especially those awash with idle liquidity, bankers say.

The CBJ has eased monetary policy and cut major benchmark lending rates by 250 basis points in eighteen months to help spur growth by prodding banks to extend cheaper credit.

Despite the successive rate cuts, most Jordanian banks still prefer to utilise abundant excess liquidity in financing the government's deficit even at low interest rates than increase risk profiles by raising the amount of credit available to borrowers in a depressed market, bankers say.

The well-capitalised banks had seen loan growth outpacing that of deposits during a boom period that saw years of rapid credit expansion, when the country's free-market reforms attracted billions of dollars of investments by both local and foreign investors, bankers say.

Private sector loans fell 1.5 per cent during 2009 as lending shrunk with banks risk averse, compared to a 14.2 per cent rise in 2008 and a record 15.7 per cent in 2007. – Reuters




Tags: Jordan | Loans | Amman | Private sector | May |

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