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French Version

Arab Bank distributes JD53.4 million in cash to shareholders

The ordinary and extraordinary general assembly of the Arab Bank endorsed the recommendation of the board of directors to distribute 15 percent of the nominal share value in cash, during two meetings held on March 31 under the chairmanship of Mr Abdel Hameed Shoman, chairman of the board of directors and general manager of Arab Bank.

The dividends included new shares whose value of JD53.4 million would be distributed to shareholders, reflecting an increase of 51.7 over dividends distributed in 2004. Moreover, the assembly endorsed the election of the board of directors for the coming four years. Membership of the board was attained uncontested by each of Messrs. Abdel Hameed Shoman, Sabih Masri, Saudi Arabian Ministry of Finance, Nazek Audeh Hariri, Social Security Corporation, Samir Farhan Kawar, Muhammad Thabit Taher, Riyad Burhan Kamal, Muhammad Ahmad Hariri, Wahbeh Abdullah Tamari and Abdel Hameed Shoman Foundation.

The Board of Directors convened its first session and elected Mr Shoman by consensus as chairman of the board and general manager of Arab Bank, and Mr Masri as deputy chairman for the coming four years. The extraordinary general assembly decided to purchase 50 percent of Al-Nisr Al-Arabi for Insurance, and resolved to buy a ratio of the Arab Bank stock in light of the recent directives of the Central Bank, which permitted banks to buy 5 percent of their shares in Amman Stock Exchange (ASE).

The Bank’s shareholders approved in an extraordinary meeting held last year to double the bank’s capital and to buy 3 percent of treasury shares. The Companies’ Comptroller, Dr Mahmud Ababneh, praised the economic and social role played by Arab Bank, and referred to the positive response of the bank to His Majesty’s vision in allocating 2 percent of the new shares in favor of the Jordan Armed Forces.

Ababneh also said that the Arab Bank represents an exemplary model for Jordanian and Arab banks and companies, and has effectively moved towards globalism. The two meetings were attended by shareholders holding personally and by proxy 311.9 million shares, that is in excess of 90 percent of the capital, and by 10 board members out of 11. Furthermore, the general assembly approved the operational results of Arab Bank for 2004 and its net profits amounting, after taxes and allocations, to JD200.1 million, which represents the highest profit earned by the Bank since its foundation 75 years ago, with an increase amounting to JD51.8 million compared to 2004 profits, an increase of 34.9 percent. Arab Bank Group, whose indicators realized tangible progress in 2004, realized record profits of $671.3 million (before taxes and provisions) and $503.2 million (after taxes) in 2005.

Shoman said that the record profits achieved by Arab Bank Group during the previous year was a consequence of the banking policy followed by the management of the Bank, and its effectively applied strategy in its various banking operations. Shoman emphasized that Arab Bank was able to deal with the economic variables witnessed by the Arab region and the areas in which it has operations; effectively contributed to providing necessary finance to companies, institutions and individuals; increased its activity in Loans & Deposits; succeeded in fulfilling the needs of investors; and contributed to providing necessary financing for major projects in its areas of operations. In response to a question on the business results of the Jordanian branches, Shoman stated that their profits at the end of 2005 amounted to JD97.7 million before taxes and fees, while net profits after taxes and fees reached JD73.2 million, compared to JD37.2 million in net profits for 2004, an increase of JD36.0 million, a growth rate of 96.8 percent. Shoman stressed that the key performance indicators of Arab Bank and Arab Banking Group have shown exponential progress, with shareholders’ equity in Arab Bank Group increasing by 13.5 percent, to reach $3,885 million before the increase of capital.

Shoman added that the increase in capital increased shareholders’ equity to $5.4 billion, around 40 percent increase, which will enable Arab Bank to expand its financial and banking operations, to offer modern and advanced banking services and products, and to stay abreast of developments in the global banking industry. Shoman said that the figures and statements included in the balance sheet of Arab Bank as on 31/12/2005 reflect its plans’ success in increasing the credit facilities portfolio by a ratio of 12.8 percent over 2004. Indeed, Arab Bank management is keen and eager to improve the quality of the portfolio, and to deepen the role of the bank and its contribution to the credit facilities in various market sectors. The performance indicators show that the average return on the Group’s shareholders’ equity amounted to approximately 14 percent compared to around 10 percent for 2004. Moreover, the ratio of operating expenses to total revenues reached 47.0 percent in 2005 compared to 53.9 percent in 2004.

In fact, Arab Bank maintained an excellent ratio of liquidity, which amounted at the end of 2004 to 55.8 percent despite the increase in demand for credit in local and foreign currencies. Arab Bank succeeded in implementing a new subscription process in its shares amidst a huge demand from shareholders for subscription in the capital increase, while the total of the issue proceeds exceeded JD1 billion. This issue pushed the bank to being on the verge of joining the list of the 100 largest banks worldwide. Responding to a question on the developments concerning the price of the Arab Bank share in ASE, Shoman said, “The Arab Bank share in the ASE has been distinguished by strong confidence, and it is considered the leading share in ASE insofar as continued growth of operational results are concerned, the increase in shareholders’ equity, high profits and the bank’s successful policies since its establishment.”

Concerning the possibility of increasing the ratio of cash dividends distributed to shareholders in light of record profits realized by Arab Bank in 2005, Shoman asserted that the high profitability achieved by Arab Bank and its Arab Banking Group is a major accomplishment and is, ultimately, for the benefit of the Arab Bank shareholders. Moreover, the distribution of the sum of JD53.4 million to shareholders is considered a good ratio, stressing that the remaining profits will be earmarked for strengthening the capital base, especially since local, Arab and international banks are powerfully orienting themselves toward increasing their capital bases in order to face large and medium credit requirements. Furthermore, dividends that will be distributed at a ratio of 15 percent of the nominal value means that the ratio of distribution of dividends on the shares before the new subscription is 30 percent because the new shares also earned dividends, which indicates that the dividends of 2005 are higher than the ratio distributed in 2004, which amounted to 20 percent. Responding to a question on the business results of the bank for the first quarter of the current year, Shoman stressed that it would be possible to characterize the year 2006 as the year of a qualitative leap forward for Arab Bank in light of the doubling of its capital, particularly since Jordan and other Arab countries are witnessing unprecedented investment activity, and hence realized profits this year surpassed those of same period of last year. Commenting on some shareholders’ inquiries about the significance of doubling the capital and the Arab Bank’s plan in light of this, Shoman explained that the consolidation of a firm capital base is a reflection of the implementation of the Bank’s strategic plan, given that Arab Bank is close to becoming one of the world’s 100 banks insofar as financial trustworthiness; shareholders’ equity; local, regional and international expansion; and engagement in financing large and medium-size projects, adding that in order to safeguard this plan the bank will intensify its activities in the Loans & Deposits markets, and in retail services. On the importance and necessity of establishing Arab Bank-Europe, Shoman said that establishing Arab Bank-Europe comes in response to the accelerating developments witnessed by the international banking industry, and also to bring together all the branches of the Arab Bank in Europe under its umbrella. Indeed, it is a subsidiary entity and fully owned by Arab Bank, and it would consolidate Arab Bank’s position and in turn will enhance the efficiency of the Bank’s international operations performance, and will strengthen the revenue base.

On the plans of the bank to achieve expansion by utilizing information technology, communications and investing in human resources, Shoman stated that Arab Bank assigns maximal importance to investing in human resources, and to harnessing information and communications technology in its banking operations. A glance at the bank’s strategic plan will show a marked development in the skills of Arab Bank employees, with the utilization of latest state-of-the-art banking operations. Indeed, it is the view of the management of Arab Bank that spending on human resources and information technology is a form of investment expenditure, and not a current one.

Shoman concluded by saying that Arab Bank, founded by his grandfather the late Abdel Hameed Shoman in 1930, has achieved outstanding rates of growth, which have qualified it to be among the leading banking institutions that enjoy a presence in most financial and investment capitals and centers worldwide, and that the long march of successes has been achieved thanks to the trust instilled and generated during the past 75 years.

The Star

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