the twelfth annual report the bank’s investment portfolio increased by 83% from jd89 million to...

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The Twelfth

Annual Report

His Majesty the Late King Al Hussien Bin Talal

His Majesty King Abdullah II Bin Al Hussien

TABLE OF CONTENTS

Board of Directors

Chairman & Chief Executive’s statement

Board of Directors Report for 2007

• Introduction

• CorporateServices

• RetailServices(ConsumersSector)

• TreasuryandCapitalMarketsActivities

• CapitalInvestmentsandBrokerageCompany

• CapitalManagement

• Research

• CorporateFinance

• RiskManagement

• HumanResources

• CorporateSocialResponsibility

Corporate Governance Code

Auditor’s Report

Financial Statements 2007

Other Disclosers

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ChairmanDr. Ziad Mohammed Fariz Fariz

ViceChairmanDr. Fayez Mohammed Atawy Soheimat

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BOARD OF DIRECTORS

Mr. Mohammed seif El-Seif

Mr. Mansoor Mohammed FustoqRepresentativeofSpumanteComercioInternacionalLDA

Mr. Abdel Raouf Waleed Abdel Raouf Al-Bitar

Mr. Elia C. Nuqul RepresentativeofInvestment&IntegratedIndustriesCompany

Mr. Mazen Sameh Taleb Darwazeh

Mr. Bassam Wael Roshdy KanaanRepresentativeofHotafInvestmentCompany

Mr Hytham AlmajalyRepresentativeofSocialSecurityCorporation

Mr. Kim Foad saad Abu Jaber

Mr. Fawzy JumeanRepresentativeofAlkhaleelcompanyforinvestments

Members

Chairman’s Letter

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Distinguished Shareholders,

Iamgladtopresenttoyou,atmyfirstGeneralAssemblymeeting,theenclosedtwelfthannualreportofthebank’sresultsandvariousactivitiesfor2007.

Iamalsopleasedtotakeadvantageofthisopportunitytoextendtoyou,onbehalfofmyselfandtheBoardofDirectors,ourcongratulationsontheproudsuccessesaccomplishedbyCapitalBankandthesteadygrowthitachievedinallBalanceSheetandIncomeStatementitemsandsharehold-ersequity;notingyourcontinuedcooperationwithManagement’sefforts,yourcontinuedsupportforthebankaswellasyourkindunderstandingwhichhashadthebesteffectinachievinggrowthandprofitability.

CapitalBankwasabletofurtheritssourcesofoperationalincomeandtomaintaintheperformancelevelofitscreditandinvestmentsportfoliosthroughenhancingthelevelofitsbankingservices,di-versifyingitsmoderne-products,increasingtheefficiencyofitshumanresourcesandseekingnewinvestmentopportunitiesinsideandoutsidetheKingdom.Thishasreinforceditsfinancialstatusasapioneeringbank,broadeneditscompetitivecapabilities,andincreaseditslevelsoffinancialsolvencyandcapitaladequacy.

CapitalBankassetsincreasedfromJD856millionin2006toaroundJD940millionin2007,anincreaseofJD84million(9.7%).Directcreditfacilities(net)alsoincreasedfromJD490milliontoJD497millionduringthesameperiod.TheBank’sinvestmentportfolioincreasedby83%fromJD89milliontoJD163million,whileprofit(netoftax)duringthisyearreachedJD13.508comparedtoJD18.059lastyear.

Inaddition,GrossClientDepositsincreasedfromaroundJD434millionduringlastyeartoJD482millionforthisyear(i.e.atotalincreaseofJD49million(11.2%).Thisprovidesastrongindicatorofthecontinuedbroadeningofthebank’sclientbase,theincreasedtrustinCapitalBankaswellasitsenhancedmarketcompetitiveness.

TotalShareholders’EquityatCapitalBankhas increased fromaboutJD151million lastyear toaboutJD165millionforthisyear(i.e.anincreaseof9.6%).ThiswasduetotheincreaseinPaid-inCapitalfromJD116milliontoJD123millionaswellastheincreaseinvariousreservesandprofitsachievedbetweenthetwomentionedyears.

Thisishowthebank-whichhastakenupthenewnameofCapitalBanksince2006andsetforitselfauniqueidentityandsloganthatreflecteditsvisionofitselfasacomprehensivebankanddedicateditsstrategicvisionasaproviderofintegratedfinancialservices,inventivesolutionsandmoderninvestmenttools,wasabletoachieveallthesecalculatedresultswherebycapitaladequa-cythisyearreached21.55%Lookingatthispositiveperformance,theinternationalratinginstitu-tionhasgrantedthebank,forthesecondconsecutiveyear,arankofBBB,whichhasplacedCapitalBankamongthemosthighly-ratedbanksinJordanandincreasedtheconfidenceofcorrespond-ingbanksinit.

During2007,BankCapitalwaskeentodevelop itscorporategovernancepractices inamannerconsistentwiththerequirementsoftheMonetaryAuthorityandotherregulatoryauthorities,soastobeinlinewithbestinternationalbankingpracticesinthisregard.

WithintheframeworkoftheBank’scontinuouseffortstoincreaseitsshareofthecreditmarket,andtoattractnewclients,specificallyintheretailsandcorporatesectors,andaspartofimplementingtheBank’sstrategicplangearedtowardsthemobilizationofadditionalavailablefinancialresourc-es,thisyearCapitalBankopenedthreebranchesinAl-MadinahAl-MunawwarahStreet,Sweifieh

Chairman’s Letter

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area,andAqabacitycenter,bringingthetotalnumberofoperatingbranchestoeightinadditiontotheofficeattheAqabaEconomicZone.WorkiscurrentlyunderwaytoopenanewbranchonMedicalCityStreetandanotherinBayaderWadiAl-Seer,introducingmoderntechnologycapableofofferingmoderne-bankingservicesandthecreationofhighqualitysalesoutletsalongwithof-feringabatteryofexistingproductsandservices.

Thisexpansionplanenabledustofurtherourpresenceintheretailmarketandincreasethesizeofloansextendedtoindividualstomeettheirvariousconsumerrequirements.

TheBankwaskeentomaintainthequalityofitscreditportfoliothroughbalancingbetweentheelementsofrisksandreturnswhileatthesametimemaintainingalowpercentofnonperformingloans,whichwas3.06%andamongthelowestratiosacrosstheJordanianbankingsector.AmongtheareaswhichthebankpaysspecialattentiontoistheexpansioninprovidingfinancetosmallandmediumenterprisesandtobenefitfromtheexperienceoftheBank’sstrategicpartner,theInternationalFinanceCorporation(IFC),inthisregard.

AsfortheperformanceofCapitalInvestforinvestmentsandfinancialbrokerage,ownedbyCapi-talBankasitsinvestmentarm,thepositiveperformanceoftheAmmanStockExchangereflectedpositivelyitsprofitabilityandincreasedthesizeofitsbusinessandenabledittoexpanditscapacitytooffernewinvestmentservicestostockmarketclientsandbeyond,includingcorporatefinanceservices,assetmanagementandfinancialbrokerageservices.ThisallowedittoachieveanetprofitofJD2.3millioncomparedtoJD1.6millionduringlastyear.

WithregardtothestrategicpartnershipagreementwiththeNationalBankofIraq(NBI)bywhichCapitalBankgainedownershipofthelargershareofsubscribedcapitalforthatbankatabout59%andvaluedat25billionIraqiDinar.Iwouldalsoliketonotethatthisbankwasabletoovercomethelossesof2006,whichamountedtoJD600thousand,toachievethisyearaprofitofaroundJD1.3million.ThisindicatesthecorrectnessofourstrategicdecisioninfindingafootholdforourbankintheIraqimarket,amarketwhichisfullofrewardinginvestmentopportunities.

Wepaidduecaretodevelopacomprehensivefutureplanthataccountsforexpansionacrossvari-ouslevels.AdvancedworkprogramsareinplaceaimedatintroducingchangetotheBank’spolicesandproceduresanddiversifying investmentandfinancingactivitiesaswellasofferingthebestandmostmodernservicessoastoincreasetheBank’smarketshareacrossthevarioussegments.

Iwouldalso like topointout to thewisepolicyweadopted,asCapitalBankmanagementandshareholdersthroughouttheyears,ofcapitalizingprofitsandincreasingcapitalthroughprivateplacements,whichledtotheexpansionoftheBank’scapitalbase.ThiswillenableustoimplementtheBank’sstrategicexpansionplanandtobenefitfromlocalandregionalopportunities,whichwillreflectpositivelyontheBank’sperformanceandwillincreaseitsreturnsoninvestments,includingreturnonassets(ROA)andreturnonequity(ROE).

AfterthejoiningoftheInternationalFinanceCorporation(IFC)astheBank’sstrategicpartnerandtheincreaseoftheBank’scapitalto132.280millionsharesandthatofshareholdersequitytoJD186millionasofthebeginningof2008,IwouldliketheGeneralAssemblytoapprovetheBoard’srec-ommendationtodistribute58%ofnetprofitsasdividendsamongshareholderswhichamountstoapproximatelyJD7.5million,orto6.1%ofcapital.Wishingyougoodluckandwishingourbankmoreprogressandsuccess.

Dr. Ziad FarizChairman

Chairman’s Letter

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Board of Directors Report 2007

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Board of Directors Report2007

Introduction:For thetwelfthconsecutiveyear,CapitalBankhascontinued its intensivemarchofgrowthandprogress,recordingresultsthatcallformoretrustintheeffortsexertedbytheExecutiveManage-mentandtheBank’sstaff,andbestowingpridefromthesupportoftheshareholders,thebank’sclients,themonetaryauthorities,theJordanSecuritiesCommissionaswellasallthosewhosevalu-ablecontributionshavehadthedeepesteffectinachievingthebesttargetrevenues.

Despite some unforeseen market conditions, Capital Bank registered a net profit of aroundJD13.508million,wherebynetinterestsandcommissionsincreasedby2.3%toreachJD31.4mil-lion,accountingfor76%oftotalrevenueswhichincreasedby13.3%toreachJD41.4millionin2007comparedtoJD36.5millionin2006.

Furthermore,theBankexpandedthesizeofitsoperations,asindicatedbytheincreaseinassetsfromaroundJD856millionin2006toaroundJD940millionin2007,agrowthofapproximatelyJD83million(9.7%).

Inparallel,theBank’stotalequityincreasedfromapproximatelyJD151millionduringlastyeartoaroundJD165millionthisyeari.e.atotalincreaseofJD14.5million(9.6%),whichisattributedtothe increaseof thesubscribedandpaid incapital fromJD116milliontoJD123million,andtheincreaseofvariouslegalandoptionalreserves.

These promising results were the fruitful outgrowths of diligent efforts exerted by the Bankthroughouttheyearandduringwhichitwasabletosuccessfullycontinueimplementationofitsendorsedstrategicplan.ThishasreflectedpositivelyonfurtheringtheCapitalBank’sstandinginthebankingsector,enhancingitscapacitytofulfill itsclients’requirementsandtheirvariedandincreasingneeds. Italso reinforced theBank’s sourcesofoperatingprofits, increased itsmarketshare,instilledmorecorporategovernanceprinciples,andqualifiedittomaintainhighestratinglevelsamonglocalbanks,wheretheCapitalIntelligencehasgrantedourBankaBBBratingforthesecondconsecutiveyear.

Asaresult,duringthisyearCapitalBankmaintainedarateofReturnonAssets(ROA)of(1.5%),andreturnonshareholdersequity(ROE)of(8.21%).TheBankalsomaintainedacapitaladequacyratioof(21.55%)whichexceededthelevelsetbytheCentralBankofJordanaswellasBaselrequire-ments.Moreover,CapitalBankmaintainedlowlevelsofnon-performingloanstobeamongthelowestlevelsrecordedinthebankingsectorinJordan,whereitamountedtoaround(3.06%).

Thus, thepositiveoutcomesof theBoardofDirectorseffortsandthoseof theBank’sExecutiveManagementwerearesultofthepracticalandtangibleimplementationoftheendorsedplananddevelopmentalprogramswhichtheBankcontinuestoimplementsinit isalsoattributedtothepoliciesandproceduresthatarebasedonadvancedscientificbasis;itsqualifiedpoolofhumanre-sources;modernfinancialproducts;increasednumberofsalesoutlets;theefficientmanagementoftheBank’sfinancialresourcesandtheirdeployment,inadditiontomanyfactors,allincreasedtheattractivenessofCapitalBank,andattractedmoreclientsfromboththeretailandcorporatesectors.

Corporate ServicesCapitalBankmaintaineditsstatusasoneofthemostpreferredBanksbylargecorporationsandin-vestorswhishingtodealwithaBankthatpossessesexperienceandknowledgeofallproductsthatcatertothecorporatesector.During2007,CapitalBankwasabletofocusonproductiveeconomic

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sectorsandtofurtheritsrelationswithexistingcorporateclientsaswellastoattractnewones.Thevariouseffortsresultedinachievingthefollowing:

• Direct facilitiesextendedduringthe2007tooldandnewcustomers reachedapproximatelyJD145million.

• Fullandpartialsettlementsofdirectfacilitiesduring2007reachedaroundJD131million.• CapitalBankwas,asusual,amongthepreferredoptionsforinvestorsandimporterswhereby

thevolumeofindirectcredit,bothLC’sandtransfersreachedapproximatelyJD400million.• Guaranteesvolumeduring2007amountedtoapproximatelyJD102million

Retail Services (Consumers Sector)InimplementationoftheBank’sstrategicplantoincreasethepercentofcreditextendedtoindi-vidualsofthetotalcreditportfolio,theservicesoftheRetailDepartmentwerefurtheredandtheDepartmentwas suppliedwithqualifiedpersonnel. Inaddition, severalbankingproductswerelaunchedtomeetthevariedconsumersandindividualsneeds.Thenumberofone-stop-shopsalespointsofferingtimelyservicingofclientswasincreasedandtheDepartmentalsocontinuedtoim-proveanddevelopappropriateprocessesandpoliciestoachieveitsgoals.Furthermore,theBanklaunchedamulti-tierpromotioncampaignthatcontributedtoattractingseveralclientswishingtobenefitfromtheservicesprovidedbytheBankinthisfield.

Accordingly,theretailsectoratCapitalBankcontinuedtoprosperyearafteryear,especiallyduringthelastthreeyearsduringwhichthesizeofconsumerandpropertyloansincreasedfromapproxi-matelyJD79millionin2005toapproximatelyJD101millionin2007(agrowthrateof27.8%).

Duringtheyearswitnessingaboomintherealestatemarket,theBanksignedseveralagreementstofinancethepurchasingofhousingunitswithinmajorpropertyprojectsindifferentgovernoratesacrossthekingdom,whichcontributedlateronintheincreaseoftheportfolioofrealestateloansextendedtoindividuals.Italsoofferedpersonalloanstofinancethebuyingofsolarenergyheat-ers,scooters,cars,boatsandland,withlenientconditionsthataremostresponsivetoclients’rapidneeds,andthatachievethehighestlevelsofcustomerconfidenceandsatisfaction,andenhancecommunicationwithapublicthathasreceivedqualityservicefromabankthatkeepsitscommit-mentsandpromisesandseekshardtoalwaysprovidethelatestintheretailservicessector.

WhileCapitalBankofferedmoree-bankingservicesandparticipatedinthemarketingcampaignsofVisaandMasterCardinadditiontoitsowncreditcards,italsoenhanceditsconsumerservices.Thiswasachievedthroughtheestablishmentofadirectsalesunitandacallcenter,aswellasthedevelopmentofaninternetbankingservices.

Within the frameworkofenhancing itscompetitiveness, furthering itspresence,and increasingits share in thebankingsector, specifically in the individualsandconsumerssegment, thisyearCapitalBankopenedthreebranchesinstrategiclocationsinAl-MadinahAl-MunawwarahStreet,Sweifieharea,andAqabacitycenter.WorkiscurrentlyunderwaytoopenabranchonMedicalCityStreetinDabouq,andanotherinWadiAl-SeerIndustrialArea.Meanwhile,theBankhasrenovateditsmainbranchtobeinlinewithitsnewcorporateidentity.ItalsohasplanstoestablishsixATMunitsacrossdifferentareas.

CreditcardserviceswitnessedsignificantgrowthwherebythenumberofcardsissuedaswellascreditextendedthroughboththeVisaandMastercardsincreased.Internetpaymentwasalsoin-troducedandfreeShortMessageServicewaslaunchedforbankingandcreditcardaccounts.

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Treasury and Capital Markets ActivitiesDespite the severefluctuationswitnessedby themain capitalmarketsduring2007alongwithheightenedrisksarisingfrominterestratesfluctuations,theTreasuryDepartment,throughtheAs-setsandLiabilitiesManagementCommitteewasabletomaintaintherequirementspertinenttoadequatesolvency,thusenablingtheTreasuryDepartmenttoachievesignificantgrowthinrev-enuescomparedtolastyear.Thiswastheresultofadoptinganappropriatefinancingstructureandutilizingthebesttoolssuitableformanagingmarketrisks.

TheTreasuryDepartmentcontinuedtooffervariousanddistinctservicestoallofitsclientsaswellastheclientsofthevariousbranchesanddepartments,whetherinthefieldofdealingwithforeigncurrenciesandpreciousmetals,orinthefieldofcurrencytradingandhedgesinforeignexchangemarket.TheTreasuryDepartmentalsoprovided its capitalmarket services, inboth foreignandlocalcurrencies,includingGulfcurrencies,throughtheBank’snetworkofcorrespondentsspreadthroughoutdifferentregionsoftheworld.

Moreover,theTreasuryDepartmenthasactivatedthehedgingmechanismforalloftheBank’scli-ents,whereprecautionarymethodsandadvicewereprovidedtoclientswishingtohedgeagainstcurrencyexchangeratesfluctuations.Currencyforwards,interestrateswapsandswapswereen-teredintoforclientsupontheirrequest.

TheTreasuryDepartmentcontinuouslypromotes,sellsandpurchasesbondsanddifferentcom-mercialpapers, in localand foreigncurrencies, thatare issued inJordanby theCentralBankofJordanorbyotherJordaniancompanies,toallcurrentandinterestedclients.TheTreasuryDepartmentalsohandledliquiditymanagementoftheBankthroughthevariousin-vestmenttoolsandmethodsandthroughissuingdifferentkindsofspecialcertificatesofdeposits.

Aspartofitsdiligenteffortstodealwithfinancialinstrumentsthatmeetclients’preferencesandneeds,theTreasuryDepartmenthastradedlocalandforeignbonds,fortheBank’sownportfolioinadditiontoclients’portfoliosandwasactiveinthelocalsecondarybondmarketthroughprovid-ingtheBank’sclientswiththesellingandbuyingpricesofthesebonds,inadditiontoinformationandanalysisspecifictofixedincomeproductssuchasgovernmentbondsandcorporatebondsaswellascommercialpapersissuedbyforeigncompanies.Moreover,theDepartmentoffersclientsthebestfinancialproductsatcompetitivepricesandhelpsclientsstayabreastwithlatestdevelop-mentsandnewspertinenttoforeigncurrencymarkets,includingeconomicreports.

ItisworthreiteratingthattheTreasuryDepartmentoffersitsclientsvariousinvestmenttoolsin-cludinginterestrateswapandforeigncurrencydealcontractsfortheBank’sclientsandmarginsdealingsclients, includingspotcontracts, forwardcontractsandcurrencyswapcontractswhichoffersuitablesolutionsforhedgingagainstforeigncurrencyfluctuationrisks.

Capital Investments and Brokerage CompanyInthepursuitofachievingahighlevelofqualitativeefficiency,andincreasingtheeffectivenessofitscapabilitiesinthefieldofspecializedinvestmentactivities,in2006CapitalBankestablishedacompanyspecializedininvestmentbankingandstockmarketsunderthenameCapitalInvest.Itsservicesincludemanagementof investmentportfolios,funds,andbrokeragesservicescoveringlocal,regionalandinternationalmarkets.Furthermore,italsoprovidesrevaluationandconsulta-tionservicesformergersandacquisitiontransactionsanddevelopsadditionalsuitableproductsaswellasdevelopstheBank’sinvestmentpolicypertinenttobothmonetaryandinvestmentmarketssuchthatrevenuesareincreasedwhilereducingrisklevels.


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Inthefieldoffinancialbrokerageandinvestmentfundsmanagement,CapitalBank’sspecializedcompanywasactiveacrossthreequalitativelevels:

First: Local BrokerageWhiletheBrokerageOfficeofCapitalInvestcontinuedtoholdaleadingpositionamongstseveralbrokeragefirmsactiveinAmmanStockExchangedealings,ateamofqualifiedbrokerscontinuedtoofferabatteryofspecializedservicestoclientswithhighefficiencyandprofessionalism,leadingtotheincreaseinthecompany’sbusinessvolumeandprofit,achievingcustomersatisfactionandfulfillingtheirneedsinatimelymanner,andprovidingthemwithinformationpertinenttostockmovementsandnewsoflistedcompanies.

CapitalInvestwasabletooffersuchqualitativeservices,sturdilyenhancingitscompetitiveness.In2008,theElectronicTradingSystemwillbelaunched,allowinglocalclientstomanagetheirportfo-liosthroughtheinternet,thusenablingthemtogetrealtimeinstantpricesoftheirtradedstockswhichallowsthemtocontinuouslyreevaluatetheirportfoliosandatappropriatetimes.

Second: Regional BrokerageFollowingtheexpansionoftheRegionalBrokerageDepartment’sactivityintothestockmarketsoftheGulf,Egypt,Dubai,LebanonandPalestine,theDepartmentwasabletofurtherexpanditsactiv-itytoincludethemarketsofSaudiArabiaandMorocco,thusopeningthewayforclientstopartici-pateinstocksubscriptionsofpromisingcompaniesinvariousmarketsacrosstheArabregion.

Duetothisservicewhich isuniquetoCapital Investandperformedbyateamofqualifiedper-sonnelthatutilizespremiumElectronicTradingSystems,theRegionalBrokerageDepartmentwasabletodoublethenumberofitsclientsin2007.Moreover,theDepartmentpresentedreports,an-nouncements,newsandinformationregardingtheabove-mentionedtrademarkets,thushelpingclientstakeinvestmentdecisionsatpropertimes,andprovidedthemwithoptimalfundsalloca-tionopportunitiesandhelpedthemchoosethebestandmostsuitableinvestmentdeployments.

During2008,theFinancialBrokerageUnitatCapitalBankintendstocontinueitsspecializedactivi-tiesandtapintonewopportunitiesinordertoexpanditsclientbasebyattractingnewpotentialclientsandexpandingitsservicerangetoincludeadditionalinvestmentopportunitiesnowthattheElectronicTradingSystemhasallowedaccesstodifferentstockmarketsworldwide.

Third: International BrokerageThe InternationalBrokerageservice isconsideredoneof thepioneeringservicesofferedbytheBank throughCapital Invest. Its servicesaredirected towardscompaniesand investorswishingtodiversify their investments throughdirectdeployment in international stockmarkets. In thisregard, the InternationalBrokerageUnitprovidesawide rangeofmodern investment services,including the servicesofbuying/selling international stocks and theirderivatives suchas stockoptions,financialindicators,investmentfundsandexchange-tradedfunds(ETFs).Ateamwithex-tensivetechnicalandpracticalexperienceassistsclientsinmakingtheirinvestmentdecisionsbyproviding themwith investment reportspertinent tomarketsof interest coveringprimary andsecondarysectors,companies,internationaleconomicandtechnicalindicatorsandnews.Inad-dition,theyalsoprovideadvice,guidance,directionandanswerstoallclients’questionsabouttheglobalmarkets,thevariousstrategiesaswellasthedifferentfinancialinstrumentsthatcanbeusedtoincreaserevenueandminimizerisk.

InaimofdevelopingofferedservicestoInternationalBrokerageclients,andinharmonywithour


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goalstocreateinnovativeinvestmentservices,theInternationalBrokerageserviceswereexpand-edtoincludenewEuropeanandEastAsianmarkets.Thisunitwillalsoinitiateagroupofnewin-novativeinvestmentservicesin2008includingFuturesContractTradingininternationalmarkets.

Capital ManagementTheCapitalManagementteamatCapitalInvestoffersinvestmentportfolioservicesdesignedspe-cificallytomeetclients’demandsandhonortheirdesires.ThesemanagedportfoliosincludeCapi-talGuaranteedportfolios,GrowthportfoliosandFinancialLeverageportfoliosinadditiontomanyportfoliosdesignedinvariouscurrencies.

Thedistributionofassetsineachportfoliodependsonthelevelofrevenueandriskspecifiedintheinvestmentpolicyontheonehand,andonthegeneraloutlookoftheeconomicsituationontheother.ThestrategyoftheFundManagementUnitaimstoincreasethevolumeofmanagedassetswhileatthesametimemaintainaremarkableperformancerecord.

CapitalBanklaunchedtheHorizonFundinMarch2005(anopeninvestmentfundwithvariablecapital),aimingtoachievegrowth in long-termcapital for thenetvalueof the fund’sassetsbymaximizingthemarketvalueofthevariousinvestmentsinthedifferentlocal,regionalandglobalsectors.InJulyofthisyeartheAssetsManagementDepartmentlauncheda3-yearcompoundin-vestmentproductwithguaranteedcapitaltiedtotheperformanceofArabmarkets.AssetsMan-agementwill launchmore investment products tied to the local, regional and globalmarketsthroughout2008.

ResearchTheResearchandStudiesDepartmentatCapital Invest ismanagedbyan integratedteamspe-cializedinfinancialandeconomicanalysisrelevanttocompanies,sectorsandeconomictrends,be iton the local, regionalor international level.TheDepartment’sactivitiesare focusedon lo-calmarkets,wheretheDepartmentprovidesitsclientswithacomprehensiveassessmentoftheperformanceoftheJordaniancapitalmarket,andpreparesperiodicpublicationscoveringstudiesandforecastsabouttheeconomy,stockmarketsandthedevelopmentsofsectorsandindividualcompanies.

TheresearchesoftheDepartmenthadamajorroleinincreasingitscredibility,andassuchitsabil-itytoprovideconsultationstomanylocal,regionalandinternationalinvestmentfundssinterestedintheJordaniancapitalmarketandtheeconomicdevelopmentsintheKingdom.

Corporate Finance TheCorporateFinanceDepartmentatCapitalInvestwasablethisyeartoexpandthebaseofdealsin the localand regionalmarkets. Inaddition, itwasable toexpand the scopeoffinancialandconsultingservices,suchthattheyareonparwiththelatestbankingandinvestmentservicesde-velopmentsintheregion.

FollowingthesuccessesachievedbytheDepartmentoverthepastyears,thisyearitcontinuedtorecordexceptionalperformance.AmongthemajorachievementsofCapitalInvestduring2007wasthesigningofanagreementwiththeSaudiAl-RajihiGroupthroughwhichCapitalInvestwouldact,onbehalfoftwoofAl-RajihiGroupcompanies,astheco-arrangerforthefinancingofUS$850millionperIslamicShariarules.SaidfinancingwillbeusedforexpandingtheirinvestmentsintheareatoincludetheestablishmentofnewcementfactoriesinJordanandSyria.


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BeingtheexclusivefinancialconsultantoftheNationalAl-FarisCompanyforInvestmentsandEx-ports (Optimiza), the leadingproviderof technologysolutionsandconsultancies in Jordanandtheregion, in2007Capital InvestprovidedfinancialconsultancyservicestoOptimizaduringitsacquisitionofeightothercompanies.

During this year, theCorporateFinanceDepartmentalsofinancedworkingcapital (short term)requirements for two leadingcompanies in theJordanianmarket inorder toarrangeand issuetradablecommercialpapersvaluedatJD25millionforthebenefitofMiddleEastComplexforEngi-neering,ElectronicsandHeavyIndustriesandArabRealEstateDevelopmentCompany.

The Department continues to contribute to the development of the Jordanian capitalmarketthroughtheissuanceandmanagementoflocalpublicofferingsandthesupervisionandcoordina-tionofsubscriptiontostocklistedataccreditedbanks.TheCorporateFinanceteammanagedsev-eralissuancesonbehalfofdistinguishedcompaniesincludingAl-DulailIndustrialEstateComplexandArabOrientforFinancialandEconomicInvestments.

Aspartofitscommitmenttoofferthebestandlatestfinancialvaluationtechniques,theCorporateFinancespecializedteamprovidedvaluationreportsforseveralcompaniesacrossvarioussectorstoincludethesectorsoftelecommunications,informationtechnical,realestate,construction,tour-ismandtransport.

Risk ManagementInharmonywiththedevelopmentswitnessedbythebankingsector,specificallythosepertinenttotheinstilmentofgoodcorporategovernanceprinciplesinlinewiththeCentralBankofJordanrequirementsinpreparationforimplementingBaselIIresolutions,duringthepasttwoyearCapitalBankstartedpreparingasetofsystemsandprocedurestocontrolthekeyrisksthatfacethevariousactivitiesoftheBank,supervisedbyanindependentdepartment.Theresponsibilityofrisksman-agement entails the identification,measurements, and continuousmonitoring of financial andnon-financialrisksthatmayhaveanadverseimpactontheBank’sperformanceandreputation.Italsoentailsguaranteeingtheeffectivedistributionofcapitaltoachieveoptimalreturnsrelativetorisks.

ThemajorfunctionsofRisksManagementrelatetofourkeyareas:• MaintainingoftheBank’ssolidfinancialstatus.• Achievingbalancebetweenrisksandreturns.• Transparencyinhighlightingrisksandensuringthatsaidrisksareclearandunderstoodboth

internallyandexternally.• EnsuringthatrisksarewithinthelevelsendorsedbytheBoardofDirectors.

RiskmanagementatCapitalBankiscarriedoutaccordingtokeydoctrinesandriskgovernanceprinciplesmanifestedintheavailabilityofrisksstrategiesandpoliciesendorsedbytheBoard;thevariousriskscommitteesandtheRiskManagementUnit.

AmongthekeyTasksoftheDepartmentfor2008willbetoselectappropriatefinancialformstomeasureandmonitorfinancialrisksthatarecongruentwiththenatureandsizeoftheBank’sactiv-ityaswellasinternationalbestpractices.TheDepartmentwillalsocompletetheprojectofdevel-opingbusinesscontinuityplansandimplementingaself-assessmentrisksystemacrossthevariousBank’sunits,inadditiontotheimplementationofBaselIIdecisionsaccordingtotheCentralBankofJordanrequirements.


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Human ResourcesStemmingforitsdeepacknowledgementoftheimportanceofqualifiedpersonnelasanessentialbearingpointintheprocessofselfevolutionandtheaccomplishmentofdesiredfurtherdistinc-tionandsuccess,CapitalBankhasgivenitsvaluablehumanresourcesutmostattentionandcare,whether through the introductionof novel competencies by thosewith thequalifications andpracticalexperiences,or throughqualitativetraining,skillshoning,offeringtrainingonmodernbankingprinciples,andanyotheraspectthatcanhelpkeepupwiththelatestintheworldoffi-nance,businessandbanking.

Indeedduringthisyear,CapitalBankfurthereditsqualifiedmanagerialcompetenciesthroughtherecruitmentofnewtalent.Inaddition,theBoardofDirectorsandtheexecutivemanagementdili-gentlyworkedondevelopinganeworganizationalstructureandjobdescriptionsthatrespondstotheneedsofthenextphaseandfulfilltherequirementspertinenttotheaccuratedistributionofresponsibilitiesanallocationoftasksamongtheBank’sdifferentdepartmentsinsuchawaythatfurthersinternalcommunication,guaranteesstreamlinedworkflow,achievesinternalcontrols,andallowsforrequireddecisionstobemadeintheappropriatetime.Furthermore,anewpersonnellistwasdevelopedthatincludesanaccuratedescriptionofjobsandtasksassignedtoeachemployee,andanupdatedsalaryandbenefitsscalethatwouldsupportskillsretentionandattraction.

Corporate Social Responsibility Stemmingfromitssocialresponsibilitycommitmenttowardsitslocalcommunity,andrealizingtheimportanceofcontinuouseffectiveinteractionwithitssocialsurroundings;andtoachievemutualbenefitforitandthedifferentsocietalstrata,thisyearCapitalBankcontinuedtothepathofprevi-ousyearsandimplementedanumberofcreativesocialinitiatives.Thoseinclude:

- Attending tonon-profitorganizationsandcharityassociations,andprovidingsupport toentitiesdedicatedtohelpingorphansandthepoor,suchastheSOSChildren’sVillageAsso-ciation.Inaddition,iftarmeals,foodrations,andchildren’sclothingwereprovidedthroughthecontributionsoftheBank’semployees

- Providingfinancialandmoralsupporttoinstitutionsandassociationsconcernedwithpeo-plewithspecialneeds,suchasthesupportextendedtotheKingHusseinCancerCenter.

- Contributingtoenvironmentprotectionefforts,anexampleofwhichistheBank’ssupportofthenationalforestationproject,bysponsoringtheforestationandreclamationofnon-forestlands,theeffortwhichfallsundertheAgricultureReformProgrambeingspearheadedbytheMinistryofAgriculture.

- BuildingthemainofficesoftheOrphanCareCharityAssociation inthecityofAl-Mafraq;sponsoring25orphans;andbuyingabustoservetheassociationandtofacilitatethetrans-portofitsbeneficiaries.

- ProvidingeducationtoexcellingstudentsfrompoorandlessfortunateclassesandareasintheKingdom.

- ContributionandparticipationwithInjazinbuildingoneofthepublicschoolsandprovid-ingdonationforitsrestorationandmaintenance.


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- VoluntaryworkbytheBank’semployeessomewhotaughtatpublicschoolsthroughInjazprogram.

- Collaborationwith“Al-Keema” Foundation forUnique Initiatives in supporting educationandawarenessprogramonaspectskeytothesociety.

- TakingontheeducationalexpensesofanumberofdisabledstudentsthroughtheYoungWomenMoslemAssociation(YWMA).

- BlooddonationcampaignbytheBank’semployees

- TrainingmaleandfemaleuniversitystudentsfromvariousdisciplinesattheBank’svariousdepartmentsaspartofInjazprogramtohelpimproveeducationallevel.

- DistributionoflunchpackagesthroughTkiyetUmAlito200families.

- Providingiftarmeals,foodrations,Eidclothingandwintersuppliesto100orphansinMafraqwiththemoralandfinancialactiveparticipationoftheBank’semployees

- Participation in seminars and conferences related to corporate social responsibility (CSR)andenhancingandsupportingwomen’sroleinCSR.


Introduction1.WhatisCorporateGovernance2.CorporateGovernanceBestPractices3.LegalFrameworkofCorporateGovernanceinJordan

Capital Bank of Jordan policy to Establish the Rules of Corporate Governance in the Bank

1.CorporateGovernanceCodeasareference2.PrinciplesofCorporateGovernance

Main Elements of the CodeFirst:CompliancewiththeCodeSecond:TheBoardofDirectorsThird:TheCommitteesoftheBoardFourth:TheSecretaryoftheBoard

The Executive ManagementDiscipline and Internal ControlRelationship with the ShareholdersTransparency and Disclousure

C o n t e n t s

Corporate Governance CodeCapital Bank of Jordan

20

Introduction:

Effectivecorporategovernancepracticesareessentialtoachievingandmaintainingpublictrustandconfidenceinthebankingsystem,whicharecriticaltotheproperfunctioningofthebankingsector and economy as awhole.There is no doubt that goodCorporateGovernance providessuitableincentivestotheBoardofDirectorsandtheexecutivemanagementtocontinueachievingtheirobjectives,whichgowiththeinterestofboth;theinstitutionanditsshareholders,facilitatetheexistenceofeffectivecontrol,andkeepthemanagementaccountabletowardstheBoardofDirectorsononehand,andtheBoardofDirectorsaccountabletowardstheshareholdersandotherstakeholdersontheotherhand.

1. What is Corporate Governance?CorporateGovernanceisdefinedas“thesetofrelationshipsbetweenacompany’smanagement,itsboard,itsshareholders,andotherstakeholders.Corporategovernancealsoprovidesthestructurethroughwhichtheobjectivesofthecompanyareset,andthemeansofattainingthoseobjectivesandmonitoringperformancearedetermined”.Effective Corporate Governance is connected with internal factors that include; effectivecommunicationbetweenthemanagementofthebank,theBoardofDirectors,theshareholdersandthemanagement.WhiletheexternalfactorsplayaroleinsupportingtheavailabilityofgoodCorporateGovernance,suchasthefollowing:

• Lawsandregulationsthatprotectrightsoftheshareholders'andotherstakeholderssuchasthedepositors.

• TheappropriatecontrolenvironmentbythesupervisorybodiessuchastheGovernment,theCentralBankofJordanandAmmanStockExchange.

2. Corporate Governance Best PracticeTheStructureofCorporateGovernanceprocessaswellasthelegalandorganizationalframeworksvariesvastlyamongcountries.Yet,thesoundCorporateGovernancecanbeachievedregardlessofthemodeladoptedbythebankinginstitutionaslongastherearebasicfunctionsoperatingasrequired.Therearefourformsofcontrolthatorganizationalframeofeachbankmustincludetoensureeffectivecontrol;namely:(1)oversightbytheBoardofDirectors.(2)oversightbyindividualswhoarenotinvolvedinthedaytodaywork(3)directlinesupervisionofdifferentbusinessareas(4)IndependentRiskmanagement,compliance,andauditfunctions.Itisalsoimportantthatthekeypersonnelarefitandproperfortheirjobs.

3. Legal Framework of Corporate Governance in JordanTherulesandprinciplesofCorporateGovernancedependonthefollowinglegislations:- BanksLawNo.28of2000anditsamendments- CompaniesLawNo.22of1997anditsamendments- SecuritiesLawNo.76of2002anditsamendments- RegulationsandInstructionsissuedbasedontheabovelaws


21

Capital Bank of Jordan’s policy for Enhancing Corporate Governance principles

1. Corporate Governance Code as a ReferenceCapitalBankofJordanisawareoftheimportanceofenhancingCorporateGovernanceprinciplesinthebank,astheyprovidesoundbasisforitsdevelopmentandtheimprovementofitsperformance,these principles also increase trust in the bank’s activities, which will attract the funds of thedepositories,thecapitaloftheshareholders,andgivethebanktheabilitytoeffectivelyparticipateindeveloping thefinancial system in Jordan.Basedon the foregoing, theBankhasdecided toadopttheCorporateGovernancecodeinconsistencewiththebestinternationalpracticesinthisregard,whichwereissuedbyBaselInternationalCommitteeforBankingsupervisioninFebruary2006,underthetitle“EnhancingCorporateGovernanceforBankingOrganization”andtheBoardsofDirectorsGuidelineswhichwasissuedbytheCentralBankofJordanin2007.2. The Four Principles of sound Corporate Governance- Fairness: minority of shareholders and other stakeholders must be treated fairly and their

interestsmustbetakenintoconsideration.- Transparency: financial and organizational information and the incentives of the executive

managementmustbedisclosedtothestakeholderstoenablethedepositorsandshareholderstoassesstheperformanceoftheorganization.

- Accountability: The executive management answers any enquiry raised by the Board ofDirectors inconnectionwith the implementationofplansandapplicationof theprescribedpolicieswiththeaimofensuringthemaintenanceoftheassetsandfinancialpositionoftheBank.Ontheotherside,theBoardofDirectorsmustshowpreparednessonceitisquestionedbytheshareholdersintheGeneralAssemblyandanyotherstakeholders.

- Responsibility:Authoritiesandresponsibilitymustbeclearlydefined.

Main Elements of the CodeFirst: Commitment to Corporate Governance - The Bank has formed a committee for Corporate Governance from boardmembers whose

dutiesarestatedintheCode.- TheCorporateGovernanceCommitteehaspreparedthisCode,whichwasthenapprovedbythe

BoardofDirectors.TheannualreportoftheBankisincludedtherein.Furthermore,anupdatedcopythereofisavailableonthewebsiteoftheBankforwhoeverneedsit.

- TheBankannuallydeclaresitsextentofcompliancewiththisCode.Wherevernecessary,detailsofhowtheBankapplieseachitemintheCodearesetforth.Inotherinstances,theBankstateswhyitfollowedsomeproceduresthataredifferentfromthecodecontent.

- InlinewiththedevelopmentswitnessedbytheBank,thisCodewillbesubjecttoperiodicreviewanddevelopmentwheneverrequiredtomeettheneedsoftheBankandtheexpectationsthatmightariseinthesurroundingenvironment.

Second: The Board of Directors1. The Responsibilities of the Board of DirectorsA. General Principles- TheBoardassumesitsresponsibilitiesrelatedtotheoperationsoftheBank,Itsfinancialintegrity,

the satisfaction of central bank requirements, the interests of the shareholders, depositors,debtors,employeesandotherstakeholdersensuringthattheBankismanagedprudentlybasedontheframeworkoftheapplicablelaws,instructions,andthebylawsoftheBank.


22

- TheBankisstrengtheningtheconceptwhichstatesthateachmemberintheBoardofDirectorsisobligedtowardstheBankandallitsshareholders,ratherthanacertainshareholder.

- TheBoarddefinesbankobjectivesandguidestheexecutivemanagementtodrawupastrategythatcanachievesuchobjectives.TheexecutivemanagementdrawsupworkplansthatgoinlinewithsuchstrategiesthroughaprocessthatincludestheparticipationofallBankdepartments.TheBoardadoptsthestrategy,workplans,andensuresthattheexecutivemanagementreviewstheperformanceachievementsinaccordancewiththeworkplansandtakescorrectivestepswherevernecessary.Theprocessofpreparingtheestimatedbudgetsshouldbedeemedtobepartoftheshorttermplanningprocessandperformancemeasurement.

- TheBoardensuresthattheBankenjoyshighintegrityinexercisingitsoperations.Thisisrealizedby the availability of policies, rules and procedures that organize the operations with therelatedpartiesandtheexistenceofworkethicscharter,whichincludesadefinitionofconflictofinterestsandthetransactionsmadebytheBankemployeesfortheirpersonalinterestbasedoninternalinformationabouttheBankthatwasobtained/accessedasaresultofthepowersvestedinthem.SuchpoliciesandtheworkethicschartershouldbecirculatedtoalltheBank’semployeesandthemembersoftheBoardandtheirconsenttothesameshouldbesecuredandtheyshouldbepublishedtothepublic.

b. The responsibilities of the Board of Directors were defined in accordance with the powers vested in them pursuant to the Bank’s Articles of Association and to those provided for by the Banks Law, Companies Law and pertinent instructions. They include the following responsibilities:- Definitionoftheobjectivesanddrawingtheplanswithwhichtheexecutivemanagementof

theBankshouldcomply.- Selecting an executivemanagement which is capable ofmanaging the affairs of the Bank

efficientlyandeffectively.- ApprovingthedifferentpoliciesoftheBankincludingthepoliciesofdifferentrisks,provided

thattheCentralBankissuppliedwithacopyofthepoliciesprovidedforbasedoninstructions.- Controlling the implementation of the Bank’s policies and ensuring the correctness of the

proceduresfollowedforachievingthesame.- EnsuringthatnomembermaymakepersonalbenefitattheaccountoftheBankinterest.- TakingthestepsthatguaranteetheaccuracyoftheinformationthatisprovidedtotheCentral

BankaccordingtotheCentralBank’slawandinpursuancewiththeprovisionsofthislaw.- TakingalltheproceduresthatguaranteecompliancewiththeprovisionsoftheBanksLaw,and

anyotherlegislationrelatedtotheoperationsandactivitiesoftheBank.- Drawing the Bank’s internal regulations and instructions that define the duties andpowers

ofitsdifferentdepartments,which,inturn,guaranteetheachievementofadministrativeandfinancialcontroloveritsoperations.

2. The Role of the Chairman - ThepositionsoftheChairmanandtheGeneralManagerwereseparated.TheBankobserves

thatnorelationshipexistsbetweentheChairmanandtheGeneralManagerbelowthirdgrade.ResponsibilitiesaredecidedbasedonwritteninstructionsauthorizedbytheBoardandreviewedwhenevernecessary.

- ThepositionoftheChairmanwasseparatedfromthatoftheChiefExecutiveOfficer(CEO)inordertopromoteanindependentelementwithintheBoard.


23

The role of the Chairman should be as follows:1. RepresentingtheBankinaccordancewiththeprovisionsoftheCompaniesLaw,BanksLawand

theregulationsissuedbyvirtuethereof,andanyotherregulationsapplicableintheCompany.2. Supervisingtheactivitiesof theexecutivemanagementandensuringthat theyaremade in

accordancewith therecognizedfinancialandbankingstandards,h theapplicable laws,andregulations,andthepoliciesadoptedbytheBoardofDirectors.

3. Signing the agreements, contracts, and financial transactions that fall within his powers inaccordancewiththeprovisionsoftheCompaniesLaw,andtheregulationsandresolutionsoftheBoardofDirectorsissuedinthisconnection.

4. InvitingtheBoardofDirectorstomeetanddefinethesubjectsthatareincludedinthemeetingagenda.

5. InformingthedepartmentswiththeresolutionsoftheBoard,supervisingthefollowupoftheirimplementationincooperationwiththemanagementoftheBank,andensuringthattheexecutivemanagementhastakenallthenecessarymeasurestoperfectlyimplementsuchresolutions.

6. Promoting the relationshipbetween theBoardofDirectorsand theexecutivemanagementandbetweentheexecutiveandnon-executivemembersoftheBoardofDirectors.

7. CreatingacultureinthemeetingsoftheBoardofDirectorsthatallowconstructivecriticism,listeningtothevariousviewpointsandmakingthenecessaryvotingfortakingresolutions.

8. EnsuringthattheBoardofDirectorsobtainsthenecessaryandadequateinformationintime.9. Ensuringthattheshareholdersobtainthenecessaryandadequateinformationintime.10.EnsuringtheachievementofthehigheststandardsofcorporategovernanceintheBank.

3. Standards, Values and Efficiency of the Board of Directors:Standards:EachboardmembermustbefitandpropertoservetheinterestsoftheBankandotherpertinentparties. Besides the conditions contained in the Banks Law and Companies Law thatmust befulfilled inwhoeveroccupies thepresidency andmembershipof theBoardofDirectors kwithregardtoage,personality,requirementsoffinancialsolvencyofthemanagers,themembersmustfulfillallthefollowingexperiencesandqualifications:1. Abilitytobeindependentinjudginganymatters.2. Financialknowledge,includingknowledgeofthefinancialdata,reasonableunderstandingof

thepercentagesusedtomeasureperformance,andtheavailabilityofthenecessaryexpertiseinthefieldoftheinternationalmarkets.

3. TheavailabilityofskillsorexperiencesthatcontributetoenrichingtheBoardinthefieldsofaccounting,financing,banksoranyotherbankingexperience.

4. Commitment to learn thebank’sbusiness,meet the stockownership requirements; offer toresignfromtheBoardifthereisanychangeintheprofessionalresponsibilities,anddevotingthenecessaryeffortsandtime.

5. Theavailabilityofunderstandingandknowledgeofthebestinternationalpracticesinthefieldofadministrationanditsapplications.

6. Leadership, represented in the ability to empower and motivate a high performancemanagementteam.

7. Ability to provide strategic orientation, conceptualize emerging trends, and challengeinnovations.

Loyalty and Care Responsibilities:Memberstruthfulness,loyaltyandconcernabouttheBankisdeemedtobeofutmostimportance


24

toachievegoodcorporategovernanceasfollows:1. Trustfulness: a member cares that his relationship with the Bank to be a trustful one and

should,likeanyotheremployee,declareanyimportantinformationeffectinganytransactionorcommercialdealingwiththeBank.

2. Loyalty:ShouldanyconflictofinterestarisebetweenthememberandtheBank,allpartiesmustendeavorthatthetransactionmustbefairtotheBank.Thismeansthatthedirectorwhoisdealingwith the Bankwould be given the same conditions that would have been given to him if norelationshipexistsbetweenhimandtheBank.Forrealizingtheaspiredloyalty,thedirectorshould:- ExercisehisrolehonestlyandputtheinterestoftheBankalwaysfirst.- Avoid conflictof interests, andavoidexploitinghispositionor theBank’s information to

achievepersonalgoals.- Advise the Boardwith anypotential conflict of interests and abstain fromvoting to any

decisionsthatarerelatedtothissubject.3. Care:Amembermustbecarefultocarryoutalldutiesprovidedforinthelawsandregulations

applicable inthisfield,andmustendeavortoobtainall thenecessary informationtoensurethatallthedecisionstakenareintheinterestoftheBank.

Forrealizingtheaspiredcare,amembershould:- UnderstandtheoperationsoftheBank,themarketsandthesectorsheisserving.- AttendthemeetingsoftheBoardandpreparewellandahead,especiallywithregardtothe

decisionstobemadeduringsuchmeetings.- Carryoutthedutiesassignedtohimhonestly,lookforprecautionaryindicatorsandfollow

upallimportantissueswiththeexecutivemanagementoftheBank.- Getobjectiveadviceifrequired.- ComplywiththeprovisionsofthedifferentlawsrelatingtotheBoardofDirectors.

Independence:To increase the efficiency of board’s control over the executivemanagement and ensure thatit doesn’t exercise any imprudent measures. The Bank’s Board of Directors should maintainan appropriate number of non-executivemembers in the Board, at least three of them to beindependent.The independent member is defined as the member (whether in his personal capacity or asrepresentingacorporateperson)whohasnorelationshipwiththeBankotherthanhismembershipintheBoardofDirectors,whichmakeshisjudgmentunaffectedbyanyconsiderationsorexternalmatters.Theminimumrequirementsthatmustbeavailableinanindependentmemberincludethefollowing:1. HemustnothaveworkedasanemployeeintheBankduringthelastthreeyearsprecedinghis

nominationtotheBoardmembership.2. NorelationshipshouldexistbetweenhimandanyexecutivemanagementintheBankbelow

thesecondgrade.3. Hemustnotreceiveanysalaryorfinancialsum,exceptwhathereceivesforhismembership.4. Hemust not be a director or owner of a company with which the Bank deals, except the

transactions that arise because of the services and/or the ordinary activities submitted bytheBank to its clients,provided that theyaregovernedwith the sameconditionsof similartransactionswithanyotherparty,andwithoutanypreferentialconditions.

5. Hemustnotbepartnerto/oremployedbytheexternalauditorduringthethreeyearsprecedinghisnominationtotheBoardmembership.


25

6. HissharesmustnotformaninterestthataffectthecapitaloftheBank,andmustnotbeanallytoanothershareholder.

Toensureindependence,amembermustcomplywiththefollowing:

- He(she)mustdeclareinwriting,andregularlywhetherhe,hisspouse,oranyofrelatives,uptothethirdgrade,hasapersonalinterestinanytransactionorcontracttowhichtheBankisaparty,orwhetheranyoneofthemhasaninterestaffectingacompanywithwhichthattransactionorcontractisrelated.Hemustnotparticipateinanymeetinginwhichthattransactionorcontractisdiscussed.

EvaluatingtowhichdegreehisotheractivitiesaffecthisindependenceasamemberintheBoardoftheBank.

Acquaintance and Knowledge:- ThedirectoroftheBoardshouldhaveunderstandingandknowledgeinthebankingoperations

andtherisks that theBankfaces, inadditiontothefinancialdatawhichreflects itsfinancialstanding.

- ThedirectoroftheBoardshouldhaveknowledgeinthelawsandinstructionswithwhichtheBankisrequiredtocomplywith,andmustfollowupthenewtopics inthefinancialservicessectorandanydevelopmentsthereto.

- The member must attend the meetings of the Board of Directors and the committeesresultingtherefrom,andreviewallthesubjectsraisedandreportspresentedbytheexecutivemanagement,theinternalandexternalauditors,andtheotherstakeholders.

4. Organizing the activities of the Board- With the aim of ensuring the comprehensiveness of the subjects presented in the board

meetings,whichmustnotbelessthan(6)meetingsperyear,theexecutivemanagementshouldproposethesubjectsitdeemstobeimportantfortheagendaofeachmeeting.

- TheBankshouldmaintainanappropriatenumberof independentmemberswiththeaimofensuringtheavailabilityofobjectivedecisions,andtoensurethattheBankmaintainsalevelofcontrolthatensurestheequilibriumoftheinfluencesofallparties,includingtheexecutivemanagementandthemainshareholders,andensureaswellthatthedecisionstakenareintheinterestoftheBank.

- TheexecutivemanagementshouldprovidethedirectorsoftheBoardwithadequateinformationbeforethemeetingsoftheBoardinordertoenablethemtaketheappropriatedecisions.

- Thesecretaryshouldprovideeachmember,uponbeingelected,withaletterwhichstatestherights,responsibilities,anddutiesofthememberinlinewiththerelevantlegislations.

- ThepoliciesoftheBankincludeanexplanationofallthebankingoperationsthatrequiretheapproval of the Board of Directors, including their powers with regard to the transactionsconcludedwith the concernedparties, or anyotherbankingoperations that fallwithin theauthorityoftheBoard.

- TheBoardanditscommitteesmayhavedirectcontactwiththeexecutivemanagement.- TheBoardanditscommitteesshouldhavethepowertoseekassistancefromexternalsources

tohelpthemcarryoutthedutiesassignedtothemsatisfactorily.


26

5. Composition of the Board of Directors and Formation of Committees- Thenumberofthedirectorsistwelve,andthatisdeemedtobeasuitablenumberasperthe

bestinternationalpractices.- TheBoardofDirectorshasdelegatedsomeofitspowerstocommitteesthataremadeupof

alessernumberofdirectorswiththeaimofincreasingitsefficiency.Thisisachievedwithinacharter thatputs forth thepowersand responsibilitiesof thecommittees.SuchcommitteesworkbymeetingindependentlyfromtheBoardandpresentperiodicreportstoit.

Third: The Committees of the Bank’s Board of Directors

1. The Executive CommitteeThe Charter of the Executive Committee:TheexecutivecommitteeshouldbeformedbasedonadecisionbytheBoardofDirectorsfromamongthedirectorsoftheBoardandshouldbepresidedbytheChairmanoftheBoardandincludefourofitsmembers.TheBoardshouldappointavicepresidenttothecommitteeandthesecretaryoftheBoardshouldappointarapporteurtothecommittee.

Duties and Powers of the executive committee1. RecommendingtotheBoardtheappointmentofthegeneralmanager2. RecommendingtotheBoardofappointmentofthegeneralmanager’sdeputiesandassistants

basedonanominationbythegeneralmanager3. Recommending to theBoardofDirectors thedraft regulationsand instructions re theBank

business.4. Grantingcreditfacilitiesorrecommendinggrantingthesameinaccordancewiththeceilings

prescribedinthecreditpolicy.5. Followingupandevaluatingthegrantedcreditfacilitiesandtakingtheappropriatemeasures

tocorrectthedelayed.6. Approving purchasing of supplies or recommending to the Board purchasing the same in

accordancewiththepowersprescribedbytheBoardinthepertinentregulationsanddecisions.7. Following up the balances of expenditure items and comparing them with the estimated

budgetsandmonitoringexpenditurecontrol.8. RecommendingtotheBoardofDirectorsreferringlawsuitstothecourtsorforarbitrationand

followingupthesame.9. Subscribinginsharesandbondsinthenewprojectsinaccordancewiththeceilingsofamounts

andconditionsprescribedintheinvestmentpolicysystem.10.AnypowersordutiesprovidedforbytheregulationsandinstructionsissuedbytheBoardof

Directors.11.AnyotherpowersordutiesdecidedbytheBoardofDirectors.

The Meetings of the Executive Committee1. Thecommitteeshouldmeetbasedonaninvitationfromitspresidentonceeverytwoweeks

orwheneverrequiredbasedonarequestfromthepresidentorbasedonarequestfromtwomembersinthecommittee.Themeetingshouldbelegalwiththepresenceofthreemembers.The committee should take its decisions by unanimous voting or with themajority of thenumberofitsmembers.

2. Thecommitteemayinvitethegeneralmanagerand/oranyemployeeintheBanktoattendthemeetingifnecessary.


27

Reports1. ThesecretaryoftheBoard/rapporteuroftheexecutivecommitteeshouldpreparetheminutes

and decisions of themeeting and get them endorsed by the committee in preparation forpresentingthesametotheBoardofDirectors.

2. The secretary of the Board should advise the generalmanagement of the decisions of theexecutivecommitteeandfollowuptheimplementationofthedecisionsandsubmitareporttothecommitteetofollowupitsdecisions.

2. Appointment, Nomination and Premiums CommitteeCharter of the Appointment, Nomination and Premiums CommitteeTheAppointment,RemunerationandIncentivesCommitteeshouldbeformedbasedonadecisionbytheBoardofDirectorsandismadeupofthreenon-executivemembers,twoofwhom(includingthepresidentofthecommittee)arefromtheindependentmembers.TheBoardshouldnominatethepresidentofthecommitteeanditsdeputyandthesecretaryoftheBoardshouldappointtherapporteurofthecommittee.

The Duties and Powers of the Appointment, Remuneration and Incentives Committee1- Nominating the names of themembers of the Board to the Board of Directors taking into

consideration the abilities and qualifications of the nominated persons. In cases of re-nomination,thefrequencyoftheirattendanceandthekindandefficacyoftheirparticipationinthemeetingsoftheBoardshouldbetakenintoaccount,observingthecontentoftheCompaniesLawregardingtherenewalofthemembershipofadirectortoensurethefulfillmentofallthenecessarybasesandconditionswhenformingthecommitteesoftheBoardofDirectors.

2- Definingwhetheradirectorhasthecapacityofanindependentdirector.3- Thenominationandpremiumscommitteeshouldfollowspecificbasesinassessingtheefficiency

oftheBoardinadditiontotheextentoftheparticipationofthememberinthemeetingsoftheBoard.ThestandardofassessingperformancemustbeobjectiveandmustincludeacomparisonwiththeotherbanksinadditiontothestandardsoftheintegrityofthefinancialdataoftheBankandtheextentofobservingtherequirementsofthecontrolauthorities.

4- Thecommitteeassumesthe responsibilityofproviding informationandabstractsabout thebackgroundof some important topics on the Bank to the directors and ensuring that theycontinually acquaint themselves with the most up-to-date subjects relevant to bankingoperations.

5- The nomination and premiums committee should recommend premiums (including themonthly pay and other benefits) to the generalmanager.Moreover, the committee shouldreviewtheannual incrementsgranted to theothermembersof theexecutivemanagementandemployees.

6- ThenominationandpremiumscommitteeshouldassumetheresponsibilityofensuringtheexistenceofapolicyintheBankwhichguaranteesthatthepremiums/salariesbesufficienttoattractqualifiedpersonstoworkintheBankandtoretaintheminaccordancewiththepremiums/salariesgrantedbythesimilarbanksinthemarket.TheBankpolicymustalsoincludethatthesalariesbeassociated,partially,withperformance.ProgramsforincentivesmustbedrawnwiththeaimofpromotingthevalueoftheBank’ssharesatthelongtermandpromotingtheinternalcontrolenvironmentand leading to integrityandsoundnessof thefinancialpositionof theBank,i.e.nottoconcentrateonincreasingtheallocationofthedividendsoftheBank’sshareattheshortterm.

7- EnsuringthedeclarationofthepremiumspolicyintheannualreportoftheBank,specifically


28

thepremiumsofthedirectors,individually,andthehighestsalariespaidduringtheyeartotheexecutivemangers,otherthanthedirectorsoftheBoard.

8- Incoordinationwith theChairman,preparinga trainingprogramspecially for themembersoftheBoardofdirectorsonthebanking,financialandaccountingoperationsandtheinternalcontrolregulationsandencouragingthedirectorsoftheBoardtoattendseminarsoreventswhichallowthemthechancesofmeetinglocalandinternationalorganizations.

9- Annuallyassessingtheperformanceofthegeneralmanager.10-RecommendingthattheBoardofDirectorsapprovesuccessionplansofthedirectorsandthe

executivemanagersoftheBank,soastoincludethequalificationsandrequirementsthatmustbefulfilledbythoseoccupyingsuchpositions.

The Meetings of the Committee ThecommitteeshouldconvenebasedonaninvitationfromitsChairorItsdeputytwiceayearatleastorwheneverrequiredbasedonarequestfromtheChairorarequestfromtwomembersofthecommittee.Themeetingwillbelegalwiththeattendanceoftwoofitsmembers.Ittakesitsdecisionsunanimouslyorthebymajorityoftwomembers.ThecommitteemaycallanyemployeeintheBanktoattendthemeeting,ifnecessary.

Reports1. The secretary/the committee raporrteur should prepare the minutes and decisions of the

meetingandgetthemapprovedbythecommitteeinpreparationforsubmissiontotheBoardofDirectors.

2. ThesecretaryoftheBoardshouldinformthegeneralexecutivemanagementofthedecisionsofthecommittee,followuptheimplementationofthedecisionsandsubmitareporttothecommitteeforfollowingupthedecisions.

3. Auditing, Risks Management and Compliance CommitteeCharter of the Auditing, Risks Management and Compliance CommitteeFormation of the Committee1. The auditing, risksmanagement and compliance committee should be formed based on a

decisionfromtheBoardofDirectorsandiscomposedofthreenon-executivemembers,twoofthem,atleast,areindependent.

2. TheBoardshouldnominatethepresidentofthecommittee,providedthatheisnon-executiveandindependent.

3. Uponappointingthemembers,twomembers,atleast,musthaveacademicqualificationsand/orexpertiseinthefieldsofthefinancialmanagement.

4. ThetenureofthecommitteeshouldbeconnectedwiththetenureoftheBoard.ThecommitteeshouldsubmititsreportstotheBoard.

5. ThesecretaryoftheBoardshouldappointaraporrteurtothecommittee.

The Objectives of the CommitteeThe basic objective of the committee should be to help the Board of Directors assume itsresponsibilitiestowardstheshareholdersandforeignpartiesthrough:1. ReviewingtheFinancialStatementsoftheBank.2. Reviewingthecorrectnessandadequacyoftheinternalcontrolsystem.3. Reviewing and controlling the risksmanagement in the Bank so as to reflect the real risks

surroundingtheBankoperation.


29

4. Controllingtheworkoftheexternalandinternalauditors.5. OpeningcommunicationchannelsbetweentheexternalandinternalauditorswiththeBoard

ofDirectorsandtheexecutivemanagementoftheBank.6. ControllingthecomplianceoftheBankwiththeapplicablelaws,legislationsandinstructions

andanyrelevantguidelinesandmanuals.

Powers1. ThecommitteeshouldbeauthorizedbytheBoardofDirectorstoinvestigateanyoftheactivities

anddutiesassignedtoitpursuanttoitscharter.Thecommitteeshouldhavefullpowertoobtaintheinformationitrequires.TheexecutivemanagementoftheBankandallemployeesshouldcooperatewithanysuchrequestfromthecommittee.

2. The committee should have the power of requesting legal consultancies or any otherconsultanciesfromforeignpartiesandfromexpertsshoulditseethisnecessary.

First: In the Field of Auditinga) Financial Statements:1. Reviewing the financial statements, annual, semi-annual and quarterly budgets and

recommendingtotheBoardofDirectorsapprovingthembeforebeingissued.2. Reviewingtheproceduresoftheexecutivemanagementwithregardtotherecommendations

oftheexternalauditorsabouttheannualFinancialStatementsandtheamendmentsthatarisepursuanttotherecommendationsoftheauditors.

3. Furthertotheaboveprocedures,thecommitteeshouldcarryoutthefollowingmeasuresbeforesubmittingtheFinancialStatementstotheBoardofDirectorsforapproval:

- Reviewinganyamendmenttothefollowedaccountingpolicies.- ReviewfinancialstatmentstoinsurethattheywerepreparedinaccordancewiththeInternational

FinancialReportingStandards.- Reviewingthemechanismofmakingtheextraordinaryortherelativelyhighvalueentriesin

casethereismorethanonemethodforthis.- AnychangethatoccurstotheaccountsoftheCompanyasaresultoftheauditingoperations

orasaresultofthesuggestionsoftheaccountsauditor.- ThattheywerepreparedinaccordancewiththerequirementsoftheCentralBankofJordan

oranyothercontrollingorsupervisorybodywithregardtotheadequacyoftheallocationstomeetthedoubteddebtsandtheallocationsoftheinvestmentportfolioandexpressingopinionwithregardtotheinoperativefacilitiesorthoseproposedtobedepreciated,inadditiontoanyotherrequirements.

- Reviewingtheaccountingestimatescontainedinthefinancialdata.- ReviewinganddiscussinganylegalmattersthatmayaffecttheBank’sFinancialStatements.- Reviewingthedataandinformationattachedwiththefinancialstatementsintheannualreport

suchasthecorporategovernance.

b) Internal Control System:1. Reviewing the internal control system with regard to its adequacy and effectiveness and

ensuringthatthemanagementhaspaidtheinternalcontrolsystemdueattentionandthattheconcernedpersonnelareawareofandcomplywiththissystemandthat responsibilitiesaredefined.

2. Theplansoftheinternalandexternalauditorsmustprovideforreviewingtheframeworkofthedisciplineregulationsandinternalcontrolonceayearatleast.


30

3. Reviewingtheparagraphofthe internalcontrol regulationsandrisksmanagement,whichareincludedintheannualreportoftheBankandrecommendingtotheBoardtoapprovethesame.

4. ReviewingthepolicyofreportingfortheunsoundpracticessothattheemployeesmaybeabletoreportaboutsuchpracticesandrecommendingtotheBoardtoapprovethesame.

5. ReviewingthepolicyoftheBankwithregardtodealingwiththeconcernedpartiessoastoensurethenon-existenceofanyconflictofintereststhatmayariseoutofthetransactionsorcontractsconcludedbytheCompanyorenteringintoprojectswiththeconcernedparties.

c) External Auditing:1. Discussing thematters relating to thenominationof theexternalauditorandensuring that

he fulfils the conditions of theCommission and that nothing affects his independence andobjectivityand theextentof the influenceofanyotheroperationshe iscarryingout to theaccountoftheCompanyonsuchindependence.

2. Discussingallmatters related to theworkof theexternal auditor includinghis annualplan,remarks,suggestionsandreservationsandfollowinguptheextentoftheresponsivenessoftheBank’smanagementtothesameandpresentingrecommendationsinthisregardstotheBoardofDirectors.

3. Reviewingtheremarkscontainedinthereportsoftheexternalauditorandfollowingupthecorrectivemeasurestakeninthisregard.

4. ParticipatinginsolvingtheproblemsresultingfromthedifferenceofviewpointsbetweenthemanagementoftheBankandtheexternalauditorswithregardtothetechnicalandfinancialissuesandpromotingtheindependenceofsuchauditors.

5. Discussing the possibility of recommending the regular rotation of the external auditor orrequesting regular rotation from themain shareholder who is responsible for the externalauditingoftheBank.

d) Internal Auditing:1. Reviewingandadoptingtheorganizationalchartoftheinternalauditingdepartmentandthe

activitiesofthedepartment.2. The power of appointing or terminating the services of the internal auditingmanager and

auditorsandreviewingtheirgoodperformance.3. The committee should review and adopt the performance evaluations of themanager and

employees of internal auditing department and authorize their annual promotion andpremiums.

4. Reviewingtheefficacyoftheactivityofinternalauditingandapprovingtheplansofstrategicandannualauditingandthebudgetsofthedepartment.

5. WatchingtheobservationoftheauditingdepartmentwiththestandardsofinternalauditingthatareissuedbytheSocietyofInternalAuditorsandanysubsequentamendments.

6. Approvingthecharteroftheinternalauditingdepartmentandensuringthatitiscopingwiththechanges.

7. Reviewingtheresultsoftheauditingdutiesandensuringthatthereisasatisfactoryfollowupfortheseresults.

8. ParticipatinginsolvingtheproblemsresultingfromthedifferenceintheviewpointsbetweenthemanagementoftheBankandtheinternalauditorswithregardtothetechnicalandfinancialissuesandpromotingtheindependenceandobjectivityofsuchauditors.

9. Thecommitteeshouldberesponsibleforreviewingtheevaluationofexternalauditorsoftheperformanceofthe internalauditorsandforreviewingtheworkscarriedoutbythe internal


31

auditorsofthemattersofconflictofinterestsandobservationoftherulesofprofessionalandethicalconductintheBank.

e) Other Duties:1. Reviewing the charter of the committee andproposing that theBoardmake thenecessary

amendments.2. PreparingareporttotheBoardaboutthedutiesandpowersofthecommitteeandthedecisions

andrecommendationstakenbythecommitteeduringtheperiod.3. GettingacquaintedwiththereportsoftheexternalsupervisorybodiessuchastheCentralBank

ofJordanandensuringthe implementationof therecommendationscontainedthereinandtheexecutionbytheexecutivedepartmentofthemeasuresthatguaranteenon-repetitionoftheviolationsandremarkscontainedtherein.

4. FollowinguptheextentoftheobservationoftheBankoftheSecuritiesLawandtheregulations,instructionsanddecisionsissuedthereupon.

5. Training new members on the committee and continuous training of the president andcommitteemembers.

6. Ensuringcoordinationbetweentheworkoftheexternalauditorandinternalauditor.7. AnyotherdutiesthatarerequiredbytheBoardofDirectors.

Second: In the Field of Risks1. ReviewingthestrategiesandpoliciesofrisksmanagementbeforebeingapprovedbytheBoard

ofDirectorsandcontinuouslyassessingtheirefficacyandconsistency.2. Reviewingthepoliciesandworkframeofriskmanagement,programsandtoolsnecessaryfor

thesameannually,asaminimum,toensuretheirefficacyandtoamendthemifnecessary.3. Reviewingthestructureofrisksmanagement,whichispreparedbytheexecutivemanagement

andrecommendingthatitisapprovedbytheBoard.4. Reviewingthemeasuresoftheexecutivemanagementfordefining,measuringandcontrolling

thepotentialrisksintheBank,whichinclude:a. Creditrisksb. Marketrisksc. Liquidityrisksd. Operationalrisks

5. SubmittingperiodicreportstotheBoardofDirectorsshowingtowhatextenttheexistingrisksarecongruentwiththeappliedpoliciesandthelevelsofacceptablerisksthatarecontainedthereinsoastoenabletheBoardtotaketheproperandnecessarydecisions.

6. Supervisingthedevelopmentofthedatabasenecessaryforrisksmanagement.7. Studyingtheperiodicreportsthatareissuedbyrisksmanagement.8. Ensuringthattheplanoftheinternalandexternalauditorsisincludedinthedutyofreviewing

risksmanagementintheBank.9. Ensuringtheuseofmoderndatasystemsformanagingriskswhichguaranteetheavailabilityof

qualityinformationontherisksfacedbytheBank.Third: In the Field of Compliance1. RecommendingtotheBoardofDirectorstoadoptcompliancecontrollingpolicyandtoassess

theefficiencygradewithwhichtheBankismanaging(compliancerisks)onceayearatleastandreviewingthesamewhenmakinganynecessarychanges.

2. Controlling and following the application of compliance controlling policy and receipt of


32

reportsoncompliancefromthecompliancedirectorateandsubmittingthesametotheBoardofDirectorswiththenecessaryrecommendations.

3. ThecompliancemanagershouldprepareeffectivemethodologytoguaranteethecomplianceoftheBankwithalltheapplicablelawsandregulationsandanyrelevantguidelinesandmanualsandtheexistenceofeffectivefollowupsystem.TheBankshoulddocumenttheduties,powersandresponsibilitiesofthecompliancemanagementandarrangetocirculatetheminsidetheBank.

4. TakingthemeasuresnecessarytopromotestraightforwardnessvaluesandsoundprofessionalpracticesinsidetheBankinsuchawayastomakecompliancewiththeappliedlaws,regulations,instructions,ordersandstandardsabasicobjectivewhoseachievementisamust.

The Meetings of the Committee 1. Thecommitteeshouldconvenebasedonan invitationfromitspresidentor itsdeputyonce

everythreemonthsatleastorwheneverrequired,orbasedonarequestfromtheChairmanoftheBoardorarequestfromanyofitsmembers,orbasedontherequestoftheexternalauditorsorinternalauditorsifnecessary.

2. The head of internal auditing should be invited to attend themeetings of the committee.Periodicmeetingsarealsoheldwiththeexternalauditor,themanagerofrisksmanagementandthepersoninchargeofcompliance.

3. Meetingwiththeexternalandinternalauditors,thepersoninchargeofcomplianceandtheexecutivedepartmentinseparatesessionsatleastonceayearfordiscussionofanymatterthecommitteeorotherbodiessuggesttobediscussed.

4. ThecommitteehastherighttoinviteanyemployeeintheBanktoattendanyofitsmeetingsifitdeemsthisnecessary.

5. Followingcoordinationwiththepresidentandmembersofthecommittee,thedatesandplaceofthemeetingofthecommitteeshouldbedefinedbytheraporrteurofthecommitteebasedon invitations, provided that the agendabe prepared anddistributed to the president andmembersofthecommitteeandotherinviteesreasonablyaheadofthemeetingdate.

6. Themeetingshouldbelegalwiththeattendanceoftwoofthemembers.Ittakesitsdecisionsunanimouslyorthebymajorityoftwomembers.

7. Thepresidentofthecommitteeshouldattendtheannualmeetingofthegeneralassemblytoanswertheenquiriesoftheshareholderswithregardtothedutiesofthecommittee.

ReportsThecommitteeraporrteurshouldpreparetheminutesofthecommitteemeetinganddistributethemtothepresidentandmembersofthecommitteeforapprovalinpreparationforsubmissiontotheBoardofDirectors.

4. The Corporate Governance CommitteeThe Charter of the Committee:TheCorporateGovernanceCommittee shouldbe formedbasedon adecisionby theBoardofDirectorsandismadeupofthreenon-executivemembers,twoofwhom(includingthepresidentofthecommittee)arefromtheindependentmembers.TheBoardshouldappointthepresidentofthecommitteeanditsdeputyandthesecretaryoftheBoardshouldappointaraporrteurtothecommittee.

Duties and Powers- EnsuringtheobservationofthecontentoftheCorporateGovernanceCode.Itshouldundertake


33

theprocessofreviewingandupdatingit.- TheCommitteemayinviteanypersonintheBank,atalladministrativelevelstotakecounsel

withhimortoaskhimaboutanymatter.

The Meetings of the CommitteeThecommitteeshouldconveneatleastonceayearbasedonaninvitationfromitspresident.

ReportsThecommitteeshouldsubmitareporttotheBoardatleastonceayear,whichputsforthitsopinionintheextentofobservingtheitemsoftheCode.

Fourth: Secretary of the BoardThe Duties and Powers of the Secretary of the Board of DirectorsTheBoardofDirectorsshouldappointasecretaryfortheBoardanddefinehis/herpremiums.Thesecretaryshouldorganizeitsmeetings,prepareitsagendasandrecordtheminutesofitsmeetingsanddecisions ina special registerand in successive seriallynumberedpages,which shouldbesignedbytheChairmanandmembersoftheBoardwhoattendedthemeeting.EachpageshouldbeaffixedwiththeCompany’sstamp.

First: In Connection with the Board of Directors1-PreparingtheagendaofthesessionsoftheBoardincoordinationwiththeChairman.2-FollowingupthemanagementtosupplythesecretaryoftheBoardwiththedocuments,papers

andworkpapers,whicharethesubjectoftheagenda.3- Attending the sessions of the Board and recording the minutes of its meetings as well as

decisions.4-PreparingandcheckingtheminutesofthemeetingsoftheBoardanddispatchingthesameto

theBoardofDirectors,who,inturn,shouldreadandapprovetheminutes.5-FollowingupthemeasuresrelatingtothesignatureoftheChairmanandmembersoftheBoard

onallthepagesoftheminutesofthemeeting.6-SupervisingtheprocessofthemaintenanceoftheminutesanddecisionsoftheBoardmeetings

insuccessiveseriallynumberedpages,andensuringthattheyaresignedbythemembersoftheBoardwhoattendedthemeeting.

7-ThesecretaryoftheBoardshouldnotifytheconcerneddepartmentsofthedecisionsthatareissuedbytheBoardofDirectorsfortheimplementationofthesame.

8- In coordination with the concerned departments, following up the implementation of thedecisionsand recommendations thatare issuedby theBoardandpreparinga report to theBoardofDirectors,whichincludesthemeasurestakenbytheBankdirectoratestoimplementthedecisions.

Second: In Connection with the Committees of the Board of Directors1. FollowinguptheconcerneddepartmentstosupplythesecretaryoftheBoardwiththeinformation

andpreparingtheworkpapersnecessaryfortheworkofthecommitteesoftheBoard.2. PreparingtheagendasofthecommitteesincoordinationwiththeChairman.3. Attendingthesessionsofthecommitteesandrecordingtheminutesoftheirmeetings.4. Preparingandcheckingtheminutesof themeetingsof thecommitteeanddispatchingthe

sametothepresidentofeachcommittee,who,inturn,shouldreadandapprovetheminutes.5. Themaintenanceoftheminutesofthesessionsofthecommitteesinsuccessiveseriallynumbered


34

pages,andensuringthattheyaresignedbythememberswhoattendedthemeeting.6. Notifytheconcerneddepartmentsofthedecisionsthatareissuedbythecommitteesofthe

Boardfortheimplementationofthesame.7. In coordination with the concerned departments, following up the implementation of the

decisionsandrecommendationsthatareissuedbythecommitteesoftheBoard.

Third:ThesecretaryshouldfollowupthedecisionsoftheBoardofDirectors,representedbytherelationshipoftheBoardwiththeexternalbodiessuchastheSecuritiesCommissionand/ortheMinistryofIndustryandCommerceand/ortheCentralBankand/ortheDepositionCenterand/oranyofficialornon-officialpartyandpreparingthenecessarybooksanddulynotifythesametosuchbodies.

Fourth: The secretaryof theBoardofDirectors should carryout any additionalduties that areassignedtohimbytheChairman.

The Executive Management

Duties and Powers of The Executive ManagementResponsibilities of the General ManagerThegeneralmanageristheheadoftheexecutivesystemintheBankand,inexercisinghisduties,should be responsible towards the Board of Directors. For this end, he should implement thepoliciesandachievetheobjectivesandaimsthattheBoarddrawsup,basedonthedutiesandpowershereinbelowstated:

General Description of the Responsibilities:1. ManaginganddirectingtheBankforachievingthebasicobjectivesdependingonprofit,the

capitaladdedreturnsandtheresponsibilityforthetotalprocessofmanagingtheBank,whichincludesplanning,organizinganddevelopinginsideandoutsideJordan.Thegeneralmanagershould also be responsible for the structure ofwork and the employees and for activatingtheworkplanandbudgetsaswellasdevelopingthequality,methodandproceduresoftheworkandimplementingthestrategicplansandthedecisionswhicharetakenbytheBoardofDirectors.

2. Thegeneralmanagershouldbethemainexecutorof thepoliciesthatare laiddownbytheBoardofDirectors.

3. TheGeneralmanagershouldberesponsiblebeforetheBoardofDirectorsforimplementingallthedecisionsthataretakenbytheBoard.

Main Duties:1. Preparinganddevelopingthestrategiesandpolicies,arrangingtoapplythemfollowingthe

approvaloftheBoardofDirectorsandapplyingthecurrentandlongtermobjectivesandtheplansandpoliciesthatrequiretheapprovaloftheBoardofDirectors.

2. Preparinganddevelopingtheworkproceduresinsuchawayastoguaranteethedefinition,controlofandwatchingtherisksthatfacetheBankandapplyingsuchmeasures.

3. Planning, coordinating and control of the daily operations of the Bank, drawing up properdisciplinaryandinternalcontrolpoliciesandapplyingthemfollowingtheapprovaloftheBoardofDirectors.


35

4. PreparingthefinancialstatementsandthefinalaccountsandpreparinganannualbudgetandgettingthemapprovedbytheBoardofDirectors.

5. Providingtheinternalandexternalcontrolbodiessuchasthecontrolauthoritiesandinternalandexternalauditingandanyothercompetentpartieswiththeinformationandstatementsnecessaryforsuchpartiestocarryouttheirwork.

6. Preparinganorganizationalchartandensuringactualobservationof thesamefollowing itsapprovalbytheBoardofDirectors.

7. ReviewingtheoperationsresultoftheBank,comparingthemwiththeplannedobjectivesandtaking the steps necessary for adopting the appropriatemeasures for the correctionof thedissatisfactoryresults.

8. Achievingtheeffectivenessofthecontrolandinternaldisciplineandsubmittinganannualreport,atleast,totheBoardofDirectorsoftheapplicationandeffectivenessoftheregulations.

9. LayingdownthemeasuresthatguaranteetheevaluationoftheadequacyofthecapitalandsubmittingannualreportstotheBoardofDirectorsinthisconnection.

10.DraftingworkethicscharterandgettingitapprovedbytheBoardofDirectors.11.DevelopingtheprofessionalskillsandconductoftheBank’spersonnelsoastobeconsistent

withthemostup-to-datedevelopmentsandtechnologies.12. Applying the laws, regulations and decisions of the Board of Directors and implementing

responsibilitiespursuanttothepowersvested.

Powers of the General Manager:1. Thegeneralmanagershouldexercisehispowersandresponsibilities inaccordancewiththe

Companies Law, Banks Law, the regulations issued according to it and the regulations andinstructionsthatareissuedbytheBank.

2. ThegeneralmanagershouldberesponsiblebeforetheChairmanoftheBoardofDirectorsfortheworksanddutiesassignedtohim.

3. Thegeneralmanagershouldexercisethefollowingpowersandresponsibilities:- RunningtheordinarydailyoperationsoftheBankanddrawinguptheexecutiveplansand

generalprogramsforimplementingtheapplicablepoliciesoftheBank.- ExercisinginternalcontroloverworkprogressintheBankandcheckingitscompliancewith

theapplicablelaws,regulationsandinstructions.- OverallreviewoftheresultsoftheoperationsoftheBanktoensurethattheyarerunningas

pertheprescribedplansandschedules.- Updatingtheregulations,instructionsandworkmethodsandsupervisingthereviewofthe

draftregulations,instructions,plansandschedulesfordevelopingtheperformanceoftheBank.

- Endeavoringtoraisetheleveloftheperformanceoftheemployeesandmotivatethemtogivethebesttheyhave.

- UpdatinganddevelopingthesystemsandequipmentnecessarytoperformtheoperationsoftheBankinsuchawayastoguaranteethedeliveryofdevelopedbankingservicesbasedonthemostrecent,mostefficient,fastestandmostaccuratebases.

- Appointingandmovingtheemployees,decidingtheirpromotionanddelegation,definingtheirpostslocation,grantingthemleavesandimposingdisciplinarypenaltiesinaccordancewiththeprovisionsofthepersonnelsystemintheBank.

- PeriodicallyprovidingtheBoardofDirectorsoftheBankwithreportsabouttheconditionsoftheBankandensuringthatallitsoperationsarerunninginaccordancewiththepolicylaiddownbytheBoardofDirectorsandrecommendinganyproposalsitdeemsnecessary


36

fordevelopingtheworkoftheBank.- SigningthefinancialtransactionsissuedbytheBankinaccordancewiththefinancialsystem

andotherregulations.- ProvidingtheCentralBankwiththeinformationanddataitdemandsinaccordancewiththe

provisionsofthislawandtheregulationsandordersissuedaccordingtoit.- SubmittingproposalsaboutthefinancialandbankingpoliciesoftheBanktotheBoardof

DirectorsthroughtheChairman.- Undertakingtheotherfinancialandadministrativepowersassignedtohimpursuanttothe

decisionsissuedbytheBoard.- Thegeneralmanagerisentitledtodelegateanyofhispowerstothedeputygeneralmanager

and/oranyofhisassistantsinaccordancewiththeregulationsandpoliciesapplicableintheBank.

Discipline and Internal Control Environment

Disciplinary and Internal Control RegulationsTheframeworkofthedisciplineandinternalcontrolshouldbereviewedbytheinternalauditorandexternalauditoronce,atleast,peryear.TheBoardshouldalsoincludeintheannualreportoftheBankareportabouttheextentoftheadequacyofthedisciplineandinternalcontrolregulationsregardingfinancialreporting.

Internal Auditing- The Bank shouldmake available to the internal audit directorate sufficient numbers of the

qualifiedhumanresources,whowillbeproperlytrained.TheauditingdirectorateshouldhaveaccesstoanypieceofdataandcontactanyemployeeinsidetheBank.Itshouldalsobegivenallthepowerswhichenableittoperformthedutiesassignedtoitasrequired.TheBankshoulddocumenttheduties,powersandresponsibilitiesofthedirectorateofauditingbasedontheInternalAuditingCharter,whichisadoptedbytheauditingcommitteeandcirculatedinsidetheBank.

- The internal auditing directorate should submit its reports to the Chair of the auditingcommittee.

- Theinternalauditingemployeesmaynotbechargedwithanyexecutiveresponsibilities.Theinternalauditingdirectorateshouldberesponsibleforproposingtheframeandscopeoftheinternalauditingaswellasfor informingtheauditingcommitteeofanypotentialconflictofinterests.

- Theinternalauditingdirectorateshouldexerciseitsdutiesandprepareitsreportsinfullwithoutanyforeigninterference.Itmaydiscussitsreportswiththeauditeddepartments.

- Thebasicresponsibilityoftheinternalauditingdirectorate,whichisbasedonrisks, includesreviewingthefollowingasaminimum:1.TheoperationsoffinancialreportingintheBank(toensureaccuracy,credibilityandproper

timinginthemaindataofthefinancialandadministrativemattersandoperations).2.CompliancewiththeinternalpoliciesoftheBank,theinternationalstandardsandprocedures

andthepertinentlawsandinstructions.

External Auditing:- TheBankobservestheregularrotationoftheexternalauditingbetweentheauditingoffices,or


37

atleasttheregularrotationofthemainshareholderresponsiblefortheexternalauditingoftheBank.

- The external auditor should provide the auditing committeewith a copy of his report.Theexternalauditorshouldmeetwiththeauditingcommitteewithoutthepresenceoftheexecutivemanagementonceayearatleast.

Risks Management Department- TheBankhasaseparatedepartmentforrisksmanagementwhichsubmitsitsreportsperiodically

to the risksmanagement committee. As to the daily operations, its connection is with thegeneralmanager.

- TheresponsibilitiesoftherisksmanagementdepartmentintheBankincludethefollowing:1.Analyzingalltherisksincludingthecreditrisks,marketrisks, liquidityrisksandoperations

risks.2.Developingmethodologyformeasuringandcontrollingofeachkindofrisks.3.Recommendingrisksceilingsandapprovalstotherisksmanagementdepartment,submitting

reportsandregisteringcasesofexceptionsfromtherisksmanagementpolicy.4. Providing the Board and the higher executive management with information on risks

measurementandrisksprofileintheBank(theBoardshouldregularlyreviewthequalitativeandquantitativerisksstatisticsintheBankineachoftheBoard’smeetings).

5.ProvidinginformationabouttherisksintheBankforuseforthepurposesofdeclarationandpublicationtothepublic.

6.TheBank’scommittees,suchasthecreditcommitteesandtheassetsandliabilitiesmanagementcommittee/thetreasuryandrisksshouldassisttherisksmanagementdepartmentincarryingoutitsdutiesinaccordancewiththepowersassignedtosuchcommittee.

7.TheannualreportoftheBankincludesinformationabouttherisksmanagementdepartmentwithregardstoitsstructure,natureofitsoperationsandthedevelopmentsthattookplace.

Compliance- TheBankhasaseparatedirectoratethatwassupportedwithtrainedcadresandworksasper

theinstructionsoftheCentralBank,whichareissuedinthisconnection.- The compliance directorate should prepare an effective methodology to guarantee the

complianceoftheBankwithallvalidlawsandlegislationsandanypertinentguidelinesandmanuals.The Bank should document the duties, powers and responsibilities of compliancedirectorate,whichwillbecirculatedinsidetheBank.

- TheBoardadoptsandcontrolsthecompliancepolicy,whosedraftingandapplicationwillbetheresponsibilityofthecompliancedirectorate.

- IncompliancewiththeinstructionsoftheCentralBankissuedinthisregard,thecompliancedirectorateshouldsubmititsreportsontheresultsofitsactivitiesanditscompliancecontroltotheBoardortothecompliancecommitteewhichstemsfromitandshoulddispatchacopytotheexecutivemanagement.

Relationship with Shareholders- TheBankshouldtakestepstoencouragetheshareholders,especiallytheminorones,toattend

theannualmeetingofthegeneralassemblyandtovoteeitherinpersonaorbyaproxyincasetheyareabsent.

- Theheadsoftheauditing,nominationandpremiumscommitteesandanyothercommitteesstemmingfromtheBoardshouldattendtheannualmeetingofthegeneralassembly.


38

- Representatives of the external auditors should attend the annual meeting of the generalassemblytoansweranyquestionsthatmayberaised.

- Each issue raised during the annualmeeting of the general assembly should be voted forseparately.

- PursuanttothecontentoftheCompaniesLaw,thedirectorsshouldbeelectedorre-electedduringtheannualmeetingofthegeneralassembly.Theexternalauditorshouldbeelectedinthesamemeetingaswell.

- Followingtheexpiryoftheannualmeetingofthegeneralassembly,areportshouldbepreparedfor the informationof theshareholders remarksraisedthereinandtheresults, includingtheresults of voting and questions raised by the shareholders and the replies of the executivemanagementthereto.

Transparency and Declaration:- The Bank shouldmake declarations in accordance with the International Financial Reports

StandardsandthevalidinstructionsoftheCentralBankofJordan,whichareissuedaccordingtothevalidBanks’Lawandpertinentlegislations.Furthermore,theBankisawareofthechangesthatoccurtotheinternationalpracticesforfinancialreportingandthescopeoftransparencyrequiredfromthefinancialorganizations.TheBankshouldobservefullapplicationofallamendmentsthatoccurtotheInternationalFinancialReportsStandards.TheexecutivemanagementshouldsubmittotheBoardreportsonthedevelopments,inadditiontosubmittingrecommendationsabouthowtoenhancetheBank’spracticesinthefieldofdeclarationsoastogobeyondtherequirementsoftheCentralBankofJordaninthisregard.

- TheBankshouldprovideindicativeandrichinformationaboutitsactivitiestotheCentralBank,theshareholders,depositors,otherbanksandthepublicingeneral,concentratingatthesametimeontheissuesthatexcitetheworryoftheshareholders,providedthattheBankperiodicallydeclareallsuchinformationandmakeitaccessibletoall.

- TheBank should in its annual report set forthhis responsibilities towards the accuracy andadequacyofitsfinancialstatementsandtheinformationcontainedinitsannualreport.

- TheBankshouldmaintaincommunicationlineswiththesupervisorybodies,theshareholders,depositors,otherbanksandthepublicingeneral.Suchlinesshouldbethroughthefollowing:a. Thepositionofshareholdersaffairs,whichisoccupiedbyqualifiedcadrethatarecapableof

providingcomprehensive,objectiveandupdatedinformationabouttheBank,itsfinancialposition,performanceandactivities.

b. Theannualreportwhichisissuedfollowingtheendofthefiscalyear.c. QuarterlyreportsthatcontainquarterlyfinancialdatabesidesthereportoftheBoardabout

thecirculationoftheBank’ssharesandaboutitsfinancialpositionduringtheyear.d. Periodic meetings between the executive management in the Bank, the investors and

shareholders.e. Providingaperiodicabstracttotheshareholdersandtheanalysts inthefinancialmarket

andthejournalistsspecializedinthefinancialsectorbythehigherexecutivemanagement,especiallythegeneralmanagerandthechiefofficer.

f. ProvidingtheinformationprovidedintheannualreportoftheBank,initsquarterlyreportsorinthelecturesgivenbytheexecutivemanagement,throughthepositionofinvestmentaffairsonthewebsiteoftheBankinsuchanupdatedformbothinArabicandEnglish.


39

- The annual report of the Bank and Its quarter reports should include a declaration by theexecutivemanagementoftheBank,thatiscalledManagementDiscussionandAnalysis,whichallows the investors tounderstand the resultsof the current and futureoperations and thefinancialpositionoftheBankincludingtheprobableeffectoftheknowntrends,eventsandcasesofnon-certainty.TheBankundertakestoobservethatalltheclarificationsprovidedforinthisdeclarationareauthorized,complete,fair,balancedandunderstandableandarebasedonthepublishedfinancialstatementsoftheBank.

1. Aspartofobservationoftransparencyandfulldeclaration,theannualreportshouldspecificallyincludethefollowing:a. TheCorporateGovernanceCodeoftheBankandtheannualdetailsofhisobservationofits

items.b. Informationabouteachdirector:hisqualifications,experience,his/hershareinthecapitalof

theBank,whetherhe/sheisindependent,executive,non-executive,his/hermembershipintheBoard’scommittee,dateofhis/herappointmentintheBoard,anymembershipsinotherBoardsofDirectors,premiums/salariesreceivedfromtheBank,loansgrantedfromtheBankandanyotheroperationsbetweentheBank,hiscompaniesorthepartiesrelatedtothem.

c. AsummaryoftheorganizationalchartoftheBank.d. AsummaryofthedutiesandresponsibilitiesofthecommitteesoftheBoardandanypowers

theBoardhasdelegatedtosuchcommittees.e. ThefrequencyofthemeetingsoftheBoardandthecommitteesoftheBoardf. A summary of the policy premiums and the highest salary paid to the executive

management.g. AtestimonyfromtheBoardastotheadequacyofthedisciplineregulationsandinternal

control.h. Adescriptionoftheframeworkandactivitiesoftherisksmanagement.i. ThemainshareholdersintheBankj. Adeclarationaboutpertinentparties.


41

Consolidated Financial StatementsAs of December 31st, 2007

and Auditor’s Report

42

WehaveauditedtheaccompanyingconsolidatedfinancialstatementsofCAPITALBANKOFJOR-DAN(apublicshareholdingcompany)anditssubsidiaries(“theBank”),whichcomprisethecon-solidatedbalancesheetasat31December2007and theconsolidated incomestatement, con-solidatedstatementofchangesinequityandconsolidatedcashflowstatementfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes.

Directors’ Responsibility for the Financial Statements

TheDirectorsareresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinan-cialstatementsinaccordancewithInternationalFinancialReportingStandards.Thisresponsibilityincludes:designing, implementingandmaintaining internalcontrol relevant to thepreparationand fairpresentationoffinancial statements thatare free frommaterialmisstatement,whetherduetofraudorerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccount-ingestimatesthatarereasonableinthecircumstances.

Auditors’ Responsibility

Ourresponsibility istoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethical requirementsandplanandperformtheaudit toobtainreasonableassurancewhetherconsolidatedthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclo-suresintheconsolidatedfinancialstatements.Theproceduresselecteddependontheauditors’judgement, including theassessmentof the risksofmaterialmisstatementof theconsolidatedfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationoftheconsoli-datedfinancial statements inorder todesignauditprocedures thatareappropriate for thecir-cumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtained issufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

Inouropinion, theconsolidatedfinancial statementspresent fairly, inallmaterial respects, thefinancialpositionoftheBankasof31December2007anditsfinancialperformanceanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards.

Amman–Jordan24February2008 Ernst & Young

Independent Auditors’ Report to the Shareholders ofCapital Bank of JordanAmman - Jordan

AMemberofErnst&YoungGlobal

43

The Accompanying Note From 1 - 49 are an Integral part of these Financial Statments

AssetsCash and balances with Central BanksBalances at banks and financial institutionsDeposits at banks and financial institutionsFianancial Assetes held for trading Direct credit facilitiesFianancial assets available for saleFianancial assets held to maturityProperty and equipmentGoodwill and other intangible assetsDeferred tax assetsOther assets

Total Assets

Liabilities And EquityLiabilities -

Banks and financial institutions’ depositsCustomers’ depositsMargin accountsLoans and borrowingsSundry provisionsIncome tax liabilitiesDeferred tax liabilitiesOther liabilities

Total Liabilities

EquityEquity attributable to the Bank’s shareholders

Paid in capitalAdditional Paid In CapitalStatutory reserveGeneral banking risk reserveForeign currency translation adjustmentCumulative changes in fair valueRetained earningsProposed dividendsProposed issue of bonus shares

Total equity attributable to the Bank’s shareholdersMinority interests Total Equity Total Liabilities and Equity

80‚694‚003150‚988‚307

6‚381‚00041‚962‚183

489‚727‚25935‚381‚79411‚910‚500

8‚934‚9844‚406‚786

419‚368 25‚568‚539

856‚374‚723

59‚407‚850433‚597‚400

56‚786‚429132‚614‚564

289‚5347‚558‚863

95‚7899‚032‚524

699‚382‚953

116‚000‚000709‚472

11‚155‚8394‚249‚3801‚235‚542

) 209‚833(10‚481‚141

- 7‚000‚000

150‚621‚541 6‚370‚229

156‚991‚770 856‚374‚723

Consolidated Balance SheetCapital Bank of Jordan

At 31 December 2007(In Jordanian Dinars)

88‚048‚157136‚908‚920

- 49‚870‚961

497‚411‚90740‚035‚87173‚302‚108

9‚784‚6865‚609‚5683‚346‚600

35‚320‚457939‚639‚235

32‚788‚278482‚309‚858

61‚293‚858173‚429‚653

3‚226‚9797‚292‚527

255‚942 6‚667‚016

767‚264‚111

123‚000‚000709‚472

12‚874‚4205‚119‚8442‚420‚483

238‚73913‚278‚669

7‚500‚000 -

165‚141‚627 7‚233‚497

172‚375‚124 939‚639‚235

456789

1011122014

15161718192020

21

22222323

24252626

2006JD

2007JDNotes

44


Interest incomeInterest expense and similar charges

Net interest income

Net commission

Net interest and commission income

Other income-

Net gain from foreign currenciesNet gain )loss( from financial assets held for tradingNet gain from financial assets available for saleOther income

Gross profit

Employees’ expensesDepreciation and amortizationOther expenses Imapairment losses on direct credit facilitiesSundry provisions

Total expenses

profit before tax

Income tax expense

Profit for the year

Attributable to:

Equity holders of the parent for the yearMinority interest

Basic and diluted earnings per share

56‚129‚85730‚382‚805

25‚747‚052

4‚893‚737

30‚640‚789

1‚155‚020) 1‚058‚792(

1‚416‚732 4‚352‚652

36‚506‚401

5‚218‚072 957‚083

6‚163‚247) 686‚514( 386‚733

12‚038‚621

24‚467‚780

6‚407‚875

18‚059‚905

18‚279‚742) 219‚837(

JD/Fils 0.149

Consolidated Income Statement Capital Bank of Jordan

for the Year Ended 31 December 2007

65‚184‚55339‚382‚10925‚802‚444

5‚554‚629

31‚357‚073

2‚177‚6832‚623‚951

164‚519 5‚040‚350

41‚363‚576

6‚882‚5211‚118‚3496‚493‚6735‚924‚767

2‚973‚419

23‚392‚729

17‚970‚847

4‚462‚181

13‚508‚666

12‚956‚462 552‚204

JD/Fils 0.110

2728

29

303132

33

3411 & 12

358

19

20

36

2006JD

2007JDNotes

(In Jordanian Dinars)

45

Consolidated Statement Of Changes In Equity Capital Bank of Jordan

for the Year Ended 31 December 2007(In Jordanian Dinars)

Balan

ce as

of 1

Janu

ary 2

007

Forei

gn cu

rrenc

y tran

slatio

n adju

stmen

tInc

rease

in ca

pital

fees

Net m

ovem

ent in

cumu

lative

c

hang

es in

fair v

alue a

fter t

ax

Total

inco

me an

d exp

ense

s for

the

yea

r reco

gnise

d dire

ctly i

n equ

ityPro

fit for

the y

ear

Total

inco

me an

d exp

ense

s for

the y

ear

Increa

se in

Capit

alTra

nsfer

s to r

eserv

esPro

pose

d divi

dend

s

Balan

ce as

of 31

Dec

embe

r 200

7

Balan

ce as

of 1

Janu

ary ,

2006

Forei

gn cu

rrenc

y tran

slatio

n adju

stmen

tNe

t mov

emen

t in cu

mulat

ive

cha

nges

in fa

ir valu

e afte

r tax

To

tal in

come

and e

xpen

ses

reco

gnise

d dire

ctly i

n equ

ityPro

fit for

the y

ear

Total

inco

me an

d exp

ense

s f

or th

e yea

rInc

rease

in Ca

pital

Trans

fers t

o res

erves

Propo

sed i

ssue o

f bon

us sh

ares

Balan

ce at

31 D

ecem

ber, 2

006

Min

ority

In

tere

sts

JD

Prop

osed

Di

viden

dsJD

JD

Prop

osed

issue

of

bonu

ssh

ares

Reta

ined

earn

ings

JD

Cum

ulat

ivech

ange

s in

fair

valu

esJD

Fore

ign

curre

ncy

trans

latio

nad

justm

ent

JD

Gene

ral

bank

ing

risk

rese

rve

JD

Stat

utor

yre

serv

e

Addi

tiona

l p

aidin

capi

tal

Paid

inCa

pita

lJD

Tota

l

Equi

ty

JD

JDJD

116‚0

00‚00

0-

-

-

-

-

-

7‚000

‚000

-

-

123‚0

00‚00

0

101‚4

33‚78

9-

-

-

-

-

14‚5

66‚21

1-

-

116 ‚

000‚0

00

709‚4

72-

-

-

-

-

-

-

-

-

709‚4

72

-

-

-

-

-

-

709‚4

72

-

-

709‚4

72

156‚9

91‚77

01‚4

96‚00

5)

69‚8

89(

448‚5

72

1‚874

‚688

13‚50

8‚666

15‚38

3‚354

-

-

-

172‚3

75‚12

4

135‚9

34‚72

42‚0

39‚37

9

) 3

17‚92

1(

1‚721

‚458

18‚05

9‚905

19‚78

1‚363

1‚275

‚683

-

-

156‚9

91‚77

0

6‚370

‚229

311‚0

64-

-

311‚0

64 5

52‚20

486

3‚268

-

-

-

7‚233

‚497

5‚757

‚999

832‚0

67

-

832‚0

67)

219‚8

37(

612‚2

30-

-

-

6‚370

‚229

7‚000

‚000

-

-

-

-

-

-

) 7‚00

0‚000

(-

-

-

14‚00

0‚000

-

-

-

-

-

)14‚0

00‚00

0(-

7‚

000‚0

00

7‚000

‚000

10‚48

1‚141

-

) 6

9‚889

(

-

) 6

9‚889

(12

‚956‚4

6212

‚886‚5

73-

)2

‚589‚0

45(

)7‚50

0‚000

(

13‚27

8‚669

2‚39

6‚530

-

-

-

18‚27

9‚742

18‚27

9‚742

-

) 3‚19

5‚131

() 7

‚000‚0

00(

10‚48

1‚141

) 209

‚833(

-

-

448‚5

72

448‚5

72

-

44

8‚572

-

-

-

238‚7

39

108‚0

88-

) 31

7‚921

(

) 31

7‚921

(

-

) 31

7‚921

(-

-

-

) 20

9‚833

(

1‚235

‚542

1‚184

‚941

-

-

1‚18

4‚941

-

1‚184

‚941

-

-

-

2‚420

‚483

28‚23

0 1,

207,3

12

-

1‚207

‚312

-

1‚207

‚312

-

-

-

1‚235

‚542

11‚15

5‚839

-

-

-

-

-

-

-

1‚718

‚581

-

12‚87

4‚420

8‚515

‚917

-

-

-

-

-

-

2‚639

‚922

-

11‚15

5‚839

4‚249

‚380

-

-

-

-

-

-

-

870‚4

64

-

5‚119

‚844

3‚694

‚171

-

-

-

-

-

-

555‚2

09

-

4‚249

‚380

-

-

-

-

-

-

-

-

-

7‚500

‚000

7‚500

‚000

-

-

-

-

-

-

-

-

-

-

* Inc

lude

d in

the

Reta

ined

ear

ning

s bal

ance

an

amou

nt o

f JD

3,34

6,60

0 re

pres

entin

g de

ferre

d ta

x ass

ets,

in a

dditi

on to

JD 4

26,7

40 u

nrea

lized

gai

ns fr

om fi

nanc

ial a

sset

s hel

d fo

r tra

ding

as

of D

ecem

ber 3

1, 2

007,

)200

6: JD

419

,368

repr

esen

ting

defe

rred

tax a

sset

s( a

nd a

ccor

ding

to th

e Ce

ntra

l Ban

k of

Jord

an’s

regu

latio

ns, t

hese

bal

ance

s are

not

ava

ilabl

e fo

r dist

ribut

ion.

The

Acco

mpa

nyin

g N

ote

From

1 -

49 a

re a

n In

tegr

al p

art o

f the

se F

inan

cial

Sta

tmen

ts

Bank

’s sha

reho

lder

s equ

ityEq

uity

attri

buta

ble t

o eq

uity h

older

spa

rent

sJD

150‚6

21‚54

11‚1

84‚94

1)

69‚8

89(

448‚5

72

1‚563

‚624

12‚95

6‚462

14‚52

0‚086

-

-

-

165‚1

41‚62

7

130‚1

76‚72

51‚2

07‚31

2

) 3

17‚92

1(

889‚3

9118

‚279‚7

42

19‚16

9‚133

1‚275

‚683

-

-

150‚6

21‚54

1

46

Profit before income taxAdjustments for -

Depreciation and amortizationImpairment loss )reversal( on direct credit facilitiesUnrealized )gain( loss from financial assets held for tradingImpairment of available for sale investmentsSundry provisions Effect of exchange rate changes Operating Profit before changes in operating assets and liabilities

Changes in Assets and Liabilities -)Increase( decrease in balances with Central Banks maturing after more than three months Decrease )increase( in deposits at banks and financial institutions maturing after more than three months)Increase( decrease in restricted balancesIncrease in financial assets held for tradingIncrease in direct credit facilitiesIncrease in other operating assets)Decrease( increase in banks and financial institution deposits maturing after more than three monthsIncrease in customers’ depositsIncrease in margin accounts Decrease in other liabilitiesSundry provision paid

Net cash from (used in) operating activities before income tax Income tax paid

Net cash from (used in) operating activities

Cash Flows from Investing ActivitiesRedemption of financial assets held to maturityPurchase of financial assets held to maturityProceeds from financial assets available for salePurchase of financial assets available for salePurchase of property and equipmentProceeds from sale of property and equipmentPurchase of intangible assets Net cash (used in) from investing activities

Cash Flows from Financing ActivitiesIncrease in capitalCapital Increase feesAdditional paid in capitalProceeds from loans and borrowingsRepayment of loans and borrowings Net cash from financing activities

Net increase in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Effect of exchange rate changes on cash at the National Bank of IraqCash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year

17‚970‚847

1‚118‚3495‚924‚767

) 234‚433( -

2‚973‚419) 2‚299‚004(

25‚453‚945

) 4‚000‚000(

6‚381‚000) 19‚859(

) 7‚644‚352() 13‚432‚163() 9‚733‚447(

) 10‚646‚766( 48‚338‚206

4‚495‚674)2‚365‚508(

) 35‚974(

36‚790‚756) 7‚543‚007(

29‚247‚749

11‚169‚216) 72‚560‚824(

11‚170‚965) 15‚319‚017() 1‚904‚557(

201‚347) 708‚351() 67‚951‚221(

- ) 69‚889(

- 55‚322‚266

) 14‚507‚177(40‚745‚200

2‚041‚7282‚299‚004

886‚982186‚781‚336192‚009‚050

3737

Consolidated Cash Flow StatementCapital Bank of Jordan

for the Year Ended 31 December 2007

2006JD

2007JDNotes

24‚467‚780

957‚083) 686‚514(

586‚62722‚981

386‚733) 985‚634(

24‚749‚056

5‚000‚000

) 6‚026‚500(1‚191‚120

) 16‚293‚570() 103‚917‚248() 5‚150‚624(

7‚186‚100 82‚546‚065

1‚595‚896)3‚046‚029(

) 174‚227(

) 12‚339‚961() 900‚578() 13‚240‚539(

24‚178‚887) 11‚145‚095(

16‚084‚841) 19‚844‚641() 4‚390‚194(

1‚744) 592‚526( 4‚293‚016

566‚211-

709‚47275‚007‚774

) 44‚434‚961( 31‚848‚496

22‚900‚973985‚634

3‚153‚051159‚741‚678186‚781‚336


Cash Flow from operating Activities

(In Jordanian Dinars)

47

GENERAL INFORMATION

The Bank is a public shareholding company registered and incorporated in Jordan, on August 30 1995 in accordance with the companies law no )1( of )1989(. Its registered office is in Amman.

The Bank provides its banking services through its main branch located in Amman, and through its eight Branches in Jordan and its subsidiaries: Capital Investments and Brokerage Company in jordan, National Bank of Iraq in Iraq, and Capital Investment Fund company in Bahrain.

The Bank originally had a paid in capital of JD 20 million. During the years, the Bank increased its capital to reach JD 123 million. The increases in capital were effected through capitalizing its dis-tributable reserves and private placements to shareholders.

All Capital Bank of Jordan shares are listed at Amman Stock Exchange.

The financial statements were authorized for issue by the Bank’s Board of Directors in their meeting Number 2/2008 held on 24 February 2008. These financial statements require the General Assem-bly’s approval.

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the financial statements are set out below:

Basis of preparation• TheaccompanyingconsolidatedfinancialstatementsoftheBankanditssubsidiarieshavebeen

prepared in accordance with International Financial Reporting Standards )IFRS( and its interpre-tations )IFRICs(, and in conformity with the applicable laws and regulations of the Central Bank of Jordan.

• Theconsolidatedfinancialstatementsarepreparedonahistoricalcostbasis,exceptforfinan-cial assets held for Trading and available for sale, which have been measured at fair value.

• ThefinancialstatementshavebeenpresentedinJordanianDinars(JD)whichisthefunctionalcurrency of the Bank.

Changes in accounting policies:Except as noted below the Bank’s accounting policies are consistent with those used in the previ-ous year. As of 1 January, 2007 the Bank applied the following new IFRSs which had no effect on the Bank’s financial position or performance, but resulted in additional disclosures:

IAS 1 – Presentation of Financial Statements (revised 2005)The standard requires the presentation of additional disclosures to enable users of the financial statements to evaluate the entity’s objectives, policies and processes for managing capital.

1

2

Notes to the Consolidated Financial StatementsCapital Bank of Jordan

31 December 2007 (In Jordanian Dinars)

48

IFRS 7 – Financial Instruments: DisclosureThe standard requires disclosures that enable users of the financial statements to evaluate the sig-nificance of the entity’s financial instruments and the nature and extent of risks arising from those financial instruments.

IFRIC 8 – Scope of IFRS 2 This interpretation requires IFRS 2 – Share-based Payment to be applied to any arrangements where equity instruments are issued for consideration which appears to be less than fair value.

IFRIC 9 – Reassessment of Embedded Derivatives This interpretation establishes that the date to assess the existence of an embedded derivative is the date an entity first becomes a party to the contract, with reassessment only if there is a change to the contract that significantly modifies the cash flows.

IFRIC 10 – Interim Financial Reporting and ImpairmentThis interpretation concludes that an entity shall not reverse an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost. The entity did not have any previous interim impairments losses that would otherwise have been reversed.

Summary of significant accounting policies:

Basis of consolidation The consolidated financial statements comprise the financial statements of the Bank and its sub-sidiaries where the Bank has the power to govern the financial and policies of an entity so as to obtain benefits from its activities

The financial statements of the subsidiaries are prepared for the same reporting year as the Bank, using consistent accounting policies. If different accounting policies were applied by the subsidiar-ies, adjustments shall be made on their financial statements in order to comply with those of the Bank.

All intra-company balances, transactions, income and expenses and profits and losses resulting from intra-company transactions that are recognized in assets or liabilities, between the Bank and the following subsidiaries are eliminated in full:

• CapitalInvestmentsandBrockerageCompanyLtd/Jordan;ofwhichtheBankowns100%ofitspaid in capital amounting to JD 10,000,000 as of 31 December 2007. the company was estab-lished on 12 July 2005.

• NationalBankofIraq(NBI)/Iraq;ofwhichtheBankowns59.2%ofitspaidincapitalamountingto IQD 25,000,000,000 )JD 11,392,587( as of 31 December, 2007. This was aquired effective Janu-ary 1, 2005.

• CapitalInvestmentFundCompany/Bahrain;ofwhichtheBankowns100%ofitspaidincapitalamounting to BHD 1,000 )JD 1,888( as of 31 December 2007. It will hold mutual funds, but has

Notes to the Consolidated Financial Statements31 December 2007

49

not started operations yet.

Subsidiaries’ financial statement are prepared using same accounting policies and reporting period as the Bank.

Subsidiaries are fully consolidated from the date of acquisition being the date on which the Bank obtains control and continue to be consolidated until the date that such control ceases.

Minority interests represent the portion equity and profit or loss not owned by the Bank

Segmental reporting• Business segments represent distinguishable components of the Bank that are engaged in pro-

viding products or services which are subject to risks and rewards that are different from those of other segments.

• Geographical segments are associated to products and services provided within a particular economic environment, which are subject to risks and rewards that are different from those of other economic environments.

Financial assets held for trading Financial assets held for trading are those purchased with the intent to be resold in the near future to generate gains as a result of changes in market prices of such investments.

They are initially recognised at the fair value of consideration given and subsequently remeasured at fair value. All realised and unrealised gains or losses are transferred to the income statement including any gains or losses resulting from the translation of such assets held in foreign currencies to the functional currency.

Interest earned is included in interest income and dividends received are included in gains )losses( from financial assets and liabilities held for trading.

Direct credit facilities Credit facilities are initially recoginsed at the fair value of consideration given and subsequently mea-sured at amortised cost after allowance for credit losses and interest and commission in suspense.

Impairment of direct credit facilities is recognised in the allowance for credit losses when events occur after the initial recognition of the facility that have an impact on the estimated future cash flows of the facilities that can be reliably estimated. The impairment is recorded in the income statement.

Interest and commission arising on non-performing facilities is suspended when loans become impaired according to the Central Bank of Jordan’s regulations.

Loans and the related allowance for credit losses are written off when collection procedures be-come ineffective. The excess in the allowance of possible loan losses, if any, is transferred to the income statement, and cash recoveries of loans that were previously written off are credited to the income statement.


50

Financial assets available for sale Available-for-sale financial investments are those which are designated as such or do not qualify to be classified as designated at fair value through profit or loss, held-to-maturity or loans and advances.

After initial measurement, available-for-sale financial investments are measured at fair value. Un-realised gains and losses are recognised directly in equity as ‘Cumulative change in fair value re-serve’. When the security is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the income statement.

The losses arising from impairment of such investments are recognised in the income statement and removed from the cumulative change in fair value reserve. Reversal of impairment on equity instruments is reflected in the cumulative change in fair value, while reversal of impairment on debt instruments is transferred to the income statement.

Gains or losses on debt instruments resulting from foreign exchange rate changes are transferred to the income statement. On equity instruments, such gains and losses are transferred to the cu-mulative change in fair value.

Interest earned on available for sale financial investments is reported as interest income using the effective interest method.

Financial assets available for sale which can not be reliably measured at fair value are recorded at cost. Impairment on such assets is recognised in the income statement.

Financial assets held to maturityHeld-to-maturity financial investments are those which carry fixed or determinable payments and have fixed maturities and which the Bank has the positive intention and ability to hold to maturity.

Held-to-maturity investments are initially recognised at cost, being the fair value of consideration given including directly attributable transaction costs. After initial measurement, held-to-maturity financial investments are subsequently measured at amortized cost using the effective interest method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees that are an integral part of the effective interest meth-od.

Fair valueFor investments and derivatives quoted in an active market, fair value is determined by reference to quoted market prices. Bid prices are used for assets and offer prices are used for liabilities.

For financial instruments where there is no active market fair value is normally based on one of the following methods:

- Comparison with the current market value of a highly similar financial instrument.- The expected cash flows discounted at current rates applicable for items with similar terms and

risk characteristics.- Option pricing models.


51

The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount payable on demand.

Where the fair value of an investment cannot be reliably measured, it is stated at the fair value of consid-eration given or amortised cost and any impairment in the value is recorded in the income statement.

Impairment of financial assetsThe Bank assesses at each balance sheet date whether there is any objective evidence that a finan-cial asset or a group of financial assets is impaired. If such evidence exists, the recoverable amount is estimated in order to determine the amount of impairment loss to be recognised in the income statement.

Impairment is determined as follows:• Forassetscarriedatamortisedcost,impairmentisbasedonthedifferencebetweenthecarry-

ing value and the estimated cash flows discounted at the original effective interest method.• Forassetscarriedatfairvalue,impairmentisthedifferencebetweenthefairvalueofconsider-

ation given and the fair value.• Forassetscarriedatcost,impairmentisbasedonthedifferencebetweenthefairvalueofcon-

sideration given and the present value of future cash flows discounted at the current market rate of return from a similar financial asset.

Impairment is recognised in the income statement. If, in a subsequent period, the amount of the impairment loss decreases, the carrying value of the asset is increased to its recoverable amount. The amount of the reversal is recognised in the income statement except for equity instruments classified as available for sale investments for which the reversal is recognized in the statement of equity.

Property and equipment• Propertyandequipmentaremeasuredatcostlessaccumulateddepreciationandaccumulated

impairment in value. Depreciation is calculated using the straight-line method to write down the cost of property and equipment to their residual values over their estimated useful lives. Land is not depreciated. Depreciation rates used are as follows:

%Buildings 2Equipment and furniture 2.5 - 25Vehicles 15Computers 25Others 10

• Thecarryingvaluesofpropertyandequipmentarereviewedforimpairmentwheneventsorchanges in circumstances indicate that the carrying values may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amounts, the assets are written down to their recoverable amount, and the impairment is recorded in the income statement.

• Anitemofpropertyandequipmentisderecognisedupondisposalorwhennofutureeconomicbenefits are expected from its use or disposal.


52

ProvisionsProvisions are recognised when the Bank has a present obligation )legal or constructive( arising from a past event and the costs to settle the obligation are both probable and reliably measured.

Employee’s Bonus:Annual Bonus is divided into two categories:Board of directors approves the bonus amount based on actual net income compared to budget.

The approved amount will be divided into two categories:A. Cash Bonus: Paid immediately after the general assembly.B. Shares Bonus: which will be vest to employees on the following basis: -25%ofgrantedsharesafteroneyear. -25%attheendofsecondyear -50%attheendofthirdyear.

Income TaxTax expense comprises current tax and deferred taxes.

• Currenttaxisbasedontaxableprofits,whichmaydifferfromaccountingprofitspublishedinthe income statement. Accounting profits may include non-taxable profits or tax deductible expenses which may be exempted in the current or subsequent financial years.

• Taxiscalculatedbasedontaxratesandlawsthatareapplicableinthecountryofoperation.

• Deferredtaxisprovidedontemporarydifferencesatthebalancesheetdatebetweenthetaxbases of assets and liabilities and their carrying amounts for financial reporting purposes. De-ferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on laws that have been enacted or substantially enacted at the balance sheet date.

• Thecarryingvaluesofdeferredincometaxassetsarereviewedateachbalancesheetdateandreduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Fiduciary assetsAssets held in a fiduciary capacity are not recognised as assets of the Bank. Fees and commis-sions received for administering such assets are recognised in the income statement. A provision is recognised for decreases in the fair value of guaranteed fiduciary assets below their original principal amount.

OffsettingFinancial assets and financial liabilities are only offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and the Bank in-tends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

Revenue and expense recognition Interest income is recorded using the effective interest method except for fees and interest on non-


53

performing facilities, on which interest is transferred to the interest in suspense account and not recognised in the income statement.Expenses are recognised on an accrual basis.Commission income is recognised upon the rendering of services. Dividend income is recognised when the right to receive payment is established.

Trade date accountingPurchases and sales of financial assets are recognised on the trade date )that being the date at which the sale or purchase takes place(.

Derivative financial instruments held for trading Derivative financial instruments such as foreign currency forward and future deals, interest rate forward and future deals, swaps, foreign currency options and others, are initially recorded at cost as other assets / liabilities, and subsequently carried at fair value in the balance sheet. Fair value is determined by reference to current market prices. In case such prices were not available, the method of valuation is stated. Changes in fair value are transferred to the income statement.

Repurchase and resale agreementsAssets sold with a simultaneous commitment to repurchase at a specified future date )repos( will continue to be recognised in the Bank’s financial statements due to the Bank’s continuing exposure to the risks and rewards of these assets using the same accounting policies.

The proceeds of the sale are recorded under loans and borrowings. The difference between the sale and the repurchase price is recognised as an interest expense over the agreement term using the effective interest method.

Assets purchased with a corresponding commitment to resell at a specified future date )reverse repos( are not recognised in the Bank’s financial statements as assets since the Bank is not able to control these assets. The related payments are recognised as part of deposits at banks and finan-cial institutions or direct credit facilities as applicable, and the difference between purchase and resale price is recognised in the income statement over the agreement term using the effective interest method.

Assets Seized by the BankAssets seized by the Bank through calling upon collateral are shown in the balance sheet under “Other assets” at the lower of their carrying value or fair value. Assets are revalued at the balance sheet date on an individual basis and losses from impairment are transferred directly to the income statement, while revaluation gains are not recognised as income. Reversal of previous impairment losses shall not result in a carrying value that exceeds the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. Intangible assetsa) Goodwill• Goodwillacquiredinabusinesscombinationisinitiallymeasuredatcostbeingtheexcessof

the cost of the business combination over the Bank’s interest in the net fair value of the identifi-able assets, liabilities and contingent liabilities acquired. Goodwill arising from the investment in subsidiaries will be separately shown under intangible assets, while that arising from the


54

investment in associates will be shown as part of investment in associates and subsequently adjusted for any impairment losses.

• For thepurposeof impairmenttesting,goodwillacquired inabusinesscombination is fromthe date of acquisition allocated to each of the Bank’s cash-generating units, or groups of cash-generating units. Where the recoverable amount of the cash-generating unit is less than the carrying value, an impairment loss is recognised.

• Following initial recognition,goodwill ismeasuredatcost lessanyaccumulated impairmentlosses. Goodwill is reviewed for impairment, annually or more frequently, if events or changes in circumstances indicate that the estimated recoverable amount of a cash-generating unit or group of cash-generating units is less than their carrying amount. Impairment losses are trans-ferred to the income statement.

b) Other Intangible assets

• Intangibleassetsacquired throughbusinesscombinationare recordedat their fair valueonthat date. Other intangible assets are measured on initial recognition at cost.

• Intangibleassetswithfinitelivesareamortisedovertheusefuleconomiclife,whileintangibleassets with indefinite useful lives are assessed for impairment at each reporting date or when there is an indication that the intangible asset may be impaired.

• Internallygeneratedintangibleassetsarenotcapitalisedandareexpensedintheincomestate-ment.

• Indicationsofimpairmentofintangibleassetsarereviewedforandtheirusefuleconomiclivesare reassessed at each reporting date. Adjustments are reflected in the current and subsequent periods.

• Intangibleassetsincludetrademarks,computersoftwareandprogramsManagementestimatestheusefullivesforeachitem.Amortizationiscalculatedusingstraight-linemethodat25%.

Foreign currencies • Transactionsinforeigncurrenciesareinitiallyrecordedinthefunctionalcurrencyattherateof

exchange ruling at the date of the transaction.

• Monetaryassetsand liabilities in foreigncurrenciesare translated into respective functionalcurrencies at rates of exchange prevailing at the balance sheet date as issued by Central Bank of Jordan. Any gains or losses are taken to the income statement.

• Translationgainsorlossesonnon-monetaryitemscarriedatfairvalue(suchasstocks)throughequity are included in equity as part of the cumulative changes in fair value. For non-monetary items carried at fair value through profit and loss, such gains and losses are taken to the income statement.

• Asatthereportingdate,theassetsandliabilitiesofforeignsubsidiariesandoverseasbranches

are translated into the Bank’s presentation currency at the rate of exchange ruling at the bal-ance sheet date, and their income statements are translated at the weighted average exchange rates for the year. Exchange differences arising on translation are taken directly to a separate component of equity. On disposal of an entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is transferred to the income statement.


55

Cash and cash equivalents Cash and cash equivalents comprises cash on hand and cash balances with banks and financial institutions that mature within three months, less banks and financial institutions deposits that mature within three months and restricted balances.

USE OF ESTIMATES The preparation of the financial statements requires management to make estimates and assump-tions that affect the reported amounts of financial assets and liabilities and disclosure of contingent liabilities. These estimates and assumptions also affect the revenues and expenses and the resul-tant provisions as well as fair value changes reported in equity. In particular, considerable judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of provisions required for non-performing credit facilities. Such estimates are necessarily based on assumptions about several factors involving varying degrees of judgment and uncertainty and actual results may differ resulting in future change in such provision.

a( Provision for credit losses: The Bank reviews its loan portfolios to assess impairment at least on a monthly basis. In determining whether an impairment loss should be recorded in the income statement, the Bank makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of borrowers in a Bank, or national or local economic conditions that correlate with de-faults on assets in the Bank.

b( Impairment losses on collaterals acquired by the Bank are determined based on appraisal re-

ports prepared by certified appraisers. Provisions are recognised when impairment is deter-mined at the financial statements date individually and any impairment is recorded in the in-come statement. Valuation is performed on a regular basis.

c( Income tax is calculated based on the tax rates and laws that are applicable at the balance sheet date.

d( A periodic review is performed on assets estimated useful lives and assets that are subject to am-ortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

e( Legal provision is calculated for facing any legal liabilities according to the lawyer’s opinion.

3


56

CASH AND BALANCES WITH CENTRAL BANKS

Cash on handBalances at Central Banks:

Current and demand depositsTime depositsStatutory cash reserveCertificates of deposits

Total

• ExceptforthestatutorycashreserveheldatCentralBanks,therearenorestrictedcashbalancesas of 31 December 2007 and 2006.

• CertificatesofdepositmaturingafterthreemonthsamountingtoJD7,000,000asof31Decem-ber 2007 )2006: JD 3,000,000(.

BALANCES AT BANKS AND FINANCIAL INSTITUTIONS

Current and demanddepositsDeposits maturingwithin 3 monthsCertificates of depositTotal

• NoninterestbearingbalancesatbanksandfinancialinstitutionsamountedtoJD10,586,934asof 31 December 2007 )2006: JD 5,646,863(.

• RestrictedbalancesamountedtoJD402,719asof31December2007(2006:JD382,860)seenote 18.

DEPOSITS AT BANKS AND FINANCIAL INSTITUTIONS

Depositsmaturing from 3 to 6 months

Total

6

-

-

6‚381‚000

6‚381‚000

-

-

-

-

-

-

6‚381‚000

6‚381‚000

2006JD

2007JD

Total2006

JD2007

JD

Foreign Banks andFinancial Institutions

2006JD

2007JD

Local Banks andFinancial Institutions

130‚575

30‚475‚637 -

30‚606‚212

445‚186

14‚969‚140 -

15‚414‚326

22‚633‚571

83‚669‚137 -

106‚302‚708

17‚446‚608

117‚772‚873 354‚500

135‚573‚981

22‚764‚146

114‚144‚774 -

136‚908‚920

17‚891‚794

132‚742‚013 354‚500

150‚988‚307

2006JD

2007JD

Total2006

JD2007

JD

Foreign Banks andFinancial Institutions

2006JD

2007JD

Local Banks andFinancial Institutions

4‚158‚668

13‚109‚87513‚480‚18733‚945‚273 16‚000‚000 80‚694‚003

5‚576‚545

450‚15416‚135‚18335‚886‚275

30‚000‚000 88‚048‚157

2006JD

2007JD

4

5

57

7

2‚954‚71613‚865‚59714‚907‚374

1‚380‚191 8‚854‚30541‚962‚183

3‚765‚42012‚058‚29718‚147‚834

2‚605‚16013‚294‚25049‚870‚961

2006JD

2007JD

FINANCIAL ASSETS HELD FOR TRADING

Local treasury billsQuoted equitiesQuoted debt securitiesFundsCommercial PaperTotal

DIRECT CREDIT FACILITIES

Consumer lending OverdraftsLoans and bills * Credit cards

Residential mortgagesCorporate lending

OverdraftsLoans and bills *

Small and medium enterprises lending”SMEs” OverdraftsLoans and bills *

TotalLess: Suspended interestLess: Allowance for impairment lossesDirect credit facilities, net

* Net of interest and commissions received in advance of JD 3,265,661 as of 31 December 2007 )2006: JD 2,104,116(.

• At31December2007,non-performingcredit facilitiesamountedtoJD19,032,364 (2006:JD13,913,690),representing3.70%(2006:2.78%)ofgrossfacilitiesgranted.

• At31December2007,non-performingcreditfacilities,netofsuspendedinterest,amountedtoJD15,625,422(2006:JD11,483,075),representing3.06%(2006:2.31%)ofgrossfacilitiesgrantedafter excluding the suspended interest.

8

956‚17024‚416‚337

1‚035‚80652‚414‚208

51‚597‚408359‚370‚985

3‚930‚130 6‚387‚234

500‚108‚2782‚430‚6157‚950‚404

489‚727‚259

642‚48531‚059‚187

1‚113‚57767‚904‚314

45‚715‚905359‚596‚224

3‚256‚319 5‚439‚312

514‚727‚3233‚406‚942

13‚908‚474497‚411‚907

2006JD

2007JD


58

Reconciliation of the allowance for impairment losses for direct credit facilities by class is as fol-lows:

2007At 1 January 2007Charge )surplus( for the yearAmounts written offForeign Exchange Differences

At 31 December 2007Individual impairment

Collective impairmentAt 31 December 2007

2006At 1 January 2006Charge )surplus( for the yearAmounts written offForeign Exchange DifferencesAt 31 December 2006

Individual impairment

Collective impairmentAt 31 December 2006

Non-performing credit facilities that were settled or collected amounted to JD 2,690,220 during 31 December 2007 )2006: JD 3,127,321(.

1‚072‚163347‚651

) 3‚112( 12‚935

1‚429‚637920‚065

509‚5721‚429‚637

609‚678431‚416

) 18( 31‚087

1‚072‚163

692‚396

379‚7671‚072‚163

5‚732156‚933 - -

162‚665162‚665

- 162‚665

- 5‚732

- -

5‚732

5‚732

- 5‚732

6‚674‚2145‚514‚842

- 45‚859

12‚234‚91510‚884‚499

1‚350‚41612‚234‚915

8‚118‚274)1‚287‚947() 266‚331( 110‚2186‚674‚214

4‚944‚168

1‚730‚0466‚674‚214

198‚295) 94‚659() 22‚379(

-

81‚25763‚238

18‚019 81‚257

295‚742164‚285

) 261‚732( -

198‚295

147‚978

50‚317198‚295

7‚950‚4045‚924‚767) 25‚491( 58‚794

13‚908‚47412‚030‚467

1‚878‚00713‚908‚474

9‚023‚694) 686‚514() 528‚081( 141‚3057‚950‚404

5‚790‚274

2‚160‚1307‚950‚404

JDTotal

JDSMEs

JDCorporate

JD

Residentialmortgages

JDConsumer


59

A reconciliation of suspended interest on direct credit facilities by class is as follows:

2007At 1 January 2007Add: Suspended interestduring the yearLess: Amount transferredto income on recovery Less: Amounts written offForeign Exchange DifferencesAt 31 December 2007

2006At 1 January 2006Add: Suspended interestduring the yearLess: Amount transferredto income on recovery Less: Amounts written offForeign Exchange DifferencesAt 31 December 2006

FINANCIAL ASSETS AVAILABLE FOR SALE

Quoted InvestmentsTreasury billsGovernment debt securitiesCorporate debt securitiesEquitiesTotal quoted investmentsUnquoted InvestmentsEquities*Total unquoted investments Total financial assets available for saleAnalysis of debt instrumentsFixed rateFloating rateTotal

* Included in unquoted equities are investments carried at cost since the fair value could not be measured reliably. There are no indications of impairment in value as of the balance sheet date.

109‚090

129‚147

) 15‚470() 1‚775(

2‚144223‚136

41‚786

66‚967

) 5‚005() 20( 5‚362109‚090

1‚325

30‚108

- -

- 31‚433

-

1‚325

- -

- 1‚325

2‚209‚918

1‚203‚328

) 186‚757() 81‚717( 7‚601

3‚152‚373

2‚213‚606

898‚878

) 832‚453() 89‚123( 19‚0102‚209‚918

110‚282

-

- )110‚282(

- -

411‚319

-

)191‚931()109‚106(

- 110‚282

2‚430‚615

1‚362‚583

) 202‚227() 193‚774(

9‚7453‚406‚942

2‚666‚711

967‚170

) 1‚029‚389() 198‚249(

24‚3722‚430‚615

JDTotal

JDSMEs

JDCorporate

JD


JDConsumer

9

433‚28622‚934‚089

1‚807‚548 9‚013‚507

34‚188‚430

1‚193‚364 1‚193‚364

35‚381‚794

24‚465‚923 709‚000

25‚174‚923

3‚621‚52533‚092‚017

1‚250‚8951‚518‚525

39‚482‚962

552‚909552‚909

40‚035‚871

36‚393‚160 1‚571‚277

37‚964‚437

2006JD

2007JD


60

FINANCIAL ASSETS HELD TO MATURITY

Quoted InvestmentsTreasury billsGovernment debt securitiesCorporate debt securitiesOther debt securities

Total quoted investments

Analysis of debt instrumentsFixed rateFloating rate

Total

• Heldtomaturityinvestmentsmatureinonepaymentatmaturitydatewithinthreeyearsexceptfor an amount of )JD: 2,086,162( representing bonds to be amortized over three years com-mencing on 12 December 2008.

• FinancialassetsheldtomaturityincludeanamountofJD34,400,000representingrepurchaseagreements as of 31 December 2007. No repurchase agreements existed as of 31 December 2006.

10

11‚039‚247 -

129‚969 741‚284

11‚910‚500

11‚910‚500 -

11‚910‚500

2‚957‚73046‚415‚56219‚000‚000 4‚928‚816

73‚302‚108

68‚175‚108 5‚127‚000

73‚302‚108

2006JD

2007JD


61

PROPERTY AND EQUIPMENT

2007Cost:At 1 January 2007Foreign Exchange DifferencesAdditionsDisposals At 31 December 2007Depreciation:At 1 January 2007Depreciation charge during the yearForeign Exchange DifferencesDisposalsAt 31 December 2007

Projects under constructionNet book value of property andequipment at 31 December 2007

2006Cost:At 1 January 2006Foreign Exchange DifferencesAdditionsDisposalsAt 31 December 2006Depreciation:At 1 January 2006Depreciation charge during the yearForeign Exchange DifferencesDisposalsAt 31 December 2006

Projects under constructionNet book valueof property and equipment at 31 December 2006

* Represents refurbishment, interior design and decoration of buildings and branch offices.

- The estimated costs to complete the purchase of premises and equipment amounted to JD 359,710 as of 31 December 2007

- Fully depreciated property and equipment amounted to JD 565,229 as of 31 December 2007 )2006: JD 519,221(.

11

9‚818‚578190‚783

2‚457‚985 )201‚346(12‚266‚000

2‚090‚534879‚189

165‚611 )150‚343(2‚984‚9919,281,009 503‚677

9‚784‚686

6‚151‚683108‚511

3‚569‚747 ) 11‚363(9‚818‚578

1‚396‚275 668‚658 35‚821

)10‚220(2‚090‚5347,728,0441‚206‚940

8‚934‚984

1‚819‚9586‚260

1‚138‚462 )83‚831(

2‚880‚849

506‚042212‚378

1‚850 )65‚948( 654‚322

2,226,527 346‚609

2‚573‚136

1‚419‚676 - 400‚282 -

1‚819‚958

354‚318 151‚724

- -

506‚0421,313,916 129‚445

1‚443‚361

1‚158‚992109‚948630‚342 -

1‚899‚282

637‚449252‚784 - -

890‚2331,009,049 59‚598

1‚068‚647

864‚787 - 294‚205 -

1‚158‚992

463‚637173‚812 - - 637‚449521,543412‚561

934‚104

192‚93217‚159

124‚098 )65‚049(269‚140

90‚23635‚772

17‚429 )54‚616(

88‚821180,319 -

180‚319

176‚3476‚166

21‚434 ) 11‚015(

192‚932

68‚087 30‚483 1‚799

)10‚133(90‚236

102,696 -

102‚696

1‚849‚8687‚944

565‚083 )52‚466(2‚370‚429

744‚176286‚184

136‚559 )29‚779(1‚137‚1401,233,289 97‚470

1‚330‚759

1‚414‚62337‚839

397‚754 ) 348(

1‚849‚868

494‚750 222‚686 26‚827

)87( 744‚176

1,105,69233‚884

1‚139‚576

3‚691‚71442‚947

- -

3‚734‚661

112‚631 92‚071

9‚773 -

214‚4753,520,186

-

3‚520‚186

1‚770‚69746‚954

1‚874‚063 -

3‚691‚714

15‚483 89‚953 7‚195 -

112‚6313,579,083

-

3‚579‚083

1‚105‚1146‚525

- -

1‚111‚639

- - - - -

1,111,639 -

1‚111‚639

505‚55317‚552

582‚009 -

1‚105‚114

- - - - -

1,105,114 631‚050

1‚736‚164

JDTotal

JDOthers*

JDComputers

JDVehicles

JD

Furniture & Fixtures

JDBuildings

JDLand


62

INTANGIBLE ASSETS

2007Net book value:At 1 January,AdditionsForeign currency TranslationAmortization

Translation project under constructionAt 31 December,

2006Net book value:At 1 January,AdditionsAmortization

Translation project under constructionAt 31 December,

- The estimated cost to complete the projects under progress is JD 348,660.

- Fully amortized intangible asstes amounted to JD 1,263,381 as of 31 December 2007 compared to JD 574,022 as of 31 December 2006.

Impairment Testing of GoodwillGoodwillarosefromtheacquisitionof59.2%oftheNationalBankofIraq.

The bank has tested the goodwill using the following key assumptions:- The recoverable amount of NBI has been determined based on the value in use calculation, us-

ing five-year cash flow projections approved by senior management based on National Bank of Iraq performance assumptions verified against financial economic indicators such as interest rates.

- ThediscountrateusedbytheBankis35%.- Thecashflowprojectionsshowedthatthereturnonequityisestimatedat19%duringthecom-

ing five years.In the opinion of the Bank’s management based on the discounted cash flow projections, goodwill is not impaired. * Goodwill as of 31 December 2007 has been retranslated using year-end exchange rates there-

fore goodwill balance increased by JD 733,591, this increase was recorded within foreign cur-rency translation in the statement of changes in equity.

12

8‚130 - - ) 3‚575( 4‚555 -

4‚555

357‚771509‚770 -

) 235‚584( 631‚9571‚052‚3011‚684‚258

3‚187‚164 - 733‚591 -

3‚920‚755 -

3‚920‚755

3‚553‚065509‚770733‚591

) 239‚159(4‚557‚2671‚052‚3015‚609‚568

JDTotal

JDOthers

JDGoodwill

JD

ComputerSoftware

JD

Trademarks


- 11‚661

) 3‚531( 8‚130 - 8‚130

407‚337156‚961

) 206‚527( 357‚771

853‚7211‚211‚492

3‚187‚164 - -

3‚187‚164 -

3‚187‚164

78‚367 - )78‚367( - - -

3‚672‚868168‚622

) 288‚425(3‚553‚065 853‚7214‚406‚786

63

Acquisition of National Bank of IraqInitsextraordinarymeetingheldin2004,theGeneralAssemblydecidedtoacquire59.2%ofthepaidincapitaloftheNationalBankofIraq;splitintoadirectandindirectacquisitionof49%and10.2%respectively.Accordingly,thefinancialstatementswereconsolidatedasof1January2005;being the date on which control was transferred to the Bank, and the resultant goodwill recog-nised and recorded on that date.

The regulations of the Central Bank of Iraq state that all Iraqi banks should increase their paid in capital to be no less than 50 billion Iraqi Dinars by the end of 2007, however, this was not enforced by the Central Bank up to the date of the financial statements. Capital Bank’s share in the National Bank of Iraq will amount to JD 8,820,800 upon the increase of share capital.

There were no acquisitions or disposal of operations during 2006 and 2007.

Other Assets

Accrued interest and revenuePrepaid expensesAssets seizd by the Bank by calling on collateralExport documents & bills purchasedPositive fair value of derivativesAdvance payment for establishing areal estate fund* Others

* Establishment of the Real Estate Fund was cancelled in order to comply with banks law, and the land was sold for JD 12,085,246.

A reconciliation of assets obtained by the Bank by calling on collateral during the year is as fol-lows:

At 1 January Difference of ExchangeAdditionsRetirments

Total

* This Amount represents stocks sold during 2007

1‚704‚847358

275‚160862‚282

1‚118‚083

- -

15‚771‚421*498‚249

15‚273‚172

1‚704‚847358

16‚046‚5811‚360‚531

16‚391‚255

2‚255‚215 -

382‚829)933‚197(

1‚704‚847

JD

Total2006

JD

Total2007

JD

Others2007

JD

Real estate 2007


13

3‚213‚5751‚830‚6751‚704‚8476‚047‚896

180‚36210‚477‚003 2‚114‚181

25‚568‚539

3‚934‚4911‚897‚776

16‚391‚25511‚457‚333

160‚964-

1‚478‚63835‚320‚457

2006JD

2007JD

14

64

BANKS AND FINANCIAL INSTITUTIONS’ DEPOSITS

Current and demanddepositsTime depositsCertificates of depositTotal

CUSTOMERS’ DEPOSITS

2007Current and demand depositsSaving accountsTime and notice depositsCertificates of depositOthersTotal

2006Current and demand depositsSaving accountsTime and notice depositsCertificates of depositOthersTotal

• GovernmentandPublicSectorinstitutions’depositsamountedtoJD67,646,556representing14.03%oftotalcustomers’depositsandJD56,690,572representing13.07%ofcustomers’de-posits as of December 31, 2007 and 2006, respectively.

• Non-interestbearingdepositsamountedtoJD61,588,182representing12.77%oftotaldepos-itsandJD55,258,682representing12.74%oftotaldepositsasofDecember31,2007and2006,respectively.

• RestricteddepositsamountedtoJD2,444,118andJD31,729asofDecember31,2007and2006,respectively.

• Dormantaccountsamounted to JD1,206,267andJD868,693asofDecember31,2007andDecember 31, 2006, respectively.

391‚75916‚202‚983

- 16‚594‚742

JD

Inside Jordan2007

15

9‚725‚9466‚467‚590

- 16‚193‚536

JD

Outside Jordan2007

10‚117‚70522‚670‚573

- 32‚788‚278

JD

Total2007

1‚002‚40339‚489‚384

4‚500‚00044‚991‚787

JD

Inside Jordan2006

7‚834‚2586‚581‚805

- 14‚416‚063

JD

Outside Jordan2006

8‚836‚661 46‚071‚189

4‚500‚000 59‚407‚850

JD

Total2006

16

39‚511‚0892‚969‚410

155‚183‚21859‚216‚077 506‚946

257‚386‚740

41‚760‚7131‚486‚128

112‚978‚72750‚554‚113 1‚911

206‚781‚592

31‚434‚59624‚772

119‚384‚409 3‚145‚024

88‚852154‚077‚653

28‚384‚128889

136‚107‚6864‚928‚933

77‚075169‚498‚711

2‚542‚672 - -

656‚237 -

3‚198‚909

626‚525 - - -

- 626‚525

1‚126‚838 -

64‚269‚718 2‚250‚000

- 67‚646‚556

1‚208‚454 -

52‚037‚1183‚445‚000 -

56‚690‚572

74‚615‚1952‚994‚182

338‚837‚345 65‚267‚338 595‚798

482‚309‚858

71‚979‚8201‚487‚017

301‚123‚53158‚928‚046 78‚986

433‚597‚400

JDTotal

JD

Governmentalsectors

JDSMEs

JDCorporate

JDConsumer


65

MARGIN ACCOUNTS

Margins on direct credit facilitiesMargins on indirect credit facilitiesDeposits against cash margin dealings’ facilities OthersTotal

LOANS AND BORROWINGS

2007Amounts borrowed from Central Bank of JordanAmounts borrowed from local banks and institutionsAmounts borrowed from foreign banks and institutionsOther loans and borrowingsTotal

2006Amounts borrowed from Central Bank of JordanAmounts borrowed from local banks and institutionAmounts borrowed from foreign banks and institutionOther loans and borrowingsTotal

• AmountsborrowedfromCentralBankofJordanaredueduringtheperiodfrom2008to2010.

• Included in the borrowings from local financial institutions are amounts due to Real EstateMortgageFinanceCo.ofJD35,000,000.Themortgageloanswererefinancedatarateof9.5%.

• AtDecember31,2007,fixed-rateloansamountedtoJD94,484,634,whileloanswithfloating-rates amounted to JD 78,945,019.

• IncludedintheborrowingsfromforeignbanksandinstitutionborrowingsareamountsduetoArab Investment Company amounted to USD 45,000,000 which are subject to contractual cov-enants, which give the lender the right to claim back the amount)s( if the Bank did not comply with its covenants. The covenants state that total equity and capital adequacy should not fall belowJD57millionand14%respectivelyuptothedateoffinancialstatements.

17

38‚461‚62717‚628‚996

54‚906 640‚90056‚786‚429

29‚749‚03427‚147‚847

107‚670 4‚289‚30761‚293‚858

2006JD

2007JD

18

2‚287‚381

49‚219‚533

86‚190‚499 35‚732‚240173‚429‚653

3‚923‚883

39‚966‚138

88‚724‚543 -

132‚614‚564

AmountJD

532

13

861

824

12

101

payments

222

10

801

426

9

88

payments

-

-

402‚719 - 402‚719

-

-

382‚860 - 382‚860

Collaterals

2.5%–7.0%

5.45%-8.6%

2%-6.75%4.85%

2.5%-6.51%

4.5%-8.35%

5.04%-5.06%

Interest rate%

OutstandingTotal no of.


66

• IncludedintheborrowingsfromforeignbanksandinstitutionborrowingsareamountsduetoCitibank amounted to USD 60,000,000 which are subject to contractual covenants, which give the lender the right to claim back the amount)s( if the Bank did not comply with its covenants. The covenants state that tangible net worth and capital adequacy should not fall below JD 115millionand12%respectivelyuptothedateoffinancialstatements,theratioofloanlossprovisions to non-performing loans shall not at any time during the term of the facility be less than the amount set in the instruction for classification of credit facilities and calculation of the decline provision and general bank risk reserve number )30/2006( issued by Central Bank of Jordan. The amount due to banks shall not exceed at any time during the term facility 30 per cent of the total gross direct facilities.

• IncludedintheborrowingsfromothersisanamountofJD35,732,240arisingfromarepurchaseagree-ment of treasury bonds, with nominal value of JD 34,400,000, and maturity date 20 March 2008.

• CapitalInvestmentandBrokerageCompanysignedloanagreementswithlocalbankswithto-tal limits of JD 16,420,000 and a utilized amount as of 31 December 2007 of JD 14,219,533 with interestratesofbetween8%-8.5%.

SUNDRY PROVISIONS

2007Provision for impairmentloss on assets seized by the bankOthers Provision*Total

2006Others Provision*Total

* Other provisions are set against clients managed portfolios.

INCOME TAX Income Tax liabilitiesThe movements on the income tax liability were as follows:

At January 1Foreign exchange differencesIncome tax paidIncome tax charge for the yearIncome tax charge for previous yearAt December 31

19

- 289‚534

289‚534

77‚02877‚028

3‚226‚979 -

3‚226‚979

386‚733 386‚733

- )35‚974( )35‚974(

)174‚227( )174‚227(

- ) 253‚560() 253‚560(

- -

3‚226‚979 -

3‚226‚979

289‚534289‚534

JD

Balance at December 31

JD

Transferred to income

JD

Utilised during the year

JD

Provided during the period

JD

Balance at January 1st

20

758‚74718‚070

) 852‚979(7‚635‚025

- 7‚558‚863

7‚558‚8632‚449

) 7‚543‚007(6‚922‚078

352‚1447‚292‚527

2006JD

2007JD


67

Income tax appearing in the statement of income represents the following:

Current income tax chargePrevious years income tax chargesMovement on deferred tax assetsMovement on deferred tax liabilitiesForeign exchange differencesTotal

• TheBankreachedafinalsettlementwiththeIncomeTaxDepartmentfortheyearended2003.• TheIncomeTaxDepartmentreviewedtheBank’srecordsfor2004,2005,2006,andtheydidnot

yet issue their final report.• TheIncomeTaxDepartmentreviewedtheaccountsofCapitalInvestmentandBrokerageCom-

pany’s record for the year ended 2005, and thay did not yet issue their final report.• TheNationalBankofIraqreachedafinalsettlementwiththeIncomeTaxDepartmentuntilthe

end of year 2006.

- The movements on temprory differences giving rise to deffered tax assets and liablities are:

a( Deferred tax assetsShares granted to employees Provision for impairment loss on assets seized by the bank Provision for credit losses and interest in suspense.

b( Deferred tax liabilitiesUnrealised gain )loss( from trading InvestmentsUnrealised gain from available for sale investment

• DeferredtaxliabilitiesincludeamountsofJD140,079asof31December2007(2006:JD95,789)resulting from revaluation gains of financial assets available for sale which are included in the cumulative change in fair value.

• Incometaxratefordeferredtaxassetsis35%,whilefordeferredtaxliabilityoflocalfinancialsecuritiesis26.25%,andonforeignfinancialsecurities35%.

7‚635‚02547‚599

) 419‚368() 853‚207(

) 2‚174( 6‚407‚875

6‚922‚078352‚144

) 2‚927‚232(115‚863

) 672( 4‚462‚181

2006JD

2007JD

JD

Balance at January 1

JD

Relesaed during the year

JD

Additions during the year

JD

Balance at December 31

JD

DeferredTax

JD

DeferredTax


) 274‚107(

-

- ) 274‚107(

1‚846‚942

207‚3102‚054‚252

441‚953

3‚226‚979

4‚968‚6938‚637‚625

2‚457‚002

327‚3812‚784‚383

1‚366‚041

3‚226‚979

4‚968‚693 9‚561‚713

234‚436

604‚871839‚307

419‚368

-

- 419‚368

-

95‚78995‚789

1‚198‚195

-

- 1‚198‚195

) 375‚624(

484‚800109‚176

478‚115

1‚129‚443

1‚739‚0423‚346‚600

115‚863

140‚079255‚942

68

The movement on deferred assets/ liabilities account is as follows:

At 1 JanuaryAdditionsReductionsAt 31 December

Reconciliation between tax expense and the accounting profit is as follows:

Accounting profitNon-taxable incomeExpenses not deductible In determining taxable profitTaxable profitEffective rate of income tax

ThestatutorytaxrateonbanksinJordanis35%andthestatutorytaxrateonsubsidiariesrangebetween15%to25%.

OTHER LIABILITIES

Accrued interest expenseInterest and commissions received in advanceAccrued expensesCertified checksChecks payableUniversity feesScientific research feesEducational, vocational training and technical fund feesChecks under collectionBoard of directors’ remunerationOthersTotal

PAID IN CAPITAL

Paid in capital

The authorized and paid in capital amounted to JD 132,280,000 divided into 132,280,000 shares at a par value of JD 1 per share )2007: JD 123,000,000(.

24‚467‚780) 6‚285‚435(

2‚095‚94920‚278‚294

26.19%

17‚970‚847) 4‚177‚785(

9‚232‚40523‚025‚467

24.83%

2006JD

2007JD

21

4‚107‚47422‚493

1‚459‚6091‚914‚736

497‚585252‚123252‚123175‚137

4‚32855‚000

291‚916 9‚032‚524

3‚780‚481-

923‚090372‚543664‚168139‚050139‚050106‚573

4‚32855‚000

482‚7336‚667‚016

2006JD

2007JD


22

419‚3683‚023‚169) 95‚937(

3‚346‚600

JD

Assets2007

95‚789600‚603

) 440‚450(255‚942

JD

Liabilities2006

- 419‚368

- 419‚368

JD

Assets2006

930‚311100‚916

) 935‚438( 95‚789

JD

Liabilities2006

69

On January 3, 2008, the Bank increased its paid in capital by 9,280,000 shares at a par value of JD 1 per share. The increase in capital was subscribed and paid for by the International Finance Corpora-tion )IFC(. As part of the increase IFC paid JD 11,971,200 as additional paid in capital.

An additional paid in capital amount appears in equity which resulted from selling stocks raised from public subscription during 2005, and sold during 2006 for an amount JD 709,472 as premi-um.

RESERVES

Statutory ReserveAsrequiredbytheLaw,10%oftheprofitbeforetaxistransferredtothestatutoryreserve.TheBankmay resolve to discontinue such annual transfers when the reserve equals the paid in capital. This reserve is not available for distribution to shareholders.

General banking risk reserveThis reserve is appropriated from retained earnings in compliance with the regulations of the Cen-tral Bank of Jordan.

The use of the following reserves is restricted by law:

DescriptionGeneral banking risk reserveStatutory reserve

CUMULATIVE CHANGE IN FAIR VALUE

Balance at 1 JanuaryNet unrealised gainsDeferred tax liabilitiesRealised )gains( lossesBalance at 31 December

The cumulative change in fair value is presented net of deferred tax liabilities of JD 140,079 as of 31 December 2007 )2006: JD95,789(.

23

Central Bank of JordanCompanies Law

Restriction Law

5‚119‚84412‚874‚420

AmountJD

24

) 265‚826(305‚453

2‚686) 43‚094() 781(

) 209‚833(443‚765

) 44‚290(49‚097

238‚739

709‚122) 3‚581(

64‚183)713‚731(

55‚993

55‚993138‚312

) 46‚976( 92‚191 239‚520

)601‚034(315‚687

)82‚868( 102‚389

)265‚826(

108‚088312‚106)18‚685(

)611‚342()209‚833(

JD

Stocks2007

JD

Bonds2007

JD

Total2007

JD

Stocks2006

JD

Bonds2006

JD

Total2006

Financial assets available for sale Financial assets available for sale


70

RETAINED EARNINGS

Included in the Retained earnings balance an amount of JD 3,346,600 representing deferred tax assets, in addition to JD 426,740 unrealized gains from financial assets held for trading as of De-cember 31, 2007, )2006: JD 419,368 representing deferred tax assets( and according to the Central Bank of Jordan’s regulations, these balances are not available for distribution.

PROPOSED DIVIDENDS

Proposedcashdividendsfortheyear2007willamounttoJD7,500,000representing6.1%ofpaidin capital, which is subject to the approval of the General Assembly. Bonus shares issued in 2006 amountedto7,000,000sharesrepresenting6.03%ofpaidincapital.

INTEREST INCOME

Consumer lending Overdrafts Loans and bills Credit cards

Residential mortgagesCorporate lending Overdrafts Loans and bills

Small and medium enterprises lending Overdrafts Loans and bills

Balances at central BanksBalances at banks and financial institutionsFinancial assets held for tradingFinancial assets available for saleFinancial assets held to maturityOthersTotal

26

27

80‚8412‚186‚759

125‚679

3‚377‚305

5‚542‚46630‚179‚984

416‚224542‚391

2‚054‚4075‚712‚1371‚271‚1821‚797‚1822‚361‚454 481‚846

56‚129‚857

101‚0212‚774‚076

185‚534

5‚373‚804

5‚432‚25432‚361‚556

400‚278495‚543

4‚628‚6616‚168‚9912‚610‚4001‚916‚7752‚456‚404

279‚25665‚184‚553

2006JD

2007JD


25

71

INTEREST EXPENSE AND SIMILAR CHARGES

Banks and financial institution depositsCustomers’ deposits - Current accounts and deposits Saving accounts Time and notice placements Certificates of deposits Margin accountsLoans and borrowingsDeposit guarantee feesTotal

NET COMMISSION

Commission income -Direct credit facilitiesIndirect credit facilitiesOther commissionLess: commission expense

Net Commission

NET GAIN FROM FOREIGN CURRENCIES

Resulting from -Trading in foreign currenciesRevaluation of foreign currenciesTotal

28

2‚974‚159

359‚42459‚177

14‚348‚9413‚300‚9462‚467‚2826‚309‚638

563‚23830‚382‚805

2‚164‚659

451‚819199‚930

18‚250‚3093‚643‚3754‚046‚2459‚992‚697

633‚07539‚382‚109

2006JD

2007JD

29

30

257‚8883‚874‚5031‚140‚135

378‚789

4‚893‚737

249‚0074‚795‚8181‚127‚322

617‚518

5‚554‚629

2006JD

2007JD

169‚386985‚634

1‚155‚020

)121‚321(2‚299‚0042‚177‚683

2006JD

2007JD


72

NET GAIN (LOSS) FROM FINANCIAL ASSETS HELD FOR TRADING

2007

Treasury bills EquitiesDebt SecuritiesTotal

2006

Treasury bills EquitiesDebt SecuritiesTotal

NET GAIN FROM FINANCIAL ASSETS AVAILABLE FOR SALE

Dividend incomeGain from sale of financial assets available for saleLess: impairment losses on investmentsTotal

OTHER INCOME

Commission on customers’ funds managementOther income

Total

31

32

33

) 13(2‚516‚834 107‚1302‚623‚951

154‚290 ) 882‚479() 330‚603()1‚058‚792(

- 341‚981

- 341‚981

- 478‚682

- 478‚682

TotalDividend incomeJD

) 1‚908(175‚392

60‚949234‚433

133‚946 )313‚150()407‚423(

)586‚627(

Unrealised gain )loss(JD

1‚8951‚999‚461 46‚1812‚047‚537

20‚344)1‚048‚011(

76‚820) 950‚847(

Realised Gain )loss(JD

6‚3811‚433‚332 )22‚981(1‚416‚732

9‚572154‚947 - 164‚519

2006JD

2007JD

3‚346‚7801‚005‚872

4‚352‚652

3‚426‚5631‚613‚787

5‚040‚350

2006JD

2007JD


73

EMPLOYEES’ EXPENSES

Salaries and benefitsEmployee bonusesBank’s contribution to social securityMedical expensesTraining and researchPaid vacationsPer DiemsBank’s contribution to savings fund

Total

OTHER EXPENSES

RentConsulting and professional feesStationary and printingBoard of Directors’ transportationReuters’ subscription expenseDonationsAdvertisementSubscriptions, fees and licensesTravel and transportationComputer expensesPost, telephone, telex and swiftSubscriptionJordanian universities feesScientific research and vocational training feesTechnical and vocational education and training support fund fees NBI’s Cash LossBoard of Directors’ remunerationOthersTotal

34

3‚360‚7631‚139‚966

301‚947201‚368

36‚27822‚076

107‚75547‚919

5‚218‚072

4‚615‚240515‚439423‚619810‚219333‚002

14‚968149‚240

20‚794

6‚882‚521

2006JD

2007JD

35

724‚071411‚613162‚201113‚352131‚088183‚337

1‚556‚231268‚866168‚998223‚290436‚280162‚633252‚123252‚123

175‚137525‚861

55‚000361‚043

6‚163‚247

841‚245631‚577203‚191129‚231146‚272140‚000

1‚867‚11492‚192

167‚268395‚479479‚364171‚972139‚050139‚050

106‚574-

55‚000789‚094

6‚493‚673

2006JD

2007JD


74

EARNINGS PER SHARE

Profit for the year attributable to ordinary equity holders of the Parent

Weighted average number of shares

Basic and diluted earnings per share )JD / Fils(

Diluted earnings per share equal basic earnings per share as the Bank did not issue any potentially convertible instruments which would have an impact on earnings per share.

CASH AND CASH EQUIVALENTS Cash and cash equivalents appearing in the statement of cash flows consist of the following bal-ance sheet items:

Cash and balances with Central BanksAdd: Balances at banks and financial institutions maturing within 3 monthsLess: Banks and financial institutions’ deposits maturing within 3 monthsLess: Restricted cash balances

Cash and cash equivalents

DERIVATIVE FINANCIAL INSTRUMENTSThe table below shows the positive and negative fair values of derivative financial instruments together with the notional amounts analyzed by their term to maturity.

2007Derivatives held ForTrading )SellingContracts(Derivatives held ForTrading )BuyingContracts(

36 2006JD

2007JD

18‚279‚742

123‚000‚000

JD/Fils0.149

12‚956‚462

123‚000‚000

JD/Fils0.110

37

2006JD

2007JD

77‚694‚003

150‚988‚307

) 41‚518‚114() 382‚860(

186‚781‚336

81‚048‚157

136‚908‚920

) 25‚545‚308() 402‚719(

192‚009‚050

38

160‚964

-

Positive fair valueJD

20‚742‚492

20‚494‚254

20‚742‚492

20‚494‚254

-

-

Total notional amountJD

Within 3 monthsJD

3 – 12 monthsJD

Par value maturity


75

2006Derivatives held ForTrading )SellingContracts(Derivatives held ForTrading )BuyingContracts(

The notional amounts indicate the volume of transactions outstanding at the year end and are neither indicative of the market risk nor the credit risk.

RELATED PARTY TRANSACTIONSThe accompanying consolidated financial statements of the Bank include the following subsidiar-ies:

Company name Ownership

Capital Investment and Brokerage CompanyNational Bank of Iraq

The Bank entered into transactions with major shareholders, directors, senior management and their related concerns in the ordinary course of business at commercial interest and commission rates. All the loans and advances to related parties are performing advances and are free of any provision for credit losses.

The following related party transactions took place during the years:

Balance sheet items:Direct credit facilitiesBalances at banks Margin accountsDeposits at banks and financial institutions

Off balance sheet items:Indirect credit facilities

Income statement items:Interest and commission incomeInterest and commission expense

180‚362

-

18‚825‚095

18‚615‚861

16‚034‚861

15‚826‚016

2‚790‚234

2‚789‚845

39

2006JD

2007JD

10‚000‚00012‚078‚581

10‚000‚00011‚392‚587

Paid in capital

100%59‚2%

2007JD

2006JD

Total

5‚399‚60930‚122‚588

682‚784

2‚287‚677

29‚675‚840

521‚839

1‚498‚858

2‚800‚698 25‚586‚129

1‚011‚148

-

9‚427‚387

561‚194

261‚153

2‚800‚69816‚053‚984

275‚275

-

2‚149‚227

321‚297

183‚873

- 9‚532‚145

735‚873

-

7‚278‚160

239‚897

77‚280

Subsidiary companiesJD

BOD members and executive management JD

Related party


Positive fair valueJD

Total notional amountJD

Within 3 monthsJD

3 – 12 monthsJD

Par value maturity

76

• DebtinterestratesoncreditfacilitiesinJordanianDinarrangebetween3.9%-15%• Debtinterestratesoncreditfacilitiesinforeigncurrencyrangebetween7.09%-13%• CreditinterestratesondepositsinJordanianDinarrangebetween2.5%-6.75%• Creditinterestratesondepositsinforeigncurrencyrangebetween0.95%-4.15%

Compensation of the key management personnel is as follows:

Benefits )Salaries, wages, and bonuses(of senior managementTotal

FAIR VALUE OF FINANCIAL INSTRUMENTSFinancial instruments include cash balances, deposits at banks and central banks, credit facilities, other financial assets, customs deposits, banks deposits and other financial liabilities.

As mentioned in note )9( there is an amount of JD 552,909 representing financial assets available for sale investments carried at cost )2006: JD 1,193,364(. These investments were stated at cost since the fair value could not be measured reliably. There is no indication of impairment in the values as of the balance sheet date.

There are no material differences between the fair value of financial instruments and their book value.

Risk management Policies The Bank manages its various banking risks in many ways based on a comprehensive strategy for risks and means of controlling and mitigating them through Risk Management Department, ALCO, Invest-ment Committee, and Credit Quality Department. Moreover, all bank’s departments are responsible for defining the risks related to bank operations setting the appropriate controls and monitoring its continuity and efficiency in accordance with the risk control system.

Capital Bank is exposed to risks, and that is why it resorts to managing its risks to maintain solvency and profit levels.

Risk is managed through a process of ongoing identification, measurement and monitoring of finan-cial and non-financial risks that can have adverse effects on the Bank’s performance and reputation.

The Bank is exposed to the following risks:- Credit risk - Market risk - Liquidity risk - Operational Risk - Regulatory Compliance risk

2006JD

2007JD

1‚247‚5921‚247‚592

1‚416‚7441‚416‚744

40

41


77

The Bank’s risk management is inline with the main principles and objectives of corporate gov-ernance that are coherent with: the size and complexity of its operations, regulatory authorities’ instructions, and International best practices. These principles constitute the following:

- Board’s strategies for Risk Management.- Risk management policies approved by the Board. - Setting acceptable risk appetite limits by the Risk Committee, which are subsequently approved

by the Board.- Communication of risk management to all employees and developing risk awareness. - Distribution of tasks and responsibilities to staff in accordance with specialization.- Ensuring the effectiveness of the policies and procedures of risk management by the Audit and

Risk Committee. - Determining the ideal employment of capital by the Assets and Liabilities Management Com-

mittee )ALCO(, and ensuring the continuous monitoring of market and liquidity risks.

Risk Management is an independent department that manages credit, market, liquidity, opera-tional, and compliance risks in a centralized and comprehensive approach using systems that help in managing such risks. The department directly reports to the General Manager, Audit, Risk and Compliance Committees that emanates from the Board of Directors.

The Internal Audit Department provides independent assurance on compliance with policies and procedures set by the Risk Management department, and the degree of effectiveness of its risk framework in the Bank.

The Bank’s risk management policy is continuously reviewed and updated with the industry’s most recent developments and services. Its risk management philosophy is based on knowledge, expe-rience, management supervision, ability to judge on banking issues, and the availability of a clear manual of authorities set by the Board.

Risk Management department provides recommendations to senior management and Risk Com-mittee. In addition, it sets the rules and instructions for implementing effective regulatory con-trols, reporting the degree of compliance with controls, providing analytical resources for senior management, and following up on all technical developments relating to the measurement and management of risk.

Measuring Risks & Reporting Systems The Risk controlling process monitors the Bank’s risk appetite and capacity, which is determined by the Bank’s strategy as well as various market factors surrounding its activities.

Information is collected from different management units within the Bank and analyzed to deter-mine the expected possible exposure. The results are subsequently communicated and explained to the Risk Committee.

Credit Risk Credit risk is the risk that the Bank will incur a loss because its customers, clients or counterparties failed to discharge their contractual obligations. The Bank manages and controls credit risk by set-ting limits on levels of risk it is willing to accept for individual counterparties and for geographical and industry sectors, and by monitoring exposures in relation to such limits and continually assess-


78

ing the credit worthiness of counterparties. In addition, the Bank obtains security where appropri-ate.

The Bank’s risk management policy includes the following:

Defining credit concentration and limits:

The credit policy contains clear and specified ratios for maximum credit allowed to any client or group of clients based on pre-approved concentration ratios defined by the Central Bank of Jor-dan, in addition to concentration limits for various economic sectors. Moreover, there are approval limits set for each administrative level.

Customer Credit Rating:Customers are internally rated based on their credit worthiness and their commitment of repay-ment using financial and non-financial criteria that is reviewed and evaluated by the Risk Manage-ment Department. The Bank is currently developing a “Credit Scoring system” for retail credit.

Risk Mitigation Techniques:

The risk management process in the Bank depends on various methods to mitigate against risk:

Collaterals, which are based on availability for liquidation and their percentage of granted credit. Collaterals are monitored and evaluated continuously.

The types of collateral used against facilities are as follows:- Mortgages on real estate. - Financial instruments such as Bonds and Stocks.- Banks Guarantees.- Cash Collateral.- Government Guarantees.

The Credit Administration Department monitors the market value of collateral on a regular basis, and upon decline in value, more collateral is demanded to cover the risk exposure.

Adopting a Credit Committee System for granting credit that depends on customer size, amount of facility, maturity, and customer risk level.Diversification is a key principle for mitigating against credit risk. For this reason, the Bank’s annual plan contains targeted distribution of credit and investments over various sectors and markets based on risk rating systems of economic and geographic sectors.

3. Borrowing Instruments External ratings issued by international rating institutions such as Moody’s and Standard & Poor’s or equivalent institutions are used to manage credit exposure to borrowing instruments.


79

Credit granting, monitoring, and follow up:The Bank develops the policies and procedures necessary to: define credit granting techniques, maintaining the neutrality and integrity of the decision making process, and ensuring that credit risks are accurately evaluated and approved.

The general framework for credit policy contains credit approval delegations, credit limit defini-tions, and risk level methods. The Bank currently relies on internal credit rating and capital ad-equacy requirements based on Basel II to measure credit risk.

1( Credit Risk Exposures: The table below shows the maximum exposure to credit risk for the components of the balance

sheet, including derivatives. The maximum exposure is shown gross, before the effect of mitiga-tion through the use of master netting and collateral agreements.

Balance sheet items: Cash and balances at Central BanksBalances at banks and financial institutionsDeposits at banks and financial institutionsDirect credit facilities Consumer lending Residential mortgages Corporate lending: Large corporations Small and medium enterprisesLending to governmental sectors Bonds and treasury bills: Within financial assets held for trading Within financial assets available for sale Within financial assets held to maturityOther assets Total Balance Sheet Items Off balance sheet items Letters of guarantee Letters of credit Acceptances Irrevocable commitments to extend creditForwared Deal Total off Balance Sheet Total

76‚535‚335150‚988‚307

6‚381‚000

25‚227‚06052‚407‚151

402‚084‚26110‚008‚787

26‚716‚39525‚174‚923

11‚910‚500 9‚441‚833

796‚875‚552

71‚082‚21960‚759‚462

9‚721‚187 23‚228‚474

18‚615‚861183‚407‚203

980‚282‚755

82‚471‚612136‚908‚920

-

31‚162‚47667‚710‚216

389‚924‚8418‚614‚374

35‚207‚50437‚964‚437

73‚302‚108 15‚552‚788

878‚819‚276

100‚239‚536119‚931‚197

20‚229‚612 26‚130‚086

20‚494‚254 287‚024‚685

1‚165‚843‚961

2006JD

2007JD


80

2( Credit exposures are classified by the level of risks according to the following table:

2007Low riskAcceptable risk

Maturing:Up to 30 daysFrom 31 to 60 daysWatchlist -From 61 to 90 daysNon performing:

SubstandardDoubtfulLossOverdraft

Total

Less: Suspended interestLess: provision forimpairment losses

Net

2006Low riskAcceptable risk

Maturing:Up to 30 daysFrom 31 to 60 daysWatchlist -From 61 to 90 daysNon performing:

SubstandardDoubtfulLoss Overdraft

Total

Less: Suspended interestLess: provision forimpairment losses

Net

297‚557‚538 539‚485‚836

13‚675‚76913‚216‚098

40‚058‚955

5‚425‚9662‚122‚601

10‚778‚395 705‚401

896‚134‚692

) 3‚406‚942(

) 13‚908‚474(

878‚819‚276

266‚476‚293486‚047‚907

32‚767‚22411‚068‚449

40‚818‚681

1‚762‚7112‚611‚3388‚661‚601

878‚040807‚256‚571

) 2‚430‚615(

) 7‚950‚404(

796‚875‚552

270‚834‚562110‚572‚807

- -

-

- - -

- 381‚407‚369

-

-

381‚407‚369

231‚730‚54075‚417‚753

- -

-

- -

- -

307‚148‚293

-

-

307‚148‚293

488‚3887‚122‚848

923‚962786‚891

600‚672

478‚816 - -

4‚9078‚695‚631

-

) 81‚257(

8‚614‚374

373‚7587‚752‚296

3‚038‚512630‚729

1‚854‚248

43‚330 -

293‚732 -

10‚317‚364

) 110‚282(

) 198‚295(

10‚008‚787

21‚237‚652330‚131‚616

12‚354‚15011‚775‚773

38‚715‚922

3‚439‚5831‚273‚8319‚998‚061

515‚464405‚312‚129

) 3‚152‚373(

)12‚234‚915(

389‚924‚841

28‚622‚759333‚609‚873

29‚511‚58510‚172‚901

37‚731‚699

318‚6022‚229‚843

7‚732‚286 723‚331

410‚968‚393

) 2‚209‚918(

) 6‚674‚214(

402‚084‚261

4‚058‚90362‚119‚420

160‚774164‚132

-

1‚214‚045463‚274

47‚872 800

67‚904‚314

)31‚433(

) 162‚665(

67‚710‚216

4‚715‚49147‚650‚051

34‚73828‚531

-

16‚67531‚991 -

- 52‚414‚208

) 1‚325(

) 5‚732(

52‚407‚151

938‚03329‚539‚145

236‚883489‚302

742‚361

293‚522385‚496732‚462

184‚23032‚815‚249

) 223‚136(

) 1‚429‚637(

31‚162‚476

1‚033‚74521‚617‚934

182‚389236‚288

1‚232‚734

1‚384‚104349‚504

635‚583 154‚709

26‚408‚313

) 109‚090(

)1‚072‚163(

25‚227‚060

TotalJD

Bank and other Finaicial Instituations

JDSMEs

JDCorporate

JD


JDConsumer

JD


81

3( The following table shows the distribution of collaterals measured at fair value over credit facilities:

2007Collaterals Low riskAcceptable riskWatchlist - From 61 to 90 daysNon performing:

SubstandardDoubtfulOverdraftLoss

Total

Comprising of:Cash marginReal Estate Traded equitiesVehicles and machinery

Total

2006Collaterals Low riskAcceptable riskWatchlist - From 61 to 90 daysNon performing:

SubstandardDoubtfulOverdraftLoss

Total

Comprising of:Cash marginReal Estate Traded equitiesVehicles and machinery

Total

The fair value of collaterals shown does not exceed the value of the loan for each individual client.

26‚722‚976141‚544‚516

37‚202‚616

3‚970‚6191‚430‚678

763 3‚435‚202

214‚307‚370

27‚633‚565127‚759‚164

37‚098‚314 21‚816‚327214‚307‚370

34‚745‚753156‚210‚740

23‚391‚357

419‚0211‚394‚614

450 4‚136‚304

220‚298‚239

34‚745‚75399‚725‚80765‚106‚866

20‚719‚813220‚298‚239

488‚3883‚001‚378

378‚045

283‚363 - -

16‚800 4‚167‚974

488‚3882‚704‚833

611‚611 363‚142

4‚167‚974

373‚7582‚758‚799

231‚332

38‚543 - -

192‚8433‚595‚275

373‚758291‚351

1‚887‚2231‚042‚9433‚595‚275

21‚237‚652115‚978‚519

36‚655‚977

2‚593‚886749‚502

- 3‚047‚694

180‚263‚230

22‚148‚241106‚708‚351

34‚930‚522 16‚476‚116

180‚263‚230

28‚622‚759124‚813‚559

22‚403‚510

208‚1401‚299‚463

- 3‚721‚290

181‚068‚721

28‚622‚75976‚039‚28960‚102‚545

16‚304‚128181‚068‚721

4‚058‚90316‚353‚978

-

987‚123426‚737

- 47‚310

21‚874‚051

4‚058‚90316‚728‚640

700‚654 385‚85421‚874‚051

4‚715‚49122‚163‚232

-

16‚26831‚991 -

- 26‚926‚982

4‚715‚49119‚422‚888

2‚359‚004 429‚59926‚926‚982

938‚0336‚210‚641

168‚594

106‚247 254‚439

763323‚398

8‚002‚115

938‚0331‚617‚340

855‚527 4‚591‚215

8‚002‚115

1‚033‚7456‚475‚150

756‚515

156‚07063‚160

450 222‚171

8‚707‚261

1‚033‚7453‚972‚279

758‚0942‚943‚1438‚707‚261

TotalJD

SMEsJD

CorporateJD


JDConsumer

JD


82

Rescheduled Debts

Are defined as debts that were classified as “non-performing” facilities, and subsequently removed and included under “Watch List” based on proper rescheduling that complies with the Central Bank of Jordan’s regulations. The sum of these debts amounted to JD 5,416,291 as of 31 December 2007 )2006: JD 962,324(.

Restructured Debts

Restructuring is reorganizing credit facilities in terms of instalments, extending the term of credit facilities, deferment of instalments, or extending the grace period and accordingly are classified as “Watch List”. The sum of these debts amounted to JD 2,296,252 as of 31 December 2007 )2006: JD 12,210,160(.

3( Bonds and Treasury Bills

The following table explains the classifications of bonds and treasury bills based on international classification standards:

Risk Rating Class

Non-ratedGovernmental

Total

38‚833‚782107‚640‚267

146‚474‚049

23‚213‚16150‚088‚947

73‚302‚108

1‚959‚89536‚004‚542

37‚964‚437

13‚660‚72621‚546‚778

35‚207‚504

TotalJD

Included in financial assets held for trading

JD

Included in financial assets

available for saleJD

Included in financial assets

held to maturityJD


83

4( Credit Concentration based on geographic distribution is as follows:

2007

Cash and balances at Central BanksBalances at banks and financial institutions

Direct credit facilities:Consumer lendingResidential mortgages

Corporate lending:Large corporationsSmall and medium enterprises

Bonds and treasury bills within:financial assets held for tradingfinancial assets available for salefinancial assets held to maturityOther assets

Total 2007

Total 2006

* Excluding Middle-Eastern countries.

82‚471‚612

136‚908‚920

31‚162‚47667‚710‚216

389‚924‚841

8‚614‚374

35‚207‚504

37‚964‚437

73‚302‚108 15‚552‚788

878‚819‚276

796‚875‚552

-

104‚963

- -

-

-

-

-

- -

104‚963

79‚617

-

7‚973‚352

- -

-

-

-

-

- -

7‚973‚352

8‚426‚644

-

49‚463

- -

-

-

-

-

- -

49‚463

5‚016‚095

-

81‚872‚292

- -

1‚772‚500

-

-

-

715‚654 -

84‚360‚446

90‚977‚701

64‚565‚225

30‚606‚212

30‚329‚92867‚710‚216

383‚879‚099

8‚147‚232

34‚472‚769

37‚964‚437

68‚373‚29215‚552‚788

741‚601‚198

655‚623‚252

17‚906‚387

16‚302‚638

832‚548 -

4‚273‚242

467‚142

734‚735

-

4‚213‚162 -

44‚729‚854

36‚752‚243

Inside JordanJD

Other MiddleEastern countries

JDEurope

JDAsia *

JDAmericas

JDOther

JDTotal

JD


84


82‚4

71‚6

12

136

‚908

‚920

497‚

411‚

907

35‚2

07‚5

04

37‚9

64‚4

37

73‚3

02‚1

08 1

5‚55

2‚78

8

878‚

819‚

276

796‚

875‚

552

-

-

4‚20

3‚61

7

-

130‚

234

-

-

4‚3

33‚8

51

6‚90

6‚14

6

-

-

-

21‚5

46‚7

78

36‚0

04‚5

42

50‚0

88‚9

46

-

107‚

640‚

266

49‚

137‚

863

-

-

10‚3

29‚7

11

-

-

-

-

10‚3

29‚7

11

8‚2

79‚9

40

-

-

88‚9

02‚9

28

-

-

-

-

88‚

902‚

928

109‚

455‚

380

-

-

12‚4

44‚3

06

-

-

-

-

12‚4

44‚3

06

5‚9

53‚0

67

-

-

143‚

045‚

718

10‚3

68‚3

00

-

19‚0

00‚0

00

-

172‚

414‚

018

81‚8

39‚6

49

-

-

134‚

779‚

558

-

388‚

618

-

-

135‚

168‚

176

141‚

813‚

755

-

-

99‚0

80‚4

15

3‚29

2‚42

6

1‚44

1‚04

3

-

-

103‚

813‚

884

139‚

636‚

689

82‚4

71‚6

12

136‚

908‚

920

4‚62

5‚65

4

-

-

4‚21

3‚16

2 1

5‚55

2‚78

8

243‚

772‚

136

253‚

853‚

063

5(

Con

cent

ratio

n in

the

cred

it ex

posu

res

base

d on

the

econ

omic

sec

tor i

s as

follo

ws:

Tota

lJD

Oth

erJD

Publ

ic an

d go

vern

men

tal

JDCo

nsum

erJD

Trad

ing

JDAg

ricul

ture

JDRe

al e

stat

eJD

Com

mer

cial

JDIn

dust

rial

JDFi

nanc

ial

JD

2007

Cash

and

bal

ance

s at

Cen

tral B

anks

Bala

nces

at b

anks

and

fina

ncia

l ins

titut

ions

Dire

ct cr

edit

faci

litie

s:

Bond

s and

trea

sury

bill

s w

ithin

:fin

anci

al a

sset

s hel

d f

or tr

adin

gfin

anci

al a

sset

s ava

ilabl

e f

or sa

lefin

anci

al a

sset

s hel

d t

o m

atur

ityO

ther

ass

ets

Tota

l 200

7

Tota

l 200

6

The

bala

nce

incl

udes

real

est

ate

loan

s gr

ante

d to

cor

pora

tions

and

mor

tgag

e le

ndin

g in

stitu

tions

.

85

4. Market Risk

This is the risk of fluctuation in the fair value or the cash flows from financial instrument due to changes in market prices, interest rates, currency rates, and equity prices. These risks are moni-tored based on specific policies and procedures carried out through specialized committees and concerned business units.

Market risk is measured and monitored using different methods such as sensitivity analysis, “stop loss limits reports “, and monitoring of trading limits.

Sensitivity analysis is based on estimating the possible loss as a result of changes in the interest and foreign exchange rates. The fair value is calculated based on the present value of future cash flows adjusted for changes in interest rates.

1- Interest rate Risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial instruments .The Bank is exposed to interest rate risk as a result of mismatches in interest rates between assets and liabilities. Accordingly, it manages these risks by reviewing the rates on a regular basis.

The Asset & liability policy provides limits for interest rate sensitivity and the “Asset and Liability Committee” )ALCO( analyses interest rate gaps and compares them to the approved limits. Posi-tions are monitored on a regular basis and hedging strategies are used to ensure positions are maintained within the established limits.

Risk Mitigation Asset and Laiability committee studies the interest rate risks by holding periodic meetings for this purpose. The gaps in maturities and effect of current and expected rates and put sulutions for mitigating these risks.

Balancing Maturity dates for assets & laibilities:The Bank attempts to harmonize the effect of interest rate changes across categories of assets and liabilities, and limit the adverse effects that can emerge as a result.

Interest Rate GapsThe Bank attempts to avoid having interest rate gaps by matching between interest rates and ma-turities.


86

Hedging for interest rates.The Bank acquires long term financing to meet its long-term investments using fixed interest rates where possible to avoid fluctuations. Conversely, it enters into short-term investments to hedge against fluctuations that occur on floating and variable interest rates.

The sensitivity of income statement is represented by the effect of the possible expected changes in interest rates on the Bank’s profits for one year. It is calculated based on the financial assets and liabilities that carry a variable interest rate as of 31 December 2007.

2007Currency

US DollarEuropean CurrencyPound SterlingJapanese YenOther Currency

2006Currency


2007Currency


2006Currency


11111

Increase in interest rate %

) 281‚658() 4‚526(

16‚441154‚847

) 606‚351(

Sensitivity of net interest incomeJD

34‚389 - - - -

Sensitivity of equityJD

11111

) 293‚856() 6‚110() 9‚633(

151‚414)1‚137‚503(

54‚944 - - - -

)1()1()1()1()1(

) 1‚011‚420(4‚526

) 16‚441() 154‚847(

606‚351

) 35‚366( - - - -

)1()1()1()1()1(

583‚1936‚1109‚633

) 151‚414(1‚137‚503

20‚028 - - - -











87

Currency Risks

Foreign currency risk is the risk of change in the value of financial instruments as a result of change in foreign currency rates. Jordanian Dinar is the basic currency of the Bank. The Board sets posi-tion limits for each foreign currency in the Bank. These positions are monitored on daily basis, and hedging strategies are adopted to ensure that the foreign currency positions held are within the approved limits.

The Bank’s investment policy allows it to hold positions in major foreign currencies as long as it doesnotexceed5%ofshareholdersequity ineachcurrency,andthenetcurrenciespositionof15%ofshareholdersequity.Foreigncurrencypositionsaremonitoredondailybasis.Inaddition,market instruments are used to hedge against fluctuations in currency exchange rates in order to protect the Bank from additional risk exposures.

The following table illustrates the possible effect on the income statement as a result of fluctuations in exchange rates against the Jordanian Dinar assuming that all other variables remain constant:

2007Currency


2006Currency


In the event of an opposite change in the indicator, the effect will remain constant but with an op-posite sign.

Increase in currency exchange rate JD

Effect on profit before taxJD

Increase in currency exchange rate JD

Effect on profit before taxJD

55555

)1‚677‚865() 495() 5‚923(

5‚560140‚915

55555

) 1‚510‚971() 3‚159(

4‚0244‚902

102‚145


88

3- Equity Price Risk

Equity price risk arises from the change in the fair value of equity investments. The Bank manages this risk by distributing its investments over various geographic and economic sectors. Most of the Bank’s investments are listed in Amman stock market, Palestine, Egypt, Dubai, Abu Dhabi and Iraq securities market, in addition to some international markets such as London stock exchange.

The following table illustrates the income statement sensitivity and the accumulative change in fair value as a result of possible reasonable changes in the equity prices while assuming that all other variables remain constant:

2007Currency

Amman Stock exchangeShuaa CapitalDow JonesIraq Stock Exchange

2006Currency

Amman Stock exchangeShuaa CapitalDow JonesIraq Stock Exchange

In the event of an opposite change in the indicator, the effect will be for the same amount but in an opposite direction.

5555


) 314‚230() 18‚308() 19‚694(

) 13‚278(


) 354( - - -


5555

) 389‚009() 34‚967() 8‚723(

) 40‚711(

- - - -





89

6‚2 4‚71

7‚83

8‚50 6‚4

5 5‚6

1

6‚12

4‚77

5‚61

4‚46

6‚21

88‚04

8‚157

136‚9

08‚92

049

‚870‚9

6149

7‚411

‚907

40‚03

5‚871

73‚30

2‚108

9‚784

‚686

5‚609

‚568

3‚346

‚600

35

‚320‚4

5793

9‚639

‚235

32‚78

8‚278

48

2‚309

‚858

61‚29

3‚858

173‚4

29‚65

33‚2

26‚97

925

5‚942

7‚292

‚527

6

‚667‚0

16 7

67‚26

4‚111

172‚3

75‚12

4

856‚3

74‚72

3 69

9‚382

‚953

156‚9

91‚77

0

41‚91

2‚974

10‚58

6‚934

14‚66

3‚457

-

2‚071

‚434

-

9‚784

‚686

5‚609

‚568

3‚346

‚600

23‚8

31‚87

311

1‚807

‚526

633‚5

3261

‚588‚1

825‚8

11‚07

5

-

3‚2

26‚97

925

5‚942

7‚292

‚527

6‚

667‚0

16 85

‚475‚2

5326

‚332‚2

73

121‚1

42‚59

2 8

0‚302

‚513

40‚84

0‚079

-

-

-

1

0‚231

‚895

12‚19

8‚190

5‚000

‚000

-

-

-

-

27

‚430‚0

85

-

-

-

15‚57

7‚560

-

-

-

-

15

‚577‚5

6011

‚852‚5

25

41‚43

4‚902

20‚42

5‚323

21‚00

9‚579

-

-

-

82

‚673‚6

878‚7

83‚97

514

‚101‚7

24

-

-

-

2‚2

76‚61

310

7‚835

‚999

-

13‚28

8‚740

-

7‚106

‚089

-

-

-

-

2

0‚394

‚829

87‚44

1‚170

175‚2

47‚16

024

‚735‚1

97

150‚5

11‚96

3

-

-

-

23

‚266‚2

02

-

11‚00

0‚000

-

-

-

2‚223

‚035

36‚48

9‚237

5‚242

‚969

32‚56

1‚479

-

20‚23

3‚121

-

-

-

-

58

‚037‚5

69) 2

1‚548

‚332(

76‚75

5‚928

49‚64

3‚961

27‚11

1‚967

7‚000

‚000

-

-

256‚0

22‚55

916

‚143‚0

385‚9

57‚73

0

-

-

-

1‚640

‚020

286

‚763‚3

47

2‚000

‚000

17‚34

9‚169

40‚21

5‚490

47

‚296‚2

28

-

-

-

-

106‚8

60‚88

717

9‚902

‚460

62‚99

4‚040

62‚48

5‚996

50

8‚044

14‚00

0‚000

-

34‚92

8‚328

87‚47

9‚341

-

37‚24

2‚654

-

-

-

5

52‚27

917

4‚202

‚602

5‚000

‚000

98‚13

0‚656 -

50‚29

6‚180

-

-

-

-

15

3‚426

‚836

20‚77

5‚766

139‚4

71‚35

912

0‚699

‚560

18‚7

71‚79

9

25‚13

5‚183

126‚3

21‚98

627

9‚176

37‚73

8‚223

839‚2

34

-

-

-

-

4‚796

‚637

195‚1

10‚43

9

19‚91

1‚777

259‚3

91‚63

215

‚267‚2

9332

‚920‚4

75

-

-

-

-

327‚4

91‚17

7 )1

32‚38

0‚738

(

239‚3

28‚74

234

1‚090

‚403

) 101

‚761‚6

61(

Less

than

1 m

onth

JD1 –

3 m

onth

sJD

3 – 6

mon

ths

JD

6 – 12

mon

ths

JD1 –

3 ye

ars

JD

3 or m

ore

year

sJD

Non-

inte

rest

bear

ing

JDTo

tal

JD

Avg.

Int.

Rate %

The

inte

rest

rate

s se

nsiti

vity

is a

s fo

llow

s:Th

eclassificationisbased

ontheinterestra

tere

-pric

ingorm

aturity

dates;w

hich

everislessearlier:

Asse

tsCa

sh an

d ba

lance

s at C

entra

l Ban

ksBa

lance

s at b

anks

and

finan

cial in

stitu

tions

Finan

cial a

sset

s held

for t

radi

ngDi

rect

cred

it fa

ciliti

es-n

etFin

ancia

l ass

ets a

vaila

ble f

or sa

leFin

ancia

l ass

ets h

eld to

mat

urity

Prem

ises a

nd eq

uipm

ent

Inta

ngib

le as

sets

Defe

rred

tax a

sset

sOt

her a

sset

sTo

tal A

sset

s

Liabi

lities

Bank

s and

finan

cial in

stitu

tion

depo

sits

Custo

mer

s’ dep

osits

Mar

gin

acco

unts

Loan

s and

bor

rowi

ngs

Sund

ry p

rovis

ions

Defe

rred

tax l

iabilit

iesTa

x pro

visio

nOt

her l

iabilit

iesTo

tal L

iabilit

iesIn

tere

st ra

te se

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vity g

ap

2006

Tota

l Ass

ets

Tota

l Liab

ilities

Inte

rest

rate

sens

itivit

y gap

2007


90

Liquidity Risks

Liquidity risk is the risk that the Bank will be unable to meet its payment obligations when they fall due, or to finance its activities without bearing additional costs or losses .The liquidity policy was approved by the Board of Directors.

The asset and liability management policy is carried out by ALCO which works on diversifying the funding sources and matching between their maturity dates, in addition to maintaining sufficient reserves of cash, cash equivalents and trading investments to mitigate against liquidity risks.

Diversifying Funding Sources

The Bank seeks to diversify its financing sources and customer base. Borrowing from local and for-eign banks and financial institutions will allow the Bank to obtain reasonable maturity dates and interest rates.

Analysing and Monitoring Asset & liability maturity dates The Bank reviews the liquidity of its assets and liabilities and monitors the changes that can affect them on a daily basis. It aims to match between maturities of assets and liabilities to decrease liquidity gaps.

The policy also includes a “Liquidity Contingency Plan” to be applied in dire situations.

The Risk Management Department raises recommendations regarding the policies and proce-dures of liquidity risk management, sets implementation methods for effective controls, and re-ports about liquidity risks and the extent of compliance with laws and regulations. In addition, it provides analytical resources to be used by management. .

The Geographical and Sectoral distripution:

The Bank’s assets and liabilities are distributed between local and foreign investments based on several financial markets. Credit facilities are also distributed over various sectors and geographical areas to balance between corporate and retail customers.

Reserves with Banking Regulatory Authorities

The Bank holds compulsory cash reserves with banking regulatory authorities amounting to JD 35,886,275 as of 31 December 2007.


91


20‚63

1‚452

306‚3

20‚61

029

‚401‚0

3835

‚139‚3

03

-

-

7‚2

92‚52

7 5

‚009‚9

15

403‚7

94‚84

526

1‚133

‚244

41‚63

7‚813

263‚3

83‚83

021

‚623‚2

163‚8

78‚50

0

-

12

‚922

7‚543

‚007

5‚22

7‚754

343

‚307‚0

42

239‚3

28‚74

2

5‚059

‚625

104‚2

37‚26

54‚0

69‚34

857

‚048‚2

49

-

25

5‚942

-

484‚1

82

171‚1

54‚61

114

1‚574

‚193

5‚719

‚796

99‚06

0‚213

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‚146‚7

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89‚56

3

-

82

‚867

-

1‚049

‚296

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48‚52

6

120‚7

32‚78

5

33‚23

1‚837

495‚0

50‚28

765

‚124‚3

6619

7‚460

‚207

3‚226

‚979

255‚9

427‚2

92‚52

76‚6

67‚01

4

808‚3

09‚15

9 9

39‚63

9‚235

65‚86

9‚578

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32‚13

260

‚043‚2

7615

5‚196

‚886

289‚5

3495

‚789

7‚558

‚863

9‚032

‚526

740‚8

18‚58

4

856‚3

74‚72

3

2‚047

‚700

27‚26

6‚455

4‚973

‚257

3‚699

‚567

-

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-

700

‚435

38‚68

7‚414

112‚0

52‚38

6

12‚62

4‚924

41‚61

9‚914

5‚537

‚216

14‚48

4‚344

-

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47‚08

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76‚11

3‚478

67‚64

8‚756

5‚493

‚060

41‚05

1‚453

6‚002

‚160

10‚23

7‚864

-

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46

8‚156

63‚25

2‚693

117‚8

87‚24

5

5‚887

‚045

31‚17

8‚293

6‚261

‚033

1‚413

‚718

289‚5

34

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45‚57

8‚680

90‚83

9‚786

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16‚17

4‚504

9‚830

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66‚55

6‚091

3‚226

‚979

-

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95‚78

8 ‚52

418

6‚406

‚855

-

6‚327

‚827

15‚04

5‚537

109‚7

11‚48

9

-

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-

52‚6

61

131‚1

37‚51

4

175‚2

47‚16

0

-

-

5‚478

‚470

24‚77

9‚133

-

-

-

-

30‚25

7‚603

106‚7

01‚92

8

-

1‚162

‚055

7‚788

‚585

21‚41

9‚272

-

-

-

1

0‚267

30‚38

0‚179

41‚43

4‚902

-

-

5‚369

‚143

-

-

-

-

4‚

326

5‚373

‚469

13‚88

3‚384

-

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640‚8

98

-

-

-

-

31

2‚267

953‚1

65

121‚1

42‚59

2

Less

than

1 m

onth

JD

1 – 3

mon

ths

JD

3 – 6

mon

ths

JD

6 – 12

mon

ths

JD

1 – 3

year

sJD

3 or m

ore

year

sJD

Non-

inte

rest

bear

ing

JDTo

tal

JD

Liab

ilitie

s 2

007

Bank

s an

d fin

anci

al in

stitu

tion

depo

sits

Cust

omer

s’ de

posi

tsM

argi

n ac

coun

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ans

and

borr

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ndry

pro

visi

ons

Def

erre

d ta

x lia

bilit

ies

Tax

prov

isio

nO

ther

liab

ilitie

s

Tota

l Lia

bilit

ies

Tota

l Ass

ets

Liab

ilitie

s 2

006

Bank

s an

d fin

anci

al in

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tion

depo

sits

Cust

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argi

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Def

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Tax

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liab

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s

Tota

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bilit

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Tota

l Ass

ets

Firs

t: th

e ta

ble

belo

w s

umm

aris

es th

e m

atur

ity p

rofil

e of

the

Bank

’s fin

anci

al li

abili

ties

at 3

1 D

ecem

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ased

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92

TotalJD

1 – 5years

JD

Less than 1 year

JD

70‚480‚649-

36‚457‚11718‚615‚861

125‚553‚627

- 23‚228‚47434‚625‚102

- 57‚853‚576

70‚480‚64923‚228‚474 71‚082‚21918‚615‚861

183‚407‚203

Second: the below table summaries the maturities of financial derivatives as of the date of the financial statements:

Financial derivatives / liabilities, which are settled net, include foreign currency derivates: off bal-ance sheet market currency options, currency futures and on balance sheet foreign currency swap-ping contracts.

Financial derivative’s / liabilities which are settled gross include: foreign currency derivatives: cur-rency contracts that have passed their maturity dates.

a( Forgein Currency Derivative:

2007

Derivatives held for trading:OutflowsInflows

2006

Derivatives held for trading:OutflowsInflows

Off balance sheet items

2007

Acceptances and Letters of CreditIrrevocable commitments to extend creditLetters of guaranteeForeign Currency Forward Deals Total

2006

Acceptances and Letters of CreditIrrevocable commitments to extend creditLetters of guaranteeForeign Currency Forward Deals Total

TotalJD

3 – 6months

JD

1 – 3months

JD

Less than 1 month

JD

13‚813‚92414‚070‚023

15‚409‚89015‚629‚888

6‚680‚330 6‚672‚469

416‚126404‚973

- -

2‚789‚8452‚790‚234

20‚494‚254 20‚742‚492

18‚615‚861 18‚825‚095

TotalJD

1 – 5years

JD

Less than 1 year

JD

140‚160‚809-

74‚104‚11720‚494‚254

234‚759‚180

- 26‚130‚08626‚135‚419

- 52‚265‚505

140‚160‚80926 ‚130‚086

100‚239‚53620‚494‚254

287‚024‚685


93

Concentration in currency risk:

2007AssetsCash and balances at Central BanksBalances at banks and financial institutionsFinancial assets held for tradingDirect credit facilitiesFinancial assets available for saleFinancial assets held to maturityPremises and equipmentOther assetsTotal Assets

LiabilitiesBanks and financial institution depositsCustomers’ depositsMargin accountsLoans and borrowingsIncome tax provisionOther liabilitiesTotal LiabilitiesNet concentration in the balance sheetFuture contractsNet concentration in foreign currency

2006Total AssetsTotal LiabilitiesNet concentration in the balance sheetFuture contractsNet concentration in foreign currency

40‚223

13‚402‚212142‚030

- - - -

102‚09613‚686‚561

- 14‚379‚419

373‚484 - -

111‚39614‚864‚299

)1‚177‚738(127‚377

) 1‚127‚632(

551‚7365‚445‚832

58‚021) 113‚456(

) 55‚435(

-

2‚988‚698 -

19‚650‚949 - - -

2‚250‚47324‚890‚120

5‚003‚7251‚550‚516

145‚186 - - 1‚883

6‚701‚310

18‚188‚810) 17‚551‚085(

18‚986

18‚253‚1811‚728‚102

16‚418‚456)16‚382‚712(

) 35‚744(

14‚284‚177

78‚108‚2016‚506‚621

79‚317‚5181‚755‚5522‚842‚654

- 10‚570‚037

193‚384‚760

8‚345‚095133‚497‚672

19‚054‚41684‚690‚480

- 1‚393‚464

246‚981‚127

)53‚596‚367( 33‚565‚755

)11‚579‚631(

267‚631‚772292‚902‚726

)29‚674‚015(46‚564‚492

16‚890‚477

308‚679

7‚255‚788 -

128‚891 -

2‚086‚162 -

288‚39910‚067‚919

399‚322‚659

385‚673 - -

101‚6649‚810‚035

)257‚884( -

)49‚599(

7‚572‚8007‚534‚106

) 60‚935(93‚028

32‚093

19‚230‚078

9‚561‚829265‚551

1‚531‚356508‚625

- 1‚983‚260 506‚07533‚586‚774

141‚241 14‚191‚371

315‚764 -

243‚225 442‚98915‚334‚590

18‚252‚184 -

18‚440‚438

15‚890‚5286‚969‚105

7‚430‚71512‚179

7‚442‚894

US Dollar Euro British Pound Japanese Yen Other


94

Operational Risks

Operational Risk is the risk of loss resulting from inadequate or the failure of internal processes, people, and systems or from external events. This definition includes legal, strategic, and reputa-tional risks.

Strategic RisksThese are the losses that the Bank could be exposed to as a result of taking an improper strategic decision relating to its business that has an adverse effect on performance.

These risks are managed by various business units in addition to the decision maker party.

Reputational Risks There are losses that the Bank could be exposed to due to negative public opinion and lack of trust in its operational competency. These risks are managed within the framework of Operational Risk management or Compliance management depending on their nature.

Due to the nature of operational risks certainty of occurrence is not possible. Consequently, the risk management policies are established to mitigate against risks via effective control systems, continuous monitoring, qualified human resources, clarity of delegations,high-tech efficiency and creation of a risk awareness culture.

The Risk Management Department provides indicators and measures that assist in improving in-ternal controls and monitoring systems. It also adopts the self assessment method to assess risks and controls )being one of the tools pro-posed by the Basel Committee( and provides a mechanism to collect operational events. The Bank is currently in the process of developing a comprehensive Business Continuity Plan.

The Operational Risk policy was approved by the Board of Directors.

Regulatory Compliance Risk management

This is the risk of regulatory or legal penalties, financial, and reputation risks that the Bank can be exposed to by non-compliance with laws, regulations, instructions, code of conduct, and good banking practice.

Compliance risk management process includes the evaluation of the appropriateness of proce-dures and compliance guidelines in the Bank, and following up on any inefficiencies or non-compli-ance issues, developing the appropriate recommendations to perform amendments, and ensuring the application of the approved regulatory compliance risk management policy. This is achieved by performing regular evaluations and submitting reports to the Board of Directors and executive management. Reports contain an evaluation of compliance risks, details of the tests conducted during the reporting process, discrepancies, deficiencies, and corrective actions taken.

The regulatory risk compliance policy was approved by the Board of Directors.


95

SEGMENT INFORMATION

Primary segment informationFor management purposes the Bank is organised into four major business segments:

Retail banking:Principally handling individual customers’ deposits, and providing consumer type loans, overdrafts, creditcardsfacilitiesandfundstransferfacilities;

Corporate banking:Principally handling loans and other credit facilities and deposit and current accounts for corporate andinstitutionalcustomers;

Corporate finance:Principally arranging structured financing, and providing services relating to privatisations, IPO’s andmergersandacquisitions;

Treasury:Principally providing money market, trading and treasury services, as well as the management of the Bank’s funding operations by use of treasury bills, government securities and placements and acceptances with other banks, through treasury and wholesale banking.

These segments are the basis on which the Bank reports its primary segment information.

2007Total revenueProvision for credit lossessegment resultUnallocated expensesProfit before taxIncome tax expensesNet profit Other information

Segmental assets

Segmental liabilities

Capital expenditureDepreciation andamortisation

42

66‚889‚206686‚515

36‚806‚182)12‚338‚402(

24‚467‚780) 6‚407‚875(

18‚059‚905

856‚374‚723

699‚382‚953

)4‚982‚720(

)957‚083(

80‚745‚685) 5‚924‚767(

35‚692‚369)17‚721‚522(

17‚970‚847)4‚462‚181(13‚508‚666

939‚639‚235

767‚264‚111

)2‚612‚908(

)1‚118‚349(

1‚612‚268-

1‚612‚268- - - -

42‚253‚978

17‚442‚465

-

-

26‚662‚110-

24‚751‚011- - - -

399‚623‚350

267‚511‚788

-

-

827‚321-

827‚321- - - -

-

-

-

-

8‚232‚308) 999‚192()5‚805‚247(

- - - -

98‚378‚856

257‚386‚740

-

-

43‚411‚678) 4‚925‚575(14‚307‚016

- - - -

399‚383‚051

224‚923‚118

-

-

Retail BankingJD

Corporate Banking

JD

Corporate Finance

JDTreasury

JDOther

JD2007

JD2006

JD

Total


96

Geographical Information

The following table shows the distribution of the Bank’s operating income and capital expenditure by geographical segment:

Total profitsTotal assetsCapital expenditure

CAPITAL MANAGEMENT

The Bank maintains an appropriate paid in capital in order to meet its operational risk, and it regu-larly monitors its capital adequacy in accordance with BASEL I to comply with the Central Bank of Jordan’s regulations.

As per Central Bank of Jordan’s regulations Number 17/2008, the minimum required paid in capital of Jordanian banks shall not be lower than JD 40 million and the total shareholders equity shall not belessthan6%oftotalassets

Throughitsoperationalyears;theBankmaintainedacapitaladequacyratioinexcessof12%,be-ingtheminimumcapitaladequacyraterequiredbytheCentralBankofJordan(8%asperBaselI).Furthermore, the Bank regularly reviews and complies with the concentration ratios using regula-tory capital as an indicator

Description of Paid in Capital Regulatory capital comprises of primary capital that consist of: paid in capital, additional paid in capital, declared reserves, retained earnings, minority interest after excluding current period losses, goodwill, treasury stock cost, deficiency of required provisions, deferred tax assets and any other restricted balances by law.

The second part of regulatory capital is supplementary capital that consists of: undeclared reserves, subordinated debts, foreign currency translation adjustment, banking risk reserve, and hybrid debts. The third part is used to meet market risk. Investment in other banks and unconsolidated subsidiaries are excluded from regulatory capital.

Regulators Requirement for Paid in Capital For the year 2007, all banks must comply with the Central Bank of Jordan Regulations no )16/2007( related to regulatory capital and capital adequacy including market risks, under Basel I require-ments.

66‚889‚206856‚374‚723

4‚982‚720

80‚745‚685939‚639‚235

2‚612‚908

2007JD

2006JD

Total

5‚906‚424192‚745‚313

3‚307

9‚979‚34840‚926‚678

184‚893

2007JD

2006JD

Outside Jordan

60‚982‚782663‚629‚410

4‚979‚413

70‚766‚337898‚712‚557

2‚428‚015

2007JD

2006JD

Jordan

43


97

Primary Capital Paid in Capital Statutory Reserves Additional paid in Capital Proposed issue bonus shares Retained earning Minority interests

Less Goodwill Restricted cash balances

Total Primary Capital

Supplementary Capital Foreign Currency translation Adjustment General banking risk reserves Others

Less Investment in bank

Total Regulatory Capital Total Risk Reserve

Capital adequacy ratio (%) Primary Capital ratio (%)

FIDUCIARY ACCOUNTS

- The Bank provides custody, trustee, corporate administration, investment management and advisory services to third parties, which involve the Bank making allocation, purchase and sale decisions in relation to a wide range of financial instruments. Those assets that are held in a fiduciary capacity are not included in the financial statements. At the balance sheet date, the Bank had investment custody accounts amounting to approximately JD 5,661,016 as of 31 De-cember 2007 )2006: JD 9,194,944(. The asset management fees and commissions are recorded in the income statement.

- In the normal course of business, the Bank performs investment management services for its clients. Investments and other assets held by the Company in fiduciary capacity amounting to JD 4,451,066 at December 31, 2007 are segregated from the Bank’s assets and are not included in the financial statements.

123,000,00012,874,420

709,472-

13,278,6697,233,497

3,920,7553,773,340

149,401,963

2,420,4835,119,844

107,433

1,791,365

155,258,358720,552,739

21.5520.49

2006JD

2007JD

116,000,00011,155,839

709,4727,000,000

10,481,1416,370,229

3,187,16410,896,371

137,633,146

1,235,5424,249,380

) 209,833(

1,488,782

141,419,453609,679,195

23.2022.33

44

98

MATURITY ANALYSIS OF ASSETS AND LIABILITIES

The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled:

2007

AssetsCash and balances at Central BanksBalances at banks and financial institutionsFinancial assets held for tradingDirect credit facilitiesFinancial assets available for saleFinancial assets held to maturityPremises and equipmentIntangible assetsDeferred tax assetsOther assetsTotal Assets

LiabilitiesBanks and financial institution depositsCustomers’ depositsMargin accountsLoans and borrowingsSundry provisionsDeferred tax liabilitiesTax provisionOther liabilitiesTotal Liabilities

Net Assets

45

88‚048‚157136‚908‚920

32‚022‚379296‚077‚115

17‚825‚85549‚073‚383

1‚218‚708632‚159304‚492

10‚535‚899632‚647‚067

32‚788‚278468‚705‚239

43‚728‚984100‚207‚008

- 255‚942

7‚292‚5276‚662‚688

659‚640‚666

)26‚993‚599(

88‚048‚157 136‚908‚920

49‚870‚961497‚411‚907

40‚035‚87173‚302‚108

9‚784‚6865‚609‚5683‚346‚60035‚320‚457

939‚639‚235

32‚788‚278482‚309‚858

61‚293‚858173‚429‚653

3‚226‚979 255‚942

7‚292‚527 6‚667‚016767‚264‚111

172‚375‚124

- -

17‚848‚582201‚334‚792

22‚210‚01624‚228‚725

8‚565‚9784‚977‚4093‚042‚10824‚784‚558

306‚992‚168

- 13‚604‚61917‚564‚87473‚222‚645

3‚226‚979 - -

4‚328107‚623‚445

199‚368‚723

More than 1 yearJD

TotalJD

Within1 yearJD


99

2006AssetsCash and balances at Central BanksBalances at banks and financial institutionsDeposits at banks and financial institutionsFinancial assets held for tradingDirect credit facilitiesFinancial assets available for saleFinancial assets held to maturityProperty and equipmentGoodwill and other intangible assetsDeferred tax assetsOther assetsTotal Assets

LiabilitiesBanks and financial institution depositsCustomers’ depositsMargin accountsLoans and borrowingsSundry provisionsDeferred tax liabilitiesTax provisionOther liabilitiesTotal LiabilitiesNet Assets

CONTINGENT LIABILITIES AND COMMITMENTS To meet the financial needs of customers, the Bank enters into various irrevocable commitments and contingent liabilities. Even though these obligations may not be recognised on the balance sheet, they do contain credit risk and are therefore part of the overall risk of the Bank.

a( The totals outstanding commitments and contingent liabilities are as follows:

Letters of creditAcceptancesLetters of guarantee - Payments Performance OtherForeign Currency ForwardIrrevocable commitments to extend credit

47‚466‚816150‚605‚447

6‚381‚000 41‚962‚183 241‚022‚448

11‚195‚07111‚169‚216

821‚293239‚160

- 18‚497‚002

529‚359‚636

59‚407‚850427‚084‚794

48‚903‚02935‚183‚295

289‚534 -

7‚361‚8818‚631‚091

586‚861‚474) 57‚501‚838(

80‚694‚003150‚988‚307

6‚381‚00041‚962‚183

489‚727‚25935‚381‚79411‚910‚500

8‚934‚9844‚406‚786

419‚36825‚568‚539

856‚374‚723

59‚407‚850433‚597‚400

56‚786‚429132‚614‚564

289‚53495‚789

7‚558‚8639‚032‚524

699‚382‚953156‚991‚770

33‚227‚187382‚860

- -

248‚704‚81124‚186‚723

741‚2848‚113‚6914‚167‚626

419‚368 7‚071‚537327‚015‚087

- 6‚512‚6067‚883‚400

97‚431‚269 - 95‚789

196‚982401‚433

112‚521‚479214‚493‚608

More than 1 yearJD

TotalJD

Within1 yearJD

46

60‚759‚4629‚721‚187

23‚576‚23811‚466‚44836‚039‚53318‚615‚86123‚228‚474

183‚407‚203

119‚931‚19720‚229‚612

32‚333‚61919‚385‚10348‚520‚81420‚494‚25426‚130‚086

287‚024‚685

2006JD

2007JD


100

b( The contractual commitments of the Bank are as follows:

Construction Contracts

Annual rent of the Bank’s main building and branches amounted to JD 469,797 as of 31 December 2007 )2006: JD 380,618(.

Included in the fiduciary assets are capital guaranteed investments amounting to JD 1,510,870 as of December 31, 2007, maturing at 28 October 2008. During 2007, most of the capital guaranteed funds were transferred to Capital Investment and Brokerage Company.

LAWSUITS • Thevalueof lawsuitsproceedingagainst thebank,aspartof theordinarycourseofbusiness, total JD

1,809,906 as of March 31st, 2008. According to the Bank’s Management and legal counsel the Bank is not liable in any of these cases.

• There is also another lawsuitof JD15,577,127proceedingagainst theBankpertaining toownershipofshares, whereby the ownership of said shares was transferred to the bank as they had been put up as collat-eral by a customer. In addition, the plaintiff sought a claim for emotional damages valued )for the purpose of legal fees( at JD 3 million. In the opinion of the legal counsel there is no need to provide for this claim.

• ThereisanothercaseforJD17,358,705proceedingagainsttheBankinordertorecoverthevalueofchequeswhich were paid from the account of the plaintiff company. In addition, the plaintiff sought a claim for emo-tional damages estimated )for the purposes of the court fees( at JD 3 million. In the opinion of the Bank’s legal counsel there is no need to provide for this claim.

• Inaddition,thereisacaseforJD3,332,816proceedingagainstthebanktorecoverthevalueoftwochequesdrawn by a customer. In the opinion of the legal counselor there is no need to provide for this claim.

- There are no claims against the National Bank of Iraq.

NEW ISSUED INTERNATIONAL FINANCIAL REPORTING STANDARDSThe following standards and interpretations have been issued but are not yet effective.IFRS 8 – Operating SegmentsThe standard requires amendments on the disclosures for operating segments. The standard is ef-fective for years commencing on or after 1 January 2009.IAS 23 – Borrowing CostsIFRIC 11 – Scope of IFRS 2: Group and Treasury Share TransactionsIFRIC 12 – Service Concession ArrangementsIFRIC 13 – Customer Loyalty ProgrammesManagement do not expect these interpretations to have a significant impact on the Bank’s finan-cial statements when implemented in 2007.

COMPARATIVE FIGURES:Some of 2006 balances were reclassified to correspond with those of 2007 presentation. The reclas-sification has no effect on the profit for the year and equity.

762‚922 762‚922

413‚739 413‚739

2006JD

2007JD

47

48

49


Other Disclosures

103

Chairman’s statements

BOD’s report

Major Activities DescriptionCapital Bank of Jordan offers all banking financial businesses products and services to all economic sec-tors in Jordan through its head office and branches in the Hashemite kingdom of Jordan. It also offers in-vestment and brokerage services through Capital Investment and Brokerage Company: which is wholly ownedbythebankwithapaidincapitalofJD10million.TheBankalsoowns59.2%oftheNationalBankof Iraq with a paid in capital of 25 billion Iraqi dinar )Equivalent to JD 14 million(, by that providing all facilities and services to customers wishing in invest in Iraq’s Promising market.

Geographical Locations and Number of Employees in Each OneThe Bank and Capital Investment & Brokerage Company employee’s reached 336 distributed by geographical locations as follows

Disclosures required by the Jordan Securities Commission2007

A

1

B

Subsidiary Companies : - Capital Investment & Brokerage Company - National Bank Of Iraq - Capital Investment Fund in Bahrain

2

Subsidiary Company Name Capital Investment andBrokerage Company

National Bankof Iraq

Capital Investment Fund Company

Subsidiary CompaniesMain activityPaid in capital

Percentage owned byCapital BankSubsidiary Companies addressOther information

Limited responsibilityBrokerage & investment company

10,000,000

100%

Amman - Shmesani-

public shareholdingBanking

25 Billion Iraqi dinar )Equivalent to around

14 million JOD(59.2%

Iraq-

stock Bahrain company - closedEstablishing Investment Funds

1,000 Bahraini dinar

100%

BahrainIs not operating yet

Capital BankNumber of StaffCityBranch

* There are no other branches out side Jordan

Capital expenditureCapital expenditures amounted to JOD 2,457,986 as of 31/12/2007

Head OfficeShmesani BranchAqaba Branches

Irbid BranchZarqa Branch

Wehdat BranchMadina Branch

SweifeyehHead Office

Amman Amman AqabaIrbid

ZarqaAmman Amman Amman Amman

155846456

147

55Capital Investment & Brokerage Company

104

Dr. Ziad Mohammed Fariz Fariz Position: Chairman ) Representing Al-Bayader Trade & Investment Company(Membership Date: 18/10/1997 Date of Birth: 15/06/1943 Scientific Certificates: Holds PHD from Keel University - UK in 1978 Holds a high diploma in Planning from the Arab Institution for

Planning / Kuwait Holds BSc in Economics from Baghdad University in 1966Professional Experience: Long Experience in Central Bank of Jordan since in 1966. During that

he occupied in many positions: became the Minister of Planning for five years then as the Minister of Commerce and Industry for two years and as the Minister of Planning for four years then as the mayor of Central Bank of Jordan for four years, he also worked as the chairman and the executive manager of Arab Banking Corporation Bank / Jordan in 2001, started his work in Capital Bank as the chairmen starting September 2007

Dr. Fayez Mohammed Atawy SoheimatPosition: Vice Chairman Membership Date: 22/11/1995 Date of Birth: 01/01/1938 Scientific Certificates: Holds PHD in Engineering Professional Experience: Has a long professional experience, Attended many banking courses,

and held many upper mangment posts he is a board member on a number of public corporations such as, General Manager of National Oil Company and General Manager of Industrial Estates Corporation

Mr. Mohammed Seif Al-Seif Position: Member of The Board of Directors Membership Date: 16/3/1999 Date of Birth: 13/2/1956 Scientific Certificates: Holds of BSc in Industrial Engineering from the University of Southern

California in 1980 He attended many courses in advanced management at Harvard

University Professional Experience: He has a long banking & finance experience, and is currently the

Chairman of Al-Seif for Development and )UME( Holding Company.


3 Board of Directors & Top management The Board of Directors

105


Mr. Mansoor Mohammed Fustoq Position: Member of The Board of Directors - Represents Spumante Comercio

International LDA Membership Date: 19/6/2003 Date of Birth: 13/2/1956 Scientific Certificates: Holds a of BSc in Civil Engineering from the University of Manchester,

EnglandProfessional Experience Is currently the Managing Director of Al-Hadaf Trading Establishment

and the Chairman of the board in several other companies

Mr. Abdel Raouf Waleed Abdel Raouf Al-BitarPosition: Member of The Board of Directors Membership Date: 9/4/2002 Date of Birth: 11/11/1956 Scientific Certificates: Holds a BSc in Civil Engineering from Syracuse University, USA Professional Experience: Has a long experience in the industrial business, and is currently the

Chief Executive Officer at Al Manhal Water factory Co Ltd in Saudi Arabia and the Chairmen of Jordan New Cables Company

Mr. Elia Costundy Faruh NuqulPosition: Member of The Board of Directors - Represent Investment & Integrated

Industries Company Membership Date: 22/11/1995 Date of Birth: 25/12/1928 Scientific Certificates: Holds a BSc in Accounting & Business AdministrationProfessional Experience: Chairman of Nuqul & Bro. Group and a board member in several other

companies. Holder of Al Hussein Medal of Excellence of the First Order

Mr. Mazen Sameh Taleb Darwazah Position: Member of The Board of Directors Membership Date: 20/11/2003 Date of Birth: 5/6/1958 Scientific Certificates: Holds an Advanced Management Program )Diploma( from INSEAD,

France Holds a Diploma from the International Marketing Institute Program

from Boston, USA Holds BSc Business Administration from Beirut University, LebanonProfessional Experience: Currently holds the positions of Group Vice Chairman for Hikma

Pharma, Jersey, and Chairman of Hikma Pharmaceuticals.

106


Mr. Bassam Wael Roshdy Kanaan Position: Member of The Board of Directors - Represent of Hotaf Investment

Company Membership Date: 20/6/2007 Date of Birth: 10/5/1965 Scientific Certificates: Holds a BSc in Economic / Accounting from Claremont Mckenna

College - los Angeles 1986 Holds a Masters Degree in Business Administration Professional Experience: Long experience in the private sector , worked in companies

such as Delloitte & Touche. He currently is the CFO in Al-Hikma Pharmaceutical

Mr. Haitham Abdelmajed Mosleh Al-Majali Position: Member of The Board of Directors - Represent the Social Security

Corporation Membership Date: 22/11/1995 Date of Birth: 18/6/1956 Scientific Certificates: Holds a BSc in Electromecanic Engineering from Kardeev University

- England Professional Experience: He worked in the private sector in both Jordan & England. He is a

member of the Board of Directors & the General Manager of the Duty free markets and the Jordanian Businessmen Association

Mr. Kim Foad Sa’d Abu Jaber Position: Member of The Board of Directors Membership Date: 20/6/2007 Date of Birth: 27/9/1956 Scientific Certificates: Holds a BSc in Business Administration from Arizona University /

Towson in 1980 Professional Experience: He is and entreprneur and an investor in many companies such as

Technical Packaging LLC, Solid Iron & Steel Manufacturing and Forming CO,PSC

Mr. Fawzi Fwaz Hana Jumean Position: Member of The Board of Directors - Represent Alkhaleel Company

for Investments Membership Date: 5/7/2005 Date of Birth: 21/9/1978 Scientific Certificates: Holds a Masters Degree in Business Administration from Stanford

University Holds a BSc in Business Administration from Yale UniversityProfessional Experience: He is currently the Executive Manager of Emirates Company for Gulf

investments.

107


Mr. Haytham Yousef Abdelminaem Kamhiyah Position: General Manager Date of appointment: 4/1/1996 Date of Birth: 1/8/1969 Scientific Certificates: Holds a B. A. in Accounting from University of Jordan Diploma in Advanced Management Program )AMP( from INSEAD

University / France Holds the following professional certificates CRA, CPA, CMAProfessional Experience: Has an extensive experience in the field of External Audit with Arthur

Anderson, Amman. Joined Export and Finance Bank in 1996، His latest position was Assistant General Manager for Finance and

Risk, and subsequently became the General Manager in May 2005.

Mss. Iman Mohammad Allan Al Damen Position: Chief Credit Officer Date of appointment: 16/12/2007 Date of Birth: 6/5/1957 Scientific Certificates: Holds a Masters degree in Finance from University of Jordan, and a

Diploma in Advanced Economic from UK, Manchester Holds BSc in Business Administration from University of Kuwait

Professional Experience: She has a long experience in credit management. She worked in many positions at Cairo Amman Bank / Jordan Commercial Bank / Bank of Jordan then moved to Capital Bank in 2007 as Chief Credit Officer

Mr. Mohammad Fayyad Alhag Ahmad Position: Assistant General Manager / Treasury & Investment Date of appointment: 1/8/2001 Date of Birth: 18/9/1964 Scientific Certificates: Holds a Master degree in Business Administration from University of

Jordan & holder of the professional certificate CFA Professional Experience: Long experience in the field of investment and financial markets,

worked at the Central Bank of Jordan for nine years and the last position was Assistant Manager for Foreign Investment unit, then he worked at Trust Company for Investments for two years as Financial Markets Department Manager

Mr. Rami Mohammad Jawad Hadid Position: Assistant General Manager / Corporate BankingDate of appointment: 19/11/2004 Date of Birth: 28/2/1969 Scientific Certificates: Holds a Master degree in Accounting & Business Administration from USA Holds BSc in Accounting & Economic From University of Jordan

Is a public certified accountant )CPA(

Members of Top Management

108

Professional Experience: Has an experience in the field of external audit and banking. He worked at Ernst and Young, Amman, and at many banks )Arab

Bank Corporation Bank - New York, BNP Paribas - Bahrain( in corporate credit. He also participated in the establishment of the Commercial Branch of Housing Bank, Bahrain.

Mr. George Farah Jeries Sofia Position: Assistant General Manager / Retail Banking, Branches & Marketing Date of appointment: 1/10/2005 Date of Birth: 2/5/1966 Scientific Certificates: Holds a BSc in Business Administration / Management from London UKProfessional Experience: Long experience in branches and retail credits

Worked at HSBC. His last position there was Amman Branches Manager, He also worked at Societe General /Jordan as Retail Banking Manger

Mr. Talal Mohammad Maher Shakeeb Yaish Position: Assistant General Manager / Strategy Management and Human

Resource and Administration Affairs Date of appointment: 2/1/2007 Date of Birth: 8/7/1972 Scientific Certificates: Holds a BSc in Industrial Engineering from University of Jordan Professional Experience: Worked in administration positions in different industrial fields such

as )Nuqul Group, Shaheen Group for Businesses, Tawfeek Gargor Group( and his last position was Manager for Human Resources & Administration affairs at Fast Link. He moved to Capital Bank in 2007

Mr. Ihab Shaker Mustafa Al Aqqad Position: Acting General Manager Assistant / Operations Date of appointment: 16/6/2002 Date of Birth: 7/6/1965 Scientific Certificates: Holds a Master degree in Finance from Finance Studies Institution /

University of Jordan Holds a BSc in Economic & Accounting from Al Yarmouk UniversityProfessional Experience: Worked in Cairo Amman Bank & Bank of Jordan and Union Bank

for Saving and investment then he moved to Capital Bank in 2002 Worked in many position and currently he is acting as General Manager Assistance for operations.

Mr. Rafat Abdallah Ismail Khalil Position: Chief Audit Executive Date of appointment: 4/10/2007 Date of Birth: 12/10/1964


109

Scientific Certificates: Holds a BSc in Administration from Al Yarmouk University Holds the professional certificate CBA

Professional Experience: Worked for seven years in Central Bank of Jordan and Oman’s Commercial Bank for 4 years and Oman Arab Bank for 7 years. He became Capital Bank’s Chief Audit Executive in 2007

Mr. Mohammed Hafez Abdel Kareem Mu’az Position: Head of Legal Department / Legal counselor Date of appointment: 2/6/2003 Date of Birth: 27/10/1969 Scientific Certificates: Holds a B. A. In law from University of Jordan

Holds Post graduate Diploma in International Law from the UK Holds Masters Degree in Commercial law from the UK

Professional Experience: Joined “Dajany & Associates / Law firm for 5 years then was appointed as a lawyer at Arab Bank PLC in the Legal Department / International Division for two years

Member of Jordanian Bar Association since 1997

Mr. Ibrahim Salah Mohammed Samha Position: Financial Controller Date of appointment: 7/3/1999 Date of Birth: 10/7/1973 Scientific Certificates: Holds a Masters degree in the Finance from the Institute of Banking

Studies / University of Jordan Holds a BSc in Accounting from University of JordanProfessional Experience Worked at HSBC / Jordan for 4 years then moved to Capital Bank in

1999 and held many positions in financial department. He became the Financial Controller in December 2006

Mss. Manal Omar Husni Omar Position: Risk & Compliance Department Manager Date of appointment: 1/3/2005 Date of Birth: 21/5/1969 Scientific Certificates: Holds a BSc in Statistic and Computer Science from Al Yarmouk

University Holds special professional certificates in risk management and high

diploma in International Accord Basel II

Professional Experience: Worked in Jordan Kuwait Bank for 12 years in the financial controlling and auditing department. Became the Risk & Compliance Department Manager in Capital Bank in 2007.


110

4 Major shareholder who own 5% or more

9.63%8.81%6.65%6.02%5.42%5.19%

JordanianJordanian

PortugueseK.S.A

JordanianJordanian

Social Security CorporationMr. Abdel Raouf Waleed Al-BitarSPUMANTE COMERCIO INTERNATIONAL LDAMr. Mohammed Mosaed Seif Al-SeifInvestment & Integrated Industries CompanyMr. Basem Khalil Salem Al Salem

11,840,46910,840,3788,179,8497,404,1176,662,2886,379,277

%No. of Stock as of 31/12/2007

NationalityShareholder Name No. of Stock as of 31/12/2007

9.78%9.68%6.65%6.02%5.42%5.19%

%

11,339,40411,223,4467,714,3306,982,7456,283,1346,016,229

5 Competitive position and market share The last few years witnessed an increase in capital bank market share, as its share of the sector reached3.43%and4.41%ofassetsandcreditfacilities,respectively.Ownersequityincreasedtofrom4.23%ofthesector’sequity,whilecustomerdepositsrosetofrom2.95%oftotaldeposits.* Sector: Jordanian Banking Sector.

Reliability degree on certain vendors and or key customers in the case it is 10% or moreThere are no vendors or customers with operations holding more than 10% of the Bank’soperations

Description of any governmental protection or privilegesThere is no governmental protection or privileges aworded to the Bank or any of its products.The Bank has no patent of invention or copyrights during 2007

Description of any decisions issued by the government or international organizationsThere are no decisions issued by the government or any international organization that have a material effect on the Bank’s operations, products or competitive capability.

6

7

8


111

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Organization charts, Number of employees, and their qualifications 9

A-


112

Capital Bank of Jordan

National Bank of Iraq59.2%

Capital Investment& Brokerage Company

100%

2 21 3 202 26 7 10 10

281

Capital BankPHDMasters High DiplomaB. A/ BSc DiplomaSecretary Secondary school Lower than secondary school

Total

Scientific Degree

Organization charts, Number of employees, and their qualifications 9

B-


C- Number of employee and their qualifications:

- 3 - 42 1 1 3 5

55

Capital Investment & Brokerage Company

113

13113037262418161222108665444333332222222222222222222222

71

593

Time ManagementCommunication SkillsSafety & SecurityEnglish LanguageUniform Customs & Practice for Documentary Credits )UCP 600(Train the Trainers Communication Skills, Telephone Curtsey & Handling Complaints Certified Banking Commercial Lender Fraud and Finances CrimesGreat Leaders, Great Teams, Great ResultsStructured InterviewsThe Secret of Great Leadership )Tony Schwartz(legality matters for banks checksrestructuring investments and productsInternational Banking ForumIslamic Real Estate FinancingFinancial Analysis SkillsAdvanced Microsoft Excel 2000safety insurance for banks depositsBuilding early model for alarm system for expecting banking crisisIslamic TreasuryMaster Card2nd Annual Middle East managing Banks forumFeasibility studyManagement of human affairHuman recourses diplomaIBM DS 3000 & DS 4000Basel II applicationsOraclePortfolio management seminarloan management problemRisk and crises management in financial markets Sigma SixManagement of legal departmentCapital leasing in JordanUncovering banking forgery and fraud on cashiersFull training program for new employeesMarketing credit cards and fraudHead in letter of creditPrivate workshop in improving leasing credit skillsAdvanced excel for AccountantFinancing Big CompaniesCost AccountingAnalyzing financial directions in financial marketsother

Total

D- Training and qualifying programs for bank and its subsidiaries


Training course Number of employees

114

10 Description of Risks As stated in the financial statements disclosure number 41

Achievement of the bank for the year 2007 Capital Bank assets increased from JD856 million in 2006 to around JD940 million in 2007, an increase ofJD83million(9.7%).Directcreditfacilities(net)alsoincreasedfromJD490milliontoJD497millionduringthesameperiod.TheBank’sinvestmentportfolioincreasedby83%fromJD89milliontoJD163million, while profit )net of tax( during this year reached JD13.508 compared to JD18.059 last year.

In addition, Gross Client Deposits increased from around JD434 million during last year to JD482 million forthisyear(i.e.atotalincreaseofJD49million(11.2%).Thisprovidesastrongindicatorofthecontinuedbroadening of the bank’s client base, the increased trust in Capital Bank as well as its enhanced market competitiveness.

Total Shareholders’ Equity at Capital Bank has increased from about JD151 million last year to about JD165millionforthisyear(i.e.anincreaseof9.6%).ThiswasduetotheincreaseinPaid-inCapitalfromJD116 million to JD123 million as well as the increase in various reserves and profits achieved between the two mentioned years.

The financial effect for extraordinary operations An amount of JD 546,063 represents proceeds from selling lands owned by the Bank to Saraya Company during December 2007

11

12


13 Time chain for realized profit and loss. Dividends, and net shareholders equity (2001-2007)

Year Equity Net Income Cash Div Stock Div Closing PriceDividends

2001200220032004200520062007

32,106,66437,590,37345,779,47659,872,518135,934,724156,991,770172,375,124

2001200220032004200520052005200620072008

StockDividendof15%ofcapitalStockDividendof18.58%ofcapitalStockDividendof15%ofcapitalStockDividendof20.29%ofcapitalPrivatesubscriptionof48.20%ofcapitalStockDividendof17.08%ofcapital Privatesubscriptionof41.66%ofcapitalStockDividendof13.73%ofcapitalStockDividendof6.3%ofcapitalRecommendation for distribution of 7.5 million cash dividends from 2007 earnings

5,056,8905,568,2528,061,82712,346,35421,358,98918,059,90513,508,666

million 3.3million 4.7million 4.5million 7million 10.5million 14million 7

1.841.383.934.413.321.932.02

115

14 Analysis of the Bank’s Financial Position

1.50%8.21% 0.110 18.3%21.55%3.06%89.01%

31/12/07Returned on assetsReturned on equityEarning per shareEfficiency ratioCapital adequacy Non performing loans ratio Coverage ratio

Financial Ratio2.32%13.00%0.14918.30%23.20%2.31%69.24%

31/12/06

15 Future Developments:


We are committed to the development of an integrated future plan with expansionary dimensions on both domestic and regional scales. our plans also include entering into strategic partnerships for the purpose of strengthening and adding variety to our activities in the areas of investment and finance, and to prove the best and most updated services. This will fortify our market share from all aspects.

An integrated work team from the bank’s management conducts a thorough reviewing of the bank’s policies and procedures to ensure its timely development is in line with the banking industry, and to increase the wholeness of the products offered.

The future plan also entails increasing returns on ownership rights in the best possible manner with the retention of asset type and quality, in addition to preserving a satisfactory level of capital for the bank’s expansionary plans.

16 External auditor’s fees Ernst & Young’s fees for auditing the Bank and its subsidiaries amounted to JD 119,900.

116

Al-Bayader Trade & Investment CompanyFayez Mohammed Atawy SoheimatMohammed Seif Al-SeifSpumante Comercio International LDAAbdel Raouf Waleed Abdel Raouf Al-Bitar Investment and Industrial Integrated CompanyMazen Sameh Taleb DarwazehHotaf Investment CompanySocial Security CorporationKim Foad Sa’d Abu JaberAlkhaleel Company for Investments

Dr. Ziad FarizHimselfHimselfMr. Mansoor fustoqHimselfMr. Elia NuqulHimselfMr. Bassamn kanaanMr. Haitham Al-MajaliHimselfMr. Fawzi Jumean

ChairmanVice ChairmanMemberMemberMemberMemberMemberMemberMemberMemberMember

JordanianJordanianK.S.A PortugueseJordanianJordanianJordanianJordanianJordanianJordanianJordanian

555,645700,193

7,404,1178,179,849

10,840,3786,662,2881,493,3946,063,907

11,840,469941,685

42,70754,724,632

6,137

6,137

Rola Samer Khalel NaserWaled Mazen Sameh DarwazehDarhold LimitedFuture Company for CosmeticsMiddle East com. for Financial & Economic InvestmentsAl -Mamounyah for Investments & TradingSuria kim Foad Saad Abu JaberEmad Kim Foad Saad Abu JaberFoad Kim Foad Saad Abu Jaber

Mazen Sameeh Taleb DarwazehMazen Sameeh Taleb DarwazehMazen Sameeh Taleb DarwazehMazen Sameeh Taleb DarwazehFayez Mohammed Atawy SoheimatFayez Mohammed Atawy SoheimatKim Foad Sa’d Abu JaberKim Foad Sa’d Abu JaberKim Foad Sa’d Abu Jaber

WifeSonHimselfHimselfHimselfHimselfDaughterSonSon

134,31366,600

3,225,06061,495

1,466,6401,523,827

1,2051,2051,205

6,481,550


17 Status for Number of Financial Securities

Member Representative Position Nationality

Status for Number of Financial Securities issued by the bank and owned by the board of directors, top management, executive authority and their relatives. Members of The Board of Directors

Number of stocks as of 31/12/2007

Member’s relatives Member Relation Number of stocks

Number of stocks owned By

representative as of 31/12/2007

NationalityMember Representative Number of stocks as of 31/12/2007

Number of stocks owned By representative as of

31/12/2007

Social Security CorporationMr. Abdel Raouf Waleed Abdel Raouf Al-BitarSPUMANTE COMERCIO INTERNATIONAL LDAMohammed Ali Satea Al HusryMr. Mohammed Seif Al-SeifInvestment & Integrated Industries CompanyMazen Sameh Taleb DarwazehAl-Bayader Trade & Investment CompanyFayez Mohammed Atawy SoheimatAlkhaleel Company for InvestmentsMarwan Jameel Issa Muasher

Yehya Abu ErshaidHimselfMr. Mansor FustoqHimselfHimselfMr. Elia NuqulHimselfMr. Amer FarizHimselfMr. Fawzy JumeanHimself

JordanianJordanianPortugueseJordanianK.S.AJordanianJordanianJordanianJordanianJordanianJordanian

11,339,40411,223,446

7,714,3307,441,8746,982,7456,283,1341,452,022

524,023660,345

40,277218,024

53,879,624

522

522

As of 31/12/2006

117

Top Management

Mr. Haytham Yousef Abdeminaem Kamhiyah Mss. Iman Mohammad Allan Al DamenMr. Mohammad Fayyad Alhag AhmadMr. Rami Mohammad Jawad HadidMr. George Farah Jeries Sofia Mr. Talal Mohammad Maher Shakeeb Yaish

Mr. Rafat Abdallah Ismail KhalilMr. Mohammed Hafeth Abel Al Kareem Mu’azMr. Ibrahim Salah Mohammed SamhaMr. Ihab Shaker Mustafa Al AqqadMss. Manal Omer Hosny Omer

Members of Top Management

Waleed mazen sameeh taleb darwazehRola Sameer NasrDarhold LimitedFuture Com. For Natural CozmatixLeen Foad Metry FarajOmar Marwan Al MuasherHana Marwan Al MuasherNadia Rady Fawzy tofahahMiddle east for financial investmentAl -Mamounyah for Investments & Trading

Mazen Sameh Taleb DarwazehMazen Sameh Taleb DarwazehMazen Sameh Taleb DarwazehMarwan Jameel Muasher Marwan Jameel Muasher Marwan Jameel Muasher Marwan Jameel Muasher Fayez Mohammed Atawy SoheimatFayez Mohammed Atawy SoheimatFayez Mohammed Atawy Soheimat

sonwifeOwnedHimselfwifesonDaughterwifeHimselfHimself

102,810109,6703,241,52057,99613,55420,17020,1702,0001,503,7241,437,1066,508,720

Member’s relatives Member Relation Number of stocks

Nationality PositionNumber of Stock As of 31-12-2007

JordanianJordanianJordanianJordanianJordanian

JordanianJordanianJordanianJordanianJordanianJordanian

___3,565100

__2,593___6,258

____1,518

___724__2,242

General managerChief Credit OfficerAssistant General Manager Treasury & InvestmentAssistant General Manager Corporate BankingAssistant General Manager Retail banking, Branches & MarketingAssistant General Manager For strategy management & Human Resource & Administration AffairsChief Audit OfficerLegal department manager / Legal counselorFinancial ControllerActing General Manager Assistant in Operations Risk & Compliance Manager

Number of Stock As of 31-12-2006

Board of directors, top management relatives Status for Number of Financial Securities issued by the bank and owned There are no stocks owned by top management relatives All executive management relatives are carrying Jordanian nationality except the Assistant General Manager for Corporate Banking’s wife who carries a Bahraini nationality


118

Al Bayader Trade & Investments Companyrepresentative by Dr. Zyad Fariz from 5/10/2007Dr. Fayez Mohammed atawy SoheimatMr. Mazen Sameh Taleb DarwazehInvestment & Integrated Industries Companyrepresentative by Mr.Elia C. Nuqul Mr. Mansoor Mohammed FustoqSocial Security Corporationrepresentative by Mr Haitham AlmajalyMr. Abdel Raouf Waleed Abdel Raouf Al-BitarMr. Mohammed seif El-SeifAlkhaleel company for investmentsrepresentative By Mr. Fawzy JumeanMr. Kim Foad sa’d Abu JaberMr.Bassam Wael Roshdy KanaanMr. Ali K. Al-Husry previous ChairmanMr. Amer Fariz previousrepresentative of Al Bayader companyMr. Yehya Abu Ershaid previous social security foundation representativeDr. Marwan AL Muasher Mr. Sa’d Sameeh Taleb Darwazeh

Chairman

Vice ChairmanMember

MemberMember

MemberMemberMember

MemberMemberMemberPre-Chairman

Pre-Member

Pre-MemberPre-MemberPre-Member

3,600

16,10012,900

11,9004,600

11,6006,3006,279

8,6007,5007,3005,500

11,000

1,1006001,900116,779

-

5,000 5,000

5,000 5,000

- 5,000 5,000

5,000 - - 5,000

5,000

5,0004,583417 55,000

1,380

4,140 5,282

1,650

12,452

101,600

21,10017,90016,900

10,980

11,60015,440

16,56115,2507,5007,30044,500

16,000

6,1005,1832,317316,231

98,000

34,000

Board of directors, top management, and executive authority’s remuneration and other benefits

Board of directors

overall yearlysalaries

Board of directors Position Transportation Yearlyequivalent

Yearly Traveling expenditure

Yearly Total Advantages

* This item represents the equivalent for the year 2006 paid during the year 2007

Top Management

Mr. Haytham Yousef Abdeminaem Kamhiyah Mss. Iman Mohammad Allan Al Damen from 16-12-2007 Mr. Mohammad Fayyad Alhag AhmadMrs. Narmeen Nabulsi- Resigned in 12-9-2007Mr.Rami Mohammad Jawad HadidMr. George Farah Jeries Sofia

Mr. Talal Mohammad Maher Shakeeb Yaish

Mr. Rafat Abdallah Ismail KhalilMr. Mohammed Hafeth Abel Al Kareem Mu’azMr. Ihab Shaker Mustafa Al Aqqad

Mr. Ibrahim Salah Mohammed samhaMss. Manal Omer Hosny Omer

General Manager

Chief Credit OfficerAssistant General Manager Treasury & InvestmentAssistant General Manager Operations & ITAssistant General Manager Corporate BankingAssistant General Manager Retail Banking,Branches & Marketing Assistant General Manager For strategy management and Human Resource and Administration AffairsChief Audit ExecutiveLegal department manager / Legal counselorActing Assistant General Manager for Operations start from 12-12-2007Financial ControllerRisk & Compliance Manager

18

124,900

2,745 86,345 55,392 61,385

59,800

63,350 15,496 50,795

36,400 37,800 30,800

625,208

73,125

- 45,000 32,250 26,250

19,375

- -

23,500

9,125 10,250

5,750244,625

198,025

2,745 131,345

87,642 87,635

79,175

63,350 15,496 74,295

45,525 48,050 36,550

869,833

Top Management Position overall Yearlysalaries

remuneration Total

* Represent 2006 remuneration paid during 2007


119

Donations and grants paid during 2007

Institution

33,85030,00019,34010,209

9,0007,6655,5003,0002,500

500500500350250250

5,1505,0005,1001,336

140,000

Amount

SOS Children’s Village Association of JordanKing Hussein Cancer CenterOrphan CareTkiyet Um AliYoung Muslim Women AssociationInjazInjaz School CoursesJordan Chinese Friendship AssociationDistinguished initiativeDonation scientism Hashemite Association highness prince Ali ClubEnjaz Program For Schools and university custodyMar Mansoor AssociationAl Aon Jordanian SocietyJerusalem Day AssociationDonation For Women CommitteeJordan River FoundationThe Royal Society for the Conservation of NatureOtherTotal Amount Paid

Declaration of any contracts or projects with the subsidiaries companies There are no contracts or projects or engagements taken with the subsidiary companies, the Chair-man Board of Directors, Executive management or General Manager or any employee in the Bank or their relatives

19

20


120

Bank contribution For environmental protection and community Service 21

A- Contribution For environment protectionThe Bank’s supports the national forestation project, by sponsoring the forestation and relamation of non forest lands the effort which falls under the Agriculture Reform Program being spearheaded by the Ministry of Agriculture

B- Contribution For community ServiceStemming from its social responsibility commitment towards its local community, and realizing the importance of continuous effective interaction with its social surroundings, and to achieve mutual benefit for it and the different societal strata, this year Capital Bank continued to: - Attending to non-profit organizations and charity associations, and providing support

to entities dedicated to helping orphans and the poor, such as the SOS Children’s Village Association. In addition, iftar meals, food rations, and children’s clothing were provided through the contributions of the Bank’s employees

- Providing financial and moral support to institutions and associations concerned with people with special needs, such as the support extended to the King Hussein Cancer Center.

- Building the main offices of the Orphan Care Charity Association in the city of Al-Mafraq, sponsoring 25 orphans, and buying a bus to serve the association and to facilitate the transport of its beneficiaries.

- Providing education to excelling students from poor and less fortunate classes and areas in the Kingdom.

- Contribution and participation with Injaz in building one of the public schools and providing donation for its restoration and maintenance.

- Voluntary work by the Bank’s employees some who taught at public schools through Injaz program.

- Collaboration with “Al-Keema” Foundation for Unique Initiatives in supporting education and awareness program on aspects key to the society.

- Taking on the educational expenses of a number of disabled students through the Young Women Moslem Association )YWMA(.

- Blood donation campaign by the Bank’s employees- Training male and female university students from various disciplines at the Bank’s various

departments as part of Injaz program to help improve educational level.- Distribution of lunch packages through Tkiyet Um Ali to 200 families. Providing iftar meals, food rations, Eid clothing and winter supplies to 100 orphans in Mafraq

with the moral and financial active participation of the Bank’s employees Participation in seminars and conferences related to corporate social responsibility )CSR( and enhancing and supporting women’s role in CSR.

C- Annual Financial ReportsIncluded in Board of Director Report

D- Auditors ReportAuditors report Ernst & Young appears in annual reports


121

Al Bayader Trade & Investments Company representative by

Dr. Zyad Fariz

Mr. Mohammed seif El-SeifDr. Fayez MohammedAtawy Soheimat

Spumante Comercio Internacional LDA

Representative By Mr. Mansoor Mohammed Fustoq

Mr. Abdel Raouf Waleed Abdel Raouf Al-Bitar

Investment & Integrated Industries Company representative by Mr. Elia

C. Nuqul

Mr. Mazen Sameh Taleb Darwazeh Hotaf Investment CompanyRepresentative by Mr.Bassam Wael

Roshdy Kanaan

Social Security Corporation representative

by Mr Hytham Almajaly

Mr. Kim Foad saad Abu Jaber Alkhaleel company for investmentsrepresentative By Mr. Fawzy Jumean


E-AffirmationBased on term article H from section 4 from disclosure criterion and accounting standard issued the Capital Bank Board of Directors admit according to its knowledge and its belief of non-existence of major matters that might affect the Bank’s continuity during 2008 and admit its responsibility for preparation the financial data and for existence of an effective control system. The Chairman, General Manager and Financial Controller admit the accuracy and completeness of the provided information in this report.

122


ChairmanDr. Zyad Fariz

General ManagerHaytham Kamhiyah

Financial ControllerIbrahim Samha

123


Irbid Branch

Telephone:Fax:P.O. BoxE-mail:

Alkoba circle

02- 7246280 962-2 - 7395803

[email protected]

Wehdat Branch


Madaba street 06- 4750801+ 962- 6 - 4750845

[email protected]

Zarqa Branch


Prince Shaker street

05- 3979295+ 962- 5 - 3979103

[email protected]

Sweifeyeh Branch


Cross Tareq Aljondy street with Nasooh Altaher street 06- 5833799+ 962-6- 5885176

[email protected]

Branch AddressBranch

Main Branch


Shmesani - Esam Al-ajlony street

06- 5100200 + 962- 6 - 5692062Amman 941283 Jordan 11194 [email protected]

Address

Shmesani Branch


Shmesani - Esam Al-ajlony street

06- 5100200 + 962- 7 - 5695942Amman 941283 Jordan 11194 [email protected]

Madina Street Branch


Madina Monawarh Street

06- 5529994+ 962- 6 - 5549252

[email protected]

Aqaba Branch


Alnahda street

03- 2039990962- 3 - 2039949

[email protected]

Aqaba Office


Airport street

03- 2039710+ 962-3 - 2039711

[email protected]

the twelfth annual report the bank’s investment portfolio increased by 83% from jd89 million to...

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