Annual Report 2011 - Jordan Investment and Finance bank

Annual Report 2011 - Jordan Investment and Finance bank

23His Royal Majesty King Abdullahthe Second Bin Al Hussein

45His Royal Highness Hussein bin Al AbdullahCrown Prince of Jordan

Our PromisesBoard of DirectorsChairman of Board StatementAction Plan for the year 2012-2014Board of Directors’ RecommendationActivities and Financial StatementMajor Financial IndicatorsAdditional StatementsIndependent Auditor’s Report and ConsolidatedFinancial Statements for 2011

Board of DirectorsChairmanAbdul Raheem Jardaneh & Sons Co. represented by Mr. BisherM. JardanehOur promises..We only make the pledges we can fulfillWe are committed to offer creative banking solutionsWe are committed to launching responsible partnershipsWe are committed to building special relationships with our customersVice ChairmanMr. Ayman S. Jmean, until April 27, 2011Ma'daba Co. for Financial Investment represented by Mr. AymanS. Jmean as of May 19, 2011Vice ChairmanRa'ouf Abu Jaber & Sons Co. Represented by Mr. Ziad Ra'ouf S.Abu Jaber from April 27, 2011 till May 19, 2011MembersDr. Mohammed K. Al-TalDr. Nabeel H. QaddumiRa'ouf Abu Jaber & Sons Co. Represented by Mr. Ziad Ra'ouf S. Abu JaberMr. Abdul Raheem Nizar Abdul Raheem JardanehMa'daba Co. for Financial Investment represented by Dr. Foti I. Khamisuntil April 27, 2011Dr. Foti I. Khamis as of April 27, 2011Ma'daba Co. for Financial Investment represented by Mr.Muhannad Al-Shuaiti as of April 27, 2011 till May 19, 2011Mrs. Zina Nizar Abdul Raheem Jardaneh until April 27, 2011Abdul Raheem Jardaneh & Sons Co. (second membership)represented by Mrs. Zina Jardaneh April 27, 2011 till May 19, 2011Jordan Drug Store Company represented by Mrs. Zina Jardanehas of May 15, 2011Oussoul investment & Economic Co represented by Mrs WijdanM. Al Talhouni as of April 27, 2011Mrs. Wijdan M. Al Talhouni as of April 27, 2011Al-Nahda Financial Investments represented by Mr. Walid E. Finanuntil April 27, 2011Bank of Palestine represented by Mr. Hashem H. Al-ShawaMr. Fehmi Bin Fa'aiq Abu Khadra'a as of April 27, 2011General ManagerMr. Muntaser I. Dawwas as of August 1, 2011Acting Chief Executive Office/General ManagerMr. Jamal Fariz till February 28, 2011Acting Chief Executive Office/General ManagerMr. Ibrahim Besharat from March 1, 2011 until August 1, 2011

10Chairman of BoardDear Shareholders,It is a pleasure for me as we meet again this year to present to you on behalfof myself and my colleagues, members of the board and the entire Investbankfamily the 29th Annual Report for the year 2011, a year that witnesseddefining events in the entire Arab region. We are currently experiencing therepercussions of these events that are interloping with the global financialand economic crisis, which continues unabated in different forms, includingthe sovereign debts crisis in the EU and the weak world and regional economicgrowth.Jordan’s EconomyIt was hoped that the Jordanian economy would pass the bottleneck but theaccelerating events in the Arab region and the financial and economic criseshad their again. These factors negatively affected the GDP growth, whichremained around 2.5%, coupled with a budget deficit, rising state debts,shrinking investments and a decline in revenues from tourism and expatriateremittances.Safe UmbrellaUndoubtedly, the Central Bank of Jordan remains the safe umbrella of thebanking sector, thanks to its prudent policies and the institutionalized natureof its decisions and instructions that are characterized by consistency. Thishas enforced the pillars of the banking sector and enhanced its ability torespond to crises and developments and rendered the sector the catalyst ofeconomic activity, especially since the new leadership of the CBJ is the bestchoice to boost this confidence and add to the accomplishments.Good PerformanceWithin this context as we are preparing to mark the 30th anniversary of thebank, a glimpse into its results in 2011 would indicate that it performed well,reflecting the relentless efforts exerted over the past year to improve theseresults. These efforts paid off, particularly in terms of shareholders’ equity,which grew from JD79.230 million in 2007 to JD131.897 in 2011.In light of continued implementation of a policy to widen capital base, withthe aim of raising capital to JD100 million, a private placement was launchedinvolving 14.75 million shares, with a coverage ration of 95.7%. This is prone toenhance our status as a local bank that offers comprehensive and distinguishedbanking, commercial and investment services and reinforce the bank’s abilityto compete more aggressively in the Jordanian market and expand operationsand activities into various sectors.11Statement

12TheChairman of Board StatementBest Competitive EdgeThis comes amid an ongoing restructuring process to meet the bestperformance and achievement criteria, in line with the bank’s overallstrategy, which yielded the corporate identity and produced new branches andadvanced services. Among the other results the focus on compliance risks,enhancing good governance, financing medium-sized companies and offeringspecial banking services and investment banking, in addition to expansion inthe specialized financial subsidiaries like Al Mawared for Brokerage. The newstrategy also focused on the supply (chain finance) and financial lease. Thebank continued concentrating on developing the various services, with focuson e-services to create the best competitive edge.Modern LeadershipBecause Investbank is on a non-stop mission to develop all factors of growthand modernization and as part of its policy to recruit the best qualified cadresin the banking industry that are able to bring about added value, Mr. MuntaserDawas was appointed as the new general manager. He enjoys the bankingexperience and the right personality to add to the success of the bank and helpit improve its result to meet your expectations.Investbank will always a model of balanced banking performance becauseexperience, knowledge, skills and a high sense of responsibility have takenroots in this bank despite time changes. It will adhere to the rules set byfounders as cornerstones of success, on which loyal shareholders built, asthey believed in the message of the bank and supported its march towardsachievement.Dear Shareholders,It is a pleasure to present you the 29th annual report including key achievementsand activities in 2011, in addition to financial statements and auditors’ reportfor the year ending on December 31, 2011, outlining the performance of thebank in this exceptional banking year.Financial AchievementsThe bank achieved in 2011 net profits amounting to JD9.596 million, comparedwith JD10.887 million in 2010. Profits before taxes stood at JD13.650 million,with tax deduction of JD4.054 million. As always, the profits made reflect theefforts of the bank, despite the impact of the surrounding conditions and thegeneral economic performance. Efforts are being exerted to increase profitsso as to enhance solvency and raise capital. Profits were distributed as shownin the table below.Statement/DataTax DeductionLegal Reserves 10%General Banking Risks ReservesRetained EarningsTotalTo nearest million dinars201120104.0544.9821.3781.615(0.031)0.3528.2498.92013.650 15.86913Chairman LetterChairmanBisher Mohammad JardanehTotal IncomeThe bank’s total income for the year 2011 stood at JD36.492 million, withan increase of 4.6% when 2010 reached JD34.889 million. Net interests andcommissions earnings constituted 80% of the total income for the year 2011.

16Shareholders’The Twenty-Eighth Annual Report of 2011EquityThe bank increased its capital through the capitalization of JD7.750 millionin the second half of 2011, thus raising capital to 85.250 million dinar/share. The aim is to increase capital to 100 million dinar/share in line withCBJ instructions. In this regard, the bank offered 14.750 million shares fora private placement (after obtaining the permission of the Jordan SecuritiesCommission (JSC) on November 22, 2011) among the shareholders asregistered in the bank’s records on December 6, 2011. The placement, whichtook place between December 19, 2011- January 1, 2012, was covered by95.7%. In line with the JSC instructions pertaining to placement rights, andwith the aim of preserving the rights of shareholders who did not subscribeto the placement, the non-subscribed shares were offered for sale at AmmanStock Exchange during the period February 15, 2012- March 30, 2012. Thenumber of these shares stands at 633327 shares and they are expected to besold and thus capital will be raised to JD100 million by March 30, 2012.Bank’s Action Plan for 2012Investbank continues the implementation of its strategic plan for the years2012-2014, building on its 2009 strategy, which has since then furthercrystallized and become more consistent with the achievements made bythe bank in the past three years, which form the launching pad for moreaccomplishments in the coming three years. The bank seeks to make a strongappearance among Jordanian banks as by offering high-quality services totargeted clients that include large, medium and small businesses, in additionto mid-market companies.Another pillar in the strategy is the branch network. The bank is conducting astudy of the locations of its branches and making blueprints for re-designingtheir interiors. Upon completion, the study will suggest either keeping thebranch in question or moving it to another location and propose locationsfor new branches and ATM locations, selecting the most strategic areas ofthe highest concentration of our clients It is noteworthy to mention that thebank has re-located its headquarters to a new building that features the newcorporate identity.The strategic plan also paid attention to the human resources aspect. Thebank focuses on investment in its most important asset: the human capital,seeking to upgrade services, improve performance and raise productivitythrough retaining qualified personnel, develop their capacity and attractnew outstanding employees to join a team that can add to the progress andachievements of the bank.The strategy also focused on subsidiaries, as the bank is working to expandits operations through a group of specialized subsidiaries. The ultimate goalis to provide clients with a matrix of comprehensive and integrated servicesthat meet current and future needs of existing and potential clients. The bankwill be working to develop the business of these subsidiaries in the fields ofbrokerage, leasing and finance chain.17The Twenty-Eighth Annual Report of 2011To implement the strategy, the bank focused on a group of aspects, includingcredit and credit processing. Prudent credit policies are in place to ensureflexibility and cut short on the time needed to make a decision and extendcredit facilities to clients. This is prone to enhance clients confidence in thebank and help expand its operations.The other aspect is the work model. Concerning facilities extended toindividuals and medium-sized companies, the bank has adopted a strategybased on developing innovative products targeting these categories. As forlarge and commercial companies, they are offered a high-level client servicethrough a qualified team of PR managers.There is also the IT aspect, where focus is placed on developing theinfrastructure and the various IT systems, including e-banking services and thecall center. The aim is to provide a diversified set of communication channelswith the bank in a way that meets the needs of clients and accelerates andfacilitates banking transactions, ensuring the highest degree of accuracy andsafety.The strategic plan also featured the corporate identity of the bank and itsnew public image, which it seeks to promote among existing and potentialclients through a well-studied and effective marketing campaign. The planalso stipulates the enhancement the role of the public relations apparatus atthe bank.

1819Board of Directors’Recommendations1. Approving the financial statement for the year 2011and to free members of the board of directors of anyliabilities as per the said period2. Confirming the appointment of Jordan Drug StoreCompany as of June 15, 2011 on the board of directorsafter Abdul Raheem Jardaneh & Sons Co. relinquishedits second seat on June 15, 20113. Approving the board of directors’ decision todistribute 8% of the paid capital through or JD8 million(eight million Jordanian dinar)4. Any other issuesThe board of directors thanks the shareholders and allthose dealing with the bank for their trust and kindsupport. They also thank the bank’s employees for theirloyal efforts, which contributed effectively to the bankcontinuous success.

20Bank’sThe Twenty-Eighth Annual Report of 2011Activities and Financial StatementsThe year 2011 witnessed the beginning of the so-called Arab Spring, whichcharacterized the entire landscape in the region and imposed itself on thepace of events throughout the entire year, rendering 2011 a special year byall standards, especially in the economic realm. This was coupled with the EUsovereign debts crisis which brought back to minds the global financial crisis.All that had grave repercussions on the Jordanian economy as official figuresindicate, including a 2.5% GDP growth. Despite all that, Investbank continuedits activities, armed with a will and determination to make achievements thatfuel progress of the bank while observing the established banking normsand credit standards. Such an approach enabled the bank to overcome therepercussions of the year and their local effects as it stands at the thresholdof a new era of progress, achievement and success.First: Sources of Funds1. DepositsClients deposits rose in 2011 by 4.7%, to amount to JD 470 million, includingwhat is equivalent to JD88 million in foreign clients compared with JD449million in 2010, of which JD79 million was in foreign currencies. The bankfocuses on clients’ deposits as the most important source of funds, especiallyon low-cost deposits, taking into consideration the bank’s needs to finance itsactivities, as shown in Table (1) and Table (2):Table 1Sources of FundsA chart illustrating sources of fundsBanks Deposits 3%Cash Margins 10%Cash MarginsClient Deposits 87%Client DepositsBanks DepositsTable (2)21The Twenty-Eighth Annual Report of 2011StatementTo nearest million dinars2011 2010Clients Deposits87%47083%449Banks DepositsCash MarginsTotal3%10%100%185354110%7%100%5538542StatementClients Deposits / JDTo nearest million dinar2011 2010382370Clients Deposits / Foreign CurrenciesTotal8847079449

222.The Twenty-Eighth Annual Report of 2011Growth in Shareholders’ EquityBy the end of 2011, shareholders’ equity rose to JD131 million from JD107million at the end of 2010, with a growth rate of 22%.Second: Uses of FundsTable (3) illustrates the distribution of assets usage on various sectors as wellas the share of each sectorStatementBanks/Banking Institutions Accounts& DepositsCash and Accounts at the CentralBank of JordanCredit FacilitiesStock PortfolioTable 3To nearest million dinars2011 201012%6%57%25%83393871689%6%57%28%5841374184The following are details of some of the items pointed out above as follows:- Investment in financial assets portfolioTable (4): Size of bank’s investments at the end of 2011 as compared to 2010To nearest million dinarStatementFinancial Instruments/ StockFinancial Instruments/ BondsTotal180201020111601401202011 2010202214816216818423The Twenty-Eighth Annual Report of 2011Total100%677100%6571002010201180Illustration of asset management for 20116040Cash and accounts at theCentral Bank of Jordan 6%20201120100Banks/Banking Institutionsaccounts & Deposits 12%Financial Instruments/ StockFinancial Instruments/ BondsCreditFacilities 57%StockPortfolio 25%Stock PortfolioCredit FacilitiesCash and accounts at theCentral Bank of JordanBanks/Banking Institutionsaccounts & Deposits

243.The Twenty-Eighth Annual Report of 2011Credit FacilitiesThe bank was keen during 2011 to continue applying a prudent policy onextending credit facilities. Applications for credit were well studied and sortedout in line with the established credit criteria, regarding both direct andindirect facilities, as follows:A: Direct FacilitiesDespite the bank’s focus in 2011 on personal and housing loans programsin addition to various funding programs, the bank targeted SMEs as well asfunding external trade and projects in the most active sectors. However, thebank followed a cautious policy before granting these facilities to avoid creditrisks and to maintain the interest of clients themselves and shareholdersin the first place. In spite of all these challenges and restrictions, the bankresults in 2011 showed an increase in the size of credit facilities portfolio toreach a net of JD387 million, compared with JD374 million in 2010.B: Indirect FacilitiesAware of the importance of financing external trade operations (throughletters of credit, bills of collection, guarantees) as the second option for theusage of funds, the bank continued granting facilities to this sector, taking intoconsideration the inherent risks. Therefore, applications were reviewed andstudied carefully. The bank sought to increase its share in the total fundingextended to the external trade sector at the Kingdom’s level. The facilitiesoffered by the bank to this sector reached in 2011 around JD238 million,compared with JD315 million in 2010.Third: Statement of Income and Changes to Shareholders’ EquityA: Statement of IncomeTotal earnings amounted in 2011 to JD36.492 million, while net profits stoodat JD9.596 million after tax. Table (5) shows key revenues and expenses for2011 and 2010.StatementTotal EarningsDebited InterestsNet CommissionsProfits of Financial AssetsCurrency Differences & OthersTotal ExpendituresCredited InterestsAdministrative, General Expenditures& ConsumptionsTable (5)To nearest million dinar2011 Percentage 2010 Percentage53.221 100% 51.625 100%41.4584.3092.9524.50239.57116.72913.06278%8%6%8%100%42%33%39.9116.4500.1945.07035.75516.73512.15977%12%0%10%100%47%34%25The Twenty-Eighth Annual Report of 2011Table (5) illustrates the indirect facilities:Debts Provisions & Various ProvisionsNet Profits before Tax9.78013.65025%6.86115.86919%StatementTo nearest million dinar2011 2010Income TaxNet Profits after Tax4.0549.5964.98210.887Outstanding of Insurance Policies & LOC174.486240.049Outstanding GuaranteesTotal63.076237.56275.445315.494

26B:The Twenty-Eighth Annual Report of 2011Statement of Changes in Shareholders’ EquityProfitsDistributable profits reached JD9.382 million in 2011, including the profitsmade during the year and retained profits of 13,129. This includes JD2.131million whose usage is restricted under the CBJ instructions and JD1.615 millionrestricted as a result of the effect of early application of the standard ofthe International Financial Reporting Number (9). The usage of this sum isrestricted except for what can be actually achieved through sale in line withJSC instructions.Changes to rounded up profits are illustrated in Table (6).StatementBalance at the Beginning of the yearEffect of Early Application of the Standard of theInternational Financial Reporting Number (9)Year’s profitsTransferred to CapitalTransferred to (from) ReservesBalance of Retained Profits at YearendTo nearest million dinar2011 20109,746,6112,885,6939,594,044(7,750,000)(1,347,300)13,129,0488,320,811-10,893,192(7,500,000)(1,967,392)9,746,611Shareholders’ EquityA total of 14,750,000 shares were offered to private placement with thepurpose of raising capital to JD100 million, where the private placementwas14,116,574. The unsubscribed shares were 633,426 and will be handled inline with instructions governing equity issued by the JSC. The shares offeredfor capital raise were listed in Amman Stock Exchange as of January 30, 2012.Accordingly, shareholders’ equity stood at JD131 million, compared with JD107million in 2010, with a 22% increase. Table (7) shows total shareholders’ equityfor 2011 and 2010:StatementPaid CapitalCapital Raise PaymentsLegal ReservesGeneral Banking Risks ReservesVariation of Fair ValueNet Fair Value ReserveRetained ProfitsTotalTable (7)To nearest million dinar2011 201085,250,00014,116,57414,710,4423,180,766-1,035,20813,129,048131,422,03877,500,000-13,331,9593,211,9493,630,749-9,746,611107,421,26827The Twenty-Eighth Annual Report of 2011

28MajorThe Twenty-Eighth Annual Report of 2011Financial IndicatorsThe bank’s financial indicators show that between 2006-2011 there has beena steady rise in shareholders’ equity, by 78%, and paid capital, by 126%, totalassets (3%), clients deposits (20%) and loans and facilities granted (46%).This clearly indicates the steady progress made by the bank in terms ofperformance and financial indicators. It also shows that the bank is makingsuccess amid crises sweeping the region and the world, which underlinesthe soundness of its approach and effectiveness of its plans and programsimplemented to achieve its goals.Major Financial Indicators:Table (9)To nearest million dinarStatement 2006 2007 2008 2009 2010 2011A: GrowthTotal of Shareholders RightsPaid CapitalTotal AssetsClient DepositsGranted Loans & Facilities73.99644.000-671.915392.591264.91579.23055.000-699.127411.931313.26685.75261.325-683.282447.973324.11093.24970.000-666.715477.606315.277107.42177.500-677.217449.296373.816131.42285.25014.117691.772469.627386.577Distribution of free sharesThe bank continued distributing free shares among shareholders as part of itsplan to raise its capital from 2006-2010; 8.250 million shares were given outas shown in table 10:Year profitsYear20062007200820092010Table (10)Percentage of Capital Stock25%11.50%14.15%10.74%10.00%11,000,0006,325,0008,675,0007,500,0007,750,000The following illustration shows profits after taxes posted in the years 2006-201129The Twenty-Eighth Annual Report of 2011B: ProfitabilityTotal IncomeYTD Profit (After Tax Deduction)19.5969.77221.1906.38521.6148.87521.4237.23834.88910.88736.4929.5969.596Cash Profits Distributed onShareholders2.200-----Percentage of Cash Distributed5%-----Share of Net Profit per Stock2221161459914197filsfilsfilsfilsfilsfilsReturn on Assets1.45%0.91%1.30%1.09%1.61%1.39%Return on Share Holders Equity13.20%8.06%10.35%7.76%10.13%7.30%C: Market Value of Stock (JD)3.292.881.91.51.611.34

3031Stake owned by boardmembers and top managementpersonnel and their relativesand companies they control for2010-2011

32Additional StatementsA: Stake owned by board membersName2011 2010DesignationNationalityNo. of StockTotalTotalB: Stake owned by relatives of board members (spouses and underagechildren)NumberNameDesignationKinshipNationalityNo. of Stock2011201033Abdul Raheem Jardaneh &ChairmanJordanian158208158208143826Mr. Ayman S. JmeanViceJordanianThe Twenty-Eighth Annual Report of 2011Sons Co. represented byMr. Bisher M. JardanehMa'daba Co. for Financial Investmentrepresented by Mr. Ayman S. JmeanDr. Mohammed K.Al-TalDr. Nabeel H. QaddumiRa'ouf Abu Jaber & Sons Co.Represented by Ziad Ra'ouf S. Abu JaberJordan Drug Store CompanyRepresented by Mrs. Zina JardanehMr. Abdul Raheem N. JardanehDr. Foti I. KhamisMrs. Wijdan M. Al TalhouniMr. Fehmi Bin Fa'aiq Abu Khadra'aBank of Palestine represented by Mr.Vice ChairmanMemberMemberMemberMemberMemberMemberMemberMemberMemberJordanianJordanianKuwaitiJordanianJordanianJordanianJordanianJordanianSaudiPalestinian3251394699110615218362317748860581423084471876127134475835117280656592995127212110615218362317748509142571876127134475835117280656592995157667994466166930170444628569653419364859817410599363212Nahlah T. KaradshehShafeeq A. JmeanTamara A. JmeanZaid A. JmeanNehad A. Shafeeq JmeanNatasha A. JmeanWijdan M. TalhouniBassam K. Al-SaketChairmanMemberC: Stake owned by companies controlled by board members and theirrelatives:WifeSonDaughterSonDaughterDaughterHusbandJordanianJordanianJordanianJordanianJordanianJordanianJordanianJordanian36123612361236123612361210547132843284328432843284328495883The Twenty-Eighth Annual Report of 2011Hashem H. Al-ShawaMemberJordanianNo. of Stock2011NameDesignationName of Controlled Co.Co. ClassificationNationalityNo. Of Stock Ownedby Controlled Co.No. Of Stock Ownedby Controlled Co.Bisher MohammedChairmanAl-Mashreq for Real -L.L.CJordanian216659176277JardanehEstate Services Co.Arabtic Jardaneh Co.L.L.CPalestinian9234983954PalestineAyman ShafeeqVice ChairmanMa’daba FinancialL.L.CJordanian3251392808JmeanInvestments

34D:The Twenty-Eighth Annual Report of 2011Stake owned by members of the top/executive managementThere are no stocks owned by members of the higher/executive managementE: Stake owned by companies controlled by relatives of members of the top/executive management (spouses and underage children)There are no stocks owned by companies controlled by relatives of membersof the higher/executive management.Names of major shareholders and number of stocks they owned in 2011,compared to the previous year:NO.12345NameEhab S. Farhan JmeanAbdul Raheem N. JardanehBank of Palestine Co.Abu Jaber Bros. Co.Raghda H. MangoNo. of Stock10,127,8227,187,6126,592,9956,572,6425,990,3662011Benefits and remunerations for board members:NameMr. Bisher M. JardanehMr. Ayman S. JmeanMr. Ziad R. Abu JaberMrs. Wijdan M. TalhouniContributionPercentage11,880%8,431%7,733%7,710%7,027%To nearest JDAnnualTransportationAllowance4,8004,4004,8004,800No. of Stock9,207,1116,534,1935,993,6326,483,1995,445,788AnnualBonus5,0004,5005,0005,0002010ContributionPercentage11,880%8,431%7,733%8,365%7,27%Total9,8008,9009,8009,800To nearest million dinarBenefits and remunerations for top management members for 2011Salaries of the Top Management 2011-12-3112345NO.NameSoha Tawfeeq J. KaradshehRajaie Jeryes Al-QasosHani Abdul Rahman M. Al-AliIbrahim Noor S. BsharatMontaser Ezzat Ahmad Abu DawasStarting from 01/08/2011Total for Bank Staff Only111,400.00127,133.33128,000.00152,000.00133,333.33651,906.67Community service and environment protection---12,000.00-12,000.00bonus25,000.0035,000.0035,000.0032,000.0060,000.00187,000.00Salaries/Wages Total136,440.00162,133.33163,000.00196,000.00193,333.33850,906.67Investbank believes in the corporate social responsibility due to its importancein serving local communities and achieving sustainable development thatbrings about public good and benefits for all.Our concern for social responsibility, particularly our focus on environmentprotection and combating poverty is not new to us, as the bank has always beenvery active socially in every sense. Investbank has set social responsibility asa top priority out of keenness to serve the community and contribute to itsadvancement.Out of our belief that the environment has a great effect on society, the bankhas attached much importance to this issue, as reflected in its support forthe Royal Society for the Conservation of Nature and the Tree Society, amongothers, in addition to its support for awareness campaigns organized byvarious parties and societies in the Kingdom.35The Twenty-Eighth Annual Report of 2011Mr. Walid E. FinanDr. Mohammed K.A-TalMr. Abdul Raheem N. JardanehDr. Fouti I. KhamisMrs. Zina N. Abdul Raheem JardanehDr. Nabeel H. Al-QaddumiMr. Hashem H. Al-ShawaMohannad J. Eid Al-Shae'eneFehmi Bin Fa'aiq Abu Khadra'aTotal1,2004,8004,8004,8004,8008,0104,8004003,60056,0101,5005,0005,0005,0005,0005,0005,0005003,50055,0002,7009,8009,8009,8009,80013,0109,8009007,100111,010Moreover, the bank attached special attention to all segments of the societyof all age categories and affiliations. We reach out to the elderly and orphans,whom we support through donations to the Al-Aman Fund for the Future ofOrphans and Ein Al-Basha Orphanage. Besides, the bank supports Al HusseinCancer Center through annual donations, a gesture that has a positive effect onthis major medical facility and a pillar in the medical industry in the Kingdom.The bank also contributed to several functions and activities that took placein 2011, including sponsorship of the Chemistry Cares Conference, thusasserting its commitment to social responsibility towards the society it worksto serve.

Donation RecipientAmount/JDDistribution of employees among headquarters and branches36Al-Aman Fund for the Future of OrphansRoyal Society for the Conservation of NatureCoffee Break SponsorTree SocietyThe Jordan Hashemite Fund for Human Development10,00028,1253,00010,00017,056Employees are distributed among the main offices, branches, Imdad andAl Mawared for Brokerage subsidiaries in line with job requirements and inaway that ensures they do their jobs with the highest level of proficiency andproductivity. They are distributed as follows:37Al Hussein cancer Center15,000The Twenty-Eighth Annual Report of 2011Ein Al-Basha OrphanageTotal15083,331Auditing fees for the bank and subsidiariesAuditing fees for Investbank stood in 2011 at JD69,960Auditing fees for Al-Mawared for Brokerage stood in 2011 at JD11,658Auditing fees for Tamkeen Leasing stood in 2011 at JD1,500Auditing fees for the IB Bank Co. for Supply Chain Funding stood in 2011 atJD4080.300Human resources developmentThe bank’s management is concerned with attracting qualified job candidatesand then sorting them out, applying established selection rules and ensuringthat there is an enough number of qualified competitors at the same time inline with the plans of the personnel and bank’s organizational chart. The aimis to recruit qualified and competent persons who are able to shoulder fullresponsibility for delivering the bank’s message and achieve its goals. Thebank appointed in 2011 a group of highly qualified and experienced employeesto support its banking team. By the end of the year, the total number ofemployees stood at 372.General Administration 234Mecca Branch/Mecca St.Main Branch/General AdministrationEmaar BranchAl-Madina Branch/King Hussein St.Sweifieh Branch/Opposite the 7th CircleAl-Wihdat Branch/Middle East CircleSahab Branch/Industrial EstateAl-Zarqa Branch/King Hussein St.Irbid Branch/Wasfi Al-Tal St.Aqaba Branch/Al-Nahda St.TotalSubsidiariesAl-Mawared for Brokerage/ShmeisaniImdad/JwaidehTamkeen LeasingTotal81469998109932513211347The Twenty-Eighth Annual Report of 2011Number of the bank’s employees and their educational levels:(Excluding Subsidiaries)StatementDoctorateMaster's DegreeBachelorDiplomaHigh School LevelBelow High School LevelTotalNo.027204541030325

38UpgradingThe Twenty-Eighth Annual Report of 2011employees’ skillsAs a result of the bank’s interest in developing the skills and potential of itsemployees in a way that enables them to do the job effectively and efficientlyand contributes to upgrading the bank’s level of performance and productivityas well as providing the best level of services, 19% of the bank’s employeesparticipated in a number of specialized training courses, such as:Provider of training Training course No.Arab Banks UnionMatchetthayes Global EventsEast QuestInstitute of Banking StudiesLiquid Nexus LtdInstitute of Banking StudiesAmman Chamber of CommerceFinancial Markets AssociationCommerzbank AGInstitute of Banking StudiesJordan Banks AssociationIncoterms 2010 and their Effect on L/C DocumentsTreasury Audit & Internal Control of TreasuryITIL V3 FoundationProduct Pricing, Hedging and Investing TechniquesPayment Risk ForumComprehensive Training Course for BankersSocial Security LawACI Dealing CertificateCash service Seminar in FrankfurtAdvanced Risk ManagementStrategic Aspects of Banking221111421111Provider of training Training course No.Jordan Banks AssociationJordan Banks AssociationJordan Banks AssociationOutsourcing Instructions ProjectWorkshop on Information Security ServicesProvisions and Applications of Anti-Money Laundering in Light ofthe Anti-Money Laundering and Terrorism Financing Law14139The Twenty-Eighth Annual Report of 2011Institute of Banking StudiesOperational Risk Management1Union of Arab Stock ExchangesTrading Techniques and Systems in Arab financial and Stock Markets1AlbatrossICAAP2Arbitration Center of the ArabArbitration and Banking Operations in L/C Documents, Letters ofFederation for Protection ofGuarantee and ChecksIntellectual Property-ACIP2Osool for Training andApplying Models of Risk-Based AuditingConsulting1Business eyeChange Management2Arab Academy for BankingExam Certified Lender Business Banker (CLBB)1ITCCOracle Database 11G:SQL Fundamentals1AlbatrossLiquidity and Interest Rates Risks1AlbatrossAdvanced Course in Credit Risk Management1Arab Academy for BankingCLBB Renewal Fees-Study Material + Exam1CyprusNetworking Infrastructure and Security Seminar1Institute of Banking StudiesElectronic Check Clearance1Institute of Banking StudiesCommon Errors of Tellers1Institute of Banking StudiesCommunication and the art of Dealing with the Public5Institute of Banking StudiesExcellence in Service Provision and Customer Care1Institute of Banking StudiesAnalyzing and Assessing Bank Customers1Institute of Banking StudiesTechniques of Detecting Fraud for Tellers and those who Deal in Cash4Institute of Banking StudiesMS Excel 2007 / Basic and Advanced1AlbatrossBasel III Requirements and their Effects on Banks1

40D:The Twenty-Eighth Annual Report of 2011Subsidiaries1) Al-Mawared for BrokerageClassification: L.L.CMain Activity: Business FinancialBroke through broker, dealer, and margin fundingCapital: JD10 millionPercentage of Bank Ownership: 100%Address: Amman – Shmeisani – Abdul Hamid Sharaf Street - Building No. 43,next to Professional Associations Complex - Investbank BuildingTel: +962 6 5630500 - Fax: +962 6 5622405No. of Employees: 13Branches Address: No BranchesProjects owned by the company and its capitals: NoneMember of managers board/general manager : Miss Hana Al-Harasees2) Tamkeen Leasing Company:Classification: L.L.C (license number 13153)Main Activity: Lease Business and importing of items related to its operationCapital: JD3 millionPercentage of Bank Ownership: 90%Address: Mecca St. – Building no. 244 – Investbank BuildingTel: +962 6 5502610 - Fax: +962 6 5502609No. of Employees: 13Branches Address: No BranchesProjects owned by the company and their capitals: All assets and projects areregistered in the name of the company through leasing contractsThe company is accredited and licensed3) Al ImdadClassification: L.L.CMain Activity: Financing performing capitals, imports and exports of goodsand basic commoditiesCapital: JD3 millionPercentage of Bank Ownership: 94%Address: Amman – Jwaideh – Salah Fleih Ateyat St. – Building No. 19Tel: +96 2 4130301 – Fax: +962 6 4130412No. of Employees: 21Branch addresses: Investbank Bonded – Sahab – King Abdullah IndustrialEstateProjects owned by company: NoneCapital Investment:The bank’s capital investment reached JD26,387,692 by December 31, 2011.The Competitive Status of the Bank:The bank’s share of the local banking market was as follows: Client Depositsreached 1.93%, whereas the total facilities share reached 2.44%.Independent Auditor's ReportConsolidated Statement ofFinancial PositionConsolidated Statement of IncomeConsolidated Statement ofComprehensive IncomeConsolidated Statement of Changesin Owners' EquityConsolidated Statement of Cash FlowsNotes to Consolidated Financial StatementsINVESTBANK(A PUBLIC SHAREHOLDINGCOMPANY)AMMAN - JORDANDECEMBER 31, 2011Independent auditor's report 2011 Annual Report41

4243Independent Auditor’sReport31/12/2011

Independent Auditor’s ReportAM/ 31664To the Shareholders ofINVESTBANKAmman – The Hashemite Kingdom of Jordan44Report on the Consolidated Financial StatementsWe have audited the accompanying consolidated financial statements ofINVESTBANK (a public shareholding company), which comprise of theconsolidated statement of financial position as of December 31, 2011, andthe consolidated statements of income, comprehensive income, changes inowners’ equity and cash flows for the year then ended, and a summary ofsignificant accounting policies and other explanatory information.Management’s Responsibility for the Consolidated ‎Financial StatementsManagement is responsible for the preparation and fair presentation ofthese consolidated financial statements in accordance with InternationalFinancial Reporting Standards, and for such internal control as managementdetermines necessary to enable the preparation of financial statements thatare free from material misstatement, whether due to fraud or error.Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financialstatements based on our audit. We conducted our audit in accordance withInternational Standards on Auditing. Those standards require that we complywith ethical requirements and plan and perform the audit to obtain reasonableassurance whether the consolidated financial statements are free frommaterial misstatement.OpinionIn our opinion, the consolidated financial statements present fairly, in allmaterial respects, the consolidated financial position of INVESTBANK asof December 31, 2011, and its consolidated financial performance andits consolidated cash flows for the year then ended in accordance withInternational Financial Reporting Standards.Report on Other Legal and Regulatory RequirementsThe Bank maintains proper accounting records and the accompanyingconsolidated financial statements are in agreement therewith and with theconsolidated financial statements presented in the Board of Directors’ report.We recommend that the General Assembly of Shareholders approve theseconsolidated financial statements.The accompanying consolidated financial statements are a translation ofthe statutory financial statements which are in the Arabic language to whichreference should be made.Amman – JordanFebruary 22, 2012Deloitte & Touche (M.E.) – JordanAn audit involves performing procedures to obtain audit evidence aboutthe amounts and disclosures in the consolidated financial statements.The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidatedfinancial statements, whether due to fraud or error. In making those riskassessments, the auditor considers internal control relevant to the Bank’spreparation and fair presentation of the consolidated financial statements inorder to design audit procedures that are appropriate in the circumstances,45but not for the purpose of expressing an opinion on the effectiveness of theBank’s internal control. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimatesmade by management, as well as evaluating the overall presentation of theconsolidated financial statements.We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.

Consolidated Statement of Financial PositionDecember 31,Consolidated Statement of Income46ASSETSCash and balances at the Central BankBalances at banks and financial institutionsDeposits at banks and financial institutionsFinancial derivativesFinancial assets at fair value through profit or lossDirect credit facilities - netAvailable-for-sale financial assetsFinancial assets at fair value through other comprehensive incomeFinancial assets at amortized costProperty and equipment - netIntangible assetsDeferred tax assetsOther assetsTOTAL ASSETSLIABILITIES AND OWNERS' EQUITYLIABILITIESBanks and financial institutions depositsCustomers depositsCash marginsBorrowed fundsSundry provisionsProvision for income taxDeferred tax liabilitiesOther liabilitiesTOTAL LIABILITIESOWNERS' EQUITY (Shareholders)Authorized capitalSubscribed and paid-up capitalPayments on capital increaseStatutory reserveGeneral banking risks reserveCumulative change in fair value - netFair value reserve - netRetained earningsTOTAL OWNERS' EQUITY (Bank Shareholders)Non-Controlling InterestTOTAL OWNERS' EQUITYTOTAL LIABILITIES AND OWNERS' EQUITYNote 2011 2010456427119810121320141516171819202021222222232324252628JD39,366,57179,108,5823,942,0654,38011,778,182350,008,522-13,406,061143,208,74326,387,6922,074,4102,131,45620,355,310691,771,97418,270,292469,626,56653,517,9753,623,862952,7893,880,629925,7409,076,655559,874,508100,000,00085,250,00014,116,57414,710,4423,180,766-1,035,20813,129,048131,422,038475,428131,897,466691,771,974JD40,739,98152,851,8135,442,2347,891-350,274,314183,871,301--25,064,4451,569,2292,016,16915,379,330677,216,70754,614,460449,295,87338,326,3587,557,6442,340,7895,430,5881,556,03510,499,773569,621,52077,500,00077,500,000-13,331,9593,211,9493,630,749-9,746,611107,421,268173,919107,595,187677,216,707Interest incomeLess: Interest expenseNet Interest IncomeCommission income - netNet Interest and Commission IncomeForeign currency exchange income(Loss) from trading financial assetsIncome from financial assets at fair value through profit or lossIncome from available-for-sale financial assetsCash dividends from financial assets at fair value throughother comprehensive incomeIncome from sale of financial assets at amortized costOther incomeGross IncomeEmployees expensesDepreciation and amortizationOther expensesProvision for impairment in direct credit facilitiesOther sundry provisionsTotal ExpensesNet Income before Income TaxLess: Income taxIncome for the YearAttributable to:Bank's ShareholdersNon-Controlling InterestEarnings per Share (shareholders)Basic and dilutedNote 2011 2010JDJD29 41,458,023 39,910,96730 16,728,896 16,735,17824,729,127 23,175,78931 4,309,221 6,450,22629,038,348 29,626,01532 3,201,430 2,587,22534 -(99,955)33 2,224,924 -36 -293,580515,445 -35 212,054 -37 1,300,090 2,482,50536,492,291 34,889,37038 7,100,213 5,913,83412 & 131,570,8101,138,33539 4,391,094 5,106,99211 11,168,207 6,708,42019 (1,388,000) 152,55422,842,324 19,020,13513,649,967 15,869,23520 4,054,414 4,982,1249,595,553 10,887,1119,594,044 10,893,19228 1,509 (6,081)9,595,553 10,887,11140 - /112 - /12847THE ACCOMPANYING NOTES FROM (1) TO (54) CONSTITUTE AN INTEGRALPART OF THESE CONSOLIDATED FINANCIAL STATEMENTS AND SHOULD BETHE ACCOMPANYING NOTES FROM (1) TO (54) CONSTITUTE AN INTEGRALPART OF THESE CONSOLIDATED FINANCIAL STATEMENTS AND SHOULDBE READ WITH THEM.CHAIRMAN OF BOARD OF DIRECTORS GENERAL MANAGERREAD WITH THEM.CHAIRMAN OF BOARD OF DIRECTORSGENERAL MANAGER

48Consolidated Statement Of Comprehensive IncomeDecember 31,2011 2010JDJDIncome for the Year9,595,553 10,887,111Other Comprehensive Income Items:Change in fair value reserve - net of tax(200,467) -Net Change the in fair value of available-for-sale financialassets net of tax-2,091,446Transferred to the statement of income as a result of impairmentin available-for-sale financial assets-1,187,268Total Other Comprehensive Income for the Year9,395,086 14,165,825Total Other Comprehensive Income Attributable to:Bank Shareholders9,393,577 14,171,906Non-controlling interest1,509(6,081)9,395,086 14,165,825THE ACCOMPANYING NOTES FROM (1) TO (54) CONSTITUTE AN INTEGRALPART OF THESE CONSOLIDATED FINANCIAL STATEMENTS AND SHOULDBE READ WITH THEM.PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS AND SHOULD BE READ WITH THEM.THE ACCOMPANYING NOTES FROM (1) TO (54) CONSTITUTE AN INTEGRAL-Use of the general banking risks reserve is restricted and requires the prior approval of the Central Bank of the Jordan Securities Commission.IFRS (9). These amounts are restricted and cannot be utilized unless realized through actual sale as instructed- Retained earnings include an amount of JD 1,615,472 as of December 31, 2011 which represents the effect of early adoption ofCentral Bank of Jordan against deferred tax assets (JD 2,016,169 as of December 31, 2010).- Included in income for the year and retained earnings is an amount of JD 2,131,456 as of December 31, 2011 restricted by theBalance - End of the Year77,500,000 -13,331,959 3,211,949 3,630,749 -9,746,611 107,421,268 173,919 107,595,187Transferred to / (from) reserves--1,615,330352,062 --(1,967,392) ---Transferred to paid-up capital (Note 26)7,500,000 -----(7,500,000) ---Non-Controlling interests--------180,000 180,000Total Other Comprehensive Income for the Year----3,278,714 -10,893,192 14,171,906 (6,081) 14,165,825transferred to the statement of income----1,187,268 --1,187,268 -1,187,268Impairment loss on available- for- sale financial assets,Net change in fair value----2,091,446 --2,091,446 -2,091,446Income for the year------10,893,192 10,893,192 (6,081) 10,887,111Balance - beginning of the year70,000,000 -11,716,629 2,859,887 352,035 -8,320,811 93,249,362 -93,249,362For the Year Ended December 31, 2010Balance - End of the Year85,250,000 14,116,574 14,710,442 3,180,766 -1,035,208 13,129,048 131,422,038 475,428 131,897,466Transferred to / (from) reserves--1,378,483(31,183) --(1,347,300) ---Private offering for capital increase (Note 22)-14,116,574---14,116,574 -14,116,574Transferred to paid-up capital (Note 26)7,750,000 -----(7,750,000) ---Non-Controlling interests--------300,000 300,000Total Other Comprehensive Income for the Year-----(200,467) 9,594,044 9,393,577 1,509 9,395,086Net change in the fair value reserve-----(200,467) -(200,467) -(200,467)Income for the year------9,594,044 9,594,044 1,509 9,595,553Adjusted balance - beginning of the year77,500,000 -13,331,959 3,211,949 -1,235,675 12,632,304 107,911,887 173,919 108,085,806Effect of early adoption of IFRS (9)----(3,630,749) 1,235,675 2,885,693 490,619 -490,619Balance - beginning of the year77,500,000 -13,331,959 3,211,949 3,630,749 -9,746,611 107,421,268 173,919 107,595,187For the Year Ended December 31, 2011JD JD JD JD JDJDJD JD JD JDcapitalReserveInterestStatutoryEarningsPaid-upPaymentson CapitalIncreaseRisksBank ShareholdersValueAttributable ToGeneral BankingChange in FairFair ValueEquityControllingTotalCumulativeRetainedSahreholders'Non-ReservesTotalConsolidated Statement Of Changes In Owners' Equity

CONSOLIDATED STATEMENT OF CASH FLOWSCASH FLOWS FROM OPERATING ACTIVITIES:Net income before income taxAdjustments:Depreciation and amortizationImpairment loss on available-for-sale financial assetsProvision for impairment in credit facilitiesProvision for employees end-of-service indemnitySurplus / provision for lawsuits against the bankProvision for contingent liabilities(Gains) losses on sale of property and equipmentProvision for impairment in assets seized by the bank(Gains) from sale of assets seized by the bank(Revenue) from assets seized by the bank for bad debtsUnrealized losses from valuation of financial assets at fair value through profit or lossInterest expense (income) - netEffect of exchange rate fluctuations on cash and cash equivalentsIncome before Changes in Assets and LiabilitiesNet Changes in Assets and Liabilities:Decrease (increase) in deposits at banks and financial institutions due after 3 monthsDecrease in trading financial assetsDecrease in financial asset at fair value through profit or lossDecrease in financial derivatives(Increase) in direct credit facilities(Increase) decrease in other assets(Decrease) in banks and financial institutions deposits due after 3 monthsIncrease (decrease) in clients depositsIncrease in cash margins(Decrease) increase in other liabilitiesNet Cash Flows from (used in) Operating Activities before Tax, lawsuits and EmployeesIndemnities PaidEmployees indemnities paidPaid from the provision for lawsuitsIncome tax paidNet Cash Flows from (used in) Operating ActivitiesCASH FLOWS FROM INVESTING ACTIVITIES:Decrease in available-for-sale financial assetsDecrease in financial assets at amortized cost(Purchases) of property and equipment and payment on purchases of property andequipment and projects under constructionProceeds from sale of property and equipment(Purchases) of intangible assetsNet Cash Flows from Investing ActivitiesCASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from capital increase(Decrease) increase in borrowed fundsNon- controlling interestNet Cash Flows from Financing ActivitiesEffect of exchange rate fluctuations on cash and cash equivalentsNet Increase (Decrease) in Cash and Cash EquivalentsCash and cash equivalents - beginning of the yearCash and Cash Equivalents - End of the YearNOTE 2011201012&13111919193332191920121322324141JD13,649,9671,570,810-11,168,207-(1,465,000)77,000(3,273)-(13,524)-965,94595,561(152,524)25,893,1691,500,169-935,8043,511(10,902,415)(3,239,961)-20,330,69315,191,617(3,241,174)46,471,413--(6,264,040)40,207,373-13,780,803(2,445,079)27,880(978,766)10,384,83814,116,574(3,933,782)300,00010,482,792152,52461,227,52738,977,334100,204,861JD15,869,2351,138,3351,187,2686,708,420379152,175-6,374914,611(185,211)(1,586,067)-(630,505)(232,605)23,342,409(1,543,392)898,016-11,527(57,384,323)1,500,754(30,267)(28,310,397)3,505,7221,673,207(56,336,744)(950)(35,450)(4,283,777)(60,656,921)14,147,673-(8,772,223)5,634(791,427)4,589,657-1,760,608180,0001,940,608232,605(53,894,051)92,871,38538,977,334INVESTBANK(a public shareholding company)Amman – jordanNotes to the consolidtaed financial statements1.GeneralInvest Bank was established as a Jordanian public shareholding companyunder number (173) on August 12, 1982 in accordance with the CompaniesLaw No. 12 for the year 1964 with a paid-up capital of JD 6 million distributedover 6 million shares with a par value of JD 1 per share. The Bank’s capital wasincreased several times, the last of which was during the year 2011. Accordingto the resolution of the Bank’s general assembly in its extraordinary meetingheld on June 15, 2011 the Bank’s authorized and subscribed capital has beenincreased to become JD 100 million through the capitalization of JD 7,750,000from retained earnings and the remaining through a private offering providedto the investors registered at the bank of JD 14,750,000. On August 29, 2011,the bank capitalized JD 7,750,000 from retained earnings increasing thebanks subscribed and paid up capital to JD 85,250,000 which was approved bythe Jordan Securities Commission on September 4, 2011, noting the privateoffering has not been completed at the date of the consolidated financialstatements.The Bank’s headquarter is in Amman, Abdel Hameed Sharaf Street, Shmesani,Tel: 5001500, P.O. Box 950601, Amman 11195 – Jordan.The Bank is engaged in banking and related financial operations throughits headquarter, branches in the Hashemite Kingdom of Jordan totaling 9branches, and the subsidiary companies.The Bank’s is a public shareholding company listed in Amman Stock Exchange.The consolidated financial statements have been approved by the Bank’sBoard of Directors, in its meeting held on February 22, 2012, and are subjectto the approval of the General Assembly of Shareholders2. Significant Accounting PoliciesBasis of Presentation- The accompanying consolidated financial statements of the Bank and itssubsidiary companies are prepared in accordance with the standards issuedby the International Accounting Standards Board (IASB), interpretationsissued by the Committee of the IASB, prevailing local laws, and regulations ofthe Central Bank of Jordan.51Notes to the consolidtaed financial statementsTHE ACCOMPANYING NOTES FROM (1) TO (54) CONSTITUTE AN INTEGRAL PART OFTHESE CONSOLIDATED FINANCIAL STATEMENTS AND SHOULD BE READ WITH THEM- The consolidated financial statements are prepared under the historicalcost convention except for financial assets at fair value through profit orloss, financial assets at fair value through other comprehensive income andfinancial derivatives which have been measured at fair value at the date ofpreparation of the consolidated financial statements. Moreover, hedged assetsand liabilities are stated at fair value.

52-TheNotes to the consolidtaed financial statementsreporting currency of the consolidated financial statements is theJordanian Dinar, which is also the functional currency of the Bank.- The accounting policies for the current year are consistent with those usedin the year ended December 31, 2010, expect for the effect of adoption of thenew and modified standard as in note (53 – a) and the effect of the adoption ofthe following:IFRS 9 Financial Instruments Issued in November 2009 and Amended inOctober 2010The Bank and its subsidiaries have early adopted the first stage for (IFRS9) in the preparation of the consolidated financial statements as of January1, 2011 in accordance with the requirements of the Securities ExchangeCommission, the Central Bank of Jordan and the transitional provisions ofthe standard. Therefore the comparative figures for the previous year have notbeen adjusted, which is permitted by the standard. Therefore, the beginningbalance, for retained earnings, cumulative change in fair value and deferredtax liabilities have been reclassified as of January 1, 2011.The effects of applying the IFRS (9) on the consolidated financial statementsare detailed in note (52).The followings are the significant new and revised IFRSs adopted during theyear ended December 31, 2011:a. Financial Assets at Amortized CostInternational Financial Reporting Standards).b. Financial Assets at Fair Value through Profit or Loss- It is the financial assets held by the Bank for the purpose of trading in thenear future and achieving gains from the fluctuations in market prices in theshort term or trading margins.- Financial assets at fair value through profit or loss are initially stated atfair value at acquisition date (purchase costs are recorded at the consolidatedstatement of income upon acquisition) and subsequently measured at fairvalue. Moreover, changes in fair value are recorded in the consolidatedstatement of income including the change in fair value resulting fromtranslation of non monetary assets stated at foreign currency. Gains or lossesresulting from the sale of these financial assets are taken to the consolidatedstatement of income.- Dividends and interests from these financial assets are recorded in theconsolidated statement of income.- It is not allowed to reclassify any financial assets to / from this categoryexcept for the cases specified in International Financial Reporting Standards.- It is not allowed to classify any financial assets that do not have prices inactive markets and active dealings in this items.c. Financial Assets at Fair Value through Other Comprehensive Income- Those financial assets represent the investments in equity instruments heldfor long term.53Notes to the consolidtaed financial statements- Financial assets at amortized cost are the financial assets which the Bank’smanagement intends according to its business model to hold for the purposeof collecting the contractual cash flows which comprise the contractualcash flows that are solely payments of principal and interest on the principaloutstanding.- Financial assets are recorded at cost upon purchase plus acquisitionexpenses. Moreover, the issue premium \ discount is amortized using theeffective interest rate method, and recorded to interest account. Provisionsassociated with the decline in value of these investments leading to the inabilityto recover the investment or parts thereof are deducted. Any impairment isregistered in the consolidated statement of income and should be presentedsubsequently at amortized cost less any impairment losses.- Financial assets at fair value through other comprehensive income areinitially stated at fair value plus transaction costs. Subsequently, they aremeasured at fair value with gains and losses arising from changes in fair valuerecognized in the consolidated statement of other comprehensive incomeand within owner’s equity, including the changes in fair value resulting fromtranslation of non monetary assets stated at foreign currency. Gain or lossfrom the sale of these investments should be recognized in the consolidatedstatement of comprehensive income and within owner’s equity, and the balanceof the evaluation reserve for these assets should be transferred directly to theretained earnings not to the consolidated statement of income.- No impairment testing is required for those assets.- Dividends are recorded in the consolidated statement of income.- The amount of the impairment loss recognised is the difference between theasset’s carrying amount and the present value of estimated future cash flowsdiscounted at the original effective interest rate.- It is not allowed to reclassify any financial assets from / to this category exceptfor certain cases specified at the International Financial Reporting Standards(and in the case of selling those assets before its maturity date, the resultsshould be recorded in a separate account in the consolidated statement ofincome, disclosures should be made in accordance to the requirements ofIAS 24 Related party disclosures - Amended- IAS 24: Related Party Disclosures simplifies disclosures for related entitiesto simplify the determination of a related party and reduce the discrepanciesupon implementation.- There was no impact on the consolidated financial position or financialperformance upon the implementation of the amended standard.IAS 32 financial instruments – Classification of Rights Issues - Amended- IAS 32 financial instruments – Classification and presentation of RightsIssues: The amendment on IAS 32 for the classification of rights issues. For

54rightsNotes to the consolidtaed financial statementsissues offered for a fixed amount of foreign currency current practiceappears to require such issues to be accounted for as derivative liabilities.The amendment states that if such rights are issued pro rata to an entity’s allexisting shareholders in the same class for a fixed amount of currency, theyshould be classified as equity regardless of the currency in which the exerciseprice is denominated.- There was no effect on the consolidated financial position or financialperformance upon the implementation of the amended standard.Basis of Consolidation- The consolidated financial statements include the financial statements ofthe Bank and the wholly owned subsidiary companies controlled by it. Controlexists when the Bank has the ability to control the financial and operatingpolicies of the subsidiary companies in order to achieve financial benefits outof their operations. All inter-company transactions, balances, revenues andexpenses between the Bank and its subsidiaries are eliminated.- Non-controlling interest represents that part of the subsidiary’s equity notowned by the Bank.- The Bank owns the following subsidiaries as of December 31, 2011:services subject to risks and returns different from those of other businesssegments. It is measured according to the reports used by the GeneralManager or other key decision – makers at the Bank.- A geographical segment is a distinguishable component of an entity engagedin providing products or services within a particular economic environmentsubject to risks and returns different from those of components operating inother economic environments.Financial Assets Held for TradingPolicy applied before 1 January 2011:Financial assets held for trading represent investments in stocks, funds andbonds of companies in active markets. Moreover, the purpose of keeping theseinvestments is to generate profits from the fluctuation in short-term marketprices or a trading profit margin.- Financial assets held for trading are initially recognized at fair value whenpurchased (acquisition costs are taken to the consolidated statement ofincome). They are subsequently re-measured to fair value as of the date ofthe consolidated financial statements, and the resulting changes are includedin the consolidated statement of income in the period in which they arise.Moreover, fair value differences resulting from the translation of foreigncurrency non-monetary assets are taken to the consolidated statement ofincome.- Distributed income or realized interest is recorded in the consolidatedstatement of income.55Notes to the consolidtaed financial statements- The financial statements of the subsidiaries relating to the same financialyear of the Bank are prepared using the same accounting policies adoptedby the Bank. In case the accounting policies applied by the subsidiaries aredifferent from those adopted by the Bank, the necessary adjustments tothe financial statements of the subsidiaries are made as to comply with theaccounting policies used by the Bank.- Results of operations are consolidated in the consolidated statement ofincome from the date of acquisition which represents the date when controlover the subsidiaries is passed on to the Bank. Moreover, results of operationsof the disposed of subsidiaries (if any) are consolidated in the consolidatedstatement of income until the disposal date which represents the date whenthe Bank loses control over the subsidiaries.Segment Information- A business segment is a group of assets or operations jointly engaged inproviding an individual product or service or a group of related products orDirect Credit Facilities- A provision for the impairment in direct credit facilities is recognized whenit is obvious that the financial assets of the Bank can not be recovered, thereis an objective evidence of the existence of an event negatively affecting thefuture cash flows of the direct credit facilities, and the impairment amount canbe estimated. The provision is taken to the consolidated statement of income.- Interest and commissions on non-performing credit facilities are suspendedin accordance with the regulations of the Central Bank of Jordan.- Impaired credit facilities, for which specific provisions have been taken,are written off by charging the provision after all efforts have been made torecover the assets. Any surplus in the provisions is taken to the consolidatedstatement of income, while debt recoveries are taken to income.Available-for-Sale Financial AssetsPolicy applied before 1 January 2011:Available-for-sale financial assets are financial assets held by the Bank andclassified as neither trading nor held-to-maturity financial assets.- Available-for-sale financial assets are initially recorded at fair valueincluding acquisition costs. They are subsequently re-measured at fair valueas of the date of the consolidated financial statements. Moreover, change infair value is recorded in a separate account within the consolidated statementof comprehensive income and within shareholders’ equity. In case these

56assetsare fully or partially sold, disposed of, or determined to be impaired,the income or losses are recorded in the consolidated statement of income,including the related amounts previously recorded within owners’ equity. Theloss resulting from the impaired value of the debt instruments is reversedwhen it is objectively evident that the increase in their fair value occurred afterthe losses had been recognized and recorded in the consolidated statementof income. Impairment losses resulting from the decline in the value of equitysecurities are reversed through the cumulative change in fair value andthrough the statement of comprehensive income.- Income and losses from foreign exchange of interest-bearing debtinstruments within available - for - sale financial assets are included in theconsolidated statement of income. Differences in the foreign currency ofequity instruments are included in the cumulative change in fair value withinthe consolidated statement of comprehensive income.- Interest from available-for-sale financial instruments is recorded in theconsolidated statement of income using the effective interest rate method.Impairment in such assets is recorded in the consolidated statement ofincome when incurred.and discounted are amortized within interest revenue or expense in theconsolidated statement of income.The evaluation methods aim to provide a fair value reflecting the expectationsof the market, and take into consideration market factors, risks and expectedbenefits, at the time of evaluation of the financial instruments. In case the fairvalue of an investment can not be measured reliably, it is stated at cost lessany impairment.Financial assets, the fair value of which can not be reliably measured, arestated at cost less any impairment.Impairment in the Value of Financial AssetsThe Bank reviews the values of financial assets on the date of the consolidatedstatement of financial position in order to determine if there are any indicationsof impairment in their value individually or in the form of a portfolio. In casesuch indications exist, the recoverable value is estimated in order to determinethe impairment loss.Impairment is determined as follows:57- Financial assets for which fair value cannot be reliably determined are shownat cost. Any impairment is recorded in the consolidated statement of income.Held-to-Maturity Financial AssetsPolicy applied before 1 January 2011:Held-to-maturity investments are financial assets with fixed or determinablepayments and the Bank has the positive intent and ability to hold to maturity.- Held-to-maturity investments are recorded at cost (fair value) plus acquisitioncosts. Premiums and discounts are amortized in the consolidated statement ofincome according to the effective interest rate method. Provisions associatedwith irrecoverable impairment in their value, partially or totally, are deducted.Any impairment in assets is recorded in the consolidated statement of income.Fair ValueFair value represents the closing market price (Acquisition of assets/ Sale ofliabilities) of financial assets and derivatives on the date of the consolidatedfinancial statements. In case the declared market prices do not exist, activetrading of some financial assets and derivatives is not available, or the marketis inactive, fair value is estimated by one of several methods including thefollowing:- Impairment in financial assets recorded at amortized cost represents thedifference between the book value and the present value of the expected cashflows discounted at the original interest rate.- Impairment in financial assets available for sale recorded at fair value (policyapplied before 1 January 2011) represents the difference between book valueand fair value.The impairment in value is recorded in the consolidated statement of income.Any surplus in the following period resulting from previous impairment in thevalue of debt instruments is taken to the consolidated statement of income andany impairment in the value of equity instruments is taken to the consolidatedstatement of other comprehensive income.Property and Equipment- Property and equipment are stated at cost net of accumulated depreciationand any impairment in value. Moreover, property and equipment (exceptfor land) are depreciated according to the straight-line method over theirestimated useful lives using the following rates:- Comparison with the fair value of another financial asset with similar termsand conditions.- Analysis of the estimated future cash flows and discounted cash flows atcurrent rates applicable for items with similar terms and risk characteristics.- Adoption of the option pricing models.- Evaluation of long term assets and liabilities that bears no interest inaccordance to discounted cash flows using effective interest rate, premiums

58-When the carrying values of property and equipment exceed their recoverablevalues, assets are written down to the recoverable value, and impairmentlosses are recorded in the consolidated statement of income.- The useful lives of property and equipment are reviewed at the end of eachyear. In case the expected useful life is different from what was determinedbefore, the change in estimate is recorded in the following years, being achange in estimate.- Property and equipment are derecognized when disposed of or when thereis no expected future benefit from their use or disposal.Provisions- Provisions are recognized when the Bank has an obligation on the date ofthe consolidated statement of financial position as a result of past events, it isprobable to settle the obligation, and a reliable estimate of the amount of theobligation can be made.Provision for Employees End-of-Service Indemnities- The employees’ end-of-service indemnities provision is calculated at a rateof one month per service year for contracted employees more than 60 yearsold.- The required provision for end-of-service indemnities for the year isrecorded in the consolidated statement of income while payments to departingemployees are deducted from the provision amount.Cost of Issuing or Purchasing Bank SharesAny costs that result from purchasing or issuing bank shares are charged toretained earnings (net of the tax effect relating to those costs, if any). If theunderwriting process or purchase process was incomplete, these costs arecharged to the consolidated statement of income.Income Tax- Income tax expenses represent accrued taxes and deferred taxes.- Income tax expenses are accounted for on the basis of taxable income.Moreover, taxable income differs from income declared in the consolidatedfinancial statements because the latter includes non-taxable revenue or taxexpenses not deductible in the current year but deductible in subsequentyears, accumulated losses acceptable by the tax authorities, and items notaccepted for tax purposes or subject to tax.- Deferred tax assets are reviewed as of the date of the consolidated financialstatements, and reduced in case it is expected that no benefit will arisetherefrom, partially or totally.Accounts Managed on Behalf of ClientsThis item represents the accounts managed by the Bank on behalf of itsclients and is not part of the Bank’s assets. The fees and commissions formanaging these accounts are shown in the consolidated statement of income.Furthermore, a provision is taken against the decline in the value of capitalguaranteedportfolios managed on behalf of clients.OffsettingFinancial assets and financial liabilities are offset, and the net amount isreflected in the consolidated statement of financial position only when there arelegal rights to offset the recognized amounts, the Bank intends to settle themon a net basis, or assets are realized and liabilities settled simultaneously.Realization of Income and Recognition of Expenses- Interest income is realized and expenses are recognized using the effectiveinterest rate method, except for interest and commission on non-performingloans which are not recognized as revenue but recorded in the interest andcommission in suspense account until they are received in cash.- Expenses are recognized on the accrual basis.- Commission is recorded as revenue when the related services are provided.- Dividends are recorded when realized (decided upon by the General Assemblyof Shareholders).Recognition of Financial AssetsFinancial assets are recognized on the trading date which is the date the Bankcommits itself to purchase or sell the financial assets.Financial Derivatives and Hedge AccountingFor hedge accounting purposes, financial derivatives are stated at fair value.Hedges are classified as follows:- Fair value hedge:Hedge for the change in the fair value exposures of the Bank’s assets andliabilities.59Notes to the consolidtaed financial statements- Taxes are calculated on the basis of the tax rates prescribed according to theprevailing laws, regulations, and instructions in Jordan.- Deferred taxes are taxes expected to be paid or recovered as a result oftemporary timing differences between the value of the assets and liabilitiesin the consolidated financial statements and the value of the taxable amount.Deferred tax is calculated on the basis of the liability method in the consolidatedstatement of financial position according to the rates expected to be appliedwhen the tax liability is settled or tax assets are recognized.When the conditions of effective fair value hedge are met, the resulting gain orloss from re-measuring the fair value hedge is recognized in the consolidatedstatement of income.When the conditions of effective portfolio hedge are met, the gain or lossresulting from the revaluation of the hedging instrument at fair value as wellas the change in the fair value of the assets or liabilities portfolio are recordedin the consolidated statement of income for the same period.

60-Notes to the consolidtaed financial statementsCash flow hedge:Hedge for the change in the current and expected cash flows exposures of theBank’s assets and liabilities.When the conditions of effective cash flow hedge are met, the gain or loss ofthe hedging instruments is recognized in the consolidated statement of othercomprehensive income in owners’ equity. Such gain or loss is transferredto the consolidated statement of income in the period in which the hedgetransaction impacts the consolidated statement of income.- Hedge for net investment in foreign entities:When the conditions of the hedge for net investment in foreign entities are met,fair value is measured for the hedging instrument of the hedged net assets.In case of an effective relationship, the effective portion of the loss or profitrelated to the hedging instrument is recognized in the consolidated statementof other comprehensive income and in owner’s equity. The ineffective portionis recognized in the consolidated statement of income. The effective portionis recorded in the consolidated statement of income when the investment inforeign entities is sold.When the conditions of the effective hedge do not apply, gain or loss resultingfrom the change in the fair value of the hedging instrument is recorded in theconsolidated statement of income in the same period.Financial Derivatives for TradingThe fair value of financial derivatives for trading such as forward foreigncurrency contracts, future interest rate contracts, swap agreements, andforeign currency options is recorded in the consolidated statement of financialposition under other assets or other liabilities as the case may be. Fair valueis measured according to the prevailing market prices, and if they are notavailable, the measurement method should be disclosed. The change in theirfair value is recognized in the consolidated statement of income.amortized over the life of the contract using the effective interest rate method.Assets Seized by the BankAssets seized by the Bank are shown under “other assets” at the acquisitionvalue or fair value, whichever is lower. As of the consolidated financialstatements date, these assets are revalued individually at fair value. Anydecline in their market value is taken to the consolidated statement of incomewhereas any such increase is not recognized. A subsequent increase is takento the consolidated statement of income to the extent it does not exceed thepreviously recorded impairment.Intangible Assets- Intangible assets purchased in an acquisition are stated at fair value at thedate of acquisition. Intangible assets purchased other than through acquisitionare recorded at cost.-Intangible assets are to be classified on the basis of either definite or indefiniteuseful life. Intangible assets with definite useful economic lives are amortizedover their useful lives and recorded as an expense in the consolidatedstatement of income. Intangible assets with indefinite lives are reviewed forimpairment as of the consolidated financial statements date, and impairmentloss is treated in the consolidated statement of income as an expense for theperiod.- No capitalization of internally generated intangible assets resulting from theBank’s operations is made. They are rather recorded as an expense in theconsolidated statement of income for the period.-Any indications of impairment in the value of intangible assets as of theconsolidated financial statements date are reviewed. Furthermore, theestimated useful lives of the impaired intangible assets are reassessed, andany adjustment is made in the subsequent period.61Notes to the consolidtaed financial statementsRepurchase and Resale Agreements- Assets sold with a simultaneous commitment to repurchase them at a futuredate continue to be recognized in the consolidated financial statements as aresult of the Bank’s continuous control over these assets and as the relatedrisks and benefits are transferred to the Bank upon occurrence. They alsocontinue to be measured in accordance with the adopted accounting policies.Amounts received against these contracts are recorded within liabilities underborrowed funds. The difference between the sale price and the repurchaseprice is recognized as an interest expense amortized over the contract periodusing the effective interest rate method.-The following is the accounting policy for each item of the intangible assetsowned by the Bank and its subsidiaries:Softwares and computer programs are amortized over their estimated usefuleconomic lives at a rate of 20% annually.Foreign Currency-Transactions in foreign currencies during the year are recorded at theexchange rates prevailing at the date of the transaction.- Purchased assets with corresponding commitment to sell at a specific futuredate are not recognized in the consolidated financial statements because theBank has no control over such assets and the related risks and benefits are nottransferred to the Bank upon occurrence. Payments related to these contractsare recorded under deposits with banks and other financial institutions orloans and advances in accordance with the nature of each case. The differencebetween the purchase price and resale price is recorded as interest revenue-Financial assets and financial liabilities denominated in foreign currenciesare translated at the average rates prevailing on the consolidated statementof financial position date and declared by the Central Bank of Jordan.-Non-monetary assets and liabilities denominated in foreign currenciesand recorded at fair value are translated on the date when their fair value isdetermined.

62-GainsNotes to the consolidtaed financial statementsor losses resulting from foreign currency translation are recorded inthe consolidated statement of income.-Translation differences on non-monetary assets and liabilities denominatedin foreign currencies are recorded as part of the change in fair value.Cash and Cash EquivalentsCash and cash equivalents comprise cash balances with the Central Bank ofJordan and balances with banks and financial institutions maturing withinthree months, less balances due to banks and financial institutions maturingwithin three months and restricted funds.Accounting EstimatesPreparation of the consolidated financial statements and the application of theaccounting policies require the Bank’s management to perform assessmentsand assumptions that affect the amounts of financial assets and liabilities,fair value reserve and the disclosure of contingent liabilities. Moreover, theseassessments and assumptions affect revenues, expenses, provisions, andchanges in the fair value shown within the consolidated statement of othercomprehensive income. In particular, this requires the Bank’s managementto issue significant judgments and assumptions to assess future cash flowamounts and their timing. Moreover, the said assessments are necessarilybased on assumptions and factors with varying degrees of consideration anduncertainty. In addition, actual results may differ from assessments dueto the changes resulting from the conditions and circumstances of thoseassessments in the future.-Management frequently reviews the financial assets stated at cost to estimateany decline in their value. Impairment loss (if any) is taken to the consolidatedstatement of income as an expense for the year.-Management estimates the impairment in fair value when the market valuereaches a certain limit indicative of the amount of impairment loss.- Fair Value Hierarchy:The Bank determines and discloses the level in the fair value hierarchyinto which the fair value measurements are categorised in their entirety,segregating fair value measurements in accordance with the levels definedin IFRS. Differentiating between Level 2 and Level 3 fair value measurements,i.e., assessing whether inputs are observable and whether the unobservableinputs are significant, may require judgement and a careful analysis of theinputs used to measure fair value, including consideration of factors specificto the asset or liability.We believe that our estimates adopted in the preparation of the consolidatedfinancial statements are reasonable.63Notes to the consolidtaed financial statements-A provision is set against the lawsuits raised against the Bank. This provisionis subject to an adequate legal study prepared by the Bank’s legal advisors.Moreover, the study highlights potential risks that the Bank may encounter inthe future. Such legal assessments are reviewed periodically.- A provision for performing and non-performing loans is taken on the basesand estimates approved by the Bank’s management in conformity withInternational Financial Reporting Standards (IFRS). The outcome of thesebases and estimates is compared against the adequacy of the provisionsas per the Central Bank of Jordan’s instructions. The strictest outcomethat conforms to International Financial Reporting Standards is used fordetermining the provision.-Impairment loss (if any) is booked after a sufficient and recent evaluation ofthe assets seized by the Bank has been conducted by approved surveyors. Theimpairment loss is reviewed periodically.-Management periodically reassesses the economic useful lives of tangibleand intangible assets for the purpose of calculating annual depreciationand amortization based on the general condition of these assets and theassessment of their useful economic lives expected in the future. Impairmentloss (if any) is taken to the consolidated statement of income.

64Cash in vaults4. Cash and Balances at the Central Bank This item consists of the following:Balances at the Central Bank:2011JD5,348,6652010JD5,875,1737. Financial Assets at Fair Value through Profit or LossThis item consists of the following:Companies shares2011JD6,998,0402010JD-65Current and demand accounts-2,858,391Bonds4,546,002-Term and notice depositsMandatory cash reserveTotal6,500,00027,517,90639,366,571- Except for the mandatory cash reserve, there are no restricted balances as ofDecember 31, 2011 and 2010.5. Balances at Banks and Financial InstitutionsThis item consists of the following:Current and demandaccountsDeposits due within3 monthsTotalLocal Banks &Financial InstitutionsDecember 31JD63,13118,545,00018,608,13154,056- Non-interest bearing balances at banks and financial institutionsamounted to JD 8,536,930 as of December 31, 2011against JD 10,249,025 as of December 31, 2010.-54,05636,975,13223,525,31960,500,45125,577,76927,219,98852,797,75737,038,26342,070,31979,108,582-32,006,41740,739,981Banks &Financial Institutions AbroadTotalDecember 31 December 312011 2010 2011 2010 2011 2010JD JD JD JD JD25,631,82527,219,98852,851,813Notes to the consolidtaed financial statementsInvestment fundsTotal234,14011,778,182--8. Financial Assets at Fair Value through Other Comprehensive IncomeThis item consists of the following:2011 2010JDJDQuoted shares11,364,385 -Unquoted shares *2,041,676 -Total13,406,061 -* The fair value of the unquoted shares has been valued using the equity method whichis considered the best method to valuate such investments.- Cash dividends on investment amounted to JD 515,445 for the year endedDecember 31, 2011.Notes to the consolidtaed financial statements- There are no restricted balances as of December 31, 2011 and 2010.6. Deposits at Banks and Financial InstitutionsThis item consists of the following:Local Banks &Financial InstitutionsDecember 31Banks &Financial Institutions AbroadTotalDecember 31 December 312011 2010 2011 2010 2011 2010DescriptionJDJD JD JD JD JDDeposits-2,127,0003,942,0653,315,2343,942,0655,442,234Total-2,127,0003,942,0653,315,2343,942,0655,442,234- There are no restricted deposits as of December 31, 2011 and 2010.

669. Available-for-Sale Financial AssetsThe details of this item are as follows:Quoted Available-for-Sale Financial Assets:Governmental bonds or bonds guaranteed by the GovernmentCompanies bonds and debenturesCompanies sharesDecember 31,2011JD---2010JD141,422,38820,281,98319,096,95011 . Direct Credit Facilities - NetThis item consists of the following:Individuals (retail)OverdraftDecember 31,20112010JD11,698,281JD18,796,48067Total Quoted Available-for-Sale Financial Assets-180,801,321Loans and promissory notes*29,423,28926,661,223Notes to the consolidtaed financial statementsUnquoted Available-for-Sale Financial Assets:Governmental billsCompanies sharesTotal Unquoted Available-for-Sale Financial AssetsTotal Available-for-Sale Financial AssetsBonds and Bills Analysis:Fixed returnTotal- Unquoted available-for-sale financial assets are recorded at cost/amortized cost as their fair valuescannot be reliably determined. These assets amounted to JD 3,069,980 as of December 31, 2010.10. Financial Assets at Amortized CostsThe details of this item are as follows:Quoted available-for-sale financial assets:Governmental billsGovernmental bonds or bonds guaranteed by the governmentTotal Quoted Available-for-sale Financial AssetsUnquoted Available-for-Sale Financial Assets:Governmental billsGovernmental bonds or bonds guaranteed by the governmentCompanies bonds and debenturesTotal Unquoted Available-for-Sale Financial Assets-------3,069,9803,069,980183,871,301161,704,371161,704,371December 31,20112010JD99,024,24717,500,804116,525,05112,634,1092,002,07812,047,50526,683,692JD-------Credit CardsReal estate loansCompaniesLarge CompaniesOverdraftLoans and promissory notes*Medium and small companiesOverdraftLoans and promissory notes*Government and public sectorTotalLess: Provision for impairment in direct credit facilitiesSuspended interestNet Direct Credit Facilities1,682,34060,882,50255,834,119195,075,29610,366,95520,723,575891,122386,577,47931,315,7755,253,182350,008,5221,761,02563,141,29356,413,540181,351,7309,715,41412,347,3803,627,843373,815,92820,590,4392,951,175350,274,314* Net after deducting interest and commissions received in advance of JD 5,008,566 as of December 31, 2011 against JD4,205,882 as of December31, 2010.- Non-performing credit facilities amounted to JD 50,776,611 which is equivalent to (13.1%) of total direct credit facilities asof December 31, 2011against JD 41,434,644, which is equivalent to (11.1%) of total credit facilities as of December 31, 2010.- Non- performing credit facilities excluding interest and commissions in suspense amounted to JD 45,523,429 which isequivalent to (11.9%) of totaldirect credit facilities after excluding interest in suspense as of December 31, 2011 against JD JD38,483,471 which isequivalent to (10.4%) of totalcredit facilities after excluding interest in suspense as of December 31, 2010.- Direct credit facilities granted to / guaranteed by the Government of Jordan amounted to JD 891,122 which is equivalent to(0.2%) of total directfacilities against JD 3,627,843, which is equivalent to (1%) as of December 31, 2011.Notes to the consolidtaed financial statementsTotal Available-for-Sale Financial Assets143,208,743-Bonds and Bills analysis:Fixed returnTotal143,208,743143,208,743--

68Notes to the consolidtaed financial statementsProvision for Impairment in Direct Credit Facilities:The movement on the provision for impairment in direct credit facilities was as follows:2011Balance – beginning of the yearProvision for the year taken from revenueUsed during the year (written-off) *Balance – End of the Year2010Balance – beginning of the yearProvision for the year taken from revenueUsed during the year (written-off) *Balance – End of the YearIndividualsJD4,759,2412,786,058437,8477,107,4523,402,8991,385,22128,8794,759,241Real EstateLoansJD JD JD JD1,823,1473,718,027-5,541,1748,316,7174,037,7745,02412,349,4675,691,334626,348-6,317,68220,590,43911,168,207442,87131,315,775599,3201,223,827-1,823,147CompaniesLargeCompanies5,326,0642,997,0576,4048,316,717Small andMedium Companies4,589,0191,102,315-5,691,33413,917,3026,708,42035,28320,590,439- The provisions no longer needed due to settlements or repayments of debts and transferred against other debts amounted to JD4,172,680 against JD 1,883,116 for the previous year.The provision for impaired credit facilities representing underwatch and non-performing loans is calculated based on the individualcustomer and not the portfolio.Interest in Suspense- The movement on interest in suspense is as follows:20112011Balance – beginning of the yearAdd: Interest in suspense for the yearLess: Interest taken to incomeInterest in suspense written-off *Balance - End of the Year2010Balance – beginning of the yearAdd: Interest in suspense for the yearLess: Interest taken to incomeInterest in suspense written-off *Balance - End of the YearIndividualsJD786,762487,21678,74128,0291,167,208813,267313,880317,85522,530786,762Real EstateLoans* As per in the decision of the board of directors and the board of directors of Al-Mawared (subsidiary company), non-performingTotalJD JD JD JD289,014914,68134,072-1,169,623959,5001,034,34559,734-1,934,111915,89993,94927,608-982,2402,951,1752,530,191200,15528,0295,253,18283,340215,1609,486-289,014CompaniesLargeCompanies198,498930,576169,574-959,500Small andMedium Companies666,323348,96799,391-915,899Total1,761,4281,808,583596,30622,5302,951,175location) and its two branches at Emar Towers and bonded which are still under construction as of the statement of financial position date.* This item represents down payments for the purchase of furniture, fixtures and equipment for the purposes of the banks branch at Shmesani (newJD 4,611,815 as of December 31, 2010.- Property and Equipment as of December 31, 2011 include an amount of JD 5,311,293 representing fully depreciated property and equipmentNet Book Value of Fixed Assets6,030,272 1,247,157 1,667,648216,394 323,324 15,579,650 25,064,445Balance - End of the year-1,082,608 1,498,767115,470 247,635 -2,944,480Disposals--316,22268,198 69,048-453,468Additions-133,377 380,91172,644 75,419-662,351Balance - beginning of the year-949,231 1,434,078111,024 241,264 -2,735,597Accumulated Depreciation:Balance - End of the year6,030,272 2,329,765 3,166,415331,864 570,959 15,579,650 28,008,925Transfers639,026 (548,821) 1,134,410-8,658(1,233,273) -Disposals--328,23068,198 69,048-465,476Additions1,746,910 -268,149111,436 153,001 6,492,727 8,772,223Balance - beginning of the year3,644,336 2,878,586 2,092,086288,626 478,348 10,320,196 19,702,178Cost:Year 2010Net Book Value of Fixed Assets10,976,945 9,293,003 1,946,220166,029 753,943 3,251,552 26,387,692Balance - End of the year-1,225,758 2,225,708148,720 409,096 -4,009,282Disposals--14,27818,145 --32,423Additions-143,150 741,21951,395 161,461 -1,097,225Balance - beginning of the year-1,082,608 1,498,767115,470 247,635 -2,944,480Accumulated Depreciation:Balance - End of the year10,976,945 10,518,761 4,171,928314,749 1,163,039 3,251,552 30,396,974Transfers4,946,673 8,188,996 656,291-455,540 (14,247,500) -Disposals--17,03040,000 --57,030Additions--366,25222,885 136,540 1,919,402 2,445,079Balance - beginning of the year6,030,272 2,329 ,765 3,166,415331,864 570,959 15,579,650 28,008,925Cost:JD JD JD JD JDJDJD2011Down Payment forFurniture,Purchaseing FixedLandAssets & ProjectsBuildings Fixtures and Vehicles Computers under ConstructionTotalEquipment*12. Property and Equipment - NetThe details of this item are as follows:Notes to the consolidtaed financial statementscredit facilities with their related interest in suspense have been written off for the amount of JD 470,900 during the year 2011against JD 57,813 for the year 2010.69

13. Intangible AssetsThis item consists of the following:15. Banks and Financial Institutions DepositsThis item consists of the following:70Notes to the consolidtaed financial statementsDescriptionBalance-beginning of the yearAdditions *Less : Amortization for the yearBalance - End of the Year14. Other AssetsThis item consists of the following:2011Computer Systemsand Programs* Additions represent the amounts paid to acquire and improve the banking systems and programs.Accrued interest and incomePrepaid expensesAssets seized by the Bank *Refundable depositsClearance checksOtherTotalJD1,569,229978,766473,5852,074,4102011JD1,722,495498,84011,606,048723,3945,377,378427,15520,355,310December 31,* According to the Banks Law, buildings and plots of land seized by the Bank against debts due fromcustomers are to be sold within two years from the ownership date. For exceptional cases, the CentralBank of Jordan can extend this period for two consecutive years at maximum.2010Computer Systemsand ProgramsJD1,253,786791,427475,9841,569,2292010JD2,583,075529,5459,991,387252,469941,6761,081,17815,379,330Year 2011Current and demand accountsTime deposits *Total16. Customers DepositsThis item consists of the following:InsideJordan1,096,146-1,096,146OutsideJordanTotalInsideJordanOutsideJordanJD JD JD JD JDJD2,256,14614,918,00017,174,1463,352,29214,918,00018,270,2924,233,37625,196,31829,429,694* This account does not include any amount due within a period exceeding 3 months as of December 31, 2011 and 2010.Current and demand accountsSaving depositsTime deposits subject to noticeDeposits certificatesTotalDecember 31, 2011IndividualsLargeCompaniesSmall andMediumCompaniesPublicSector10,184,76615,000,00025,184,766TotalJD JD JD JD JD76,145,676874,907181,502,6442,752,876261,276,10333,804,8389,76081,455,1932,839,981118,109,77218,229,53465,94539,006,75879,56057,381,7971,131,20985731,726,828-32,858,894129,311,257951,469333,691,4235,672,417469,626,566December 31, 2010IndividualsLargeCompaniesSmall andMediumCompaniesPublicSectorTotalTotal14,418,14240,196,31854,614,46071Notes to the consolidtaed financial statementsJD JD JD JD JD- The movement on assets (properties) seized by the Bank was as follows:Current and demand accountsSaving deposits65,121,227896,76026,777,4217,84721,024,3855,8841,242,942837114,165,975911,328Time deposits subject to notice193,590,73260,799,23145,599,42227,224,565327,213,95020112010Deposits certificates6,227,71243,74932,811700,3487,004,620JDJDTotal265,836,43187,628,24866,662,50229,168,692449,295,873Balance - beginning of the yearAdditionsDisposalsRetained / (Provision) for impairment of assets seized by the BankBalance - End of the Year9,991,3872,054,578492,29652,37911,606,0489,219,4092,321,371634,782(914,611)9,991,387a. Public sector deposits inside Jordan amounted to JD 32,858,894 which is equivalent to (7%) of total customers deposits as ofDecember31, 2011 against JD 29,168,692, which is equivalent to (6.5%) of total customers deposits as of December 31, 2010.b. Non-interest bearing deposits amounted to JD 68,357,249 which is equivalent to (14.5%) of total customers deposits as ofDecember 312011 against JD 56,478,241, which is equivalent to (12.6%) of total customers deposits as of December 31, 2010.c. Restricted deposits amounted to JD 12,129,092, which is equivalent to (2.6%) of total customers deposits as of December 31, 2011against JD 10,965,848, which is equivalent to (2.4)% as of December 31, 2010.d. Frozen deposits amounted to JD 12,199,986 as of December 31, 2011 against JD 752,321 as of December 31, 2010.

17. Cash MarginsThis item consists of the following:19. Sundry ProvisionsThis item consists of the following:72Notes to the consolidtaed financial statementsCash margins on direct credit facilitiesCash margins on indirect credit facilitiesMarginal depositsTotal18. Borrowed fundsThis item consists of the following:Year 2011Revolving loan (Ahli Bank)Overdraft (Abu Dhabi National Bank)Revolving loan (Abu Dhabi National Bank)TotalYear 2010Overdraft (Jordan Money Bank)Overdraft (Ahli Bank)Overdraft (Cairo Amman Bank)Overdraft (Audi Bank)TotalInsideJordan1,850,433693,4291,080,0003,623,862OutsideJordanDecember 31,2011 2010JD16,015,12115,900,18121,602,67353,517,975JD14,366,91817,214,5246,744,91638,326,358- This item represents credit facilities overdraft accounts and revolving loans granted to the subsidiary companies (Al Mawared forFinancial Brokerage, Tamkeen Leasing Company and Al-Istethmari LeTamweel Selselat Al Imdad) against the guarantee of theCompany's networth.TotalInside JordanOutsideJordanJD JD JD JD JD JDInsideJordan2,621,8114,297,580217,265420,9887,557,644111OutsideJordan111TotalOne payment after9 month from financingOne payment onAugust 31, 2012One paymentwithin May,2013Inside Jordan---OutsideJordanJD JD JD JD JD JD11111111One payment onAugust 20,2011One payment onMarch 11, 2011One payment onApril 21,2011One payment onMarch 31, 2011---Total888Total8.58.258.758.5Year 2011Provision for employees end-of-service indemnityProvision for lawsuits against the Bank (Note 51)Provision for contingent liabilitiesTotalYear 2010Provision for employees end-of-service indemnityProvision for lawsuits against the BankProvision for contingent liabilitiesTotal20. Income TaxA. Provision for income tax:The movement on the provision for income tax was as follows:Beginning balanceIncome tax paidPrior years' income taxIncome tax for the yearEnding BalanceBeginningBalanceJD3,8232,160,253176,7132,340,789BeginningBalance4,3942,043,528176,7132,224,635Additions Disposals Returnedto IncomeJD JD JD JD-300,00077,000377,000-----1,765,000-1,765,0003,823695,253253,713952,789Additions Disposals Returnedto Income379152,175-152,5542011JD5,430,588(6,264,040)100,0004,614,0813,880,62995035,450-36,4002010JD3,484,443(4,283,777)178,9546,050,9685,430,588----EndingBalanceEndingBalance3,8232,160,253176,7132,340,78973Notes to the consolidtaed financial statements

74Notes to the consolidtaed financial statements- Income tax for the year consists of the following: -Tamkeen Leasing company (a subsidiary) has not submitted its tax return forthe period from inception on October 31, 2006 to December 31, 2007 and for2011 2010the years 2008 and 2009. In the opinion of management and the tax advisor,the Company will not have any tax liabilities as it has not conducted anyJDJDactivities yet.Income tax for the year4,614,081 6,050,968- The company submitted its tax return for the year 2010 but the income andPrior years' income tax100,000 178,954sales tax department has not yet reviewed the company’s records.Amortization of deferred tax liabilities(544,380) -- Regarding the year 2011 given that the company made a loss, in the opinionDeferred tax assets(665,094) (1,258,718)of the company’s management and the tax advisor, the Company will not haveAmortization of deferred tax assets549,807 10,920any tax liabilities as it has incurred losses for the period. Tax status of AL-Istethmari Letamweel Selselat Al Imdad (subsidiary company)4,054,414 4,982,124-The company has submitted its tax return for the period from inceptionon February 11, 2010 to December 31, 2010 but the income and sales tax- Income tax has been settled with the Income and Sales Tax Department updepartment has not yet reviewed the company’s records. Regarding theto the end of the year 2009 except for the years 2000 and 2008.year 2011, the company has calculated the accrued income tax and in theopinion of management and the tax advisor, the Company will not have any- Regarding the tear 2000, the court of appeal issued its verdict in favor of thetax liabilities as it has incurred losses for the The income and sales tax department appealed the verdict and is stillin the court of appeal noting that the disputed amount is JD 350,950 of whichb. Deffered tax Assets/LiabilitiesJD 175,952 represents deposits at the Ministry of Finance (50% of the litigatedThe details of this item are as follows:amount) while the balance represents a provision by the Bank.- The tax return for the year 2008 has been properly submitted within thespecified legal period. However, no final settlement has been reached withthe Income and Sales Tax Department. Moreover, an appeal has been made tothe Tax Court of First Instance as the Department has subjected the revenuesreceived from the Visa Company to tax. The disputed amount is JD 178,954and has been fully provided for.- The income and sales tax department has reviewed the bank’s records forthe year 2010 and no final settlement has been reached yet.- Regarding the year 2011, the Bank has calculated the accrual income taxfor the year and paid a percentage of semiannual income tax of JD 361,904. Inthe opinionof the bank’s management and its tax advisor, the tax liabilities do not exceedthe provision booked as of December 31,2011. ax status of Al-Mawared forfinancial brokerage company (subsidiary company)- Income tax has been settled with the income and sales tax department forthe period from inception on March 5, 2006 until December 31, 2006 and forthe year 2008 except the year 2007 as the income and sales tax departmenthas reviewed the subsidiary’s records and imposed a tax difference of JD6,412.However, the Company has objected against the decision and the caseis still under consideration in the Department. Moreover, the tax returnsfor the years 2009 and 2010 were submitted but the income and sales taxdepartment has not yet reviewed the companys records. Regarding the year2011, the company has calculated the accrued income tax for the year andpaid a percentage of semiannual income tax of JD 41,824. In the opinion of thecompany’s management and its tax advisor, the tax liabilities do not exceedthe provision booked as of December 31,2011. Tax status of Tamkeen LeasingCompany (subsidiary company)Accounts Included1. Deferred Tax AssetsProvision for impairment in credit facilities (before the year 2000)Provision for employees end -of-service indemnitiesProvisions for lawsuits against the BankProvisions for debts under watchProvision for impairment in assets seized by the BankProvision for impairment in financial brokerage2-Deffred Tax liabilitiesEffect of early adoption of IFRS (9)Change in fair value reserveCumulative change in fair valueBeginning BalanceAdditionsDeductionsEnding BalanceBeginningBalanceReleased2011AmountsAdditionsEndingBalance2011JD JDJD JD JD JD513,3163,8232,160,2532,182,761914,6111,182,2506,957,0143,421,5341,765,250-5,186,7842,016,169770,177654,8902,131,456--1,765,000920,76767,691437,8473,191,3051,814,6011,342,744-3,157,3451,556,035316,909947,209925,740--300,0002,000,460-1,484,4553,784,915-1,056,362-1,056,362768,3711,258,71810,9202,016,169513,3163,823695,2533,262,454846,9202,228,8587,550,6241,606,9331,478,868-3,085,801843,1851,186,626473,7761,556,03575December 31,DeferredTax153,9951,147208,576978,736254,076534,9262,131,456482,080443,660-925,7402010DefferredTaxDeffered tax liabilities include an amount of JD 443,660 as of December 31,2011 (JD 1,556,035 prior year) which represents tax liabilities against gains on theevaluation of financial assets at fair value through other comprehensive income which is shown under fair value reserve in owners equity. In addition, there's anamount of JD 482,080 for deffered tax liabilities on gain on financial assets at fair value through profit or loss which is shown under retained earnings as a result ofthe early adoption of IFRS (9)The movement on deffered tax assets / liabilities was as follows:AssetsJD20112012Liabilities Assets LiabilitiesJDJDJD153,9951,147648,076654,828274,383283,7402,016,169--1,556,0351,556,035Notes to the consolidtaed financial statements

C- The summary of the reconciliation between accounting profit and taxableprofit is as follows:22. Paid-up Capital76Notes to the consolidtaed financial statementsAccounting profit for the yearNon-taxable profitExpenses not deductible for tax purposesTaxable profitIncome tax percentagePercentage of deferred taxesIncome tax percentage for the subsidiariesDeferred tax percentage for the subsidiaries21. Other LiabilitiesThis item consists of the following:Brokerage receivableAccepted and certified checksAccrued interestVarious creditorsShareholders' depositsDeposits on safe deposit boxesCredit accounts in suspenseAccrued expensesJordanian universities feesScientific research and vocational trainingVocational and Technical Education andTraining Support Fund feesBoard of Directors' remunerationsOther liabilitiesTotal13,649,967(7,198,893)9,115,67015,566,74430%30%24%24%2011 2010JD722,1321,145,3571,818,0562,272,813186,48430,52521,9351,032,525-183,28156,60155,0001,551,9469,076,655December 31,JD15,869,235(1,803,019)6,445,80420,512,02030%30%24%24%December 31,2011 2010JDJD2,991,4072,307,8141,952,570311,785254,17230,97515,896925,950151,536183,28156,60155,0001,262,78610,499,773Authorized capital amounted to JD 100 million distributed over 100 million shares at a par value of JD 1 per shareas of the end of the year 2011 (against JD 77.5 million distributed over 77.5 million shares at a par value of JD 1 pershare as of December 31, 2010).Paid up capital amounted to JD 88.25 million per share as of December 31, 2011(JD 77,5 million per share as of December 31, 2010. The General Assembly decided in their extraordinary meetingheld on June 15, 2011, to increase the bank's capital up to the balance of the authorized and paid up capital fromJD 85,250,000 per share to JD 100 million per share giving an increase of JD 14,750,000 through private offering ofJD 14,750,000 shares at a par value of 1 JD per share for the registered investors at the bank. On November 24,2011, the bank obtained the approval of the Jordan Securities Commission. The total payments on the capitalincrease amounted to JD 14,116,574 as of December 31, 201123. ReservesThe details of the reserves as of December 31, 2011 are as follows:a- Statutory ReserveThis account represents the accumulated amount of appropriations from income before tax at 10% at the end of theyear 2010according to the Banks Law. This amount is not to be distributed to shareholdersb- General Banking Risks ReserveThis item represents the general banking risks reserve according to the Central Bank of Jordan's instructionsc- The details of the restricted reserves are as follows:ReserveStatutory reserveGeneral banking risks reserve24. Cumulative Change in Fair ValueThis item consists of the following:December 31,2011 2010JD14,710,4423,180,766Available-for-SaleFinancial AssetsJD13,331,9593,211,949Restricted according to the Banks LawRestricted according to the CentralBank of Jordan RegulationsAvailable-for-SaleFinancial Assets77Notes to the consolidtaed financial statements20112010Shares Bonds Total Shares Bonds TotalBeginning balanceUnrealized (losses) profitDeferred tax liabilitiesRealized losses (profit) transferredto the statement of incomeImpairment loss on available -for-salefinancial assetsEnding Balance *JD JD JD JD JD JD------------------871,5872,730,024(802,947)(161,667)1,187,2683,824,265(519,552)235,93990,097--(193,516)352,0352,965,963(712,850)(161,667)1,187,2683,630,749* The cumulative change in fair value is presented as a net amount after deducting deferred tax liabilities of JD 1,556,035 as of

25. Fair Value Reserve - NetThis item consists of the following:29. Interest IncomeThis item consists of the following:78Notes to the consolidtaed financial statementsBeginning balanceEffect of early adoption of IFRS (9)Deferred tax liabilitiesUnrealized (losses)Ending Balance *2011JD-1,235,67585,915(286,382)1,035,208* The fair value reserve is presented as a net after deducting deferred tax liabilities of JD 443,660 as ofDecember 31, 2011.26. Retained EarningsThis item consists of the following:Beginning balanceEffect of early adoption of IFRS (9)Adjusted balanceProfit for the year2011JD9,746,6112,885,69312,632,3049,594,0442010JD8,320,811-8,320,81110,893,1922010JD-----Direct credit facilities:Individuals (retail):OverdraftLoans and promissory notesCredit cardsReal estate loansCompaniesLarge companiesOverdraftLoans and promissory notesMedium and small companiesOverdraftLoans and promissory notesGovernment and public sectorBalances and deposits at banks and financial institutionsFinancial assets at fair value through profit or lossAvailable-for-sale financial assetsFinancial assets at amortized costTotal30. Interest ExpenseThis item consists of the following:December 31,2011 2010JDJD1,142,4591,532,0313,272,5882,932,929237,684185,5905,123,5835,407,1945,071,7672,400,77515,292,97914,416,6731,314,4831,641,1241,566,835828,97177,153235,810337,989157,443267,678--10,172,4277,752,825-41,458,02339,910,967December 31,2011 2010JDJD79Notes to the consolidtaed financial statements(Transferred) to reservesTransferred to capitalEnding Balance(1,347,300)(7,750,000)13,129,048(1,967,392)(7,500,000)9,746,611- Included in retained earnings is an amount of JD 2,131,456 restricted against deferred tax assets as of December 31,2011 (JD 2,016,169 as of December 31, 2010).- Retained earnings include an amount of JD 1,615,472 as of December 31, 2011 which represents the effect of earlyadoption of IFRS (9). These amounts are restricted amounts and cannot be utilized unless realized as instructed by theJordan Securities Commission.Deposits at banks and financial institutionsCustomers Deposits:Current and demand accountsSaving accountsTime and notice depositsCertificates of depositCash marginsBorrowed fundsDeposit guarantee feesTotal548,5551,674,8796,53512,249,067269,939828,612219,103932,20616,728,896419,8831,246,5955,96112,946,549476,05899,326710,447830,35916,735,178- During the year 2011, an amount of JD 7.75 million was capitalized from retained earnings, equivalent to 10% ofcapital against JD 7.5 million equivalent to 10.714% for the year 2010.31. Commission Income - NetThis item consists of the following:27 - Proposed Dividends:a. The Board of Directors decided to recommend to the General Assembly of Shareholders to distribute JD 8 millionabout 8% of capital. In addition, the General Assembly of Shareholders approved the Board of Directors' recommendationin their extraordinary meeting to distribute JD 7.75 million as free shares for the year 2010, equivalent to 10%of capital, through capitalizing part of retained earnings. Moreover, the free shares have been listed effectivefrom May 19, 2011 after obtaining the approval of the Jordan Securities Commission.28. Non-Controlling InterestThis item consists of the following:Non-ControllingNon-ControllingInterest ShareInterest Share of Net Profit(Loss) for the YearNon ControllingInterest Shareof Net AssetsNon-ControllingInterest ShareNon-ControllingInterest Shareof Net(Loss) for the YearNon ControllingInterest Shareof Net AssetsCommission Income:Direct credit facilities commissionsIndirect credit facilities commissionsBrokerage commissionsOther commissionsTotal Commissions IncomeLess: Commissions expenseNet Commissions IncomeDecember 31,2011 2010JDJD1,807,5742,259,3521,807,5372,747,605629,9201,355,683739,783663,8264,984,8147,026,466675,593576,2404,309,2216,450,226Tamkeen leasing CompanyAl-Istethmari LeTamweel Selselat Al Imdad%106JD JD %JDJD(8,322)9,8311,509291,678183,750475,428-6-(6,081)(6,081)-173,919173,919

8032.Foreign Currency Exchange IncomeThis item consists of the following:Gains from foreign currencies trading / dealingGains from revaluationTotal33. Income from Financial Assets at Fair Value through Profit or LossThis item consists of the following:Year 2011Companies sharesInvestment fundsCompanies bonds and debenturesTotal34. (Loss) from Trading Financial AssetsThis item consists of the following:Year 2011Companies sharesYear 2010Companies sharesRealized (Loss)JD2,772,671-(5,972)2,766,699Realized (Loss)JD--(99,955)(99,955)2011JD3,048,906152,5243,201,4302010JD2,354,620232,6052,587,225Unrealized (Loss) Dividends Income TotalJD(814,476)(30,219)(121,250)(965,945)Unrealized (Loss)JD----424,170--424,170Dividends Income----2,382,365(30,219)(127,222)2,224,924--(99,955)(99,955)37. Other IncomeThis item consists of the following:Rental of safe deposit boxesBonded incomeTelex incomeIncome from sale of assets seized by the bankOther *TotalSalaries, bonuses and employees' benefitsBank’s share in social securityMedical expensesPer diemsTravel expensesTraining and researchEmployees life insuranceTotal2011JD14,210432,122292,58913,524547,6451,300,0902011JD6,172,342558,366292,1343,89523,14930,68519,6427,100,2132010JD7,100218,894407,581185,2111,663,7192,482,505* This item includes a net amount of JD 1.6 million for the year 2010 as a result of acquiring real estates from one of thecustomers who had previously written off debts against zero in 2011.38. Employees ExpensesThis item consists of the following:2010JD5,237,086452,572133,0303,23624,35646,98016,5745,913,83481Notes to the consolidtaed financial statements35. Income from Sale of Financial Assets at Amortized CostDuring the second quarter of 2011, the bank sold financial assets at amortized cost at a par value of JD 21.5 million and the resultof these operations were in a gain of JD 212,054. The main reason for this sale is to cover the temporary time gap for the Bank'sliquidity as per the assets and liabilities committee (ALCO) decisions nothing the maturity of these sold financial assets is betweenAugust 18, and September 28, 2011.36. Income from Available-for-Sale Financial AssetsThis item consists of the following:2011JD2010JDDividends incomeIncome from the sale of available-for-sale financial assetsImpairment (loss) on available for sale financial assetsTotal----1,040,430440,418(1,187,268)293,580

82Notes to the consolidtaed financial statements39. Other ExpensesThis item consists of the following:RentStationeryAdvertisementsSubscriptionsTelecommunication expensesMaintenance and repairInsurance expensesLegal fees and expensesWater, electricity and heatingProfessional feesConsultation expensesFine expensesBoard of Directors' transportationDonationsJordanian universities feesBoard of Directors' remunerationsProvision for impairment in assets seized by the BankArchiving expensesEstablishment expensesOthersTotalDecember 31,2011 2010JDJD417,238329,598113,43285,092461,270241,995637,984562,044591,366544,604311,401357,97155,63635,782116,155114,034173,818142,559272,271142,085453,378532,3427,28015,52555,82153,09083,33129,754-151,53651,66755,000-914,61145,98054,586-126,387543,066618,3974,391,0945,106,992For the Year End December 31,Income for the yearWeighted average number of shares *Income per share for the year41. Cash and Cash EquivalentsThe details of this items are as follows:Balances at central banks due within 3 monthsAdd: Balances at banks and financial institutions due within 3 monthsLess: Banks and financial institutions deposits due within 3 monthsCash and Cash EquivalentsDecember 31,2011 2010JD39,366,57179,108,58218,270,292100,204,861For the Year EndDecember 31,2011IFRS (9)JD9,304,966Shares85,250,000JD/ Share- /109JD40,739,98152,851,81354,614,46038,977,33483Notes to the consolidtaed financial statements40. Earnings Per Share - Bank ShareholdersThe details of this item are as follows:December 31,2011 2010JDJDIncome for the year9,594,04410,893,192Weighted average number of shares *Shares85,250,000Shares85,250,000Income per share for the yearJD/ Share- /112JD/ Share- /128* The weighted average number of shares for the year 2010 has been amended to 85.250 million shares instead of 77.5million shares as the increase represents bonus shares .The following is the compassion for earnings per share calculation between the profits generated after the reclassification ofinvestments and the measurement of its fair value made in accordance to the implantation of IFRS (9) (Financialinstruments), and the profits that will be generated if the bank continue using IAS 30 (measurement and recognition) and notimplemented IFRS 9 mentioned above.

84Notes to the consolidtaed financial statements42. Financial DerivativesThe details of financial derivatives outstanding at the end of 2011 is as follows :Year 2011Trading Derivatives:Forward sales contracts in foreign currenciesForward purchase contracts in foreign currenciesTotalPositive FairValue9,4409,440297,430297,430306,870Negative FairValueTotal NominalAmountsWithin 3MonthsForm 3 Months From 1 Yearup to 12 Months up to 3 YearsJD JD JD JD JDJD(293,270)(293,270)(9,220)(9,220)(302,490)3,364,4033,364,4033,366,0523,366,0526,730,455158,652158,652158,616158,616317,2683,205,7513,205,7513,207,4363,207,4366,413,187- The nominal value represents the deals value outstanding at year-end and does not represent market risks or credit risks.The details of financial derivatives outstanding at the end of 2010 is as follows:Year 2010Trading Derivatives:Forward sales contracts in foreign currenciesForward purchase contracts in foreign currenciesTotalAl-Mawared for financial brokerageTamkeen leasing CompanyAl Istethemari Letamweel Selselat Al ImdadPositive FairValue15,62415,62414814815,772Negative FairValueTotal NominalAmountsWithin 3Months-----Form 3 Months From 1 Yearup to 12 Months up to 3 YearsJD JD JD JD JDJD--(7,881)(7,881)(7,881)(1,174,487)(1,174,487)1,166,5961,166,596(7,891)OwnershipJD1009094(474,676)(474,676)473,967473,967(709)(699,811)(699,811)692,629692,629(7,182)-----2011 2010JD10,000,0003,000,0003,000,000More than3 Years-----More than3 Years43. Transactions with Related PartiesThe consolidated financial statements include the financial statements of the bank and the subsidiary companies as follows:-----10,000,0001,000,0003,000,000Others (Employees,Board ofDirectorsEmployees Relatives,Relatives of Membersof the Board ofSubsidiaries * Members andDirectors, Executive2011 2010ExecutiveManagementManagement andControlled CompaniesOn-Financial Position Items:Credit facilitiesProvision for impairment in direct credit facilitiesDeposits and current accountsOff-Financial Position Items:Letters of guaranteeLetters of creditStatement of Income:Interest and commission receivedInterest and commission paidProvision for impairment in direct credit facilitiesAdditional InformationUnderwatch credit facilitiesProvision for underwatch credit facilitiesNon-performing credit facilitiesProvision for non-performing credit facilitiesInterest in suspenseJD182,712-1,899,783435,446710,00048,67484,038------JD6,978,252-3,279,452-5,300249,58086,428------JD35,901,0791,087,85618,304,607854,13012,619,5452,465,951733,854811,22114,481,609217,125942,851870,73130,652JD43,062,0431,087,85623,483,8421,289,57613,334,8452,764,205904,320811,22114,481,609217,125942,851870,73130,652JD3,947,639276,63520,592,908722,93714,313,4523,337,935861,29091,63516,245,396243,63533,00033,000-* All those amounts and transactions are eliminated from the consolidated financial statements and are shown for explanatorypurposes only.Maximum credit interest rate 15%" Maximum creditcommission 1% "Minimum credit interest rate 3%" Minimum creditcommission 0.5% "Maximum debit interest rate 4/6%" Maximum debitcommission 0% "The following is a summary of the executive management salaries and benefits85Notes to the consolidtaed financial statementsThe Bank entered into transactions with companies owned by members of the Board of Directors ,major shareholders, executivemanagement and subsidiaries within the normal banking practice according to the commercial interest rates and commissions.All credit facilities granted to related party companies represent performing credit facilities and no provision has been takenthereon (except as mentioned below). The following represents a summary of transactions with related parties during the yearand previous year:Salaries and benefitsThe following is a summary of the executive management salaries and benefits20112010JDJDSalaries and benefits 1,717,048 1,603,336

8644.Notes to the consolidtaed financial statementsRisk ManagementGeneral framework of risk managementThe Risk Management and Compliance Committee has set the riskmanagement framework for the Bank. Moreover, the Board of Directors hasestablished the Risk Management and Compliance Committee, formed bythe Board members and executive management. Its objective is to monitorand control the various risks (credit risks, operating risks, market risks andcompliance risks) or any other risks the Bank might be exposed to.The Risk Management and Compliance Committee’s tasks are as follows:1. To supervise the management of the risk policy and ensure that the RiskManagement and Compliance Department achieves its objectives accordingto the approved policies.2. To ensure appropriate and sufficient support for the Risk Management andCompliance Department in achieving its objectives in accordance with theapproved policies and procedures and the Central Bank’s instructions.3. To ensure the availability of work procedures for risk management incompliance with the various management risk policies at the Bank.4. To verify the adoption of new methods in managing and evaluating theBank’s risks such as stress testing, what-if analysis, and economic capital.5. To determine the bases and principles of managing risks regarding riskacceptance, risk rejection, risk transfer and risk mitigation.6. To review the periodical reports of the Risk Management and ComplianceDepartment.7. To ensure that the Bank adheres to the Central Bank of Jordan instructions.The department manages the Bank’s various risks (credit risk, operating risk,market risk, compliance risk, and other risks) within the general framework ofrisks management. The role of the department can be summarized as follows:1. Risk Identification.2. Risk Assessment.3. Risk Control / Mitigation.4. Risk Monitoring.Internal Capital Adequacy Assessment Process:According to the instructions of the Central Bank of Jordan – Basel II (secondPillar), and to enable the Bank to efficiently manage the risks it is exposed to,the Bank has to identify the risks matrix through which the acceptable risk(risk appetite) for each type of risk is specified. The amount of these riskswill be calculated according to the methodology used in Basel Standard II –i.e. tying risk with capital and specifying the utilized capital against each typeof risk. Consequently, the higher the risks, the greater the Bank’s need forcapital to cover these risks. This methodology will help the Bank in connectingrisk appetite with capital, monitoring risk limits to determine the Bank’s riskprofile size, and perform amendments to reach the targeted risk appetite.The Bank has identified the risks to be measured, managed, and controlledas follows:1. Credit Risk.2. Market Risk.3. Operational Risk.4. Concentration Risk:• Credit Concentration Risk.• Other Concentration Risks5. Residual Risk:• From adopting credit risk mitigation through the standard method.• From applying the simple indicator method of the operating risk account.• From using the standard method of the market risk account.6. Interest Rate Risk in the Banking Book.7. Liquidity Risk.8. Strategic Risk.9. Reputation Risk.10. Business Cycle.11. Compliance Risk.12. Stress Test.44. a. Credit RisksCredit risks are defined as the probability of not fully recovering the debt orinterest in the specified time causing financial losses to the Bank.Moreover, credit risk represents the major portion banks are exposed to ingeneral (representing 60% or 70% of the risks banks are exposed to). Inrecognition of this reality, the Bank has accorded credit risk management greatsignificance through managing credit risks at the portfolio level, economicsector level, group level, or single customer level, taking into considerationthe achievement of an appropriate return on the risks the Bank is exposed to.To achieve this, based on the risk management strategy, the Bank hasperformed the following:1. The risk appetite and ceilings are based on credit risk commensuratewith the acceptable risk limits adopted by the Board of Directors and Risksand Compliance Department. Risk limits are set for each client, group andeconomic sector, in order to mitigate the Bank’s exposure to credit riskconcentrations.2. A risk rating system is prepared. It consists of 12 degrees and takes intoaccount all factors leading to increased credit risk for the client. In addition,it helps the Bank to detect the credit risk early on so that it can addressand mitigate the risk before it increases. Moreover, the Bank has signed an87Notes to the consolidtaed financial statements

88agreementwith SUNGARD Company for the purchase of an automated systemto apply this system.3. Credit risk is mitigated through credit risk factors (collaterals such as realestate, shares or other) commensurate with the credit risk faced by the Bankto cover any unexpected subsequent events.4. Proper legal and credit documentation is applied for all conditions associatedwith the credit facilities.1. Credit risk exposure (less the impairment provision and interestin suspense and before guarantees and other risk - mitigating factors):December 31,On Financial Position Items:Balances at the Central BankBalances at banks and financial institutionsDeposits at banks and financial institutionsDirect credit facilities:IndividualsReal estate loansCompaniesLarge companiesSmall and medium institutionsGovernment and public sectorBonds, Bills and Debentures:Financial assets at fair value through profit or lossIncluded in available-for-sale financial assetsFinancial assets at amortized costFinancial derivatives instruments2011JD34,017,90679,108,5823,942,06534,529,25054,171,705236,625,83723,790,608891,1224,546,002-143,208,7434,3802010JD34,864,80852,851,8135,442,23441,672,72561,029,132228,489,05315,455,5613,627,843-161,704,371-7,89189Notes to the consolidtaed financial statementsOther assets2,944,7293,365,089Off Financial Position Items:Letters of guarantee110,350,298113,407,868Letters of credit23,968,29926,392,422Letters of acceptance9,167,6636,422,350Unutilized facility ceilings9,329,94050,408,284Total770,597,129805,141,444To cover the above credit risk exposures, the Bank uses the following risk mitigatingfactors within the conditions of the credit policy set by the Bank:1. Cash collaterals.2. Accepted bank letters of guarantee.3. Real estate mortgages.4. Listed shares collaterals.5. Vehicles and equipment mortgages.

902.Credit exposures according to the degree of risk are categorized according to the following table:December 31, 2011Low riskAcceptable riskOf which is due:*within 30 daysfrom 31 to 60 daysUnder watchNon-performing:Below levelAllowance providedBad debtTotalIndividualsReal EstateLoansCompaniesLargeCompaniesSmall andMediumGovernment andPublic SectorBanksand OtherFinancialInstitutionsJD JD JD JD JDJD JD1,005,96330,969,426-27,783,1173,526,981194,507,4931,401,22319,599,507166,070,267--83,050,647172,004,434355,910,190102,96574,8962,594,929542,1851,370,1716,321,23642,803,91015,259235,09220,443,048374,8901,055,89811,225,54960,882,5025,776,8371,121,15148,195,834137,6335,403,66718,680,422270,452,03033,65978,5624,424,840196,056920,3914,548,51331,090,530------166,070,267------83,050,647Total5,928,7201,509,70175,658,6511,250,7648,750,12740,775,720654,349,886The following table breaks down the fair value of collaterals held as security for credit facilities:2011Gurantees against:Low riskAcceptable riskUnder watchNon-performing:Below levelAllowance providedBad debtTotalIndividualsReal EstateLoansCompaniesLargeCompaniesSmall andMediumGovernment andPublic SectorBanksand OtherFinancialInstitutionsJD JD JD JD JDJD1,005,96314,526,9661,692,979-41,647,11112,649,4603,526,98186,125,36831,596,5471,401,2235,633,258862,547---5,934,167147,932,70346,801,53375,8961,789,6522,011,58921,103,045489,667853,6941,523,64757,163,579516,8472,563,96411,027,741135,357,448-633,3898,255,63616,786,053----1,082,4105,840,69922,818,613230,410,12591Less: Impairment provisionLess: Interest in suspenseNetDecember 31, 2010Low riskAcceptable riskOf which is due:*within 30 daysfrom 31 to 60 days7,107,4521,167,20834,529,2505,541,1741,169,62354,171,70512,349,4671,934,111256,168,4526,317,682982,24023,790,608--166,070,267--83,050,647JD JD JD JD JDJD715,82434,819,669-44,374,8375,472,070134,222,984706,02866,201,941145,050,231-89,949,3073,209,54831,45176,13487,19165,131388,322151,421101,91820,917----31,315,7755,253,182617,780,929JD241,893,460282,828,979608,882313,603Of it:Cash marginsAccepted letters of guaranteeReal estateTrade stocksVehicles and equipmentTotal1,005,963-11,337,9873,906,4004,852,69521,103,045--57,163,579--57,163,5793,526,981-125,768,4564,365,4251,696,586135,357,4481,401,223-14,399,469-985,36116,786,053------5,934,167-208,669,4918,271,8257,534,642230,410,125Under watchNon-performing:2,227,60415,426,17146,856,0181,385,258--65,895,0512010Below level3,615,747714,5117,002,741---11,332,999Allowance providedBad debtTotalLess: Impairment provisionLess: Interest in suspenseNet827,7596,233,41448,440,0174,759,241786,76242,894,014312,3132,313,46163,141,2931,823,147289,01461,029,1321,340,42410,202,063205,096,3008,316,717959,500195,820,083158,6858,713,52677,165,4385,691,334915,89970,558,205--145,050,231--145,050,231--93,158,855--93,158,8552,639,18127,462,464632,052,13420,590,4392,951,175608,510,520* The whole debt balance becomes due when one of the installments or interest is due. Moreover, the overdraft account becomesdue whenever it exceeds the ceiling.Gurantees against:Low riskAcceptable riskUnder watchNon-performing:Below levelAllowance providedBad debtTotal715,82430,683,8601,692,9792,830,179625,7473,984,31040,532,899-41,647,11112,649,460533,689236,0941,714,61156,780,9655,472,07096,120,88240,703,1235,725,400875,4276,856,539155,753,441706,02853,318,3961,122,059-119,9586,457,98861,724,429-------6,893,922221,770,24956,167,6219,089,2681,857,22619,013,448314,791,734Of it:Cash margins715,824-5,472,070706,028-6,893,922Accepted letters of guarantee------Trade stocks17,401,193-8,039,510--25,440,703Real estate12,760,83156,780,965128,494,73253,622,395-251,658,923Vehicles and equipment9,655,051-13,747,1297,396,006-30,798,186Total40,532,89956,780,965155,753,44161,724,429-314,791,734

92ScheduledDebts:These debts are debts previously classified as non-performing credit facilitiesbut taken out therefrom according to proper scheduling. They have beenclassified as “debts under control” and amounted to JD 14,895,919 as ofDecember 31, 2011 (against JD 34,177,132 for the year 2010).Restructured Debts:Restructuring means rearranging credit facilities installments throughincreasing their duration, postponing some installments, or increasing thegrace period. Restructured debts amounted to JD 17,334,040 as of December31, 2011 (against JD 28,217,873 for the year 2010).3. Bonds, Bills, and DebenturesThe following table illustrates the classification of bonds, bills, and debenturesaccording to external rating institutions:4. Credit Risk Exposure According to Geographical Areas:Balances at banks and financial institutionsDeposits at banks and financial institutionsCredit facilities:IndividualsReal estate loansCompanies :Large companiesSmall and medium institutionsGovernment and PublicSectorBonds, bills, and debentures:Financial assets at fair valueThrough profit or lossFinancial assets at amortized costFinancial derivatives instrumentsOther assetsTotal for the current yearTotal for the comparative figures* Excluding Middle East Countries30,665,2192,127,00034,570,02454,171,705236,585,06323,790,608891,122618,829143,208,7434,3802,944,729563,595,328548,451,935Balances at Central Bank34,017,906Item Inside Jordan93Rating GradeRatingInstitutionWithin Financial Assetsat Fair Value throughProfit or LossWithin FinancialAssets atAmortized CostTotal4,080,0512,920,933---2,112,429------808,504-CountriesMiddle EastJD JD JDBBUnclassifiedGovernmentalS&P 596,9213,949,081-4,546,002-12,047,506131,161,237143,208,743596,92115,996,587131,161,237147,754,74544,618,576 214,722 10,314,242 379,453 608,510,520----------28,358,121 36,298 17,298,839 5,571,410 617,780,929---2,944,729---4,380---143,208,743--1,814,744 4,546,002---891,122---23,790,608---236,585,063---54,171,705---34,570,0241,241,697 -121,827 451,541 3,942,06527,116,424 36,298 17,177,012 3,305,125 79,108,582---34,017,906OtherEurope Asia * America TotalCountries

94ExposureNotes to the consolidtaed financial statementsAccording to Economic Sector:Financial assets at fair valuethrough profit or lossFinancial assets at amortized costFinancial derivatives instrumentsOther assetsTotal for the current yearTotal/comparative figures4,546,00212,047,5064,3802,944,729153,272,173122,815,093---83,514,15655,506,081---110,798,46873,161,009---56,239,31261,029,132---5,136,6066,530,127---14,193,31640,850,333---28,556,63368,703,706-131,161,237--166,070,265179,915,0394,546,002143,208,7434,3802,944,729617,780,929608,510,520Bonds, bills and debentures:Deposits at banks and financialinstitutionsCredit facilities3,942,06550,678,909-83,514,156-110,798,468-56,239,312-5,136,606-14,193,316-28,556,633-891,1223,942,065350,008,522Balances at banks and financialinstitutions79,108,582 -------79,108,582Balances at central banks-------34,017,906 34,017,906ServicesSectorItem Financial Industrial Trading and Real EstateSharesAgricultural Individualsand PublicGovernment44. b. Operational RiskOperating risk is defined as “the loss resulting from the failure or inadequacyof the internal procedures, the human factor, and systems, or from externalevents including legal risks.Operational risks at banks constitute from 15% to 20% of the risks banks areexposed to. These risks directly or indirectly impact the banks net profitsthrough either decreasing the expected profits or increasing the expectedexpenses. To manage these risks, the Bank has set up an automatic systemfor the identification of these risks, determination of the adequacy of theinternal control system and procedures, and efficiency of the human elementto mitigate these risks, in addition to the identification of operating risks thatconfronted the Bank or other banks in the past, and consequently, spottingthe events causing them. This is to enable the Bank to remedy them and tobenefit from the mistakes causing these risks. In this regard, the Bank hasimplemented the following:•Control & Risk Self Assessment (CRSA).•Key Risk Indicator (KRI).•Key Risk Driver (KRD).Compliance RiskThis represents the risks that arise from the probability that the Bankmay not comply with (violate / transgress) the prevailing laws, regulations,instructions, banks laws, and code of ethics issued by international and localregulatory authorities.Compliance with the regulations and prevailing laws issued by the regulatoryauthorities represents one of the most important risks which the Bank mightbe exposed to, due to the major financial losses resulting from the violation ofthe laws and instructions that affect the Bank›s reputation. Moreover, the pastfew years witnessed many new regulations, instructions and laws organizingthe work of the various institutions. Accordingly, the need for managing thecompliance risk of the Bank is necessary. Moreover, compliance enhances theefficiency of managing risks and decreases the risk the Bank might be exposedto as a result of noncompliance with the prevailing laws and instructions.44.c Market RiskMarket risk is the potential losses that may arise from the changes in marketprices such as the change in interest rates, foreign currency exchange rates,and prices of shares and products.The Board of Directors has set limits for the acceptable risk levels for managingthe financial portfolio market risks. Moreover, the Bank periodically appliesthe appropriate methodology to evaluate market risks and sets estimates forthe probable economic losses based on a set of assumptions and changesin market conditions. The following are the methods used by the Bank tomeasure market risks:95Notes to the consolidtaed financial statements

961-ValueNotes to the consolidtaed financial statementsat Risk (VaR)2-Daily Earnings at Risk (DEaR)3-Stress Testing4- Scenario Analysisc.1. Interest Rate Risk:Interest rate risk results from the potential change in interest rates, andconsequently, the potential impact on the cash flows or the fair value offinancial instruments.The Bank is exposed to interest rate risks as a result of the timing gaps ofrepricing assets and liabilities. These gaps are periodically monitored by theAssets and Liabilities Committee (ALCO). Moreover, various hedging methodsare used to remain within the acceptable interest rate gap limits.Sensitivity analysis:December 31, 2011CurrencyIncrease inInterest Rate%Impact on Profitsand (Losses)JDOwners’EquitySensitivityJDDecember 31, 2010CurrencyUS DollarEuroGBPJapanese YenOther currenciesCurrencyUS DollarEuroGBPJapanese YenOther currenciesIncrease inInterest Rate%22222Increase inInterest Rate%22222Impact on Profitsand (Losses)JD376,730(23,556)182,7774,344(131,972)Impact on Profitsand (Losses)JD(229,804)91,729(111,199)(4,344)168,357Owners’EquitySensitivityJD(84,706)(39,888)--(12,839)Owners’EquitySensitivityJD86,91839,888--12,83997Notes to the consolidtaed financial statementsUS Dollar2(181,322)-EuroGBPJapanese YenOther currenciesCurrency2222Increase inInterest Rate37,56027,7471,174(69,660)Impact on Profitsand (Losses)----Owners’EquitySensitivityc.2. Foreign currencies riska. The following table illustrates the currencies to which the Bankis exposed and the potential and reasonable change in their ratesagainst the Jordanian Dinar and the related impact on the profitand loss statement. The currencies positions are monitored dailyto ensure that they are within the determined limits. Moreover,the related reports are submitted to the Assets and LiabilitiesCommittee and Board of Directors.%JDJDUS Dollar2181,322-Euro2(37,560)-GBP2(27,747)-Japanese YenOther currencies22(1,174)69,660--

98Notes to the consolidtaed financial statementsDecember 31, 2011CurrencyEuroGBPJapanese YenOther currenciesCurrencyEuroGBPJapanese YenOther currenciesChange in ForeignCurrency ExchangeRate%5555Change in ForeignCurrency ExchangeRate%5555Impact on Profitsand Losses93,90269,3692,935174,150897,340755,47631,153,429c.3. Risks of Changes in Shares Prices:This represents the risk resulting from the decline in the fair value of theinvestment portfolio of the shares due to the changes in the value of theshares indicators and the change in the value of shares individually.JDImpact on Profitsand LossesJDImpact on----Owners’EquityJDImpact onOwners’EquityJD99,721--32,098Interest Rate Repricing GapThe Bank adopts the assets - liabilities compatibility principle and the suitability of maturities to narrow gaps through categorizing assets and liabilitiesinto various maturities or price review maturities, whichever are nearer, to lower risks in interest rates, studying gaps in the related interest rates, andusing hedging policies through the adoption of advanced financial instruments such as derivativesThe interest rate sensitivity is as follows:2011Assets:Balances at central banksBalances at banks and financial institutionsDeposits at banks and financial institutionsFinancial assets at fair value through profit or lossFinancial assets at fair value through othercomprehensive incomeDirect credit facilities - netFinancial derivativesFinancial assets at amortized costProperty and equipmentIntangible assetsDeferred tax assetsOther assetsTotal AssetsLiabilities:Banks and financial institutions depositsCustomers' depositsCash marginsLess thanOne Month6,500,00068,399,697---88,091,004220-----162,990,92116,852,292248,980,7899,662,576More than 1Month Up to 3MonthsMore than3 Months Upto 6 MonthsCompaniesMore than6 Months Upto 1 YearFrom 1 YearUp to 3 YearsMore than3 YearsJD JD JD JD JDJD-2,171,955---17,623,228-4,998,621----24,793,8041,418,00084,400,4432,702,858--2,294,6171,814,744-33,499,17221346,003,732----83,612,478-39,490,5015,441,174--1,647,448--19,170,2393,94730,498,110----51,319,744-28,397,5842,344,019---663,913-41,344,910-50,193,375----92,202,198--30,611,456---2,067,345-149,273,897-11,514,905----162,856,147---Non-InterestBearing32,866,5718,536,930-7,232,18013,406,0611,006,072--26,387,6922,074,4102,131,45620,355,310113,996,682-68,357,2492,755,892Total39,366,57179,108,5823,942,06511,778,18213,406,061350,008,5224,380143,208,74326,387,6922,074,4102,131,45620,355,310691,771,97418,270,292469,626,56653,517,975December 31, 2011Borrowed funds---2,543,8621,080,000--3,623,862Sundry provisions------952,789952,789Indicator ofChange inIndicator%Impact on Profitand LossJDImpact onOwners’EquityJDIncome tax provisionDeferred tax liabilitiesOther liabilitiesTotal LiabilitiesInterest Rate Repricing Gap---275,495,657(112,504,736)---88,521,301(63,727,497)---44,931,67538,680,803---33,285,46518,034,279---31,691,45660,510,742----162,856,1473,880,629925,7409,076,65585,948,95428,047,7283,880,629925,7409,076,655559,874,508131,897,466Amman Stock Exchange5325,268472,239Palestine Stock Exchange543,66147,4812010Total Assets152,459,32223,431,20142,914,50846,719,025136,417,397166,614,041108,661,213677,216,707Indicator ofChange inImpact on ProfitImpact onTotal Liabilities357,636,27991,458,40424,555,00815,924,411--80,047,418569,621,520Indicatorand LossOwners’Interest Rate Repricing Gap(205,176,957)(68,027,203)18,359,50030,794,614136,417,397166,614,04128,613,795107,595,187Equity%JDJDAmman Stock Exchange5-711,423Palestine Stock Exchange5-70,324

10Concentration in foreign currencies risk:2011Assets:Cash and balances at the Central BankBalances at banks and financial institutionsDeposits at banks and financial institutionsFinancial assets at fair value through profit or lossFinancial assets at fair value through othercomprehensive incomeDirect credit facilitiesOther assetsTotal AssetsLiabilities:Banks and financial institutions depositsCustomers' depositsCash marginsOther liabilitiesTotal LiabilitiesNet Concentration on-Financial Positionfor the Current YearOff-Financial Position Contingent Liabilitiesfor the Current Year2010Assets:Cash and balances at the Central BankBalances at banks and financial institutionsDeposits at banks and financial institutionsDirect credit facilitiesAvailable-for-sale financial assetsOther assetsTotal AssetsLiabilities:Banks and financial institutions depositsCustomers' depositsCash marginsOther liabilitiesTotal LiabilitiesNet Concentration on-Balance Sheetfor the Current YearOff-balance Sheet Contingent Liabilitiesfor the Current YearUS DollarCurrency (Equivalent in Jordanian Dinars)Euro Sterling Japanese YenPoundOthersTotalJD JD JD JD JDJD8,147,38543,353,3703,189,5702,874,076494,1868,016,061183,3071,814,744185,3187,902,401569,189--59,930--68,232396,143-1,044,8298,895,12159,727,9053,942,0665,733,6491,054,04424,382,203735,58983,736,2372,717,78663,066,80326,994,90622,83692,802,331(9,066,094)123,783,7029,219,31330,855,8505,442,23422,501,4514,235,286142,48672,396,6208,669,66429,385,0589,470,18411447,525,02024,871,60024,739,685-5,431,332100,75416,040,384274,20013,300,790585,4831,87814,162,3511,878,03330,691,157927,7738,270,113-4,201,7931,994,42491,40415,485,5073,639,26813,634,5812,666,72865419,941,231(4,455,724)10,016,507-5922,2198,679,18615,0137,203,33368,9644,4917,291,8011,387,385219,750528,69812,847,330-7,868-8,15913,392,055526,16114,315,783264,0953,47115,109,510(1,717,455)175,404---59,9301111,122--1,23358,697--217,267----217,26769---69217,198---6,9231,516,127705,9974,254,15122,10016,8814,999,129(3,483,002)1,733,016102,727607,199-26641,9515,4441,357,347196,25421,277,1462,224,642-23,698,042(22,340,695)1,793,8531,054,04429,813,594865,485110,031,8643,713,10787,826,19927,671,45346,086119,256,845(9,224,981)156,427,62510,778,51152,797,7595,442,23426,711,1386,871,661247,493102,848,79613,031,41678,612,56814,625,6494,239106,273,872(3,425,076)36,725,44944. d. Liquidity Risk:Liquidity risk represents the Bank's inability to meet its obligations on their maturity dates. To ward off these risks, including the managementof Assets and Liabilities, matching and analyzing their maturities, matching the maturities of short and long-term assets andliabilities, diversifying sources of funds, and maintaining an adequate fund of cash and cash equivalents and marketable securities, liquidityis managed and reviewed periodically at different levels. According to the Central Bank of Jordan instructions, the Bank maintains cashreserves to mitigate liquidity risks.First : The following table illustrates the distribution of liabilities (undiscounted) on the basis of the remaining period tothe contractual maturity at the date of the financial statements.Total Assets200,971,76423,431,20144,448,18547,780,277152,075,122171,885,09836,625,060677,216,707Total Liabilities393,325,00899,620,02729,000,44919,685,01425,650,233-2,340,789569,621,520Other liabilities5,091,7132,746,3931,344,8101,316,857---10,499,773Deferred tax liabilities-1,556,035-----1,556,035Income tax provision5,430,588------5,430,588Sundry provisions------2,340,7892,340,789Borrowed funds-4,718,568217,2652,621,811---7,557,644Cash margins3,272,5533,859,1953,100,6312,443,74625,650,233--38,326,358Customers' deposits329,415,69482,239,83624,337,74313,302,600---449,295,873Banks and financial institutions deposits50,114,4604,500,000-----54,614,460Liabilities:2010Total Assets200,051,82924,793,80483,612,47851,319,74492,202,198162,856,14776,935,774691,771,974Total Liabilities344,279,15193,671,59545,676,72138,209,04437,085,208-952,789559,874,508Other liabilities1,895,2111,510,2641,833,8673,837,313---9,076,655Deferred tax liabilities-925,740-----925,740Income tax provision3,880,629------3,880,629Sundry provisions------952,789952,789Borrowed funds---2,543,8621,080,000--3,623,862Cash margins4,312,9825,417,1484,352,3523,430,28536,005,208--53,517,975Customers' deposits317,338,03784,400,44339,490,50228,397,584---469,626,566Banks and financial institutions deposits16,852,2921,418,000-----18,270,292Liabilities:2011JD JDJD JD JD JDJDJDMore than 1 More than More thanLess than Month up to 3 3 Months up 6 Months up From 1 Year More than Non-InterestOne Month Months to 6 Months to 1 Year Up to 3 Years 3 YearsBearingTotal101

102- The movement on deferred tax assets / liabilities was as follows:Second: Financial DerivativesThe following table summarizes the maturities of financialderivatives on the basis of the remaining period to the contractualmaturity date from the date of the consolidated financialstatements:2011Trading derivatives:Currency derivatives2010Trading derivatives:Currency derivativesThird: Off-statement of financial position items:2011Up toOne MonthJD220709Up toOne MonthFrom OneMonth to3 MonthsJD--From OneMonth to3 MonthsFrom3 Monthsto one YearJD4,1607,182From3 Monthsto one YearTotalJD4,3807,891TotalJD JDJD JDNotes to the consolidtaed financial statements45. Sector Analysisa.Information on the bank sectors operation- The Bank is organized, for managerial purposes, into three major sectors.Moreover, the Bank owns three subsidiaries: one conducts financialbrokerage, the other financial lease, and the third bonded stores operationand management.- Individuals accounts: include following up on individual clients accounts,and granting them loans, credit, credit cards, and other services.- Corporate accounts: include following up on deposits, credit facilities, andother banking services related to clients.- Treasury: includes providing dealing services and management of the Bank’sfunds.103Letters of credit and acceptances33,135,962--33,135,962Unutilized credits9,329,940--9,329,940Guarantees110,350,298--110,350,298Operating lease contract liabilities306,507--306,507Capital liabilities277,949--277,949Total153,400,656--153,400,6562010Letters of credit and acceptances32,814,772--32,814,772Unutilized credits50,408,284--50,408,284Guarantees113,407,868--113,407,868Operating lease contract liabilities302,290--302,290Capital liabilities917,349--917,349Total197,850,563--197,850,563

Capital Expenditures3,423,8459,563,650--3,423,8459,563,650Total Assets691,771,974677,216,707--691,771,974677,216,707Total Revenue53,896,78052,200,788--53,896,78052,200,788JD JD JD JD JDJD2011 20102011 20102011 2010104Inside JordanOutside JordanTotalgeographical distribution of the bank's revenues, assets and capital expenses according to geographical distribution:This sector represents the geographical distribution of the Bank's operations. The Bank performs its operations mainly in the Kingdom, and these operations represent the local operations.The following is theb. Information on the geographical allocation:Depreciation and amortization---9,0569,45325,6361,526,665 1,570,810 1,138,335Capital Expenditures---2,71498,59075,2973,247,244 3,423,845 9,563,650Total Liabilities261,276,103 208,350,465 18,270,292 983,267 2,340,494 1,870,487 66,783,400 559,874,508 569,621,520Liabilities not distributed over sectors-----66,783,400 66,783,400 18,271,150Sector's Liabilities261,276,103 208,350,465 18,270,292 983,267 2,340,494 1,870,487 -493,091,108 551,350,370Total Assets53,662,901 275,405,608 285,458,436 11,681,132 5,420,688 4,930,084 55,213,125 691,771,974 677,216,707Assets not distributed over sectors------55,213,125 55,213,125 41,201,741Sector's Assets53,662,901 275,405,608 285,458,436 11,681,132 5,420,688 4,930,084 -636,558,849 636,014,966Income for the Year3,015,648 6,822,919 12,475,704 772,857 (67,027) 250,345(13,674,893) 9,595,553 10,887,111Less: Income tax---(9,797) -20,4694,043,742 4,054,414 4,982,124Income before Taxes3,015,648 6,822,919 12,475,704 763,060 (67,027) 270,814(9,631,151) 13,649,967 15,869,235Less: Undistributed Expenditures---346,309 318,859 531,63611,865,313 13,062,117 12,159,161Results of Business Sector3,015,648 6,822,919 12,475,704 1,109,369 251,832 802,4502,234,162 26,712,084 28,028,396Sundry provisions------1,388,000 1,388,000 (152,554)Provision for credit facilities(1,486,055) (8,956,898) -(726,964) -1,710-(11,168,207) (6,708,420)Gross income4,501,703 15,779,817 12,475,704 1,836,333 251,832 800,740846,16236,492,291 34,889,370JD JDJD JD JD JDJDJD2011 2010FinancialIndividuals Corporations Treasury BrokerageFinancialLeasingBondedManagement OthersFor the Year Ended December 31,TotalThe following table represents information on the Bank's sectors according to activities:46. Capital Managementa.Description of CapitalAccording to the Central Bank of Jordan Law and in compliance with thecapital adequacy requirements, capital consists of many parts:•Primary capital made up of paid-up capital, declared reserves, (includingstatutory reserve, voluntary reserve, share premium (discount), treasuryshare premium, and other reserves), retained earnings, and non-controllinginterest (if any) minus intangible assets, loss for the period, acquisition costsof treasury stock, provisions required by the Central Bank of Jordan, fullamount of goodwill, and any restricted amounts.•Supplementary capital provided that the general banking risk reserve doesnot exceed 1.25% of total credit risk weighted assets, subordinated debts, andthe positive cumulative change in fair value at 45%, less the negative changebalance provided that this part of capital does not exceed 100% of regulatorycapital•The third part consists of short-term subordinated loans to meet marketrisks. This part supplements capital and is utilized to face the potential lossesfrom market risks.Additionally, the Bank complies with Article (62) of the Banks Law whichrequires the Bank to appropriate 10% of its net profits in the Kingdom andcontinue to do so until the reserve equals the Bank’s paid-up capital.b.Regulatory Authorities Requirements Concerning Capital and Method ofFulfilling ThemThe Bank considers the compatibility of the size of capital with the nature ofrisks it is exposed to provided that paid-up capital is not less than the minimumrequired by the Central Bank of Jordan and regulatory capital not less than12% of the weighted value of credit and operating market risks. Furthermore,the minimum leverage ratio (equity to total assets) should not be less than 6%.Moreover, not less than 28.5% of market risks should be covered by regulatorycapital.c. How to Achieve the Objectives of Capital ManagementThe Bank’s management aims at achieving the Bank’s capital managementobjectives, a surplus in operating income and revenues, and the optimalutilization of the available sources of funds so as to reach the targetedgrowth in shareholders’ equity through the increase in the statutory reserve,recognized profits, voluntary reserve, and retained earnings.Capital is allocated to work lines and various functions according to assetsweighted by risks. Moreover, capital and its adequacy are monitoredperiodically, and capital adequacy is calculated by the Risk Management andCompliance Department and reviewed by the internal auditor.105

The106sources:capital adequacy ratio for the years 2011 and 2010 has been calculatedaccording to Basel II Standard, in addition to the instructions of the CentralBank of Jordand.Reasons for and sources of change in the Bank’s regulatory capital duringthe year:Increase in regulatory capital amounted to JD 8,215,232 from the following- Increase in capital of JD 7,500,000.- Increase in payments on capital increase of JD 14,116,574.- Increase in the statutory reserve of JD 1,378,483.- Decrease in retained earnings of JD 6,233,035.- Decrease in the general banking risks reserve of JD 31,183.- Decrease in the cumulative change in fair value for available-for- sale assetsof JD 1,167,993.- Increase in the deferred tax assets and intangible assets of JD 620,468.- Increase in investments in banks and insurance companies of JD 6,977,147.Notes to the consolidtaed financial statementse. The amount the Bank considers as capital and capital adequacy ratio are as follows:December 31,20112010JDJDSubscribed and paid-up capital85,250,000 77,500,000Payments on capital increase14,116,574 -Statutory reserve14,710,442 13,331,959Retained (earnings) losses net of restricted amounts3,513,576 9,746,611Goodwill or any intangibles and deferred tax assets(4,205,866) (3,585,398)Investments deducted from capital by 50%(7,029,539) (1,849,501)Primary Capital106,355,187 95,143,671Fair value reserve as per IFRS (9)465,844 -The effect of application of IAS 39 andcumulative change in fair value-1,633,837General banking risks reserve3,180,766 3,211,949Investments deducted from capital by 50%(3,646,610) (1,849,501)Additional Paid-up Capital-2,996,285Total Capital Structure106,355,187 98,139,955Total risk weighted assets589,763,583 589,820,654107Capital Adequacy Ratio (%)18.03%16.64%Primary Capital Ratio (%)18.03%16.13%47. Accounts Managed on Behalf of CustomersThere are no investment portfolios managed by the Bank on behalf of customers.

108ASSETS48. Analysis of the Maturities of Assets and Liabilities:The following table illustrates the analysis of assets and liabilities according to the expected period of theirrecoverability or settlement:Year 2011Cash and balances at the central bankBalances at banks and financial institutionsDeposits at banks and financial institutionsFinancial assets at fair value through profit or lossFinancial derivativesDirect credit facilitiesFinancial assets at fair value through other comprehensive incomeFinancial assets at amortized costProperty and equipmentIntangible assetsDeferred tax assetsOther assetsTOTAL ASSETSUp toOne YearMore thanOne YearTotalJD JD JD39,366,571-39,366,57179,108,582-79,108,5823,942,065-3,942,0659,046,9242,731,258 11,778,1824,380-4,380122,522,091 227,486,431 350,008,52213,406,061-13,406,06181,500,46361,708,280 143,208,743-26,387,692 26,387,692-2,074,410 2,074,4102,131,456-2,131,4568,749,26211,606,048 20,355,310359,777,855 331,994,119 691,771,97449. Fair Value HierarchyThe table below analyzes financial instruments carried at fair value by the valuation method. The different levels have been defined asfollows:· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;· Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. asprices) or indirectly (i.e. derived from prices);· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).December 31, 2011Financial derivativesFinancial assets through profit or lossFinancial assets through other comprehensive incomeDecember 31, 2010Financial derivativesAvailable-for-sale financial assetsLevel 1JD JD JD JD4,380- -4,38011,778,182 - -11,778,18211,364,385 2,041,676 -13,406,06123,146,947 2,041,676 -25,188,623Level 1JD7,891180,801,321180,809,212Level 2 Level 3Level 2 Level 3JD------JDtotaltotalJD7,891180,801,321180,809,212- The available-for-sale financial assets with no available market values are stated at cost/amortized cost as it is impractical tomeasure their fair values reliably. They amounted to JD 3,069,980 as of December 31, 2010.50. Commitments and Contingent Liabilities (Off-Financial Position)109LIABILITIESBanks and financial institutions depositsCustomers depositsCash marginsBorrowed fundsSundry provisionsProvision for income taxDeferred tax liabilitiesOther liabilitiesTOTAL LIABILITIESNetYear 2010ASSETSCash and balances at the central bankBalances at banks and financial institutionsDeposits at banks and financial institutionsTrading financial assetsFinancial derivativesDirect credit facilitiesAvailable-for-sale financial assetsProperty and equipmentIntangible assetsDeferred tax assetsOther assetsTOTAL ASSETS18,270,292469,626,56617,512,7672,543,862-3,880,629925,7409,076,655521,836,511(162,058,656)40,739,98152,851,8135,442,234-7,891154,100,06356,085,333--2,016,1695,387,943316,631,427--36,005,2081,080,000952,789---38,037,997293,956,122-----196,174,251127,785,96825,064,4451,569,229-9,991,387360,585,28018,270,292469,626,56653,517,9753,623,862952,7893,880,629925,7409,076,655559,874,508131,897,46640,739,98152,851,8135,442,234-7,891350,274,314183,871,30125,064,4451,569,2292,016,16915,379,330677,216,707a. Credit commitments and contingencies:Letters of creditAcceptances and periodic withdrawalsLetters of guarantee:PaymentsPerformance bondsOtherUnutilized credit facilitiesTotalb. Contractual obligations:Contracts to purchase fixed assetsConstruction contractsTotalDecember 31,20112010JDJD23,968,29926,392,4229,167,6636,422,35029,969,50919,933,70941,772,96150,520,29538,607,82842,953,8649,329,94050,408,284152,816,200196,630,924December 31,20112010JDJD15,470948,462262,4792,402,397277,9493,350,859LIABILITIESBanks and financial institutions depositsCustomers depositsCash marginsBorrowed fundsSundry provisionsProvision for income taxDeferred tax liabilitiesOther liabilitiesTOTAL LIABILITIESNet54,614,460449,295,87312,676,1257,557,644-5,430,5881,556,03510,499,773541,630,498(224,999,071)--25,650,233-2,340,789---27,991,022332,594,25854,614,460449,295,87338,326,3587,557,6442,340,7895,430,5881,556,03510,499,773569,621,520107,595,187c. Operating leases amounted to JD 306,507 with periods ranging from 1 to 12 months51. Lawsuits Against the Banka. The Bank is a defendant in lawsuits amounting to JD 9,665,704 as of the consolidated financial statements date against JD 12,218,553in the prior year. The total provision booked against these lawsuits amounted to JD 695,253 as of December 31, 2011. The Bank hasreversed a provision booked against a case filed by one of the Jordanian Banks (under liquidation), based on the Bank’s legal advisoropinion. In which Amman’s Court of First Instance have dismissed the case and the court’s decision has become final and peremptory,as no appeal was filed and thus the case has ended and there is no need to book a provision for this lawsuit. As a result, a provision ofJD 1,765,000 was reversed to the consolidated statement of income ( JD 2,160,253 as of December 31, 2010).b. There were no lawsuits against the subsidiaries Tamkeen Leasing Company and Al Istethemari Letamweel Salselat Al Imdad as ofDecember 31, 2011 and 2010.c. There's one lawsuit in the stated amount above that includes Al-Mawared for financial brokerage for an amount of JD 300,000. In theopinion of the management and legal advisor, no liabilities would rise against the Company for this case.

52- THE EFFECT OF APPLYING IFRS (9)110The Bank and its subsidiaries early adopted IFRS (9) startingJanuary 1, 2011 (date of adoption) and resulting the follows:a.The reclassification of debt and equity financial assets as following:Measurement criteriaDescriptionEquity instrumentsEquity instrumentsDebt instrumentsOwners’ equityOwners’ equityOwners’ equityFinancial assets at fair valuethrough profit or lossFinancial assets at fair value throughother comprehensive incomeFinancial assets at amortized costFinancial assets evaluation reserveRetained earningsRetained earningsIAS(39)Available-for-sale financial assetsAvailable-for-sale financial assetsAvailable-for-sale financial assetsCumulative change in fair valueCumulative change in fair valueRetained earningsJanuary 1, 2011Book ValueIFRS(9) IAS(39) IFRS(9) DifferenceJD JD JD13,679,93113,242,968156,948,4021,235,6752,395,0749,746,61113,679,.93113,733,587156,948,4021,235,6752,395,07412,632,304b. Investments in companies’ shares originally classified as available-for-salefinancial assets that are evaluated at fair value, the management reclassifiedthe part which they suppose in accordance to its business model, that arestrategic and not for trading purposes within the financial assets at fairvalue through other comprehensive income. And as a result, an amount ofJD 1,235,675 has been reclassified from cumulative change in fair value tofinancial assets reserve. However, the management reclassified the remainingavailable-for-sale investments which they suppose in accordance to itsbusiness model that are for trading purposes within the financial assets at fairvalue through profit or loss. And as a result, an amount of JD 2,395,074 hasbeen reclassified from cumulative change in fair value to retained earningsas of January 1, 2011. In addition, there is an amount of JD 490,619 whichrepresents the difference between the book value of on the available-for-saleinvestments as per IAS 39 and the recalculated book value for that investmentas per IFRS 9. This amount has been transferred to retained earnings as ofJanuary 1, 2011 making the total amount transferred to retained earnings asa result of the adoption of IFRS 9 JD 2,885,693.c. The adoption of IFRS (9) had an effect on the items of consolidated statementof income as of December 31, 2011 amounting to JD 965,945. This amountrepresents the losses of evaluating the investment previously classified asavailable – for – sale financial assets to financial assets at fair value throughprofit or loss as compared to what was used in IAS 39 which would have led toan impairment loss of JD 1,255,023 for the investments previously classifiedas available-for-sale financial assets.-490,619---2,885,69353. Adoption Of New and Revised International Financial ReportingStandards (IFRSs)a. The following new and revised IFRSs have also been adopted in thepreparation of the Bank’s consolidated financial statements for whichit did not have any material impact on the amounts and disclosures of theconsolidated financial statements, however, may affect the accounting forfuture transactions or arrangements.IAS 24 Related Party Disclosures(2009)Amendments to IFRS 1 relating toLimited Exemption from ComparativeIFRS 7 Disclosures for First-timeAdoptersAmendments to IAS 32 FinancialInstruments: Presentation, relatingto classification of Rights IssuesAmends the requirements of theprevious version of IAS 24 to:•Provide a partial exemption fromrelated party disclosure requirementsfor government-related entities•Clarify the definition of a relatedparty•Include an explicit requirementto disclose commitments involvingrelated parties.Provides additional exemption onIFRS transition in relation to IFRS 7Financial Instruments: Disclosures,to avoid the potential use of hindsightand to ensure that first-time adoptersare not disadvantaged as comparedwith current IFRS preparers.Amends IAS 32 FinancialInstruments: Presentation to requirea financial instrument that gives theholder the right to acquire a fixednumber of the entity’s own equityinstruments for a fixed amount of anycurrency to be classified as an equityinstrument if, and only if, the entityoffers the financial instrument prorata to all of its existing owners of thesame class of its own non-derivativeequity instruments. Prior to thisamendment, rights issues (rights,options, or warrants) denominated ina currency other than the functionalcurrency of the issuer were accountedfor as derivative instruments.11

Amendments to IFRIC 14:112Prepayments of a Minimum FundingRequirementImprovements on IFRSs issued in2010IFRIC 19 Extinguishing Liabilitieswith Equity InstrumentsMakeslimited-applicationamendments to IFRIC 14 IAS 19 –The Limit on a Defined Benefit Asset,Minimum Funding Requirements andtheir Interaction. The amendmentsapply when an entity is subject tominimum funding requirementsand makes an early paymentof contributions to cover thoserequirements, permitting the benefitof such an early payment to berecognized as an asset.The application of Improvements toIFRSs issued in 2010 which amendedIFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 27,IAS 32, IAS 34 and IFRIC 13 has nothad any material effect on amountsand disclosures reported in theconsolidated financial statements.Requires the extinguishment of afinancial liability by the issue of equityinstruments to be measured at fairvalue (preferably using the fair valueof the equity instruments issued)with the difference between the fairvalue of the instrument issued andthe carrying value of the liabilityextinguished being recognized inprofit or loss. The Interpretationdoes not apply where the conversionterms were included in the originalcontract (such as in the case ofconvertible debt) or to commoncontrol transactions.Notes to the consolidtaed financial statementsNotes to the consolidtaed financial statementsb. New and revised IFRSs issued but not yet effective:The Bank has not applied the following new and revised IFRSs that have beenissued but are not effective yet:Amendments to IAS 12 Income Taxesrelating to Deferred Tax: Recovery ofUnderlying AssetsAmendments to IAS 32 FinancialStatements – Offsetting Financial Assetsand LiabilitiesAmendments to IFRS 7 Financial Instruments:Disclosures / FinancialInstruments – Transfer o f AssetsAmendments to IFRS 7 Financial Instruments:Disclosures – OffsettingFinancial Assets and LiabilitiesIAS 1 Presentation of Financial StatementsIAS 19 Employee BenefitsIAS 27 Separate Financial StatementsIAS 28 Investments in Associates andJoint VenturesIFRS 10 Consolidated FinancialStatementsEffective for annualperiods beginning on or after1 January 20121 January 20141 July 20111 July 20131 July 20121 January 20131 January 20131 January 20131 January 2013113IFRS 11 Joint Arrangements1 January 2013IFRS 12 Disclosures of Interests inOther Entities1 January 2013IFRS 13 Fair Value Measurement1 January 2013IFRIC 20 Stripping Costs in theProduction Phase of a Surface Mine1 January 2013

The Bank’s management anticipate that the adoption of the above Standards114and Interpretations in future years will have no material impact on theconsolidated financial statements of the Bank in the period of initial application.54. Subsequent Events- During the subsequent period, the Bank sold fixed assets represented byplots of land and buildings of the old head quarter location for an amount ofJD 9.1 million which had a net book value JD 4.8 million on the date of sale toone of the Jordanian Banks.- In addition, during the subsequent period, capital increase procedures werefinalized, and subscribed shared became 11,116,574 shares out of 14,750,000share that have been put in the private offering according to the securitiesDepository Center certificate. As a result the subscribed and paid-up capitalbecame JD 99,366,574 per share.Notes to the consolidtaed financial statements

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