Raad Mahmoud Al-Tal

Despite the global economic slowdown, rising financing costs, and persistent regional uncertainty, Jordan’s banking sector demonstrated remarkable resilience in 2025 by maintaining stability and achieving balanced growth across most key financial indicators. The figures presented in the study “Comparative Performance of Banks Operating in Jordan 2024–2025” issued by the Jordan Banks Association, reveal that Jordanian banks not only preserved their traditional strength, but also began reshaping their operational and credit models to adapt to new economic realities.

What stands out in the sector’s performance is that growth was not limited to a single indicator. It extended across assets, deposits, credit facilities, and shareholders’ equity, reflecting continued confidence in the Jordanian banking sector as one of the most stable pillars of the national economy. Total banking assets increased to nearly JD 71 billion, recording growth of 6.5 per cent, while deposits rose by 7.3 per cent to JD 58.3 billion. Credit facilities reached JD 33.2 billion with growth of 4.3 per cent, while shareholders’ equity climbed to JD 8.26 billion.

These figures highlight an important reality: the banking sector continues to possess a strong ability to attract liquidity, even amid increasing competition from alternative investment instruments. Moreover, the faster growth in deposits compared to credit facilities indicates that banks remain cautious in lending activities and continue adopting more conservative risk management strategies.

From a market structure perspective, the study confirms the continued dominance of Jordanian commercial banks within the banking landscape. These banks account for around 74.5 per cent of total assets, 72.9 per cent of total deposits, and 64.5 per cent of total credit facilities. However, the most significant indicator lies in the rapid growth of Islamic banks, whose assets expanded by 12.6 per cent, compared with only 5.1 per cent for Jordanian commercial banks.

This shift reflects a gradual transformation in customer preferences, especially with growing demand for Islamic financing instruments. Islamic banks have also demonstrated an increasing ability to expand financing for individuals, housing, and small and medium-sized enterprises. Furthermore, the 12.45 per cent increase in Islamic banks’ financing portfolios indicates a clear expansion of their economic role within Jordan.

In contrast, foreign banks operating in Jordan appear to be gradually losing market share in assets, deposits, and lending activities. This may be linked to broader strategic repositioning by parent banks globally, or to the limited expansion opportunities available compared with local and Islamic banks that possess stronger market understanding and wider domestic networks.

A closer analysis of credit distribution also reveals important economic implications regarding the nature of growth in Jordan. Large corporations accounted for nearly 40 per cent of total credit facilities, while retail lending represented 27 per cent, government and public sector financing accounted for 14 per cent, and small and medium-sized enterprises received only 8 per cent of total financing.

Here lies one of the structural challenges facing the Jordanian economy. The limited share of financing directed toward SMEs suggests that a major segment of economic activity still struggles to access adequate funding, despite the fact that SMEs represent the primary engine for employment creation and economic dynamism. This indicates that the challenge is no longer merely about the availability of liquidity within banks, but rather about directing that liquidity toward productive sectors capable of generating real economic growth.

At the same time, the continued expansion of retail lending reflects the banking sector’s ongoing reliance on consumer financing, raising questions about the balance between consumption-driven lending and productive investment financing within the economy.

On profitability, Jordanian banks maintained relatively stable performance levels. The return on assets stood at 0.93 per cent, while return on equity reached 6.44 per cent. Although these levels remain relatively solid compared to regional conditions, they also reveal increasing pressure on profit margins, particularly amid higher financing costs, growing digital competition, and expanding compliance and governance requirements.

Meanwhile, the continued rise in shareholders’ equity and bank capital reflects the strength of the sector’s capital base and its ability to absorb potential shocks. Capital adequacy indicators and the regulatory oversight imposed by the Central Bank of Jordan continue to represent key pillars of stability within the local financial system.

However, the greatest challenge facing Jordanian banks in the coming years will not simply be preserving financial stability, but transitioning toward a more dynamic and innovative banking model. Digital transformation, the rise of fintech, and changing customer behavior are all factors that will force banks to redefine their traditional roles.

Accordingly, the future of Jordan’s banking sector will depend on three key pillars. First, expanding productive financing toward sectors capable of generating growth and employment. Second, accelerating digital transformation and improving operational efficiency. Third, strengthening financial inclusion and expanding access to underserved individuals and businesses.

The results of 2025 confirm that Jordan’s banking sector remains one of the strongest and most resilient sectors within the national economy. Yet the sector now stands at a critical turning point. The challenge is no longer limited to achieving financial growth alone, but rather to enhancing banks’ developmental role within an economy facing accumulated domestic pressures and growing regional and global uncertainties.