Jordan and Egypt Banking Sectors Demonstrate Resilience Despite Regional Headwinds and Monetary Policy Challenges

AMMAN – Banking systems across Jordan and Egypt continue demonstrating remarkable resilience amid challenging external environments, with Jordan's banking sector capital adequacy ratio rising to 18 percent at end of 2024 – comfortably above the 12 percent regulatory minimum – while both countries navigate global economic instability, tightening monetary policies and regional geopolitical tensions.

The Central Bank of Jordan issued its 2024 Financial Stability Report on October 14, 2025, assessing the financial sector and overall macroeconomic situation alongside analysis of risks and opportunities affecting financial system stability. The report defines financial stability as the ability of banks and other financial institutions to withstand risks and prevent structural imbalances, according to public service television Al Mamalak.

Jordan's economy has demonstrated strong resilience and exceptional ability to maintain macroeconomic stability despite heightened geopolitical uncertainty in the region, particularly due to the ongoing Gaza war and its longer-than-expected repercussions. The banking sector continues enjoying high stability levels with notable improvements in key financial ratios and indicators.

The capital adequacy ratio increased from 17.9 percent at end of 2023 to 18 percent at end of 2024 and June 2025. The sector maintains safe liquidity levels exceeding thresholds required by CBJ regulations. Non-performing loans accounted for 5.8 percent of total loans as of June 2025, with 71.3 percent covered by provisions.

Stress test results indicated the Jordanian banking sector remains capable of withstanding shocks and elevated risks thanks to strong capitalization, liquidity and profitability levels. Total bank assets in Jordan increased 5.6 percent to reach 69.85 billion dinars in 2024 according to the Jordan Banks Association report on Key Banking Developments.

This growth was driven by 5.2 percent increase in domestic assets reaching 63.05 billion dinars alongside 9.3 percent growth in foreign assets reaching 6.8 billion dinars. Bank assets constituted 184.4 percent of GDP at current prices, reflecting the pivotal role banks play financing economic activity and providing necessary liquidity for growth.

Total deposits at Jordanian banks witnessed remarkable growth during 2024, increasing 6.8 percent to reach approximately 46.7 billion dinars. This reflected growth in both private and public sector deposits, with increases across demand, savings and time deposits throughout 2024. These figures evidence ongoing trust in Jordanian banking institutions and their stability, reflecting robust relationships between banks and individual and corporate clients.

Credit facilities granted by licensed banks increased 4.2 percent to reach 34.78 billion dinars by end of 2024, confirming banks' continued active financing role stimulating economic activity. Loans and advances constituted 60.3 percent of total facilities, followed by Islamic bank receivables at 29.9 percent, while current accounts reached 8.2 percent.

In terms of currency distribution, 87.6 percent of facilities were in Jordanian dinars while 12.4 percent were in foreign currencies. Four main economic sectors accounted for approximately two-thirds of credit facilities: construction at 22.6 percent, services and public utilities at 17.2 percent, general trade at 16.2 percent and industry at 11.1 percent.

Some sectors saw clear growth, as facilities to general trade increased 16.5 percent and those for services and utilities rose 9.2 percent. The report highlighted increasing growth in retail banking services, with banks issuing more than 191,000 credit cards of various types during 2024 and granting over 136,000 personal loans totaling 1.08 billion dinars.

Banks granted around 33,100 housing and real estate loans in 2024 totaling 867.5 million dinars, while car loans reached 49,000 loans totaling 629 million dinars. This retail banking expansion demonstrates how Jordanian banks are broadening their service offerings beyond traditional corporate and commercial lending into consumer finance segments.

Central Bank Governor Adel Sharkas stated Jordan's economy is expected to grow 2.7 percent in 2025, further accelerating to 3.5 percent in the medium term. This followed credit rating agency S&P Global stating Jordan's GDP expansion will be driven by tourism sector recovery and increasing trade relationships with Syria and Iraq.

Inflation reached 2.2 percent in the first two months of 2025 and is expected to stabilize at 2 percent for the full year, reflecting the Central Bank's firm commitment to monetary stability and the exchange rate peg to the US dollar. Jordan attracted foreign direct investment valued at $1.3 billion during the first three quarters of 2024, while tourism income jumped 22 percent in January compared to the same period last year.

The Central Bank of Jordan maintains interest rates on monetary policy instruments unchanged, with the committee discussing economic and monetary developments revealing the national economy's strength and ability to continue positive performance momentum despite prevailing regional conditions. Foreign reserves reached a record $19.1 billion, sufficient to cover imports of goods and services for 8.3 months.

CBJ continues implementing its Green Finance Strategy 2023-2028, launched as the first of its kind in the Middle East. The bank issued the Kingdom's first climate risk management instructions for banks, aimed at strengthening and operationalizing climate risk governance within the sector. The strategy serves as a roadmap for promoting green finance and mitigating climate risks across banking and financial sectors.

The second Financial Inclusion Strategy 2023-2028, launched in March 2024, focuses on enabling responsible and sustainable access to financial products and services for all societal segments, aligned with Jordan's Economic Modernisation Vision goals. The banking sector committed 90 million dinars or $126.92 million to fund health and education projects over the next three years.

Egypt's banking sector faces similar challenges navigating global macroeconomic environments affecting funding costs, tourism flows, commodity prices and food inflation. Exchange rate devaluation has dampened household spending in 2023, leading to lower growth forecasts than 2021 and 2022 levels, though construction and energy sectors are expected to be key growth drivers slightly outpacing peers.

Egypt-based fintech Banknbox partnered with CSC Jordan to drive financial inclusion and offer joint advanced services to customers of both companies. Founded in 2022 by Bassem Mahmoud, Banknbox provides diverse services including ATM administration, transaction monitoring, POS and soft-POS. CSC Jordan, founded in 2004, offers electronic payment and ATM management services.

The partnership seeks to strengthen positions in MENA's fintech sector by integrating customer-facing systems from banks and financial institutions while linking applications to provide distinctive regional services. 

This collaboration represents CSC Jordan's first cooperation within Egypt's fintech space, demonstrating cross-border integration trends.

Both countries face ongoing challenges including managing credit risks amid economic volatility, maintaining asset quality as non-performing loans fluctuate with economic cycles, adapting to rapid digital transformation while managing cybersecurity risks, and navigating evolving regulatory frameworks as central banks balance innovation with stability objectives.

Looking ahead, regional banking sectors must continue strengthening resilience through capital buffers, liquidity management and diversified revenue streams. Digital transformation will remain central to competitive positioning as customers increasingly demand seamless online and mobile banking experiences. Financial inclusion initiatives targeting underbanked populations represent significant growth opportunities while supporting broader development goals.

The combination of strong regulatory oversight, conservative lending practices and strategic government support provides solid foundations for Jordan and Egypt's banking sectors to weather near-term uncertainties while positioning for sustainable long-term growth. Success will require continued vigilance, technological investment and careful risk management as both countries navigate complex domestic and regional economic landscapes.