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Annual Report 2019 His Majesty King Abdullah II Bin Al Hussein His Royal Highness Crown Prince Al Hussein Bin Abdullah II Table of contents • Members of the Board of Directors 1 • Vision and Mission 2 • Message from the Chairman 5 • Board of Directors’ Report 15 • Analytical Overview of Domestic and Global Economic Performance 51 • Institutional Governance Code 75 • Independent Auditors’ Report 79 • Consolidated Financial Statements for the Year Ending on 31 December 2019 95 • Statements of the Requirements of the Securities Commission 299 • Governance Report 343 Capital Bank - Annual Report 2019 Capital Bank - Annual Report 2019 1 2 Members of the Board of Directors Our Vision and Mission Capital Bank Board of Capital Bank Board of Position Position Directors - 2018 Directors - 2019 Chairman of Chairman of Bassem Khalil Bassem Khalil the Board of the Board of Salem Al-Salem Salem Al-Salem Directors Directors Our Vision Vice Chairman Vice Chairman of the Board of Mazen Samih Taleb of the Board of Mazen Samih Taleb Darwazeh Directors Darwazeh Directors To be a leading financial institution and the partner of choice for institutional and personal clients seeking innovative and holistic solutions in Jordan and Board Members names as of 2018 Board Members names as of 2019 Iraq. Social Security Corporation Represented by Social Security Corporation Represented by Shaden Ziyad Nabih Darwish Alhaji Fadi Khlid Mufleh Alalawneh 02/12/2019 Investment and Integrated Investment and Integrated Industries Co. Plc Represented by Industries Co. Plc Represented by Our Mission Omar M. I. Shahrour Omar M. I. Shahrour Al Khalil Company for Investments Al Khalil Company for Investments Represented by Represented by • To create value for our shareholders by providing consistent and profitable Khalil Hatem Khalil Al-Salem Khalil Hatem Khalil Al-Salem growth across the group Hitaf Investment Company Represented by Hitaf Investment Company Represented by "Mohammed Ali" Khaldoun Sati' Al-Husry "Mohammed Ali" Khaldoun Sati' Al-Husry • To serve our business and personal banking clients by capitalizing on our Al-Jadarah Company for Real Estate Investment Al-Jadarah Company for Real Estate Invest- unique platform in the region and the breadth of corporate, investment, and Represented by ment Represented by personal banking services Sultan Mohammed M. Elseif Sultan Mohammed M. Elseif Omar Akram Omran Bitar Omar Akram Omran Bitar • To become the employer of choice by providing a positive and challenging work environment with clear career development Reem Haitham Jamil Goussous Reem Haitham Jamil Goussous Ahmad Qasem Deeb Al-Hanandeh Ahmad Qasem Deeb Al-Hanandeh • To support the communities we operate in by promoting economic growth and trade as well as providing direct support to educational and community Khalid Walid Hussni Nabilsi Khalid Walid Hussni Nabilsi development Dawod M. D. Al Ghoul Dawod M. D. Al Ghoul Mohammad Hasan Subhi (AlHaj Hasan) Mohammad Hasan Subhi (AlHaj Hasan) Capital Bank - Annual Report 2019 Capital Bank - Annual Report 2019 3 4 Message from the Chairman Capital Bank - Annual Report 2019 Capital Bank - Annual Report 2019 5 6 Message from the Chairman Message from the Chairman Dear Shareholders, and decisively to the latest local, regional and global developments. Over the past several years, Capital Bank has implemented a comprehensive strategy to Each year, through this platform, I update you on Capital Bank’s financial and continue to invest in and upgrade its digital channels and platforms across the non-financial achievements for the past fiscal year, as well as its future plans board, including its internal operating systems, in order to ensure peak degrees of and the strategy in place that best realize the objectives of both its clients accuracy, efficiency and speed, thus guaranteeing the highest levels of customer and shareholders. On behalf of myself and the board of directors, I am happy to satisfaction. present you with our achievements for 2019, as well as outline our priorities for the coming years. The bank’s team translated these detailed plans into a strategy that continues to develop and progress with the ultimate aim of remaining up to date with the Ladies and Gentlemen, latest global technology innovations, harnessing them for the benefit of both the Despite the continuing challenging economic situation in Jordan, as well as the bank and its clients, therefore ensuring that Capital Bank remains the financial unstable political environment in Iraq, in 2019 Capital Bank achieved substantial institution of choice. net growth in its operational revenues of 29%, which amounts to JD46 million, compared to JD35.7 million the previous year. To this end, the bank has created a package of unique and innovative banking products that caters to both our corporate and our individual clients and that This growth is directly in line with the bank’s strategy to maximize its revenues mirrors the latest developments in the international banking sector. Through from sources of income other than interest, a plan that was set in place in order these products, Capital Bank has embraced the global changes that have had a to reflect these enhanced revenues on shareholder equity, decrease pressure on noticeable impact on the very core of the banking sector, and that have had a capital adequacy, achieve the highest levels of efficiency in the management of transformative effect on the general perspective of banks worldwide. We now available financial resources, and reduce the vulnerability of the bank’s profits offer our clients a diverse list of foreign exchange options, gold and derivative in light of fluctuating interest rates to stabilize profits. Therefore, the bank’s products, working capital management services for our corporate clients, as well revenues from sources other than interest increased during 2019 by 38% to reach as insurance for individuals, wealth management advisory services and trading a high of JD39 million, compared to JD28 million in 2018. products. Because of this marked increase in net total operational revenues, the bank Since its establishment, Capital Bank has upheld the pillars of efficiency and has been able to absorb the increased impact of non-performing debts and the proficiency, especially in its human resources, which it believes are the very amounts allocated for them in the income statement, maintaining its profits foundation of its success. By investing heavily in its human resources, the bank can without any notable changes from the previous year, totaling JD37 million, while implement its strategy to the highest degrees of professionalism. Capital Bank team net profit after tax declined by 5%. members are able to benefit from a range of carefully curated training programs and seminars, allowing them to develop and enhance their skills in the most up- Ladies and Gentlemen, to-date global developments in the field of banking. The bank’s management The intensity of the competition among banks in Jordan, which has reached team will continue providing all its employees with a stable and comfortable work unprecedented levels, has propelled our efforts to continue evolving and environment that allows them to excel and perform outstandingly. progressing dynamically and with increased flexibility in order to react proactively Capital Bank - Annual Report 2019 Capital Bank - Annual Report 2019 7 8 Message from the Chairman Message from the Chairman The bank also consistently stresses the importance of protecting itself as well as its clients from the risks that are now prevalent on the global stage, and has consequently taken decisive steps to make information and cyber security its top priorities, not only by employing the best talents, but also by using the most sophisticated systems available today, by applying the most stringent measures of protection, and by establishing a solid protection framework as an integral part of its risk management system. Ladies and Gentlemen, In closing, I would like to take the opportunity to share with you a quote that is especially apt in the times that we live in now: “Challenges give birth to great opportunities.” For the entire Capital Bank team, challenges only serve to ignite our optimism in a brighter future, increasing our determination to continue forward, even stronger and better. Our hope rests on our team, which has consistently proven its ability to give its best, capturing the opportunities that lie at the heart of these challenges. Please allow me to thank the entire team on your behalf for maintaining these levels of perseverance, ambition and confidence. I would also like to take this opportunity to thank the governor of the Central Bank of Jordan and his team for the efforts they exert in managing, developing and protecting the banking sector. Through their guidance, they have provided the sector with the ability to continue its success and development while supporting financial stability and safeguarding the local economy. To you, the shareholders of Capital Bank, allow me to express my sincerest gratitude for your continued confidence in us, and pray to God that He grace us with the success to continue to serve our establishment and our homeland. May God protect Jordan, and its Hashemite leadership, headed by HM King Abdullah II Ibn Al Hussein. Chairman of the Board Bassem Khalil Al-Salem Capital Bank - Annual Report 2019 Capital Bank - Annual Report 2019 9 10 Financial Ratios Financial Ratios Loan to Deposit Ratio Direct Credit Facilities 87% 82%

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