Fair, honest and trusted banking services ANNUAL REPORT 2019 2 His Majesty King Abdullah II Bin Al Hussein 3 4 His Royal Highness Prince Hussein Bin Abdullah II Crown Prince 5 6 Table of Contents Safwa Islamic Bank ...............................................................................................................10 Names of the Board of Directors Members ..........................................................................12 Members of Shari’a Supervisory Board ................................................................................12 Names of Executive Management ........................................................................................13 Name of the External Auditor ................................................................................................13 Chairman’s Letter ..................................................................................................................14 CEO’s Letter ...........................................................................................................................17 Annual Report of Shari’a Supervisory ...................................................................................24 Independent Auditor’s Report (2019) .....................................................................................28 Financial Statments and notes about them ..........................................................................39 Board of Directors’ Report ....................................................................................................166 Information and details regarding applying the provisions of corporate Governance And Companies Governance Guidelines ..........................................236 Corporate Governance Manual .............................................................................................237 Governance Report ...............................................................................................................272 IT Governance Guide for Information Management and Associated Technology .................284 7 Safwa Islamic Bank Fair, honest and trusted banking services Safwa Islamic Bank Fair, honest and trusted banking services In The Name of Allah Safwa Islamic Bank Safwa Islamic Bank is a public shareholding limited company licensed by the Central Bank of Jordan to practice and provide Islamic business and banking services in accordance with the Banking Law and the Companies Law. The Bank’s General Assembly at its extraordinary meeting held on 17 May 2017, decided to change the name of the Bank from “Jordan Dubai Islamic Bank” to “Safwa Islamic Bank”. The Bank provide all financial banking and structured investment services on a non-Interest basis in accordance with Islamic shari’a through the Bank’s head office and its thirty six branches and its subsidiary within the Kingdom, in accordance with the effective Banking Law. Our Vision Leading Islamic banking to serve all spectrums of the society. Our Mission To provide distinctive and innovative services emanating from the divine principles of Islam to build lasting and solid partnerships and to maximize benefits to all stakeholders. Our Values Innovation: At Safwa Islamic Bank, we adhere to the principles of innovation and distinguish ourselves as a pioneering financial institution by combining traditional Islamic values with the latest technology and innovative products and services; thus delivering the best of modern Islamic banking. Knowledge: At Safwa Islamic Bank, our guiding principle of banking is inspired by the knowledge and doctrines embodied within the Islamic Shari’a Principles. Built from these strong foundations, we are proud to introduce the new standard of modern Islamic banking in Jordan. Quality: Structuring products and providing service is implemented with the same principle of delivering quality through perfection. At Safwa Islamic Bank our wide array of solution driven products and services are created in harmony with our customers’ specific financial needs. 10 Value: Defined by our modern Islamic banking approach and the success of our customers, our commitment is to deliver value and measurable returns by providing the finest banking service available. It is our valued belief at Safwa Islamic Bank that our customer’s benefit is key to our success World Class Service At Safwa Islamic Bank: We are a customer-centred modern Islamic banking institution that bases each of its relationships on unparalleled personal service and understanding. We care, we listen and we constantly deliver world class services 11 Names of the Board of Directors Members Dr. “Mohammed Nasser” Chairman of the Board / Representative Abu Hammour of Al-Etihad Islamic for Investment Co. Hamdan Al-Fawair Deputy Chairman of the Board /Representative of Orphans Fund Development Foundation Basem Salfiti Representative of Al-Etihad Islamic for Investment Co. Deema Aqel Representative of Al-Etihad Islamic for Investment Co. Khaled Al-Gonsel Representative of Al-Etihad Islamic for Investment Co. Dr. Khaled Zentuti Representative of Al-Etihad Islamic for Investment Co. Dr. Ahmed Menesi Representative of Al-Etihad Islamic for Investment Co. Dr. Nofan Alaqil Representative of Government Contributions Management Company Samir Abu Lughod Dr. Ibrahim Saif Salem Burqan Members of Shari’a Supervisory Board His Eminence Dr. Hussein Hamed Chairman of the Shari’a Supervisory Board and Hassan Executive Member His Eminence Dr. Ali Muhieddin Al Qaradaghi Deputy Chairman of the Shari’a Supervisory Board His Eminence Sheikh Abdul Karim Al-Khasawneh His Eminence Dr. Ahmad Salem Melhem 12 Names of Executive Management Samer Tamimi General Manager/ Chief Executive Officer Rami khayyat Deputy CEO, Chief of Corporate Banking Hani Al-Zrari Deputy CEO, Chief of Central Operations Ziad Kokash Deputy CEO, Chief Credit Officer Ibrahim Samha Deputy CEO, Chief of Finance and Corporate Strategies Nasfat Taha Head of Retail Banking Wael Al-Bitar Head of Treasury and Investment Rami Al-Kilani Head of Information Technology Ahmad Tarteer Head of Compliance and AML Masoud “Sakf al-Hait” Chief of Legal Affairs and Board Secretariat Muneer Faroneyah Head of Shari’a Supervision Mohammad Hawari Head of Human Capital Management Khalid Al-Issa Head of Internal Audit Ahmad Jafar Acting/Head of Risk Management Name of the external auditor Deloitte & Touche (M.E) - JORDAN 13 Chairman’s Letter Dear Brothers and Sisters Dear Shareholders, Peace, mercy and blessings of Allah On behalf of the Board of Directors of Safwa Islamic Bank, I am pleased to present to you our 2019 annual report of the Bank. Safwa Islamic Bank went on its ambitious career during the year 2019, “Safwa went on his achieving a growth in assets of 436 million dinars (39%), to reach 1,557 ambitious career, million dinars. as a result bank’s investments grew across different business achieving remarkable sectors and in line with the bank’s directions to achieve the best results for growth in a year that all stakeholders’ within a clear strategy, this was reflected in the results of witnessed difficult the bank with a 20% growth in net income, while maintaining adequate economic conditions.” provisions to meet any future challenges, as the year witnessed 32% growth in pre-tax income, up from 13.1 million dinars in 2018 to 17.2 million dinars in 2019. As the local community has shown an increasing interest in accepting the “Islamic banks tolerant Islamic Shari’a-compliant services, Islamic banks has continued to continued to raise its raise its share in the banking market. Therefore, the share of Islamic banks share in the banking has risen to nearly 20%, and Safwa Islamic Bank has had a major role in this market in 2019, Safwa growth, with its outstanding performance during 2019. has made a significant The bank strives to provide excellent banking services by understanding the contribution.” needs of customers and providing flexible and fast solutions tailored for them. new offers have been developed to meet the needs of our customers and their ever-increasing expectations regarding products and services that are provided to them, whether through our branches network distributed in the Kingdom, our electronic channels, or the call center that started providing 24/7 service with excellent operational and marketing services. Bank’s operating revenues were boosted by a growth of 27% over what was achieved during the year 2018, hence leading all financial indicators to grow as well in the year 2019. The bank provides a variety of products and services for all business sectors and we strive to raise the level of customer satisfaction through optimal service that is closely monitored via customer follow-up, through our several channels such as call center, complaints monitoring and measuring the quality of service for all branches and departments of the bank. 14 To keep up with the successive developments of digital transformation, the “Safwa added and year witnessed the addition and improvement of many services provided improved many of through electronic channels that facilitate our customers and reduce their the services provided effort and time and take into account their needs within the strategic goals through its electronic to improve the customer experience. The bank also developed it’s website channels in order to on a modern way, at the same time we developed the necessary safety and improve customer protection measures to face cyber-crimes and cyber intrusions. experience.” During the past year, the