Standard & Poor's (S&P) Ratings Services revised its outlook on Jordan-based Arab Bank (AB) and Jordan Islamic Bank (JIB) from negative to stable, affirming its long-and short-term counterparty ratings on both banks at 'BB-/B', according to S&P's report published on its official website. S&P also revised its outlook on AB's two subsidiaries, Europe Arab Bank PLC and Arab Bank Australia from negative to stable, affirming its counterparty credit ratings at 'BB+/B'.

Some of the key macroeconomic indicators in Jordan will gradually improve over the medium term, such as the fiscal and external balances of the Jordanian sovereign (BB-/Stable/B).

The improvement in key macroeconomic indicators should also support the overall operating environment for Jordanian banks, S&P’s report said, adding that there are lower downside risks for the banking system.

Worth noting, Jordan’s AB had a $2.5 billion exposure to the Jordanian sovereign in local currency at the end of last year, which constituted approximately 31% of the bank's total adjusted capital for the same period, which is considered to be high. Being the largest bank in Jordan, AB is anticipated to capitalize on relative improvements in the local economy.

According to the report, JIB has kept good business resilience against the adverse economic conditions in Jordan. The bank is affected by changes in the domestic operating environment, so it should make use from the stabilization of economic risks.