Circular to Licensed Banks

Greetings...

Subsequent to the instructions for classifying facilities and preparing impairment provisions No. (2009/47) dated 10/12/2009 and based on the provisions of Article (A/45) of the Central Bank of Jordan Law No. (23) of 1971 and its amendments, and in the context of the Central Bank of Jordan's efforts to improve the efficiency and effectiveness of reviewing non-performing and under review debt statements and calculating their impairment provisions, we inform you that updated electronic forms for non-performing and under review debt statements have been prepared in Excel format, emphasizing the following:

1. The necessity of filling out the aforementioned required statements according to the attached guide and providing an electronic copy attached to the annual, semi-annual, and quarterly financial data submitted to the Central Bank, effective for data as of 31/12/2015, with the utmost precision required when filling out these statements.

2. The continuation of providing the statements specified in Item (Fifth/16) of our instructions No. (2009/47) dated 10/12/2009, in parallel with the statements mentioned in Item (1) above, for comparison purposes until further notice.

3. The use of these statements for preparing provisions against facilities granted by Islamic banks, excluding financing ending with ownership (Ijarah Muntahia Bittamleek), which is processed according to the instructions for classifying and processing financing ending with ownership No. (2014/60) dated 17/11/2014. Islamic banks are required to prepare separate statements for provisions against financing ending with ownership and submit them along with the aforementioned statements.

Noting that you will be provided with an electronic copy of these statements via email to the Compliance Manager at the Bank.

Please accept our highest regards,

The Governor
Dr. Ziad Farra

• Attachment

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Website: www.cbj.gov.jo • E-mail: info@cbj.gov.jo • Phone: 4735721, 4734721, 4738886 • Fax: 473-3011 • Jordan, Amman 11118 P.O. Box 27

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Appendix

Guide for Filling Out Non-Performing Credit Facilities Impairment Provision Statements

First: Data Entry Mechanism:

1. The date of the current financial data (e.g., 30/6/2015 or 31/12/2015) is entered in the designated cell, ensuring the date format (Date Format) matches the order (Day, Month, Year) present in the (Windows) system, which appears on the computer screen below the clock in the bottom right corner. The date must be entered in the Excel cell in the same order, for example:

   a. If the date appears as: Day then Month then Year (e.g., 31/12/2015), the date must be entered in the Excel cell in the same order (Day then Month then Year), separated by the symbol (-) or the symbol (/). The date can be entered in any of the following formats: (2015-12-31) or (2015/12/31).

   b. If the date appears as: Month then Day then Year (e.g., 12/31/2015), the date must be entered in the Excel cell in the same order (Month then Day then Year), separated by the symbol (-) or the symbol (/). The date can be entered in any of the following formats: (2015-12-31) or (2015/12/31), and so on.

2. Subsequently, complete filling out the data in the table in the unshaded cells, observing the following:

   a. Enter each customer in the statements as a total, regardless of whether they have more than one facility account (except for current accounts, uncovered demand accounts, and paid guarantees, which have separate statements prepared for them). Each row (Row) in the statement represents one customer, and the economic sector of the customer is entered in the item (Economic Sector or Type of Facilities) within the non-performing debt statements for companies.

   In the case where there are guarantees corresponding to part of the facilities granted to the customer (guarantees that do not cover all facilities granted to the customer), these facilities and their corresponding guarantees must be separated and entered in another (Row) independently. In this case, each type of facility granted to the customer is determined in the item (Economic Sector or Type of Facilities), and the impairment provision is calculated for each (Row) separately according to the relevant instructions.

   b. Do not enter any data in the cells shaded yellow, as they are protected cells and do not accept editing.

   c. Enter amounts to the nearest dinar without using commas; the Excel program will add commas automatically.

   d. If decimal places are entered, the program will round the decimal places to the nearest whole number.

Central Bank of Jordan
CENTRAL BANK OF JORDAN

3. The date of default (stoppage of payment) is entered in the designated cell using the same mechanism mentioned in Item (1) above. The program will calculate the number of days of default and classify the facilities automatically according to a prepared equation.

It is necessary to note that if the program does not calculate the number of days of default and the symbol (#value!) appears in that box, it means that the Excel program did not recognize the date of the current financial data and/or the date of default due to incorrect entry. Therefore, they must be re-entered correctly according to what is stated in Item (1) above until the number of days of default appears correctly in the designated cell.

4. After completing the entry of remaining customer data, the program will automatically calculate the required impairment provision value for facilities according to instructions No. (2009/47) dated 10/12/2009 and the value of surplus/deficit in the provision, with amounts appearing in the designated cells.

5. The remaining statements are filled out in the same manner.

6. Regarding non-performing credit facilities guaranteed by both the Jordanian Loan Guarantee Company and the Overseas Private Investment Corporation (OPIC), it is necessary to separate the part guaranteed by these two entities within the specific non-performing facilities statements (Statements 28 and 30), so that all facility categories are included in the same statement (sub-standard, doubtful, and loss). Additionally, separate collateral (if any) must be included in their specific collateral statements (Statements 29 and 31), so that the impairment provision against these facilities is calculated according to what is stated in Item (Third/C) of instructions No. (2009/47) dated 10/12/2009 and/or the provisions of our instruction No. (2016/2/10) dated 27/2/2016 (the bank calculates the required provision and fills it manually in the statement, and there is no automatic calculation equation for this provision).

In the event that the customer has other facilities (not guaranteed by the aforementioned entities), they should not be included in the aforementioned statements (28, 29, 30, 31), but rather separated and included (facilities and collateral) in other non-performing debt statements and other collateral statements according to the category and sector, based on the actual situation, and impairment provisions against them are calculated according to instructions No. (2009/47).

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Central Bank of Jordan
CENTRAL BANK OF JORDAN

### Second: General Notes:

1. The statements are divided based on two factors:
   a. According to categories (under review, sub-standard, doubtful, and loss), i.e., each category in a separate statement. Therefore, customer data must be entered according to their correct classification, each in the statement designated for them.
   b. According to the facility sector (companies or retail). Separate statements for non-performing and under review debts were designed for the companies sector and another for the retail sector. Regarding retail sector facilities, their statements were also divided into two parts:
      - Statements specific to credit card products, personal auto financing, and personal loans and advances, and similar items, for which the required provisions were determined according to Item (Third/C) of instructions No. (2009/47).
      - Statements specific to real estate loans for the retail sector, the provision for which will be calculated in the same manner as the provision for the companies sector.

2. Regarding non-performing credit facilities for the companies sector that have acceptable tangible collateral, their provisions will be calculated based on the number of days of default in light of the provisions of Item (Third/C/2) of instructions No. (2009/47). As for non-performing credit facilities for the companies sector that do not have acceptable tangible collateral, the calculation of their provisions will be derived according to the category in light of the provisions of Item (Third/C/1) of instructions No. (2009/47).

3. No tangible collateral will be taken into account against non-performing retail loans related to credit card products, auto financing, and personal loans and advances, and similar items. However, it will be taken into account for real estate loans related to the retail sector.

4. Each of the statements includes a specific number of rows (rows cannot be deleted or added as the file is protected), and there is a total row at the end of the statement. If you wish to print the statement, you can specify the pages containing customer data and print them independently, and then print the last page containing the total. Alternatively, you can use the Hide Row feature to hide extra (excess) rows until reaching the total box, and then print the statement.

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Model (1/1/1/09)
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