Outlook Stable

Fitch Ratings-London-13 May 2013: Fitch Ratings has affirmed Byblos Bank S.A.L.'s Long-term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. The Viability Rating (VR) has been affirmed at 'b'. A full list of rating actions is at the end of this commentary.

RATING DRIVERS - IDRs and VR

Byblos Bank S.A.L.'s Long-Term IDR is driven by its intrinsic strength expressed by its VR. The IDRs and VR reflect the strong correlation between sovereign and bank risks due to the bank's substantial exposure to the Lebanese sovereign through its large holding of government debt, as well as the difficult local and regional operating environment. The ratings also take into account Byblos's strong domestic franchise, its experienced management, relatively sound asset quality despite some weakening, its resilient profitability and strong deposit franchise.

RATING SENSITIVITIES - IDRs and VR

The ratings are closely correlated with Lebanon's ratings, and are sensitive to economic and political developments, both within Lebanon and in the wider region. A prolonged weakening of the operating environment, especially if it materially affected depositor confidence, significant deterioration in asset quality or substantially reduced profitability could result in downward rating pressure.

RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR

Fitch considers that the Lebanese authorities would have a high propensity to support Byblos if necessary, in view of its systemic importance to the banking sector and to the economy as a whole. However, given the low sovereign rating ('B'), the sovereign's ability to provide support, although possible, cannot be relied on; the Support Rating Floor of 'CCC' indicates the potential difficulty the authorities might have if system-wide support for the banking sector, including Byblos, were required.

RATING SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR

The ratings are sensitive to changes in the sovereign's ratings, as they are closely correlated to the sovereign's ability to provide support.

Byblos is Lebanon's third-largest bank by assets, accounting for about 10% of system assets at end-2012. The bank offers a broad range of corporate, retail and investment banking services, supported by an extensive domestic branch network, and international branches and subsidiaries.

The rating actions are as follows:

Long-term IDR affirmed at 'B'; Stable Outlook

Short-term IDR affirmed at 'B'

Viability Rating affirmed at 'b'

Support Rating affirmed at '5'

Support Rating Floor affirmed at 'CCC'

Contact:
Primary Analyst
Philip Smith
Senior Director
+44 20 3530 1091
Fitch Ratings Limited
30 North Colonnade
London E14 5GN

Secondary Analyst
Laila Sadek
Director
+44 20 3530 1308

Committee Chairperson
Gordon Scott
Managing Director
+44 20 3530 1075

Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com.

Additional information is available on www.fitchratings.com

Applicable criteria, 'Global Financial Institutions Rating Criteria' dated 15 August 2012, and 'Evaluating Corporate Governance' dated 12 December 2012, are available at www.fitchratings.com.

© Press Release 2013