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The 2011 Financial Results of the Three Largest Lebanese Banks: Resiliency and steady performance amid a challenging regional environment

During 2011, the three largest Lebanese banks ( BLOM , Audi , and Byblos) proved highly resilient growing their earnings amidst a year filled with uncertainty and dramatic changes in the region despite reporting a combined $94 million in net collective provisions. The events in neighboring Syria and the political disputes in Lebanon along with falling interest rates have set a challenging environment for Lebanese Banks. Nevertheless, these banks have been accustomed to operating in a turbulent environment taking more precautions on average than banks in the region. This is reflected through their high Tier 1 capital which has grown by 8.7% at BLOM , 4.3% at Byblos, and 0.9% at Audi .



On an individual basis, Bank Audi reported the highest absolute level of net profits at $365 million, growing by 3.7% over 2010. BLOM Bank came second, growing by 0.3% to reach net profits of $332 million while Byblos profits grew by 1.2% to reach $180 million. When looking at profitability ratios, which represent the bank's ability to generate earnings from its equity and assets, BLOM Bank registered the highest rate of return on equity (ROE) at 19.2% with a return on assets (ROA) of 1.46%. Bank Audi comes second with an ROE of 16.4% and an ROA of 1.27%, followed by Byblos Bank with an ROE of 13.6% and an ROA of 1.13%. What drives BLOM Bank 's high profitability ratios is its managerial efficiency in generating revenues and controlling costs. This is demonstrated in BLOM Bank 's cost-to-income ratio, estimated at 36.4%, the lowest of all three, followed by 42.82% for Byblos Bank and 46.57% for Bank Audi .

While growth in assets has been registered for the three banks, growth in equity was only reported at BLOM and Byblos. BLOM 's equity grew by 4.9% over 2010 to reach $1.98 billion while Byblos reported 1.1% growth in equity reaching $1.65 billion. Audi 's equity slightly retreated by 2.7% to reach $2.35 billion. As for assets, the highest asset growth was registered by Byblos with total assets growing by 8.6% to reach $16.6 billion with its customer deposits growing by 7.8% to reach $12.8 billion. BLOM 's total assets grew by 3.7% to reach $23.2 billion with its customer deposits increasing by 3.5% to reach $20.3 billion. Audi Bank follows, growing its assets by 0.2% to reach $28.7 billion however its customer deposits mildly shrank by 0.2% to reach $24.8 billion.

When comparing loans-to-deposits ratio, BLOM Bank is clearly the most conservative in giving out loans, with a loans-to-deposits ratio of 27.5%, compared with 31.3% for Byblos and 34.7% for Audi Bank. Even with such a conservative policy, BLOM succeeded in registering the highest growth in loans reaching $5.6 billion, 8% higher than during 2010. Byblos came second with its loans growing by 6.3% to reach $4 billion followed by Audi with its loans growing by 0.5% to reach $8.6 billion. As for Non-Performing Loans, the three banks have taken precautions and reported a coverage ratio of at least 70% without accounting for the fair value of the collateral attached to these loans.

All three Lebanese banks realize the importance and sensitivity of this period to the health and stability of their balance sheet, but they have acquired a rich experience in operating under unstable economic and political conditions. As a result, they will continue to adopt safe and precautionary measures that aim at sound risk management, ample liquidity, and high quality of assets and investments in all their units of operation.

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© Press Release 2012