Activity Highlights as at End June 2010.

Beirut, 22 Jul 2010
Economic conditions in Lebanon in the first half of 2010 extended the buoyant performance of the past couple of years. According to IMF forecasts, Lebanon might be heading to a real GDP growth of 8% this year, ranking 2nd regionally and fourth globally. Lebanon is seeing strong upsurge in its real sector indicators amid relatively stable politico security conditions. But as a net slowdown in capital inflows to Lebanon to more sustainable levels was witnessed this year, banking activity growth was relatively less pronounced than last year when Lebanon had somehow benefited from the effects of the global crisis. Over the first five months of this year, bank deposits grew by US$ 3.4 billion against a 5-month growth of US$ 6.6 billion in 2009, yet without adversely impacting banks’ capacities to finance the domestic economy. Indeed, bank domestic loans grew by US$ 2.5 billion over the first five months of 2010, the equivalent of 80% of aggregate growth in full-year 2009 (US$ 3.2 billion).

In the MENA region, economic conditions were characterised by a relative though gradual recovery, benefiting from the 49% surge in oil prices in the first half of 2010 relative to the corresponding 2009 period. It is within this context that the IMF has revised its real growth for the region to 4.5% in 2010, against a low 2.5% last year. Within this environment, near eastern countries, where Bank Audi’s activity is concentrated, reported a favourable growth in banking activity year-to-date. Major banking aggregates for the Near East region at large show a 4.4% asset growth, a 2.4% deposit growth and a 4.6% lending growth over the first five months of 2010, relatively better than the corresponding growth rates of the similar period of last year.

This conducive environment benefited to Bank Audi sal - Audi Saradar Group, as revealed by the following activity highlights:

  • The Bank reinforced its position as the largest bank in Lebanon and among the top 20 Arab banking groups, with consolidated assets reaching US$ 27.3 billion.
  • Consolidated deposits reached US$ 23.8 billion, growing by US$ 798 million over the first half of 2010, a very favourable performance when compared to the stagnation reported in the deposit base of a large number of regional banks.
  • The contribution of regional entities to consolidated assets and earnings reached 27% after an average of only 3 years of activity.
  • Shareholders’ equity amounted to US$ 2.3 billion, representing 28% of the consolidated shareholders’ equity in the Lebanese banking sector and translating into a capital adequacy ratio as per Basel II of 11.8%, a level well exceeding the minimum requirement (8%).
  • Risk profile continues to improve with net doubtful loans representing 0.79% of gross loans within the context of a coverage ratio on those loans of 74.1%, which reaches 117% when accounting for real collaterals. In addition to specific provisions, collective provisions reached US$ 53 million, the equivalent of 0.7% of consolidated net loans.
  • Primary liquidity placed with central banks and banks reached US$ 11.7 billion, representing 49.2% of customers’ deposits, one of the highest liquidity levels in the region.
  • Overall efficiency strengthened as a result of tight control over operating conditions. Consequently, the cost to income ratio improved by 2.4%, moving from 49.1 % in the first half of 2009 to 46.7% in the first half of 2010.
  • Earning power gained strength, as net earnings reached US$ 161.4 million in the first half of 2010, 21.4% higher than in the corresponding 2009 period.
  • Return on average common equity reached 15.3%, a level in line with regional, emerging and global markets’ averages.
The strong first half 2010 results represent a solid proof of the Bank’s capacity to maintain steady growth in activity and earning indicators. Such results confirm the ability of the Group to pursue its regional expansion strategy and rank among the top 10 regional Arab banking groups.

The wide franchise and strong financial standing that the Bank enjoys makes it a distinguished partner at the service of Lebanese and Arab customers that have increasing needs and demand for Retail, Commercial, Corporate and Private Banking services in which Bank Audi has a leading providing role.

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