Activity Highlights as at End March 2010.

Beirut, 22 Apr 2010
Lebanon’s economic activity in the first quarter of 2010 was buoyant, extending the trend witnessed over the past couple of years. Capital inflows reported an additional growth estimated at 20% over the first two months, generating a record high balance of payments surplus of US$ 760 million. Corollary, banks deposits reported a healthy growth of US$ 1.3 billion over the first two months, with lending activity regaining vigor, with a high US$ 1.5 billion year-to-date growth against a net contraction over the similar period of last year. Currency conversions continued towards the national currency, raising the Central Bank’s foreign assets to a record high of above US$ 30 billion, the equivalent of 85% of LP money supply, suggesting a significantly high level of foreign exchange immunity at large.

In parallel, the Middle East and North Africa region, where Bank Audi retains a widespread presence, started to recover in the first quarter of 2010 from the global crisis spillovers. The region has benefited from the rise in oil prices which were 72% higher than in the corresponding period of 2009, as well as from the effects of the recent countercyclical measures, in addition to the relative improvement in global economic conditions. This has reflected positively on banks’ operating conditions, translating into regained growth in activity following the overall weakness of the past year.

This conducive environment benefited to Bank Audi sal - Audi Saradar Group, as revealed by the following activity highlights
  • Consolidated assets reached US$ 26.8 billion, sustaining the Bank’s position as the largest bank in Lebanon and reinforcing its ranking among the top 20 Arab banking groups.
  • The contribution of regional entities to consolidated assets and earnings increased to respectively 27% and 32% after an average of only 3 years of activity.
  • Shareholders’ equity amounted to US$ 2.2 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 11.5%, a level well exceeding the minimum requirement (8%).
  • Risk profile continues to improve with the Lebanese sovereign Eurobonds portfolio reaching US$ 1.17 billion, representing only 7% of customers’ deposits denominated in foreign currencies.
  • Net doubtful loans represented 0.13% of gross loans within the context of a coverage ratio on those loans of 95.8%, which exceeds 100% when accounting for collaterals.
  • Primary liquidity placed with Central Banks and banks reached US$ 11.9 billion, representing 51.4% 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 7%, moving from 52.8 % in the first quarter of 2009 to 45.8% in the first quarter of 2010.
  • Earning power gained strength, as net earnings reached in the first quarter of 2010 US$ 80.2 million, translating into US$ 8.9 of basic earnings per common share on an annualized basis.
  • Return on average common equity reached 14.9%, a level in line regional, emerging and global markets’ averages.
Based on those encouraging results, the Bank is continuing its expansion strategy to regional markets with enticing growth prospects and to European markets of value added to the Bank strategy comprising an important presence among individuals and corporates from the MENA region.  Within this context, the Bank has previously announced that on January 15, 2010, it had entered into an agreement to acquire Dresdner Bank Monaco SAM. Upon closing, this acquisition would allow the Bank to cater private banking services in Monaco, South of France and Northern Italy. In addition, the Bank launched a branch in Gibraltar and intends to expand its activities to the United Kingdom. At the same time, the Bank continues to consolidate its main lines of business (Retail Banking, Commercial and Corporate Banking and Private Banking) in regional markets where it is present. Subsequently, the Group’s expansion strategy reinforces the Bank’s positioning as one of the privileged partners of individual customers and corporates in regional


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