Lebanon's Bank Audi posts 21 pct rise in profit

Lebanon’s Bank Audi posts 21 pct rise in profit

Loans to customers grew by 1 billion dollars.

July 22, 2010 9:32 by Reuters

Net profits at Lebanon’s Bank Audi rose 21.4 pct to $161.4 million in the first half of the year, the company said on Wednesday, boosted by positive economic conditions in the countries where it operates, including Lebanon, Egypt, Syria and Jordan.

“The economic environment in Lebanon is still supportive,” Chief Financial Officer Freddie Baz told Reuters. The IMF raised its forecast last month for Lebanese economic growth in 2010 to at least 8 percent, citing domestic stability and prudent economic policies.

“Also the GDP growth in the region is at 4.5 (percent) which is a good level compared to other regions of the world,” Baz said in an interview.

The bank’s 2009 H1 net profit was $132.9 million. Its deposits rose by $798 million in the first half of the year to $23.8 billion, as it captured close to 19 percent of the total deposit growth in the Middle East and North Africa region, Baz said.

Growth in Lebanese banking sector deposits is seen as vital in helping the state meet borrowing needs to finance a public debt equivalent to nearly 148 percent of gross domestic product.

Loans to customers grew by 1 billion dollars, Baz said.

Inflows, mainly from expatriates and Gulf Arab nationals were almost flat at $6.6 billion. The figure was boosted last year by the global financial crisis which prompted many Lebanese living overseas to move their money to Lebanon’s banks, seen as relatively safe option in times of turbulence.

“We are still at the same level as last year. There has been some fear that inflows might lessen … but we kept the (same) pace as last year’s,” Baz said.

He said the bank was targeting the Arab world’s three biggest markets — Egypt, Saudi Arabia and Algeria, which he said together represent close to 50 percent of the Arab population and Arab wealth.

“Our ambition is to extend our licence in (Saudi Arabia) to cover conventional banking, commercial retail banking because we believe there is a lot of added value to bring to this market … But for the time being there is no prospect.”

He said Bank Audi also had submitted an application for a licence with Algeria’s central bank.

“They said there is a delay in the licence because the authorities are making changes in legislation and regulation which has translated into some delay in the licensing,” Baz said.

The bank’s GDR shares closed down 1.7 percent at $8.06 before the results were announced, while its main shares closed unchanged at $8.00.

Lebanon’s banking sector is one of the country’s main strengths and strict central bank regulations meant Lebanese banks avoided the worst of the financial crisis.

(By Mariam Karouny,Editing by Greg Mahlich)