S A L
Your Investment Reference
THE LEBANON BRIEF
ISSUE 920 Week of 26 - 30 May, 2015
ECONOMIC RESEARCH DEPARTMENT BLOMINVEST Bank Headquarters Bab Idriss, Beirut, Lebanon T (01) 991 784/2 F (+961) 1 991 732 [email protected] www.blom.com.lb
TABLE OF CONTENT
FINANCIAL MARKETS 3 Equity Market 3 Foreign Exchange Market 5 Money & Treasury Bills Markets 5 Eurobond Market 6
ECONOMIC AND FINANCIAL NEWS 7 Value of Cleared Checks Declined by 8.26% y-o-y by April 7 Despite Overall Fall in Trading Activity Some Custom Offices Saw Positive Results by March 8 RAMCO: $480M worth of Unsold Apartments in 2014 9
CORPORATE DEVELOPMENTS 10 Solidere’s Consolidated Profits for 2014 Surged to $113.70M 10 Bank Audi S.A.E’s Profit Rose to $23.85M in Q1 2015 11 Bank Audi to Buy Back its Preferred Class “E” Shares 11 BEMO Bank to Distribute 2014’s Dividends 12
FOCUS IN BRIEF 13 Alpha Banks: Q1 2015 Performance Highlights 13
This report is published for information purposes only. The information herein has been compiled from, or based upon sources we believe to be reliable, but we do not guarantee or accept responsibility for its completeness or accuracy. This document should not be construed as a solicitation to take part in any investment, or as constituting any representation or warranty on our part. The consequences of any action taken on the basis of information contained herein are solely the responsibility of the recipient.
ISSUE 920; Week of 26-30 May, 2015 S A L
The Lebanon Brief Page 3 of 20
FINANCIAL MARKETS Equity Market Stock Market Considering the positive impact of discussions for regarding the fiscal budget for 2015, after 3 29/05/2015 22/05/2015 % Change ministries’ budgets were approved as well as the BLOM Stock Index* 1,193.65 1,191.57 0.17% allocation of funds to all the ministries, the Average Traded Volume 397,118 128,093 210.02% Lebanese Bourse saw higher trading activity Average Traded Value 3,455,985 2,459,673 40.51% through the week. The BLOM Stock Index (BSI) *22 January 1996 = 1000 mirrored the stock market’s performance and BLOM Stock Index increased by 0.17% to 1,193.65 points this week, 1250 HI: 1,236.40 broadening its year-to-date gains to 2.00%
1230 Average daily traded volume went up to 397,118
1210 shares worth $3.46M compared to 128,093 shares worth $2.46M last week. Market capitalization 1190 expanded from $10.03B to $10.05B.
1170 LO: 1,159.48 On a comparative scale, the BSI outperformed the S&P Pan Arab Composite Large-Mid-Cap Index, S&P 1150 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 AFE 40 Index and the Morgan Stanley Emerging
Markets Index (MSCI) which respectively lost Banking Sector 1.39%, 2.36% and 2.24% since last week.
On the regional front, most GCC Bourses took a Mkt % Change 29/05/2015 22/05/2015 heavy hit due to the 6% decline in Brent crude oil BLOM (GDR) BSE $10.05 $10.00 0.50% during the week, bearing in mind that Saudi Arabia BLOM Listed BSE $9.60 $9.50 1.05% has shipped, in the month of March alone, their BLOM (GDR) LSE $10.05 $10.00 0.50% highest level of oil since November 2007. Qatar’s Audi (GDR) BSE $6.59 $6.55 0.61% Stock Exchange was the worst performer, plunging Audi Listed BSE $6.11 $6.12 -0.16% by 4.35% as 14 FIFA officials were arrested due to Audi (GDR) LSE $6.59 $6.30 4.60% fraud, bribery and racketeering charges. This opens Byblos (C) BSE $1.62 $1.62 0.00% the door for many countries to bid for the 2022 Byblos (GDR) LSE $80.50 $80.50 0.00% World Cup. Dubai’s Bourse also ticked down by Bank of Beirut (C) BSE $18.40 $18.40 0.00% 2.87% followed by Abu Dhabi that posted a weekly BLC (C) BSE $1.70 $1.70 0.00% downturn of 1.92%. Fransabank (B) OTC $27.00 $27.00 0.00% BEMO (C) BSE $1.89 $1.89 0.00% Worth mentioning, Federal Reserve statement about
raising interest rates might affect some equity Mkt 29/05/2015 22/05/2015 % Change markets in the region since all Gulf States are Banks’ Preferred 104.43 104.44 -0.01% pegged to the dollar. Shares Index * Audi Pref. E BSE $102.20 $102.20 0.00% In contrast, Amman’s Stock Market was the best Audi Pref. F BSE $100.30 $100.30 0.00% performer, increasing by 0.58% from last week, Audi Pref. G BSE $100.30 $100.30 0.00% followed by Tunisia’s and Muscat’s Stock Markets Audi Pref. H BSE $100.50 $100.50 0.00% that up-ticked by 0.56% and 0.11%, respectively. Byblos Preferred 08 BSE $100.30 $100.20 0.10% Byblos Preferred 09 BSE $100.30 $100.30 0.00% Back to Lebanon, the banking sector grasped Bank of Beirut Pref. E BSE $25.50 $25.50 0.00% 87.60% of total traded value, while the real estate sector contributed to the remaining 12.40%. Bank of Beirut Pref. I BSE $25.35 $25.35 0.00%
Bank of Beirut Pref. H BSE $25.50 $25.50 0.00%
BLOM Preferred 2011 BSE $10.10 $10.10 0.00% * 25 August 2006 = 100
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The Lebanon Brief Page 4 of 20
Real Estate On the London Stock Exchange (LSE), BLOM GDR Mkt 29/05/2015 22/05/2015 % Change shares increased by 0.50% to $10.05 as well as Solidere (A) BSE $11.50 $11.50 0.00% Audi GDR’s upticking by 4.60% to $6.59. Solidere (B) BSE $11.38 $11.41 -0.26% Solidere (GDR) LSE $11.40 $11.40 0.00%
Manufacturing Sector In the banking sector, BLOM Bank listed and GDR shares gained 1.05% and 0.50% to end the week Mkt 29/05/2015 22/05/2015 % Change at respective levels of $9.60 and $10.05, noting HOLCIM Liban BSE $16.18 $16.18 0.00% that 500,165 BLOM’s common shares were cross Ciments Blancs (B) BSE $3.75 $3.75 0.00% traded. Bank Audi GDR shares also increased by Ciments Blancs (N) BSE $2.75 $2.75 0.00% 0.61% to $6.59 while its common shares lost 0.16% to $6.11.
Funds The BLOM Preferred Shares Index (BPSI) edged down by 0.01% to 104.43 points, on the back of Mkt 28/05/2015 21/05/2015 % Change BLC Preferred shares class “C” declining by BLOM Cedars Balanced 0.99% to $100.00 by the end of the week. ----- $7,536.36 $7,525.04 0.15% Fund Tranche “A” Meanwhile, Byblos preferred shares 2008 went BLOM Cedars Balanced up by 0.10% to $100.30, over the same period. ----- $5,390.12 $5,382.02 0.15% Fund Tranche “B” BLOM Cedars Balanced ----- $5,723.92 $5,715.32 0.15% In the real estate sector, Solidere shares class “B” Fund Tranche “C” lost 0.26% to close the week at $11.38 while it’s BLOM Bond Fund ----- $9,481.98 $9,481.98 0.00% “A” counterpart traded at last week’s quote of $11.50. Solidere declared its results for year 2014, achieving consolidated profits of $113.70M and the possibility to distribute dividends after a 3 year halt.
Retail Sector Looking ahead, the expected final cabinet Mkt 29/05/2015 22/05/2015 % Change meeting relating to 2015 budget is expected to RYMCO BSE $3.23 $3.23 0.00% keep on positively impacting the Beirut Stock Exchange. However, the parliamentary session, ABC (New) OTC $27.00 $27.00 0.00% scheduled next week on the 3rd of June, may have a considerable influence on trading activity if any political breakthrough was reached.
Tourism Sector
Mkt 29/05/2015 22/05/2015 % Change Casino Du Liban OTC $323.00 $323.00 0.00% SGHL OTC $7.00 $7.00 0.00%
ISSUE 920; Week of 26-30 May, 2015 S A L
The Lebanon Brief Page 5 of 20
Foreign Exchange Market Demand for the dollar continued to weaken for the second consecutive week in the Lebanese Forex market. This was partially Lebanese Forex Market due to the excess supply of foreign currency inflow to the banking sector, illustrated by the increase in broad money dollarization from 29/05/2015 22/05/2015 %Change 58.27% to 58.33%, during the first 2-weeks of May. Consequently, Dollar / LP 1.0960 1.1170 -1.88% the Lebanese pound’s peg against the dollar dropped from 1,509- Euro / LP 1.5275 1.5659 -2.45% 1,513 with a mid-price of $/LP 1,511 on May 22, to $/LP 1,505- Swiss Franc / LP 0.9438 0.9345 1.00% 1,509 with a mid-price of $/LP 1,507. Foreign assets (excluding Yen / LP 123.83 121.07 2.28% gold) at the Central Bank decreased by a monthly 1.94%, from Sterling / LP 2,302.71 2,360.59 -2.45% $38.48B by end-March to $37.73B by end-April. Meanwhile, the dollarization rate of private sector deposits stood at 65.25% in NEER Index** 164.44 163.37 0.65% March 2015 compared to 65.71% in December 2014. *Close of GMT 09:00+2 **Nominal Effective Exchange Rate; Base Year Jan 2006=100 **The unadjusted weighted average value of a country’s currency relative to all major currencies being traded within a pool of currencies. The NEER represents the approximate relative price a consumer will pay for an imported good. The Euro depreciated by 1.88% against the dollar to €/$1.0960, for Nominal Effective Exchange Rate (NEER) the second week running. This could be on the back of Greece probably not reaching an agreement with the ECB, as Angela
168 Merkel gave the country until May 31st to arrive to a settlement. 165 In terms of the “green back”, the dollar demand improved due to 162 better economic data in April, allowing Janet Yellen to state that the 159 Fed will hike interest rates this year. 156 153 150 Demand for gold fell significantly during the week, with the 147 impressive bullish drift of the dollar, coupled with the bearish trend 144 141 in Brent oil price, which downturned by about 6% over the same 138 period. In turn, gold went down to $1,189.85/ounce from 135 $1,212.13/ounce on the 22nd of May 2015. 132 129 By Friday May 22nd, 2015, 12:30 pm Beirut time, the dollar-pegged May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 LP appreciated against the euro going from €/LP 1,683.88 on the 22nd of May to €/LP 1,652.22. The Nominal effective exchange Rate (NEER) augmented by 0.65% to 164.44 points, broadening its year-to-date gains to 11.62%. Money & Treasury Bills Markets During the 2-week period ending May 14th 2015, broad Money M3 surged by LP 526B ($349.11M), to reach LP 180,477B ($119.72B) Money Market Rates with a 5.55% yearly growth and a 1.7% y-t-d uptick. In contrast, M1 went down by LP 307B ($203.65M) due to the decrease in demand 28/05/2015 21/05/2015 Change bps deposits by LP 313B ($207.63M) which offset the LP 6B ($3.98M) Overnight Interbank 2.75% 2.75% 0 increase in money in circulation. BDL 45-day CD 3.57% 3.57% 0 Total deposits (excluding demand deposits) went up by LP 833.71B BDL 60-day CD 3.85% 3.85% 0 ($553.04M), over the two weeks, given the expansion of deposits denominated in foreign currencies by $276M and in term and
saving deposits in domestic currency by LP 418B. Over the above mentioned period, the broad money dollarization rate experienced Treasury Yields an up-tick from 58.27% to 58.33%. According to the Central Bank, 28/05/2015 21/05/2015 Change bps the overnight interbank rate remained constant at 2.75% at the end of March 2015. 3-M TB yield 4.39% 4.39% 0
6-M TB yield 4.87% 4.87% 0 In the TBs auction held on the 21th of May 2015, the Ministry of 12-M TB yield 5.08% 5.08% 0 Finance raised LP 78.95B ($52.37M), through the issuance of bills 24-M TB coupon 5.84% 5.84% 0 maturing in 3M and 1Y, and 5Y notes. The highest demand was achieved on the 5Y notes, with a 50.47% share of total 36-M TB coupon 6.50% 6.50% 0 subscriptions. Meanwhile, the 3M and 1Y bills captured respective 60-M TB coupon 6.74% 6.74% 0 proportions of 21.82% and 25.81%. In addition, the 3M and 1Y bills
yielded 4.39% and 5.08%, respectively, while the coupon rate of the 5Y notes stood at 6.74%.
ISSUE 920; Week of 26-30 May, 2015 S A L
The Lebanon Brief Page 6 of 20
Eurobond Market Eurobonds Index and Yield 28/05/2015 21/05/2015 Change Year to Date BLOM Bond Index (BBI)* 107.888 107.562 0.30% 1.70% Weighted Yield** 5.39% 5.46% -7 37 Weighted Spread*** 385 390 -5 -45 *Base Year 2000 = 100; includes US$ sovereign bonds traded on the OTC market ** The change is in basis points ***Against US Treasuries (in basis points)
Lebanese Government Eurobonds 28/05/2015 21/05/2015 Weekly 28/05/2015 21/05/2015 Weekly Maturity - Coupon Price* Price* Change% Yield Yield Change bps 2016, Nov - 4.750% 100.72 100.52 0.20% 4.22% 4.37% 15 2017, Mar - 9.000% 107.99 108.06 -0.06% 4.36% 4.36% 1 2017, Oct - 5.000% 101.33 101.12 0.21% 4.40% 4.50% 10 2018, Jun - 5.150% 101.54 101 0.53% 4.60% 4.79% 19 2018, Nov - 5.150% 101.25 100.75 0.50% 4.75% 4.91% 16 2019, Apr - 5.500% 101.5 101.13 0.37% 5.07% 5.18% 11 2020, Mar - 6.375% 104.5 104.25 0.24% 5.29% 5.36% 6 2020, Apr - 5.800% 102 101.75 0.25% 5.33% 5.39% 6 2020, Jun - 6.150% 103.38 103 0.37% 5.38% 5.46% 9 2021, Apr - 8.250% 113.75 113.35 0.35% 5.48% 5.56% 8 2022, Oct - 6.100% 102.5 102.25 0.24% 5.68% 5.72% 4 2023, Jan - 6.000% 101.75 101.25 0.49% 5.71% 5.79% 8 2024, Dec - 7.000% 107.75 107 0.70% 5.92% 6.02% 10 2025, Jun - 6.250% 101.63 101.25 0.38% 5.98% 6.03% 5 2026, Nov - 6.600% 103.75 103.38 0.36% 6.14% 6.19% 4 2027, Nov - 6.750% 104.75 104.38 0.35% 6.20% 6.24% 4 Mid Prices ; BLOMINVEST bank
Weighted Effective Yield of Eurobonds 6.00% 5.50% 5.00% 4.50% May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15
The Lebanese Eurobonds market witnessed a hike in demand, for the past few weeks, all along the yield curve. Foreign demand on short-term maturities following the selloff of European bonds and the decline in US yields, helped boost the local bond market, in which domestic investors shifted their demand to medium and long-term maturities. There is no doubt that the stable security situation and the positive momentum of budget discussions had their positive impact on demand. Accordingly, the BLOM Bond Index (BBI) augmented by a weekly 0.30% to 107.89 points. In addition, yields on the 5Y and 10Y Lebanese notes declined 8 basis points (bps) and 6 bps, since the last week, to 5.12% and 5.94%, respectively. The BBI also managed to outperform the JP Morgan Emerging Markets’ Bond Index, which lost 0.44% to 686 points over the same period.
Demand for US notes slightly improved during the week despite Janet Yellen, the Fed Chair, exclaiming that they will most probably hike interest rates before the turn of the year, but definitely not in June. The Fed’s decision mainly rested from April’s inflation rate rising faster than economists expected. The progression in the US bond could have been attributed to the 6.24% decline in international oil prices during the week, as a result of the OPEC cartel bumping up production to maintain market share. Furthermore, lenders might be shifting from the European bond market to the US treasuries, due to concerns regarding Athen’s ability to strike a deal regarding their debt by Sunday. Consequently, the yields on the 5Y and 10Y benchmark notes down ticked weekly by 2 bps and 6 bps to 1.51% and 2.13%, respectively. Accordingly, the spread between the yields on the 10Y Lebanese bonds and their US counterpart steadied at 381 bps while that of the 5Y tightened by 6 bps to 361bps.
Lebanese 5Y Credit Default Swaps (CDS) slightly drifted during the week from 370-395 bps to 369-395 bps. In regional economies, 5 year CDS quotes of Saudi Arabia and Dubai tightened from 62-68 bps and 197-208 bps in the previous week to 60-67 bps and 194-205 bps, respectively. In contrast, Turkey’s and Brazil’s 5Y CDS quotes broadened from 204-207 bps and 218-221 bps to respective quotes of 210-214 bps and 232-235 bps. Meanwhile, Egypt’s 5Y quotes remained at their previous level of 331-335 bps, respectively.
ISSUE 920; Week of 26-30 May, 2015 S A L
The Lebanon Brief Page 7 of 20
ECONOMIC AND FINANCIAL NEWS
Value of Cleared Checks Declined by 8.26% y-o-y by April
Value of Cleared Checks by April (in $M) The total number of checks, cleared by Banque du Liban, showed a drop of 3.60% yearly, to 4.02M in the first four months of the year, 5,840 compared to a higher level of 4.17M a year earlier. Furthermore, the 5,368 4,744 5,276 4,838 6,170 cumulative value of these checks, cleared by Banque du Liban, declined by 8.26% year-on-year (y-o-y) to recording $22.86B, with April 2014 value recorded at $24.91B. This is on the back of the declining value of the cleared checks in foreign currency offsetting the rise in the value checks denominated in local currency. 19,073 18,286 17,776 18,061 18,312 16,686 In details, the value of cleared checks denominated in Lebanese Pound (LP) grew by 5.65% annually to $6.17B by April, in comparison to the $5.84B registered in April 2014. However, that 2010 2011 2012 2013 2014 2015 of foreign currencies plunged by 12.52% y-o-y to $16.69B, significantly lower than the $19.07B disclosed last year. Value of Local Currency Cleared Checks Consequently, the dollarization rate, in terms of value, went down Value of Foreign Currency Cleared Checks from 76.56% in April 2014, to 73.01% in April 2015.
The value of returned checks, accounting for 2.33% of the total Source: ABL checks’ value, increased yearly by 13.45% to $533M, over the same
period.
In April alone, the total value of cleared checks dropped by 17.19%
to $5.71B. Cleared checks denominated in foreign currencies
decreased by 23.66% y-o-y to $4.16B, while those denominated in
local currencies showed a 7.15% improvement from April 2014 to $1.55B.
ISSUE 920; Week of 26-30 May, 2015 S A L
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Despite Overall Fall in Trading Activity Some Custom
Offices Saw Positive Results by March
Imports Tonnage Relating to Lebanon’s Main Despite the 15.3% year-on-year (y-o-y) decline of the overall Custom Offices imports’ tonnage in Q1 2015 to 3.47M tons of goods worth $4.17B, 4 out of 9 custom offices revealed higher volumes of imports 3,500,000 compared to Q1 2014.
3,000,000 Tyre was the custom office to witness the largest upturn at 48.0% y-o-y increase to 1,049 tons imported in Q1 2015. Similarly, custom 2,500,000 offices of Arida and Tripoli saw annual rises of 43.1% and 7.5% in 2,000,000 imports’ volume to 27,757 tons and 764,261 tons, respectively. The former’s ascent was largely due to Arida being a safe passage to 1,500,000 the North of Syria, while the attenuation of security developments in the latter boosted its trading activity. Port of Saida also saw a 1,000,000 5.4% yearly improvement to 189,309 tons brought in, over the same period. 500,000
0 The main decline in terms of imported tonnage was in the PoB, Port Of Tripoli Saida Masnaa which illustrated a 22.4% y-o-y plunge from March 2014 to 2.39M Beirut tons by March 2015. PoB has suffered over the quarter from labor strikes regarding the forth basin and the shipping halts that 2015 Tonnage Imported 2014 Tonnage Imported characterized all the country’s ports due to the bad weather. Importing activity in terms of volume at Rafik Hariri International Airport (RHIA) also declined, although at a slower pace, by 11.19% Source: Customs y-o-y to 11,564 tons of imported goods. Furthermore, goods
received from Masnaa’s custom office declined by 11.02% y-o-y to 53,703 tons in Q1 2015. In fact, the ongoing turbulences at the Lebanese/Syrian border keep on taking their toll on Masnaa’s trading activity. Thus, it is highly expected that the volume of imported goods at the mentioned gate will keep on weakening in the coming period especially after Syrian rebels took control of the Jordanian Nasib border crossing (between Syria and Jordan) in the beginning of April and kidnapped nine Lebanese truck drivers.
Separately, the imported volume through the custom office in Abboudieh remained relatively stagnant at 31,304 tons by March 2015 compared to 31,893 tons by March 2014.
ISSUE 920; Week of 26-30 May, 2015 S A L
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RAMCO: $480M worth of Unsold Apartments in 2014
Overview of Residential Projects Completed in In a recent publication, RAMCO revealed that the total bulk of 2014 apartments that were unsold in 2014 stood at 271, in Municipal Beirut, worth approximately $480M. In details, the census was based on 56 completed projects throughout 51 neighborhoods in the capital. Number of Projects 56
Total Number of Units 1,236 In addition, the sales ratio (residential area sold out of the total Total Built-up Area (BUA) 342,901 residential stock under construction) stood at 76% in 2014 comparing to 78% and 82% in 2013 and 2012, respectively. It is Number of Unsold Units 271 Average Size of Unsold Apartments highly expected that the sales ratio will maintain its bearish trend (SQM) 310 given that the majority of real estate apartments are usually sold off-plan, which means before the effective construction of the units Ratio of Unsold Units 24% that could take up to 3 years on average. Accordingly, and noting Total BUA Still Available (SQM) 83,976 that the deterioration of real estate demand mainly started in 2012, Overall Take-Up Rate from Total BUA 76% the sales ratio is projected to drop further, as it will mainly reflect Listed Value of Remaining Stock (USD) 477,158,659 the real estate demand of the previous three years.
Number of Projects with 100% Sold 14 Raja Makarem, Managing Director of RAMCO, believes that the Ratio of Projects with 100% sold 25% underlying problem was the lack of understanding of the Lebanese real estate market dynamics. This led developers to fail in meeting the actual market demand and selling their units. Mr. Makarem Source: RAMCO anticipates that the unsold stocks of apartments illustrate the relative stagnation of the residential market.
ISSUE 920; Week of 26-30 May, 2015 S A L
The Lebanon Brief Page 10 of 20
CORPORATE DEVELOPMENTS
Solidere’s Consolidated Profits for 2014 Surged to $113.70M
Solidere Consolidated Financials - 2014 ($M) Solidere S.A.L, Lebanon’s leading real estate company, reported a net profit of $96.90M for FY 2014, in comparison to $39.68M for the
previous year, and in line with Blominvest’s estimates. The group’s consolidated revenues recorded $239.01M, a 47.30% annual 2013 2014 increment, while net profits soared 167.02% year-on-year (y-o-y) to
$113.70M. Total Assets 2,873.50 2,964.09
Total Liabilities 922.67 899.49 In details, Solidere’s revenue from the land sales leapt 78.60% y-o-y to reach $169.47M as a direct result of 7 new sales contracts during Total Equity 1,951.92 2,064.59 2014. Revenue from rented properties displayed a similar increase Net Profits 42.58 113.70 of 12.03% to $61.48M over the same period following the opening of the movie theater at year-start and despite the company applying Earnings Per Share 0.2659 0.7100 (EPS) more relaxed rent policies on customers considering the economic slowdown the country is experiencing.
Source: Solidere The consolidated profits were also boosted by the improving standing of Solidere International, which contributed $25.10M to
Solidere’s profits.
Solidere’s healthy position is backed by the company’s land bank of 1.8 million m2 with an estimated value of $7B and a real estate
portfolio of completed projects for sale and rent worth an estimated
$1.4B.
In relation to these financial results, Solidere S.A.L invited holders of the company’s listed “A” and “B” shares to an ordinary general assembly, scheduled for Monday June 22nd at 9:30 a.m in Biel. The assembly schedule includes the discussion of the company’s 2014 financial results, the election of members of the board of administrators and the assignment of an auditor’s committee.
Dividends will also be decided on, with a suggested payout ratio of
33%, noting that the company’s last distribution was in 2012.
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The Lebanon Brief Page 11 of 20
Bank Audi (S.A.E) Q1 2015 Financial Highlights Bank Audi S.A.E’s Profit Rose to $23.85M in Q1 2015
Bank Audi S.A.E, the bank’s Egyptian subsidiary, recorded a profit of 15-Mar 14-Mar % change $23.85 M in Q1 2015, a 63.18% year-on-year (y-o-y) increase. In detail, net interest income increased by 19.43% y-o-y to settle at Customer's Deposits 4,011.09 2,844.80 41.00%$30.34M, while net income from fees and commission surged by Loans and Facilities to 41.83% y-o-y to reach $8.69M. 1,715.65 1,386.25 23.76% customers As for total assets, they increased by an annualized 39.15% to Total Assets 4,495.37 3,230.64 39.15%$4.49B as loans and facilities to customers (constituting 38.16% of Net Profit 23.85 14.62 63.18%total assets) rose by 23.76% to $1.72B.
Shareholders’ Equity 313.81 259.30 21.02% On the liabilities side, customers’ deposits (constituting 95.92% of
total liabilities) and total shareholders’ equity registered yearly Source: Company’s Website upturns of 41% and 21.02% to $4.01B and $313.81M respectively.
Y-o-Y Performance of Bank Audi Preferred Bank Audi to Buy Back its Preferred Class “E” Shares shares Class “E” Bank Audi S.A.L declared the cessation in trading of all the 1.25M $102.5 preferred shares class “E”, as of the 26th of May on the Beirut $102.0 Stock Exchange (BSE). In details, all of the mentioned outstanding $101.5 shares will be bought back, within sixty days from the 31st of May, in order to increase the nominal value of the bank’s remaining $101.0 shares by LP 5.111034 to LP 1,655.111534. However, it was also $100.5 suggested to increase capital in order to round up the nominal $100.0 value per share to LB 1,656.
$99.5
$99.0 $98.5
Source: Beirut Stock Exchange and Blominvest Bank
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BEMO Bank to Distribute 2014’s Dividends Allocation of BEMO Dividend Distribution for 2014 The Ordinary General Assembly of BEMO Bank’s shareholders convened on May 29, 2015 and approved the distribution of dividends for the year 2014 worth LP 6,793M (or $4.51M). Those
dividends will be distributed as follows: Type Type of Share Price/Share % change of Share i. Holders of common shares would receive: LP 50, the
equivalent of $0.031/share (or a net of $0.126 after the Common Common Shares LP 50 41.00% deduction of the 5% applicable tax). Shares Preferred Preferred 2013 ii. Holders of BEMO preferred shares class 2013: $7 2013 23.76% Shares $7/share (or a net of $6.65 after the deduction of the Shares 5% applicable tax).
Worth mentioning that the record date is on June 4, 2015, ex- dividend date is on June2, 2015, while the payment date will be on
June 9, 2015.
Source: BSE News
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FOCUS IN BRIEF
Alpha Banks: Q1 2015 Performance Highlights
Alpha Group’s Main Financial Highlights, In USD
% Mar-14 Mar-15 Change
Total Assets 179,041,263,682 194,034,618,905 8%
Loans and Advances to Customers 55,267,351,907 59,258,863,018 7%
Customer Deposits 148,875,958,872 160,394,033,831 8%
Shareholders' Equity 15,705,156,219 17,485,338,640 11%
Net Profit 428,949,254 479,055,390 12%
Ranking of Alpha Banks by Return on Average Assets
Rank Bank ROAA 1 BLOM Bank 1.3 2 Banque Libano-Francaise Sal 1.25 3 IBL Bank 1.16 4 Bank of Beirut Sal 1.1 5 Societe Generale de Banque au Liban Sal 1.07 6 Bank Audi Sal 0.96 7 Creditbank Sal 0.94 8 Fransabank Sal 0.91 9 BankMed Sal 0.83 10 Lebanon and Gulf Bank Sal 0.81 11 First National Bank Sal 0.78 12 BBAC Sal 0.77 13 Credit Libanais Sal 0.74 14 Byblos Bank Sal 0.69
Source: Bank Data Alpha Report
For Lebanon’s economy in general and for the banking sector in particular, 2015 represents the fifth year during which the Syrian spillovers and the political deadlock take a heavy toll. In good times and bad times, economists seek to assess key parameters in the core sector of banking, which contributes to 7% of GDP1, whose assets are 3.5 times the GDP2 and which acts as the main financier of the treasury.
The performance of the Alpha Group or the top 14 Lebanese banks with deposits exceeding $2B, is highly reflective of the overall status of the banking sector. The Alpha Group Report issued by Bankdata Financial Services reveals that in spite of persistent regional turmoil and local deadlock, alpha banks were able to maintain sound year-on year growth rates in the first quarter of 2015 (Q1 2015).
1 According to 2012-2013 national accounts 2 As at March 2015, share in 2015 estimated GDP
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The Alpha Banks’ total assets amounted to $194B at end March 2015, growing by 8.4% year-on-year (y-o-y). In fact, loans and advances to customers progressed by 7.22% y-o-y to $59.3B in Q1 2015, as commercial banks continue to fuel domestic consumption in the form of various retail loans and to promote access to home ownership through housing loans. Confidence in the sector remains a main lever of growth and resistance as shown by the sustained growth in deposits. As the backbone of the banking sector, customer deposits rose by 7.7% y-o-y to $160.4B in Q1 2015 and constituted 82.7% of Alpha Banks’ total assets. With a dollarization ratio of 70% at end March 2015, customer deposits in foreign currency grew by 7.99% y-o-y to reach $112.4B while customer deposits in local currency grew at a slower rate of 7.14% to $48B.
Despite the sentiments of confidence and resilience, the banking sector continues to adopt a conservative operating scheme. The low loans-to-deposits ratio stands testimony to that as it registered 36.95% at end March 2015, little changed from the loans to deposits ratio of 37.12% at end March 2014. Net provisions for credit losses, acting as security buffers for Alpha Banks, grew by $93M from $59.6M at end March 2014 to $152.9M at end March 2015.
Indicators point to a higher asset quality amongst Alpha Banks. The ratio of net doubtful and substandard loans to gross loans declined from 2.02% in March 2014 to 1.86% in March 2015. The capitalization of Alpha banks has also been enhanced with equity to assets advancing from 8.77% in March 2014 to 9.01% in March 2015.
Liquidity of Alpha Banks, another main pillar of financial soundness, has also shown signs of improvement in the first quarter of 2015. The ratio of net primary liquidity to customer deposits increased from 30.57% in March 2014 to 32.53% in March 2015. In terms of the net primary liquidity to customer deposits ratio, BLOM Bank ranked first with a ratio of 45.32%, followed by Byblos Bank with 40.73% and IBL Bank with 36.99%.
The Bank Data report highlights that in spite of the strong subscriptions of banks to the $2.2B Eurobonds issue in February, their exposure to the foreign-currency denominated public debt decreased. The ratio of Alpha banks’ holding of Lebanese sovereign Eurobonds to foreign currency deposits declined from 15.39% in March 2014 to 14.84% in March 2015.
According to Bank data, return ratios remained relatively stable after contractions in the past few years. The Return on Average Assets (ROAA) remained barely unchanged at 0.99% while the Return on Average Equity (ROAE) stood still at 11.06%. BLOM Bank ranked first amongst Alpha banks with the highest ROAA of 1.30% followed by Banque Libano - Francaise with 1.25% and IBL Bank with an ROAA of 1.16%.
Profitability of Alpha banks remained robust with the group’s net profit posting a double-digit y-o-y growth of 12% to $479.1M. The 8% y-o-y upturn in the net interest income to $843M compensated for the 5% decline in the net fee and commission income to $194M.
Amidst tough operating conditions, Alpha banks have turned to optimization strategies. Cost control efforts are revealed by the contraction of the cost to income ratio from 51.64% in Q1 2014 to 47.47% in Q1 2015. In fact the 8% y-o-y increase in staff expenses, which represent 56% of total operating expenses, was outpaced by a 12% y-o-y rise in net operating income.
The increase in staff expenses as well as in the number of bank branches points to the Alpha group’s continued expansion efforts. The number of branches totaled 1,214 in March 2014 up by 6.3% from 1,142 branches in March 2014. The number of staff employed reached 29,857 in March 2015, up from 28,712 in March 2014. It is worth mentioning that 68% of the staff is located in Lebanon while 32% is located abroad.
Overall, although the year 2015 presents various challenges to the banking sector, key parameters, be it in terms of provisions, profitability or returns, indicate that the sector is robust and capable of weathering the tough operating environment.
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Research Department: Wael Khoury [email protected] David Achdjian [email protected]
Lana Saadeh [email protected] S A L Riwa Daou [email protected] Mirna Chami [email protected] Your Investment Reference Maya Mantach [email protected] Marwan Mikhael [email protected]