annual report 2014 - Microsoft · 6 / © Annual Report 2014 2009 2010 2011 2012 2013 2014 8.56% 0 2000 4000 6000 8000 10000 12000 7,475 8,687 10,201 11,064 11,271 10,488 Loans and

annual report

2014

2 / © Annual Report 2014

table of Contents

2014 was marked by grief, mourning the loss of the late Chairman General Manager of Banque Libano-Française Farid Raphaël. The latter accomplished so much for hisfamily, for the bank he founded as well as society andLebanon, both on the national and economic fronts. In his long career, he embodied four characters: a statesman with exceptional qualities, upholding the interest of the country above any other interests; a businessman who firmly believed that the soundness of the economy is the key to a permanent, sustainable private sector; a far-sighted banker alwaysbalancing between the monetary stability and moderatelending; and finally a well beloved remarkable humanist. Farid Raphaël, to a unique man who has always put his professional skills and human qualities at the country’s service, we bid you farewell!


FARID RAPHAËL (1933-2014)MAIN POSITIONS AND MANDATES

Founder (1967) thenGeneral Manager (1971)and Chairman (1979) ofBanque Libano-Française

Manager at CompagnieAlgérienne de Créditet de Banque

Founder and ChairmanGeneral Manager of Banque Libano-Française (France)

Minister of Finance,Justice, Posts andTelecommunications

Chairman of theAssociation of Banksin Lebanon (1997-2001),and Board Member from1979 to 2014

Member of the Boardand Advisor to theChairman of BanqueFrançaise de l’Orient(France and Switzerland)

Acquisition of BanqueSBA (France, Switzerlandand Cyprus) and BoardMember

Founder ofBank Al-Sharq (Syria),Board Member thenChairman from2010 till 2014

1956-1967 1967-2014 1976-1989 1976-1979 1979-2014 1989-2000 2006-2014 2008-2014


2009 2010 2011 2012 2013 2014

8.56%

0

2000

4000

6000

8000

10000

12000

7,475

8,687

10,201

11,27111,06410,488

Loans and advances In millions of Usd caGR 09-14

2009 2010 2011 2012 2013 2014

12.36%

0

1000

2000

3000

4000

5000

2,306

2,955

3,404

3,8084,130

3,452

ToTaL cUsTomeRs’ deposITs In millions of Usd caGR 09-14

eqUITy aTTRIbUTabLe To The GRoUp In millions of Usd caGR 09-14

ToTaL asseTs In millions of Usd caGR 09-14

neT Income aTTRIbUTabLe To The GRoUp In millions of Usd caGR 09-14

2009 2010 2011 2012 2013 2014

8.53%

0

2000

4000

6000

8000

10000

6,363

7,431

8,7499,508 9,580

9,056

2009 2010 2011 2012 2013 2014

11.02%

0

200

400

600

800

1000

1200

595

746798

840

1004

919

2009 2010 2011 2012 2013 2014

8.71%

0

20

40

60

80

100

120

67

79

61

84

102100

banqUe LIbano-FRançaIse s.a.L.: seLecTed consoLIdaTed FInancIaL daTa

In millions of Usd and % 2009 2010 2011 2012 2013 2014

Total assets 7,475 8,687 10,201 10,488 11,064 11,271Loans to customers 2,306 2,955 3,404 3,452 3,808 4,130Customers’ deposits 6,363 7,431 8,749 9,056 9,508 9,580Shareholders’ equity 595 746 798 840 919 1,004Net financial revenues 176 194 189 213 236 247Net earnings 67 79 61 84 100 102Number of branches (Group) 46 48 54 60 62 65Number of staff (Group) 1,073 1,168 1,232 1,247 1,308 1,428 Liquidity and asset qualityPrimary liquidity / deposits 39.52% 36.46% 38.78% 37.91% 37.32% 34.75%Liquid assets / deposits 46.84% 46.82% 45.55% 45.02% 43.67% 45.82%Loans to deposits 36.24% 39.76% 38.91% 38.12% 40.05% 43.11%Net doubtful loans / net loans 1.09% 0.92% 0.58% 1.43% 0.21% 0.54%Loan loss provisions / gross doubtful loans 84.89% 90.31% 93.02% 75.05% 97.39% 93.18%Net doubtful loans / equity 4.21% 3.64% 3.91% 5.89% 2.78% 3.80% capital adequacyAverage equity to assets 7.77% 8.30% 8.17% 7.92% 8.16% 8.61%Capital adequacy ratio* 11.95% 12.41% 11.32% 13.48% 13.13% 12.89% profitabilityROAA 0.97% 0.98% 0.65% 0.81% 0.93% 0.92%ROAE 12.50% 11.77% 7.90% 10.25% 11.35% 10.65%ROAE adjusted with interest on cash contribution to capital 12.99% 12.09% 8.14% 10.50% 11.58% 10.85% management efficiencyCommissions and other financial revenues to net financial income 29.04% 27.53% 15.44% 26.68% 26.77% 25.03%Cost to income 52.21% 51.49% 59.89% 53.01% 51.04% 51.29%Footings per branch (in USD million) 213.8 236.9 233.6 220.1 221.6 223.0Footings per staff (in USD million) 9.2 9.7 10.2 10.6 10.5 10.2 share dataCommon Shares outstanding 20,000,000 20,000,000 20,000,000 21,000,000 21,000,000 21,000,000Preferred Shares outsanding 1,000,000 1,000,000 2,000,000 2,500,000 2,500,000 2,500,000Net dividends on Common Shares (in USD million) 16.58 19.90 19.78 19.78 23.26 23.26Net dividends on Preferred Shares (in USD million) 10.25 16.00 18.50 18.50 18.50 18.50Earnings per Common Share (in USD) 2.91 3.21 2.13 3.20 3.99 3.91

*As per Basel II requirements from 2009 to 2011 As per Basel IIII requirements from 2012

1 – Consolidated Financial Highlights


table of Contents

FINANCIAL HIGHLIGHTS 6

STATEMENT OF THE CHAIRMAN 10 BOARD OF DIRECTORS 16 BIOGRAPHIES OF BOARD MEMBERS 17 SENIOR MANAGEMENT 24 COMMITTEES 27 CORPORATE STRUCTURE 32 MAIN BUSINESS ACTIVITIES 33 SUBSIDIARIES 38 MANAGEMENT DISCUSSION AND ANALYSIS 41 HUMAN RESOURCES DEVELOPMENT 64 CORPORATE SOCIAL RESPONSIBILITY 70 RESOLUTIONS OF THE ANNUAL ORDINARY GENERAL ASSEMBLY 73 INDEPENDENT AUDITORS’ REPORT 80

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 82

CONSOLIDATED INCOME STATEMENT 84

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 85

CONSOLIDATED STATEMENT OF CHANGES IN EqUITY 86

CONSOLIDATED CASH FLOw STATEMENT 88

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 90

MAP OF BRANCH LOCATIONS 148 MAP OF ATM LOCATIONS 150 DIRECTORY 152 MAIN CORRESPONDENT BANKS 156


In spite of the challenges of 2015, the low growth environment, and the lack of visibility, Banque Libano-Française will remain steadfast in:• Creatingvaluetoallitsstakeholders,• ProvidingexcellentqualityofserviceandauniquebankingexperiencetoitsclientsandtotheLebanese diaspora,• BeingareferenceintheLebanesebankingsectorwhichremainsthebackboneofthecountryand its economy,• Contributing to the growth and development of Lebanon on the Human, Economic,Environmental, and Social levels,• BuildingonourCorporateSocialResponsibilityinordertoreachsustainabilityinbanking.

Finally I would like to reiterate my thanks to the Bank’s shareholders, correspondents, clients and employees who have shown an unwavering commitment and who have helped us achieve

the significant milestones that we reached in 2014.

walid RaphaëlChairman General Manager

sTaTemenT oF The chaIRman

2 – Statement of the Chairman

On September 1, 2014, our Founder, Chairman and General Manager, Farid Raphaël, passed away. A great page of the life of the Bank but also of our banking sector has been turned.

Farid Raphaël left us a great legacy, an institution, a Bank that inspires trust to all its stakeholders. The Banque Libano-Française family is committed to pursue his vision staying faithful to his values of Responsibility, Integrity, Competencies, Humanism, and Commitment; the five founding values of our Bank that make our strength and our difference.

This annual report is dedicated to his memory and to all the people that he touched.

The conflict in Syria, now in its fifth year, dominates Lebanon’s outlook, with refugees now comprising more than one-quarter of the population. The refugee crisis is straining local communities and placing further pressure on the economy, the already weak public finances and the infrastructure. Moreover, Lebanon faces a difficult domestic political situation. The presidency has been vacant since May 2014 and a lack of consensus between the major parties is paralyzingtheexecutivebranchandhinderingtheenforcementofkeylegislation.

In the face of this uncertainty, economic growth remains subdued. Real GDP growth dropped from 3 percent in 2013 to an estimated 2 percent in 2014. A similarly modest growth rate is projected for 2015. Lebanon’s traditional growth drivers - tourism, real estate and construction - have received a significant blow and a strong rebound is unlikely soon.

The Lebanese banking sector remained resilient in this difficult environment, and continued tocaptureastrongflowofremittancesandexpatriateinvestments.In2014,customerdepositsgrew by 6 percent to USD 144 billion, while loans to the private sector increased by 7.4 percent to USD 51 billion, equivalent to the size of the GDP.

Despite the tremendous challenges and the economic slowdown in Lebanon and the region, Banque Libano-Française achieved excellent results in 2014, with net profits amountingto USD 102 million, the highest level in the Bank’s history. Banque Libano-Française also pursued its strong commitment towards the Lebanese private sector, increasing its loan book by 8.5percent,exceedingtheaveragegrowthofthebankingsector.TheBankmaintainedaveryhealthy Capital Adequacy ratio, which registered 12.9 percent as per Basle III requirements.

During 2014, the Banque Libano-Française group continued to develop its branch network and enhance its technology, while managing its cost base. The consolidated cost-to-income ratio remained stable at 51 percent, while the number of branches in Lebanon reached 54.

Towards the end of 2014, we launched our Series 4 Preferred Shares. Thanks to very high demand, subscriptions reached USD 250 million, which incited us to increase the size of the issuefromUSD100milliontoUSD150million.Withthis issue,ourequityhasexceededUSD 1 billion, giving our Bank the means to pursue our growth.

Back to Table of Contents




bIoGRaphIes oF boaRd membeRs

Mr. Walid Raphaël

Born in 1971Chairman since September 2014Term expires at the 2018 Annual General Meeting of ShareholdersChairman of the Board

Chairman of the Board of Directors since September 2014 and General Manager of the Bank since March 2010, Chairman and General Manager of Libano-Française Finance and Member of the Board of Banque SBA and LF Finance (Suisse), Mr. Raphaël began his banking career in 1995 at Credit Agricole Indosuez, where he held several positions in both Paris and London, in the International Project Finance Department and in capital markets covering emerging markets. He joined the General Management of the Bank in 2004 and was elected member of the Board of Directors and appointed Deputy General Manager in March 2006. Mr. Raphaël received a Masters degree in Law from Panthéon-Assas University (France), a Masters diploma in Banking and Financial Law from Panthéon-Sorbonne University (France), and a MBA from INSEAD (France).

Mr. Elie Nahas

Born in 1944Director since April 2006Term expires at the 2018 Annual General Meeting of ShareholdersChairman of Group Banque Libano-Française

Member of the Board of Directors since April 2006, Mr. Nahas has been the General Manager of the Bank since 2004 and was Vice-Chairman between 2010 and 2014. He was elected Chairman of Group Banque Libano-Française in September 2014. He began his career in banking with ABN AMRO in 1964 and was Country Manager Lebanon from 1986 to 2002. Mr. Nahas was General Manager and Member of the Board of Directors of Byblos Bank between 2003 and 2004. He was a member of the Board of Directors of the Lebanese Bankers’ Association from 1987 to 1990. He was Honorary Consul General of Netherlands in Lebanon from 1988 to 2010. Mr. Nahas was recognized by H.M. queen BeatrixoftheNetherlandsas“Grootmeesterderorde van Oranje-Nassau” in 1997. He graduated from Saint-Joseph University in Beirut with a degree in Economics and Banking.

boaRd oF dIRecToRs

3 – Board of Directors

Mr. walid Raphaël Chairman

Mr. Elie Nahas Chairman of Group Banque Libano-Française

Mr. Zafer Chaoui Member

Mr. Philippe Doré Member

Mr. Habib Letayf Member

Mr. Philippe Lette Member

Dr. Marwan Nsouli Member

Mrs. Raya Raphaël Nahas Member

Mr. wafic Said Member

Raphaël & Associés Legal Advisor

Deloitte & Touche Auditors

DFK Fiduciaire du Moyen-Orient Auditors

chanGes To The boaRd oF dIRecToRs dURInG The yeaRs 2014 and 2015 To daTe

may 2014

•ReelectionofMr.PhilippeDoréandMr.WaficSaidforathreeyeartermexpiringuponholdingoftheOrdinaryGeneralMeetingofShareholdersthatwillexaminetheaccountsandactivityoftheyear 2016.

•ElectionofDr.MarwanNsouliforathree-yeartermexpiringuponholdingoftheOrdinaryGeneralMeetingofShareholdersthatwillexaminetheaccountsandactivityoftheyear2016.

sepTembeR 2014

•ElectionofMr.WalidRaphaelasChairmanoftheBoardofdirectors

•ElectionofMr.ElieNahasasChairmanofGroupBanqueLibano-Française

apRIL 2015

•Reelection of Mr. Walid Raphaël, Mr. Zafer Chaoui, Mr. Elie Nahas, Mr. Habib Letayf and MePhilippeLetteforathreeyeartermexpiringuponholdingoftheOrdinaryGeneralMeetingofShareholdersthatwillexaminetheaccountsandactivityoftheyear2017.



boaRd oF dIRecToRs

Mr. Habib Letayf

Born in 1934First elected to the board in 1979Term expires at the 2018 Annual General Meeting of ShareholdersNon-Executive DirectorChairman of the Corporate Governance and Remunerations CommitteeMember of the Audit Committee till September 2015 Member of the Board Risk Committee

Member of the Board of Directors, Mr. Letayf was the General Manager of the National Council for Touristic Development in Lebanon from 1964 to 1984, Attaché to the Lebanese Embassy in Paris from 1985 to 1992, and Chairman and General Manager of Casino du Liban from 1992 to 1999. Mr. Letayf holds a degree in Economics.

Mr. Philippe Lette

Born in 1948Director since April 2006Term expires at the 2018 Annual General Meeting of ShareholdersNon-Executive DirectorMember of the Audit CommitteeMember of the Corporate Governance and Remunerations Committee

Member of the Board of Directors, Mr. Lette is an international commercial lawyer with offices in Toronto, Montréal, Paris and Geneva. He is a Board Member of various companies. Mr. Lette received a Bachelor of Civil Law from McGill University (Canada), a Masters diploma in Law fromUniversity ofBordeaux (France),a Masters diploma in Comparative Private Law from Panthéon-Sorbonne University (France), and a LLM from Faculté Internationale pour l’Enseignement du Droit Comparé (France).

Mr. Philippe Doré

Born in 1966Director since April 2008Term expires at the 2017 Annual General Meeting of ShareholdersNon-Executive DirectorChairman of the Audit Committee till September 2015Member of the Audit CommitteeMember of the Board Risk Committee till September 2015Chairman of the Board Risk Committee

Independent member of the Board of Directors, Mr. Doré is a Director at Arjil, an independent investment bank based in Paris. Mr. Doré was until September 2010, Assistant Director in the International Division at Credit Agricole France. He graduated From Ecole Nationale des Ponts et Chaussées (France) with a degree in Civil Engineering.

boaRd oF dIRecToRs

Mr. Zafer Chaoui

Born in 1947Director since June 1991Term expires at the 2018 Annual General Meeting of ShareholdersNon-Executive DirectorChairman of the Board Risk Committee till September 2015Member of the Board Risk CommitteeMember of the Corporate Governance and Remunerations Committee

Member of the Board of Directors, Mr. Chaoui is a businessman. He has been Honorary Consul General of Finland in Lebanon since 1996. He is also Chairman and a Board Member of various industrial and commercial companies and acts as an agent in Lebanon and in several Arab countries for major international companies. Mr.Chaouiwasrecognizedas“CommanderoftheFinnishLion”in2001,receivedthe“FinnishArmyMedal” in 2001, and the “Medal of theCatholic Church of Jerusalem” in 2006. He graduated from Saint-Joseph University in Beirut with a degree in Economics.



Mr. Wafic Rida Said

Born in 1939Director since April 2005Term expires at the 2017 Annual General Meeting of ShareholdersNon-Executive DirectorMember of the Corporate Governance and Remunerations Committee

Member of the Board of Directors, Mr. Said started his business career in investment banking in 1963 at UBS in Geneva. He is the Chairman of Said Holdings Limited, a financial holding company with global investments extendingfrom the Far East to Europe and North America. In 1982, he founded the Said Foundation, an English charity working to effect lasting changes in the lives of disadvantaged children in the Middle-East through its scholarship program and projects in the fields of education, health and disability, and to promote understanding between the Arab and western worlds. He is co-Founder and Trustee of the Said Business School Foundation (Oxford University’sBusiness School) and a Member of Oxford’sCourt of Benefactors. In 2003, he was awarded “Oxford’sSheldonMedal”.Heholds,as“GrandCommandeur”,the“OrdredeMériteduCèdre”of Lebanon and the “Ordre Chérifien” ofMorocco.

boaRd oF dIRecToRs

Dr. Marwan Nsouli

Born in 1938Director since May 2014Term expires at the 2017 Annual General Meeting of ShareholdersNon-Executive DirectorChairman of the Audit Committee

Independent member of the Board of Directors, Dr. Nsouli is an international lawyer specialized in the Banking and financial sector. Dr. Nsouli was Vice-Governor of the Lebanese Central Bank, “Banque du Liban” from 1998 to 2008.During those years, Dr. Nsouli represented the “BanqueduLiban”intheIMF,WorldBankandthe AMF (Arab Monetary Fund). He currently serves as Member of the Board of Directors of the Near East Commercial Bank S.A.L. Dr. Nsouli holds a Phd degree in Law from Paris V- René Descartes University (France) and a Masters in Comparative Law from New York University (USA).

Mrs. Raya Raphaël Nahas

Born in 1973Director since April 2010Term expires at the 2016 Annual General Meeting of ShareholdersExecutive Director

Member of the Board of Directors since April 2010, she serves as General Manager of the Bank since September 2014. Mrs. Nahas began her career in banking at Banque Libano-Française in 1997 as a Financial Analyst and subsequently, has taken responsibilities in project finance, investment banking, retail banking and bancassurance. She was elected member of the Board of Directors and appointed Deputy General Manager in March 2010. Mrs. Nahas is an active Member of LIFE (Lebanese International Finance Executive). She chairs the BeirutChapter and the Promote Piller of this non-profit association that aims to promote networking between Lebanese working in the financial field. Mrs. Nahas received a degree in Economics and a Masters in Financial Management from Paris-Dauphine University (France) and a Masters diploma in Money, Banking and Finance from Panthéon-Sorbonne University (France).

boaRd oF dIRecToRs




bUsIness deveLopmenT dIvIsIons

branch networkPatrick Gaglio

corporate bankingHoda Assi

middle-market bankingElie Aoun

Treasury, capital markets and Wealth managementGeorges Khoury

InternationalMaurice Iskandar

Loan RemediationMoustapha Alwan

Retail banking products and marketingRonald Zirka

cards servicesMyrna wehbe

senIoR manaGemenT

4 – Senior Management

Walid RaphaëlChairman and General Manager

elie nahasChairman of Group Banque Libano-Française and General Manager

Raya Raphaël nahasGeneral Manager

Jamal mansourDeputy General Manager

hoda assiHead of Corporate Banking

elie aounHead of Middle-Market Banking

Joséphine chahineChief Risk Officer

philippe chartounyOrganization & Information Technology

patrick GaglioHead of Branch Network

maurice IskandarHead of International

Georges KhouryHead of Treasury, Capital Markets and wealth Management

execUTIve commITTee


5 – Committees

boaRd commITTees

boaRd aUdIT commITTee

The Board Audit Committee follows up the internal audit reports, keeps updated with the recommendationsoftheBankingControlCommissionandoftheBank’sexternalauditorsandensurescompliancewithrulesandregulations.Headedbyanindependentnon-executiveDirector,ithasfourmembers and meets four times per year.

boaRd RIsK commITTee

The Board Risk Committee supervises the proper application of the Risk Management principles, establishestheriskpolicyoftheGroupandcontrolstheGroup’sexposureintermsofcredit,market,liquidity,interestrateandoperationalrisks.Headedbyanindependentnon-executiveDirector,ithasthree members and meets four times per year.

coRpoRaTe GoveRnance and RemUneRaTIons commITTee

The Corporate Governance and Remunerations Committee establishes the rules and principles of governance of the Bank and ensures their proper application. It validates the code of conduct and professional ethics that aims to promote healthy governance culture. It also develops a remuneration policy in accordance with regulations of the Central Bank. It has four members, is headed by a non-executivedirectorandmeetsonasemi-annualbasis.

manaGemenT commITTees

execUTIve commITTee

TheExecutiveCommitteediscussesstrategicissues,takesmajordecisionsandensurestheexecutionofthe Bank’s annual plan. It has eleven members, is headed by the Chairman and General Manager and meets on a weekly basis.

manaGemenT commITTee

The Management Committee is comprised of the Heads of the Bank’s Divisions who share and discuss their ongoing projects. The Management Committee has thirty-four members, is headed by the Chairman and General Manager and meets on a quarterly basis.

cRedIT poLIcy and sTRaTeGy commITTee

The Credit Policy and Strategy Committee reviews the Credit Policy, taking into account any major changes in the markets and environment. It defines and sets the strategies and risk policies in line with the budget and with local as well as international regulations. It has thirteen members, is headed by the Chairman and General Manager and meets on a semi-annual basis.

cRedIT RIsK commITTees

There are three Credit Risk Committees: the Board Credit Committee, the Corporate Credit Committee, and the Middle-Market Credit Committee. The objectives of these Committees are to approve and review loansandcredits,andtofixrisklimits.TheBoardCreditCommitteeiscomprisedofthreenon-executiveBoard members. The Corporate Credit Committee is comprised of the Chairman and General Manager, the Group Chairman and General Manager, the General Manager, the Chief Risk Officer and his Deputy and four Senior Managers. The Middle-Market Credit Committee is comprised of the Chief Risk Officer andtheHeadofMiddle-MarketBankingandtheirDeputies.TheseCommitteesmeetweeklyexcepttheBoard Credit Committee that meets every two months.

Risk managementJoséphine Chahine

credit Risk Zahi Azouri

complianceSaïd Gebran

Legal compliance Maya Abboud

Financewalid Issa

organization & Information TechnologyPhilippe Chartouny

Information TechnologyGhassan Sawaya

operationsNada Khayat

communications & customer experienceTania Rizk

human ResourcesGeorges Behlock

bLF Training academyElie Dagher

General servicesGabriel Rizk

securityIskandar Aoun

Internal auditFady Lahoud

Fiscal, administrative and Financial affairs Jean Medlege

LegalMarc de Chadarevian

sUppoRT dIvIsIons

senIoR manaGemenT



InTeRnaL aUdIT and opeRaTIonaL RIsKs commITTee

The Internal Audit Committee approves and monitors the annual plan of the Internal Audit Division, monitors the quality of internal audit reports, monitors the recommendations of the Banking Control CommissionandoftheBank’sexternalAuditorsandensuresthathighrisksarewellcoveredbytheBank’s Internal Audit function. This Committee has seven members, is headed by the Chairman and General Manager and meets on a semi-annual basis.

hUman ResoURces commITTee

The Human Resources Committee proposes a recruitment policy, prepares career development plans and training programs, formulates employee benefits policies, and supervises the annual employee evaluation process and the Bank’s code of conduct. It has ten members, is headed by the Chairman and General Manager and meets on a semi-annual basis.

compLIance commITTee

The Compliance Committee sets the Bank’s anti-money laundering procedures and guidelines, and monitors issues related to money laundering and reports of suspicious activities on transactions. It has fourteen members, is headed by the Chairman and General Manager and meets on a semi-annual basis.

secURITy commITTee

The Security Committee sets the Bank’s security policy and monitors the anomalies in the realization of any project. It has eleven members, is headed by the General Manager and meets on a quarterly basis.

caRds seRvIces commITTee

The Cards Services Committee oversees the Bank’s plastic card business, approves the new credit and debitcardproductsandtheservicesrelatedtotheBank’sATMandpointsofsalesnetworks,andexaminesfraud cases. It has seven members, is headed by the General Manager and meets on a quarterly basis.

caReeR deveLopmenT commITTee

The Career Development Committee discusses the employees’ careers and establishes specific training programs for employees that show potential to reach managerial positions. It has three members, is headed by the Human Resources Manager and meets on a bi-monthly basis.

bUsIness conTInUITy manaGemenT

Business Continuity Planning (BCP) is a complete management process that identifies potential impacts menacing an organization. The BCP Committee ensures that the organization has the proper response to major disruptions threatening its survival and operational capability. It has eleven members, is headed by the Chairman and General Manager and meets on an annual basis.

commITTees

Loan RemedIaTIon commITTees

There are three Loan Remediation Committees: the Corporate Loans Remediation Committee, the Middle-Market Loans Remediation Committee and the Retail Loans Remediation Committee. Loan Remediation cases are assigned to a particular committee on the basis of the nature and size of the credit. Each Loan Remediation Committee is comprised of the members of the corresponding Credit Committees as well as the Head of the Legal Department and the Head of the Loan Remediation Division. The Middle-Market and Corporate Loans Remediation Committees meet on a quarterly basis. The Retail Loans Remediation Committee meets on a semi-annual basis.

asseT and LIabILITy manaGemenT commITTee

The Asset and Liability Management Committee manages the assets and liabilities of the Bank’s balance sheetintermsofinterestrisk,foreignexchangeriskandliquidityrisk,determinestheBank’sinterestrateand cash management policies and approves the launch of new financial products. It has eight members, is headed by the Chairman and General Manager and meets on a monthly basis. A follow-up committee to the Asset and Liability Management Committee meets weekly.

saLes and maRKeTInG commITTee

The Sales and Marketing Committee discusses the market and the competition, and defines the commercial strategy in order to increase the Bank’s market share. It has ten members, is headed by the General Manager and meets on a monthly basis.

InvesTmenT commITTee

The Investment Committee monitors the economic and financial environments and propose policies and investments for the Bank and its clients. It advises the Bank and its clients on wealth protection and capital appreciation. In case of turbulence or crisis in the markets, emergency meetings are called. It has seven members, is headed by the Chairman and General Manager and meets on a monthly basis.

oRGanIzaTIon and sTRaTeGIc pLannInG commITTee

The Organization and Strategic Planning Committee has several functions related to the Bank’s annual plan, including preparing and monitoring the implementation of the annual plan, identifying and initiating projects aimed at improving the Bank’s performance and efficiency, creating cross-synergies amongst the Bank’s Divisions, ensuring that the Bank’s procedures are documented and implemented properly. This Committee has seven members, is headed by the General Manager and meets on a

quarterly basis.

opeRaTIons and InFoRmaTIon TechnoLoGy commITTee

The Operations and Information Technology Committee identifies the needs of the Bank in terms of information technology, prepares a three-to-five year plan, determines the priorities of the Bank and supervises the installation of new software programs, and the security systems. It has nineteen members, is headed by the General Manager and meets on a quarterly basis.

commITTees




7 – Main Business activities

commeRcIaL and coRpoRaTe banKInG

The Bank has historically been one of Lebanon’s leading commercial banks, offering services to large- and medium-sized private sector businesses and maintaining one of the largest loan portfolios among banks in Lebanon. Commercial banking products and services offered by the Bank include working capital lines and overdrafts, medium-term and long-term loans, trade finance, documentary credits and guarantees and other off-balance sheet facilities and financial consulting services, as well as all traditional term deposits accounts, cash management services and cards services.

Commercial banking activities are carried out through two main commercial divisions: the Corporate Banking Division and the Middle-Market Banking Division.

TheMiddle-MarketBankingDivisioncoverssmall-ormedium-sizebusinesseswithacreditexposure at the Bank of up to USD 1.5 million and an annual turnover of less than USD 10 million. As at December31,2014,theMiddle-MarketBankingDivisionhadapproximately2,400clientsspreadacrossthe Bank’s 54 local branches.

The Middle-Market Banking Division is run by a specialized, fully dedicated team. In addition to the primary products and services outlined above, the Middle-Market Banking Division provides advisory services to its clients. Such advisory services include, among others, the promotion and structuring of a wide array of financing programs such as Kafalat subsidized loans, Banque du Liban subsidized loans, Arab Trade Financing Program facilities, IFC Program facilities, as well as European Investment Bank, Agence Française de Développement and other international financial institutions loan packages. Through these services, the Bank aims to reduce the financing costs of its customers and to offer them variousfinancingoptionsandaneasieraccesstoexportmarkets,therebydevelopingsustainedcustomerrelationships.

The Corporate Banking Division was created in 2001 in order to cater to the Bank’s largest clients in termsofsalesturnoverorfacilitiesextended.CorporateclientsarecurrentlydefinedasthosewithasalesturnoverexceedingUSD10millionorwhosebankingfacilitiesattheBankexceedUSD1.5million.Asat December 31, 2014, the Corporate Banking Division had around 550 clients.

Corporate client files are distributed among specialized units within the Corporate Banking Division, consisting of Relationship Managers and Junior Officers and headed by a Senior Relationship Manager who work closely with the Branch Manager where the corporate account is held. These specialized teams are divided into five different units focusing on various economic sectors: the General Trading Unit; the General Contracting and Real Estate Unit; the International Trading, Services and Insurance Unit; the Industries Unit; and the Syndicated, Subsidized and Special Loans Unit.

InvesTmenT banKInG and GLobaL maRKeTs

The Bank provides general investment banking services, including acting as arranger or participant in loan syndications (generally when the Bank acts as lead lender and agent bank), and placement agent in connectionwiththeissuanceoffixedandfloating-ratebondsaswellasstructuringandmanagingsharesand rights issues for corporate clients.

The Bank also structures sophisticated investment products that are offered to both retail and private clients. It also advises its corporate and private banking clients and structures sophisticated hedging solutions for covering various financial markets and products as well as commodities. The Bank has a proprietarytradingactivityinLebaneseandinternationalfixedincomesecurities,equitiesandforeigncurrencies.

Since 1996, the Bank has managed and arranged primary-market investment-banking transactions with an aggregate value of over USD 2 billion.

maJoR sUbsIdIaRIes oF banqUe LIbano-FRançaIse as aT decembeR 31, 2014

100%Libano-Française Finance S.A.L. (LFF)

Financial institution

99%Banque SBA S.A.

100%LF Finance (Suisse) S.A.

Financial institution

Bank Bank Bank

79,3%Société de

Construction et de Commerce S.A.L.

(SODECO)

Real estate company

50%Centre de Traitement

Monétique S.A.L. (CTM)

Card processing

40%Bancassurance S.A.L.

49%Bank Al-Sharq S.A.S.

Baghdad branch

Representative Offices

Life insurance company

6 – Corporate Structure



pRIvaTe banKInG and WeaLTh manaGemenT

The Private Banking activities were first launched by the Bank in 2000. In 2008, following a complete reorganization of the activities of Treasury, Capital Markets and Private Banking, the wealth Management Department was created. It is composed of a team highly skilled of relationship managers whose mission istoexplore,identifyandattracthighnetworthindividualsinordertoofferthempersonalizedadvice,professional guidance and tailor-made investment solutions. Relationship Managers are backed by product specialists. The priority of Relationship Managers is to offer an integrated and solid approach based on a relationship built on the highest levels of trust, security, confidentiality and integrity.

InTeRnaTIonaL and coRRespondenT banKInG

The International Division serves the various divisions and entities of the Bank in terms of analyzing and following up counterparty and sovereign risks. It also generates business through the Bank’s correspondent banking network, including risk participation activities, forfeiting, and pre-and post-exportfinance,andcoordinateswiththeBank’sotherentitiestoprovidecashmanagementservicesandforeignexchange,securitiesbrokerageservices,locallyandinternationally.

The Bank maintains relationships and credit lines with a large number of international banks. Such a wide correspondent banking network allows the Bank to provide efficient and competitive services to its clients for all their international banking activities. The Bank’s trade finance confirmation lines were strengthened in 2005 when the Bank was the first in Lebanon and the second in the region to join the Global Trade Finance Program (GTFP) of the International Finance Corporation by becoming first an Issuing Bank and later a Confirming Bank in the Program. GTFP gives the Bank a competitive advantage in international trade finance transactions, enhances the Correspondent Banking network and improves the conditions and transparency of trade finance activities. In addition, the Bank’s International Division participates in various syndicated loans of foreign banks, and has structured several cross-border transactions as well as long-term borrowings from international and multilateral financial institutions such as AFD (Agence Française de Développement), BEI (Banque Européene d’Investissement), ATFP (Arab Trade Financing Program), OPIC (Overseas Private Investment Corporation), The Arab Investment Guarantee Company and others.

TheInternationalDivisionisinchargeoftheGroup’sInternationalexpansionplan,andsupervisesthe activities of the Bank’s Representative Offices in Abu Dhabi (UAE) and in Lagos (Nigeria) and its Baghdad Branch (Iraq).

maIn bUsIness acTIvITIes

ReTaIL banKInG

As at December 31, 2014, the Bank had 54 branches covering all the regions in Lebanon, a network of 141 ATMs and more than 150,000 active customers. This network is managed by the Branch Network Division. This Division has two main objectives: to assume the hierarchical responsibility of the branch network and to implement the Bank’s development strategy. It is composed of two departments: the Network Management Department and the Retail Loans Department.

neTWoRK manaGemenT depaRTmenT

The Network Management Department is responsible for the coordination between the Branch Network and the various Business Development and support Divisions of the Bank, in order to assist each branch in achieving its objectives, improving its performance and increasing its operational efficiency, while developing the sales skills of branch personnel. The Network Management Department carries out its responsibilities by:•communicatingandimplementingtheBank’spoliciesamongallbranches,•ensuringthetransferofinformationfromtheBranchNetworktotheManagementinanappropriateand timely manner,•continuouslymonitoringthesalesresultsandotherrelevantKPI’sofeachbranch,•assistingeachbranchmanagerinpreparingandimplementingtheannualplanoftheBank,•ensuringthatbranchpersonnelareproperlytrainedonallbranchoperationsandnewproducts,•rewardingcompetentandpromisingemployeesintheBranchNetwork.

ReTaIL Loans depaRTmenT

The Retail Loans Department is in charge of the credit approval and administration of retail credit products, including the Bank’s housing loans, Public Corporation for Housing (PCH) loans, housing loans to military personnel or other specialized programs, as well as personal loans and car loans. The Retail Loans Department has created a dedicated Call Center for payment irregularities and has implemented a standardized and efficient retail loans distribution process.

ReTaIL banKInG pRodUcTs and seRvIces

Retail Banking offers a full range of products and services, including traditional products and services, a uniquetermdepositaccountfeaturingsignificantflexibility,acompleterangeofdebitandcreditcards(MasterCard and Visa) in USD, EUR and LBP, a wide network of merchants affiliated to the Bank’s cards payment circuit, and electronic banking services (e-banking, phone banking, sms banking, call center). The Bank’s phone and internet distribution channels, Point Phone® and Point Com® and its Call Center Point Call®, allow customers to check account balances and movements, obtain answers to their inquires overthephoneorinternet,andexecutecertaintypesoftransactions.

In addition, through the Bank’s subsidiary, Bancassurance S.A.L., Retail Banking offers life and non-life-insurance, retirement plans and education plans. In 2014, the Bank’s customers participating in Bancassurance S.A.L. savings insurance plans benefited from better-than-market returns on their USD investments.

Recently, the Retail Banking Division has concentrated its efforts on quality of service and client satisfaction, the development of new product offerings, the renovation of the Bank’s branches, the expansionoftheBank’sATMnetworkPointCash®toinclude,amongotherinnovativesolutions,checkand cash deposits, as well as the training of branch staff and managers.

peRsonaL banKInG

In its continuous drive to offer personalized service to its clients, the Bank launched a Personal Banking Department in 2013 that targets VIP clients of the branch network. The purpose of this new client segment is to improve customer loyalty and satisfaction by assigning a certain number of VIP clients to specific Relationship Managers in each branch, thereby enabling branch-based Relationship Managers to better follow-up, assist and advise clients on their various needs for banking products and services.

maIn bUsIness acTIvITIes




banK aL-shaRq s.a.s.Bank Al-Sharq S.A.S. - a subsidiary of Banque Libano-Française in Syria-was officially established as a Syrian joint stock company in December 22, 2008, with a total share capital of SYP 2.5 billion. It is registered under Nº 19 on the Syrian Banks Register at the Central Bank of Syria.

Bank Al-Sharq’s capital is distributed as follows:•49%ownedbyBanqueLibano-FrançaiseS.A.L.-strategicpartneroftheBank,•30.5%ownedbyagroupofprominentSyrianbusinessmenandinvestors,•20.5%arelistedontheSyrianstockexchange

The Bank began its operations in May 3, 2009 from its first branch located in the area of Malke-Abou Remmaneh in Damascus. It opened a branch in Homs in September 2009 and a branch in Aleppo in November 2009. In 2010, the Bank inaugurated its Headquarters in Damascus, in a prime location off Hamra Street (Damascus central business district) and its main branch of Shaalan.

As at year-end 2014, Bank Al-Sharq had 113 employees and 6 branches.

Despite the persisting political uncertainties prevailing in Syria, Bank Al-Sharq delivered a positive growth in activities between 2013 and 2014. Total shareholders’ equity grew by 41.6 percent to SYP 4,329 million. Total assets increased by 51.2 percent to reach SYP 25,938 million, with an equity to assets ratio of 16.7 percent, and a capital adequacy ratio of 38.1 percent. Customer deposits grew by 44.2 percent, from SYP 13,525 million at end-December 2013 to SYP 19,499 million at end-December 2014. As at year-end 2014, the loan portfolio stood at SYP 5,064 million, accounting for 25.9 percent of customer deposits.

Being a universal bank, Bank Al-Sharq offers traditional banking services:• commercialbankingproducts targeting thebusinessneedsof SMEsand large corporate entities,including cash management services (local and international payments and collection services), trade finance and working capital finance,•RetailBankingservicesincludeelectronicsettlementservicesandvariousconsumerlendingschemestargeted to Syrian individuals, professionals and households,•Treasuryservices.

Due to the prevailing political turmoil and security instability that are severely hampering the Syrian economic activity, BLF Management focused on strengthening Bank Al-Sharq’s asset quality and resiliencebymaintainingaconservativeriskstrategyandbyreducingitsexposuretoSyriaduringthepastthree years. In 2014, the loan portfolio of Bank Al-Sharq represented 0.7 percent of the total consolidated loan portfolio of the Group. Total collective provisions grew by 65.9 percent, from SYP 144.5 million at end-December 2013 to SYP 239.6 million at end-December 2014 covering 4.7 percent of net loans, loan loss reserves reached SYP 2,153 million, covering more than 95 percent of non-performing loans.

sUbsIdIaRIes

8 – Subsidiaries

banqUe sba s.a.

Banque SBA (SBA) was established in Paris, France, in 1978 under the name of Société Bancaire Arabe by Banque worms and Arab investors, mainly from Lebanon and Syria. In 2001, after selling Banque worms, AXA retained a 34-percent participation in SBA through its wholly owned subsidiary Compagnie FinancièredeParis.In2004,AXAandtheothermainshareholders, togetherwiththemanagement of SBA, hired BNP Paribas to launch a tender offer aimed at selling a controlling stake in SBA. Banque Libano-Française acquired 78.3 percent of SBA in 2006, which increased to 79 percent in 2007 and to 99 percent in 2008.

SBA’s headquarters are located in Paris. SBA has a branch in Limassol (Cyprus) and a subsidiary, LFFinance(Suisse)S.A.(formerlyFinancièreSBA(Suisse)S.A.)inGeneva.AsatDecember31,2014,SBA had 61 employees and more than 1,800 clients, while LF Finance had 11 employees and more than 200 clients.

SBA specializes in trade finance and private banking. Its trade finance activities cover mainly Europe, the Middle East and Africa. During 2014 SBA issued more than USD 1 billion in letters of credit and letters of guarantee and other trade finance transactions on behalf of, and in favor of, its clients.

As at December 31, 2014, SBA had total shareholders’ equity of EUR 104 million and total assets of EUR 687 million, with an equity-to-assets ratio of 15.1 percent and a capital adequacy ratio of 16.7 percent. As at the same date, SBA had total deposits of EUR 486 million and a loan portfolio of EUR 409 million, accounting for 84.2 percent of customer deposits. For the year ended December 31, 2014, SBA had EUR 15.6 million of net operating income and net profits stood at EUR 3.6 million.



9 – Management Discussion and analysis

In millions of Usd 2009 2010 2011 2012 2013 2014

Nominal GDP 34,823 37,310 39,684 44,100 47,221 49,514Real GDP growth 8.5% 7.0% 1.5% 2.8% 3.0% 2.0%CPI % change 3.4% 4.6% 3.1% 10.1% 1.1% 0.7% Trade balance -12,758 -13,711 -15,893 -16,797 -17,292 -17,181Capital inflows 20,657 17,035 13,897 15,259 16,164 15,773Balance of payments 7,899 3,324 -1,996 -1,538 -1,128 -1,408 Government revenues 8,428 8,414 9,334 9,396 9,420 10,879Governmentexpenditures -11,388 -11,308 -11,675 -13,321 -13,640 -13,952Budget deficit -2,960 -2,894 -2,341 -3,925 -4,220 -3,073Total net public debt 44,114 45,026 46,368 49,116 53,201 57,300 - of which in local currency 22,853 24,435 25,443 24,731 27,076 31,700 - of which in foreign currency 21,319 20,590 20,925 24,385 26,125 25,601 M2 34,155 39,404 38,901 43,183 45,605 48,690M3 82,078 92,146 97,231 104,011 111,158 117,676Gold holdings 10,062 13,010 14,401 15,312 11,104 10,951FX reserves 25,660 28,598 30,815 29,972 31,713 32,403 Total balance sheet 115,250 128,925 140,576 151,883 164,821 175,697Total customers’ deposits 95,766 107,204 115,715 124,998 136,206 144,426 - of which in LBP 34,036 39,410 39,433 43,977 46,126 49,524 - of which in FCY 61,729 67,794 76,281 81,021 90,080 94,902Dollarization of deposits 64.5% 63.2% 65.9% 64.8% 66.1% 65.7%Total loans to customers 28,376 34,929 39,375 43,452 47,381 50,899 - of which in LBP 4,537 6,887 8,504 9,720 11,116 12,437 - of which in FCY 23,839 28,042 30,871 33,732 36,265 38,462Dollarization of loans 84.0% 80.3% 78.4% 77.6% 76.5% 75.6%

Sources: Ministry of finance, Central Bank of Lebanon, as well as public and private organizations.

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The analysis that follows highlights the consolidated performance of Banque Libano-Française in 2014 compared to 2013. All figures are based on the audited consolidated financial statements of the Bank that have been prepared in accordance with the International FinancialReportingStandards(IFRS).Unlessotherwiseindicated,allfiguresareexpressedinUSDollars(USD).USDollaramountsaretranslatedfromLebanesePounds(LBP)attheclosingrateofexchangepublishedbytheCentralBankofLebanonattherelevantdate,which was LBP 1,507.50 as of each of December 31, 2014 and 2013. Lebanon’s economic and banking data and information are derived from the Central Bank of Lebanon, various Lebanese governmental or private entities and the Association of Banks in Lebanon.

The management discussion and analysis starts with a review of the economic and banking conditions that impacted the activity of the Bank in the year 2014 and follows with an analysis of the consolidated financial position and the operating results of the Bank. The last segment includes a review of Human Resources and Corporate Social Responsibility activities during 2014.

economIc condITIons

The following table sets forth certain key economic and banking indicators for the Lebanese Republic for the years ended December 31, 2009 to 2014.

LFF is a financial company wholly owned by the Bank, registered under N° 14 on the list of financial institutionsat“BanqueduLiban”.Itwasestablishedin1995inLebanonunderthenameofIndosuezCapital Moyen-Orient S.A.L. In 1998, its name was changed to Crédit Agricole Indosuez Liban (CAIL). In 1999, the Bank increased its stake to 100 percent of the share capital of CAIL and, in 2003, changed its name to Libano-Française Finance S.A.L.

LFF offers a wide range of brokerage and asset management services, including investment advisory, assetallocation, internationalanddomestic securitiesbrokeragecoveringequity,fixed-incomeandderivatives, structured products, offshore investment trusts and all types of investment funds. LFF’s activities cover Lebanese and major international financial markets in Europe, the United States, Japan, other parts of Asia and Australia and the GCC.

As at December 31, 2014, LFF employed 15 professionals who operate through two dedicated desks: trading desk and advisory and asset allocation desk.

LFF is recognized for its fast and efficient trading capabilities, superior service quality, strict risk management and competitive brokerage rates.

The Advisory and Asset Allocation Desk offers access to a wide range of mutual and hedge funds and designs tailor-made solutions for high networth clients, as well as structured products to be distributed through the Bank’s branch network. Structured products may be based on or linked to equities, interest rate indices or interest-bearing instruments, commodities, credit instruments, foreign currencies and funds and other collective investment schemes.

The Advisory Desk also handles the origination and structuring of sophisticated financial transactions, such as Islamic compliant transactions. Through its Advisory Desk, LFF also acts as an arranger of capital markets transactions for corporate clients and financial institutions.

sUbsIdIaRIes

LIbano-FRançaIse FInance s.a.L. (LFF)



FoReIGn secToR

Asaresultofadropinbothexportsandimportsduetothesubduedeconomicactivity,thetradedeficittightenedslightlyby0.6percenttoreach USD 17.2 billion, accounting for 34.7 percent of GDP as at year-end 2014.

The drop in the trade deficit was accompanied by a decrease of 2.4 percent in financial inflows, leading to a widening balance of payments deficit, which reached USD 1.4 billion in 2014 compared to a deficit of USD 1.1 billion in 2013. The balance of payments deficit was also a result of a decrease in net foreign assets of banks of USD 5.2 billion, which was partially offset by an increase in net foreign assets of the Central Bank of USD 3.8 billion.

Source: Ministry of Finance

Trade balanceGross capital inflow Balance of payments

Balance of payments

in million of USD

-20000

-15000

-10000

-5000

0

5000

10000

15000

20000

25000

2009 2010 2011 2012 2013 2014

balance of paymentsIn millions of USD

Other countries

USA

France

GermanyChina

Italy

Importsby Main Country of Origin

61.51%8.03%

5.99%

6.22%

6.13%

12.12%

Exportsby Main Country of Destination

Other countries

SyriaSaudi Arabia

IraqUAE

South Africa

54.97%7.73%

7.30%

8.96%

9.66%

11.38%

manaGemenT dIscUssIon and anaLysIs

nominal GdpIn millions of USD

0

10000

20000

30000

40000

50000

2009

34,82337,310

39,684

47,22149,514

44,100

2010 2011 2012 2013 2014

economIc oveRvIeW

The Lebanese economy achieved a modest growth of 2 percent of GDP in 2014, after a 3 percent growth the previous year. This positive, albeit anemic economic growth was the result of sustained progress in the real sectors against a weak public sector, with a CPI of 0.7 percent.

TheLebanesebankingsystemremainedresilientandcontinuedtocaptureastrongflowofremittancesandexpatriateinvestments.Totalassets increased by 6.6 percent in 2014 to reach USD 176 billion, compared to USD 165 billion at the end of 2013. Customers’ deposits grew by 6 percent to reach USD 144 billion compared to USD 136 billion in 2013 and loans to the private sector grew by 7.4 to USD 51 billion. Lending in Lebanese pounds increased by 11.9 percent to USD 12.4 between 2013 and 2014, while lending in US dollars increased by 6.1 percent to reach USD 38.5 billion in 2014, against USD 36.2 billion at year-end 2013.

The coincident indicator, a rough estimate of economic activity and GDP published on a monthly basis by the Central Bank of Lebanon, witnessed an increase of 2 percent between December 2013 and December 2014.

Source: IMF




pUbLIc debT

The USD 3.1 billion budget deficit was translated into a 4.9 percent increase in gross public debt, from USD 63.5 billion in 2013 to USD 66.6 billion in 2014. Taking into account public sector deposits at the Central Bank, net public debt increased by 7.7 percent to USD 57.3 billion.

Public debt in local currency increased by 17.1 percent to the equivalent of USD 31.7 billion, while public debt denominated in foreign currencies decreased by 2.0 percent between 2013 and 2014. Total debt-to-GDP remained stable compared to 2013, at 134.4 percent.

0

10000

20000

30000

40000

50000

60000

2009

51.7%

54.3% 54.9%

50.4%

49.1%

44.7%

50.9%

55.3%

48.3%

45.7% 45.1%

49.6%

44,172 45,02646,358

49,116

53,201

57,300

2010 2011 2012 2013 2014

Total net public debt Public debt in local currency

PUBLIC DEPT

in million of USD

Public debt in foreign currency

public debtIn millions of USD


manaGemenT dIscUssIon and anaLysIsmanaGemenT dIscUssIon and anaLysIs

pUbLIc FInance

state budget

Government revenues rose by 15.5 percent to reach USD 10,879 million in 2014, compared to USD 9,420 million in 2013. These revenues includeUSD9,779millionofbudgetrevenuesandUSD1,100millionofoff-budgettreasuryreceipts.Inparallel,expendituresroseby2.3 percent, from USD 13,640 million in 2013 to USD 13,952 million in 2014, driven mainly by a 18.2 percent increase in general budget expendituresanda10.5percentincreaseininterestpaymentsonpublicdebt.Thankstotheincreaseinrevenues,thebudgetdeficitdecreased in 2014 by 27.2 percent to reach USD 3.1 billion, and stood at 6.2 percent of GDP against 8.9 percent in 2013.

2009 2010 2011 2012 20142013

-15000

-12000

-9000

-6000

-3000

0

3000

6000

9000

12000

State budget

Fiscal balance (deficit)Government revenues Government expenses

in million of USD

state budgetIn millions of USD





Source: Central Bank of Lebanon

0

5000

10000

15000

20000

25000

30000

35000

2009

25,660

28,59830,815

29,972

10,062

13,01014,401 15,312

31,713

11,104

32,403

10,951

2010 2011 2012 2013 2014

FX reserves

Gold holdings

central bank Fx Reserves and Gold holdingsIn millions of USD

banKInG secToR

The banking sector’s consolidated domestic assets increased by 6.6 percent to reach USD 175.7 billion at the end of 2014 against USD 164.8 billion at the end of 2013. Customers’ deposits also increased by 3.8 percent during the same period to reach USD 144.4 billion, compared to USD 139.2 billion at the end of 2013. The USD 5.3 billion increase in deposits strengthened the banking sector’s funding base, with deposits accounting for 82.2 percent of the aggregate balance sheet.

The breakdown of deposits reveals that the growth recorded in 2014 was mostly due to a USD 4.8 billion increase in foreign currency deposits, which accounted for 58.7 percent of the total growth in deposits. This USD 4.8 billion increase in foreign currency deposits was nevertheless almost half of the increase achieved between 2012 and 2013. Deposits denominated in LBP grew at a more important pace than during the previous year, increasing by the equivalent of USD 3.4 billion, or 7.4 percent between year-end 2013 and 2014. As a result, the dollarization rate of deposits declined by 0.4 percent to reach 65.7 percent at the end of 2014, compared to 66.1 percent at the end of 2013.

Withrelativelyhighliquidityandalowratioofloanstodepositsof35percent,Lebanesebankshadenoughfinancialflexibilitytoincreasetheir lending activities. The consolidated loan portfolio of the Lebanese banks increased by 7.4 percent in 2014 to reach USD 50.9 billion, withtheincreaseinloansofUSD3.5billionallocatedalmostexclusivelytotheresidentsector.Inpartduetotheincreasedmortgagelendingactivity in Lebanese Pounds, the share of foreign currency loans to the total loan portfolio has been dropping regularly since 2008, from 86.6 percent in that year to 75.6 percent in 2014. In spite of the 11.9 percent increase in Lebanese Pound loans (from the equivalent of USD 11.1 billion in 2013 to USD 12.4 billion in 2014), foreign currency loans still account for the biggest share in loan growth, accounting for 62.4 percent of the growth recorded in 2014.


moneTaRy sITUaTIon

Onthemonetarylevel,thesituationremainedquiteflexible,withnonoticeablepressuresonthecurrency.TheUSDollaraveragerateremainedstableatLBP1,507.5withtheCentralbankmaintainingitsinterventionontheforeignexchangemarketinanarrowbandof LBP 1.501 to LBP 1514 per USD.

TheCentralBank’sforeigncurrencyreserves,excludinggold,reachedUSD32.4billionin2014,covering70percentofLBPmoneysupplyand 19 months of imports. Consequently, the Central Bank remained in a comfortable position to defend the currency peg.

Money supply (M3) grew to USD 118 billion at the end of December 2014 of which 60.7 percent denominated in foreign currencies, representing an increase of 5.9 percent over year-end 2013. This annual increase was offset by a contracting velocity of money of 7 percent.


2009 2010 2011 2012 2013 201420000

40000

60000

80000

100000

120000

M2 - M3 EVOLUTION

M3M2

in billion of USD

m2 - m3 evolutionIn billions of USD




Breakdown of Liabilitiesin 2013

Customer deposits

Bank deposits

Other liabilities

Shareholders’ equity

85.93%

8.31%

3.94%1.82%

Breakdown of Liabilitiesin 2014

Customer deposits

Bank deposits

Other liabilities

Shareholders’ equity

85.00%

8.91%

3.58%2.51%

Breakdown of Assetsin 2014

29.54%

36.64%

30.41%

3.41%

Breakdown of Assetsin 2013

Central Bank & banks Placements

Net loans

Securities portfolio

Non interest earnings assets

Central Bank & banks Placements

Net loans

Securities portfolio

Non interest earnings assets

32.07%

34.42%

31.17%

2.35%

banqUe LIbano-FRançaIse consoLIdaTed peRFoRmance In 2014

In spite of the tremendous challenges and the economic slowdown in Lebanon and the region, Banque Libano-Française was able to grow its consolidated assets by 1.9 percent, from USD 11.0 billion in 2013 to USD 11.2 billion at year-end 2014, while its customer deposits remained stable at USD 9.6 billion. On the lending side, Banque Libano-Française continued to be one of the main contributors to the growth of the private sector, and its loan portfolio grew by 8.5 percent to USD 4.1 billion at the end of 2014. In line with its continued drive to finance the Lebanese private sector, Banque Libano-Française continued to show one of the highest loans to deposits ratios in the sector, at 43.1 percent at year-end 2014.

The breakdown of assets and liabilities in 2013 and 2014 is highlighted in the following charts.


0

30000

60000

90000

120000

150000

2009 2010 2011 2012 20142013

Lebanese Pounds

Foreign currency

Dollarization

CUSTOMERS’ DEPOSITS

in million of USD

64.5%

63.2%

65.9% 66.1% 65.7%64.8%

customers depositsIn millions of USD



2009 2010 2011 2012 2013 2014

Lebanese Pounds

Foreign currency

LOANS TO CUSTOMERS

0

10000

20000

30000

40000

50000

60000

in million of USD

45%

55%

84.0%

80.3%

77.6%76.5%

75.6%

78.4%

Dollarization

Loans to customersIn millions of USD

The banks’ aggregate capital base increased by 10.8 percent in 2014 to reach USD 15.7 billion, compared to USD 14.2 billion at the end of 2013.




However, and in spite of the unstable economic situation and the rising political tensions that prevailed in 2014, customer deposits in Lebanese Pounds continued to increase. As at year-end 2014, Lebanese Pound deposits accounted for 30.7 percent of total deposits, compared to 28.5 percent in 2013.

62.47%

3.23%

8.29%

26.01%

Up to 3 months

3 to 12 months

1 to 3 years

Not subject to maturity

Deposits by Maturityin 2013

Up to 3 months

3 to 12 months

1 to 3 years

Not subject to maturity

Deposits by Maturityin 2014

60.65%5.81%

5.71%

27.83%

Customers’ deposits are typically short-term in nature. Deposits maturing within 12 months accounted, as at year-end 2014, for 94.2 percent of total deposits, compared to 96.8 percent the previous year. However, thanks to the launch of new deposit schemes and products, and to an active asset-liability management, the average tenor of deposits increased to 144 days in 2014 compared to 141 days in 2013.

The average cost of deposits denominated in Lebanese Pounds and US Dollars was 5.8 percent and 3.4 percent respectively in 2014, slightly higher than the 5.8 percent and 3.1 percent recorded in 2013.

shaRehoLdeRs’ eqUITy

Shareholders’ equity, the Bank’s second major funding source, increased by 9.5 percent to USD 1 billion as at December 31, 2014. This increase is attributed to the Bank’s strong internal capital generation and reflects the Bank’s longstanding strategy of maintaining a high buffer of equity to meet regulatory ratios and to face political uncertainties. The Bank’s payout ratio remained stable, at 40.8 percent in 2014 against 41.8 percent in 2013.

pRImaRy LIqUIdITy

The Bank has always maintained a high level of primary liquidity in the form of placements with the Central Bank of Lebanon and with foreign, highly-rated, correspondent banks. As at December 31, 2014, primary liquidity, which totaled USD 3.3 billion out of USD 11.3 billion in total assets, accounted for 29.5 percent of total assets and 34.8 percent of customer deposits.

as at december 31,

2013 2014 Usd millions % Usd millions %

Cash 30 0.85 34 1.03Central Bank of Lebanon 1,920 54.36 2,433 73.50Foreign Central Banks 13 0.37 11 0.33Financial institutions 1,569 44.42 832 25.14

Total primary liquidity 3,532 100.00 3,310 100.00

PlacementsattheCentralBankofLebanon(excludingcertificatesofdepositsissuedbytheCentralBank)accountedfor73.5percentofprimary liquidity as at December 31, 2014 against 54.4 percent at the end of 2013.

The Bank has a strict and conservative allocation of liquidity. In addition to USD 2.4 billion in local and foreign currency deposits placed at the Central Bank of Lebanon both as reserve requirements and as regular deposits, the Bank maintained, as at year-end 2014, more than USD 832 million in foreign currency, short-term deposits, with its international correspondent banks. Major international, foreign banks with a rating higher of A- capture more than 70 percent of the Bank’s placements with banks and financial institutions. The majority of the Bank’s deposits with its correspondent banks are short-term, with an average tenor of 80 days.

LIabILITIes

Similar to other banks in Lebanon, stable and recurrent customer deposits are the main source of funding for the Bank. In 2014, customer deposits remained steady at USD 9.6 billion and accounted for 85.0 percent of total assets. Shareholders’ equity, strengthened by record profits in 2014, increased by USD 84.5 million and accounted for 8.9 percent of total assets at the end of 2014. Deposits from banks and Financial Institutions, which include current accounts, short-term money market borrowings as well as certain long-term borrowings from major international financial institutions, were stable between 2013 and 2014 at USD 404 million and accounted for 3.6 percent of total assets at year-end 2014. The following table provides a breakdown of the Bank’s major funding sources as at December 31, 2013 and 2014.


as at december 31,

2013 2014 Usd millions % Usd millions %

banks and financial institutions 436 3.94 404 3.58Of which current accounts 85 0.77 72 0.64Of which short-term borrowings 275 2.48 212 1.88Of which long-term borrowings 76 0.69 120 1.06notional amount of customer deposits at fair value through profit and loss 5 0.05 0 0.00customer deposits at amortized cost 9,503 85.88 9,581 85.00Of which current accounts and demand deposits 1,545 13.96 1,633 14.49Of which term deposits 6,666 60.25 6,681 59.27Of which collateral 713 6.44 831 7.37Of which margins on L/C’s and L/G’s 70 0.63 92 0.82Of which other margins and cash provisions 476 4.30 303 2.69Accrued interest payable 33 0.30 41 0.36Total customer deposits 9,508 85.93 9,581 85.00shareholders’ equity 919 8.31 1,004 8.91subtotal: major funding sources 10,863 98.18 10,989 97.49

Total assets 11,064 100.00 11,271 100.00

cUsTomeR deposITs

In line with the relatively high dollarization of the Lebanese economy, foreign currency deposits account for the biggest share of customer deposits at Lebanese banks in general and at Banque Libano-Française. The majority of these foreign currency deposits are denominated in USD, which account for 57.8 percent of total deposits as at year-end 2014 compared to 60.7 percent the previous year.

US Dollars

Lebanese PoundsEuro

Other foreign currencies

57.79%

2.45%

30.68%

9.08%

Deposits by Currencyin 2013

60.74%

2.33%

28.46%

8.47%

US Dollars

Lebanese PoundsEuro


Deposits by Currencyin 2014




Loans and advances

Banque Libano-Française has historically been one of the main contributors to the development of the private sector of Lebanon. The size of the Bank’s loan portfolio compared to other banks in Lebanon, both in gross terms and as a percentage of total deposits and total assets, reflects its ongoing commitment and involvement in financing Lebanon’s various economic sectors.

As at December 31, 2014, loans to customers reached USD 4.1 billion, representing a growth of 8.5 percent over 2013. The Bank’s loans to deposits ratio increased by 3.0 percent, from 40.1 percent as at December 31, 2013 to 43.1 percent at the end of 2014.

TheBankmanagesitsloanportfolioandcreditriskinaconservativemannerandtheBankhasalongtrackrecordinextendingloansandinfollowing up its loan book. Provisioning policy is stricter than regulatory requirements and loan-loss provisions more than adequately cover non-performing loans; By year-end 2014, loan loss provisions had reached 93.2 percent of doubtful loans, while the ratio of net doubtful loanstototalloansremainedverylow,at0.54percent,excludingsecuritiesandcollateral.

The Bank’s loan portfolio is predominately short-term, with 57.4 percent of the loan portfolio comprised of short-term working capital and trade finance facilities as at December 31, 2014.

75.24%

13.94%

74.90%

2.78%

7.98% 14.89% 7.43%

2.84%

LBP

US Dollars

Euro


LBP

US Dollars

Euro


Loans by Currency in 2014

Loans by Currency in 2013

In line with the rest of the banking sector in Lebanon, the loan portfolio is also characterized by a high level of dollarization, which reflects the high level of dollarization of the Lebanese economy. As at December 31, 2014, 74.9 percent of total loans were denominated in US Dollars, compared to 75.2 percent as at December 31, 2013. Between 2013 and 2014, loans denominated in US Dollars grew by 8.0 percent while Lebanese Pounds-denominated loans increased by 15.8 percent, mainly thanks to mortgage loans in local currency under various government and Central Bank subsidy schemes.

73.19%

16.16%10.65%

77.30%

14.96%7.74%

Breakdown of Net Loansby Customer Type

in 2013

Breakdown of Net Loansby Customer Type

in 2014

Corporate banking clients

SMEs & small businesses

Retail & personal banking clients

Corporate banking clients

SMEs & small businesses

Retail & personal banking clients

A breakdown of the Bank’s consolidated loan portfolio at the end of 2014 by customer type reveals that loans to corporate and SME customers accounted for 85.0 percent of total loans, against 83.8 percent in 2013.The share of retail loans stood at 15.0 percent at year-end 2014. This 15 percent share of the retail loans is in line with the Bank’s strategy of diversifying its loan portfolio and developing new and competitive retail


secURITIes poRTFoLIo

The Bank’s investment and trading portfolio includes Lebanese treasury bills, foreign currency sovereign bonds, Central Bank of Lebanon certificatesofdeposits,highlyratedinternationalfixedincomesecurities,aswellassharesandothersecuritieswithvariableincome.TheBank’s securities portfolio remained steady at USD 3.4 billion between 2013 and 2014, and accounted for 29.9 percent of total assets compared to 30.7 percent in 2013.

The following charts highlight the breakdown of the Bank’s local and international securities portfolio by instrument and currency, as at December 31, 2013 and 2014.

Securities Portfolio in 2014

Securities Portfolio in 2013

44.06%

9.87% 0.56%

20.69%

T-Bills in LBP

Sovereign bonds in FC

Central Bank CD’s

Corporate bonds

Equities

T-Bills in LBP

Sovereign bonds in FC

Central Bank CD’s

Corporate bonds

Equities

24.82%

38.11%

6.86% 0.59%

32.25%

22.19%

The investment securities in Lebanese pound totaled USD 2.2 billion at year-end 2014 compared to USD 2.1 billion at year-end 2013. This 5.0 percent increase was mainly due to a 50.4 percent increase in the portfolio of Lebanese Pounds-denominated certificates of deposits issued by the Central Bank of Lebanon, which accounted for 28 percent of the Bank’s total securities portfolio, against 18.5 percent as at December 2013. In line with the Bank’s prudent and conservative liquidity and asset-liability management strategy, the average tenor of the Lebanese Pounds-denominated securities portfolio as at year-end 2014, remained steady at 1756 days with an average yield of 7.51 percent. In spite of the 5.0 percent increase in the Bank’s investments in Lebanese Pounds treasury bills and Central Bank certificates of deposits, the ratio of these investments to the Bank’s total customer deposits dropped from 78.8 percent to 76.1 percent between 2013 and 2014.

The ratio of government bonds in foreign currency to customer deposits in foreign currency eased slightly from 12.4 percent as at December 31, 2013 to 11.2 percent at year-end 2014, compared to an average of 17.2 percent for the rest of the Lebanese banking sector. This ratio underlinestheBank’sconservativepolicytowardsforeigncurrencyexposuretoLebanesesovereignrisk.

LBP

US Dollar

Euro


61.86%

4.44%

65.29%

31.27%

0.99% 2.77% 0.67%

32.71%

LBP

US Dollars

Euro


Breakdown Securities Portfolio by Currency

in 2014

Breakdown Securities Portfolio by Currency

in 2013




december 31, year-on-year changeIn millions of Usd 2013 2014 amount percentage Risk-weighted assets-standardized approach 6,389 6,822 433 6.78%

o/w Credit risk-standardized approach 5,726 6,130 404 7.06%o/w Market risk-standardized approach 199 225 27 13.34%o/w Operationnal risk-basic indicator approach 464 466 2 0.47% Tier one capital (including net profit less proposed dividends) 833 875 42 5.00%

o/w Common equity tier 1 capital (including net profit less proposed dividends) 542 585 43 7,87%o/w Additional tier 1 capital 291 290 (1) -0.35% Net tier two capital 4 3 (1) 22.35%

Total regulatory capital 837 878 41 4.88% Tier one ratio 13.04% 12.83% -0.22%

o/w Common equity tier 1 ratio 8.49% 8.58% 0.09% Tier two capital ratio 0.05% 0.04% -0.01%

Risk based capital ratio - tier 1 and tier 2 capital 13.10% 12.87% -0.23%

capITaL adeqUacy RaTIo as peR baseL III

The Bank’s capital adequacy ratio as per Basel III stood at 12.87 percent at year-end 2014, against 13.10 percent at year-end 2013. Based on the standardized approach, risk weighted assets reached USD 6,822 million as at December 31, 2014 compared to USD 6,389 million as at December 31, 2013. Tier One ratio stood at 12.83 percent as at December 31, 2014 against 13.04 percent in 2013.

TheBankhasalwaysmaintainedhealthycapitalratiosthatexceedtheminimumlevelsrequiredbytheCentralBankofLebanon.Theseratiosplace the Bank in a comfortable and solid capital position to grow its activities and balance sheet.

december 31,In millions of Usd 2013 2014 average Interest average average Interest average balance amount rate balance amount rate

Loans and placements with Banks 3,581 72 2.00% 3,557 80 2.25%Loans to customers 3,540 233 6.59% 3,851 247 6.42%Interest-earning securities 3,337 197 5.90% 3,438 212 6.17%Interest-earning assets 10,458 502 4.80% 10,846 539 4.97%Other assets 318 - - 321 - -

Average assets 10,776 502 4.66% 11,167 539 4.83% Interbank deposits 358 4 1.17% 283 2 0.75%Deposits from customers 9,282 322 3.47% 9,544 356 3.72%Long term borrowings 77 3 3.55% 98 2 2.47%Cash contribution to capital (CCC) 40 2 6.08% 40 2 5.64%Interest-bearing liabilities 9,757 331 3.40% 9,965 362 3.64%Other liabilities 179 - - 281 - -Shareholders’equity(excludingCCC) 840 - - 921 - -

Average liabilities 10,776 331 3.08% 11,167 362 3.24%

pRoFITabILITy

aveRaGe baLances and InTeResT RaTes

The following table summarizes average balances and interest rates of assets, liabilities and shareholders’ equity of the Bank and its

consolidated subsidiaries for each of the two years ended December 31, 2013 and 2014.


The Bank strives to diversify the credit risk of its loan portfolio by maintaining a balanced sectorial distribution of loans, with a focus on sectors that areconsideredtobethemostproductiveandleastrisky.In2014,thegreatestexposurewastotherealestateandconstructionsectors,withashareofrespectively 27.6 percent and 11.9 percent of the loan portfolio, followed by the trade sector, with a share of 22.1 percent.

Noting that the construction sector include loans to contractors working in both public and private infrastructure, and real estate sector consist of commercial and residential development projects that have high levels of equity funding and of pre-sales, and residential mortgage to private banking

clients in Paris and London.

Loan qUaLITy

The Bank’s sustained lending activities and its increased share of retail loans in its loan portfolio did not have an impact on asset quality. Net doubtful loans amounted to USD 22.4 million, accounting for 0.5 percent of net loans. During 2014, gross doubtful loans increased by USD 21 million while specific provisions increased by USD 8.7 million.

Specific and collective provisions, and reserved interest on non performing loans, reached USD 306.7 million covering 93.2 percent of total doubtful loans as at December 31, 2014.

The following table highlights the quality of the loan portfolio as well as the provisions for substandard and doubtful loans as at December 31, 2013 and 2014.

december 31,In thousands of Usd 2013 2014 year-on year-change percent percent amount of gross amount of gross amount percentage

Regular loans 3,717,876 90.19 4,044,545 90.80 326,669 8.79Substandard loans 90,035 2.18 74,791 1.68 -15,244 -16.93Doubtful loans 307,871 7.47 329,126 7.39 21,255 6.90Accrued interest receivable 6,669 0.16 5,669 0.13 -1,000 -14.99 Total gross loans 4,122,451 100.00 4,454,131 100.00 331,680 8.05

Unearned interest on substandard loans -15,447 -0.37 -17,595 -0.40 -2,148 13.91Unearned interest on doubtful loans -110,463 -2.68 -121,660 -2.73 -11,197 10.14Provisions on doubtful loans -171,810 -4.17 -169,342 -3.80 2,468 -1.44Collective provisions -17,549 -0.43 -15,677 -0.35 1,872 -10.67

Total provisions -315,269 -7.65 -324,274 -7.28 -9,005 2.86 Total net substandard loans 74,588 1.81 57,196 1.28 -17,392 -23.32

Total net doubtful loans 8,049 0.20 22,447 0.50 14,398 178.88

Total net loans 3,807,182 92.35 4,129,857 92.72 322,675 8.48

RatioDoubtful loans provisioning ratio 97.39 93.18 -4.21Net doubtful loans / total net loans 0.21 0.54 0.33

Breakdown of Net Loansby Economic Sector

in 2013

Breakdown of Net Loansby Economic Sector

in 2014

Construction

Services & others

Individuals

Trade

Industry

Real Estate

Construction

Services & others

Individuals

Trade

Industry

Real Estate

18.54%

10.46%

10.66% 19.37%10.59%

8.37%

11.91%27.62%9.41%28.66%

22.14%22.27%

productsinordertoexpandtheclientbase,mostlybycapturingabiggermarketshareinmortgagelendingandinotherasset-backedretailproducts.




non-InTeResT Income

Non-interest income for the year 2014 amounted to USD 66.4 million. The breakdown of non-interest income continues to reflect the Bank’s strong trade finance activity. At the end of 2014, net commissions reached USD 43.6 million and accounted for 65.7 percent of total non-interest income: commissions from letters of credit and letters of guarantee represented 39.3 percent of fees and commission income while service fees on customer transactions accounted for 38.4 percent of fees and commission income.

Net revenues from foreign currency transactions reached USD 9.6 million and accounted for 14.4 percent of total non-interest income.

opeRaTInG expenses

TheBankincurredtotaloperatingexpensesofUSD126.9millionfor2014,a5.6percentincreaseover2013.Between2013and2014,theBank’s cost-to-income ratio after loan loss provisions remained steady at 51.3 percent .

ThefollowingpiechartsprovideabreakdownoftheBank’soperatingexpensesfor2013and2014.

Net Non-Interest Incomein 2014

65.69%

9.78%

14.44%

8.15%

1.94%

Net Non-Interest Incomein 2013

Net commissions

Foreign exchange operations

Share in profits of associates

Net gain on securities portfolio

Other income (other operations)

54.60%

15.22%

1.00%6.18%

23.00%

Net commissions

Foreign exchange operations

Share in profits of associates

Net gain on securities portfolio

Other income (other operations)

Operating Expensesin 2014

Staff costs

Administrative expenses

Depreciation and amortization

7.10%

31.42%

61.48%

Operating Expensesin 2013

Staff costs

Administrative expenses

Depreciation and amortization

7.53%

32.93%

59.54%


In 2014, average interest-earning assets accounted for 97.1 percent of average assets, compared to 97.0 percent at the end of 2013, while average interest-bearing liabilities accounted for 89.2 percent of average assets. The average spread, measured by the difference between the average rate earned on assets and the average rate paid on liabilities, remained stable at 1.6 percent.

neT IncomeNet income for 2014 amounted to USD 102.4 million, an increase of 2.6 percent over 2013. Part of the increase in net earnings is due to a better asset-liability management which led to an increase by 0.17 percent in the average rate on the interest earning assets from 4.66 percent at year-end 2013 to 4.83 percent at year-end 2014.

Return on average equity (ROAE), adjusted for interest paid on cash contribution to capital, reached 10.9 percent, while return on average assets (ROAA) remained steady at 0.9 percent as at year-end 2014. Earnings per common share, based on the number of shares outstanding as at December 31, 2014, stood at USD 3.91.

december 31,

2013 2014

Usd thousands percent of nFI Usd thousands percent of nFI Interest income 513,403 217.99% 550,035 222.33%Interestexpense -331,601 -140.80% -362,656 -146.59%

Net interest income 181,802 77.19% 187,379 75.74% Fee and commission income 51,241 21.76% 55,987 22.63%Feeandcommissionexpense -9,534 -4.05% -12,391 -5.01%

Net fee and commission income 41,707 17.71% 43,596 17.62% Net gain on securities portfolio 17,722 7.52% 6,670 2.70%Other operating income 16,952 7.20% 16,098 6.51%Net loan loss provisions -22,666 -9.62% -6,347 -2.57%

Net financial income after loan loss provisions 235,517 100.00% 247,396 100.00% Operatingexpenses -120,205 -51.04% -126,891 -51.29%

Incomebeforeexceptionalitemsandtax 115,313 48.96% 120,505 48.71% Deferredtaxonsubsidaries’profits -336 -0.14% -619 -0.25%Incometax -15,166 -6.44% -17,489 -7.07%

Net income 99,811 42.38% 102,397 41.39%

TheBank’soperatingmargin,definedastheratioofincomebeforeexceptionalitemsandtaxtonetfinancialincome,decreasedfrom49.0percent as at December 31, 2013 to 48.7 percent as at December 31, 2014. This decrease was the result of a 5.0 percent increase in net financial incomeafterloanlossprovisionsagainstanincreaseinoperatingexpensesof5.6percent.

neT InTeResT Income

Despite the increase in the Bank’s net interest income before provisions from USD 181.8 million at year end 2013 to USD 187.4 million at year-end 2014, the net interest margin, remained at the same level of 1.6 percent for the years 2013 and 2014.






empLoyees GendeR composITIon

Along with the increased headcount and the lower average age of the staff, and since gender equality is a key and basic principle for the Human Resources Division’s recruitment policy, the percentage of women has been steadily increasing over the past few years: women accounted for 54.4 percent of total staff at the end of 2014.

The Bank’s staff is mostly comprised of highly qualified individuals, most of whom have a university degree and strong academic achievements, and many have a successful professional track record.

The Bank strives to provide its employees with the opportunity to develop their potentials and professional skills. In 2014 the Bank provided 27,400 hours of training, equivalent to 21 hours of training per employee.

Trainingisprovidedbothin-houseandthroughexternalseminarsandprogramsandcoversbothtechnicalandmanagerialaspects.Through its in-house training programs, the Bank aims to establish a common culture among its employees and to adequately develop their commercial and professional skills and standards.

In order to build a better framework for the training provided to the staff, the Bank established in 2009 a Training Center equipped with state-of-the-art technology, and developed programs covering a wide variety of topics and skills.

0

10

20

30

40

50

60

Men

49.5% 51.0%49.0%

52.1%

47.9%

54.0%

46.0%

54.4%

45.6%

50.5%49.7% 50.3%

2009 2010 2011 2012 2013 2014

Women

hUman ResoURces deveLopmenT

10 – Human resources Development

hR deveLopmenT

Overthe2009-2014period,andtoaccompanytheexpansionstrategyinLebanonandabroad,employmentatBanqueLibano-Françaisehasbeen following an ascending trend.

The number of employees reached 1,428 at the end of 2014, reflecting a 5.9 percent CAGR over the period.

aveRaGe aGe

InlinewiththeBank’smotto“APartnerforyourAmbitions”, theHumanResourcesDivisioncontinuedtoattractyoungandtalentedindividuals. This has resulted in a decreasing average age of the Bank’s employees from 40.6 years in 2009 to 38.6 years currently.

2009 2010 2011 2012 201420130

300

600

900

1200

1500

HR DEVELOPMENT

1,0731,168

1,232 1,2471,308

1,428

5.88%

2009 2010 2011 2012 201420130

10

20

30

40

50

AVERAGE AGE

39.6740.55 38.95 39.01 38.96 38.56





Onanotherfront,theBankestablishedin2013aCustomerExperienceDepartmentthatconstantlymonitors its service through quality internal assessments, mystery shoppers and satisfaction surveys. 310 mystery shoppers visits were carried out in the branches in 2014. The results were a 94% satisfaction level for branch customers according to a survey conducted by IPSOS. In addition to setting up a comprehensive program for solving complaints, the Department is in charge of implementing the policyrelatingto“ThePrinciplesofBankingandFinancialOperationswithCustomers”inconformitywith BDL’s Circular N.134.

WoRKpLace

Banque Libano-Française considers its people as the ambassadors of its brand and continuously motivates its staff. The Bank is actively working on fostering a culture of performance, where accomplishments are recognized and rewarded with development opportunities, career advancements, as well as attractive remuneration.

Banque Libano-Française is an equal opportunity employer: women account for 54 percent of the staff, 25 percent of the members of the Management Committee, 50 percent of the branch managers and 54 percent of Middle Management positions. Because it also actively promotes a work-life balance, the Bank has set up a shorter time schedule for mothers.

In2014,theBankalsoprovidedalmost28,000hoursofinternalandexternaltrainingtoitsstaffaswell as integration seminars for new recruits.

To reinforce the belongingness of its employees and to keep communication lines open with the bank’s Management, the Bank has built an internal culture of information and interaction. It keeps employees in the loop about all activities and actions and it entices them to take part in them. For this, the Bank has dedicated numerous communication tools such as an employee handbook, an internal newsletter, a daily-updated Intranet site, a Facebook staff group, internal events and campaigns, integration seminars for newcomers, challenges and rewards, polls, etc.…

Inaddition,BanqueLibano-FrançaiseisoneofthefewbanksinLebanontohaveestablisheda“Club”which organizes fun team-building activities outside the work premises, and heavily subsidizes employees’ participations in various social, cultural and sport events, vacation trips, or certain products and services…

commUnITy

The community is a key focus of CSR strategy at Banque Libano-Française. As today’s environment is undergoing significant change, the Bank is working actively to uplift living conditions in many areas.

In 2014, the Bank supported more than 300 CSR projects including charitable causes, community outreach programs as well as arts, culture, youth, health and education activities of major organizations and NGOs.

Banque Libano-Française renewed its partnership with Help Lebanon, a non-governmental organization that has been beautifying Lebanon’s streets since 1997 through the rehabilitation of the facades of old buildings. Since the beginning of this partnership, the Bank financed the rehabilitation of 530 buildings in different regions across Lebanon.

The Bank also built a partnership with Kunhadi - an NGO that raises the awareness of youth on conscientious driving to reduce the number of road accidents and casualties. Banque Libano-Française assists the organization through employee volunteering, stakeholders’ involvement and sponsoring of safety awareness projects such as 40 conferences in schools across Lebanon. The initiative earned the Bank a Social Economic Award for Public Safety in 2014.

Intheculturalarena,theBankextendeditssupporttotheBeirutArtCenter,theMouawadMuseum,the Arab Image Foundation, the Institut Français as well as various arts festivals.

coRpoRaTe socIaL ResponsIbILITy

11 – Corporate Social responsibility

banqUe LIbano-FRançaIse: a TRUe paRTneR FoR a sUsTaInabLe commUnITy

Throughout the years, Banque Libano-Française has been running its operations by embracing five founding values: Responsibility, Integrity, Competences, Humanism and Engagement. These values are the cornerstone of its Corporate Social Responsibility strategy that focuses on four main pillars: workplace, Marketplace, Environment and Community.

Embeddedinitsmotto,“APartnerforyourAmbitions”,theBank’spromiseistomakeanimpactonthe social and environmental levels while contributing to foster sustainable economic development.

As a result of its CSR commitment, Banque Libano-Française was selected in 2013 by LIBNOR, the Lebanese Standards Institution affiliated to the Lebanese Ministry of Industry, to participate as a pilot organization in the uptake and use of ISO 26,000 guidelines, an International Standard providing organizations with guidance concerning Social Responsibility. Following a Gap Analysis based on seven Core Subjects (Organizational Governance, Labor Practices, Human Rights, Environment, Fair Operating Practices, Consumer Issues as well as Community Involvement and Development), BLF developed an action plan to further integrate social responsibility in its behavior, operations, and interaction with all stakeholders. In 2014, it included shared value and sustainability in its Mission Statement and formulated a new strategy aiming at “Leading Sustainable Banking inLebanon” through: Sustainable Lending, Sustainable Financial Innovation, Sustainable Support to the Community, Sustainable Environmental Strategy, and Sustainable Engagement with Stakeholders.

During that same year, Banque Libano-Française also signed a Letter of Commitment to join the UnitedNationsGlobalCompact,“theworld’slargestvoluntarycorporateresponsibilityinitiativethatoffers strategic businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labor, environment and anti-corruption.”

maRKeTpLace

Banque Libano-Française has always played a crucial role in Lebanon’s development as it firmly believes in its potential and mission. Therefore, it supported the Lebanese economy during the most difficult periods of the country’s history. In the aftermath of war, the Bank was actively involved in Lebanon’sreconstructionandextendedfinancingtothecountry’smostimportantpublicandprivateprojects and corporates.

Banque Libano-Française strives to propose products and services that cater to the growing needs of its clients.Togetclosertothemandhelpthemexpandtheirbusinesses,theBankisexpandingregionallyand internationally, and is building a large network in Lebanon to cover as many geographic regions as possible and make banking services easily accessible to all Lebanese.

In addition to encouraging entrepreneurship through its support to business incubators and various events such as Horeca, Bader, Berytech, BIAT, the Bank is a leader in the financing of start-ups under the Kafalat Innovative program. The Bank also empowers youth by providing them insights into the working realities of the banking sector through various conferences at universities and open doors at its premises. For young children between 7 and 14 years, Banque Libano-Française created their first contactwiththebankingworldthrough“3mn@BLF”,afinancialgamepostedonlineandbroadcaston TV.

In the previous year, the Bank launched a Digital Food Program in partnership with the world Food Program and MasterCard, aiming at enhancing the living conditions of the Syrian Refugees. This financial inclusion initiative has earned BLF three international awards and ranked it 4th among the Top 10 innovations that have improved the world in 2013, according to Mashable, the third most visited blog in the world.



12 – resolutions of the annual ordinary General Meeting

annUaL oRdInaRy GeneRaL meeTInG heLd on apRIL 21sT, 2015

FIRsT ResoLUTIon

The Ordinary General Meeting of shareholders of the Bank approved the Bank’s accounts, in particular the balance sheet and the profit and loss statement as at and for the year ended on December 31st, 2014, and granted full discharge to the Chairman and members of the Board of Directors in respect of their management of the Bank’s activities during the year 2014.

This resolution was adopted unanimously.

second ResoLUTIon

TheOrdinaryGeneralMeetingofshareholdersoftheBankdecidestofixthefeesofthemembersof the Board of Directors at an annual gross sum of 1,500 million Lebanese Pound for the year 2014.

The Ordinary General Meeting of shareholders of the Bank grants special authorization to the Board of Directors to approve the compensation of Mr. walid Raphaël, Chairman and General Manager.

This resolution was adopted unanimously, with members of the Board having abstained.

ThIRd ResoLUTIon

The Ordinary General Meeting of shareholders of the Bank notes that the non-consolidated net income for the year ended December 31st, 2014 amounted to LBP 134,544,349,000 and the consolidated net incomeaftertaxandminorityinterestsamountedtoLBP151,031,704,000,aftersettingasidealltheprovisions and reserves deemed necessary by the Board of Directors.


FoURTh ResoLUTIon

TheExtraordinaryGeneralMeetingofshareholdersoftheBankheldonDecember15th, 2009 having decided that holders of Series (2) Preferred Shares will receive USD 8 (Eight Dollars) per preferred shares for the year 2014.

The Ordinary General Meeting of shareholders of the Bank approves the distribution to holders of Series (2) Preferred Shares, of a total amount of USD 8,000,000 for the year 2014, equivalent of LBP 12,060,000,000, i.e. USD 8 per share.

This amount will be distributed among holders of Series (2) Preferred Shares, after deduction of a5percentdistributiontax,sincetheBanksettlestheremaining5percentofthedistributiontax.

TheamountofUSD7.6persharenetoftaxshallbepaidatthecountersofBanqueLibano-Françaisesal in Beirut beginning April 24th, 2015.


envIRonmenT

A healthier environment undoubtedly ranks high on Banque Libano-Française’ CSR strategy. Its multi-year green strategy is based on actively participating in shaping environmental policies, developing eco-friendly products and services, adopting environmentally friendly practices at the workplace (such as the recycling of paper and waste), while raising green awareness among its internal andexternalstakeholders.

within the framework of a sustainable energy finance partnership between the Bank and the International Finance Corporation (IFC), an ongoing program is providing the Bank with the necessary tools (energy calculators, staff trainings, green building assessment) and know-how to help the Bank and Lebanese companies use resources more efficiently, enhance the competitiveness of these companies’ products and services and improve their profitability while protecting and improving the environment.

As at end of December 2014, Banque Libano-Française had granted more than 3,200 solar water heater loans and grabbed over 30 percent market share, the highest in this sector, and had allocated more than $62 million of loans related to environmental protection.

In 2013, the Bank received a National Green Award from the Minister of Environment for creating the Earth Card, the first green card in Lebanon. It is made from biodegradable plastics and helps fund eco-friendly projects in partnership with UNDP and MasterCard. In 2014, Earth Card revenues and contributions from BLF translated into prizes of USD 40,000 offered to the winning projects of the “PromotingWaterConservation”competition,namely“WaterHeroes”byArcencielandthe“WaterConservationandSustainableDevelopment”byCollègeSaint-JosephAntoura.

The Bank also supports local green initiatives such as the Jabal Moussa Biosphere Reserve, Jouzour Loubnan, and Blue Gold.

Internally, the Bank has launched a number of initiatives on green and environmentally friendly behaviors and practices and, as at end of December 2014, had recycled more than 305 tons of paper, helping save the equivalent of 5,186 trees and had donated 1,415 e-waste items.

coRpoRaTe socIaL ResponsIbILITy



ResoLUTIons oF The annUaL oRdInaRy GeneRaL meeTInG

TenTh ResoLUTIon

The“CashContributiontoCapital”earnsinterestatannualrateequalto,either90percentoftheyield(at issuance) of the most recent USD Eurobonds issued by the Lebanese Government during the second half of the previous year, with a maturity of 5 years or more, or to 90 percent of the arithmetic average of the yield – as at December 31st of the previous year-of Lebanese Government USD Eurobonds with residual maturity of 5 years or more.

In view of the no issuance of Eurobonds during the second half of the 2014 fiscal year, and taking into account that the last public issuances had an arithmetic average yield of 6.13 percent, the interest rate of the Cash Contributions to Capital for the 2015 fiscal year is set at 5.517 percent.

This remuneration will be paid within the limit of the Bank’s free net income and after the approval of the Banking Control Commission.


FIFTh ResoLUTIon

TheExtraordinaryGeneralMeetingofshareholdersoftheBankheldonMarch17th, 2011 having decided that holders of Series (3) Preferred Shares will receive USD 7 (Seven Dollars) per preferred shares for the year 2014.

The Ordinary General Meeting of shareholders of the Bank approves the distribution to holders of Series (3) Preferred Shares, of a total amount of USD 10,500,000 for the year 2014, equivalent of LBP 15,828,750,000, i.e. USD 7 per share.

This amount will be distributed among holders of Series (3) Preferred Shares, after deduction of a 5percentdistributiontax,sincetheBanksettlestheremaining5percentofthedistributiontax.

TheamountofUSD6.65persharenetoftaxshallbepaidatthecountersofBanqueLibano-Françaisesal in Beirut beginning April 24th, 2015.


sIxTh ResoLUTIon

The Ordinary General Meeting of shareholders of the Bank decides to allocate the non-consolidated profits for the fiscal year 2014 as follows:

In thousand of LBP Legal reserve 13,271,156Reserveforfixedassetsearmarkedforliquidationandacquiredinsettlementofdebt 5,037,341Reserve for general banking risks 30,000,000Collective Reserve for Retail Loans in accordance with intermediate circular Nº 383 issued by the Central Bank of Lebanon 711,605Collective Reserve for other Loans in accordance with intermediate circular Nº 383 issued by the Central Bank of Lebanon 8,500,000Special reserve 9,047,880Dividends Preferred Shares Series (2) 12,060,000Dividends Preferred Shares Series (3) 15,828,750Dividends Common Shares 35,070,000Profit Carried Forward for 2014 5,017,617

134,544,349

The dividend on common shares amounting LBP 35,070,000,000 will be paid as of April 21st, 2015 at the counters of Banque Libano-Française sal as LBP 1,670 per common share after deducting the distributiontaxof10percent.


eIGhTh ResoLUTIon

Noting that the term of office Mr. walid Raphaël, Mr. Zafer Chaoui, Mr. Elie Nahas, Mr. Habib letayf and Me. Philippe Lette has reached its term, the Ordinary General Meeting of shareholders of the Bank,renewsthereterminaccordancewitharticle18oftheBy-Laws,forthree-yeartermsexpiringuponholdingoftheOrdinaryGeneralMeetingofshareholdersthatwillexaminetheaccountsandactivity of the year 2017.


ResoLUTIons oF The annUaL oRdInaRy GeneRaL meeTInG





OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Banque Libano-Française S.A.L. and its subsidiaries as of December 31, 2014, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Beirut, Lebanon

April 1, 2015 DFK Fiduciaire du Moyen Orient Deloitte & Touche

IndependenT aUdIToR’s RepoRT

To the Shareholders of Banque Libano-Française S.A.L. Beirut, Lebanonwe have audited the accompanying consolidated financial statements of Banque Libano-Française S.A.L. (the“Bank”) and its subsidiaries (collectively the“Group”),which comprise the consolidatedstatement of financial position as at December 31, 2014, and the consolidated statements of profit or loss, profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express anopinionon these consolidatedfinancial statementsbasedonour audit. we conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement within the framework of local banking laws. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to designauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Deloitte & Touche Arabia House 131 Phœnicia Street Ain Mreisseh, Beirut P.O.Box961Lebanon Beirut - LebanonTel: +961 (0) 1 364 700 Tel: +961 (0) 1 364 701 Fax:+961(0)1367087Fax:+961(0)1369820www.deloitte.com

FMOSin El-FilFouad Chehab BoulevardGeahchan Building (1st f loor)P.O.Box110-167Lebanon Beirut - LebanonTel: +961 (0) 1 496 682Tel: +961 (0) 1 480 917Tel: +961 (0) 1 480 723Fax:+961(0)1496682

13 – Independent auditor’s report



december 31,In thousands of Lbp notes 2014 2013

Liabilities Deposits from banks and financial institutions 16 427,138,315 542,727,523Customers’ deposits designated at fair value through profit or loss 17 - 7,779,770Customers’ deposits at amortized cost 18 14,442,480,651 14,325,303,899Liability under acceptances 11 254,848,514 132,803,824Long term borrowings 19 181,165,928 114,811,635Other liabilities 20 157,132,872 151,497,172Provisions 21 14,602,231 18,696,427

Total liabilities 15,477,368,511 15,293,620,250

equityShare capital 22 210,000,000 210,000,000Preferred shares 23 376,828,349 376,828,349Shareholders’ cash contribution to capital 24 60,300,000 60,300,000Reserves 25 457,735,098 401,531,116Regulatory reserve for assets acquired in satisfaction of loans 13 21,438,202 17,237,316Currency translation adjustment (16,044,944) (5,822,953)Cumulative change in fair value of investment securities at fair value through other comprehensive income 26 8,010,145 7,222,712Retained earnings 144,360,540 113,447,286Profit for the year 151,565,361 154,286,476

equity attributable to the equity holders of the Group 1,414,192,751 1,335,030,302

Non-controlling interests 27 98,805,716 50,614,098

Total equity 1,512,998,467 1,385,644,400

Total liabilities and equity 16,990,366,978 16,679,264,650

The accompanying notes 1 to 43 form an integral part of the consolidated financial statements.

consoLIdaTed FInancIaL sTaTemenTs

14 – Consolidated Financial Statements

consoLIdaTed sTaTemenT oF FInancIaL posITIon

december 31,In thousands of Lbp notes 2014 2013assetsCash and deposits at central banks 5 3,764,631,763 2,984,466,296Deposits with banks and financial institutions 6 1,253,918,968 2,364,863,216Financial assets at fair value through profit or loss 7 484,124,486 416,282,667Loans to banks 8 171,158,725 184,413,544Loans and advances to customers 9 6,054,600,190 5,555,913,504Investment securities 10 4,681,903,766 4,781,936,139Customers’ liability under acceptances 11 254,848,514 132,803,824Investments in associates 12 23,697,517 16,807,329Assets acquired in satisfaction of loans 13 48,195,003 43,900,850Property and equipment and intangible assets 14 172,570,347 111,785,059Other assets 15 80,717,699 86,092,222

Total assets 16,990,366,978 16,679,264,650

Financial instruments with off-balance sheet riskDocumentary and commercial letters of credit 37 181,193,198 198,303,052Guarantees and standby letters of credit 37 1,307,197,542 1,270,201,324Notional amount of derivative contracts 756,897,059 495,767,334Fiduciary deposits 196,082,059 45,132,472

assets in safekeeping and under management 2,618,998,719 2,071,956,379




consoLIdaTed sTaTemenT oF pRoFIT oR Loss and oTheR compRehensIve Income

year ended december 31, 2014 year ended december 31, 2013 Attributable to Attributable to equity holders Non-controlling equity holders Non-controlling In thousands of LBP of the Group interest Total of the Group interest Total

Profit for the year 151,565,361 2,795,731 154,361,092 154,286,476 (3,822,221) 150,464,255Other comprehensive income:Items that may be reclassified subsequently to profit or loss: Currency translation adjustment (10,221,991) 1,599,574 (8,622,417) 177,824 (2,967,576) (2,789,752)

Items that will not be reclassified subsequently to profit or loss: Change in fair value of financial

assets at fair value through other comprehensive income 787,433 - 787,433 705,651 - 705,651

Total other comprehensive loss (9,434,558) 1,599,574 (7,834,984) 883,475 (2,967,576) (2,084,101)

Total comprehensive income 142,130,803 4,395,305 146,526,108 155,169,951 (6,789,797) 148,380,154



consoLIdaTed sTaTemenT oF pRoFIT oR Loss

year ended december 31,In thousands of Lbp notes 2014 2013

Interest income 29 812,646,842 756,574,683Interestexpense 30 (546,559,396) (499,778,217)

net interest income 266,087,446 256,796,466

Fee and commission income 31 84,400,620 77,246,005Feeandcommissionexpense 32 (18,679,764) (14,372,868)

net fee and commission income 65,720,856 62,873,137

Net results on financial instrument at fair value through profit or loss 33 22,148,909 32,556,906Gain from derecognition of investment securities measured at amortized cost 34 4,291,985 11,428,087Other operating income 35 24,267,620 25,555,658

net financial revenues 382,516,816 389,210,254

Allowance for impairment of loans and advances to customers (net of write-back) 9 (9,568,546) (34,168,793)

net financial revenues after allowance for credit losses 372,948,270 355,041,461

Staff costs 36 (117,595,773) (107,887,751)Administrativeexpenses (58,299,448) (54,126,719)Depreciation and amortization (13,593,280) (13,647,359)Otherexpenses(net) 20 (1,800,429) (5,545,773)

profit before income tax 181,659,340 173,833,859

Incometaxexpense 20 (26,365,270) (22,862,614)Deferredtaxonsubsidiaries’undistributedprofits (932,978) (506,990)

profit for the year 154,361,092 150,464,255

Attributable to:•EquityholdersoftheGroup 151,565,361 154,286,476•Non-controllinginterests 2,795,731 (3,822,221)

154,361,092 150,464,255





equity attributed to the equity holders of the Group cumulative Regulatory change shareholders’ reserve for in fair value cash assets acquired currency of investment non- share preferred contribution in satisfaction translation Retained securities profit for controlling In thousands of Lbp capital shares to capital of loans Reserves adjustment earnings at FvTocI the year Total interests Total

balance January 1, 2013 210,000,000 376,828,349 60,300,000 12,572,348 351,976,820 (5,477,956) 96,174,849 6,517,061 129,340,864 1,238,232,335 28,432,268 1,266,664,603

Total comprehensive income – 2013 - - - - - 177,824 - 705,651 154,286,476 155,169,951 (6,789,797) 148,380,1540Prior period adjustments - - - - - (522,821) (140,413) - - (663,234) 492,053 (171,181)Transfer to retained earnings of regulatory reserves on liquidated assets - - - (3,726) - - 3,726 - - - - -Allocation of 2012 profit - - - 4,668,694 49,554,296 - 17,409,124 - (71,632,114) - - -Dividends paid (Note 28) - - - - - - - - (57,708,750) (57,708,750) - (57,708,750)Subscriptions of non-controlling interest in the fund managed by the Group - - - - - - - - - - 28,479,574 28,479,574

balance december 31, 2013 210,000,000 376,828,349 60,300,000 17,237,316 401,531,116 (5,822,953) 113,447,286 7,222,712 154,286,476 1,335,030,302 50,614,098 1,385,644,400

Total comprehensive income – 2014 - - - - - (10,221,991) - 787,433 151,565,361 142,130,803 4,395,305 146,526,108Prior period adjustments - - - - - - (9,604) - - (9,604) (428,797) (438,401)Transfer to retained earnings of regulatory reserves on liquidated assets - - - (338,287) - - 338,287 - - - - -Allocation of 2013 profit - - - 4,539,173 56,203,982 - 30,584,571 - (91,327,726) - - -Dividends paid (Note 28) - - - - - - - - (62,958,750) (62,958,750) - (62,958,750)Subscriptions of non-controlling interest in the fund managed by the Group - - - - - - - - - - 44,225,110 44,225,110

balance december 31, 2014 210,000,000 376,828,349 60,300,000 21,438,202 457,735,098 (16,044,944) 144,360,540 8,010,145 151,565,361 1,414,192,751 98,805,716 1,512,998,467



consoLIdaTed sTaTemenT oF chanGes In eqUITy





Cash flows from investing activities Purchase of property and equipment and intangible assets 39 (72,086,492) (11,446,611)

net cash used in investing activities (72,086,492) (11,446,611)

Cash flows from financing activities Dividends paid 28 (62,958,750) (57,708,750)Net (decrease)/increase in long term borrowings 70,177,542 (5,800,662)Subscription of non-controlling interest in the fund managed by the Group 44,225,110 28,479,574Net cash provided by/(used) in financing activities 51,443,902 (35,029,838)

net decrease in cash and cash equivalents (559,054,928) (448,650,600)

Cash and cash equivalents at beginning of year 2,044,714,745 2,491,231,283Effectofforeignexchangerateschangesoncashandcashequivalents 20,741,031 2,134,062

cash and cash equivalent at end of year 39 1,506,400,848 2,044,714,745



consoLIdaTed sTaTemenT oF cash FLoWs


Cash flows from operating activities Profitfortheyearbeforetax 181,659,340 173,833,859Adjustments for:Net allowance for impairment of loans and advances to customers 9 9,568,546 34,168,793Provision for staff termination indemnity 21&36 3,921,264 3,728,649Provision for risks and contingencies 21 453,169 (793,748)Depreciation and amortization 13,593,280 13,647,359Share in profits of associates 12 (8,151,618) (7,109,551)Accretion of treasury bills discount 10 (6,971,403) (4,949,958)Unrealized gain on financial assets designated at fair value through profit or loss 7&33 (295,714) (3,590,891)Prior period adjustment (448,011) (153,974)Net interest income (including interest on financial assets and liabilities designated at fair value through profit or loss) (277,459,607) (274,066,051)Dividends income 33&35 (517,537) (463,277)Gain on disposal of assets acquired in satisfaction of loans 35 (1,047,880) -Gain on derecognition of investment securities measured at amortized cost 34 (4,291,985) (11,428,087)

(89,988,156) (77,176,877) Net increase in financial assets at fair value through profit or loss (83,235,318) (102,205,412)Net decrease/(increase) in loans to banks 37,461,917 (97,099,890)Net increase in loans and advances to customers 39 (572,765,172) (454,750,457)Net increase in compulsory deposits with central banks (73,910,305) (44,819,088)Net increase in deposits with central banks, commercial banks and financial institutions (224,652,196) (540,449,738)Proceeds from sale and redemption of investment securities 39 1,204,127,227 902,358,337Proceeds from sale of assets acquired in satisfaction of loans 39 5,865,167 30,150Purchase of investment securities 39 (1,087,226,383) (1,107,581,081)Dividends received 1,788,564 8,125,753Net (increase)/decrease in other assets (88,269,134) 252,422,965Net decrease in deposits and borrowings from banks (94,819,418) (3,522,248)Net (increase)/decrease in other liabilities 39 10,668,861 (11,520,350)Net decrease in customers’ deposits at fair value through profit or loss (7,454,696) (12,984,203)Net increase in customers’ deposits at amortized cost 279,287,528 629,802,153Net decrease in provisions (8,195,223) (622,684)

(791,316,737) (659,992,670)

Interest received 818,184,059 773,172,370Interest paid (540,832,168) (491,213,011)Incometaxpaid (24,447,492) (24,140,840)

net cash used in operating activities (538,412,338) (402,174,151)





amendments also clarify that any change to the fair value of the derivative designated as a hedging instrument arising from the novation should be included in the assessment and measurement of hedge effectiveness. The amendments require retrospective application.

IFRIc 21 Levies

IFRIC 21 addresses the issue as to when to recognize a liability to pay a levy imposed by a government. The interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation.

The above new and revised Standards did not have a material impact on the disclosures and amounts reported for the current and prior years, but may affect the accounting for future transactions or arrangements.

2.2 new and Revised IFRss in Issue but not yet effective

The Group has not applied the following new and revised IFRSs that have been issued but not yet effective:

effective for annual periods beginning on or after

July 1, 2014

July 1, 2014

January 1, 2017

January 1, 2016

January 1, 2016

January 1, 2016


•Annual Improvements to IFRSs 2010-2012 Cycle that includeamendments to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 38 and IAS 24.

•Annual Improvements to IFRSs 2011-2013 Cycle that includeamendments to IFRS 1, IFRS 3, IFRS 13 and IAS 40.

•IFRS15Revenue fromContractswithCustomers-establishesa single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations when it becomes effective. The core principle of IFRS 15 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount thatref lectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsandservices.

•AmendmentstoIFRS11AccountingforAcquisitionsofInterestsin Joint Operations - provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined under IFRS 3 Business Combinations.

•AmendmentstoIAS16andIAS38ClassificationofAcceptableMethods of Depreciation and Amortization – Amendments to IAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to IAS 38 introduce rebuttable presumption that revenue is not an appropriate basis for amortization of an intangible asset.

•Amendments to IAS 27 Separate Financial Statements permitinvestments in subsidiaries, joint ventures and associates to be optionally accounted for using the equity method of accounting in separate financial statements.

noTes To The consoLIdaTed FInancIaL sTaTemenTsyeaR ended decembeR 31, 2014

1. GeneRaL InFoRmaTIon

BanqueLibano-FrançaiseS.A.L.(the“Bank”)isaLebanesejoint-stockcompanyregisteredintheRegister of Commerce under Number 19618 and in the Central Bank of Lebanon list of banks under Number 10. The Bank’s headquarters are located in Beirut. The consolidated financial statements of theBankcomprisethefinancialstatementsoftheBankandthoseofitssubsidiaries(the“Group”).

The Group provides a full range of corporate and retail banking, investment and private banking and operates through a network of 54 branches throughout the Lebanese territory and a branch in Baghdad, a subsidiary bank in Syria with 6 branches in addition to a subsidiary in Paris having a branch in Limassol and a subsidiary in Geneva, one representative office in Abu Dhabi (UAE), and one representative office in Lagos (Nigeria).

2. neW and RevIsed InTeRnaTIonaL FInancIaL RepoRTInG sTandaRds (IFRss)

2.1 application of new and Revised International Financial Reporting standards (IFRs)

In the current year, the Group has applied the following new and revised Standards issued by the International Accounting Standards Board (IASB) that are mandatorily effective with a date of initial application of January 1, 2014 and that are applicable to the Group:

amendments to IFRs 10, IFRs 12, and Ias 27 Investment entities:

The amendments to IFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements.

To qualify as an investment entity, a reporting entity is required to:

- Obtain funds from one or more investors for the purpose of providing them with investment management services;

- Commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

- Measure and evaluate performance of substantially all of its investments on a fair value basis.

Consequential amendments have been made to IFRS 12 and IAS 27 to introduce new disclosure requirements for investment entities. The amendments require retrospective application.

amendments to Ias32 offsetting Financial assets and Financial Liabilities:

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify themeaningof “currentlyhas a legallyenforceablerighttoset-off”and“simultaneousrealizationandsettlement”.Theamendmentsrequireretrospective application.

amendments to Ias36 Recoverable amount disclosures for non-Financial assets:

The amendments to IAS 36 remove the requirement to disclose the recoverable amount of a cash-generating unit (CGU) to which goodwill or other intangible assets with definite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements applicable to when the recoverable amount of an asset or a CGU is measured at fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by IFRS 13 Fair Value Measurements. The amendments require retrospective application.

amendments to Ias 39 novation of derivatives and continuation of hedge accounting:

The amendments provide relief from the requirement to discontinue hedge accounting when a derivative designated as a hedging instrument is novated under certain circumstances. The




ExceptforIFRS9ontheprovisioningforimpairmentandnewclassificationandmeasurementofdebtsecurities, the Directors of the Group do not anticipate that the application of these amendments will

have a significant effect on the Group’s consolidated financial statements.

3. sIGnIFIcanT accoUnTInG poLIcIes

statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs).

basis of preparation

Theconsolidatedfinancialstatementshavebeenpreparedonthehistoricalcostbasisexceptforthefollowing measured at fair value:

•financialinstrumentsdesignatedatfairvaluethroughprofitorloss(“FVTPL”);and

•investments in equity securities designated at fair value through other comprehensive income(“OCI”);

•derivativefinancialinstrumentsmeasuredatfairvalue.

Assetsandliabilitiesarepreparedaccordingtotheirnatureandarepresentedinanapproximateorderthat reflects their relative liquidity.

The principal accounting policies applied are set out below:

A. Basis of Consolidation

The consolidated financial statements of Banque Libano-Française S.A.L. incorporate the financial statements of the Bank and entities controlled by the Bank and its subsidiaries.

Control is achieved when the Group:•haspowerovertheinvestee;•isexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththeinvestee;and•hastheabilitytouseitspowertoaffectitsreturns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.


•The final versionof IFRS 9 Financial Instruments (2014)wasissued in July 2014 to replace IAS 39: Financial Instruments: Recognition and Measurement. IFRS 9 (2014) incorporates requirements for classification and measurement, impairment, general hedge accounting and derecognition. The final version of IFRS 9 introduces a) new classification for debt instruments that are held to collect contractual cash flows with ability to sell, and relatedmeasurementrequirementconsistsof“fairvaluethroughother comprehensive income (FVTOCI), and b) impairment of financialassetsapplyingexpectedlossmodelthrough3phases,startingby12monthexpected impairment losstobe initiatedon initial recognition of the credit exposure, and life timeimpairment loss to be recognized upon significant increase in creditriskpriortothedatethecreditexposureisbeingimpaired,and phase 3 when the loan is effectively impaired. On phase 1 and 2 income from time value is recognized on the gross amount of thecreditexposureandinphase3incomeisrecognizedonthenetexposure.

January 1, 2016

January 1, 2016

January 1, 2016

January 1, 2016

January 1, 2016

January 1, 2018


•AmendmentstoIFRS10andIAS28SaleorContributionofAssets between an Investor and its Associate or Joint Venture clarify the treatment of the sale or contribution of assets from an investor to its associate or joint venture to (i) require full recognition in the investor’s financial statements of gains and losses arising on the sale or contribution of assets that constitute a business (as defined in IFRS 3 Business Combinations), (ii) require the partial recognition of gains and losses where the assets do not constitute a business; i.e. a gain or loss is recognized onlytotheextentoftheunrelatedinvestors’interestsinthatassociate or joint venture. These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets occurs by an investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the subsidiary), or by a direct sale of the assets themselves.

•Amendments to IAS1PresentationofFinancial Statementsaddress perceived impediments to prepares of financial statementsexercisingtheirjudgmentinpresentingthefinancialreports.

•AmendmentstoIFRS10ConsolidatedFinancialStatements,IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investments in Associates and Joint Ventures (2011) clarify certain aspects of applying the consolidation exception forinvestment entities.

•AmendmentstoIAS16andIAS41Agriculture:BearerPlants-define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance to IAS 16, instead of IAS 41. The produce growing on bearer plants continues to be accounted for in accordance with IAS 41.

•AnnualImprovementstoIFRSs2012-2014Cyclethatincludeamendments to IFRS 5, IFRS 7, IAS 19, and IAS34.

•IFRS9FinancialInstruments(2013)wasrevisedinNovember2013 to incorporate a hedge accounting chapter and permit early application for presenting in other comprehensive income the own credit gains or losses on financial liabilities designated under the fair value option without early applying the other requirements of IFRS 9. The main amendments to hedge accounting are summarized by (i) The 80 – 125% rule for testing of hedge effectiveness is no longer required, (ii) hedge effectiveness is measured prospectively with no more consideration for retrospective testing, (iii) funding of foreign investments in foreign currency can be considered as a hedge and related foreign currency adjustment is deferred under equity, (iv) hedging instrument can be re-designated and periodically revisited to eliminate mismatch, and (v) cash flow hedgeforfixedincomesecuritiesclassifiedatamortizedcosthas become eligible.

•Thisversionofthestandardremainsavailableforapplicationif the relevant date of initial application is before February 1, 2015.



The consolidated subsidiaries consist of the following.

percentage of country of Group’s incorporation interest business activity

2014 2013

Compagnie Libanaisepour l’Informatique S.A.R.L. Lebanon 99.5% 99.5% Software (limited activity)

Beirut Liberty Plaza S.A.L. Lebanon 100% 100% Real estate – Bank’s Head Office Premises (dormant)

Société de Constructionet de Commerce S.A.L. (Sodeco) Lebanon 79.32% 79.32% Real estate

Libano-Française Finance S.A.L. Lebanon 100% 100% Financial institution

Banque SBA S.A. and subsidiary France 99% 99% Bank having its headquarters in Paris, a branch in Cyprus and a subsidiary in Geneva

Bank Al-Sharq S.A.S. Syria 49% 49% Bank having its headquarters in Damascus

LFFunds Luxembourg 22% 35% OpenendedFund

B. Business Combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former ownersof theacquireeandtheequity interests issuedby theGroup inexchange forcontrolof theacquiree. Acquisition-related costs other than those associated with the issue of debt or equity securities are generally recognized in profit or loss as incurred.

The consideration transferred does not include amounts related to the settlement of pre-existingrelationships. Such amounts are generally recognized in profit or loss.

Goodwillismeasuredastheexcessofthesumoftheconsiderationtransferred,theamountofanynon-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired andtheliabilitiesassumed.Whentheexcessisnegative,theGroupre-assesseswhetherithascorrectlyidentified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excessofthefairvalueofnetassetsacquiredovertheaggregateconsiderationtransferred,thenthegainis recognized in profit or loss.

Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries andassociates are identified separately from the Group’s equity therein.

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value


when the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including:

•thesizeoftheGroup’sholdingofvotingrightsrelativetothesizeanddispersionofholdingsoftheother vote holders;

•potentialvotingrightsheldbytheGroup,othervoteholdersorotherparties;

•rightsarisingfromothercontractualarrangements;and•anyadditionalfactsandcircumstancesthatindicatethattheGrouphas,ordoesnothave,thecurrent

ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases whentheGrouplosescontrolofthesubsidiary.Incomeandexpensesofasubsidiaryacquiredordisposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Non-controlling interest represent the portion of profit or loss and net assets of subsidiaries not owned directly or indirectly by the Group. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance.

when necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

Allintra-groupassetsandliabilities,equity,income,expensesandcashflowsrelatingtotransactionsbetween members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

•derecognizestheassets(includinggoodwill)andliabilitiesofthesubsidiary;

•derecognizesthecarryingamountofanynon-controllinginterests;

•derecognizesthecumulativetranslationdifferencesrecordedinequity;

•recognizesthefairvalueoftheconsiderationreceived;

•recognizesthefairvalueofanyinvestmentretained;

•recognizesanysurplusordeficitinprofitorloss;and

•reclassifies theparent’s shareof componentspreviously recognized inOCI toprofit or loss orretained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.




D. Foreign Currencies

The consolidated financial statements are presented in Lebanese Pounds which is the Group’s reporting currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

In preparing the financial statements of each individual Group entity, transactions in foreign currencies are initially recorded at the functional currency rates of exchange prevailing at the dates of thetransactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchangedifferencesonmonetaryitemsarerecognizedinprofitorlossintheperiodinwhichtheyariseexceptforexchangedifferencesontransactionsenteredintoinordertohedgecertainforeigncurrencyrisks,andexceptforexchangedifferencesonmonetaryitemsreceivablefromorpayabletoaforeignoperation for which settlement is neither planned nor likely to occur in the foreseeable future, which are recognized in other comprehensive income, and presented in the translation reserve in equity. These are recognized in profit or loss on disposal of the net investment.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreignoperationsaretranslatedintoLebanesePoundusingexchangeratesprevailingattheendofeachreportingperiod.Incomeandexpenseitemsaretranslatedattheaverageexchangeratesfortheperiod,unlessexchangeratesfluctuatesignificantlyduring thatperiod, inwhichcase theexchangeratesatthedatesofthetransactionsareused.Exchangedifferencesarising,ifany,arerecognizedinother comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).Suchexchangedifferencesarerecognizedinprofitorlossintheperiodinwhichtheforeignoperation is disposed of.

In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control overthesubsidiary,theproportionateshareofaccumulatedexchangedifferencesarere-attributedtonon-controlling interests and are not recognized in profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translatedattherateofexchangeprevailingattheendofeachreportingperiod.Exchangedifferencesarising are recognized in other comprehensive income.

E. Financial Assets and Liabilities

Recognition and Derecognition of Financial Assets and Liabilities

The Group initially recognizes loans and advances, deposits, debt securities issued and subordinated liabilities on the date that they are originated. All other financial assets and liabilities are initially recognized on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

The Group derecognizes a financial asset (or a part of a financial asset, or a part of a Group of similar financialassets),whenthecontractualrightstothecashflowsfromtheassetexpire,orwhenittransfersthe financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognizes its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of


or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

when the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained duringthe‘measurementperiod’(whichcannotexceedoneyearfromtheacquisitiondate)aboutfactsandcircumstancesthatexistedattheacquisitiondate.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss.

when a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognized in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognized in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information obtained about facts andcircumstancesthatexistedattheacquisitiondatethat,ifknown,wouldhaveaffectedtheamountsrecognized at that date.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

C. Goodwill

Goodwill arising on an acquisition of a business is carried at cost. Refer to Note 3B for the measurement of goodwill at initial recognition. Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expectedtobenefitfromthesynergiesofthecombination.Cash-generatingunitstowhichgoodwillhasbeen allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

TheGroup’spolicyforgoodwillarisingontheacquisitionofanassociateisdescribedunder“Investmentsin associates”.




Impairment of Financial Assets

Financial assets that are measured at amortized cost are assessed for impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the asset have been affected.

Objective evidence of impairment could include:•significantfinancialdifficultyoftheissuerorcounterparty;or•breachofcontract,suchasadefaultordelinquencyininterestorprincipalpayments;or•itbecomingprobablethattheborrowerwillenterbankruptcyorfinancialre-organization;or•thedisappearanceofanactivemarketforthatfinancialassetbecauseoffinancialdifficulties;or•significantorprolongeddeclineinfairvaluebeyondonebusinesscyclethatoccurredaftertheinitial

recognition of the financial asset or group of financial assets which impacted the estimated future cash flows of the investment.

For certain categories of financial asset, such as loans and advances, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. This provision is estimated based on various factors including credit ratings allocated to a borrower or group of borrowers, thecurrenteconomicconditions,theexperiencetheGrouphashadindealingwithaborrowerorgroupof borrowers and available historical default information, as well as observable changes in national or local economic conditions that correlate with default on loans and advances.

The amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows reflecting the amount of collateral and guarantee, discounted at the financial asset’s original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of theinvestmentatthedatetheimpairmentisreverseddoesnotexceedwhattheamortizedcostwouldhavebeen had the impairment not been recognized.

F. Classification of Financial Assets

All recognized financial assets are measured in their entirety at either amortized cost or fair value, depending on their classification.

Debt Instruments

Non-derivative debt instruments that meet the following two conditions are subsequently measured atamortizedcostusingthestraightlinemethodwhichresultsapproximatethoseresultingfromtheeffectiveinterestmethod,lessimpairmentloss(exceptfordebtinvestmentsthataredesignatedasatfairvalue through profit or loss on initial recognition):

•theyareheldwithinabusinessmodelwhoseobjectiveistoholdthefinancialassetsinordertocollectthe contractual cash flows, rather than to sell the instrument prior to its contractual maturity to realize its fair value changes, and

•thecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypayments of principal and interest on the principal amount outstanding.

Debt instruments which do not meet both of these conditions are measured at fair value through profit orloss(“FVTPL”).Inaddition,debtinstrumentsthatmeettheamortizedcostcriteriabutaredesignatedas at FVTPL are measured at FVTPL.

Even if a debt instrument meets the two amortized cost criteria above, it may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.


ownership of a transferred financial asset, the Group continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.

On derecognition of a financial asset measured at amortized cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

Up on derecognition of a financial asset that is classified as at fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is reclassified to retained earnings.

Debtsecuritiesexchangedagainstsecuritieswithlongermaturitieswithsimilarrisks,andissuedbythesame issuer, are not derecognized because they do not meet the conditions for derecognition. Premiums anddiscountsderived from theexchangeof said securities aredeferred tobeamortizedas ayieldenhancementonatimeproportionatebasis,overtheperiodoftheextendedmaturities.

The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged,cancelledortheyexpire.Thedifferencebetweenthecarryingamountofthefinancialliabilityderecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Offsetting

Financial assets and liabilities are set-off and the net amount is presented in the consolidated statement of financial position when, and only when, the Group has a legal right to set-off the amounts or intends either to settle on a net basis or to realize the asset and settle the liability simultaneously

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:•intheprincipalmarketfortheassetorliability,or•intheabsenceofaprincipalmarket,inthemostadvantageousmarketfortheassetorliability.

The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient dataareavailabletomeasurefairvalue,maximizingtheuseofrelevantobservableinputsandminimizingthe use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair measurement as a whole:

•Level1–Quoted(unadjusted)marketpricesinactivemarketsforidenticalassetsorliabilities;

•Level2–Valuationtechniques forwhichthe lowest level inputthat issignificanttothefairvaluemeasurement is directly or indirectly observable;

•Level3–Valuationtechniques forwhichthe lowest level inputthat issignificanttothefairvaluemeasurement is unobservable.

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchyasexplainedabove.




Financial Liabilities

Financial Liabilities that are not held-for-trading and are not designated as at FVTPL are subsequently measuredatamortizedcostusingthestraightlinemethodwhichresultsapproximatethoseresultingfrom the effective interest method.

Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL.

A financial liability is classified as held for trading if:•ithasbeenacquiredprincipallyforthepurposeofrepurchasingitinthenearterm;or•oninitialrecognitionitispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanages

together and has a recent actual pattern of short-term profit-taking; or •itisaderivative,exceptforaderivativethatisafinancialguaranteecontractoradesignatedandeffective

hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:•suchdesignationeliminatesorsignificantlyreducesameasurementorrecognitioninconsistencythat

would otherwise arise; or •thefinancialliabilityformspartofagroupoffinancialassetsorfinancialliabilitiesorboth,which

is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or•itformspartofacontractcontainingoneormoreembeddedderivatives,andtheentirecombined

contract is designated as at FVTPL in accordance with IFRS 9.

Financial liabilities at FVTPL are stated at fair value. Any gains or losses arising on remeasurement of held-for-trading financial liabilities are recognized in profit or loss. Such gains or losses that are recognized in profit or loss incorporate any interest paid on the financial liabilities and are included in the“Netinterestandothergainsontradingsecurities”intheconsolidatedstatementofprofitorloss.

However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognized in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is recognized in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognized in other comprehensive income are not subsequently reclassified to profit or loss.

Financial Liabilities Subsequently Measured at Amortized Cost

Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method.

Financial Guarantee Contract Liabilities

Financial guarantees contracts are contracts that require the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. These contracts can have various judicial forms (guarantees, letters of credit, and credit-insurance contracts).

Financial guarantee contract liabilities are measured initially at their fair values and, if not designated at FVTPL, are subsequently measured at the higher of:•theamountoftheobligationunderthecontract,asdeterminedinaccordancewithIAS37Provisions,

Contingent Liabilities and Contingent Assets; and•the amount initially recognized less, where appropriate, cumulative amortization recognized in

accordance with the revenue recognition policies set out above.


Equity Instruments

Investments in equity instruments are classified as at FVTPL, unless the Group designates an investment thatisnotheldfortradingasatfairvaluethroughothercomprehensiveincome(“FVTOCI”)oninitialrecognition (see below).

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in profit or loss.

On initial recognition, the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as at fair value through other comprehensive income. Investments in equity instruments at FVTOCI are measured at fair value. Gains and losses on such equity instruments are recognized in other comprehensive income, accumulated in equity and are never reclassified to profit or loss. Only dividend income is recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment, in which case it is recognized in other comprehensive income. Cumulative gains and losses recognized in other comprehensive income are transferred to retained earnings on disposal of an investment.

Designation at FVTOCI is not permitted if the equity investment is held for trading.

A financial asset is held for trading if:•ithasbeenacquiredprincipallyforthepurposeofsellingitinthenearterm;or•oninitialrecognitionitispartofaportfolioofidentifiedfinancialinstrumentsthattheGroupmanages

together and has evidence of a recent actual pattern of short-term profit-taking; or•itisaderivativethatisnotdesignatedandeffectiveasahedginginstrumentorafinancialguarantee.

Reclassification

Financial assets are reclassified between FVTPL and amortized cost or vice versa, if and only if, the Group’s business model objective for its financial assets changes so its previous model assessment would no longer apply. when reclassification is appropriate, it is done prospectively from the reclassification date.

Reclassification is not allowed where:•the“othercomprehensiveincome”optionhasbeenexercisedforafinancialasset,or•thefairvalueoptionhasbeenexercisedinanycircumstanceforafinancialinstrument.

Designation at Fair Value through Profit and Loss

The Group designates financial assets and liabilities at fair value through profit or loss when either:•theassetsorliabilitiesaremanaged,evaluatedandreportedinternallyonafairvaluebasis;or•thedesignationeliminatesorsignificantlyreducesanaccountingmismatchwhichwouldotherwisearise;or•theassetorliabilitycontainsanembeddedderivativethatsignificantlymodifiesthecashflowsthatwould

otherwise be required under the contract.

G. Financial Liabilities and Equity Instruments

Classification as Debt or Equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Group’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue, or cancellation of the Group’s own equity instruments.




Cash Flow Hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are deferred in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

Amounts previously recognized in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item is recognized in profit or loss, in the same line of the statement of profit or loss as the recognized hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognized in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability.

Hedge accounting is discontinued when the Group revokes the hedging relationship, when the hedginginstrumentexpiresorissold,terminated,orexercised,orwhenitnolongerqualifiesforhedgeaccounting. Any gain or loss recognized in other comprehensive income and accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in profitorloss.Whenaforecasttransactionisnolongerexpectedtooccur,thegainorlossaccumulatedin equity is recognized immediately in profit or loss.

Hedges of Net Investments in Foreign Operations

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in other comprehensive income and accumulated in the foreign currency translation reserve. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss.

Gains and losses accumulated in the foreign currency translation reserve are reclassified to profit or loss on disposal of the foreign operation.

I. Loans and Advances

Loansandadvancesarenon-derivativefinancialassetswithfixedordeterminablepayments,otherthaninvestment securities, that are not held for trading. Loans and advances are measured at amortized cost net of unearned interest and provision for credit losses where applicable. Bad and doubtful debts are carried on a cash basis because of doubts and the probability of non-collection of principal and/or interest.

J. Investments in Associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.

The results and assets and liabilities of associates are incorporated in these consolidated financial statementsusingtheequitymethodofaccounting,exceptwhentheinvestmentisclassifiedasheldforsale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. when the Group’s share of lossesofanassociateexceedstheGroup’sinterestinthatassociate,theGroupdiscontinuesrecognizingitsshareoffurtherlosses.AdditionallossesarerecognizedonlytotheextentthattheGrouphasincurredlegal or constructive obligations or made payments on behalf of the associate.


H. Derivative Financial Instruments

Derivativefinancialinstrumentsincludingforeignexchangecontracts,currencyandinterestrateswaps,(both written and purchased) are initially measured at fair value at the date the derivative contract is entered into and are subsequently re-measured to their fair value at each statement of financial position date. All derivatives are carried at their fair value as assets where the fair value is positive and as liabilities where the fair value is negative. The resulting gain or loss is recognized in the statement of profit or loss immediately unless the derivative is designated and effective as a hedge instrument in which event the timing of the recognition in the statement of profit or loss depends on the hedge relationship. The Group designates certain derivatives as either hedges of the fair value recognized assets or liabilities or firm commitments (fair value hedges), hedges of highly probable forecast transactions or hedges of foreign currency risk of firm commitments (cash flow hedges), or hedges of net investments in foreign operations.

Fair values are generally obtained by reference to quoted market prices, discounted cash flow models or pricing models as appropriate as indicated under Note 3E. Embedded Derivatives

Derivatives embedded in other financial instruments or other host contracts with embedded derivatives are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contract:•isnotmeasuredatfairvaluewithchangesinfairvaluerecognizedinprofitorloss.•isnotanassetwithinthescopeofIFRS9.

Hedge Accounting

The Group designates certain hedging instruments, which include derivatives, embedded derivatives and non-derivatives in respect of foreign currency risk, as either fair value hedges, cash flow hedges, or hedgesofnetinvestmentsinforeignoperations.Hedgesofforeignexchangeriskonfirmcommitmentsare accounted for as cash flow hedges.

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in fair values or cash flows of the hedged item.

Ateachhedgeeffectivenessassessmentdate,ahedgerelationshipmustbeexpectedtobehighlyeffectiveon a prospective basis and demonstrate that it was effective (retrospective effectiveness) for the designated period in order to qualify for hedge accounting. A formal assessment is undertaken to ensure the hedging instrumentisexpectedtobehighlyeffectiveinoffsettingthedesignatedriskinthehedgeditem,bothatinceptionandateachquarterendonanongoingbasis.Ahedgeisexpectedtobehighlyeffectiveifthechanges in fair value or cash flows attributable to the hedged risk during the period for which the hedge isdesignatedareexpectedtooffsetinarangeof80%to125%andareexpectedtoachievesuchoffsetinfutureperiods.Hedgeineffectivenessisrecognizedintheconsolidatedstatementofprofitorlossin“Netresults on financial instruments at fair value through profit or loss”. For situations where that hedged item is a forecast transaction, the Group also assesses whether the transaction is highly probable and presentsanexposuretovariationsincashflowsthatcouldultimatelyaffecttheconsolidatedstatementof profit or loss.

Fair Value Hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged item that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognized in the line of the statement of profit or loss relating to the hedged item.

Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrumentexpiresorissold,terminated,orexercised,ornolongerqualifiesforhedgeaccounting.Theadjustment to the carrying amount of the hedged item arising from the hedged risk is amortized to profit or loss from that date.




The gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

L. Intangible Assets Other than Goodwill

Intangible assets other than goodwill, are amortized on a straight-line basis at the rate of 20%. Intangible assetsaresubjecttoimpairmenttesting.Subsequentexpenditureonintangibleassetsiscapitalizedonlywhen it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditureisexpensedwhenincurred.

M. Assets Acquired in Satisfaction of Loans

Policy applicable to Lebanese Group entities: Real estate properties acquired through the enforcement of collateral over loans and advances are stated at cost less any accumulated impairment losses. The acquisition of such assets is regulated by the local banking authorities who require the liquidation of these assets within 2 years from acquisition. In case of default of liquidation the regulatory authorities require an appropriation of a special reserve from the yearly profits reflected in equity.

Upon sale of repossessed assets, any gain or loss realized is recognized in the consolidated statement of profitorlossunder“Otheroperatingincome”or“Otheroperatingexpenses”.Gainsresultingfromthesaleofrepossessedassetsaretransferredto“Reservesforassetsacquiredinsatisfactionofloans”startingin the following financial year.

N. Impairment of Tangible and Intangible Assets (Other than Goodwill)

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).

Recoverable amount is defined as the higher of:

•fairvaluethatreflectsmarketconditionsatthestatementoffinancialpositiondate,lesscosttosell,ifany. To determine fair value the Group adopts the market comparability approach using as indicators the current prices for similar assets in the same location and condition;•valueinuse:thepresentvalueofestimatedfuturecashflowsexpectedtoarisefromthecontinuing

use of the asset and from its disposal at the end of its useful life, only applicable to assets with cash generation units.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentloss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

The fair value of the Group’s owned properties and of properties acquired in satisfaction of loans is the estimated market value as determined by real estate appraisers on the basis of market compatibility by comparingwithsimilartransactionsinthesamegeographicalareaandonthebasisoftheexpectedvalueof a current sale between a willing buyer and a willing seller, that is, other than in a forced or liquidation sale after adjustment for an illiquidity factor and market constraints.

The impairment loss is charged to the consolidated statement of profit or loss.


AnyexcessofthecostofacquisitionovertheGroup’sshareofthenetfairvalueoftheidentifiableassets,liabilities and contingent liabilities of an associate recognized at the date of acquisition is recognized as goodwill,whichisincludedwithinthecarryingamountoftheinvestment.AnyexcessoftheGroup’sshare of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

The entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount, Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss isrecognizedinaccordancewithIAS36totheextentthattherecoverableamountoftheinvestmentsubsequently increases.

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or when the investment is classified as held for sale. when the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition. The difference between the carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognized in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

when the Group reduces its ownership interest in an associate but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

when a Group entity transacts with an associate of the Group, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to theextentofinterestsintheassociatethatarenotrelatedtotheGroup.

The financial statements of the associates are prepared for the same reporting period of the Group.

K. Property and Equipment

Property and equipment are stated at historical cost, less accumulated depreciation and any impairment loss.

Depreciationofpropertyandequipment,otherthanlandandadvancepaymentsoncapitalexpendituresis calculated using the straight-line method over the estimated useful lives of the related assets using the following annual rates:

Buildings 2% - 5%Office improvements and installations 6% - 20%Furniture, equipment and machines 8% - 20%Computer equipment 15% - 33%Vehicles 12% - 20%

The estimated useful lives and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.




orliability(e.g.commissionsandfeesearnedonloans)areincludedunderinterestincomeandexpense.

Other fee and commission income are recognized as the related services are performed.

R. Income Tax

Incometaxexpenserepresentsthesumofthetaxcurrentlypayableanddeferredtax.Incometaxisrecognizedintheconsolidatedstatementofprofitorlossexcepttotheextentthatitrelatestoitemsrecognized directly in other comprehensive income, in which case it is recognized in other comprehensive income.

Thetaxcurrentlypayableisbasedontaxableprofitfortheyear.Taxableprofitdiffersfromprofitasreportedintheconsolidatedstatementofprofitorlossbecauseoftheitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantively enacted by the end of the reporting period.

Partofdebt securities invested inby theGroup is subject towithheld taxby the issuer.This tax isdeductedatyear-endfromthecorporatetaxliabilitynoteligiblefordeferredtaxbenefit,andtherefore,accountedforasprepaymentoncorporateincometaxandreflectedasapartofincometaxprovision.

Deferredtaxisrecognizedondifferencesbetweenthecarryingamountsofassetsandliabilitiesintheconsolidatedstatementoffinancialpositionandthecorrespondingtaxbaseusedinthecomputationoftaxableprofit.Deferredtaxliabilitiesaregenerallyrecognizedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognizedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainst which deductible temporary differences can be utilized.

S. Fiduciary Accounts

Fiduciary assets held or invested on behalf of individuals and others are held on a non-discretionary basis and related risks and rewards belong to the account holders. Accordingly, these deposits are reflected as off-balance sheet accounts.

T. Operating Lease Agreements

Lease agreements which do not transfer substantially all the risks and benefits incidental to ownership of the leased items are classified as operating leases. Operating lease payments are recorded in the consolidated statement of profit or loss on a straight line basis over the lease term.

U. Cash and Cash Equivalents

Cash and cash equivalents comprise balances with maturities of a period of three months including: cash and balances with the Central Banks and deposits with banks and financial institutions.

V. Dividends on Ordinary Shares

Dividends on ordinary shares are recognized as a liability and deducted from equity when they are approved by the General Assembly of the Bank’s shareholders. Interim dividends are deducted from equity when they are declared and no longer at the discretion of the Bank.

Dividends for the year that are approved after the reporting date are disclosed as an event after the reporting date.


O. Provision for Employees’ End-of-Service Indemnity / Staff Retirement Benefits

Employees’ End-of-service Indemnities (under the Lebanese Jurisdiction):The provision for employees’ termination indemnities is based on the liability that would arise if the employment of all the employees’ were voluntary terminated at the reporting date. This provision is calculated in accordance with the directives of the Lebanese Social Security Fund and Labor laws based on the number of years of service multiplied by the monthly average of the last 12 months’ remunerations and less contributions paid to the Lebanese Social Security National Fund.

Defined benefit plans (under other jurisdictions):Obligations in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and any unrecognized past service costs and the fair value of any plan assets are deducted.

P. Provisions

Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provision is measured at the best estimate of the consideration required to settle the obligation at the statement of financial position date.

where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amountisthepresentvalueofthosecashflowsdeterminedbydiscountingtheexpectedfuturecashflowsatapre-taxratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyand,whereappropriate, the risks specific to the liability.

Whensomeoralloftheeconomicbenefitsrequiredtosettleaprovisionareexpectedtoberecoveredfrom a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Q. Revenue and Expense Recognition

Interestincomeandexpensearerecognizedonanaccrualbasis,takingintoaccounttheamountoftheprincipaloutstandingandtherateapplicable,exceptfornon-performingloansandadvancesforwhichinterestincomeisonlyrecognizeduponrealization.Interestincomeandexpenseincludediscountandpremium amortization.

Interestincomeandexpensepresentedinthestatementofprofitorlossinclude:•interestonfinancialassetsandliabilitiesatamortizedcost.•changesinfairvalueofqualifyingderivatives,includinghedgeineffectiveness,andrelatedhedgeditems

when interest rate risk is the hedged risk.

Interest income on financial assets measured at fair value through profit or loss and interest income on the trading portfolio are presented separately in the statement of profit or loss.

Net results on financial instruments measured at fair value through profit or loss, other than those held for trading, includes:•interestincome;•interestexpense;•dividendincome;•realizedandunrealizedfairvaluechanges;•foreignexchangedifferences.

Dividend income is recognized when the right to receive payment is established. Dividends on equity instruments designated as at fair value through other comprehensive income are recognized in profit or loss, unless the dividend clearly represents a recovery of part of the investment, in which case it is presented in other comprehensive income.

Feeandcommissionincomeandexpensethatareintegraltotheeffectiveinterestrateonafinancialasset





Features considered by the Group that would be consistent with amortized cost measurement include:•fixedand/orfloatinginterestrate;•caps,floors,collars;•prepaymentoptions.

Features considered by the Group that would be inconsistent with amortized cost measurement include:•leverage(i.e.options,forwardsandswaps);•conversionoptions;•inversefloaters;•variableratecouponsthatresetperiodically;•triggersthatresultinasignificantreductionofprincipal,interestorboth.

b. Key sources of estimation Uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carryingamountsofassetsandliabilitieswithinthenextfinancialyear.

The Group based their assumptions and estimates on parameters available when the consolidated financialstatementswereprepared.Existingcircumstancesandassumptionsaboutfuturedevelopments,however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Allowances for Credit Losses

Specific impairment for credit losses is determined by assessing each case individually. This method applies to classified loans and advances and the factors taken into consideration when estimating the allowance for credit losses include the counterparty’s credit limit, the counterparty’s ability to generate cash flows sufficient to settle his advances and the value of collateral and potential repossession.

Loans and advances that have been assessed individually and found not to be impaired and all individually insignificant loans and advances are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether provision should be made due to incurred loss events for which there is objective evidence but whose effects are not yet evident.

The collective assessment takes account of data from the loan portfolio (such as credit quality, levels of arrears, credit utilization, loan to collateral ratios, etc…), concentrations of risks, economic data and the performance of different individual groups.

Determining Fair Values

The determination of fair value for financial assets for which there is no observable market price requires the use of valuation techniques as described in Note 3E. For financial instruments that are traded infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

Unobservableinputsareusedtomeasurefairvaluetotheextentthatobservableinputsarenotavailable,thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective should remain the same; that is, anexitpricefromtheperspectiveofmarketparticipants.Unobservableinputsaredevelopedbasedonthe best information available in the circumstances, which may include the reporting entity’s own data.

4. cRITIcaL accoUnTInG JUdGmenTs and Key soURces oF esTImaTIon UnceRTaInTy

In the application of the Group’s accounting policies, which are described in note 3, the directors are required to make judgments, estimates and assumptions about the carrying amounts of revenues, expenses, assets and liabilities and the accompanyingdisclosures, and thedisclosureof contingentliabilities that are not readily apparent from other sources. The estimates and associated assumptions arebasedonhistoricalexperienceandotherfactorsthatareconsideredtoberelevant.Actualresultsmaydiffer from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

a. critical accounting Judgments in applying the Group’s accounting policiesIn the process of applying the Group’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect in the amounts recognized in the financial statements.

Going ConcernThe Group’s management has made an assessment of the Group’s ability to continue as a going concern and is satisfied that the Group has the resources to continue in business for the foreseeable future. Furthermore, management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a going concern. Therefore the consolidated financial statements continue to be prepared on the going concern basis.

Classification of Financial Assets

business model:The business model test requires the Group to assess whether its business objective for financial assets is to collect the contractual cash flows of the assets rather than realize their fair value change from sale before their contractual maturity. The Group considers at which level of its business activities such assessment should be made. Generally, a business model can be evidenced by the way business is managed and the information provided to management. However the Group’s business model can be to hold financial assets to collect contractual cash flows even when there are some sales of financial assets. while IFRS 9 provides some situations where such sales may or may not be consistent with the objective of holding assets to collect contractual cash flows, the assessment requires the use of judgment based on facts and circumstances.

In determining whether its business model for managing financial assets is to hold assets in order to collect contractual cash flows the Group considers:•thefrequencyandvolumeofsales;•thereasonsforanysales;•howmanagementevaluatestheperformanceoftheportfolio;•theobjectivesfortheportfolio.

Characteristics of the Financial AssetOnce the Group determines that its business model is to hold the assets to collect the contractual cash flows,itexercisesjudgmenttoassessthecontractualcashflowscharacteristicsofafinancialasset.Inmaking this judgment, the Group considers the contractual terms of the acquired asset to determine that they give rise on specific dates, to cash flows that solely represent principal and principal settlement and accordingly may qualify for amortized cost accounting.

Features considered by the Group that would be consistent with amortized cost measurement include:•fixedand/orfloatinginterestrate;•caps,floors,collars;•prepaymentoptions.




year ended december 31, 2013 average maturity currency amount interest rate Lbp’000 %

2014 LBP 76,324,000 2.992015 USD 301,500,000 1.142016 USD 1,055,250,000 2.692016 EUR 62,243,100 4.002017 USD 429,637,500 1.142017 EUR 103,738,500 4.752018 USD 113,062,500 3.552022 LBP 225,000,000 8.602022 USD 226,125,000 6.752023 LBP 40,000,000 8.24

2,632,880,600

6. deposITs WITh banKs and FInancIaL InsTITUTIons

year ended december 31,In thousands of Lbp 2014 2013

Current accounts 559,068,849 721,142,217Term placements 687,837,052 1,638,910,227Pledged deposits 6,859,125 1,281,375Accrued interest receivable 153,942 3,529,397

1,253,918,968 2,364,863,216

Term placements with banks bear maturities of less than one year and earn interest at the average interest rate of 0.36% during 2014 (0.53% during 2013).

7. FInancIaL asseTs aT FaIR vaLUe ThRoUGh pRoFIT oR Loss

december 31, 2014 december 31, 2013 Foreign Foreign In thousands of Lbp Lbp currencies Total Lbp currencies Total

Equities 4,523,095 12,369,339 16,892,434 4,598,757 11,241,696 15,840,453Lebanese treasury bills 46,899,483 - 46,899,483 38,954,323 - 38,954,323Lebanese Government bonds 327,825 78,381,543 78,709,368 321,885 66,170,892 66,492,777Certificates of deposit issued by Central Bank of Lebanon 80,589,500 15,684,030 96,273,530 22,290,600 - 22,290,600Corporate bonds - 236,477,677 236,477,677 - 265,818,888 265,818,888Funds - 1,135,787 1,135,787 - 708,318 708,318 132,339,903 344,048,376 476,388,279 66,165,566 343,939,793 410,105,359 Accrued interest receivable 2,172,923 5,563,284 7,736,207 1,069,714 5,107,594 6,177,308

134,512,826 349,611,660 484,124,486 67,235,280 349,047,387 416,282,667

Net interest income, gains and losses on trading assets portfolio are detailed under Note 33.


Compulsory reserves with central banks include non-interest earning cash compulsory reserves in Lebanese Pounds with the Central Bank of Lebanon in the amount of LBP 175 billion (LBP 166 billion as at December 31, 2013). These reserves are non-interest earning and computed on the basis of 25% and 15% of the average weekly sight and term customers’ deposits in Lebanese Pounds in accordance with the Lebanese banking regulations.

The remaining balances of compulsory reserves are with foreign central banks and are interest-earning.

Compulsory deposits with central banks are not available for use in the Group’s day to day operations.

Term placements with the Central Bank of Lebanon include as of December 31, 2014 the equivalent in foreign currencies of LBP 2,899 billion (LBP 2,292 billion as at December 31, 2013) deposited in accordance with local banking regulations which require banks to maintain interest-earning placements inforeigncurrenciestotheextentof15%ofcustomers’depositsinforeigncurrencies,certificatesofdeposits and loans from non-resident financial institutions.

Term placements with Central Banks have the following maturities.

year ended december 31, 2014 average maturity currency amount interest rate Lbp’000 %

2015 LBP 172,950,125 3.092015 USD 301,500,000 1.132016 EUR 55,016,100 4.002016 USD 1,055,250,000 2.682017 EUR 91,693,500 4.752017 USD 429,637,500 1.132018 USD 113,062,500 3.552019 EUR 91,693,500 5.602019 USD 309,037,500 2.222022 LBP 225,000,000 8.602022 USD 226,125,000 6.752023 LBP 40,000,000 8.242024 USD 226,125,000 6.84

3,337,090,725

year ended december 31,In thousands of Lbp 2014 2013

Cash on hand 50,641,218 44,959,278Current accounts with Central Banks 156,395,002 95,481,587Term placements with Central Bank of Lebanon 3,337,090,725 2,632,880,600Compulsory reserves with Central Banks 190,910,291 185,391,986Accrued interest receivable 29,594,527 25,752,845

3,764,631,763 2,984,466,296

5. cash and deposITs aT cenTRaL banKs




9. Loans and advances To cUsTomeRs

Loans and advances to customers are reflected at amortized cost and consist of the following.

december 31, 2014 december 31, 2013 Gross amount Gross amount net of unrealized Impairment carrying net of unrealized Impairment carryingIn thousands of Lbp interest allowance amount interest allowance amount Performing loans - Retail:- Mortgage loans 652,377,301 - 652,377,301 626,052,612 - 626,052,612- Personal loans 50,899,829 - 50,899,829 69,105,500 - 69,105,500- Credit cards 13,499,384 - 13,499,384 15,931,175 - 15,931,175- Overdrafts 100,917,873 - 100,917,873 92,057,396 - 92,057,396- Other (car- student-Energy) 195,920,010 - 195,920,010 194,469,035 - 194,469,035

Performing loans (classified low risk and watch list) - Corporate:- Corporates 4,440,125,050 - 4,440,125,050 3,826,310,143 - 3,826,310,143- Small and medium enterprises 472,253,162 - 472,253,162 597,358,130 - 597,358,130Accrued Interest receivable 8,546,173 - 8,546,173 10,053,489 - 10,053,489 Allowance for collectively assessed loans - (23,632,972) (23,632,972) - (26,454,986) (26,454,986)

Total performing 5,934,538,782 (23,632,972) 5,910,905,810 5,431,337,480 (26,454,986) 5,404,882,494

Non-performing loans:- Substandard 86,222,407 - 86,222,407 112,441,578 - 112,441,578- Doubtful and bad 312,754,995 (255,283,022) 57,471,973 297,592,982 (259,003,550) 38,589,432

Total non-performing 398,977,402 (255,283,022) 143,694,380 410,034,560 (259,003,550) 151,031,010

6,333,516,184 (278,915,994) 6,054,600,190 5,841,372,040 (285,458,536) 5,555,913,504 The movement of unrealized interest related to substandard and doubtful loans during 2014 and 2013

is summarized as follows. In thousands of Lbp 2014 2013 Balance January 1 189,809,026 197,008,698Realized interest (recognized in profit or loss) - Note 29 (5,608,083) (6,754,355)Additions 43,277,902 43,908,032Restructuring and write-offs (6,439,460) (45,765,747)Transfer to off-balance sheet (7,263,934) (63,285)Effectofexchangerateschanges (3,848,209) 1,475,683

balance december 31 209,927,242 189,809,026


Loans to banks are reflected at amortized cost and consist of the following.

december 31,In thousands of Lbp 2014 2013

Long term loan in LBP to a resident housing bank 46,500,000 54,507,135Short term loans in foreign currencies to commercial banks 96,248,346 128,967,340Discounted acceptances 26,686,540 -Unearned interest (89,434) -Accrued interest receivable 1,813,273 939,069

171,158,725 184,413,544

Long term loans to a resident housing bank represent 12 year financing loans in Lebanese Pounds granted to this bank. These loans are subject to interest at the rate of 40% of the coupon rate on 2 years treasury bills plus 1.75%. Interest is paid semi-annually and reset every 3 years. The loans are payable after a grace period of 2 years from the withdrawal date in 10 annual equal installments.

As a guarantee for these loans, the borrower has pledged in favour of the Group bills related to the housing loans granted to its customers.

Interest income on these loans amounted to LBP 1.14 billion during 2014 (LBP 1.33 billion during 2013) and is recorded under interest income from loans to banks (Note 29).

Discounted acceptances represent facilities derived from trade finance activity (discounted letters of credit) mainly granted to non-resident banks ; These balances are denominated in US Dollars.

Short term loans represent as of December 31, 2014 and 2013 short term financing provided by the Group to banks mainly against trade finance operations.

8. Loans To banKs




10. InvesTmenT secURITIes december 31, 2014 Fair value through other amortized cost comprehensive income Foreign Foreign GrandIn thousands of Lbp Lbp currencies Total Lbp currencies Total total Equities - - - 11,917,844 1,684,994 13,602,838 13,602,838Lebanese Treasury bills 1,878,028,505 - 1,878,028,505 - - - 1,878,028,505Lebanese Government bonds 8,647,366 1,048,214,971 1,056,862,337 - - - 1,056,862,337Certificates of deposit issued by Central bank of Lebanon 1,277,486,090 263,959,924 1,541,446,014 - - - 1,541,446,014Corporate bonds - 111,141,071 111,141,071 - - - 111,141,071

3,164,161,961 1,423,315,966 4,587,477,927 11,917,844 1,684,994 13,602,838 4,601,080,765 Accrued interest receivable 62,561,596 18,261,405 80,823,001 - - - 80,823,001

3,226,723,557 1,441,577,371 4,668,300,928 11,917,844 1,684,994 13,602,838 4,681,903,766

december 31, 2013 Fair value through other amortized cost comprehensive income Foreign Foreign GrandIn thousands of Lbp Lbp currencies Total Lbp currencies Total total Equities - - - 10,991,352 1,687,618 12,678,970 12,678,970Lebanese treasury bills 2,207,919,993 - 2,207,919,993 - - - 2,207,919,993Lebanese Government bonds 7,109,914 1,202,760,658 1,209,870,572 - - - 1,209,870,572Certificates of deposit issued by Central Bank of Lebanon 865,456,386 170,451,538 1,035,907,924 - - - 1,035,907,924Corporate bonds - 239,412,214 239,412,214 - - - 239,412,214

3,080,486,293 1,612,624,410 4,693,110,703 10,991,352 1,687,618 12,678,970 4,705,789,673 Accrued interest receivable 56,573,993 19,572,473 76,146,466 - - - 76,146,466

3,137,060,286 1,632,196,883 4,769,257,169 10,991,352 1,687,618 12,678,970 4,781,936,139


The movement of the allowance for impairment of bad and doubtful debts during 2014 and 2013 is as follows.

In thousands of Lbp 2014 2013 Balance January 1 259,003,550 224,855,178Additions 18,609,633 42,997,915write-back of provisions (12,316,781) (12,152,137)Net allowance 6,292,852 30,845,778Transfer from allowance for collectively assessed loans 5,578,509 14,358,281write-off (1,076,201) (10,244,596)Transfer to off-balance sheet (7,716,746) (154,904)Effectofexchangerateschanges (6,798,942) (656,187)

balance december 31 255,283,022 259,003,550 The movement of the allowance for collectively assessed loans during 2014 and 2013 is as follows.

In thousands of Lbp 2014 2013

Balance January 1 26,454,986 38,780,578Additions 3,275,694 3,323,015Transfer to allowance for impairment on bad and doubtful debts (5,578,509) (14,358,281)write-off - (516,280)Effectofexchangerateschanges (519,199) (774,046)


The allowance for collectively assessed loans setup during 2014 and 2013 was determined based on a stress test scenario.




a. Financial assets at amortized cost:

december 31, 2014

Lbp base accounts F/cy base accounts accrued accrued amortized fair Interest amortized Fair interestIn thousands of Lbp cost value receivable cost value receivable Lebanese Government bonds 8,647,366 8,673,572 60,237 1,048,214,971 1,063,231,717 11,577,674 Certificates of deposit issued by Central bank of Lebanon 1,277,486,090 1,272,000,000 27,259,199 263,959,924 263,515,893 5,365,278 Corporate bonds - - - 111,141,071 113,073,319 1,318,453 Lebanese treasury bills 1,878,028,505 1,917,442,225 35,242,160 - --

3,164,161,961 3,198,115,797 62,561,596 1,423,315,966 1,439,820,929 18,261,405

december 31, 2013

Lbp base accounts F/cy base accounts accrued accrued amortized fair Interest amortized Fair interestIn thousands of Lbp cost value receivable cost value receivable Lebanese Government bonds 7,109,914 7,505,969 37,195,448 1,202,760,658 1,528,658,868 13,234,223Certificates of deposit issued by Central Bank of Lebanon 865,456,386 881,816,514 19,378,545 170,451,538 169,970,625 3,286,613Corporate bonds - - - 239,412,214 254,106,532 3,051,637Lebanese treasury bills 2,207,919,993 2,254,870,226 - - - -

3,080,486,293 3,144,192,709 56,573,993 1,612,624,410 1,952,736,025 19,572,473

Duringtheyear2014,theGroupexchangedwiththeLebanesegovernment,bondsmaturingin2014denominated in USD with an aggregate nominal value of LBP30billion against bonds maturing in 2020and2026(exchangedcertificatesofdepositissuedbyCentralBankofLebanonmaturingin2014denominated in LBP with an aggregate nominal value of LBP 405 billion in 2013). The difference resultingfromtheexchangeintheamountofLBP237million(LBP9.3billionin2013)wasrecordedunder“Gainonderecognitionofinvestmentsecuritiesmeasuredatamortizedcost”intheconsolidatedstatement of profit or loss.

As of December 31, 2014, investments at amortized cost included securities with an aggregate carrying value of LBP 26 billion (LBP 13.59 billion in 2013) pledged against long term borrowings from the Central Bank in the amount of LBP 98.96 billion (LBP 15.6 billion in 2013) (Note 19).


The movement of investment securities is summarized as follows.

2014 Fair value through other amortized comprehensiveIn thousands of Lbp cost income Total

balance January 1, 2014 4,693,110,703 12,678,970 4,705,789,673Additions 1,114,471,773 - 1,114,471,773Sales (70,686,314) - (70,686,314)Redemptions (1,041,910,129) - (1,041,910,129)Amortization of sinking fund bond (57,088,799) - (57,088,799)Swap and call (30,150,000) - (30,150,000)Changes in fair value - 926,392 926,392Accretion of interest 6,971,403 - 6,971,403Amortization of premiums and discounts (11,068,153) - (11,068,153)Effectofexchangerateschanges (16,172,557) (2,524) (16,175,081)

balance december 31, 2014 4,587,477,927 13,602,838 4,601,080,765

2013 Fair value through other amortized comprehensiveIn thousands of Lbp cost income Total

balance January 1, 2013 4,477,045,998 11,388,058 4,488,434,056Additions 1,515,163,904 459,787 1,515,623,691Sales (23,351,215) - (23,351,215)Redemptions (811,617,469) - (811,617,469)Amortization of sinking fund bond (55,961,566) - (55,961,566)Swap and call (409,608,171) - (409,608,171)Changes in fair value - 830,178 830,178Accretion of interest 4,949,958 - 4,949,958Amortization of premiums and discounts (13,250,135) - (13,250,135)Effectofexchangerateschanges 9,739,399 947 9,740,346

balance december 31, 2013 4,693,110,703 12,678,970 4,705,789,673




The movement of investments in associates during 2014 and 2013 is as follows.


balance January 1 16,807,329 17,377,450Prior period adjustments 9,597 (17,196)Dividends received (1,271,027) (7,662,476)Share in net profit (Note 35) 8,151,618 7,109,551


13. asseTs acqUIRed In saTIsFacTIon oF Loans

Assets acquired in satisfaction of loans have been acquired through enforcement of security over loans and advances. The acquisition of these assets is approved by local banking authorities.

The movement of assets acquired in satisfaction of loans during 2014 and 2013 was as follows.

Real equity In thousands of Lbp estate interest Total cost balance January 1, 2013 18,587,100 21,668,897 40,255,997 Additions 2,906,316 655,245 3,561,561 Liquidation (30,150) - (30,150) Effectsofexchangerateschanges 113,442 - 113,442 Balance December 31, 2013 21,576,708 22,324,142 43,900,850 Additions 7,920,553 3,896,620 11,817,173 Liquidation (920,667) (3,896,620) (4,817,287) Transfers to other assets (2,705,957) - (2,705,957) Effectsofexchangerateschanges 224 - 224

balance december 31, 2014 25,870,861 22,324,142 48,195,003

The major asset component of entities in which the Group has acquired an equity interest in satisfaction of loans consists of real estate properties.

The acquisition of assets in settlement of loans in Lebanon requires the approval of the banking regulatory authorities and these should be liquidated within 2 years. In case of default of liquidation, a regulatory reserve should be appropriated from the yearly net profits over a period of 5 years. This reserve is reduced to 5% when certain conditions linked to the restructuring of non performing loans’ portfolio are met. The Central Bank of Lebanon has approved an annual appropriation of the regulatory reserve at the rate of 5% per annum. This regulatory reserve is reflected under equity. In this respect, an amount of LBP 4.54 billion was appropriated in 2014 (LBP 4.67 million in 2013).

During 2014, the Group sold assets acquired in satisfaction of loans with an aggregate cost of LBP 4.8 billion. The sale resulted in a gain in the amount of LBP 1.05 billion recorded in the consolidated statement ofprofitorlossunder“Otheroperatingincome”(Note35)andanamountofLBP338.29millionwastransferred to retained earnings (LBP 3.73 million in 2013).

14. pRopeRTy and eqUIpmenT and InTanGIbLe asseTs

During the first half of 2014, the Group acquired a plot of land in Moudawar, Beirut for a total consideration of LBP 55 billion of which an amount of LBP 37.7 billion was paid and the remainder was deposited in a non-interest bearing account opened in the name of the seller, to be released upon fulfillment of the terms of the contract. The Group acquired this plot of land to erect its new headquarters.


b. Investment securities designated at Fair value Through other comprehensive Income

december 31, 2014

Lbp Foreign currencies cumulative cumulative carrying change in carrying change inIn thousands of Lbp cost fair value fair value cost fair value fair value

Unquoted equities 286,080 286,080 - 1,684,994 1,684,994 -Unquoted equities measured on the basis of net assets 2,208,064 11,631,764 9,423,700 - - -

2,494,144 11,917,844 9,423,700 1,684,994 1,684,994

december 31, 2013

Lbp Foreign currencies cumulative cumulative carrying change in carrying change inIn thousands of Lbp cost fair value fair value cost fair value fair value

Unquoted equities at cost 285,980 285,980 - 1,687,618 1,687,618 -Unquoted equities measured on the basis of net assets 2,208,064 10,705,372 8,497,308 - - -

2,494,044 10,991,352 8,497,308 1,687,618 1,687,618 -

11. cUsTomeRs’ LIabILITy UndeR accepTances

Acceptances represent documentary credits which the Group has committed to settle on behalf of its customers against commitments by those customers (acceptances). The commitments resulting from these acceptances are stated as a liability in the statement of financial position for the same amount.

12. InvesTmenTs In assocIaTes

The Group has unquoted investments in Lebanese associates as follows.

december 31, 2014 Total Total net net share in Group’s share Group’sIn thousands of Lbp assets liabilities assets profit ownership % of net assets share in profit

Bancassurance S.A.L. 463,497,505 419,223,457 44,274,048 20,257,365 40 21,943,614 8,102,946

Centre de Traitement Monetique S.A.L. 4,293,593 888,489 3,405,104 97,344 50 1,753,903 48,672

december 31, 2013 Total Total net net share in Group’s share Group’sIn thousands of Lbp assets liabilities assets profit ownership % of net assets share in profit

Bancassurance S.A.L. 402,943,535 375,143,949 27,799,586 17,664,257 40 15,104,837 7,065,703

Centre de Traitement Monetique S.A.L. 4,323,379 994,266 3,329,113 87,695 50 1,702,492 43,848




17. cUsTomeRs’ deposITs desIGnaTed aT FaIR vaLUe ThRoUGh pRoFIT oR Loss

Customers’ deposits designated at fair value through profit or loss represent deposits matched with embedded derivatives linked to a basket of financial instruments, for the product introduced during 2007, totheperformanceofamutualfundandtheexchangerateofUSD/CNYfortheproductsintroducedduring2010,toabasketofequitiesfortheproductintroducedin2011andtotheexchangerateof USD/EUR for the product introduced in 2012. These instruments guarantee the depositors the repayment ofcapitalatmaturityfixedat5yearsfortheproductintroducedduring2007,at2and3yearsrespectivelyfor the products introduced in 2010, at 3 years for the product introduced in 2011 and after 1 month for the product introduced in 2012 and guarantee some coupons according to certain conditions.

These deposits are designated at fair value through profit or loss as they are covered by an embedded derivative.

The change in fair value of the customers’ deposits is as follows:


Notional amount - 7,884,225Negative change in fair value (Note 20) - (104,455)

Fair value as at december 31 - 7,779,770

18. cUsTomeRs’ deposITs aT amoRTIzed cosT

december 31,In thousands of Lbp 2014 2013 Deposits

Current and demand 2,461,466,676 2,328,970,865 Term 10,072,144,076 10,048,977,116 Collateral 1,251,993,192 1,074,219,975

13,785,603,944 13,452,167,956

Margins and other Margins on letters of credit 79,678,076 40,260,421 Margins on letters of guarantee 58,717,805 65,584,406 Margins on derivatives and other financial instruments 30,449,604 90,350,089 Other margins 399,839,127 601,181,837 Cash provisions 26,478,089 26,275,785

595,162,701 823,652,538

Accrued interest payable 61,714,006 49,483,405

14,442,480,651 14,325,303,899


15. oTheR asseTs


Investment properties 318,464 318,464Deferred interest on deposit instruments with guaranteed capital 88,608 236,466Due from National Social Security Fund (a) 10,653,705 9,535,877Regularization account of foreign currency forward contracts and swaps 533,979 5,067,113Prepayments 5,178,979 4,651,042Deferredtaxasset(b) 797,941 1,610,810Regulatory deposits with Central Bank of Syria (c) 5,300,578 5,656,484Checks for collection 45,748,371 36,617,964Sundry accounts receivable 22,336,256 32,121,092Allowance for doubtful accounts receivable (10,239,182) (9,723,090)

80,717,699 86,092,222 (a) Amounts due from the National Social Security Fund represent hospitalization charges paid by the

Group on behalf of its employees subject to recuperation from the National Social Security Fund.

(b)DeferredtaxassetsaretheresultsofprioryearlossesoftheSyriansubsidiary.

(c) The regulatory deposit with Central Bank of Syria is held according to Syrian laws and represents 10% of the subsidiary’s (Bank Al-Sharq S.A.S.) capital. This deposit is non-interest earning and can only be restituted upon liquidation of the subsidiary.

16. deposITs FRom banKs and FInancIaL InsTITUTIons


Central Banks current deposits 4,638,889 5,182,338Current deposits of banks and financial institutions 95,287,276 108,766,651Pledged deposits of banks and financial institutions 7,757,560 13,336,189Other short term borrowings 319,262,860 414,808,800Accrued interest payable 191,730 633,545

427,138,315 542,727,523




19. LonG-TeRm boRRoWInGs

The Group did not have any default of principal, interest or other branches with respect to its borrowings during 2014 and 2013.

Long-term borrowings are reflected at amortized cost and consist of the following.

december 31,


European Investment Bank (a) 10,444,881 12,331,966Govco Inc. / Citibank N.A. (b) 14,536,607 16,726,071Arab Trade Financing Program (c) 7,467,102 7,529,081Agence Francaise de Developpment (d) 19,719,593 26,254,537European Investment Bank (e) 28,018,419 35,289,584Central bank of Lebanon-Circular 313 (f) 98,965,423 15,640,178Accrued interest payable 2,013,903 1,040,218

181,165,928 114,811,635

a. european Investment bank

Borrowings from European Investment Bank through the Central Bank of Lebanon are used to finance loans extendedtotheGroup’scustomersengagedintourism,manufacturingandtechnology.


Balance January 1 12,331,966 14,918,553Settlements (1,887,085) (2,614,388)Effectofexchangerateschanges - 27,801


Contractual maturities as at December 31, 2014:

In thousands of Lbp

2015 1,968,2192016 1,869,2592017 1,630,8382018 1,839,845Thereafter 3,136,720

10,444,881

Interest expenseon above facility for the year endedDecember31, 2014 amounted toLBP527million

(LBP 673 million in 2013).


Deposits from customers at amortized cost are allocated by brackets of deposits as follows.

december 31, 2014 Lbp Foreign currencies Total % to total number of Total % to total number of deposits deposits counterparties deposits deposits counterparties millions of Lbp % millions of Lbp %

•LessthanLBP200million 1,285,737 29 81,577 1,239,481 12 94,752•FromLBP200milliontoLBP1billion 1,315,170 30 3,317 1,757,158 18 4,303•MorethanLBP1billion 1,798,132 41 511 6,985,089 70 1,344Accrued interest payable 31,143 - - 30,571 - - 4,430,182 100 85,405 10,012,299 100 100,399

december 31, 2013 Lbp Foreign currencies Total % to total number of Total % to total number of deposits deposits counterparties deposits deposits counterparties millions of Lbp % millions of Lbp %

•LessthanLBP200million 1,150,735 28 78,766 1,125,951 11 88,155•FromLBP200milliontoLBP1billion 1,202,203 29 4,637 1,587,565 16 5,534•MorethanLBP1billion 1,703,319 43 1,162 7,506,044 73 1,820Accrued interest payable 22,987 - - 26,500 - -

4,079,244 100 84,565 10,246,060 100 95,509

Lbp base accounts Foreign currencies base accounts

average balance average average balance averageyear of deposits interest rate of deposits interest rate Lbp’000 % Lbp’000 %

2014 4,232,634,510 5.64 9,815,717,895 2.902013 3,909,549,948 5.28 8,518,738,434 3.112012 3,579,865,237 5.50 8,913,746,586 2.98

Deposits from customers include as at December 31, 2014 coded deposit accounts in the aggregate of LBP 187 billion (LBP 177 billion as at December 31, 2013). These accounts are subject to the provisions of Article 3 of the Banking Secrecy Law dated September 3, 1956 which provides that the Bank’s management, in the normal course of business, cannot reveal the identities of these depositors to third parties, including its independent public accountants.

Deposits from customers at amortized cost include as at December 31, 2014 fiduciary deposits received from non-resident banks and financial institutions for a total amount of LBP 192.7 billion (LBP 171.5 billion as of December 31, 2013).

Cash provisions represent settlements effected to the Group from guarantors of credit risks.

The average balance of deposits at amortized cost and related cost of funds over the last 3 years were as follows.




d. agence Française de développement

During2007, theGroup signeda contractwith“AgenceFrançaisedeDéveloppement” inorder toobtain a concessional loan for the financing or refinancing of loans made by the Group to its customers of small and medium enterprises who encountered economic and financial difficulties following the militaryconflictinLebanoninsummer2006.ThemaximumamountofthiscreditisEUR15,000,000tobedisbursedinaminimumoftwoandamaximumofthreetrancheswithaminimumamountof EUR2,000,000foreachtranche.ThisloanwasfullywithdrawnuptillDecember31,2012.Afixedrateis determined for each tranche by the lender. The movement of this borrowing during 2014 and 2013 is as follows.


Balance January 1 26,254,537 28,933,057Settlements (3,486,549) (3,944,548)Effectofexchangerateschanges (3,048,395) 1,266,028


Contractual maturities as at December 31, 2014.

In thousands of Lbp

2015 4,861,9522016 4,861,9522017 3,118,6772018 1,375,402Thereafter 5,501,610

19,719,593

Interest expenseon above facility for the year endedDecember31, 2014 amounted toLBP796million (LBP 960 million in 2013).

e. european Investment bank

During2007,theGroupsignedacontractwith“theEuropeanInvestmentBank”inordertoobtainaloanin an amount equivalent to EUR 20,000,000 for the financing of private sector projects approved by the lender to be carried out by small and medium sized enterprises located in Lebanon. This loan falls under the Framework Agreement signed between the Republic of Lebanon and the lender. The loan contract givestheGroupthechoicebetweenafixedorafloatingrateforeachtranche.TheGrouphasselectedafixedrateforalltranches.Thisloanisdetailedasfollows.


Balance January 1 35,289,584 38,923,583Settlements (5,194,908) (4,490,752)Effectofexchangerateschanges (2,076,257) 856,753



b. Govco/citibankDuring 2007, the Group signed a contract with Govco Inc. and Citibank NA to obtain a long term loan in the amount of USD 20 million (c/v LBP 30 billion) fully withdrawn.

In thousands of Lbp Govco citibank Total

Balance January 1, 2013 18,413,036 753,750 19,166,786Settlements (1,938,215) (502,500) (2,440,715)Balance December 31, 2013 16,474,821 251,250 16,726,071Settlements (1,938,214) (251,250) (2,189,464)

balance december 31, 2014 14,536,607 - 14,536,607

Contractual maturities as at December 31, 2014:

In thousands of Lbp

2015 1,938,2142016 1,938,2142017 1,938,2142018 1,938,214Thereafter 6,783,751

14,536,607

Interest expenseon above facility for the year endedDecember31, 2014 amounted toLBP497million (LBP 554 million in 2013).

c. arab Trade Financing program

TheArabTradeFinancingProgramconsistsofaconfirmedlineofcredittotheextentofUSD15,000,000.The purpose of this line of credit is to promote trade activities between Arab countries and between Arab and non-Arab countries by financing up to 100% of the value of eligible transactions. The interest charged on each withdrawal is 6 months LIBOR plus a variable margin which depends on the duration of the withdrawal. Each withdrawalshouldbesettledinequalsemi-annualinstallmentsstartingsixmonthsafterthewithdrawaldatenottoexceedteninstallments.

The movement of these borrowings during 2014 and 2013 is as follows.


Balance January 1 7,529,081 15,070,623withdrawals 10,571,933 11,953,432Setllements (10,633,912) (19,494,974)


Interest expense on above facility for the year endedDecember 31, 2014 amounted to LBP 92million (LBP 125 million in 2013).




Theregroupingofreconciliationsbetweentheaverageeffectivetaxrateandtheenactedtaxratesissummarized as follows.


Profitbeforetax 181,659,340 173,833,859Incometaxatthenationalenactedtaxrates 26,604,003 27,805,367Taxeffectofnon-deductibleexpensesandnon-taxableincome (238,733) (4,942,753)

Incometaxexpense 26,365,270 22,862,614Less:Taxpaidduringtheyear (14,475,298) (12,890,420)

Income tax payable as at december 31 11,889,972 9,972,194

During2013,theBank’staxreturnsfortheyears2008until2011weresubjecttoreviewbythetaxauthorities, which resulted in additional tax liability issued by the tax authorities inMarch 2014 of approximately LBP 6 billion out of which, an amount of LBP 5 billion was accrued for as at December31,2013under“Withheldtaxesandothertaxespayable”inotherliabilities,andunder“otherexpense(net)”intheconsolidatedstatementofprofitorlossfortheyear2013.During2014,thistaxliability was fully paid.

TheBank’staxreturnsforyears2012to2014arestillsubjecttoreviewandanyadditionaltaxliabilitydepends on the outcome of such review.

21. pRovIsIons


Provision for staff termination indemnity 11,431,595 15,198,201Provision for risks and contingencies 2,717,821 2,731,231Provision for foreign currency fluctuation 452,815 766,458Other provisions - 537

14,602,231 18,696,427

The movement of the provision for staff termination indemnity is as follows.


Balance January 1 15,198,201 12,177,106Additions (Note 36) 3,975,257 3,892,453write-back (Note 36) (53,993) (163,804)Settlements (7,497,206) (771,405)Effectofexchangerateschanges (190,664) 63,851


The movement of the provision for risks and contingencies is as follows.


Balance January 1 2,731,231 3,644,451Additions 453,169 183,313write-back - (977,061)write off - (155,000)Effectofexchangerateschanges (466,579) 35,528



20. oTheR LIabILITIes


Currentincometaxliability 11,889,972 9,972,194Deferredtaxliabilityoncumulativechangeinfairvalueofinvestmentsecurities(Note26) 1,413,555 1,274,596Deferredtaxliabilityonfuturedividendsdistributionbysubsidiaries 6,368,558 5,437,362Withheldtaxesandothertaxespayable 7,619,280 13,904,593Due to the National Social Security Fund 972,271 940,236Checks and incoming payment orders in course of settlement 41,293,309 41,133,031Blocked capital subscriptions for companies under incorporation 1,513,935 1,722,397Accruedexpenses 13,488,477 19,322,699Derivative financial instruments (Note 17) - 104,455Regularization account on foreign currency forward contracts and swap 6,535,861 -Financial guarantee contracts issued 99,140 554,042Payables to personnel and directors 2,636,991 2,532,749Customers’ checks under collection 39,632,896 29,869,419Accrued interest payable on shareholders’ cash contribution to capital (Note 24) 3,057,572 3,296,903Sundry accounts payable 20,611,055 21,432,496 157,132,872 151,497,172

Accrued interest payable on shareholders’ cash contributions to capital is reflected as of December 31, 2014 netof10%withheldtax.

InterestexpenseonabovefacilityfortheyearendedDecember31,2014amountedtoLBP1.38billion(LBP 1.58 billion in 2013).

F. central bank of Lebanon – circular 313

During 2014 and 2013, the Central Bank of Lebanon granted the Lebanese banks pursuant to circular 313 facilities in Lebanese Pounds to be granted to their customers. These facilities bear interest at the rate of 1% computed annually and paid monthly. These facilities have maturities beyond 5 years and their repayment depend on the underlying assets settlement.

InterestexpenseonabovefacilityfortheyearendedDecember31,2014amountedtoLBP368million(LBP 257 million in 2013).

In 2014, the Group pledged certificates of deposit in the amount of LBP 26 billion against this facility (LBP 13.59 billion in 2013) (refer to Note 10).

Contractual maturities as at December 31, 2014.

In thousands of Lbp

2015 5,731,5782016 5,731,5782017 5,731,5782018 4,378,825Thereafter 6,444,860

28,018,419





25. ReseRves


Legal reserve 123,716,159 108,512,177Reserve for general banking risks 177,000,000 146,000,000Reserve for capital increase 35,018,939 35,018,939Special reserve 122,000,000 112,000,000

457,735,098 401,531,116

The legal reserve is constituted in conformity with the requirements of the Lebanese Money and Credit Law on the basis of 10% of net profit. This reserve is not available for distribution.

The reserve for general banking risks is constituted according to Lebanese banking regulations, from net profit,onthebasisofaminimumof2permilandamaximumof3permilofthetotalriskweightedassets,off-balancesheetriskandglobalexchangepositionasdefinedforthecomputationofthesolvencyratio at year-end. This reserve is constituted in Lebanese Pounds and in foreign currencies in proportion to the composition of the Bank’s total risk weighted assets and off-balance sheet items. This reserve is not available for distribution.

During 2013, the Group appropriated an amount of LBP 1.6 billion representing gains from disposals of assets acquired in satisfaction of loans from net income of the previous year to reserves restricted for capital increase.

26. cUmULaTIve chanGe In FaIR vaLUe oF InvesTmenT secURITIes desIGnaTed aT FaIR vaLUe ThRoUGh oTheR compRehensIve Income

december 31,In thousands of Lbp 2014 2013 Unrealized gain on equity securities (Note 10B) 9,423,700 8,497,308Deferredtaxliability(Note20) (1,413,555) (1,274,596)

net 8,010,145 7,222,712

27. non-conTRoLLInG InTeResTs


Capital 84,361,702 44,649,640Reserves and retained earnings 11,648,283 9,786,679Profit/(loss)fortheyear(netofdeferredtax) 2,795,731 (3,822,221)

98,805,716 50,614,098

Series 2

During 2010, the Bank issued 1,000,000 Series (2) preferred shares with a nominal value of LBP 10,000 each,increasedbyadditionalpaidincapitalfixedinUSDandamountingto,foreachpreferredshare,the difference between USD 100 and the above mentioned nominal value.

Thesepreferredsharesareperpetualnon-cumulative,redeemablepayingareturnfixedatUSD2.25pershare for the year 2009 and USD 8 per share for the year 2010 and subsequent years.

The Bank may at its option redeem or cancel all or part (but not less than 20%) of the original size issue within 60 days following the date of the Ordinary General Assembly of shareholders held to approve the accounts of the Bank for the year 2014 and for any subsequent year thereafter at its sole discretion.

Series 3

During 2011, the Bank issued 1,500,000 Series (3) preferred shares with a nominal value of LBP 10,000 each,increasedbyadditionalpaidincapitalfixedinUSDandamountingtoforeachpreferredshare,thedifference between USD 100 and the above mentioned nominal value.

These preferred shares are perpetual non-cumulative, redeemable paying a return of USD 7 per share.

The Bank may at its option redeem or cancel all or part (but not less than 20%) of the original size issue within 60 days following the date of the Ordinary General Assembly of shareholders held to approve the accounts of the Bank for the year 2015 and for any subsequent year thereafter at its sole discretion.

24. shaRehoLdeRs’ cash conTRIbUTIon To capITaL

The shareholders’ cash contribution to capital for a total amount of USD 40 million is subject to an annual interest rate equal to 90% of yield related to last issue of previous year Lebanese Eurobonds with maturity beyond 5 years. This rate was set at 5.634% in 2014 (6.075% in 2013) payable from unrestricted profits and after securing the approval of the Banking Control Commission of Lebanon.

Interest expense for the year ended December 31, 2014 amounted to LBP 3.40 billion C/V of USD2,255,345(LBP3.66billionfor2013)recordedunder“Interestexpense”inthestatementofprofitor loss (Note 30).

This sort of financial instrument is accounted for in foreign currency and therefore allows hedging againstnationalcurrencyexchangefluctuation.Accordingtolocalbankingregulations,cashcontributionto capital is considered as Tier I capital.


Series 2 150,703,349 150,703,349Series 3 226,125,000 226,125,000

376,828,349 376,828,349

22. shaRe capITaL

At December 31, 2014 and 2013, the authorized ordinary share capital of the Bank consists of 21,000,000 fully paid shares of LBP 10,000 each.

23. pReFeRRed shaRes





31. Fee and commIssIon Income


Commission on documentary credits 13,134,270 11,839,664Commission on letters of guarantee 12,720,599 11,768,874Service fees on customers’ transactions 26,219,562 25,224,522Brokerage fees 11,484,038 7,083,285Commission on debit/credit cards 17,134,526 11,008,997Asset management fees 2,619,347 6,028,380Other 1,088,278 4,292,283

84,400,620 77,246,005

Asset management fees represent fees earned by the Group on trust and fiduciary activities where the Group holds or invests assets on behalf of its customers.

32. Fee and commIssIon expense


Commissions on transactions with banks 9,443,974 9,702,961Other consumer 9,235,790 4,669,907

18,679,764 14,372,868

33. neT ResULTs on FInancIaL asseTs aT FaIR vaLUe ThRoUGh pRoFIT oR Loss


Interest income on financial assets at fair value through profit or loss 16,530,531 17,380,488Interestexpenseonfinancialliabilitiesatfairvaluethroughprofitorloss (144,956) (110,903)Dividend income 267,457 229,698Net unrealized gain from change in fair value 295,714 3,590,891Net realized gain 5,200,163 11,466,732

22,148,909 32,556,906

28. dIvIdends paId

The following dividends were declared and paid by the Group during 2014 and 2013.


Dividends distributed by the Bank on ordinary shares 35,070,000 29,820,000Dividends distributed by the Bank on preferred shares Series (2) 12,060,000 12,060,000Dividends distributed by the Bank on preferred shares Series (3) 15,828,750 15,828,750

62,958,750 57,708,750

Subsequent to the statement of financial position date, the following dividends were proposed by the Board of Directors of the Bank for the year ended 2014 which still are pending the ratification of the general assembly of shareholders.

In thousands of Lbp

Dividends distributed by Banque Libano-Française on ordinary shares 35,070,000Dividends distributed by Banque Libano-Française on preferred shares Series (2) 12,060,000Dividends distributed by Banque Libano-Française on preferred shares Series (3) 15,828,750

29. InTeResT Income

In thousands of Lbp 2014 2013 Interest income on:•DepositswithCentralBanks 102,599,304 87,367,742•Depositswithbanksandfinancialinstitutions 12,315,383 15,988,891•Investmentsecuritiesatamortizedcost 319,735,419 297,056,374•Loanstobanks 5,476,149 4,653,915•Loansandadvancestocustomers 366,912,504 344,753,406•Interestrealizedonimpairedloansandadvancestocustomers(Note9) 5,608,083 6,754,355

812,646,842 756,574,683

Interest realized on impaired loans and advances to customers represent recoveries of interest. Accrued interest on impaired loans and advances is not recognized until recovery or until rescheduling agreement is signed with the customer.

Interest income on financial assets at fair value through profit or loss is included under net results on financial instruments designated at fair value through profit or loss (Note 33).

30. InTeResT expense

In thousands of Lbp 2014 2013 Interestexpenseon:•Depositsfombanksandfinancialinstitutions 3,181,296 6,326,255•Customers’depositsatamortizedcost 529,648,467 479,288,672•Longtermborrowings 3,659,701 4,148,748•PremiumfortheNationalInstituteofGuaranteeofDeposits 6,670,000 6,350,000•Shareholders’cashcontributiontocapital(Note24) 3,399,932 3,664,542 546,559,396 499,778,217

Interestexpenseoncustomers’accountsdesignatedasatfairvaluethroughprofitorlossisincludedunder net results on financial instruments designated at fair value through profit or loss (Note 33).





36. sTaFF cosTs

In thousands of Lbp 2014 2013 Salaries 65,848,080 62,250,098Other benefits 34,401,940 28,903,397Social Security contributions 12,910,338 12,448,066Provision for employees’ end-of-service indemnities (Net) (Note 21) 3,921,264 3,728,649Provident fund 514,151 557,541 117,595,773 107,887,751

37. FInancIaL InsTRUmenTs WITh oFF baLance sheeT RIsKs

The guarantees and standby letters of credit and the documentary and commercial letters of credit represent financial instruments with contractual amounts representing credit risk. The guarantees and standby letters of credit represent irrevocable assurances that the Group will make payments in the event that a customer cannot meet its obligations to third parties and are not different from loans and advances on the statement of financial position. However, documentary and commercial letters of credit, which represent written undertakings by the Group on behalf of a customer authorizing a third party to draw drafts on the Group up to a stipulated amount under specific terms and conditions, are collateralized by the underlying shipments documents of goods to which they relate and, therefore, have significantly less risks.

38. baLances/TRansacTIons WITh ReLaTed paRTIes

In the ordinary course of its activities, the Group conducts transactions with related parties including shareholders, directors, and associates. Balances with related parties consist of the following as at December 31.

In thousands of Lbp 2014 2013 shareholders, directors and other key management personnel and close family members:Direct facilities and credit balances:•Loansandadvances 2,987,773 4,867,424•Deposits 186,220,203 126,565,046•Lettersofguarantee 14,321 240,446

associated companies:•Loansandadvances 33,470,366 135,873,594•Customers’liabilityunderacceptances 29,602 -•Deposits 274,086,359 222,069,748•Lettersofcredit 617,222 748,857•Lettersofguarantee 3,598,552 2,691,041

Theremunerationsofexecutivemanagement, including incentives,amounted toLBP26.65billion

(LBP 22.38 billion in 2013).

InterestincomeincludesapproximatelyLBP5.8billionfortheyearendedDecember31,2014representinginterests recognized by the Group from related parties.

Interest expense includes approximately LBP 16.9 billion for the year ended December 31, 2014representingexpensesincurredbytheGrouptorelatedparties.

NetcommissionincomeincludesapproximatelyLBP164millionfortheyearendedDecember31,2014representing commissions earned for services rendered by the Group to related parties.

GeneralandadministrativeexpensesincluderentfeesintheamountofLBP382millionfortheyearsended December 31, 2014 and 2013 charged by a related party company.

34. GaIn on deRecoGnITIon oF InvesTmenT secURITIes measURed aT amoRTIzed cosT

december 31, 2014 nominalIn thousands of Lbp maturity Gain/(loss) value

Net gain on sale of corporate bonds 2015, 2016, 2017 and 2020 3,807,049 70,385,865Net loss on sale of corporate bonds 2020 (211,925) 6,030,000Net gain on sale of Lebanese Eurobonds 2014 236,683 30,150,000Net gain on derecognition of sinkable funds 2017 460,178 - 4,291,985 106,565,865

december 31, 2013 nominalIn thousands of Lbp maturity Gain/(loss) value Net gain on sale of certificates of deposit issued by the Central Bank of Lebanon 2013 & 2014 9,283,137 405,000,000Net loss on sale of corporate bonds November 1, 2015 (514,108) 2,074,770Net gain on sale of corporate bonds 2014, 2015, 2017 and 2022 2,659,058 21,948,660 11,428,087 429,023,430

During 2014 and 2013, the Group derecognized certain debt instruments classified at amortized cost due to the following reasons:

•deteriorationofthecreditratingofcorporatebondsbelowthatrequiredbytheGroup’sinvestmentpolicy;

•adjustmentininvestmentportfoliotoreflectachangeinexpectedduration; •earlyredemptionbytheissuer.

Thenominalvalueofdebtsecuritiesdisposedofduringyear2014amountstoapproximately2%oftheportfolio of securities measured at amortized cost as at December 31, 2014 (9% of portfolio of securities measured at amortized cost as at December 31, 2013 for securities disposed of during year 2013).

35. oTheR opeRaTInG Income


Dividends received on investment securities designated at FVTOCI 250,080 233,579Share in profits of associates (Note 12) 8,151,618 7,109,551Foreignexchangegain(net) 14,443,036 17,525,682Gain on disposal of assets acquired in settlement of loans (Note 13) 1,047,880 -Sundry 375,006 686,846 24,267,620 25,555,658




40. capITaL manaGemenT

The Group manages its capital to comply with the capital adequacy requirements set by Central Bank of Lebanon, the Group’s lead regulator. The subsidiaries of the Group operating abroad are also required to respect particular ratios according to the competent authorities of supervisions.

Furthermore, the Central Bank of Lebanon requires each bank or banking group to hold a minimum level of regulatory capital of LBP 10 billion for the head office and LBP 500 million for each branch in Lebanon and LBP 1.5 billion for each branch outside Lebanon in addition to the minimum regulatory capital required by the host country.

Pursuant to Central Bank Decision No 10848 dated December 7, 2011, adopted with respect to the application of the Basel III regulation, all banks operating in Lebanon must gradually reach the following capital ratios.

december 31, 2012 2013 2014 2015 Ratio % % % %

Common Equity Tier 1 ratio 5.00 6.00 7.00 8.00Tier 1 ratio 8.00 8.50 9.50 10.00Total Capital ratio 10.00 10.50 11.50 12.00

Tier I capital: Comprises mainly share capital, shareholders’ cash contribution to capital, non-cumulative perpetual preferred shares, share premium, reserves from appropriation of profits, retained earnings (inclusive of current year’s net profit after deduction of proposed dividends).

Cumulative unfavorable change in fair value of assets designated at fair value through other comprehensive income are deducted from Tier I Capital.

Tier II capital: Comprises mainly qualifying subordinated liabilities, 50% of cumulative favorable change in fair value of assets at fair value through other comprehensive income.

Investments in associates are deducted from Tier I and Tier II Capital.

The Group has complied with the regulatory capital requirement throughout the year.

The Group’s capital adequacy ratio according to Basel III as of December 31, 2014 and 2013 was as follows.

december 31,

In millions of Lbp 2014 2013 Common equity Tier I (net) 881,960 817,649Additional Tier I Capital (net) 437,128 438,622 1,319,088 1,256,271 Net Tier II Capital 4,097 4,933

Total regulatory capital (including remaining net profit after distribution of dividends) 1,323,185 1,261,204

Credit risk 9,241,665 8,631, 925Market risk 339,568 273,251Operational risk 702,496 699,237Risk-weighted assets and risk-weighted off-balance sheet items 10,283,729 9,604,413

common equity Tier I Ratio 8.58% 8.51%

Tier I Ratio 12.83% 13.08%

Risk based capital Ratio – Tier I and Tier II capital 12.87% 13.13%


39. cash and cash eqUIvaLenTs


Cash on hand 50,641,218 44,959,278Current accounts with Central Banks 156,395,002 95,481,587Time deposits with Central Banks (original maturity of less than 3 months) 172,700,000 76,324,000Current accounts with banks and financial institutions 559,068,849 721,142,217Time deposits with banks and financial institutions (original maturity of less than 3 months) 540,909,239 1,106,807,663Discounted acceptances 26,686,540 - 1,506,400,848 2,044,714,745

Thefollowinginvestingandfinancingactivitiesthatrepresentnon-cashitemswereexcludedfromthecash flow statement.

2014 current year change in fair value of ForclosureIn thousands of Lbp investments of assets Investments designated at FVTOCI (Note 10) 926,392 -Loans and advances to customers - 11,817,398Assets acquired in satisfaction of loans (Note 13) - (11,817,398)

926,392 -

Deferredtaxliabilityoncumulativechangeinfairvalueofinvestmentsecurities (138,959) -Retained earnings - (338,287)Regulatory reserve for assets acquired in satisfaction of debts - 338,287Cumulative change in fair value of investments (Equity) (787,433) - (926,392) -

2013 current year change in fair change in fair value of value of deposits at ForclosureIn thousands of Lbp investments FvTpL of assets Investments designated at FVTOCI (Note 10) 830,178 - -Loans and advances to customers - - (3,561,561)Assets acquired in satisfaction of loans (Note 13) - - 3,561,561

830,178 - -

Customers’ deposits designated at FVTPL (Note 16) - (104,455) -Other liabilities - 104,455 -Deferredtaxliability (124,527) - -Retained earnings - - (3,726)Regulatory reserve for assets acquired in satisfaction of debts - - 3,726Cumulative change in fair value of investments (Equity) (705,651) - -

(830,178) - -





The Group operates according to defined credit criteria which consist of a clear identification of the target market of the Group, a deep knowledge of the borrower as well as the purpose, structure and source of repayment of the credit.

Moreover the general credit risk policy’s prime concern is to ensure a proper diversification of the lending portfolio. with this regard, internal limits have been established at the level of individual borrower, group of connected borrowers and industry, thus maintaining aggregate concentration risk within acceptable levels.

The Group complies with the limits set by the regulatory authorities and the limits set internally depending on total equity and annual profits.

•AuthorizationProcessThe Group has established a clear process for approving commercial and retail credits as follows:

Commercial credits and concentration risk:Loans approvals are assigned to different credit committees according to the nature and the amount of theloan.Creditriskisevaluatedandcalculatedaccordingtothenatureoftheloanandtheglobalexposureper counter-party, which combines all direct and contingent credit facilities granted to one group of related clients. Credit limits granted to a same group of counter-parties are well established within the credit policies of the Group. A consolidation is done at the Group level for clients that are granted credit facilities by different entities of the Group.

The Board Risk Committee ratifies credits to counter-parties that range between USD 5 and USD40million,andauthorizescreditsthatexceedUSD40millionatGrouplevel.

Reports on concentration risk are based on formulas for identification of concentration risk applied worldwide.

Standardized consumer loans:Credit decision making for retail customers is based on standardized products established according to well defined criteria and parameters which are approved by a specialized Credit Committee.

The Group has implemented a system for scoring of consumer loans and has customized for each product type a scoring application with the relevant criteria, parameters and workflow. Each credit application is assigned a score that will be the basis for decision making.

TheExecutiveCommitteehasdelegatedthedecisionmakingprivilegestotheheadofnetworkwhoisauthorized to sub-delegate within his assigned authority the decision making to the Head of Credit Retail Department. The actual authority granted to branch managers is restricted in terms of amount limit and acceptancecriteriabyproducttype.Exceptionstodelegatedauthoritiesintermsofamountorcriteriaare subject to approval by Credit Risk division and or/ratification by Credit Committee.

•CreditMeasurementandMonitoringProceduresThe Credit Administration Department in each of the Group’s entities is responsible of permanently guaranteeing the conformity of credits to the Credit Committee’s decisions, collecting legal documents and guarantees and disbursement of funds.

The Credit Analysis Division is responsible for monitoring the quality of individual credits as well as the total portfolio. This division receives regular monthly reports from the Group’s subsidiaries engaged in banking operations.

The Reporting unit of the Risk Management Division, in coordination with the analysts of the Credit Risk Division, is responsible for the reliability of the reporting and databases.

As for the measurement, the Group has adopted 2 systems for classification of Risk in compliance with BDL requirements (BDL circular Nº 256): The supervisory classification and the loan grading system through internal ratings models. These two systems are reconcilable with the internal risk classification currently adopted by the Group and based upon well defined criteria and parameters.

The Group has adopted a mapping of the risk categories which complies with the regulation of host countries and ensures a consolidation of the risk categories at Group level. supervisory risk Loan bLF internal risk classification grading system classification

The Group’s capital strategy is based on the following constraints: •Complywithregulatoryratios,onindividualandconsolidatedbasis,primarilyinrespectoftheCapital

Adequacy Ratio under Basel III. •Ensureahighreturnonequityforthecommonshareholders. •Dividendspayoutpolicyisconsistenttoprovideshareholderswithacceptabledividendyield.

The Group’s total equity funding consists of the following.

december 31, In thousands of Lbp 2014 2013 Equity allocated to common shares 1,009,475,652 930,313,203Preferred shares 404,717,099 404,717,099 Total equity 1,414,192,751 1,335,030,302


The Group’s strategy is to maintain a satisfactory economic capital beyond the regulatory threshold.

41. RIsK manaGemenT

board Risk committee

In order to ensure sound corporate governance practices and comply with BDL basic circular Nº 118, the Group has broadened the role of the Board Credit Risk Committee.

TherestructuredBoardRiskCommitteeisheadedbyanonExecutiveBoardMemberandhasthreemembersthatarenonExecutiveBoardmembers.

This Committee assists the Board in discharging its risk related responsibilities; where particularly it authorizes and submits to the Board the Group risk policies, reviews the Internal Capital Adequacy Assessment Process and the results of the capital adequacy ratio (qIS), monitors the Group’s risk profile for all types of risks, oversees the risk management framework and assesses its effectiveness at the level of the Group (mainly for Banking and financial institution subsidiaries).

management of Risks

A- Credit RiskCredit risk is the risk of financial loss to the Group if counterparty to a financial instrument fails to dischargeanobligation.Financialassetsthataremainlyexposedtocreditriskaredepositswithbanks,loans and advances to customers and other banks and investment securities. Credit risk also arises from off-balance sheet financial instruments such as letters of credit and letters of guarantee.

Concentration of credit risk arises from uneven distribution of bank loans to individual borrowers or connected group of borrowers (directly or indirectly per facilities granted or per guarantee provided), concentration of loans in industry sectors and geographical regions.

1- Credit Risk Management

•GeneralCreditRiskPolicyThe credit granting activity of the Group is integrated by the general credit policy that establishes the framework for lending and sets standards in order to achieve the Group’s strategic objectives.

Sound and prudent practices for Credit Risk Management are established within the Credit Risk Policy of the Group; these practices are in compliance with regulatory requirements and deal with establishing an adequate credit administration, measurement and monitoring process and ensuring a thorough control of Credit Risk.




On the other hand , establishing the loan grading system will ensure a step toward compliance with Basel III accord in terms of the new capital adequacy ratios requirements (BDL intermediary Circular Nº 282); the ratings assigned to credits will be an integral input in approving and pricing of credits and in assigning loan loss provisions and allocating capital.A second step toward compliance with Basel III is the ICAAP exercise (Internal Capital AdequacyAssessment Process). An annual qualitative and quantitative risk assessment is performed by the Group. The process assesses the internal governance (role of the Board, policies, procedures, and internal audit), the risk management (identification, measurement and monitoring) and the stress test (assumptions, results, actions) for each type of risk. It also evaluates the capacity of the Group to absorb losses in time of crises.

• Recovery and Provisioning Procedures

For Banque Libano-Francaise S.A.L.:

Non-performing loans and advances are divided into 3 categories, in conformity with the Central Bank’s regulation: substandard loans (unrealized interest), doubtful loans (unrealized interest and partial capital provision) and non-recoverable loans (unrealized interest and full capital provisions).Retail credits are subject to a systematic downgrading based on a predefined cycle set by product and past dues and in compliance with the downgrading and provisioning policy.Commercial credits are subject to a downgrading and provisioning policy in compliance with BDL guidelines and requirements (Reference BDL circular Nº 256). The Credit Risk Management Division ensures a monthly review for watch list files and a quarterly review for non-performing loans in coordination with the Loan Remedial Division and the Legal Division.

The Loan Remedial Division ensures the follow-up of substandard, doubtful and non recoverable loans with a prime objective of proposing loan restructurings or arrangements with the clients.

Reports are submitted to specialized committees on monthly, quarterly and semi-annual basis.

For other Group’s subsidiaries:

The Group’s subsidiaries apply the guidelines and/or policies for internal risk classification and ensure a monitoring and reporting on quarterly basis of non-performing loans and on monthly basis for watch list to be submitted to local committees and escalated to Banque Libano-Francaise S.A.L.

3-FinancialAssetswithCreditRiskExposureandRelatedConcentrations

a)ExposuretoCreditRiskandConcentrationbyCounterparty:

a.1) Loans to banks:

december 31, 2014 Lbp Foreign currencies

number of number ofbracket amount counterparties amount counterparties Lbp’000 Lbp’000

Less than LBP 5 billion - - 3,794,100 3Between LBP 15 billion and LBP 30 billion - - 24,849,065 2Between LBP 30 billion and LBP 50 billion - - 57,787,045 2Between LBP 50 billion and LBP 100 billion 46,670,421 1 38,058,094 1

546,670,421 1 124,488,304 8


number of number ofbracket amount counterparties amount counterparties Lbp’000 Lbp’000

Less than LBP 5 billion - - 1,509,394 1Between LBP 15 billion and LBP 30 billion - - 15,378,584 1Between LBP 30 billion and LBP 50 billion - - 112,723,846 3Between LBP 50 billion and LBP 100 billion 54,801,720 1 - -

54,801,720 1 129,611,824 5


supervisory Risk Loanclassification Grading system bLF Internal Risk classification

1-Normal Excellent 1 Strong 2 Normal Files with complete documentation Good 3 Files non-renewed for less than 6 months Satisfactory 4

2- Monitoring Adequate 5 Files non-renewed for more than 6 months Files missing documentation and information on the client’s activity, purpose of the loan or source of repayment Files non compliant with BDL guidelines

3- watch List Marginal 6 Loans and advances rated watch List are loans that are not impaired but for which the Group determines that they require special monitoring (weak accounts’ movement, delay in payments for 60-90 day, over limit exposuresexceeding10%ofauthorizedlimit,rescheduled loans for more than one time, decline in financial performance and delay in the submission of required document …). Vulnerable 7 Past due and rescheduled loans. These two categories require an accurate, and periodic monitoring done on monthly basis.

4- Substandard Substandard 8 Substandard loans represent loans whose interests are barely recoverable. Substandard loans present delays in payments for 90-180 days, decreasing recurring account movement without interest payment for more than 6 month, ongoing decline in financial performance, loss for 3 consecutive years. Debtors downgraded to this category of risk require a particular follow-up and they are transferred to the Loan Remedial Division.

5- Doubtful Doubtful 9 A credit file is classified as doubtful when a series of criteria are met of which mainly the deterioration of the financial situation of the customer and/or the devaluation of the guarantees received and/or no movement in account for more than 6 months, nonpayment of rescheduled loans for more than 90 days. The Group establishes an allowance for impairment that represents its estimate of incurred losses in its loan portfolio. The main component of its allowance is specific loss component that relate to individually significantexposures,andaminorpartofacollective loan loss.

6- Loss Loss 10 Total Loss with a complete write off; (Unavailable guarantee or negligible amount of the guarantee, losing contact with client…) The Group writes off a loan (and any related allowances for impairment) when it determines that the loan is uncollectible. This determination is reached after considering information such as the occurrence of significant changes in the borrower financial position such as the borrower can no longer pay the obligation, or that proceeds from collateral will notbesufficienttopaybacktheentireexposure.



B- Liquidity Risk

Liquidity risk is the risk that the Group will be unable to meet its net funding requirements. Liquidity risk can be caused by market disruptions or credit downgrades, which may cause certain sources of funding to dry up immediately.

1- Management of Liquidity Risk

Liquidity Risk Management is part of the Assets and Liabilities Management Policy and falls under the responsibility of the Assets and Liabilities Committee (ALCO) as assigned by the Board of Directors.

To address this risk, the Group diversifies its funding resources, maintains sufficient liquidity and subscribesinrelativelyconvertiblesecuritiestofaceanexceptionalincreaseinliquidityneedsinthecase of liquidity crises. The objectives of the Group’s liquidity policy consist of ensuring a well-balanced financing in a way that the Group is capable at any time to honor its obligations towards its customers, to satisfy the standards imposed by the local banking regulator and to maintain the lowest possible level of refinancing cost.

In line with the liquidity policy set by the ALCO, the Treasury department manages the investment in sovereignand/orCentralBankpapers;whiletheFixedIncomedivisionisinchargeofactivelymanagingthefixedincomeinstrumentsbymaintainingalowduration,highyield,welldiversifiedportfolio.TheInternational Division is responsible for the management of the interbank borrowings/placements based on a thorough analysis for each correspondent bank.

TheRiskManagementdivisionroleistoensurethattheGroupexposurealwayssatisfiestheinternallimits, as well as the regulatory requirements. The Risk Management actively monitors the Group exposurethroughperiodicreviews,andupholdsvariousstressscenarioswhennecessary,presentingtheresults to the Board Risk Committee.

During the past two years and due to the incentives of the Central Bank, the Group has witnessed a important increase in the Medium and Long Term loans granted to different industries. This increase has required a close follow up by the risk management.

Customers’ deposits represent the main funding source of the Group.

•ResidualContractualMaturitiesofFinancialliabilities:

The table below shows the allocation of financial liabilities based on the earliest possible contractual maturity.Theexpectedmaturityvariessignificantlyfromthecontractualmaturities,namelywithregardto customers’ deposits.


a.2) Loans and advances to customers (net of provisions and unearned interest):


% of total number of % of total number of amount counterparties accounts amount amount counterparties Lbp’000 % Lbp’000 %

Less than LBP 500 million 600,849,088 68 26,750 598,608,643 12 36,034From LBP 500 million and LBP 5 billion 182,189,152 21 182 1,145,397,069 22 673Above LBP 5 billion 95,409,198 11 55 3,423,600,867 66 200Accrued interest receivable 1,400,456 - - 7,145,717 - -

879,847,894 100 26,987 5,174,752,296 100 36,907


% of total number of % of total number of amount counterparties accounts amount amount counterparties Lbp’000 % Lbp’000 %

Less than LBP 500 million 545,235,318 73 31,016 663,173,813 14 38,373Between LBP 500 million and LBP 5 billion 165,587,937 22 182 1,127,780,469 23 546Over LBP 5 billion 33,764,564 5 3 3,010,317,914 63 184Accrued interest receivable 1,518,630 - - 8,534,859 - -

746,106,449 100 31,201 4,809,807,055 100 39,103

a.3) Investment securities:

december 31, 2014 designated as Fair value at fair value through other through amortized comprehensive number ofIn thousands of Lbp profit or loss cost income Total counterparties

quoted equities 16,892,434 - - 16,892,434 6Unquoted equities - - 13,602,838 13,602,838 13Lebanese Treasury bills / bonds 125,608,851 2,934,890,842 - 3,060,499,693 1Central Bank of Lebanon certificates of deposit 96,273,530 1,541,446,014 - 1,637,719,544 1Corporate bonds 236,477,677 111,141,071 - 347,618,748 69Funds 1,135,787 - - 1,135,787 1

476,388,279 4,587,477,927 13,602,838 5,077,469,044 91

december 31, 2013 designated as Fair value at fair value through other through amortized comprehensive number ofIn thousands of Lbp profit or loss cost income Total counterparties

quoted equities 15,840,453 - - 15,840,453 10Unquoted equities - - 12,678,970 12,678,970 9Lebanese Treasury bills / bonds 105,447,100 3,417,790,565 - 3,523,237,665 1Central Bank of Lebanon certificates of deposit 22,290,600 1,035,907,924 - 1,058,198,524 1Corporate bonds 265,818,888 239,412,214 - 505,231,102 93Funds 708,318 - - 708,318 1

410,105,359 4,693,110,703 12,678,970 5,115,895,032 115




•ExposuretoInterestRateRisk

december 31, 2014 not subject Up to 3 to 12 1 to 3 3 to 5 over 5In millions of Lbp to interest 3 months months years years years Total

Financial assetsCash and deposits at Central Banks 427,541,000 413,900,000 60,550,000 1,631,597,000 513,794,000 717,250,000 3,764,632,000Deposits with banks and financial institutions 566,082,000 682,471,000 4,457,000 908,000 - - 1,253,918,000Securities at fair value through profit or loss 25,910,000 13,707,000 73,251,000 68,450,000 46,311,000 256,496,000 484,125,000Loans to banks 1,724,000 57,107,000 65,828,000 1,000,000 - 45,500,000 171,159,000Loans and advances to customers 362,143,000 2,610,615,000 476,633,000 833,648,000 665,086,000 1,106,475,000 6,054,600,000Investment securities 151,816,000 289,217,000 315,247,000 1,503,040,000 292,975,000 2,129,608,000 4,681,903,000Other assets 5,389,000 - - - - - 5,389,000

1,540,605,000 4,067,017,000 995,966,000 4,038,643,000 1,518,166,000 4,255,329,000 16,415,726,000

Financial liabilitiesDeposits from banks and financial institutions 107,964,000 187,275,000 131,899,000 - - - 427,138,000Customers’ deposits at amortized cost 823,974,000 8,759,566,000 4,019,398,000 791,617,000 18,563,000 29,362,000 14,442,480,000Long term borrowings 2,014,000 105,743,000 15,189,000 26,820,000 18,492,000 12,908,000 181,166,000Other liabilities 6,635,000 - - - - - 6,635,000 940,587,000 9,052,584,000 4,166,486,000 818,437,000 37,055,000 42,270,000 15,057,419,000

december 31, 2013 not subject Up to 3 to 12 1 to 3 3 to 5 over 5In millions of Lbp to interest 3 months months years years years Total

Financial assetsCash and deposits at central banks 351,586,000 76,300,000 - 1,418,992,000 646,439,000 491,149,000 2,984,466,000Deposits with banks and financial institutions 725,953,000 1,470,570,000 168,340,000 - - - 2,364,863,000Financial assets at fair value through profit or loss 55,698,000 31,667,000 35,005,000 97,680,000 58,436,000 137,797,000 416,283,000Loans to banks 939,000 55,464,000 73,504,000 3,000,000 51,507,000 - 184,414,000Loans and advances to customers 116,127,000 2,564,121,000 617,020,000 483,179,000 870,764,000 904,703,000 5,555,914,000Investment securities 85,010,000 243,172,000 804,573,000 1,394,125,000 1,256,398,000 998,658,000 4,781,936,000Other assets 5,893,000 - - - - - 5,893,000

1,341,206,000 4,441,294,000 1,698,442,000 3,396,976,000 2,883,544,000 2,532,307,000 16,293,769,000

Financial liabilitiesDeposits from banks and financial institutions 127,919,000 405,134,000 9,675,000 - - - 542,728,000Customers’ deposits designated at fair value through profit or loss 7,780,000 - - - - - 7,780,000Customers’ deposits at amortized cost 1,179,822,000 8,954,471,000 3,727,560,000 359,550,000 69,026,000 34,875,000 14,325,304,000Long term borrowings 1,429,000 21,949,000 14,344,000 30,772,000 23,135,000 23,183,000 114,812,000Other liabilities 658,000 - - - - - 658,000

1,317,608,000 9,381,554,000 3,751,579,000 390,322,000 92,161,000 58,058,000 14,991,282,000

december 31, 2014 Lbp Up to 3 to 12 1 to 3 3 to 5 over 5In millions of Lbp 3 months months years years years Total

Financial liabilitiesBanks and financial institutions 295,240 131,899 - - - 427,139Customers’ deposits at amortized cost 9,583,540 4,019,398 791,617 18,564 29,362 14,442,481Long term borrowings 116,187 12,450 18,555 21,723 12,251 181,166Other liabilities 6,635 - - - - 6,635

Total Financial Liabilities 10,001,602 4,163,747 810,172 40,287 41,613 15,057,421

december 31, 2013 Lbp Up to 3 to 12 1 to 3 3 to 5 over 5In millions of Lbp 3 months months years years years Total

Financial liabilitiesBanks and financial institutions 533,053 9,675 - - - 542,728Customers’ deposits designated at fair value through profit or loss 7,780 - - - - 7,780Customers’ deposits at amortized cost 10,134,293 3,727,560 359,550 69,026 34,875 14,325,304Long term borrowings 23,378 14,344 30,772 23,135 23,183 114,812Other liabilities 658 - - - - 658

Total financial liabilities 10,699,162 3,751,579 390,322 92,161 58,058 14,991,282

C- Market Risks

The market risk is the risk that the fair value or future cash flows of a financial instrument will be affected becauseofchangesinmarketpricessuchasinterestrate,equityprices,foreignexchangeandcreditspreads.

The Risk Management Department, in collaboration with the different entities involved, monitors all the market risks that arise from both banks’ and clients’ activities. A periodic control is performed ontheGroupForeignexchangeposition(structuralandoperational),theclientsderivativescontracts,leveraging and margin calls. Relevant reporting and stress tests are periodically conducted and presented to the Board and the Board Risk Committee.

The Risk Management also guarantees the compliance with internal policies and regulatory requirements.

•InterestRateRisks

Interest rate risk arises from the possibility that changes in interest rates will affect negatively future earnings or the fair values of the Group’s interest-earning assets and interest-bearing liabilities. The Groupisexposedtointerestrateriskasaresultofmismatchesininterestratere-pricingofassetsandliabilities and off-balance sheet items that mature or re-price in a given period.

Interest Rate Risk Management is part of the Assets and Liabilities Management Policy and falls under the responsibility of the Assets and Liabilities Committee (ALCO) as assigned by the Board of Directors. The Group’s interest rate risk is framed within specific limits defined pertaining to each authorized currency and approved by the ALCO.

A close monitoring of the interest rate risk of the Group is guaranteed through periodic reports and stress tests.Sensitivityanalysesareregularlyconductedontheglobalexposureaswellasonspecificportfolioslike the medium and long term loans per currency. The Group also tends to maintain the Interest Rate Gaps within the acceptable limit of Basel II Standards.




december 31, 2013In thousands of Lbp Lbp Usd eUR Gbp other Total AssetsCash and deposits at central banks 524,237,031 2,194,850,001 196,494,997 417,856 68,466,411 2,984,466,296Deposits with banks and financial institutions 3,975,562 1,734,942,771 475,886,121 54,139,481 95,919,281 2,364,863,216Financial assets at fair value throughprofit or loss 67,235,280 220,535,463 102,093,047 10,668,310 15,750,567 416,282,667Loans to banks 54,801,719 96,505,928 - - 33,105,897 184,413,544Loans and advances to customers 746,106,449 4,222,750,437 458,380,770 21,985,545 106,690,303 5,555,913,504Investment securities 3,148,051,638 1,479,517,847 128,878,826 24,146,628 1,341,200 4,781,936,139Customers’ liability under acceptances - 118,280,883 8,580,593 2,756,616 3,185,732 132,803,824Investments in associates 16,807,329 - - - - 16,807,329Assets acquired in satisfaction of loans 58,071 41,136,822 2,705,957 - - 43,900,850Property and equipment and intangible assets 88,986,542 10,004,706 2,450,353 - 10,343,458 111,785,059Other assets 23,743,775 49,292,511 7,757,334 65,897 5,232,705 86,092,222

Total assets 4,674,003,396 10,167,817,369 1,383,227,998 114,180,333 340,035,554 16,679,264,650 LiabilitiesDeposits from banks and financialinstitutions 24,362,981 318,249,815 188,276,870 339,196 11,498,661 542,727,523Customers’ deposits designated at fair value through profit or loss - 7,779,770 - - - 7,779,770Customers’ deposits at amortized cost 4,079,243,528 8,697,372,115 1,213,869,723 105,090,556 229,727,977 14,325,303,899Liability under acceptances - 118,280,883 8,580,593 2,756,616 3,185,732 132,803,824Long term borrowings 15,640,178 54,645,849 44,525,608 - - 114,811,635Other liabilities 62,710,390 75,688,963 9,201,790 55,128 3,840,901 151,497,172Provisions 14,339,106 1,812,349 2,246,464 - 298,508 18,696,427

Total liabilities 4,196,296,183 9,273,829,744 1,466,701,048 108,241,496 248,551,779 15,293,620,250

net assets 477,707,213 893,987,625 (83,473,050) 5,938,837 91,483,775 1,385,644,400


•ForeignExchangeRisk

Thecurrentforeignexchangepositionisalwayskeptbelowtheregulatorylimitof1%ofTier1Capital.The Group’s equity in Lebanon is hedged against fluctuations of the Lebanese Pound by shareholders’ cash contributiontocapitalofUSD40millionandbyafixedforeignexchangepositionofUSD182millionasatDecember 31, 2014 (USD 160 million Banque Libano-Française S.A.L.; USD 22 million Bank Al-Sharq S.A.S.) (USD 182 million as at December 31, 2013) (USD 160 million Banque Libano-Française S.A.L.; USD 22 million Bank Al-Sharq S.A.S.).

Below is the carrying value of assets and liabilities segregated by major currencies to reflect the Group’s exposuretoforeigncurrencyexchangeriskatyearend.

december 31, 2014In thousands of Lbp Lbp Usd eUR Gbp other Total AssetsCash and deposits at central banks 638,960,552 2,718,486,506 320,811,707 1,130,086 85,242,912 3,764,631,763Deposits with banks and financial institutions 7,006,394 880,671,377 212,349,299 85,521,522 68,370,376 1,253,918,968Financial assets at fair value through profit or loss 134,512,826 254,703,503 71,486,521 13,228,997 10,192,639 484,124,486Loans to banks 46,670,421 68,449,300 24,849,065 - 31,189,939 171,158,725Loans and advances to customers 879,847,894 4,593,646,138 438,656,712 51,185,736 91,263,710 6,054,600,190Investment securities 3,238,641,401 1,360,991,918 71,009,701 11,260,746 - 4,681,903,766Customers’ liability under acceptances - 228,427,054 17,165,322 1,087,307 8,168,831 254,848,514Investments in associates 23,697,517 - - - - 23,697,517Assets acquired in satisfaction of loans 200 48,194,803 - - - 48,195,003Property and equipment and intangible assets 149,463,356 12,957,090 3,150,703 - 6,999,198 172,570,347Other assets 22,944,529 58,492,847 2,161,071 26,098 (2,906,846) 80,717,699

Total assets 5,141,745,090 10,225,020,536 1,161,640,101 163,440,492 298,520,759 16,990,366,978 LiabilitiesDeposits from banks and financial institutions 126,214 271,288,773 143,683,574 134,357 11,905,397 427,138,315Customers deposits at amortized cost 4,429,973,468 8,347,144,875 1,311,273,953 115,864,614 238,223,741 14,442,480,651Acceptances - 228,427,054 17,165,321 1,087,307 8,168,832 254,848,514Long term borrowings 100,104,776 47,503,446 33,557,706 - - 181,165,928Other liabilities 64,753,267 73,069,508 17,373,242 28,767 1,908,088 157,132,872Provisions 10,599,390 1,653,575 2,081,119 - 268,147 14,602,231

Total liabilities 4,605,557,115 8,969,087,231 1,525,134,915 117,115,045 260,474,205 15,477,368,511

net assets 536,187,975 1,255,933,305 (363,494,814) 46,325,447 38,046,554 1,512,998,467




december 31, 2014Financial assets date of valuation valuation technique and key inputs at fair value throughprofit or loss Lebanese Treasury bills December 31, 2014 DCF at a discount rate determined based on the yield curve applicable to Lebanese treasury bonds, adjusted for illiquidity.

Lebanese government December 31, 2014 Fair value determined by market makers in bonds inactive market.

Certificates of deposits December 31, 2014 DCF at a discount rate determined based onissued by the the yield curve applicable to LebaneseCentral Bank of Lebanon treasury bonds, adjusted for illiquidity.

Funds December 31, 2014 Not valued.

at fair value through other comprehensiveincomeUnquoted equities December 31, 2014 Management estimates based on unobservable input related to market volatility and liquidity.

at amortized cost:Loansandadvances December31,2014 DCFatadiscountrateextrapolatedacrossto customers the maturity spectrum and in line with average market rates.

Lebanese treasury bills December 31, 2014 DCF at a discount rate determined based on the yield curve applicable to Lebanese treasury bonds, adjusted for illiquidity.

Lebanese Government December 31, 2014 Fair value determined by market makers in bonds inactive market.

Certificates of deposit December 31, 2014 DCF at a discount rate determined based issued by the on Central Bank of Lebanon the yield curve applicable to Lebanese treasury bonds, adjusted for illiquidity.

Financial liabilitiesat amortized costCustomers’ deposits December 31, 2014 DCF based on market rates by currency atamortizedcost andmaturitybandsextrapolatedacross the maturity spectrum and in line with average market rates.

Long term borrowings December 31, 2014 DCF at a discount rate determined based on the yield curve of Central Bank of Lebanon placements for maturities greater than one year and Libor based interbank rates for maturities less than one year by currency.

There have been no transfers between Level 1 and Level 2 during the period.

43. appRovaL oF FInancIaL sTaTemenTs

The financial statements for the year ended December 31, 2014 were approved by the Board of Directors in its meeting held on April 1, 2015.


42. FaIR vaLUe oF FInancIaL asseTs and LIabILITIes

The directors consider that the carrying amounts of deposits with central banks, deposits with banks and financial institutions, loans to banks, loans and advances to related parties, customers’ acceptance liability, other assets, related parties’ deposits at amortized cost, acceptance payable and other liabilities approximate their fair valuesdue to the short-termmaturitiesof these instrumentsor short-termrepricing periods.

december 31, 2014 carrying In thousands of Lbp amount Level 1 Level 2 Level 3 Total Financial assets Financial assets measured at Fair Value through profit or loss:Lebanese Treasury bills 46,899,483 - 46,899,483 - 46,899,483Lebanese government bonds 78,709,368 - 78,709,368 - 78,709,368Certificates of deposit issued by Central Bank of Lebanon 96,273,530 - 96,273,530 - 96,273,530quoted corporate bonds 236,477,677 236,477,677 - - 236,477,677Shares (quoted equities) 16,892,434 16,892,434 - - 16,892,434Funds 1,135,787 - - 1,135,787 1,135,787

476,388,279 253,370,111 221,882,381 1,135,787 476,388,279 Fair Value through other comprehensive income: Unquoted equities 13,602,838 - - 13,602,838 13,602,838

13,602,838 - - 13,602,838 13,602,838 Amortized cost:Loans and advances to customers 6,054,600,190 - 5,579,101,034 - 5,579,101,034Lebanese Treasury bills 1,878,028,505 - 1,917,442,225 - 1,917,442,225Lebanese government bonds 1,056,862,337 - 1,071,905,289 - 1,071,905,289Certificates of deposit issued by the Central Bank of Lebanon 1,541,446,014 - 1,535,515,893 - 1,535,515,893Corporate bonds 111,141,071 113,073,319 - - 113,073,319

Total 10,642,078,117 113,073,319 10,103,964,441 - 10,217,037,760

Financial liabilities Amortized cost:Customer deposits at amortized cost 14,442,480,651 - 14,442,480,651 - 14,442,480,651Long term borrowings 181,165,928 - 181,334,106 - 181,334,106

14,623,646,579 - 14,623,814,757 - 14,623,814,757

•ValuationTechniques,SignificantUnobservableInputs,andSensitivityoftheInputtotheFairValue The following table gives information about how the fair values of financial assets and financial liabilities, are determined (Level 2 and Level 3 fair values) and significant unobservable inputs used.




Openedsince2013

Openedbefore2013

1

2

4

9

1030

31

323334

35

11

1314

1528

24

26

21

3

5

1625

12

17 18 2729

3646

37

38

45

49 5051

39

40

4120

42

54

53

43

55

56

44

22

52

48

47

23

7 198

map oF bRanch LocaTIons

15 – Map of Branch locations

GReaTeR beIRUT1. Accaoui2. Bechara El-Khoury3. Bir Hassan4. Chyah5. Dbayeh6. Dekwaneh7. Dora8. Dora Bourj-Hammoud9. Galaxy10. Gefinor11. Geitawi12. Hadat13. Hamra14. Hamra Maamari15. Haret-Hreik16. Hazmieh17. Jal El-Dib18. Jal El-Dib Centre19. Jdeideh20. Jounieh21. Kantari22. Khaldeh23. Mansourieh24. Mar Elias25. Mar Takla26. Mazraa27. Mazraat Yachouh28. Mreijeh29. Rabieh30. Saifi31. Sami El-Solh32. Sassine33. Sin El-Fil34. Sioufi35. Sodeco36. Zouk Mosbeh

oUTsIde GReaTeR beIRUT37. Bar Elias38. Batroun39. Dahr El-Ain40. Halba41. Jbeil42. Jdita-Chtaura43. Lebaa44. Mizyara45. Nabatieh46. Reyfoun47. Saida48. Saida Boulevard49. Tripoli El-Mina50. Tripoli Tebbaneh51. Tripoli Tell52. Tripoli Zehrieh53. Tyre54. Zahleh55. Zahleh Boulevard56. Zghorta



1

23

5

4

6

7

8 16

20

21

23

24

4546

474849

51

502622

27

59

28

31

75

80 73

64

78

89

8182

83

88

76

77

29

53

52

25

34

3836

40

42

43

1310

56

54

9091

9293

45

5862

5737

72

41

74

617071

6669

67

68

5584

86 87

85

1415

16

10 11 12

65

95

44

18

35

17

863

7994

19

303233

39

Installedsince2013

Installedbefore2013

*InternalATMalsoavailable24/7(nightsecuredlobbyaccessibletocardholders)

map oF aTm LocaTIons

GReaTeR beIRUT1. Accaoui*2. Achrafieh / ABC3. Achrafieh / Grand Lycée4. Achrafieh / Total5. Adliyeh / Auto Mall (drive

through)

6. Adliyeh / Lawyers House7. Bechara El-Khoury*8. Bir Hassan*9. Chyah*10. Dbayeh*11. Dbayeh / ABC12. Dbayeh / Le Mall13. Dekwaneh* 14. Dora*15. Dora Bourj-Hammoud16. Dora / City Mall17. Dora / Medco18. Furn El-Chebbak / Sagesse19. Galaxy*20. Gefinor*21. Geitawi*22. Hadat*23. Hamra*24. Hamra Maamari*25. Haret-Hreik*26. Hazmieh*27. Hazmieh / Beirut City Center

28. Hazmieh / Sacré-Cœur Hospital

29. Jal El-Dib*30. Jal El-Dib Centre*31. Jamhour / Total32. Jdeideh*33. Jdeideh / A.N. Boukhater34. Kantari*35. Khaldeh36. Koraitem/Collège

Protestant 37. Mansourieh*38. Mar Elias*39. Mar Takla*40. Mazraa*41. Mazraat Yachouh*42. Monot43. Mreijeh*44. Rabieh*45. Saifi*46. Saifi / Medco47. Sami El-Solh48. Sassine*49. Sassine ATM 50. Sin El-Fil*51. Sioufi*52. Sodeco*53. Tayouneh / Beirut Mall

oUTsIde GReaTeR beIRUT54. Aley / Medco55. Anfeh / Las Salinas56. Baabdat / Baabdat

Municipality57. Bar Elias*58. Batroun*59. Beit El Dine / Total60. Bikfaya / Total61. Bouar - wardieh station62. Dahr El-Ain*63. Damour / Total64. Dlebta65 Feytroun / Bou Khalil66. Ghazir / Total67. Halat / Indevco68. Halba*69. Jbeil*70. Jounieh*71. Jounieh / Casino du Liban72. Jdita-Chtaura*73. Lebaa*74. Mizyara

75. Nabatieh*76. Nacoura / Campus FINUL77. Nacoura / Green Hill FINUL78. Reyfoun*79. Reyfoun / Phoenicia80. Saïda*81. Saida Boulevard*82. Saida / Le Mall83. Saida / Municipality garden84. Tripoli El-Mina*85. Tripoli Tebbaneh86. Tripoli Tell*87. Tripoli Zehrieh*88. Tyre*89. UNESCO / Phoenicia90. Zahleh*91. Zahleh Boulevard*92. Zghorta93. Zghorta / Bnachii Lake94. Zouk / MBC95. Zouk Mosbeh*

16 – Map of atM locations



HazmiehTabet Center, Damascus International RoadPhone +961 (1) or (3) 79 13 32 ext.5111Fax+961(1)440121Branch Manager: Ms. Corinne Harmouche

Hazmieh - Mar TaklaLes Oliviers Building, Said Freiha / Military School Roads IntersectionPhone +961 (1) or (3) 79 13 32 ext.4011Fax+961(1)440194Branch Manager: Mr. Marc Torbey-Helou

Jal El-Dibwilliam Zard Bldg., Jal El-Dib HighwayPhone +961 (1) or (3) 79 13 32 ext.4211Fax+961(1)440122Branch Manager: Mr. Fouad Bartelmaos

Jal El-Dib CentreAl Moudir Center, Main inside RoadPhone +961 (1) or (3) 79 13 32 ext.5640Fax+961(1)440151Branch Manager: Ms. Joyce Khalil

JdeidehJdeideh Tower, Mar Sarkis streetPhone +961 (1) or (3) 79 13 32 ext.5011Fax+961(1)440197Branch Manager: Mr. Elie Bakhos

KantariCommerce et Finance Building, KantariPhone +961 (1) or (3) 79 13 32 ext.7811Fax+961(1)440153Branch Manager: Ms. Lara Moukarzel

KhaldehFawaz Abbas Bldg., Khaldeh - Shoueifat Main RoadPhone +961 (1) or (3) 79 13 32 ext.7411Fax+961(1)440125Branch Manager: Mr. Hilal Daouk

Mar EliasHamoud Center, Mar Elias Main RoadPhone +961 (1) or (3) 79 13 32 ext.4611Fax+961(1)440128Branch Manager: Mr. Ramy Fayad

MansouriehGerges Building, Main RoadPhone +961 (1) or (3) 79 13 32 ext.4311Fax+961(1)440127Branch Manager: Mr. Charbel Karaa

MazraaTarraf Kojok Building, Unesco CrossroadPhone +961 (1) or (3) 79 13 32 ext.1611Fax+961(1)440129Branch Manager: Ms. Dalal Ramadan

MreijehHaidar Mrad Building, Hadi Nasrallah BoulevardPhone +961 (1) or (3) 79 13 32 ext.4411Fax+961(1)440132Branch Manager: Mr. Noureddine Zalzaleh

SaifiAndraos Building, Arz Street.Phone +961 (1) or (3) 79 13 32 ext.2911Fax+961(1)440137Branch Manager: Ms. Rita Bechara

SodecoAlieh Building, Main RoadPhone +961 (1) or (3) 79 13 32 ext.5511Fax+961(1)440141Branch Manager: Ms. Carine Chiniara

Sami El-SolhHelene Abou Sleiman Building, Sami El-Solh BoulevardPhone +961 (1) or (3) 79 13 32 ext.1811Fax+961(1)440139Branch Manager: Ms. Carine Abboud

Sin El-FilRizkallah & Ibrahim Building, Sin El-Fil RoundaboutPhone +961 (1) or (3) 79 13 32 ext.1911Fax+961(1)440142Branch Manager: Ms. Tania Rached

Mount Lebanon

Jbeilwaqf Mar Yaacoub Building, Main RoadPhone +961 (1) or (3) 79 13 32 ext.6511Fax+961(1)440123Branch Manager: Ms. Josiane Chahine

JouniehLa Joconde Center., Fouad Chehab BoulevardPhone +961 (1) or (3) 79 13 32 ext.9111Fax+961(1)440124Branch Manager: Mr. Karim Chaptini

Mazraat YachouhKharma Building, Bickfaya Main RoadPhone +961 (1) or (3) 79 13 32 ext.4911Fax+961(1)440130Branch Manager: Ms. Aline Assaf

RabiehAbi Karam Bldg., Bickfaya Main RoadPhone +961 (1) or (3) 79 13 32 ext.4111Fax+961(1)440134Branch Manager: Ms. Rouba Hajal

ReyfounHachem Supermarket Building, Main RoadPhone +961 (1) or (3) 79 13 32 ext.9011Fax+961(1)440198Branch Manager: Ms. Carine-Pascale Salloum

Zouk MosbehSainte Lourde Center, Main RoadPhone +961 (1) or (3) 79 13 32 ext.9311Fax+961(1)440150Branch Manager: Mr. Elie Chelala

North

BatrounMichel Najm Building, Dora Area, Batroun Main EntrancePhone +961 (1) or (3) 79 13 32 ext.6411Fax+961(1)440104Branch Manager: Ms. Christelle Bassil

Koura - Dahr El-AïnRas Maska, Main RoadPhone +961 (1) or (3) 79 13 32 ext.5911Fax+961(1)440110Branch Manager: Mr. Toufic Abed

dIRecToRy

17 – Directory

1. headqUaRTeRs

banque Libano-Française s.a.L.Member of the Association of Banks in LebanonCapital: LBP 250,000,000,000 Shareholders’ Equity: LBP 1,615,320,370,000(as at June 30th, 2015)C.R. 19618 BeirutList of Banks Nº 10

5, Rome StreetBeirut Liberty PlazaHamra, Beirut, LebanonP.O.Box11-0808Postal Address Riad El-Solh, Beirut, 1107 2060Phone +961 (1) or (3) 79 13 32Fax+961(1)or(3)791332 ext.1318Swift [email protected]://www.eblf.com

2. bRanch neTWoRK

In alphabetical order

Beirut and suburbs

AccaouiDr. Saliby Building, Michel Boustros StreetPhone +961 (1) or (3) 79 13 32 ext.2111Fax+961(1)440102Branch Manager: Ms. Kareen Karam

Achrafieh - SassineKhourafi Building, Sassine SquarePhone +961 (1) or (3) 79 13 32 ext.2211Fax+961(1)440140Branch Manager: Mr. walid Gebran

Achrafieh - Sioufi5133 Building, Amine Gemayel StreetPhone +961 (1) or (3) 79 13 32 ext.5211Fax+961(1)440138Branch Manager:

Ms. Muriel Sayegh

Bechara El-KhouryBéchara El-Khoury Tower, Béchara El-Khoury RoadPhone +961 (1) or (3) 79 13 32 ext.2711Fax+961(1)440105Branch Manager: Ms. Hussein Mehdi

Bir HassanJnah, Kuwait Embassy RoundaboutPhone +961 (1) or (3) 79 13 32 ext.7511Fax+961(1)440106Branch Manager: Ms. Chaza Diab

Bourj HammoudMoucarri Center, Dora HighwayPhone +961 (1) or (3) 79 13 32 ext.2311Fax+961(1)440107Branch Manager: Mr. Antoine Ficani

ChyahAwada Center, Mar Mikhael RoundaboutPhone +961 (1) or (3) 79 13 32 ext.2811Fax+961(1)440108Branch Manager: Ms. Hala Hachem

Dbayeh591 Building, Dbayeh HighwayPhone +961 (1) or (3) 79 13 32 ext.4711Fax+961(1)440111Branch Manager: Ms. Souad Haddad

DekwanehHousing Building, Main RoadPhone +961 (1) or (3) 79 13 32 ext.4811Fax+961(1)440112 ext.4892Branch Manager:

Ms. Roula Ghalieh

DoraAwada Center, Dora RoundaboutPhone +961 (1) or (3) 79 13 32 ext.2411Fax+961(1)440113Branch Manager:

Ms. Rita Darwiche

GalaxyGalaxyCenter,CamilleChamoun BoulevardPhone +961 (1) or (3) 79 13 32 ext.2611Fax+961(1)440115Branch Manager: Ms. Bouchra Farhat

GefinorGéfinor Center, Clémenceau StreetPhone +961 (1) or (3) 79 13 32 ext.1111Fax+961(1)440116Branch Manager: Mr. Samer Zhim

GeitawiBanque Libano-Française Building, Saint Louis StreetPhone +961 (1) or (3) 79 13 32 ext.3111Fax+961(1)440117Branch Manager: Ms. Lama Abi-Raad

HadatJean Mikhael Building, Hamra street intersection, Main RoadPhone +961 (1) or (3) 79 13 32 ext.2011Fax+961(1)440152Branch Manager: Ms. Sarah Haykal

Hamra - Main BranchBeirut Liberty Plaza, Rome StreetPhone +961 (1) or (3) 79 13 32 ext.1211Fax+961(1)440118Branch Manager: Mr. Marwan El-Khalil

Hamra - MaamariIdriss Building, Maamari StreetPhone +961 (1) or (3) 79 13 32 ext.1511Fax+961(1)440126Branch Manager: Ms. Nisrine Hajj-Chahine

Haret - HreikCamelia Center, Roueiss StreetPhone +961 (1) or (3) 79 13 32 ext.1711Fax+961(1)440120Branch Manager: Ms. Rana Farhat


Damascus - Harika BranchHarika, Tarek Bin Ziad StreetPhone +963 (11) 221 74 90Fax+963(11)2217545Branch Manager: Mr. Hussein Salman

Damascus - Malki BranchMalki, Misr Street(facing Papal Embassy)Phone +963 (11) 33 54 021Fax+963(11)3354022Branch Manager: Mr. Omar Naboulsi

Damascus - Shaalan (Main Branch)Shaalan, Hafez Ibrahim Street, Bank Al-Sharq BuildingP.O.Box7732-Damascus,SyriaPhone +963 (11) 66 80 30 00Fax+963(11)66803310Branch Manager: Mr. Abdel Rehman Kobaytri

Homs - Mohafaza BranchHashem Al-Atassi Street - Plaza BuildingPhone +963 (31) 24 55 910Fax+963(31)2455911(Branch temporarily closed)

Aleppo - City Center BranchAl-Aziziyeh, Al-Shuhada Street, City Star MallPhone +963 (21) 211 78 60Fax+963(21)2117870Branch Manager: Mr. Shadi Jarjour

Lattakia BranchBaghdad Street, Al-Zein BuildingPhone +963 (41) 48 62 16Fax+963(41)486217Branch Manager: Mr. Muhamad Ali Ido

Lattakia Port OfficeLattaki a Port, Single window HallPhone + (963) 41 37 70 73

Cyprus

LimassolKanikaEnaeriosComplex-Block 1Iris House 8C, John Kennedy Street3724 Limassol - CyprusPhone +357 (25) 27 00 00Fax+357(25)581643Telex3569SwIFT SBAA CY [email protected]: Mr. Adnan NuwayhedManager

Switzerland

LF Finance (Suisse) S.A.86, Rue du Rhône - 1211 Geneva - SwitzerlandPhone +41 (22) 319 72 00Fax+41(22)[email protected]://www.lffinance.comContact: Mr. Dory HageGeneral Manager

Syria

Bank Al-Sharq S.A.S.

headquartersShaalan, Hafez Ibrahim Street, Bank Al-Sharq Building,Damascus, SyriaP.O.Box7732Damascus-SyriaPhone +963 (11) 66 80 30 00Fax+963(11)66803300Swift [email protected]://www.bankalsharq.comContact : Mr. Charbel FremGeneral Manager

3. RepResenTaTIve oFFIces

United Arab Emirates

Abu Dhabi Representative OfficeAl - Shaheen Tower,Al - Salam Street, Abu DhabiP.O.Box130828,AbuDhabi-United Arab EmiratesPhone +971 (2) 643 2028Fax+971(2)[email protected] Representative: Mr. Fadi Traboulsi

Nigeria

Nigeria Representative OfficeMabadeje Plaza, Flat 6, 49, Bourdillon Road, IkoyiLagos, NigeriaMobile (Lebanon)+961 (3) 092 332Mobile (Nigeria)+234 (803) 48 58 [email protected] Representative: Mr. Samir Maalouf

4. sUbsIdIaRIes

Libano-Française Finance S.A.L.Commerce & Finance Building Kantari, Beirut - LebanonP.O.Box113-6243Beirut-LebanonPhone +961 (1) 364443Fax+961(1)[email protected]: Mr. Imtanios wazzanGeneral Manager

Sodeco S.A.L.4th Building, First Floor, Sodeco Street, Beirut - LebanonP.O.Box4777Beirut-LebanonPhone +961 (1) 614205Fax+961(1)614192

Centre de Traitement Monetique

(CTM) S.A.L.Banque Libano-Française Building, First Floor, Saint Louis Street, Beirut - LebanonP.O.Box15-5083Beirut-LebanonPhone +961 (1) 577612 - 3 - 4Fax+961(1)577611

Bancassurance S.A.L.Fransabank Bldg, Hamra Street, Beirut - LebanonP.O.Box110393Beirut-LebanonPhone/Fax+961(1)[email protected]

France

Banque SBA S.A.

Paris68, Avenue des Champs - Elysées.75008 Paris, FrancePhone +33 (1) 53 93 25 00Fax+33(1)56885100Telex641960FSwIFT SBAA FR [email protected]://www.banque-sba.comContact : Mr. Nagi LetayfGeneral Manager

Abu Dhabi Representative Office

Nigeria - Lagos Representative Office

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HalbaFakhoury Center, Main RoadPhone +961 (1) or (3) 79 13 32 ext.6611Fax+961(1)440119Branch Manager: Ms. Salma Ghosn

MizyaraGilbert Chaghouri Building, Mizyara SquarePhone +961 (1) or (3) 79 13 32 ext.5711Fax+961(1)440131Branch Manager: Ms. Rabab Razzouk

Tripoli - El MinaMina 351 Center, Rafic Hariri SquarePhone +961 (1) or (3) 79 13 32 ext.6711Fax+961(1)440114Branch Manager: Mr. Omar Tabbal

Tripoli - TebbanehSyria StreetPhone +961 (1) or (3) 79 13 32 ext.6311Fax+961(1)440143Branch Manager: Mr. Mohammad Rachid El-Zahab

Tripoli - TellHarba Building, Abdel Hamid Karame BoulevardPhone +961 (1) or (3) 79 13 32 ext.6111Fax+961(1)440144Branch Manager: Mr. wajih Alameddine

Tripoli - ZehriehFattal Building, Mohamad Karame StreetPhone +961 (1) or (3) 79 13 32 ext.6211Fax+961(1)440148Branch Manager: Mr. Ghassan Zeini

ZghortaNear Chmor palace, Kferhata Main StreetPhone +961 (1) or (3) 79 13 32 ext.6811Fax+961(1)440149Branch Manager: Mr. Théodore Koussa

Bekaa

Bar EliasAl Meiss Building, Damascus International RoadPhone +961 (1) or (3) 79 13 32 ext.8211Fax+961(1)440103Branch Manager: Mr. Malek Abou Ajwi

Jdita - ChtauraAkel Center, Damascus International RoadPhone +961 (1) or (3) 79 13 32 ext.8411Fax+961(1)440109Branch Manager: Ms. Zeina Bechaalany

ZahlehAbou Sleiman Building, Sainte Barbe AreaPhone +961 (1) or (3) 79 13 32 ext.8111Fax+961(1)440147Branch Manager: Ms. Lara Haiby

Zahleh - BoulevardGeorges Makhoul Center, El-BoulevardPhone +961 (1) or (3) 79 13 32 ext.8311Fax+961(1)440146Branch Manager: Mr. Camille Khneisser

South

LebaaFacing the Municipality, Main StreetPhone +961 (1) or (3) 79 13 32 ext.7711Fax+961(1)440154Branch Manager: Mr. Paul Nehmé

SaidaSaida Center, Riad El-Solh StreetPhone +961 (1) or (3) 79 13 32 ext.7111Fax+961(1)440136Branch Manager: Mr. Hussein Ramadan

Saida BoulevardAdel Osseiran Street, Elia IntersectionPhone +961 (1) or (3) 79 13 32 ext.7611Fax+961(1)440135Branch Manager: Mr. Marwan Osta

Tyrewagih Farhat Building, Beirut BoulevardPhone +961 (1) or (3) 79 13 32 ext.7211Fax+961(1)440145Branch Manager: Mr. Fadel Bourgi

Nabatieh

NabatiehBanque Libano-Française Building, Al Jazayer StreetPhone +961 (1) or (3) 79 13 32 ext.7311Fax+961(1)440133Branch Manager: Mr. Ali Al-Rodi

Iraq

Baghdad Branch9/89 Building, Street. No 18Karkada Kharej,Baghdad, IraqPhone +964 (7812) [email protected] Manager:Mr. Elias Azar

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country city bank name nostro Japan Tokyo Sumitomo Mitsui Banking Corporation JPY

The Bank of Tokyo-Mitsubishi UFJ JPY

Mizuho Bank

Jordan Amman Arab Bank JOD

Kingdom of Saudi Arabia Riyadh Banque Saudi Fransi SAR

Riyad Bank SAR

Jeddah The National Commercial Bank SAR

Kuwait Kuwait City Commercial Bank of Kuwait KwD

Al Ahli Bank of Kuwait KwD

National Bank of Kuwait

Norway Oslo DNB bank NOK

Nordea Bank Norge

Omman Muscat BankMuscat OMR

Philippines Manila Philippine National Bank

qatar Doha qatar National Bank qAR

The Commercial Bank qAR

Al Khalij Commercial Bank

Sri Lanka Colombo Hatton National Bank

Sweden Stockholm Skandinaviska Enskilda Banken SEK

Nordea Bank

SwedBank

Switzerland Zurich Credit Suisse CHF

UBS

Turkey Istanbul Yapi ve Kredi Bankasi TRY

Akbank

Finansbank

Turkiye Garanti Bankasi

Turkiye Is Bankasi

United Arab Emirates Abu Dhabi Abu Dhabi Islamic Bank AED

Abu Dhabi Al Hilal Bank

Abu Dhabi National Bank of Abu Dhabi

Dubai City Commercial Bank of Dubai AED

Dubai City MashreqBank AED

Sharjah Bank of Sharjah

Sharjah InvestBank

United Kingdom London Barclays Bank GBP

Standard Chartered Bank GBP

ABC international bank

United States of America New York Citibank USD

Deutsche Bank Trust Company Americas USD

Standard Chartered Bank USD

The Bank of New York Mellon USD

maIn coRRespondenT banKs

18 – Main Correspondent Banks

eURo zone

country city bank name nostro

Austria Vienna Unicredit bank Austria Eur

Belgium Brussels KBC bank Eur

Cyprus Nicosia Banque SBA-Cyprus

Finland Helsinki Nordea Bank Finland Eur

Pohjola Bank

Skandinaviska Enskilda Banken

SwedBank

France Paris Banque SBA Eur

Credit Agricole Eur

Natixis

Germany Frankfurt Commerzbank Eur

Deutsche Bank Eur

ABC international bank

Italy Milan Intesa SanPaolo Eur

Unicredit

Netherlands Amsterdam ABN AMRO Bank

ING Bank

Utrecht Rabobank Nederland

Spain Sabadell Banco de Sabadell Eur

Barcelona CaixaBank

Portugal Porto Banco Commercial Portugues (Millennium bcp)

other countries

country city bank name nostro

Australia Sydney Commonwealth Bank of Australia AUD

Melbourne ANZ Bank

Bahrein Manama Ahli United Bank BHD

Bank Muscat

Canada Montreal National bank of Canada CAD

Bank of Montreal

China Beijing Bank of China limited CNY

Agricultural Bank of China

China Construction Bank Corporation

Industrial and Commercial Bank of China

Denmark Copenhagen Danske Bank DKK

Nordea Bank Danmark

Skandinaviska Enskilda Banken

Egypt Cairo National Bank of Egypt



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