A N N U A L R E P O R T

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1 ANNUAL REPORT 2013

2 ANNUAL REPORT 2013

3 BOARD OF DIRECTORS AND MANAGEMENT CHAIRMAN S LETTER Board of Directors Mr. Fady G. AMATOURY Chairman Mr. Toufic R. AOUAD Dr. Khalil M. BITAR Chair Mrs. Wafaa S. DAOUK Dr. Joe A. DEBBANE (since July 2014) Mr. Georges S. DOUMITH Chair Mr. Salam G. NADDA Mr. Philippe R. SEDNAOUI Bank Audi sal Management Mr. Fady G. AMATOURY Mr. Toufic R. AOUAD Mrs. Samira E. HARBABOURJAILY Mrs. Nada M. RIZK Mr. Nicolas A. CHIKHANI Mr. Youssef H. NIZAM Me. Rania S. ABOU ELOULA NAHRY Mrs. Lamia E. Kachouh Mrs. Eugenie E. RIZKALLAH Mrs. Marie G. TOUMA of the Audit Committee Chairman and General Manager General Manager Private Banking Director Private Banking Director Chief Operating Officer Chief Investment Officer Head of Legal Head of AML Compliance Head of Internal Control Head of Credit of the Risk Committee Capitalizing on the changes initiated during the previous year, Audi Private Bank reaped the benefits of a fully functional and allround integrated private banking business line in 2013, with an array of actively contributing hubs around the region and beyond, enabling it to reach solid total Footings of LBP 4,255 billion with LBP 36 billion in Net Profit over the year. Despite regional political instability and jitters, 2013 mainly witnessed the launch of the discretionary portfolio management mandates at Audi Private Bank, building on the expertise acquired through the business line s sister entities such as Banque Audi Suisse. Furthermore, robust global markets enticed the development of new financial products and tailor made structures such as the mixed mandate bonds, hybrid bond income, high dividend certificates, etc. whose availability was channeled over newly deployed platforms and system capabilities. This new product spectrum helped further expand our already rich offering, enabling us to better reach out to our clients needs and expectations. Throughout the year, our talent recruitment pace accelerated and surpassed that of the previous years, thus tending towards the full achievement of our center of excellence target previously set out, and laying the building blocks of the new Bank Audi Private Bank brand name. In light of such continued growth and success, I want to thank all our teams for the efforts deployed, our correspondents and custodians for their cooperation, and especially our prestigious clientele for its trust and loyalty. I am confident that 2013 will be one of many thriving years to come. Sincerely, Auditors Ernst & Young BDO Semaan, Gholam & Co. Fady G. Amatoury Chairman of the Board Audi Private Bank sal 4 Annual Report

4 STATEMENT OF FINANCIAL POSITION (Audited) STATEMENT OF FINANCIAL POSITION ASSETS as at LBP C/V LBP Total LBP Cash and balances with Central Banks 16, , ,473 46,420 Due from banks 17 51,252 51, Due from head office, sister, related banks 392, ,210 1,372, ,042 Financial assets taken as collateral and resale agreement Derivative financial instruments Financial assets designated at fair value through profit 12,946 12,946 and loss Financial assets designated at fair value through OCI 2, ,188 1,072 Net loans and advances to customers (1) 30, , , Net loans and advances to related parties 10,956 10,956 Financial assets held to maturity (2) 15,906 15,906 Investments in associates 8,335 88,563 96,898 19,767 Investment properties Forclosed assets 27 2,457 2, Property, plan and equipment Intangible fixed assets ,160 Other assets 1,734 1,970 3,704 15,037 Goodwill Total assets 453,996 1,746,612 2,200, ,538 C/V LBP Total 350, ,041 45,369 45,383 1,099,908 1,506, , , ,104 15,906 88,563 2, ,131, ,503 1, , ,104 15, ,330 2, ,160 15,640 2,622,757 (1) After deduction of provisions amounting to LBP (million) from loans and advances to customers as per IAS 39, of which LBP (million) 580 representing provisions on collective assessment. (2) Includes an amount of LBP (million) representing Lebanese Eurobonds. LIABILITIES AND SHAREHOLDERS EQUITY Due to Central Banks Due to banks Due to head office, sister, related banks Financial assets taken as collateral and repurchase agreement Derivative financial instruments Financial liabilities designated at fair value through profit and loss Customers deposits Deposits from related parties Debt issued and other borrowed funds Engagements by acceptances Current tax liabilities Deferred tax liabilities Other liabilities Liabilities related to noncurrent assets held for sale Provisions for risks and charges End of service benefits Subordinated loans and similar debts Total liabilities Shareholders equity group share Capital common shares Capital preferred shares Issue premium common shares Issue premium preferred shares Merger premium Cash contribution to capital Capital reserves Treasury shares Retained earnings Revaluation reserve of real estate Reserve on revaluation of financial instruments Reserve for cash flow hedges Foreign currency translation reserve Other reserves Result of the year Minority interest Profit and loss accounts Total shareholders equity Total liabilities and shareholders equity LBP 2,059 2, ,023 3,680 4, ,230 2,013 2, , ,217 40,000 99,868 55,497 1,309 3, ,697 C/V LBP ,647,403 48, ,437 1,699,139 30,772 30, ,729,911 as at Total LBP 2,822 1,453 3,205 2, ,851,426 51,733 4, ,667 2,013 2,979 1,933, ,989 40, ,522 55,497 1,427 3,117 2,200, ,047 4,910 4, ,414 1,260 2, , ,841 40,000 92,496 47, , ,477 C/V LBP Total 813 2,266 1,100 3, ,002,568 2,283,615 69,813 74,723 4, ,461 20,875 1,260 2,570 2,086,821 2,393,457 27, ,300 40,000 27, ,910 47, ,604 2,114,280 2,622,757 Audi Private Bank sal 6 Annual Report

5 OFF BALANCE SHEET INCOME STATEMENT Financing commitments Financing commitments given to banks Financing commitments received from banks Engagement to customers Bank guarantees Guarantees given to banks 305 of which: credit derivatives Guarantees received from banks of which: credit derivatives Guarantees given to customers 1,761 Guarantees received from customers 55,909 Financial notes commitments Financial notes commitments to be received of which: financial instruments sold with a buy back option Financial notes commitments to be delivered of which: financial instruments purchased with a buy back option Foreign currencies forwards Foreign currencies to receive Foreign currencies to deliver Engagements on term financial instruments Other commitments Claims from legal cases Fiduciary assets Assets under management Mutual funds Structured financial products Engagements unlikely to be executed Bad debts fully provided for LBP 3,512 49, C/V LBP 27,081 14,015 5,187 2, ,316 34,374 34, ,871 1,446,806 9,393 Total 27,081 14,320 5,187 4, ,225 34,374 34, ,383 1,496,189 10,226 as at LBP ,487 2,820 43, C/V LBP Total 39,694 14,015 4,969 2, ,384 44,460 44, ,662 1,320,881 48,067 39,694 14,320 4,969 3, ,871 44,460 44, ,482 1,364,450 48,696 Interest and similar income Interest and similar expenses Net interest income Fees and commissions income Fees and commissions expenses Net fees and commissions income Net trading income/loss Net gain or loss on financial assets or liabilities designated at fair value through profit and loss Net gain or loss on financial investments Other operating income Total operating income Net provisions for credit losses Provisions for doubtful loans Recoveries of provisions for doubtful loans Provision on impairment of financial instruments Net operating income Personnel expenses Depreciation of property and equipment Amortisation of intangible assets Goodwill impairment Other operating expenses Total operating expenses Operating profits Share of profits of associates under equity method Net gain (loss) on sale or disposal of other assets Profits before tax Income tax Profits after tax from operating activities Result of discontinued operations Net profits Minority interest Net profits group share Basic earnings per share LBP Diluted earnings per share LBP 102,547 (62,245) 40,302 10,629 (1,103) 9,526 1, ,729 66,026 (123) (690) ,903 (12,669) (366) (409) (11,647) (25,091) 40, ,813 (4,387) 116,154 (80,588) 35,566 9,176 (1,274) 7,902 1, ,886 53,251 (4,292) (6,985) 2,693 48,959 (10,465) (1,064) (297) (11,352) (23,178) 25, ,796 (4,192) 21,604 21,604 Audi Private Bank sal 8 Annual Report

6 FINANCIAL HIGHLIGHTS 2013 BANK AUDI ADDRESSES Year 2013 is yet another year of growth for Audi Private Bank amidst rising challenges in the regional economical and geopolitical situation in addition to tightening in the local and international regulatory environment. The Bank reported total Footings (onbalance sheet assets and off balance sheet assets under management) of LBP 4,255 billion at end Assets under management, excluding deposits, grew by 21% increasing from LBP 1,704 billion as at December 2012 to LBP 2,055 billion as at December 2013; customers deposits reached a total of LBP 1,903 billion despite stagnation witnessed in the Lebanese market. Audi Private Bank profitability in 2013 has also recorded new highs. The net interest income grew from LBP 36 billion to LBP 40 billion reflecting an increase of 13%. Noninterest income increased significantly by 45.46% reaching LBP 26 billion. This growth is mainly driven by an increase of 21% in the net fees and commissions income and of 87% in other operating income out of which LBP 14 billion represent dividends distributed and other non recurring items. The bank maintained in 2013 its expansion strategy which entailed an increase in its headcount. This increase was reflected on the total operating expenses that amounted to LBP 25 billion, witnessing an increment of 8% compared to Audi Private Bank has succeeded to maintain its fast growing track, achieving an increase of 68.6% in its Net Profit compared to The Bank recorded a LBP 36 billion Net Profit in BANK AUDI PRIVATE BANK AUDI PRIVATE BANK sal HEAD OFFICE Bank Audi Plaza Tel: , Block D, Bab Idriss Fax: , P.O. Box contactus.lebanon@bankaudipb.com, Lebanon BRANCH Bank Audi Plaza Tel: , Block D, Bab Idriss Fax: , , Lebanon principale@bankaudipb.com BANQUE AUDI (SUISSE) SA HEAD OFFICE Geneva Tel: , Cours des Bastions Fax: P.O. Box 384 contactus.gva@bankaudipb.com 1211 Geneva 12, Switzerland REPRESENTATIVE OFFICE Bank Audi Plaza Bab Idriss P.O. Box Tel: , Lebanon Fax: AUDI CAPITAL (KSA) cjsc Riyadh 2980 Centria Bldg., 3 rd Floor, Prince Mohammad Bin Abdul Aziz Rd. (Tahlia), Postal Address: Unit No. 28 Tel: Ar Riyadh Fax: P.O. Box , Riyadh contactus@audicapital.com Kingdom of Saudi Arabia AUDI CAPITAL GESTION sam Monaco Tel: MonteCarlo Palace Fax: Boulevard des Moulins contactus.mc@bankaudipb.com MC Monaco BANK AUDI BANK AUDI sal HEADQUARTERS Bank Audi Plaza Tel: Bab Idriss Fax: P.O. Box contactus@banqueaudi.com, Lebanon COUNTRY MANAGEMENT LEBANON Bank Audi Palladium Tel: Bab Idriss Fax: P.O Box contactus@banqueaudi.com, Lebanon BANK AUDI FRANCE sa Paris Tel: ChampsElysées Avenue Fax: Paris, France contactus.france@banqueaudi.com BANK AUDI LLC Doha Qatar Financial Centre, 18 th Floor Qatar Financial Centre Tower Diplomatic Area Tel: P.O. Box Fax: Doha, Qatar contactus.qatar@banqueaudi.com BANK AUDI INVESTMENT BANK AUDI INVESTMENT BANK sal Bank Audi Plaza Block D, Bab Idriss Tel: P.O. Box Fax: , Lebanon contactus@bankaudiib.com BANK AUDI sal Abu Dhabi REPRESENTATIVE OFFICE Arab Monetary Fund Bldg. 9 th Floor, Corniche Street Tel: P.O. Box Abu Dhabi Fax: United Arab Emirates contactus.abudhabi@banqueaudi.com Audi Private Bank sal 10 Annual Report

Audi Private Bank sal

Audi Private Bank sal CONTENTS 01 BOARD OF DIRECTORS AND MANAGEMENT 06 02 CHAIRMAN S LETTER 07 03 STATEMENT OF FINANCIAL POSITION 08 04 OFF-BALANCE SHEET 10 05 INCOME STATEMENT 11 06 FINANCIAL HIGHLIGHTS