CREDIT LIBANAIS S.A.L.

Transcription

1 CREDIT LIBANAIS S.A.L. Issue No. 575 November 11 th November 17 th Economic Research Unit Credit Libanais Headquarters Adlieh Beirut, Lebanon Tel Fax

2 TABLE OF CONTENTS LEBANON NEWS ECONOMIC INSIGHTS > LEBANON RANKS 36 TH IN THE WORLD AND 3 RD IN THE MENA REGION IN INTERNET FREEDOM IN 1 > TEN LEBANESE BANKS EMERGE AMONG TOP 1,000 BANKS IN THE WORLD IN > LEBANON CRISIS RESPONSE PLAN RECEIVES $729.3 MILLION YTD SEPTEMBER 3 > VALUE OF REAL ESTATE SALE TRANSACTIONS UP BY 21.19% Y-O-Y BY OCTOBER 4 > RESERVES AT BDL REACH $54.54 BILLION BY MID-NOVEMBER 5 > BEIRUT PORT FREIGHT ACTIVITY DROPS BY 3.21% Y-O-Y BY OCTOBER 6 > TRIPOLI PORT ACTIVITY IMPROVES BY 9.69% Y-O-Y BY SEPTEMBER 6 CORPORATE NEWS > S&P AFFIRMS BLOM BANK S B- RATING WITH A STABLE OUTLOOK 7 MONETARY PERFORMANCE > MONETARY AGGREGATES 8 > MONEY MARKETS 8 LEBANESE EQUITIES > LEBANESE EQUITIES & CREDIT LIBANAIS INDICES 9 LEBANON'S ECONOMIC & FINANCIAL SECTOR INDICATORS 11 LEBANON'S RATINGS 12 LEBANON RANKS 36 TH IN THE WORLD AND 3 RD IN THE MENA REGION IN INTERNET FREEDOM IN Freedom House positioned Lebanon among countries having a partly free internet environment, assigning it a score of 46 (on a scale of 0 to 100) for the year. Consequently, Lebanon ranked 36 th in the world and 3 rd in the Middle East and North Africa (MENA) region in terms of internet freedom. TEN LEBANESE BANKS EMERGE AMONG TOP 1,000 BANKS IN THE WORLD IN Arab banks appeared on The Banker Magazine s top 1,000 banks list for the year 2016, with Lebanon coming in third on the list (10 banks) on a regional level. LEBANON CRISIS RESPONSE PLAN RECEIVES $729.3 MILLION YTD SEPTEMBER The Office of the Coordination of Humanitarian Affairs (OCHA) reported that the LCRP received donations amounting to $729.3 million (representing 27% of the total appeal) in the first nine months of compared to $980.0 million (representing 40% of the 2016 appeal) in the same period last year. VALUE OF REAL ESTATE SALE TRANSACTIONS UP BY 21.19% Y-O-Y BY OCTOBER The value of real estate transactions increased by 21.19% y-o-y to $8.15 billion during the first ten months of, compared to $6.73 billion during that same period last year. ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: FAX:

3 SYNOPSIS OF TERMS "BDL" "ABL" "MOF" "BOP" "IMF" "Moody's" "BSE" "GDRs" "M1" "M2" "M3" "M4" "CPI" "PPI" "CLASI" "CLFI" "CLCI" EIU EOY "P/E" "P/BV" "YTD" "YTD Price Performance" "LBP" "USD" "Y-O-Y" "GDP" "MENA" Banque Du Liban Association of Banks in Lebanon The Lebanese Ministry of Finance Balance of Payment The International Monetary Fund Moody's Investors Service Beirut Stock Exchange Global Depositary Receipts Currency in Circulation + Demand Deposits in LBP M1 + Other Deposits in LBP M2 + Deposits in Foreign Currencies M3+ Treasury Bills Held by Non-Banking System Including Accrued Interests Consumer Price Index Producer Price Index Credit Libanais Aggregate Stock Index Credit Libanais Financial Sector Stock Index Credit Libanais Construction Sector Stock Index Economist Intelligence Unit End of Year Price to Earnings Multiple Price to Book Multiple Year to Date Yield to Date Price Appreciation The Lebanese Pound The United States Dollar Year-on-Year Gross Domestic Product Middle East and North Africa ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: FAX:

4 LEBANON NEWS LEBANON RANKS 36 TH IN THE WORLD AND 3 RD IN THE MENA REGION IN INTERNET FREEDOM IN Freedom House, the Washington-based non-profit research organization, released this week its latest report titled Freedom on the Net : Manipulating Social Media to Undermine Democracy, unveiling a decline in internet freedom for the seventh consecutive year, with online manipulation and disinformation tactics playing a vital role in the elections in at least 18 countries over the past year, including the United States. More particularly, the practice of manipulating online information that was first pioneered by the Chinese and Russian regimes more than a decade ago has gone global. The report highlighted a multiplicity of facts witnessed over the past year of which we mention the following. First, the report noted an increase in disruptions to the mobile internet service across different countries around the world. In details, a record number of governments placed restrictions on mobile internet services for security or political reasons, especially in areas populated by ethnic or religious minorities. Second, the report mentioned increased attacks (physical and technical) on independent media and defenders of human rights during the past year. On a global level, out of the 65 countries assessed, nearly half (32) registered drops in internet freedom since June 2016, while only 13 countries have been on a positive trajectory. The sharpest declines were in Ukraine (-7), Egypt (-5), and Turkey (-5). Furthermore, and as depicted by the table below, Estonia, Iceland, Canada, Germany, and Australia (in a descending order) topped the list of countries in terms of internet freedom, as Cuba, Iran, Ethiopia, Syria, and China bottomed the list, being the year s worst abusers of internet freedom. Overall, as far as the total world population is taken into consideration, the report divides people into the not assessed group, and these make up 13% of the entire population, implying that 87% have been assessed, of which 36% were classified as not free, 28% as partly free, and 23% as free. On a local basis, the report positioned Lebanon among countries having a partly free internet environment, assigning it a score of 46 (on a scale of 0 to 100) for the year, down from a better score of 45 a year earlier. In details, Lebanon scored 14 (on a scale of 0 to 25) in the Obstacles to Access component, 12 (on a scale of 0 to 35) in the Limits on Content metric, and 20 (on a scale of 0 to 40) in the Violations of User Rights parameter. Consequently, Lebanon ranked 36 th in the world and 3 rd in the Middle East and North Africa (MENA) region in terms of internet freedom. The report pointed out the fact that some 160,000 residents in the border town of Arsal have been deprived from affordable internet access for some two years, on the back of a permanent blackout of the mobile network in that area, prompting as such the decline in Lebanon s score. The report also pointed to the detention of some political activists in cases of defamation of political figures, and that Lebanese civil society organizations utilized digital tools to organize boycotts and call for the release of individuals detained for their social media posts. Freedom on the Net Subtotal Scores Country Status Score (0-100 pts) Rank Obstacles to Access (0-25 pts) Limits on Content (0-35 pts) Violations of User Rights (0-40 pts) Estonia Free Iceland Free Canada Free Germany Free Australia Free Tunisia Partly Free Morocco Partly Free Lebanon Partly Free Jordan Partly Free Libya Partly Free Egypt Not Free UAE Not Free Bahrain Not Free Saudi Arabia Not Free Cuba Not Free Iran Not Free Ethiopia Not Free Syria Not Free China Not Free Score: Free [0-30]; Partly Free [31-60]; Not Free [61-100] Source: Freedom House, Credit Libanais Economic Research Unit SOURCE: FREEDOM HOUSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 1

5 LEBANON NEWS TEN LEBANESE BANKS EMERGE AMONG TOP 1,000 BANKS IN THE WORLD IN 2016 Al Bayan Economic magazine published in its November issue (Issue No. 552) the results of The Banker magazine s Top 1,000 World Banks list, in which 1,000 banks around the world are ranked according to their strength and size. Banks strength is measured by their Tier 1 capital and their size in terms of total assets. The magazine also shows a glimpse on the related banks pre-tax profits, return on equity (ROE), and return on assets (ROA). According to The Banker, and as published in Al Bayan magazine, ICBC (China) emerged as the largest bank in the world with a Tier 1 capital of $ billion and total assets of nearly $3,473 billion as at end of 2016, followed by China Construction Bank with a Tier 1 capital of around $ billion and assets exceeding $3,016 billion. JP Morgan Chase & Co. (USA) came in third in the world in terms of Tier 1 capital ($ billion), while the Agricultural Bank of China ranked third in terms of assets ($2,816 billion). On a regional basis, 87 banks appeared on The Banker magazine s top 1,000 banks list for the year 2016, compared to 85 banks a year before, with the United Arab Emirates (UAE) amassing the largest number of banks on that list (21 banks), followed, and at quite a distance, by Saudi banks (12) and Lebanese, Qatari, and Bahraini banks (10 banks each), only to name a few. Qatar National Bank outperformed its regional peers in terms of Tier 1 capital ($17.25 billion; global rank: 82), followed by Saudi Arabia s National Commercial Bank (Tier 1 capital: $15.91 billion; global rank: 87) and Saudi Arabia s Al Rajhi Bank (Tier 1 capital: $13.85 billion; global rank: 101). In terms of assets, Qatar National Bank was also the largest Arab bank on the list ($ billion; global rank: 108), followed by Emirates NBD (assets: $ billion; global rank: 146) and National Commercial Bank (assets: $ billion; global rank: 149). Locally, Bank Audi ranked 321 st in the world and 35 th in the region in The Banker s top 1,000 banks with a Tier 1 capital of about $3.09 billion at end of 2016, followed by BLOM Bank (Tier 1 capital: $2.62 billion; global rank: 363), Fransabank (Tier 1 capital: $1.69 billion; global rank: 501), Byblos Bank (Tier 1 capital: $1.62 billion; global rank: 522), SGBL (Tier 1 capital: $1.57 billion; global rank: 534), Bank of Beirut (Tier 1 capital: $1.42 billion; global rank: 566), BankMed (Tier 1 capital: $1.31 billion; global rank: 594), Banque Libano-Française (Tier 1 capital: $1.04 billion; global rank: 685), Credit Libanais (Tier 1 capital: $705 million; global rank: 832), and BBAC (Tier 1 capital: $501 million; global rank: 957). As far as assets are concerned, Bank Audi remained the largest Lebanese bank (assets: $44.27 billion; global rank: 321), followed by BLOM Bank (assets: $29.52 billion; global rank: 419), Fransabank (assets: $20.86 billion; global rank: 534), Byblos Bank (assets: $20.81 billion; global rank: 536), SGBL (assets: $19.07 billion; global rank: 559), Bank of Beirut (assets: $17.21 billion; global rank: 589), BankMed (assets: $16.02 billion; global rank: 612), Banque Libano-Française (assets: $12.72 billion; global rank: 692), Credit Libanais (assets: $10.66 billion; global rank: 739), and BBAC (assets: $6.48 billion; global rank: 892). Ranking of Lebanese Banks Among the Top 1,000 Banks in the World Tier 1 Capital Assets Pre-Tax Profits ROE ROA $ Million Rank $ Million Rank $ Million % Rank % Rank Top 5 Banks in the World ICBC (China) 281, ,472, , China Construction Bank 225, ,016, , JP Morgan Chase & Co. (USA) 208, ,490, , Bank of China 199, ,611, , Bank of America 190, ,189, , Top 5 Arab & Middle East Banks Qatar National Bank 17, , , National Commercial Bank (KSA) 15, , , Al Rajhi Bank (KSA) 13, , , Emirates NBD 13, , , National Bank of Abu Dhabi 12, , , Top Lebanese Banks Bank Audi 3, , BLOM Bank 2, , Fransabank 1, , Byblos Bank 1, , Société Générale de Banque au Liban 1, , Bank of Beirut 1, , BankMed 1, , Banque Libano-Française 1, , Credit Libanais , Bank of Beirut & the Arab Countries , Source: Al Bayan Economic Magazine, The Banker, Credit Libanais Economic Research SOURCE: AL BAYAN ECONOMIC MAGAZINE, THE BANKER, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 2

6 LEBANON NEWS LEBANON CRISIS RESPONSE PLAN RECEIVES $729.3 MILLION YTD SEPTEMBER The Office of the Coordination of Humanitarian Affairs (OCHA) released its 29 th Humanitarian Bulletin for Lebanon for the months of August, September, and October in which it highlights Lebanon s major humanitarian and development needs. Firstly, the report disclosed that the preliminary results of the Vulnerability Assessment of Syrian Refugees (VASyR), which highlights the living conditions and trends of refugees, revealed that Syrian refugees have been enduring higher level of poverty, coupled with high levels of indebtedness. More specifically, the number of Syrian households living below the poverty line (less than $3.54 per capita per day) rose to 76% in, up from 71% in Some facts and figures related to the presence of refugees in Lebanon according to the OCHA report are depicted in the table below: Figures as at End of September Number of Syrian Refugees 1,500,000 Number of Registered Syrian Refugees 1,001,051 Number of Syrian Returnees 35,000 Number of Palestinian Refugees from Syria 32,000 Number of Palestinian Refugees 277,985 Number of Vulnerable Lebanese Citizens 1,500,000 Estimated Lebanese Population 4,400,000 Source: OCHA, Credit Libanais Economic Research Unit Furthermore, the report mentioned that nearly half (49%) of all Syrian refugee children aged between 3 and 18 are failing to attend school, yet the number of children attending primary school saw some improvement, increasing from 52% in 2016 to 63% in. In the same perspective, the report added that the proportion of women (aged between 15 and 19) who are married or in union stood at 22%, and that approximatively 8% of youth are working on regular basis. The report also commented that 91% of Syrian refugee families witnessed some level of food insecurity in, down from 93% in the previous year. It is worth noting that food insecurity is mainly attributed to high economic vulnerability and narrow income-earning prospects. Food Security among Syrian Refugee Households 32% 25% 56% 62% 11% 65% 7% 9% 58% 53% 34% 36% 12% 12% 23% 2% 2% Severe food insecurity Mild food insecurity Moderate food insecurity Food secure Finally, on the funding side of the Lebanon Crisis Response Plan (LCRP), OCHA reported that the LCRP received donations amounting to $729.3 million (representing 27% of the total appeal) in the first nine months of, compared to $980.0 million (representing 40% of the 2016 appeal) in the same period last year. The following pie chart attributes $238.9 million of the secured donations to Germany, followed by the United States of America ($198.4 million) and the European Union ($66 million), only to name a few. Donations Received by the LCRP Top 5 Donors to the LCRP YTD Septmber (in m. USD) Norway, 37.3 Million USD European Union, 66 United States of America, United Kingdom, YTD September 2016 YTD September Germany, SOURCE: OCHA, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 3

7 LEBANON NEWS VALUE OF REAL ESTATE SALE TRANSACTIONS UP BY 21.19% Y-O-Y BY OCTOBER Real estate activity flourished during the tenth month of the current year as investors flocked to register their properties before year-end in fear of an appreciation in their properties rental values and possibly higher registration fees in the subsequent year. In detail, the number of transactions almost doubled (93.98%) to 8,283 in October, up from 4,270 transactions a month earlier. Concurrently, the value of real estate transactions soared by % in October to $1.13 billion, from $ million in September. Moreover, the average value per transaction rose by 7.98% month-on-month to $136,864, from $126,751 in September. On a cumulative basis, the number of real estate transactions rallied by 16.57% y-o-y to 60,276 during the first ten months of, compared to 51,707 transactions during that same period last year, with the value of transactions increasing by 21.19% from $6.73 billion to $8.15 billion by October. The average value per transaction also rose by 3.96% y-o-y to $135,289 by October of this year, up from $130,131 over the same period last year. The share of sales to foreigners stood at 1.80% by October, surpassing the 1.75% level reported in the full year Real Estate Transactions For the Month of September For the Month of October Monthly % Change YTD October 2016 YTD October Y-O-Y % Change Number of Sale Transactions 4,270 8, % 51,707 60, % Value of Transactions (USD Billion) % % Average Value per Transaction (USD) 126, , % 130, , % Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit Evolution of Value & Volume of Real Estate Transactions Sales to Foreigners as a Percentage of Total Sales 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,622 94, ,984 74,569 69,198 70,721 $ Billion ,248 60, , YTD October Value of Transactions ($ Billion) Number of Transactions 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2.53% 2.04% 1.84% 1.86% 1.85% 1.69% 2.20% 1.75% 1.80% YTD October Source: GDLRC, Credit Libanais Economic Research Unit Source: GDLRC, Credit Libanais Economic Research Unit From a geographical standpoint, the average value per real estate transaction in Beirut increased by 1.92% to $530,045 by the month of October, up from $520,076 at year-end On the other hand, the average value per transaction in the Baabda region receded by 7.26% to $135,767, down from $146,400 by year-end The average value per transaction in each of the Metn and Kesserwan regions rose by 2.38% and 8.60% respectively to $218,378 and $138,074 at end of October, up from $213,312 and $127,144 as at end of Historical Evolution of Average Value per Transaction Across Different Lebanese Regions YTD October 2016 $135,767 $138,074 $146,400 $127,144 $218,378 $213,312 $530,045 $520, $134,728 $140,169 $205,516 $509, $138,644 $139,612 $210,955 $567, $120,983 $124,664 $213,584 $499, $108,028 $117,596 $182,797 $524, $100,712 $97,487 $170,953 $456, $103,397 $94,325 $153,064 $369, $78,245 $84,290 $118,546 $314,941 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 Baabda Kesserwan Metn Beirut Source: GDLRC, Credit Libanais Economic Research Unit SOURCE: GDLRC, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 4

8 LEBANON NEWS RESERVES AT BDL REACH $54.54 BILLION BY MID-NOVEMBER The Lebanese Central Bank s balance sheet revealed some $ million contraction in the foreign assets (foreign currency reserves) portfolio during the first half of November to $42.68 billion, from $43.48 billion as at end of October. In detail, this sharp drop in the level of foreign assets can be attributed in part to the fact that some depositors rushed to convert their LBP deposits into USD, driven by safe-haven purposes following the shocking resignation of Prime Minister Saad Hariri. In contrast, the value of gold reserves at BDL widened by $ million during the first half of November to $11.86 billion, as gold prices jumped to a four-week high on the closing of November 15 against a weakening US Dollar amid rising speculation about the expected path of the Fed s monetary policy in 2018 and as the Senate tax reform proposal underwhelmed markets. On an annual basis, foreign assets at BDL came in 5.19% ($2.11 billion) higher than the $40.57 billion reading reported at mid-november Similarly, the value of gold reserves rose by $0.55 billion (4.85%) year-on-year when benchmarked to the $11.31 billion figure recorded in the same period last year. Overall, total reserves (foreign currency and gold) at BDL rose by $2.66 billion annually to $54.54 billion at mid-november, up from $51.88 billion a year before. These reserves cover around months of debt service and constitute around 69.78% and 80.21% of Lebanon s gross and net public debt on a respective basis. $ Billion Mid- November 2011 Mid- November 2012 Mid- November 2013 Mid- November 2014 Mid- November 2015 Mid- November 2016 Mid- November Gold Foreign Assets Total Reserves Source: Banque Du Liban, Credit Libanais Economic Research Unit Total Reserves As a % of Gross Public Debt (1) 69.78% As a % of Net Public Debt (1) 80.21% In Months of Debt Service (2) (1) As at End of September (2) Average Monthly Debt Service as at End of June Source: MOF, ABL, Credit Libanais Economic Research Unit Evolution of Total Reserves at Banque Du Liban USD Billion Mid-November 2011 Mid-November 2013 Mid-November 2015 Mid-November Gold Foreign Assets In a related note, BDL s balance sheet narrowed by $ million during the first half of November to $ billion. This comes as a result of the 1.25% drop in total reserves to $54.54 billion, coupled with the 1.72% plunge in the value of other assets to $22.44 billion and the 0.80% decrease in the securities portfolio to $28.70 billion, which altogether outweighed the 7.16% hike in loans to the local financial sector to $11.53 billion and the 0.03% rise in the value of fixed assets to $0.24 billion. $ Billion Mid-November 2016 End of October Mid-November Bi-Weekly (% Change) Y-O-Y (% Change) Total Reserves % 5.12% Securities Portfolio % 10.65% Loans to Public Sector Loans to Local Financial Sector % 84.76% Valuation Adjustment % 0.00% Other Assets % 17.15% Fixed Assets % 7.28% Total Assets % 13.54% Currency in Circulation Outside BDL % 8.56% Financial Sector Deposits % 14.23% Public Sector Deposits % -1.04% Valuation Adjustment % 10.91% Other Liabilities % 75.68% Capital Accounts % 1.70% Total Liabilities % 13.54% Source: Banque Du Liban, Credit Libanais Economic Research Unit Source: Banque Du Liban, Credit Libanais Economic Research Unit Loans to Local Financial Sector 9.82% Breakdown of BDL's Balance Sheet as at Mid-November Loans to Public Sector 0.00% Valuation Adjustment 0.00% Securities Portfolio 24.44% Other Assets 19.11% Fixed Assets 0.20% Source: BDL, Credit Libanais Economic Research Unit In the same vein, the share of gold & foreign currency reserves at BDL fell to 46.43% of the latter s total assets by mid-november, down from 46.80% at end of October of the same year and 50.16% in mid-november of the previous year. Total Reserves 46.43% SOURCE: BDL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 5

9 LEBANON NEWS BEIRUT PORT FREIGHT ACTIVITY DROPS BY 3.21% Y-O-Y BY OCTOBER Beirut Port freight activity improved during the month of October involving a total freight volume of thousand tons, up from thousand tons in September. On a cumulative basis, however, freight activity fell by 3.21% year-on-year to 7,107 thousand tons by end of October, down from 7,343 thousand tons in the same period last year. Similarly, the number of vessels contracted by 7.71% annually to 1,580 during the period ended October, from 1,712 vessels a year before. In contrast, the number of containers increased by 12.33% on a yearly basis to 1.07 million. However, the number of imported cars via the Beirut Port contracted by 521 cars (0.59%) annually to 87,971, from 88,492 cars during the first ten months of In this perspective, Beirut port revenues fell by 0.75% on a yearly basis to $ million, down from $ million a year before. Port of Beirut For the Ten-Month Period Ending Indicators Oct-16 Oct-17 % Change Freight Activity (000 Tons) 7,343 7, % Number of Vessels 1,712 1, % Number of Imported Cars 88,492 87, % Number of Containers 954,619 1,072, % Revenues ($ Million) % Source: Beirut Port, Credit Libanais Economic Research Unit Evolution of Cumulative Freight Activity in Beirut Port Thousand Tons 7,400 7,343 7,300 7,200 7,107 7,100 7,000 6,921 6,900 6,817 6,803 6,800 6,700 6,600 6,500 October 2013 October 2014 October 2015 October 2016 October Source: Beirut Port, Credit Libanais Economic Research Unit TRIPOLI PORT ACTIVITY IMPROVES BY 9.69% Y-O-Y BY SEPTEMBER Freight activity via the Port of Tripoli widened to circa 211 thousand tons during the ninth month of the current year, up from around 130 thousand tons in August. In particular, imported freight accounted for 78.29% of total freight (164,961 tons), while export activity constituted 21.71% (45,747 tons). On a cumulative basis, Tripoli Port freight activity expanded by 9.69% annually to 1,500 thousand tons by September, compared to 1,368 thousand tons reported in the same period last year. However, the number of vessels fell by 0.50% annually to 598, down from 601 by September Moreover, the number of imported cars via Tripoli Port rose by 10.85% y-o-y to 4,272, compared to 3,854 cars a year before. In this context, port-related revenues (excluding VAT and customs) increased by 12.92% on an annual basis to $12.45 million YTD September, up from $11.02 million in the same period of the previous year. According to Al Bayan Economic Magazine, this increase in Tripoli Port s revenues can always be attributed to the fact that the Port of Tripoli has become a maritime center for the reception of ship ferries that facilitate imports and exports by truck from and to a number of MENA countries, especially amid the closing of the land borders between Syria and many of its neighbor countries (i.e. Turkey, Iraq, and Jordan). Tripoli Port For the Nine-Month Period Ending Indicators Sep-16 Sep-17 Y-O-Y % Change Freight Activity (000 Tons) 1,368 1, % Number of Vessels % Number of Imported C ars 3,854 4, % Port-Related Revenues ($ Million) % Source: Port of Tripoli, Al Bayan Economic Magazine, Credit Libanais Economic Research Unit SOURCE: BEIRUT PORT, AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 6

10 CORPORATE NEWS S&P AFFIRMS BLOM BANK S B- RATING WITH A STABLE OUTLOOK Standard & Poor s (S&P), the international rating agency, maintained BLOM Bank s long-term issuer credit rating at B- with a Stable outlook in its recent rating update on Lebanese banks. The agency attributed its rating affirmation to the bank s revenue stability, its strong position among Lebanese banks (being the second largest) with a market share of almost 10% in terms of both loans and deposits, and its robust operations citing the bank s net interest margin of 2.34%, coupled with core earnings equivalent to 1.30% of average adjusted assets in H1-. Moreover, the agency noted that earlier this year, BLOM Bank utilized the gains generated from Banque Du Liban s (BDL) financial engineering back in 2016 in order to redeem preferred shares and acquire HSBC branches in Lebanon. S&P s assessment of BLOM Banks risk position took into consideration the low concentration in its loan portfolio and its good loss experience relative to its peers as reflected by the bank s provisioning ratio in preparation for IFRS9. Furthermore, always according to the agency, BLOM Bank s funding is considered to be average and its liquidity is seen as adequate. The agency also noted that BLOM Bank maintains a strong and steady funding ratio exceeding 200% and an exceptionally high coverage of customer deposits by liquid assets. S&P added that BLOM Bank ratings are closely related to those of the sovereign given the bank s high exposure to sovereign risk as it has term deposits with BDL, holds certificates of deposits issued by BDL, and invests in public debt. On the other hand, BLOM Bank s Stable outlook, affirmed by S&P, reflects the generally stable outlook on Lebanon. The latter s stable outlook stems from the fact that in spite of the internal and external unfavorable environments, the country is expected to witness continuous financial inflows in the short term, sufficient to satisfy the government s funding needs and partially cover its external deficit. Finally, the agency stated that any possible negative rating action would follow a deterioration in Lebanon s political and economic situation, which might result in a sizeable drop in foreign deposit inflows or in BDL foreign reserves. In contrast, any ratings upgrade will happen in the event that a more effective and stable policymaking framework emerges in the country, leading to a drastic improvement in economic activity and a significant progress in public finances. SOURCE: S&P, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 7

11 MONETARY PERFORMANCE MONETARY AGGREGATES All monetary aggregates ended the week of November 2, on a positive note after several weeks of setback. In fact, the overall money supply, M4, widened by LBP billion on a weekly basis and by 7.11% on an annual basis to LBP 219,611 billion, noting that the non-banking sector s Treasury bills portfolio rose by LBP 21 billion during the concerned week. Concurrently, Lebanese-pound denominated deposits and currency in circulation, M1, soared by LBP billion week-on-week to LBP 10,100 billion on the back of some LBP 351 billion hike in money in circulation, accompanied by a LBP 143 billion expansion in demand deposits. On a yearly basis, M1 grew by 4.82%. Local currency term deposits, M2, also rallied by LBP billion on a weekly basis and registered a 2.29% year-on-year increase to settle at LBP 83,045 billion. Consequently, private sector term and saving deposits denominated in LBP ( M2-M1 ) fell by LBP billion (0.02%) during the aforementioned week to LBP 72,945 billion, with deposits denominated in foreign currencies ( M3-M2 ) receding by LBP billion (0.31%) to LBP 125,511 billion. Money Supply LBP Billion October 26, November 2, % Change M1 9,606 10, % M2 82,563 83, % M3 208, , % M4 219, , % M2- M1 72,957 72, % M3- M2 125, , % Source: Banque Du Liban, Credit Libanais Economic Research Unit 250, , ,000 Money Supply - LBP Billion - 219, , , ,556 October 26, M4 November 2, M3 MONEY MARKETS The November 9 th Treasury bill auction raised LBP billion ($ million), compared to LBP billion ($ million) in the auction of the previous week. The majority of subscriptions (63.82%) was concentrated in the three-year to maturity T-bonds, followed by the seven-year (32.04%) and six-month (4.13%) tenure treasury securities. Consequently, the weighted average yield on Lebanese Pound Treasury bills stood at 6.62% in the auction of November 9. The yields on the six-month, three-year, and seven-year to maturity Treasury securities remained flat at 4.99%, 6.50%, and 7.08% respectively. November 9, Lebanese Treasury Bills Yield (%) Face Value (in billions of LBP) % of Total Face Value 6 Months 4.99% % 36 Months 6.50% % 84 Months 7.08% % Total % Source: Reuters, Credit Libanais Economic Research Unit Source: BDL, Credit Libanais Economic Research Unit Lebanese Treasury Bills 3 Months 6 Months 12 Months 24 Months 36 Months 60 Months 84 Months 120 Months Treasury Yield 4.44% 4.99% 5.35% 5.84% 6.50% 6.74% 7.08% 7.46% 8.00% 7.50% 7.00% 6.50% 6.00% On The Run Yield Curve 24 Months 36 Months 84 Months 60 Months 120 Months 5.50% 5.00% 6 Months 12 Months 4.50% 3 Months 4.00% 3.50% 3.00% SOURCE: BDL, REUTERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 8

12 LEBANESE EQUITIES LEBANESE EQUITIES Beirut Stock Exchange activity witnessed a mild improvement this week with a small block trade on Bank Audi listed shares involving some 28,974 shares, as the renewed political and economic stalemate following the sudden resignation of Prime Minister Saad Hariri is close to entering its third week. In detail, the number of shares changing hands increased to 1,068,070 shares, from 880,172 shares a week before, while traded value dropped to around $8.88 million, from around $10.10 million a week earlier. Trades were mainly concentrated in the banking sector which accounted for 52.50% of total weekly volume. Concurrently, the average daily trading volume widened to 213,614 shares this week, from 176,034 shares last week. In contrast, the average daily trading value plunged to $1.78 million, from about $2.02 million a week earlier. Twelve losers and three gainers were spotted this week, dragging the BSE s market capitalization down by 2.91% week-on-week to nearly $10.66 billion and the Credit Libanais Aggregate Stock Index ( CLASI ) 3.37% lower to a new year-low of 1, In the real estate sector, trades mainly consisted of Solidere A and B shares (46.55% of total traded volume), with the price of Solidere A decreasing by 0.80% to $7.44 and that of Solidere B contracting by 1.84% to $7.46. On the other hand, the price of Holcim (Liban) shares, appreciated by 7.33% week-on-week to $14.50 and that of Ciment Blancs Nominal shares increased by 18.68% to $2.16. In this context, the Credit Libanais Construction Sector Stock Index ( CLCI ) ended Friday s session 0.48% higher week-on-week at In the banking sector, Byblos Bank listed shares amassed the highest concentration of trades (17.63% of total traded volume) on a thin turnover ratio of 0.03%. The Credit Libanais Financial Sector Stock Index ( CLFI ) fell by 4.14% on a weekly basis to a new year-low of 1, This comes as a result of the 8.33% contraction in the price of Bank Audi listed shares to $5.50, coupled with the 4.53% depreciation in the price of BLOM Bank GDRs to $10.97, the 4.38% decrease in the price of Byblos Bank listed shares to $1.53, the 2.56% drop in the price of Bank Audi GDRs to $5.70, and the 1.09% decline in the price of BLOM Bank listed shares to $ Credit Libanais Week of Week of Weekly YTD Indices 10-Nov Nov-17 % Change % Change Credit Libanais Aggregate Stock Index <.CLASI> Credit Libanais Financial Sector Stock Index <.CLFI> Credit Libanais Construction Sector Stock Index <.CLCI> Index Value 1,250 1,200 1,150 1,100 1,050 1, Nov-16.CLASI 09-Jan-17 1, , % % 1, , % -8.41% % % Credit Libanais Aggregate Stock Index Weekly Performance CLASI 02-Mar-17 CLASI 3.37% 23-Apr Jun-17 Credit Libanais Aggregate Stock Index Friday, November 17, Value Daily % Chng Daily Net Chng 1, % Yr.High Year Hi.Date Yr.Low Year.Lo.Date 1, Mar-17 1, Nov-17 Life High Life Hi.Date Life Low Life.Lo.Date 1, Jul Mar-09 1,700 1,650 1,600 Credit Libanais Financial Sector Stock Index Weekly Performance CLFI 05-Aug Sep Nov Credit Libanais Construction Sector Stock Index Weekly Performance CLCI Index Value 1,550 1,500 1,450 Index Value ,400 1,350 CLFI 4.14% 500 1, Nov-16 CLCI 0.48% 09-Jan Mar Apr Jun Aug Sep Nov Nov Jan Mar Apr Jun Aug Sep Nov-17 SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 9

13 LEBANESE EQUITIES BEIRUT STOCK EXCHANGE Closing Weekly %Change Weekly Volume Traded % of Weekly Volume Traded Lebanese Equities % of Weekly Value Traded Solidere A $ % 370, % $2,773, % 100,000, , % % Solidere B $ % 127, % $959, % 65,000, , % % BLC Bank $ % ,033,333 66, % % BLC Bank Preferred Class "B" $ % ,000 55,000 n.a n.a 0.00% 7.00% 6.65% 6.65% BLC Bank Preferred Class "C" $ % ,000 35,000 n.a n.a 0.00% 6.75% 6.41% 6.41% BLC Bank Preferred Class "D" $ % ,000 75,000 n.a n.a 0.00% 1.84% 1.75% 1.75% Bank Audi - Listed Shares $ % 53, % $293, % 399,749,204 2,198, % 9.09% 8.64% % Bank Audi GDR $ % 108, % $626, % 119,924, , % 8.77% 8.33% -3.97% Bank Audi Preferred "G" $ % 10, % $1,011, % 1,500, ,050 n.a n.a -1.47% 5.96% 5.66% 4.19% Bank Audi Preferred "H" $ % 2, % $202, % 750,000 75,750 n.a n.a -1.27% 6.44% 6.11% 4.84% Bank Audi Preferred "I" $ % % $57, % 2,500, ,250 n.a n.a 0.50% 2.99% 2.84% 3.34% Bank Of Beirut - Listed Shares $ % ,746, , % 3.53% 3.35% 3.35% Bank Of Beirut Priority Shares 2014 $ % ,762, , % 7.16% 7.00% 7.00% Bank Of Beirut Preferred "H" $ % ,400, ,510 n.a n.a -2.29% 6.82% 6.48% 4.20% Bank Of Beirut Preferred "I" $ % ,000, ,500 n.a n.a -2.86% 6.62% 6.29% 3.43% Bank Of Beirut Preferred "J" $ % 1, % $35, % 3,000,000 76,950 n.a n.a -2.29% 6.34% 6.02% 3.73% Bank Of Beirut Preferred "K" $ % ,000, ,400 n.a n.a 0.40% 2.25% 2.14% 2.53% Byblos Bank - Listed Shares $ % 188, % $293, % 565,515, , % 8.67% 8.24% -1.76% Byblos Bank Preferred Class 2008 $ % 2, % $204, % 2,000, ,000 n.a n.a -1.07% 7.88% 7.49% 6.42% Byblos Bank Preferred Class 2009 $ % 1, % $159, % 2,000, ,200 n.a n.a 0.79% 7.84% 7.44% 8.23% Byblos Bank GDR $ % ,309, , % 8.54% 8.11% 5.24% BEMO Bank - Listed Shares $ % ,400,000 66, % 4.08% 3.88% % BEMO Bank Preferred Class 2013 $ % ,000 34,913 n.a n.a 0.50% 7.02% 6.67% 7.17% BLOM Bank GDR $ % 103, % $1,159, % 73,896, , % 9.07% 8.62% 8.34% BLOM Bank Listed Shares $ % 89, % $986, % 215,000,000 2,332, % 9.17% 8.71% 11.07% RYMCO Class "B" $ % ,920,000 35, % 3.29% 3.12% 3.12% Holcim Liban $ % 7, % $113, % 19,516, , % 17.34% 16.47% 39.87% Ciment Blancs Nominal $ % 2, % $4, % 9,000,000 19, % 22.42% 21.30% 58.88% Note: n.a stands for not applicable Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit Weekly Value Traded Total Listed Shares Market Capitalisation ($000) P/E P/BV YTD Price Perf. Gross Dividend Yield Net Dividend Yield Evolution of Beirut Bourse Comparable Benchmarks YTD Total Net Return Activity Analysis Previous Last % Change Value Traded ($) 10,102,716 8,882, % Volume Traded 880,172 1,068, % Average Daily Trading Value ($) 2,020,543 1,776, % Average Daily Trading Volume 176, , % Market Cap - BSE ($) 10,974,729,495 10,655,385, % Weighted Average P/E % Weighted Average P/BV % Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit Nov 10, Nov 17, P/E P/BV Source: BSE, Credit Libanais Economic Research Unit The market-cap weighted average price to earnings (P/E) and the price to book (P/BV) multiples of listed stocks ended their week lower at 7.270x and 0.782x respectively based on the closing prices of Friday s session. SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 10

14 LEBANON S MAIN INDICATORS Recap of Lebanon's Major Indicators MACROECONOMIC INDICATORS GDP (Current Prices) ($ Billion) * 49.46* 50.46* 52.70* Real GDP Growth Rate 8.04% 0.92% 2.80% 2.64% 2.00%* 0.82%* 1.00%* 1.50%* GDP per Capita (Current Prices) ($) 8,850 9,144 9,914 10,399* 10,810* 11,178* 11,295* 11,684* Foreign Direct Investment Inflows ($ Billion) FDI/GDP Ratio 9.76% 7.84% 7.09% 5.78% 5.84% 4.71% 5.13% INDUSTRY Industrial Exports ($ Million) 3,291 3,530 3,567 3,384 3,150 2,956 2,527 1,427.6 (2) Import of Industrial Machinery ($ Million) (2) TOURISM Total Number of Tourists 2,167,989 1,655,051 1,365,845 1,274,362 1,354,647 1,517,927 1,688,357 1,449,517 (4) Growth in Tax-Free Spending 21% 10% -6% 4% 8% 2% -9% 7% (4) REAL ESTATE Value of Real Estate Transactions ($ Million) 9,479 8,841 9,175 8,708 8,952 8,006 8,482 8,155 (5) Number of Real Estate Sales Transactions 94,202 82,984 74,569 69,198 70,721 63,386 64,248 60,276 (5) Construction Permits (000 sqm) 15,187 13,890 12,362 10,527 11,159 10,294 9,935 7,242 (4) Cement Delivery (000 tons) 5,227 5,550 5,309 5,831 5,517 5,043 5,265 3,788 (4) TRANSPORTATION Beirut Port: Freight Activity (000 Tons) 6,469 6,677 7,225 8,268 8,281 7,240 8,737 7,107 (5) Beirut Airport: Number of Passengers (million) (4) FOREIGN TRADE Imports ($ Million) 17,964 20,158 21,280 21,228 20,494 18,069 18,705 13,888 (4) Exports ($ Million) 4,253 4,265 4,483 3,936 3,313 2,952 2,977 2,114 (4) Trade Balance ($ Million) (13,711) (15,893) (16,797) (17,292) (17,181) (15,117) (15,729) (11,774) (4) BALANCE OF PAYMENTS Net Foreign Assets at the Financial Sector ($ Million) 3,325 (1,996) (1,537) (1,127) (1,407) (3,354) 1,238 (190) (4) Foreign Assets at BDL ($ Billion) (7) Gold Reserves at BDL ($ Billion) (7) PUBLIC FINANCE Government Expenditures ($ Million) 11,336 11,675 13,321 13,640 13,952 13,528 14,867 6,968 (1) Government Revenues ($ Million) 8,414 9,333 9,396 9,420 10,879 9,576 9,923 6,060 (1) Budget Primary Deficit / Surplus ($ Million) 1,203 1,662 (110) (240) 1, ,630 (1) Total Deficit ($ Million) (2,894) (2,342) (3,925) (4,220) (3,073) (3,952) (4,944) (908) (1) Deficit / GDP Ratio 7.53% 5.84% 8.95% 9.17% 6.16% 7.78% 9.54% Debt Service / GDP Ratio 10.74% 9.99% 8.25% 8.24% 8.78% 9.21% 9.58% Net Public Debt ($ Billion) (4) Gross Public Debt/GDP Ratio % % % % % % %* %* MONETARY AGGREGATES & INFLATION M4 ($ Billion) (6) (M2-M1) ($ Billion) (6) Monetization Level (M2/GDP Ratio) % 99.32% 99.97% 98.97% 97.40% % % Change in CPI (%) 6.19% 4.27% 4.68% 2.05% -1.66% -3.40% 3.14% 4.15% (4) BANKING SYSTEM Number of Commercial Banks (1) Number of Branches ,020 1,039 1,056 1,057 (1) Total Assets ($ Million) 128, , , , , , , ,424 (4) Total Deposits ($ Million) 108, , , , , , , ,069 (4) Loans to the Private Sector ($ Million) 34,929 39,375 43,452 47,381 50,899 54,224 57,180 58,929 (4) Customer Loans/ Deposits 32.16% 33.45% 34.04% 34.05% 34.48% 34.99% 34.35% 34.05% (4) Dollarization Rate 63.24% 65.92% 64.82% 66.14% 65.71% 64.88% 65.82% 66.90% (4) Exchange Rate (LBP to USD) 1, , , , , , , , * Figures Reflect IMF Estimates (1) As at End of June,, (2) As at End of July,, (3) As at End of August,, (4) As at End of September,, (5) As at End of October,, (6) As at November 2,, (7) As at M id- November, SOURCE: CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 11

15 LEBANON S RATINGS Republic Of Lebanon Sovereign Ratings Rating Agency Tenor Rating Outlook Standard & Poor's Global Ratings Long- Term B- Short- Term B Stable Moody's Investors Service Long- Term B3 Long- Term B- Fitch Ratings Short- Term B Source: Fitch Ratings, Moody's Investors Service, S&P Global Ratings Stable Stable Lebanese Banks' Latest Ratings Rated Banks Moody's Investors Service Fitch Ratings S&P Global Ratings Long Term Foreign Currency Outlook Long Term IDR Outlook Long-Term Counterparty Credit Rating Short-Term Counterparty Credit Rating Outlook Bank Audi B3 Stable B- Stable B- C Stable BLOM Bank B3 Stable - - B- - Stable Byblos Bank B3 Stable B- Stable BankMed B- C Stable Source: Fitch Ratings, Moody's Investors Service, S&P Global Ratings SOURCE: FITCH, MOODY S, S&P RATINGS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 12

16 CONTACTS RESEARCH Fadlo I. Choueiri, CFA EXT: 1280 Jad Abi Haidar, CFA EXT Joelle Samaha EXT Mayda Zaarour EXT Nagham Abdel Ahad EXT MONEY MARKETS DESK Robert Araman EXT This document is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. This document does not constitute an offer or invitation to subscribe to or purchase any security, and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. Reasonable care has been taken to ensure that the facts stated herein are accurate and the estimates, opinions and expectations contained herein are fair and reliable. ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: FAX: