CREDIT LIBANAIS S.A.L.

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1 CREDIT LIBANAIS S.A.L. Issue No. 592 March 17 th March 23 rd 2018 Economic Research Unit Credit Libanais Headquarters Adlieh Beirut, Lebanon Tel Fax

2 TABLE OF CONTENTS LEBANON NEWS ECONOMIC INSIGHTS > BEIRUT RANKS 181 ST IN THE WORLD IN THE 2018 QUALITY OF LIVING INDEX 1 > LIFE PREMIUM COLLECTIONS IN THE LEBANESE INSURANCE SECTOR UP BY 4.35% IN > MOODY S CONSIDERS LEBANON S IMPLEMENTATION OF BASEL LIQUIDITY COVERAGE RATIO AS CREDIT POSITIVE 3 > THE WORLD BANK APPROVES A $295 MILLION PACKAGE TO FINANCE THE GREATER BEIRUT PUBLIC TRANSPORT PROJECT 4 > LEBANESE TREASURY BILLS DOMESTIC PORTFOLIO VALUE UP BY 5.0% IN > INDUSTRIAL EXPORTS DROP BY 2.11% IN 2017 TO $2.47 BILLION 6 > CONSTRUCTION PERMITS AREA AT 1.43 MILLION SQM BY FEBRUARY > ANNUAL INFLATION IN LEBANON AT 5.19% IN FEBRUARY > TRIPOLI PORT ACTIVITY NARROWS BY 3.13% Y-O-Y IN JANUARY CORPORATE NEWS > ALPHA GROUP OF BANKS POSTS NET PROFITS OF $2.40 BILLION IN > BANK AUDI EGYPT S NET PROFITS AT $57.52 MILLION IN > BANK AUDI TO DISTRIBUTE DIVIDENDS TO SHAREHOLDERS 12 > BLOM BANK TO DISTRIBUTE DIVIDENDS TO SHAREHOLDERS 12 MONETARY PERFORMANCE > MONETARY AGGREGATES 13 > MONEY MARKETS 13 LEBANESE EQUITIES > LEBANESE EQUITIES & CREDIT LIBANAIS INDICES 14 LEBANON'S ECONOMIC & FINANCIAL SECTOR INDICATORS 16 LEBANON'S RATINGS 17 BEIRUT RANKS 181 ST IN THE WORLD IN THE 2018 QUALITY OF LIVING INDEX Beirut occupied the 14 th position in the region and the 181 st in the world in Mercer Institute s 2018 Quality of Living Index. LIFE PREMIUM COLLECTIONS IN THE LEBANESE INSURANCE SECTOR UP BY 4.35% IN 2017 Al Bayan Economic Magazine unveiled that life insurance premium collections for 34 life insurance companies operating in Lebanon rose by 4.35% in 2017 to $ million, from $ million in MOODY S CONSIDERS LEBANON S IMPLEMENTATION OF BASEL LIQUIDITY COVERAGE RATIO AS CREDIT POSITIVE Moody s Investors Service expects that the Basel liquidity coverage ratio will help Lebanese banks improve their short-term liquidity management and avoid any potential liquidity shortages. THE WORLD BANK APPROVES A $295 MILLION PACKAGE TO FINANCE THE GREATER BEIRUT PUBLIC TRANSPORT PROJECT The World Bank unveiled this week the Greater Beirut Public Transport Project (GBPTP), to which its financing contribution amounts to $295.0 million. LEBANESE TREASURY BILLS DOMESTIC PORTFOLIO VALUE UP BY 5.0% IN 2017 The government s outstanding local currency debt rose by 5.0% in 2017 to $49.14 billion, up from $46.78 billion at year-end 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 BEIRUT RANKS 181 ST IN THE WORLD IN THE 2018 QUALITY OF LIVING INDEX Mercer Institute published this week its 20 th annual edition of the Quality of Living Survey covering the year 2018 and comparing and ranking 231 cities around the world based on the ease of daily life and work activities for expatriates and their families. The report aims at providing multinational companies with timely and reliable information in order to help them determine and offer reasonable compensation to expatriates relative to their compromises in terms of quality of living when placed on international assignments. Particularly, the report analyzed living conditions according to 39 factors, classified under 10 major categories namely, political and social environment, economic environment, socio-cultural environment, medical and health considerations, schools and education, public services and transportation, recreation, consumer goods, housing, and natural environment. This year s survey included as well a separate ranking of cities according to their sanitation, which was evaluated based on features like: waste removal and sewage infrastructure, levels of infectious disease, air pollution, and water availability and quality. With respect to the global ranking, and despite political and financial uncertainties in Europe, Western European cities dominated the quality of living index for the year 2018 occupying seven out of the top ten positions in the rankings. Specifically, Vienna topped the list of cities worldwide for the 9 th consecutive year, followed by Zurich, and Auckland and Munich sharing the 3 rd place. On a regional front, Dubai led Mercer s list of Arab cities on the level of quality of living in the year 2018, with a global rank of 74, followed by Abu Dhabi (global rank: 77), Muscat (global rank: 105), Doha (global rank: 110), and Tunis (global rank: 114), only to name a few. Trailing the regional list for quality of living for expatriates in 2018 were the war-torn and politically unstable cities of Damascus (global rank: 225), Khartoum (global rank: 227), Sana a (global rank: 229), and Baghdad (global rank: 231). Locally, Beirut occupied the 14 th position in the region and the 181 st in the world, performing better than several regional peers such as Algiers (global rank: 184), Djibouti (global rank: 190), Tripoli (global rank: 218), and Nouakchott (global rank: 221), in addition to the previously listed Arab cities that bottomed the list Quality of Living Survey City Regional Ranking Global Ranking Vienna, Austria - 1 Zurich, Switzerland - 2 Auckland, New Zealand - 3 Munich, Germany - 3 Dubai, United Arab Emirates 1 74 Abu Dhabi, United Arab Emirates 2 77 Muscat, Oman Doha, Qatar Tunis, Tunisia Rabat, Morocco Amman, Jordan Casablanca, Morocco Kuwait City, Kuwait Manama, Bahrain Riyadh, Saudi Arabia Jeddah, Saudi Arabia Cairo, Egypt Beirut, Lebanon Algiers, Algeria Djibouti, Djibouti Tripoli, Libya Nouakchott, Mauritania Damascus, Syria Khartoum, Sudan Sana'a, Yemen Baghdad, Iraq Source: Mercer Institute, Credit Libanais Economic Research Unit SOURCE: MERCER INSTITUTE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 1

5 LEBANON NEWS LIFE PREMIUM COLLECTIONS IN THE LEBANESE INSURANCE SECTOR UP BY 4.35% IN 2017 Al Bayan Economic magazine, the specialized banking, insurance & shipping pan-arab monthly magazine, published in its March 2018 issue (Issue No. 556) an overview on the life insurance premiums collected by the 34 life insurance companies operating in Lebanon in the year More specifically, the article unveiled that life insurance premium collections rose by 4.35% in 2017 to $ million, from $ million in Al Bayan also highlighted the exceptional performance of insurance companies affiliated to banks for yet another consecutive year. For instance, Bancassurance (which channels insurance products through Fransabank, Banque Libano-Française, and BLC Bank) amassed the second largest life premium collections of $78.61 million in 2017, right after Metlife ($88.14 million). From another perspective, and according to the article, the ten largest insurance companies operating in Lebanon detained the lion s share (63.7%) of the combined life and non-life premium collections in the year 2017, with the twenty largest companies controlling a stake of 87.0%. Among said companies, Allianz SNA topped the list of insurance companies, with its life and non-life premium collections aggregating to $ million, followed by Metlife ($ million), Bankers ($ million), and LIA ($ million), only to name a few. The largest annual expansion in life insurance premium collections came in favor of Phenicienne Insurance (70.73%), followed by Beirut Life (32.57%), LIA (14.97%), and Libano Suisse (11.43%). It is worth noting that 23 out of the 34 companies managed to grow their life insurance premium collections in 2017, while 8 suffered annual contractions in life premium collections and 3 companies witnessed a relatively stable flow of collections. Life Insurance Premium Collections at the 20 Largest Lebanese Insurance Companies (USD Thousands) Y-O-Y % Change Metlife 87,290 88, % Bancassurance 76,030 78, % Allianz SNA 67,500 70, % LIA 44,150 50, % ADIR 45,280 49, % Arope 38,700 38, % SGBL Insurance 33,400 36, % AXA M. E. 16,100 16, % Beirut Life 11,390 15, % Bankers 11,930 12, % Medgulf 13,300 11, % CLA 9,800 9, % Libano Suisse 6,910 7, % Securite 6,670 5, % Fidelity 4,800 5, % Capital 4,420 4, % Burgan 2,680 2, % RL 360 2,600 2, % Trust Compass 2,500 2, % Arabia 2,100 2, % Source: Al Bayan Economic M agazine, Credit Libanais Economic Research Unit Life & Non-Life Insurance Premium Collections at the 20 Largest Lebanese Insurance Companies (USD Thousands) Y-O-Y % Change Allianz SNA 131, , % Metlife 122, , % Bankers 112, , % LIA 105, , % Medgulf 115, , % Arope 98, , % AXA M. E. 96, , % Bancassurance 76,030 78, % Libano Suisse 80,700 77, % Fidelity 73,020 76, % ADIR 67,290 72, % Continental Trust 53,010 56, % Al Mashrek 42,480 43, % Assurex 35,060 38, % SGBL Insurance 33,400 36, % ALIG 30,480 28, % UFA 22,900 28, % Arabia 24,770 27, % Cumberland 25,510 27, % C apital 23,680 22, % Source: Al Bayan Economic M agazine, Credit Libanais Economic Research Unit SOURCE: AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 2

6 LEBANON NEWS MOODY S CONSIDERS LEBANON S IMPLEMENTATION OF BASEL LIQUIDITY COVERAGE RATIO AS CREDIT POSITIVE Moody s Investors Service, the international rating agency, released a Credit Outlook Credit Implications of Current Events report in which it tackled several international hot topics, among which was the Lebanese central bank s Basic Circular 145 concerning the application of the Basel liquidity coverage ratio (LCR) for commercial banks. The LCR is calculated as the ratio of the stock of High Quality Liquid Assets (HQLA) divided by the total Net Cash Outflows over the next 30 calendar days. The LCR calculation, which decrees that said ratio should exceed 100% for each currency that is equivalent to more than 5% of a bank s total liabilities (these currencies are usually the Lebanese Pound and the US Dollar for Lebanese banks), will be applied on a standalone basis for banks in Lebanon and their foreign branches and subsidiaries. The agency mentioned that it is expected that the LCR will help banks improve their shortterm liquidity management and avoid any potential liquidity shortages. Moreover, and citing the circular s classification of banks non-reserve deposits with Banque Du Liban (BDL) (including certificates of deposits and Lebanese government securities in both domestic and foreign currencies) as part of the stock of high quality liquid assets, Moody s anticipated that Lebanese banks already meet the LCR requirements as they are highly exposed to such securities. Nevertheless, the agency stated that banks will very likely be incapable of quickly liquidating their portfolio of Lebanese sovereign instruments without incurring a loss in value during a 30-day liquidity stress scenario (as per Basel requirements), since there is a narrow secondary market for these sovereign securities. Moody s commented as well that in spite of the fact that the LCR will provide guidance for banks to restructure their balance sheets to address any liquidity shortfalls, a systemic foreign currency liquidity crisis will exercise pressure on BDL s foreign currency reserves. Furthermore, Moody s added that cash outflow rates meet the Basel recommendations, but the application of BDL s conservative run-off rates for retail deposits addresses the risk associated with the inclusion of potentially illiquid sovereign securities among high quality liquid assets. In this vein, BDL requires a 10% run-off rate for residents retail deposits and a 20% for non-resident high net worth individuals, compared to Basel s respective thresholds of 5% and 10%. BDL s stated run-off rates are even more conservative than previously recorded overall outflow rates the system has seen. For instance, outflows stood at around 3% in March 2005 (political shock), at 4% in July 2006 (Israeli aggression against Lebanon), and, most recently, reached 2% upon Prime Minister Saad Hariri s temporary resignation in early November Finally, Moody s indicated that BDL s Basic Circular 145 calls for banks to test the LCR under harsher conditions such as: calculating net cash outflows over 90 days instead of 30, assume higher outflow rates, and examine the effect of these ratios had there been no reliance on or no interference from the central bank for liquidity. SOURCE: MOODY S INVESTORS SERVICE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 3

7 LEBANON NEWS THE WORLD BANK APPROVES A $295 MILLION PACKAGE TO FINANCE THE GREATER BEIRUT PUBLIC TRANSPORT PROJECT In a press release followed by a detailed report, The World Bank unveiled this week the Greater Beirut Public Transport Project (GBPTP), to which its financing contribution amounts to $295.0 million. According to the press release, the GBPTP is the first project to benefit from the lately approved Public-Private Partnership law the aim of which is to attract private investments in the country s infrastructure in order to ease financial pressures given the government s already weak public finances and rallying public debt. Moreover, said project, the implementation of which is expected to start in the current year and end by year 2024, represents the first phase of an ambitious long-term national public transport program, and is likely to be followed by further phases covering the southern and eastern entrances to Beirut. In detail, the project involves the purchase of a total of 120 buses to service a distance of 40 kilometers of dedicated Bus Rapid Transit (BRT) lanes from northern districts to the heart of Beirut City. In addition, 250 feeder buses are planned to operate between main stations and the hinterland. It is worth mentioning that the BRT system along with its feeder bus network will be operated and maintained by the private sector. The World Bank highlighted the various benefits and advantages the GBPTP will bring through and upon its completion which are as follows: Secure the employment of thousands of unskilled Lebanese and Syrian workers through the creation of a total of two million labor days in construction jobs. Jumpstart Lebanon s very first modern public transport system in decades. Reduce stifling congestions on Lebanese roads. Unlock private finance to and private engagement in a major infrastructure field. Attract around 300,000 passengers per day and halve commuting time between Beirut and its northern suburbs. Improve and facilitate the mobility of women, youth, and disabled persons through its safety, modernity, and reliability. Significantly diminish greenhouse gas emissions and improve air quality through introducing new and clean buses and decreasing users reliance on private vehicles. The tables below present a detailed breakdown of the financing scheme of the GBPTP by sources of funds, project components, and yearly disbursements. It is worth noting that $225.2 million of the total $295.0 million amount approved by the World Bank will be channeled in the form of a loan through the International Bank for Reconstruction and Development (IBRD) while the remaining $69.8 million will be channeled through the Global Concessional Financing Facility (GCFF) on a grant basis. The loan will be paid over a period of 31.5 years including an eight-year grace period. The covered financing raises the total value of World Bank commitments to Lebanon to $1.7 billion. Expected Disbursements (USD Million) Year Value Source: World Bank, Credit Libanais Economic Research Unit Costs and Financing of the Greater Beirut Public Transport Project Project Components IBRD and GCFF Financing (USD Million) Private Sector Financing (USD Million) Total Indicative Cost (USD Million) Component Bus Rapid Transit (BRT) Infrastructure (Incl. Land Acquisition) BRT Fleet Intelligent Transport Systems (ITS) Component Street Furniture, ITS/Telematic, and Roadworks Feeder Bus Fleet Technical Assistances Component C apacity Building and Implementation Support Awareness Campaign and Sector Reforms Front End Fee Total Source: World Bank, Credit Libanais Economic Research Unit SOURCE: WORLD BANK, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 4

8 LEBANON NEWS LEBANESE TREASURY BILLS DOMESTIC PORTFOLIO VALUE UP BY 5.0% IN 2017 According to the Lebanese Ministry of Finance s Debt and Debt Markets quarterly report, Lebanon s gross public debt widened by 6.2% in the year 2017 to LBP 119,898 billion ($79.53 billion), up from LBP 112,910 billion ($74.90 billion) at end of More particularly, the government s outstanding local currency debt rose by 5.0% in 2017 to LBP 74,077 billion ($49.14 billion), up from LBP 70,528 billion ($46.78 billion) at year-end In light of the several rounds of financial engineering schemes introduced in 2016, the Lebanese Central Bank controlled the lion s share of the government s local currency Treasury bills portfolio (48.2%), followed by commercial banks (37.3%) and public institutions (12.1%), as illustrated in the table hereunder: Breakdown of Domestic T-Bills Outstanding by Investor Type Dec-2011 Dec-2012 Dec-2013 Dec-2014 Dec-2015 Dec-2016 Dec-2017 BDL 32.3% 29.2% 29.8% 31.6% 36.7% 42.9% 48.2% Commercial Banks 51.9% 55.1% 53.7% 51.5% 46.3% 41.8% 37.3% Public Institutions 13.3% 12.9% 12.7% 12.5% 13.0% 12.4% 12.1% Others 2.5% 2.8% 3.8% 4.4% 3.9% 3.0% 2.4% Source: The Lebanese M inistry of Finance, Credit Libanais Economic Research Unit As far as the maturity spectrum is concerned, the bulk (95.8%) of Lebanon s outstanding Treasury bills portfolio is long-term in nature (in excess of one year), addressing as such the government s long term borrowing needs on the one hand, and lenders pursuit of attractive yields on the other amid the scarcity of lucrative placement opportunities for banks in the international financial and money markets. The share of T-bonds having a tenure of seven years and above stood at 47.3% of the outstanding Treasury bills portfolio, with bonds having a tenor of five years representing 22.9%, followed by the three-year (15.5%) and two-year to maturity (10.1%) T-bonds. The share of short-term Treasury bills represented a small 4.2% proportion of the outstanding Treasury bills portfolio. Breakdown of Domestic T-Bills Outstanding by Tenor as at End of Month & Above Notes 47.3% Short Term T-bills 4.2% 24-Month Notes 10.1% 36-Month Notes 15.5% 60-Month Notes 22.9% From another standpoint, foreign currency debt soared by 8.1% in 2017 to LBP 45,821 billion ($30.40 billion), up from LBP 42,382 billion ($28.11 billion) at end of Eurobonds constituted the bulk (92.40%) of foreign currency debt, followed, and at quite a distance, by multilateral loans (4.28%) and bilateral facilities (2.04%). As far as the currency breakdown of multilateral and bilateral loans is concerned, U.S. Dollar denominated loans accounted for 33.20% of total multilateral and bilateral loans, followed closely by Kuwaiti Dinar (29.04%) and Euro (24.50%) denominated loans. Sector-wise, the vast majority (33.18%) of said loans was directed to the water sector, followed by government & general technical services (18.68%) and the transportation sector (17.29%), only to name a few. Breakdown of Multilateral and Bilateral Loans by Currency as at End of 2017 Source: MOF, Credit Libanais Economic Research Unit Breakdown of Multilateral and Bilateral Loans by Sector as at End of 2017 Islamic Dinar, 6.66% Saudi Arabian Riyal, 3.46% Others, 3.14% USD, 33.20% Health, 7.22% Others, 14.28% Water, 33.18% Power, 9.35% Kuwaiti Dinar, 29.04% Euro, 24.50% Transportation, 17.29% General and Technical Government Services, 18.68% SOURCE: THE LEBANESE MINISTRY OF FINANCE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 5

9 LEBANON NEWS INDUSTRIAL EXPORTS DROP BY 2.11% IN 2017 TO $2.47 BILLION According to the Lebanese Ministry of Industry, Lebanon s industrial exports widened by 7.07% during the last month of the previous year to $219.6 million, compared to $205.1 million in November. On an annual basis however, industrial exports fell by 2.11% to nearly $2.47 billion during the year 2017, down from around $2.53 billion in On the other hand, industrial imports increased by 9.30% to $257.3 million in 2017, compared to $235.4 million a year earlier. Evolution of Industrial Activity during the Year Y-O-Y (USD Million) % Change Industrial Exports 2, , % Industrial Imports of Equipment & Machinery % Source: Ministry of Industry, Credit Libanais Economic Research Unit Evolution of Industrial Exports Evolution of Industrial Imports of Equipment & Machinery $ Million 2,955.8 $ Million , ,900 2, ,700 2,600 2, , , , , , Source: Ministry of Industry, Credit Libanais Economic Research Unit Source: Ministry of Industry, Credit Libanais Economic Research Unit Exports of machinery and electrical equipment accounted for the bulk ($485.1 million <19.61%>) of the total exports bill in 2017, followed by prepared foodstuffs and tobacco ($471.4 million <19.06%>) and products of the chemical industries ($396.7 million <16.04%>). On the imports front, Italy led the list of countries exporting to Lebanon ($54.7 million <21.24%>), followed by China ($54.3 million <21.12%>) and Germany ($35.5 million <13.78%>) as elaborated in the section below: Breakdown of Industrial Exports by Product during the Year 2017 Product Value ($ Million) Machinery and Electrical Equipment Prepared Foodstuffs and Tobacco Products of the Chemical Industries Base Metals and Articles of Base Metal Plastics & Rubbers and Articles Thereof Others Total Industrial Exports 2,473.6 Source: Ministry of Industry, Credit Libanais Economic Research Unit Plastics & Rubbers and Articles Thereof 6.34% Others 25.16% Breakdown of Industrial Exports by Product in 2017 Base Metals and Articles of Base Metal 13.80% Products of the Chemical Industries 16.04% Machinery and Electrical Equipment 19.61% Prepared Foodstuffs and Tobacco 19.06% Breakdown of Industrial Imports of Equipment & Machinery by Country of Origin during the Year 2017 Country Value ($ Million) Italy 54.7 China 54.3 Germany 35.5 Romania 13.6 France 12.3 Others 87.0 Total Industrial Imports Source: M inistry of Industry, Credit Libanais Economic Research Unit Breakdown of Imports of Equipment & Machinery by Country in 2017 France 4.77% Others 33.81% Romania 5.27% Germany 13.78% Italy 21.24% China 21.12% SOURCE: THE LEBANESE MINISTRY OF INDUSTRY, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 6

10 LEBANON NEWS CONSTRUCTION PERMITS AREA AT 1.43 MILLION SQM BY FEBRUARY 2018 The surface area of construction permits in Lebanon, which reflects the level of future supply in the real estate sector, widened to 778,318 sqm during the month of February 2018, up from 651,165 sqm in January. On a cumulative basis, however, the surface area of construction permits fell by 7.13% y-o-y to 1,429,483 sqm in the first two months of the current year, compared to 1,539,259 sqm level during that same period last year. Evolution of Construction Permit Areas (Sqm) During the Two-Month Period Ending Feb ,901,863 Feb ,415,262 Feb ,797,682 Feb ,557,256 Feb ,494 Feb ,539,259 Feb ,429,483 Source: Order of Engineers, Credit Libanais Economic Research Unit 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , ,901,863 Evolution of Construction Permit Areas (Sqm) 1,415,262 1,797,682 1,557,256 Feb-2012 Feb-2013 Feb-2014 Feb-2015 Feb-2016 Feb-2017 Feb-2018 As far as the geographical distribution of construction permits is concerned, the Mount Lebanon region continued to control the lion s share of the total surface area of issued permits (735,619 sqm <51.46%>), followed by the South (258,221 sqm <18.06%>), Bekaa (159,303 sqm <11.14%>), Nabatieh (157,799 sqm <11.04%>), and Beirut (102,276 sqm <7.15%) regions. It is worth noting that figures for the North governorate are underestimated since they exclude permits issued by the North Order of Engineers. 787,494 1,539,259 1,429,483 Geographical Breakdown of Construction Permits up to February 2018 Geographical Breakdown of Construction Permit Areas up to February 2018 Sqm No. of Transactions Average Sqm/Trans. Beirut 102, Mount Lebanon 735, South 18.06% Nabatieh 11.04% Beirut 7.15% North* 16, Bekaa 159, South 258, Nabatieh 157, Total 1,429,483 2, Bekaa 11.14% North* 1.14% Mount Lebanon 51.46% Source: Order of Engineers, Credit Libanais Economic Research Unit * Figures for the North Governorate are underestimated since they exclude permits issued by the North Order of Engineers Source: Order of Engineers, Credit Libanais Economic Research Unit Average Sqm/Construction Permit per Region up to February 2018 Nabatieh 509 North* 542 South 573 Bekaa 693 Mount Lebanon 842 Beirut Source: Order of Engineers, Credit Libanais Economic Research Unit The Beirut governorate enjoyed the highest exploitation coefficient, which stood at 930 sqm per construction permit by February 2018, followed by the Mount Lebanon (842 sqm/transaction), Bekaa (693 sqm/transaction), South (573 sqm/transaction), North (542 sqm/transaction), and Nabatieh (509 sqm/transaction) governorates. SOURCE: ORDER OF ENGINEERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 7

11 LEBANON NEWS ANNUAL INFLATION IN LEBANON AT 5.19% IN FEBRUARY 2018 According to the Central Administration of Statistics (CAS), monthly inflation in Lebanon, as captured by the change in the consumer price index (CPI), stood at 0.20% during the month of February 2018 compared to 0.05% in January. On an annual basis, Lebanon s CPI rose by 5.19% to in February 2018, from a year earlier. Said annual increase owes to the fact that all index constituents have witnessed price hikes, particularly a 6.44% increase in the prices of water, electricity, gas and other fuels (11.8% weight in the index) coupled with a 3.94% surge in the prices of food & non-alcoholic beverages (20.0% weight in the index), a 14.82% rise in the cost of clothing & footwear (5.2% weight in the index), some 4.28% appreciation in owner occupied housing prices (13.6% weight in the index), and a 5.20% expansion in the cost of transportation (13.1% weight in the index), only to name a few. The following section captures the fluctuation in Lebanon s consumer basket s key constituents: Price Volatility Monthly (January February 2018) % Change Annual (February February 2018) % Change Weight Food & Non-Alcoholic Beverages 1.01% 3.94% 20.0% Alcoholic Beverages & Tobacco 0.08% 8.27% 1.4% Clothing & Footwear -3.70% 14.82% 5.2% Housing - Actual Rent 0.28% 6.16% 2.9% Housing - Owner Occupied 0.09% 4.28% 13.6% Housing - Water, Electricity, Gas and Other Fuels 0.48% 6.44% 11.8% Furnishings, Household Equipment & Routine Household Maintenance 0.79% 4.21% 3.8% Health -0.24% 4.49% 7.7% Transportation 1.06% 5.20% 13.1% Communication 0.20% 1.07% 4.5% Recreation, Amusement, and Culture 0.53% 6.59% 2.4% Education 0.20% 3.96% 6.6% Restaurant & Hotels 0.19% 4.61% 2.8% Miscellaneous Goods & Services 0.17% 2.93% 4.1% Consumer Price Index 0.20% 5.19% 100.0% Source: Central Administration of Statistics, Credit Libanais Economic Research Unit On a geographical basis, all regions, except for the North, witnessed a monthly appreciation in their CPI values in February, particularly 1.10% in Nabatieh, 1.05% in Beirut, 0.33% in Mount Lebanon, 0.09% in the Bekaa, and 0.02% in the South. February 2018 Inflation Across Regions Region Monthly Inflation Weight Beirut 1.05% 10.8% Mount Lebanon 0.33% 47.2% North -0.39% 18.0% Bekaa 0.09% 9.2% South 0.02% 8.7% Nabatieh 1.10% 6.1% Lebanon 0.20% 100.0% Source: Central Administration of Statistics, Credit Libanais Economic Research Unit The following chart captures the evolution of the yearly change in CPI values since December 2010: Evolution of Yearly Change in CPI 12% 10% 10.10% 8% 6% 4% 4.60% 5.19% 2% 3.40% 3.10% 1.10% 3.14% 0% -2% -4% Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Feb % -3.40% SOURCE: CENTRAL ADMINISTRATION OF STATISTICS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 8

12 LEBANON NEWS TRIPOLI PORT ACTIVITY NARROWS BY 3.13% Y-O-Y IN JANUARY 2018 Freight activity via the Port of Tripoli improved to around 164 thousand tons during the first month of the current year, up from 137 thousand tons in December In detail, imported freight accounted for 80.56% of total freight (131,925 tons), while export activity constituted 19.44% (31,835 tons). On an annual basis, however, Tripoli Port freight activity contracted by 3.13% when compared to the 169 thousand tons figure reported in January of last year. Similarly, the number of vessels fell by 20.00% on a yearly basis to 48 as at end of January 2018, down from 60 vessels a year before, and the number of imported cars via the Tripoli Port decreased by 1.93% to 305, compared to 311 in January In this context, port-related revenues (excluding VAT and customs) increased by 3.05% on an annual basis to around $2.06 million in the first month of the current year, up from $2.00 million in January of the previous year. According to Al Bayan Economic Magazine, Tripoli Port has been recently granted an $86 million loan from The Islamic Development Bank in order to improve its logistic services and overall capacity and further develop its infrastructure. Moreover, the money will also be used to build up the basis of a smart port, particularly through helping meet electronic needs and requirements and purchase the necessary advanced equipment and machinery. Tripoli Port For the Month of Indicators Jan-17 Jan-18 Y-O-Y % Change Freight Activity (000 Tons) % Number of Vessels % Number of Imported Cars % Port-Related Revenues ($ Million) % Source: Port of Tripoli, Al Bayan Economic Magazine, Credit Libanais Economic Research Unit SOURCE: PORT OF TRIPOLI, AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 9

13 CORPORATE NEWS ALPHA GROUP OF BANKS POSTS NET PROFITS OF $2.40 BILLION IN 2017 The Lebanese banking sector continues to prove its resilience in the face of the prolonged local and regional tensions. More specifically, the aggregate net after-tax profits of the Alpha group of banks rose by 6.04% y-o-y to $2, million in 2017, up from $2, million in It is worth noting that the Alpha group of banks comprises 15 banks having a deposit base exceeding the $2 billion mark each, and includes Bank Audi, BLOM Bank, BankMed, Banque Libano-Française, Byblos Bank, Credit Libanais, Bank of Beirut, Bank Beirut & the Arab Countries (BBAC), First National Bank, IBL Bank, Société Générale de Banque au Liban, Fransabank, Lebanon and Gulf Bank, CreditBank, and the new-comer Saradar Bank. In details, the group witnessed some 6.11% y-o-y increase in net interest income to $4.03 billion and some three-fold rally in other operating income to $ million, which were diluted by the sharp 42.48% drop in net fee and commission income to $ million and the 62.40% plunge in net gains on financial instruments to $ million. Consequently, net operating income contracted by 9.57% on an annual basis to $5.89 billion in 2017, met by a parallel 4.89% contraction in total operating expenses to $3.13 billion. On the balance sheet front, the consolidated assets of Alpha banks widened by 6.63% during the year 2017 to around $ billion (compared to a 7.61% increase for the local banking sector which excludes foreign affiliates), up from $ billion as at year-end 2016, fueled by the 1.63% expansion in the portfolio of net loans & acceptances (compared to some 5.49% rise for the local banking sector) to $66.48 billion. In the same vein, customer deposits added 3.46% (in comparison with around 3.92% annual growth in the local banking sector) in 2017 to just below $ billion from $ billion at end of year More specifically, Alpha group s domestic customer deposits grew by 4.84% to $ billion in 2017, while non-resident deposits fell by 4.26% to $25.79 billion. In this context, the Alpha group s ratio of net loans to customer deposits fell slightly to 36.43% by year-end 2017 (compared to a local banking sector ratio of 34.87% when factoring out foreign subsidiaries), with shareholders equity propelling 6.38% higher (compared to a local banking sector increase of 4.82%) at just above $21.78 billion. From an asset quality standpoint, the ratio of gross doubtful loans to gross loans receded from 5.65% at end of 2016 to 5.63% by end of 2017, mirroring a slight improvement in the quality of the loans portfolio. As far as profitability ratios are concerned, the Alpha group reported in 2017 returns on average assets (ROaA) and average equity (ROaE) of 1.06% and 11.36% respectively. It is worth noting that the branch network of Alpha banks narrowed by 14 during the year 2017 to 1,197, with the number of employees in the Alpha group also declining by 11 to 30,854. In Millions of USD Consolidated Financial Performance of Alpha Group of Banks As at End of December 2016 As at End of December 2017 % Change Key Balance Sheet Figures Total Assets 218, , % Net Loans & Acceptances 65, , % Customer Deposits 176, , % Shareholders' Equity 20, , % Key Ratios (%) Net Loans & Acceptances to Customer Deposits 37.08% 36.43% Primary Liquidity to Assets 35.12% 40.58% Gross Doubtful Loans to Gross Loans 5.65% 5.63% Collective Provisions to Net Loans 1.57% 1.73% In Millions of USD Y-O-Y % Change Key P&L Figures Net Interest Income 3, , % Net Commission and Fee Income 1, % Net Gain on Financial Instruments 2, % Other Operating Income % Net Operating Income 6, , % Total Operating Expenses 3, , % Net Profits 2, , % Key Ratios (%) Cost to Income 43.19% 47.65% ROaA 1.07% 1.06% ROaE 11.62% 11.36% Source: Bankdata, Credit Libanais Economic Research Unit SOURCE: BANKDATA, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 10

14 CORPORATE NEWS BANK AUDI EGYPT S NET PROFITS AT $57.52 MILLION IN 2017 Bank Audi S.A.E., the Egyptian affiliate of Bank Audi S.A.L., published its audited financial statements for the year 2017, reporting a sizeable 45.79% y-o-y decrease in its net after tax profits to EGP 1, million ($57.52 million), down from EGP 1, million ($ million) in In particular, net interest income rallied by 27.64% to EGP 1, million ($ million), net commission & fee income rose by 11.71% to EGP million ($27.18 million), and impairment charges on credit losses dropped by 34.44% to EGP million ($10.05 million). However, the aforementioned were altogether outweighed by the 30.14% y-o-y expansion in administrative expenses to EGP million ($46.11 million) coupled with the EGP 1, million plunge in other operating income to a loss of EGP million ($3.87 million), compared to some EGP 1, million ($80.51 million) gain recorded in 2016, which owed mainly to foreign exchange gains stemming from the dramatic depreciation (57.00%) of the Egyptian Pound against the US Dollar during that same year. On the balance sheet front, Bank Audi S.A.E. s consolidated assets expanded by 1.41% during the year 2017 to just over EGP billion ($3.15 billion), despite the 2.44% contraction in loans and facilities to nearly EGP billion ($1.66 billion). On the funding side, customer deposits widened by 4.03% in 2017 to around EGP billion ($2.67 billion), with the ratio of net loans to customer deposits dropping to 62.05%, compared to 66.17% at year-end The bank s shareholders equity expanded to about EGP 5.56 billion ($ million) by end of 2017, from EGP 4.65 billion ($ million) at year-end Bank Audi Egypt In Millions of EGP As at End of December 2016 As at End of December 2017 % Change Key Balance Sheet Figures Total Assets 55, , % Loans and Facilities 30, , % Customer Deposits 45, , % Shareholders' Equity 4, , % Liquidity Ratios (%) Net Loans to Customer Deposits 66.17% 62.05% In Millions of EGP % Change Key P&L Figures Net Interest Income 1, , % Net Commission and Fee Income % Impairment Charges on Credit Losses % Administrative Expenses % Other Operating Income 1, % Net Profits 1, , % Source: BSE, Bank Audi, Credit Libanais Economic Research Unit 2, Evolution of Bank Audi Egypt's Profitability 1, Millions of EGP 1, , , SOURCE: BSE, BANK AUDI, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 11

15 CORPORATE NEWS BANK AUDI TO DISTRIBUTE DIVIDENDS TO SHAREHOLDERS According to an announcement issued by Bank Audi S.A.L. and a related information statement to the holders of Bank Audi Global Depositary Receipts (GDRs) both circulated by the Beirut Stock Exchange on March 23, 2018, the bank s Board of Directors decided during its meeting held on March 20 to propose to the Ordinary General Assembly, which will convene on April 10, 2018, to distribute dividends to shareholders on the following basis: LBP per common share and GDR subject to the applicable withholding tax (i.e. an aggregate amount of LBP 331,442 million ($219.9 million)); $6 per preferred share Series G subject to the applicable withholding tax (i.e. an aggregate amount of LBP 13,568 million ($9 million)); $6.5 per preferred share Series H subject to the applicable withholding tax (i.e. an aggregate amount of LBP 7,349 million ($4.9 million)); and $7 per preferred share Series I subject to the applicable withholding tax (i.e. an aggregate amount of LBP 26,381 million ($17.5 million)); and $4 per preferred share Series J subject to the applicable withholding tax (i.e. an aggregate amount of LBP 16,583 million ($11 million)). The payment date for all holders of record as at April 13, 2018 is scheduled on or about April 16, BLOM BANK TO DISTRIBUTE DIVIDENDS TO SHAREHOLDERS According to a notice issued by BLOM Bank S.A.L. and distributed by the Beirut Stock Exchange on March 19, 2018, the bank s Board of Directors decided during its meeting held on March 16 to propose to the Ordinary General Assembly, which will convene on April 11, 2018, to distribute dividends to shareholders on the basis of LBP 1,700 per common share subject to the applicable withholding tax. The dividend payment date is scheduled for April 17, SOURCE: BSE, BANK AUDI, BLOM BANK, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 12

16 MONETARY PERFORMANCE MONETARY AGGREGATES All monetary aggregates ended the week of March 8, 2018 on a negative note. In fact, the overall money supply, M4, plunged by LBP billion on a weekly basis, yet rose by 3.03% on an annual basis to LBP 219,312 billion, noting that the non-banking sector s Treasury bills portfolio fell by LBP 185 billion during the concerned week. Similarly, Lebanese-Pound denominated deposits and currency in circulation, M1, narrowed by LBP billion week-on-week to LBP 10,187 billion on the back of some LBP 306 billion drop in demand deposits, which outweighed the LBP 60 billion expansion in money in circulation. On a yearly basis, however, M1 increased by 3.88%. Local currency term deposits, M2, receded by LBP billion on a weekly basis and by 3.17% year-on-year to settle at LBP 80,139 billion. Consequently, private sector term and saving deposits denominated LBP ( M2-M1 ) edged LBP billion (0.04%) lower during the week of March 8 to LBP 69,952 billion, with deposits denominated in foreign currencies ( M3-M2 ) slipping by LBP billion (0.02%) to LBP 128,531 billion. Money Supply LBP Billion March 1, 2018 March 8, 2018 % Change M1 10,434 10, % M2 80,417 80, % M3 208, , % M4 219, , % M2- M1 69,983 69, % M3- M2 128, , % Source: Banque Du Liban, Credit Libanais Economic Research Unit 250, , ,000 Money Supply - LBP Billion - 219, , , ,670 March 1, 2018 M4 March 8, 2018 M3 MONEY MARKETS The March 15 th Treasury bill auction raised LBP billion ($ million), compared to LBP billion ($ million) in the auction of the previous week. The majority of subscriptions (43.61%) was concentrated in the ten-year to maturity T-bonds, followed, and at a short distance, by the two-year (43.59%) T-bills, and then by the six-month (12.80%) tenure Treasury securities. Consequently, the weighted average yield on Lebanese Pound Treasury bills stood at 6.44% in the auction of March 15. The yields on the six-month, two-year, and ten-year to maturity Treasury securities remained flat at 4.99%, 5.84%, and 7.46% respectively. March 15, 2018 Lebanese Treasury Bills Yield (%) Face Value (in billions of LBP) % of Total Face Value 6 Months 4.99% % 24 Months 5.84% % 120 Months 7.46% % 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 13

17 LEBANESE EQUITIES LEBANESE EQUITIES Activity on the Beirut Stock Exchange regained its normal pace after having witnessed an exceptional hike last week on the back of 3 enormous block trades on Bank Audi listed shares. Large traded chunks were still recorded this week, involving over 2 million Bank of Beirut listed shares. It is worth noting that the bank will increase its capital through the issuance of new common shares to be offered to non-shareholders, according to the agenda of the upcoming extraordinary general assembly meeting. In this context, the total number of shares changing hands plunged to 2,378,457 shares this week, compared to 30,564,295 shares a week earlier, with traded value sinking to $37.77 million, from nearly $ million a week before. Trades were mainly concentrated in banking stocks, which accounted for 96.58% of weekly traded volume. The average daily trading volume fell to 475,691 shares this week, from 6,112,859 shares last week. Concurrently, the average daily trading value narrowed to $7.55 million, from $39.80 million a week earlier. Credit Libanais Week of Week of Weekly YTD Indices 16-Mar Mar-18 % 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, , % 2.65% 1, , % 2.44% % 3.69% Credit Libanais Aggregate Stock Index Weekly Performance CLASI Ten gainers and two losers were screened this week, lifting the BSE s market capitalization up by 0.03% week-on-week to $11.71 billion and the Credit Libanais Aggregate Stock Index ( CLASI ) higher by 0.02% to 1, In the real estate sector, trades mainly consisted of Solidere A and B shares (3.42% of total traded volume), with the price of Solidere A increasing by 0.74% to $8.14 and that of Solidere B rising by 2.63% to $8.20. In this context, the Credit Libanais Construction Sector Stock Index ( CLCI ) ended the week 1.50% higher at In the banking sector, Bank of Beirut listed shares amassed the highest concentration of trades (89.63% of total traded volume) on a turnover ratio of 12.01%. The Credit Libanais Financial Sector Stock Index ( CLFI ) shed 0.28% on a weekly basis to 1, This comes as a result of 2.90% contraction in the price of BLOM Bank GDRs to $12.04 and the 2.08% drop in the price of BLOM Bank listed shares to $11.75, which altogether outweighed the 0.16% increase in the price of Bank Audi listed shares to $6.12, the 6.90% hike in the price of Bank Audi GDRs to $6.20, and the 0.63% appreciation in the price of Byblos Bank listed shares to $1.61. Index Value 1,700 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1, Mar May-17 Credit Libanais Financial Sector Stock Index Weekly Performance CLFI 05-Jul-17 CLFI 0.28% 26-Aug Oct Dec Jan Mar-18.CLASI 1,050 1, Mar May Jul-17 CLASI 0.02% Credit Libanais Aggregate Stock Index Friday, March 23, 2018 Value Daily % Chng Daily Net Chng 1, % Yr.High Year Hi.Date Yr.Low Year.Lo.Date 1, Jan-18 1, Jan-18 Life High Life Hi.Date Life Low Life.Lo.Date 1, Jul Mar-09 Index Value Mar May Aug Oct-17 Credit Libanais Construction Sector Stock Index Weekly Performance CLCI 05-Jul-17 CLCI 1.50% 26-Aug Oct Dec Dec Jan Mar Jan Mar-18 SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 14

18 LEBANESE EQUITIES BEIRUT STOCK EXCHANGE Closing Weekly %Change Weekly Volume Traded Lebanese Equities % of Weekly Weekly Volume Traded Value Traded Solidere A $ % 75, % $616, % 100,000, , % Solidere B $ % 5, % $45, % 65,000, , % BLC Bank $ % ,033,333 66, % BLC Bank Preferred Class "B" $ % ,000 55,000 n.a n.a 0.00% BLC Bank Preferred Class "C" $ % ,000 35,000 n.a n.a 0.00% BLC Bank Preferred Class "D" $ % ,000 75,000 n.a n.a 0.00% Bank Audi - Listed Shares $ % 16, % $100, % 399,749,204 2,446, % Bank Audi GDR $ % 12, % $80, % 119,924, , % Bank Audi Preferred "G" $ % ,500, ,450 n.a n.a 0.00% Bank Audi Preferred "H" $ % ,000 75,000 n.a n.a -0.60% Bank Audi Preferred "I" $ % ,500, ,250 n.a n.a 0.15% Bank Audi Preferred "J" $ % 2, % $201, % 2,750, ,000 n.a n.a 0.05% Bank Of Beirut - Listed Shares $ % 2,131, % $35,174, % 17,746, , % Bank Of Beirut Priority Shares 2014 $ % 12, % $252, % 4,762, , % Bank Of Beirut Preferred "H" $ % ,400, ,400 n.a n.a 0.39% Bank Of Beirut Preferred "I" $ % ,000, ,000 n.a n.a 1.96% Bank Of Beirut Preferred "J" $ % ,000,000 78,000 n.a n.a 1.36% Bank Of Beirut Preferred "K" $ % ,000, ,000 n.a n.a 1.58% Byblos Bank - Listed Shares $ % 35, % $57, % 565,515, , % Byblos Bank Preferred Class 2008 $ % % $51, % 2,000, ,400 n.a n.a 0.59% Byblos Bank Preferred Class 2009 $ % % $2, % 2,000, ,000 n.a n.a 1.98% Byblos Bank GDR $ % % $12, % 1,309, , % BEMO Bank - Listed Shares $ % ,400,000 77, % BEMO Bank Preferred Class 2013 $ % 1, % $157, % 350,000 36,645 n.a n.a 1.36% BLOM Bank GDR $ % 78, % $949, % 73,896, , % BLOM Bank Listed Shares $ % 5, % $67, % 215,000,000 2,526, % RYMCO Class "B" $ % ,920,000 36, % Holcim Liban $ % % $1, % 19,516, , % Ciment Blancs Nominal $ % ,000,000 23, % Note: n.a stands for not applicable Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit % of Weekly Value Traded Total Listed Shares Market Capitalisation ($000) P/E P/BV YTD Price Perf. Activity Analysis Previous Last % Change Value Traded ($) 199,005,912 37,770, % Volume Traded 30,564,295 2,378, % Average Daily Trading Value ($) 39,801,182 7,554, % Average Daily Trading Volume 6,112, , % Market Cap - BSE ($) 11,708,989,847 11,712,678, % Weighted Average P/E % Weighted Average P/BV % Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit Evolution of Beirut Bourse Comparable Benchmarks Mar 16, 2018 Mar 23, 2018 P/E P/BV Source: BSE, Credit Libanais Economic Research Unit The market-cap weighted average price to earnings (P/E) multiple of listed stocks ended its week higher at 7.309x, while the price to book value (P/BV) metric slipped to 0.808x based on the closing prices of Friday s session. SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 15

19 LEBANON S MAIN INDICATORS Recap of Lebanon's Major Indicators MACROECONOMIC INDICATORS GDP (Current Prices) ($ Billion) * 49.46* 50.46* 52.70* 55.02* Real GDP Growth Rate 0.92% 2.80% 2.64% 2.00%* 0.82%* 1.00%* 1.50%* 2.00%* GDP per Capita (Current Prices) ($) 9,144 9,914 10,399* 10,810* 11,178* 11,295* 11,684* 12,082* Foreign Direct Investment Inflows ($ Billion) FDI/GDP Ratio 7.84% 7.09% 5.78% 5.84% 4.71% 5.13% INDUSTRY Industrial Exports ($ Million) 3,530 3,567 3,384 3,150 2,956 2,527 2,474 Import of Industrial Machinery ($ Million) TOURISM Total Number of Tourists 1,655,051 1,365,845 1,274,362 1,354,647 1,517,927 1,688,357 1,856,795 Growth in Tax-Free Spending 10% - 6% 4% 8% 2% - 9% 5% REAL ESTATE Value of Real Estate Transactions ($ Million) 8,841 9,175 8,708 8,952 8,006 8,482 9,954 1,3 16 (4) Number of Real Estate Sales Transactions 82,984 74,569 69,198 70,721 63,386 64,248 73,541 9,819 (4) Construction Permits (000 sqm) 13,890 12,362 10,527 11,159 10,294 9,935 9,271 1,429 (4) Cement Delivery (000 tons) 5,550 5,309 5,831 5,517 5,043 5,265 5, (3) TRANSPORTATION Beirut Port: Freight Activity (000 Tons) 6,677 7,225 8,268 8,281 7,240 8,737 8,629 1,361 (4) Beirut Airport: Number of Passengers (million) (3) FOREIGN TRADE Imports ($ Million) 20,158 21,280 21,228 20,494 18,069 18,705 23,130 1,705 (3) Exports ($ Million) 4,265 4,483 3,936 3,313 2,952 2,977 2, (3) Trade Balance ($ Million) (15,893) (16,797) (17,292) (17,181) (15,117) (15,729) (20,287) (1,422) (3) BALANCE OF PAYMENTS Net Foreign Assets at the Financial Sector ($ Million) (1,996) (1,537) (1,127) (1,407) (3,354) 1,238 (157) (3) Foreign Assets at BDL ($ Billion) (6) Gold Reserves at BDL ($ Billion) (6) PUBLIC FINANCE Government Expenditures ($ Million) 11,675 13,321 13,640 13,952 13,528 14,867 13,6 34 (2) Government Revenues ($ Million) 9,333 9,396 9,420 10,879 9,576 9,923 10,2 59 (2) Budget Primary Deficit / Surplus ($ Million) 1,662 (110) (240) 1, ,442 (2) Total Deficit ($ Million) (2,342) (3,925) (4,220) (3,073) (3,952) (4,944) (3,376) (2) Deficit / GDP Ratio 5.84% 8.95% 9.17% 6.42% 7.99% 9.80% Debt Service / GDP Ratio 9.99% 8.25% 8.24% 9.16% 9.46% 9.84% Net Public Debt ($ Billion) (3) Gross Public Debt/GDP Ratio % % % % % %* %* %* MONETARY AGGREGATES & INFLATION M4 ($ Billion) (5) (M2- M1) ($ Billion) (5) Monetization Level (M2/GDP Ratio) 99.32% 99.97% 98.97% 97.40% % % Change in CPI (%) 4.27% 4.68% 2.05% -1.66% -3.40% 3.14% 5.01% 5.19% (4) BANKING SYSTEM Number of Commercial Banks (1) Number of Branches ,020 1,039 1,056 1,063 (1) Total Assets ($ Million) 140, , , , , , , ,586 (3) Total Deposits ($ Million) 117, , , , , , , ,558 (3) Loans to the Private Sector ($ Million) 39,375 43,452 47,381 50,899 54,224 57,180 60,318 59,613 (3) Customer Loans/ Deposits 33.45% 34.04% 34.05% 34.48% 34.99% 34.35% 34.87% 35.35% (3) Dollarization Rate 65.92% 64.82% 66.14% 65.71% 64.88% 65.82% 68.72% 68.44% (3) Exchange Rate (LBP to USD) 1, , , , , , , , * Figures Reflect IMF Estimates (1) As at End of September, 2017, (2) As at End of November, 2017, (3) As at End of January, 2018, (4) A s at End o f February, 2018, (5) As at M arch 8, 2018, (6) As at M id-m arch, 2018 SOURCE: CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 16

20 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 17

21 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: