Lebanon ranks 98 th most prosperous country in the world The Legatum Prosperity Index defines prosperity as a combination of wealth and wellbeing, benchmarking 142 countries in eight categories. In the MENA region, Lebanon came 9 th among 14 countries included in the report. The London-based Legatum Institute, an independent policy, advisory and advocacy organization, released its Prosperity Index for 2015. The index is an assessment of global wealth and wellbeing, benchmarking 142 countries in eight categories namely: Economy, Entrepreneurship & Opportunity, Governance, Education, Personal Freedom, Health, Safety & Security, and Social Capital. Lebanon ranked 98 th globally in the Prosperity Index, rising three places from its last year s rank. Lebanon's best performance is in the Health sub-index, where it ranked 59 th in 2015, while its lowest performance is in the Personal Freedom sub-index, where it ranked at the 124 th place. In the MENA region, Lebanon came 9th among 14 countries included in the report. The 2015 index reveals Norway as the most prosperous country for the seventh year in a row followed by Switzerland and Denmark. In contract, the least prosperous countries are Haiti, followed by Afghanistan and Central African Republic. The 2015 Legatum Prosperity Index Table Rankings- MENA Countries The 2015 Legatum Prosperity Index Table Rankings- MENA Countries Country Overall Rank Economy Entrepreneurship & Opportunity Governance Education Health Safety & Security Personal Freedom Social Capital UAE 30 21 28 28 36 34 34 65 39 Kuwait 36 13 33 44 27 37 35 84 52 Saudi Arabia 42 29 49 50 23 43 73 110 26 Turkey 78 87 67 51 85 57 109 100 102 Morocco 79 38 80 72 104 80 79 102 71 Jordan 88 97 72 57 58 61 84 136 110 Algeria 96 50 97 102 81 63 82 135 105 Tunisia 97 91 65 86 86 73 76 118 136 Lebanon 98 71 86 109 89 59 99 124 123 Iran 106 105 92 122 65 67 120 131 115 Egypt 110 100 87 116 96 84 105 140 118 Iraq 123 81 123 131 111 114 135 125 90 Yemen 135 134 121 134 121 108 128 142 131 Syria 136 137 124 135 112 100 140 139 127 Source: Legatum Institute, Bankmed Research Bankmed - Market & Economic Research Division 1
Legatum Prosperity Index 2015! Selected Sub-Indices for Lebanon! 73%! BUSINESS START-UP COSTS (% OF GNI PER CAPITA)! 16%! THINK IT S A GOOD TIME TO FIND A JOB! 75.8%! SAY THEY CAN RELY ON OTHERS IN TIMES OF NEED! 57%! BELIEVE IT S A GOOD PLACE TO LIVE FOR IMMIGRANTS! 12! TEACHER TO! PUPIL RATIO! 89.3%! BELIEVE BUSINESS/GOVERNMENT CORRUPTION IS WIDESPREAD! Source: Legatum Institute, Bankmed Research Bankmed - Market & Economic Research Division 2
Lebanon ranks 36 th globally and third among 11 Arab countries in terms of Internet freedom for 2015 Lebanon s ICT development has been consistently stalled by mismanagement and political tensions although there were some signs of improvement over the past year. Freedom House, a non-profit research organization, released its latest Freedom on the Net 2015 report in which it evaluates the level of Internet and digital media freedom across countries. Lebanon ranks in 36 th place among 65 countries globally and third among 11 Arab countries in terms of Internet freedom in 2015. The survey calculates a country s numerical rating as the sum of its ratings on three categories, namely the Obstacles to Access, the Limits on Content, and the Violation of User Rights. The rating for each country varies from zero to 100, with zero being the highest level of freedom. Lebanon s score improved from 47 points in 2014 to 45 points in 2015. However, the report indicated that Lebanon continues to struggle with poor telecommunications infrastructure, slow speeds, and a lack of competition in the ICT sector. It added that the country s ICT development has been consistently stalled by mismanagement and political tensions although there were some signs of improvement over the past year. Lebanon 2014 2014 2015 2015 Internet Freedom Status Partly Partly Free Free Partly Partly Free Free Obstacles to Access (0-25) Obstacles to Access (0-25) 14 14 13 13 Limits on Content (0-35) Limits on Content (0-35) 12 12 12 12 Violations of User Rights (0-40) Violations of User Rights (0-40) 21 21 20 20 TOTAL* (0-100) TOTAL* (0-100) 47 47 45 45 *0=most free, 100=least free *0=most free, 100=least free Source: Freedom House, Bankmed Research Source: Freedom House, Bankmed Research Freedom on the Net Index 2015 Score Global Rank Category Tunisia 38 26 Partly Free Morocco 43 34 Partly Free Lebanon 45 36 Partly Free Jordan 50 39 Partly Free Libya 54 42 Partly Free Egypt 64 47 Not Free Sudan 65 53 Not Free UAE 68 55 Not Free Bahrain 72 57 Not Free Saudi Arabia 73 58 Not Free Syria 87 63 Not Free Source: Freedom House, Bankmed Research Bankmed - Market & Economic Research Division 3
The balance of payments records USD 1,771 million deficit in the first nine months of 2015 In September 2015, the BOP recorded a USD 122 million deficit, registering a deterioration from a USD 131 million surplus in September 2014. The balance of payments (BOP) registered a deficit of USD 122 million in September 2015, indicating an improvement from a USD 332 million deficit registered in the previous month of August 2015 but showing a deterioration from a USD 131 million surplus in September 2014. In the first nine months of 2015, the BOP registered a deficit of USD 1,771 million, from a deficit of USD 302 million recorded in the same period last year. The balance in the first nine months of 2015 is a combination of a USD 1,158 million surplus recorded by the Central Bank and a USD 2,929 million deficit recorded by banks and financial institutions. It is worth noting that the BOP monthly figures logged deficits in October 2014, November 2014, December 2014, January 2015, February 2015, March 2015, June 2015, August 2015, and September 2015. 800! Balance of Payments! Sep-13/Sep-15! 600! 504! 534! 520! 400! 200! 194! 139! 131! 136! 189! 0! 2! -200! -400! -192! -31! -45! -85! -116! -153! -280! -424! -417! -332! -122! -600! -561! -564! -566! -800! -794! -794! -1000! Sep-13! Oct-13! Nov-13! Dec-13! Jan-14! Feb-14! Mar-14! Apr-14! May-14! Jun-14! Jul-14! Aug-14! Sep-14! Oct-14! Nov-14! Dec-14! Jan-15! Feb-15! Mar-15! Apr-15! May-15! Jun-15! Jul-15! Aug-15! Sep-15! Source: BDL, Bankmed Research Bankmed - Market & Economic Research Division 4
Net public debt reaches USD 60.4 billion at end of September 2015 Gross public debt increased by a yearly 4.1% in September 2015 to reach USD 68.7 billion, of which 62% in LBP and 38% in foreign currency. Lebanon s gross public debt stood at USD 68.7 billion at end of September 2015, registering a year-on-year rise of 4.1% from end-september 2014 (USD 66.0 billion) and increasing by 3.1% from USD 66.6 billion at end-year 2014. Debt in local currency stood at USD 42.5 billion at end of September 2015, accounting for 62% of the gross public debt. Debt in foreign currency amounted to USD 26.2 billion in the mentioned period, constituting 38% of the total. Moreover, public sector deposits at the Central Bank and commercial banks reached USD 8.3 billion at the end of September. As such, the net public debt, which excludes these deposits from the total debt figure, stood at USD 60.4 billion, recording a rise of 8% from end September 2014 (USD 55.9 billion). Gross Public Debt! (billion USD)! 26.4! 26.0! 26.2! 21.0! 22.8! 21.0! 29.9! 33.4! 33.2! 36.0! 40.0! 42.5! Sep-10! Sep-11! Sep-12! Sep-13! Sep-14! Sep-15! Debt in LBP! Debt in FCY! Source: ABL, Bankmed Research Bankmed - Market & Economic Research Division 4
BANKING & FINANCE Commercial banks total assets record a yearly 5.8% rise in September 2015 Loans to the resident private sector increased by a yearly 6% in September 2015 to USD 46.8 billion, while total private sector deposits jumped by 5% to reach USD 149.1 billion. The consolidated balance sheet of Lebanese commercial banks for the month of September 2015 recorded a yearly 5.8% increase in assets to reach USD 181.3 billion. Deposits with the Central Bank increased by 13.7% y-o-y and reached USD 69.2 billion in September 2015. Total claims on resident private sector, which accounted for around 26% of total assets, jumped by 6% y-o-y to reach USD 46.8 billion over the same period; this was attributed to an 11% rise of claims in Lebanese pounds and a 4% increase of those in foreign currencies. On the liabilities side, total resident and non-resident private sector deposits grew by 5% to reach USD 149.1 billion in September 2015. The dollarization rate of deposits reached 64.6%, going down from 65.7% in September 2014 and below its peak of 77.3% in December 2007. 10%! 9%! 9.2%! Commercial Banks' Total Assets! (billion USD)!! 171.3! 181.3! 200! 180! 8%! 7%! 6%! 126.7! 138.4! 7.2%! 148.4! 7.3%! 159.3! 7.6%! 5.8%! 160! 140! 120! 5%! 4%! 100! 3%! 80! 2%! 60! 1%! 40! 0%! Sep-10! Sep-11! Sep-12! Sep-13! Sep-14! Sep-15! 20! Total Assets! % change! Source: ABL, Bankmed Research Bankmed - Market & Economic Research Division 4
BANKING & FINANCE BLC Bank reports net profits of USD 32.8 million in the first nine months of 2015 Loans to customers dropped by a year-todate 3%, while total deposits increased by 7% in the first nine months of 2015. BLC Bank declared net profits of USD 32.8 million at end-september 2015, constituting a drop of 4% from USD 34.0 million recorded in the first nine months of 2014. Total assets reached USD 5.7 billion as at end-september 2015, compared to USD 5.4 billion at end-december 2014, while loans and advances to customers dropped by 3% year-to-date, reaching USD 1.9 billion at end- September 2015. The bank s customers deposits reached USD 4.6 billion in the first nine months of 2015, going up from USD 4.3 billion at end-2014 (+7%). Also, total equity amounted to USD 491 million at end-september 2015, going up by USD 13 million from end-december 2014. BLC Bank Financials (billion USD) Sep-15 Dec-14 % change Total Assets 5.7 5.4 6% Loans and Advances to Customers 1.88 1.9-3% Total Deposits 4.6 4.3 Total Equity 0.491 0.478 3% Net Profits (million USD) 32.8 34.0* -4% *as at Sep-14 Source: Company Data, Bankmed Research Bankmed - Market & Economic Research Division 4
BANKING & FINANCE Deposits denominated in foreign currencies regress by USD 277 million during the week of October 16-22, 2015 Term and saving deposits in LBP increased by USD 20 million during the forty-third week of the year. On the monetary front, the overall money supply M4 decreased by 0.4% during the week of October 16-22, 2015 to around USD 129 billion, while the non-banking sector treasury bills portfolio increased by USD 20 million during the week. Lebanese Pound denominated deposits and currency in circulation M1 decreased by 3.9% (or USD 210 million) during the aforementioned week to USD 5.2 billion. This is mainly due to decreases in demand deposits and in money in circulation by USD 128 million and USD 82 million, respectively. In parallel, local currency term deposits M2 decreased by USD 190 million during the same week but registered a twelve-month increase of 7.27% to stand at USD 51.3 billion. The private sector term and saving deposits denominated in LBP (M2 - M1) went up by USD 20 million during the mentioned week to around USD 46.1 billion, while deposits denominated in foreign currencies (M3 - M2) regressed by USD 277 million during the week to reach USD 70.5 billion. Money Supply Week of October Money 16 Supply - 22, 2015 Week of October 16-22, 2015 (billion USD) 15-Oct-15 22-Oct-15 Absolute change over week M1 5.409 5.199-0.210 M2 51.512 51.322-0.190 M3 122.299 121.831-0.467 M4 129.470 129.023-0.448 M2-M1 46.103 46.123 0.020 M3-M2 70.786 70.509-0.277 M1 = Currency in Circulation + Demand Deposits in LBP M2 = M1 + Other Deposits in LBP M3 = M2 + Deposits in FX M4 = M3 + TBs held by non-banking system including accrued interests Source: BDL, Bankmed Research Mazen Soueid, Stephanie Ghanem, Ziad Hariri, Rita Nehme and Nadine Abdel Fattah Disclaimer This material has been prepared by Bankmed, sal based on publicly available information and personal analysis. It is provided for information purposes only. It is not intended to be used as a research tool nor as a basis or reference for any decision. The information contained herein including any opinion, news and analysis, is based on various publicly available sources believed to be reliable but its accuracy cannot be guaranteed and may be subject to change without notice. Bankmed, sal does not guarantee the accuracy, timeliness, continued availability or completeness of such information. All data contained herein are indicative. Neither the information provided nor any opinion expressed therein, constitutes a solicitation, offer, personal recommendation or advice. Bankmed, sal does not assume any liability for direct, indirect, incidental or consequential damages resulting from any use of the information contained herein.