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Sat 18 Oct 2008 03:05 PM

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Bank Audi earnings up on surge in deposits

Lebanese lender see profit climb 28.7% in first nine months of year to $180.mn.

Bank Audi said on Saturday net profit climbed 28.7 percent in the first nine months of the year, helped by a surge in deposits from customers who see Lebanese banks as shielded from the financial crisis.

"The Lebanese domestic banking sector has never witnessed such an important recurrent increase in the deposit base," Bank Audi's Group Chief Financial Officer and Strategy Director Freddie Baz told newswire Reuters.

"I believe the process will continue," said Baz, reporting net profit of $180.6 million for the first nine months of the year. Lebanese banks had largely been protected from the international financial crisis by tight sector regulation and the risk aversion strategies of the banks' management, Baz said.

Across the sector, deposits had grown by $8 billion in the first eight months of the year - already exceeding an average yearly increase of between $5 billion and $6 billion, he said.

Bank Audi, one of Lebanon's two largest banks, captures around a quarter of Lebanon's annual deposit increase, Baz said. BLOM Bank is the bank's main Lebanese competitor.

Bank Audi's deposit base stood at $16.5 billion at the end of September - 17.9 percent higher than at the end of 2007, according to the results released to Reuters.

"The Lebanese sector is benefiting from the crisis," Baz said. "Lebanese are feeling confident to bring back their savings from abroad," he said. Bank Audi said its exposure to the financial crisis was limited to holdings of Lehman Brothers bonds worth $10 million held in Lebanon and an additional $10 million held in foreign subsidiaries.

"The group has fully provisioned the entire amount as at end-September, 2008," Bank Audi said in its results statement.

The bank's GDR shares closed down 4.3 percent on Friday at $70.40 in thin trade - the sixth straight day of decline for a stock which hit a life high of $105 on May 22.

Bank Audi said its total assets at the end of September stood at $20 billion - 15.2 percent higher than at the end of 2007. Net non-performing loans accounted for 0.35 percent of gross loans, it said.

Central bank governor Riad Salameh told Reuters on Thursday no Lebanese banks were holding subprime paper and depositors had signalled confidence in the institutions through a deposit surge in late September.

Baz said: "Maybe Lebanon was never considered a safe haven but it's becoming a haven of last recourse today because of the fact that the biggest names worldwide have been shaken." (Reuters)

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