What is your overall assessment of the banking sector in Lebanon and what is the outlook for 2010?

My overall assessment is that the Lebanese banking sector is sound and robust financially and compliant with international standards.  It is a combination of modern and traditional banking whereby the family ownerships still play and important role in the governance of banks in Lebanon.   We are 112 billion dollar in assets, 195 billion dollars in deposits, and the total capitalization is around 12 billion dollars. The average return on investments in the banking sector hovers around 1% with the return on average equity around 13%, the major characteristic of the sector is a stable deposit base.  The sector is also highly liquid because our lending portfolio does not exceed 30% of deposits in the banking sector either. 

Do you see the growth for 2010 being less than 2009 or are you optimistic about the future of the banking sector?

I am quite optimistic about the future of the Lebanese banking sector for many reasons.  The Lebanese banking sector has succeeded in regionalizing itself and they have opened markets in nearly everywhere throughout the region.  This is a major source for diversifying the revenue in the banking sector and also for growth.  It presents a major opportunity in the banking sector to lessen the risk in Lebanon while diversifying in other markets.

Lebanon’s real estate market boomed in the first two months of 2010.  The number of property-sales transactions went up 36% and this indicates a boom in the real estate sector but with the excess of liquidity in the banking sector is this a cause of concern for you?  Are you concerned with this leading to speculation in other sectors?

It is true that the real estate market has gone up tremendously the past couple of years. 

"Real estate is not overvalued but highly valued

because of the scarcity of land in Lebanon and

because it is perceived as one of the safest

investments in Lebanon."

Therefore, owning real estate is very desirable.  However, I don’t believe prices will continue to increase in the upcoming years but I also don’t see them decreasing drastically either.  The interest rate environment is low and mortgage lending is adding to liquidity in the market.  Most buyers are not speculative buyers either but rather buying for their children and the future. Also, lending is very conservative compared to other areas.

What do you think will happen to excess liquidity, where will it go?

There are plenty of places it could go.  The banking sector maintains a lot of liquidity for various reasons, for example, political turmoil.  If our deposits keep increasing we have various ways to invest this liquidity in productive projects in Lebanon that will hopefully help the government alleviate its debt.  We also have regional expansion in the Middle East and MENA and these are big economies compared to Lebanon and their should be enough appetite their to absorb the liquidity of Lebanese banks looking to invest.

Can you chart the growth of BBAC and share performance indicators?

Our bank size is 3.5 billion dollars and our deposit base is similar.  For the last two years our growth in deposits has been 12% per annum and our return on assets has exceeded 1% while our return on equity has grown from 11% to 14% in 2009. 

What makes BBAC competitive with other players on the market?

Our motto is care works better than words.  We try to communicate this through the media and we do a lot of corporate social responsibility activities that are in line with our motto.

"We are involved in medical, educational, social, and

cultural projects.  The last thing we did was champion

the women’s rights cause by being the first bank

opening account for mothers in favor of their minor children."

We see ourselves as a bank with a human face and we like our projects to be related to humanitarian efforts.

How do you see the long term vision for the bank?

Our vision for the bank is to continue to strengthen our franchise in Lebanon by communicating our message and opening up new branches.  Like many other alpha banks in Lebanon we are going to expand regionally.  We recently obtained a license to operate in Iraq and we have started to do this, Iraq is a very big, young market.  In Lebanon our strategic target is to develop our retail/consumer lending and we have doubled our portfolio the past two years.  We would like to be among the top 5-6 banks in the market.

How would you define your largest challenge?

We have many challenges.  Our main challenge for the upcoming year will be the penetration of new markets because it presents many opportunities at the same time as it presents a lot of work to be done. In the Lebanese market our major challenge due to competition is looking for other sources of income besides treasury bills and find private lending sources.  We will need to have good relations with our clients and competitive interest rates to overcome this challenge.

What are you looking for for the future? Are there any partnerships you are interested in?

It is possible we may look to team up with international players to help us in their market while help them in the Lebanese market. 

What would be your final message to our audience about Lebanon and the bank?

Lebanon has always provided a safe place for banking for Lebanese expats and for regional Arab investors.  No body has invested in Lebanon and made a bad deal here.  Our sector has modernized itself and become up to par with international players with regard to operations, products, and services.  There is also a very friendly atmosphere in the Lebanese banking sector.  People in Europe and US will find that Lebanon offers advantages too.  One being bank secrecy and another being favorable investment rates compared to other areas in Europe and the US.