Blom Bank: Expanding as a Full Service, Retail Bank in Lebanon

Interview with Saad Azhari, General Manager of Blom Bank

Blom Bank has had a long and distinguished history having been founded in 1951. Can you give us an overview of the bank’s operations and services?

Blom Bank is traditionally a commercial bank. However we have expanded gradually to become a full service bank. Now we are the number one bank in Lebanon and in the region in terms of retail banking. We are also very strong in the areas of private banking, investment banking, Islamic banking and also fund management.  Also, the Bank’s image is increasingly changing to that of a universal bank.

You are amongst the top three banks in Lebanon and by assets the second largest bank in the country. You are also the largest in terms of foreign branches. In which countries is Blom Bank present and which are proving to be the best for you?

We are currently present in 13 countries. In this region we are present in Lebanon, Syria, Egypt, Jordan, Iraq, Qatar, Saudi Arabia and UAE. We are also present in Europe: in London, Paris, Geneva, Cyprus and Romania. We had the best growth in profits in Saudi Arabia and we had good growth in Egypt and Lebanon in 2013. Overall we are profitable wherever we are.

For all Lebanese banks the internet and other technologies have changed the way that financial institutions provide their services. What kind of online, digital and cloud services does Blom Bank provide for its clients and how has this affected your bottom line?

Even though we are known as being a conservative bank, we are also a very innovative bank. We are known as being the best in terms of offering new products. A lot of our new products are very innovative. For example, in 2013 we brought out a co-branded card with a major mobile operator: Touch. This was the first of its kind in the world whereby,  when somebody spends using his bank card, immediately he gets credit on his Touch telephone. This was something that we were able to do because of our advanced  IT capabilities. In terms of internet banking,  we offer all types of online services,  for example to make transfers between accounts, to ask for a new cheque book, to review an account etc. Like all banks all over the world, we are developing and expanding all services that can be done through internet banking.

Last year was challenging across the board for Lebanese business, can you give our readers an overview of how Blom Bank ended the year in financial terms?

2013 was a good year for Blom Bank. Our profits increased by 5.1%. We had growth in our balance sheet,  and our assets grew by  4.4%. We also had  a larger growth in our lending at 5.3%. Overall, we had reasonable growth even though it was a difficult year for the region and for Lebanon.

What is your assessment of the challenges faced by Lebanese banks?

The main challenge is the difficult environment in the region overall. However, Blom Bank with its conservative strategy has managed to consistently improve its operations and increase its profits and assets despite the difficult circumstances. I am sure that we will continue in this manner even though we expect  the regional situation to remain politically unstable over the next few years.

I think that for Lebanese banks the government´s fiscal deficit is a challenge. It is very important for the government to control its deficit and to limit the growth of its debt. Since the banks are the major lenders to the government it is an important challenge for us. We are working with the government to make sure that they keep their deficit under control.

The banks have had to race to comply with the complicated American law FATCA. Has this proven to be a challenge for Blom Bank?

In general,  Lebanese banks have two thirds of their balance sheets in dollars. Hence, they are all very careful in making sure that they are following all the international regulations and standards.  One of these regulations is the FATCA and all the Lebanese banks and the associates of these banks are complying with this law.  For us this is a priority and we have already reached a high degree of preparedness to abide by the FATCA regulation.

As a financial and economics expert what is your view of the 21% drop in FDI last year? What do you think is driving foreign investors away from Lebanon?

I would say that the regional situation, especially the conflict in Syria, has affected FDI in Lebanon. Also,  we had a time without a government in place. Our government resigned 10 months ago and only recently a new government came in. We are very positive that the economic situation is going to improve and we are in fact already seeing some signs of improved activity on the stock market. We are also seeing much better activity in the market as a whole.

As an investment bank, what role has Blom Bank played in facilitating the launch of new businesses and the growth of existing businesses in Lebanon?

As an investment bank we have two main activities: first, we were the leader in terms of managing Eurobond issues for the government and we are still very active in this area. Second, as to the private sector,  we try to help companies in terms of finding shareholders and funding. In addition, we are committed to partake in the Central Bank’s initiative to help establish and develop firms in the “Knowledge Economy” sector.

What plans and expectations does Blom Bank have for this year?

I think that what characterizes Blom Bank is its consistency. Year after year we have managed to perform and deliver. We always move one step at a time. We don’t take big risks, we move in a gradual manner. I think that in 2014 we are going to see an improvement in all of our activities and in all of the countries that we are active in. In particular, we believe that we are growing gradually but steadily in the Arab region.

Is there anything that you would like to add?

Our bank is expanding horizontally and vertically. We are growing in terms of our presence; we have opened recently in Bagdad and are soon to open in Erbil. We are expanding our network in the Arab world and we are also constantly expanding our branch network. Every year we open new branches in Lebanon and we are also opening new branches in Egypt and Jordan. We are also expanding in terms of the products that we offer, for example in 2013 we had several new funds on the Arab market and also a lot of investment banking deals in Saudi Arabia in the real estate business. Thus we are definitely becoming a leading full-service regional bank.