Interview with Saad Azhari, Chairman and GM of Blom Bank

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What is your overall assessment of the banking sector in Lebanon?

It is very strong and we have witnessed very strong growth over the past few years.  Further, the liquidity is very high and the size of the banking sector compared to the economy is remarkable because the level of deposit over GDP is one of the highest in the world.  The banking sector is effectively the backbone of the economy and is very healthy despite the global financial crisis.

What positive developments lead you to believe that the deterioration in economic conditions and financial markets due to the financial crisis is ending?

We did not witness deterioration in economic conditions here in Lebanon.  Last year we have more than 8% growth and we expect even more growth this year.  We have witnessed growth in lending, real estate, commerce, tourism, and car sales, among others and we continue to see positive developments in Lebanon.

What is your outlook for 2010?

"We believe it will be better than 2009 and that there will

be strong economic growth lead by the economy as a whole

due to consumer spending."

There is a plan from the government to invest in the economy and cause further growth due to new legislation related to taxation and I think this will be positive as well.

Lebanon’s public debt stands at more than 49.5 billion dollars and is expected to reach more than 53 billion dollars at the end of 2010 if no action is taken to reduce spending and increase revenue.  Do you think measures adapted by the government and the Central Bank have favored Lebanon’s financial sector?

I think here we need to look at debt over GDP because this has decreased from 182% to down to 147% by the end of 2009.  The whole world, however, has witnessed an increase in debt over GDP.  We believe we will continue decreasing out level of debt over GDP and that is what we should be working on.

The governor of the Central Bank intends to issue more circulars this year in order to give more credit facilities to the private sector.  How do you view this decision?

I think that the Central Bank has issued a lot of very interesting and helpful circulars.  When they saw a strong demand on our local currency they issued circulars to encourage lending in the Lebanese Pound instead of dollars to lower the cost of our lending.  The Central Bank also encouraged lending in new projects and now they are concentrating on projects related to education and ecology and these are all very positive moves.

Blom Bank has been awarded a number of accolades.  As a market leader what remains the greatest challenge for you and how are you going to compete with the other players on the market?

We were very proud to receive Best Bank in the Middle East from two reputable international organizations in 2009 because it was the first time a Lebanese bank received this type of award.  We have been very successful in growing our brand in the region and this is very positive for Blom Bank and the banking sector in Lebanon as a whole.  In 2009 we had a record year and a 21% return on equity in addition to excellent results in Dubai, Egypt, Syria, and Jordan.  The bank proved itself in all of the countries it operated in in the region and we are growing very fast all the while maintaining a great degree of stability.  However, when you achieve a lot of becomes a bigger challenge to be able to continue these types of achievements.

As a competitor we maintain a peace of mind and we try not to follow the herd.  We avoid certain sectors that we didn’t deem aggressive in their banking practice and this demonstrates our conservative strategy that enables us to remain competitive. Additionally, we have a very low cost to income because our cost factor is very low and the lowest in Lebanon, thus, most of our growth is organic. 

In 2009 your net profit was 293 million dollars, an increase of 17%.  How would you assess your strategy and what is your recipe for success amidst the crisis?

Our stability and avoidance of excessive risk help us succeed in addition to our man power.  We are expanding in the region but we haven’t covered the entire area yet.  We believe we have what it takes to be the leader in the Arab world to service both the Lebanese client and also the local customers in other Arab countries.  We replicate our success in Lebanon in the countries we expand into and this strategy is a large component in our recipe for success. 

How do you envision Blom Bank in 2015?

I think we will have a very strong regional presence, especially in Egypt, Syria, and Jordan as we capture more of the market share.  I hope the Gulf will open up more so we can expand into those countries as well.  The Arab World’s growing economy also needs to delve further into investment banking and the economy needs to shift to a more market based structure.

What is your final message about Lebanon?

Lebanon is very attractive due to its continuing economic growth and abundance of potential.  We have an excellent personnel base and this makes for a strong platform for international companies looking to come into the Middle East.  It is a very interesting market for foreigners and I encourage them to invest in Lebanon and the Arab world.