Awards for Excellence 2009: Lebanon

Best Bank: Banque Audi

Competition between Lebanon’s two biggest banks, Banque Audi and Blom Bank, remains as intense as ever. This year, the decision between them was particularly hard, especially when the third-biggest bank, Byblos, is so intent on catching up. Byblos beat Blom and Audi to underwrite (along with Credit Libanais) a voluntary debt exchange for the Lebanese government worth $2.3 billion.

Nevertheless, Byblos remains behind Audi and Blom, at least in size, while Blom and Audi were almost neck and neck in their performance over the past 12 months. In the three months to March 2009, for example, Audi made $61 million net profit, while Blom made $63 million: a rise compared with the first three months of 2008 of 11.6% for Audi, and 12.2% for Blom.

In 2008, Blom’s net profits grew 22.9%, against Audi’s 19.1%. At almost 40%, Blom’s cost-to-income ratio is lower than Audi’s ratio of more than 50% – something that might be reflected in Audi’s more flashy headquarters in Beirut.

However, Banque Audi takes the award because of its higher proportion of fee-based income and the fact that its net loans and advances to customers make up a greater proportion of its asset book. This suggests Audi is diversifying its business away from investments in Lebanese government securities.

At the end of March, loans and advances to customers were about 20% of Blom’s asset book, compared with about 30% of Audi’s.

In 2008, meanwhile, Audi’s fee-based income grew about 40%, while that of Blom only grew about 25%. In the first quarter of 2009, Audi’s fee-based income was 6% higher, while Blom’s was about 10% lower year-on-year.

At Blom fee-based income as a proportion of operating income was 11% during the first quarter of 2009 and 14% in 2008, compared with about 20% at Audi over the same periods.