Lebanon used to be one of the world’s hardest banking awards to judge, as its two biggest lenders were also similarly successful. While it remains very competitive, recently these two banks’ overall performance has grown slightly further apart.
In 2018, for the third year in a row, Blom Bank, under chairman and general manager Saad Azhari, is the country’s best bank. Shares in Blom rose 16% over 2017, compared with a 12% decline in rival Bank Audi’s share price; Blom’s return on equity was also better than Audi in 2017.
Overall, Audi’s bigger international business – particularly in Turkey – has not allowed it to beat Blom. Instead, Blom has done better with a bigger share of its domestic retail market. Today, Blom is more efficient, with a cost-to-income ratio of 34% versus 51% at Audi. It is also far stronger in terms of its capital adequacy (18.5% versus 16.9%) and its non-performing loan ratio is better too (3.13% versus 3.5%).
The judges might have overlooked these statistical advantages had they not also been accompanied by Blom’s qualitative strengths. Blom is not prioritizing short-term financial gain over longer-term investment. This was the year that Blom completed its acquisition of HSBC’s Lebanon branches. Other forward-looking aspects of Blom’s strategy include the launch of a service enabling customers to make contactless payments with Android smartphones, the first of its kind in Lebanon.
Meanwhile, Blom underlined its contribution to Lebanese public-sector development as it installed terminals allowing card payments for services such as passport renewals at 50 locations. It also signed a $50 million agreement with the World Bank’s IFC, meaning lower costs and longer tenors in trade finance transactions.
Blom’s investment banking arm, Blominvest Bank, increased its contribution to startup funds as part of the Lebanese central bank’s programme of support to the funds (Blom is also active in supporting the knowledge and tech sector through its CSR programme). While it retains its strong position in the local equity brokerage market, Blominvest is also active in the primary and advisory markets, advising on the $115 million sale of Saudi’s Kingdom Holding’s share in the Beirut Four Seasons, for example.
Investment banking is one area of the local financial sector where Lebanese banking talent and entrepreneurialism shine through, despite the difficulties of the business environment.