(MENAFN Press) Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed Lebanon-based Byblos Banks Foreign Currency Long and Short-Term Ratings at B and B respectively. These ratings are constrained by Lebanons sovereign ratings. CI also affirmed Byblos Banks Financial Strength Rating at BBB- as well as the Support level of 3. All the ratings carry a Stable Outlook.
Byblos Bank (BB) is a well managed institution implementing a clear business strategy and sound risk management practices. Through successive capital injections over the years the Bank has successfully grown its balance sheet and operations in Lebanon and abroad. While the latter is bringing diversification to risk assets and revenue streams, the bulk of BBs assets remain domestic in nature and invested in local government securities and central bank certificates of deposit (CD). These investments together expose BB to significant concentration risk via claims on the Lebanese sovereign. The quality of the Banks already sound credit portfolio improved in the year under review on the back of strong economic expansion in Lebanon; BB boasted the lowest non-performing loan (NPL) ratio and best provision coverage among its peers.
The rights issue underway will strengthen the Banks capital adequacy ratio and provide additional resources to sustain business expansion. Assisted by the International Finance Corporation (IFC), which recently acquired an 11% equity stake in the Bank, emphasis is being given to building SME lending expertise. The SME sector is a significant contributor to Lebanons economy. Profitability as measured by the ROAA ratio, though stable, remains modest in common with peer banks.
BBs liquidity position is comfortable and its funding profile sound reflecting a stable base of customer deposits. However, as noted above, the bulk of the Banks liquid assets are composed of Lebanese government securities and central bank CDs as is the case with peer banks. BBs exposure to these assets is a cause for concern when viewed in the context of the governments large debt burden together with the absence of fiscal reform. That said, Lebanons near term refinancing risks have receded somewhat reflecting its significantly increased foreign currency reserves. The longer term outlook for BB, and all Lebanese banks as a group, remains constrained by political risk factors and the sovereigns weak public finances.
BB follows a universal banking model offering services in commercial and retail banking through one of the largest branch networks (76 branches) in Lebanon. Retail banking has gained considerable importance over the years bringing diversification to risk assets and revenue streams. Through its overseas banking subsidiaries namely in Belgium, Syria, Sudan and Armenia BB conducts a wide range of commercial banking and financial activities in Europe and the MENA region.
Contact:
Morris Helal
Tel: 357 2534 2300
Zafer Diab
Tel: 357 2534 2300
