The path to improving fortunes

Banque Misr Liban is looking forward to further growth and rising profitability in 2012


Lebanon’s banking sector is one of the oldest in the Arab world, tracing its roots back to the early part of the 20th century, and has thrived in the environment of economic liberalism that has long distinguished the country from all its Arab neighbours. The sector grew steadily after 1991 such that the combined assets of banks in 2011, at more than $130bn, were nearly four times Lebanon’s GDP. The soundness and liquidity of Lebanese banks helped attract a substantial inflow of funds into the sector during the global financial crisis in 2008-2009 at a time when banks in most developed and developing economies were facing difficulties.

Banque Misr Liban (BML) was established in Beirut in March 1929 and is one of Lebanon’s oldest banks, ranking number three on the official list of banks in the country.

For more than 40 years before and after Lebanon’s independence it grew to become one of the largest and most innovative banks in Lebanon with a customer base that included leading companies and high net worth individuals in Lebanon and the region. The bank was also distinguished during this period by the size and distribution of its branch network, as it was the first bank to establish branches outside Beirut and throughout Lebanon’s main cities and regions.

BML today is 92.44 percent owned by the Banque Misr (Egypt) banking group, the largest bank in Egypt and one of the largest in the Arab world with total assets exceeding $30bn in 2011. In addition to BML, it has branches and affiliate banks in the United Arab Emirates, France and Germany, as well as interests in 135 projects worldwide. Banque Misr is fully owned by the Central Bank of Egypt, which in turn makes BML the only commercial bank in Lebanon that is owned by an Arab financial institution, and thus gives it additional inherent strength and credibility.

BML’s restructuring
BML started on a new phase of growth and development in 2007 encompassing a complete internal restructuring; an ongoing renovation and modernisation of all its facilities and expansion of the branch network; the development and modernisation of its services and products to re-enforce its presence on the Lebanese market; and an increase in its paid-up capital.

As a result, BML today is poised to continue its long tradition within the Lebanese banking sector and has the vision, financial strength and resources to achieve this goal. At a time when competition, whether in the retail or corporate/SME businesses, takes place on the basis of the type and quality of the product or service provided, as well as pricing and client loyalty, BML’s primary vision is to be the preferred bank for its customers and it is working hard to achieve this vision through an emphasis on personalised service, that only a smaller bank can provide, and a corporate culture of excellence, team spirit, integrity and professionalism. All this is allied with the application of the latest risk management guidelines, and the highest standard of corporate governance.

BML offers a full range of corporate, commercial, retail and private banking services that embody the latest in banking techniques, and are geared to meet the evolving requirements and expectations of its customer base.

The bank’s corporate loans and trade finance services are highly flexible and tailored to meet all institutional requirements. Its evolving retail services and products include all types of deposit accounts – personal loans, appliance loans, housing loans, tuition loans and car loans; plastic cards of all types; insurance programs and products; fast transfers; domiciliations, and other modern services and products. Private banking investment services are provided through a small-qualified team to ensure timely information, and fast response and execution.

BML currently has a network of 16 branches, strategically located in the major cities and regions of Lebanon and supported by a network of in-branch and external ATM machines. At least two new branches will be added to this network in Beirut and its southern and northern suburbs during 2011 and 2012.

BML has plans to expand regionally to take full advantage of synergies with the regional and international network of Banque Misr. But these plans have been put on hold since 2011, pending a return to stability in the region after the events of the Arab Spring that are not yet fully resolved.

Recent growth
Reflecting the success of its development and expansion plan and as a result of a new management team, BML grew rapidly between 2007 and 2011, with assets rising nearly 107.4 percent, deposits 106.5 percent and loans and advances to customers 137.5 percent.

The average annual rate of growth in all three aggregates was faster than the overall sector and peer bank averages. In parallel to that, BML’s shareholders’ equity increased by nearly 163 percent between 2007 and 2011.

These results and achievements are particularly significant for the following three reasons at least:
a. The fact that the domestic market for banking services is highly competitive and abounds with banking services and products. Most commercial banks have developed a fairly wide range of such products and services, and competition, whether in the retail or corporate/SME business, takes place on the basis of the type and quality of product and/or service, pricing and client loyalty.
b. The high rate of market penetration in Lebanon compared with the other Arab countries and emerging economies. Commercial banks had a total of around 900 branches in 2010 and an extensive network of ATM’s of more than 1,200 machines. This represents an average ratio of around one branch per 4,500 persons and one ATM machine per 3,340 persons.
c.The excessively skewed structure of Lebanon’s banking sector, in the sense that the five largest commercial banks accounted for 59 percent of the total assets of the sector, 60 percent of customer deposits and 59.9 percent of loans to the private sector in 2010-2011, while the ten largest banks controlled nearly 81 percent of total assets, 81 percent of deposits and 81 percent of loans. That left less than 20 percent of the market to be shared among the remaining 43 commercial banks (or 55 banks if Lebanon’s three Islamic banks and 12 investment banks are accounted for).

Nevertheless, on the strength of its solid fundamentals, BML is looking forward to further steady growth and rising profitability in 2012 and beyond. The bank will continue to develop its retail and corporate services and products in line with market requirements, and cutting-edge banking industry standards. It is also presently in the process of building its private banking capabilities. The branch network and other delivery channels will continue to be expanded to go hand in hand with the development of new products and services. Most importantly, BML will continue to give primary importance, as it has always done, to developing its human resources and instilling the philosophy of excellence in service, ensuring the interests of its stakeholders, and satisfying the expectations of its social responsibility role within the community.