Rising Above the Challenges Annual Report 12

147 Pages·2013·2.5 MB·English

Annual Report
12
2 0
Rising Above the Challenges
B a n k i n g G r o u p
Annual Report
12
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At a Glance Sustainable Growth
Credit Libanais Identity..........................4 and Development
Credit Libanais Strategy........................6 Our People Capital..............................86
Facts and Figures..................................8 Internal Audit......................................94
Group Key Financial Highlights...........10 Compliance and AML/CFT.................100
Chairman’s Address.............................12 Risk Management and Strategy........106
Financial and Economic Section..........16
Corporate Governance Corporate Social
Corporate Governance Framework.....30 Responsibility (CSR)
Board of Directors...............................34 CSR and CL Business Strategy.........143
Management Committees Commitment to Shareholders
and Governance Structure................36 and Corporate Governance...........144
Group Structure...................................42 Commitment to our Customers........146
Investing in our Communities...........147
Core Banking Activity Valuing our People Capital...................149
Commitment to the Environmentally
Retail Banking.....................................50
Responsible Financing..................152
Electronic Banking Services...............58
Corporate Banking..............................68
Contents
Investment Banking (clib)....................74
Group Treasury, Global Markets
and Wealth Management...............80
Financial Results
Credit Libanais Group.......................................................................................................154
Credit Libanais Investment Bank (clib).............................................................................240
Credit Libanais d’Assurances et de Reassurances (cla)..................................................258
Correspondent Banks...........................................................................274
Branch Network...................................................................................282
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Annual Report 2012 Credit Libanais Group
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Credit Libanais’ Identity
Vision Statement
Vision Credit Libanais’ purpose is to enhance Mission Credit Libanais’ is the preferred bank in
shareholder, customer, and employee value. Lebanon-for customers and employees.
Core Values Credit Libanais’ core values are customer focus, Credit Libanais’ is primarily a retail bank and
innovation, teamwork and reward for performance serves selected corporate customers.
1961 1977 1994 1996 2000 2003 2004 2005 2006 2007 2008 2010 2011 2012
Establishment Acquisition Acquisition Launching of Acquisition Issuance Issuance of Issuance of A capital Launching Successful Opening of the Best in Launching of
of the Bank of of both First the investment of the of the third cumulative three-year Euro increase of of banking management fully-owned category: operations in
Continental Phœnician banking arm operations tranche of Preferred CD listed on USD 102 million operations in by the Bank, banking Social and Iraq (Baghdad
Bank Bank and of the Group of American three-year Shares maturing international by existing the Kingdom of with Credit subsidiary Economic and Erbil)
Capital Trust through the Express Euro CD in 2011 markets shareholders Bahrain Suisse & Credit Award for
Migration
Bank majority owned Bank, listed on Byblos Bank, International Housing Loans
Acquisition of Launching Implementation Changing to the core
subsidiary Lebanon international of Islamic of an Employee of affiliated of the 2009 sa, Senegal Social Media banking system,
“Credit Libanais markets ISO 9001:2000 Republic
banking Stock Ownership leasing Acquisition of launching Equation, across
Investment Certification of Lebanon
operations Plan for a total company EFG Hermes all branches of
Rising above the Bank” for Quality voluntary Best Website
in Lebanon consideration Credilease into Group of a the Group
Management exchange Awards
First issuance of through of 5.7% of the a Lebanese controlling
System transaction granted to Launching
Euro CDs listed the Bank’s Bank’s common financial majority in
challenges, we for a total affiliates: construction
on international subsidiary shares institution the capital of
consideration Hermes Travel works of the
markets by a “Lebanese Credit Libanais
Winning of the of some USD and CISA new landmark
continue to grow Lebanese bank Islamic Bank”
Golden Pan 2.3 billion Issuance of (Senegal) CL Group
Arab Corporate USD 75 million Headquarters
PCI DSS
Website Award Subordinated in Ashrafieh,
and create value compliance for
Bonds Lebanon
subsidiaries
maturing
Netcommerce
where we operate. in 7 years -
and IPN
Transaction
over -
subscribed
Credit Libanais’ Business Principles We Cooperate We function as a team. Cooperation among individuals and units is fundamental in delivering the whole Bank
to the customers.
We Serve We deliver superior customer service. We gain customer satisfaction with service that exceeds customers’ We Communicate We are open. We encourage continual dialogue across all units and levels.
expectations.
We Empower We emphasize delegation. Acceptance of personal accountability permeates our corporate culture.
We Act We are action-oriented and encourage personal initiative. Can Do and Will Do are basic attitudes of all
We Build We continuously upgrade our skills. Commitment to self-development and training are cornerstones of our
employees.
competitive advantage.
We Perform We grow productivity each year. Revenue and Profit per employee are key measures for Bank performance.
We Respect We value each other’s ideas. We treat colleagues fairly, sincerely and courteously regardless of differences in
We Improve We embrace change. We continuously seek better problem solutions for the customer and the Bank. background.
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Annual Report 2012 Credit Libanais Group
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Credit Libanais Strategy People Capital Optimization conservative risk management philosophy, taking only
Credit Libanais’ success depends on having the well evaluated risks in line with the board risk tolerance.
competent talents and leaders to execute our strategy.
As a leading institution in Lebanon and relies on the fundamental pillars of
Our people strategy continues to optimize available Business Diversification and Expansion
a source of major wealth creation and Customer Focus and Sustainable talent by building competitive advantage through Over the past years, our Group successfully
comprehensive development training programs and implemented a business diversification strategy. CL
development, Credit Libanais Group Growth, People Capital Optimization,
tools. Our employee engagement is further enhanced believes that foreign expansion not only diversifies
remains committed to its responsibilities Sound Capital Management, Prudent
through improved communication and alignment of the risks, but also takes advantage of the economic and
towards shareholders, customers, Risk Management and Appetite, corporate strategy with employee performance. Our business opportunities present in the regional and
system of goal-setting, measuring and performance international economies. In the coming years, the Bank
employees, communities and the Business Diversification and Expansion
evaluation helps us build a respectable working is looking forward to further expanding its local, regional
environment, and thrives to meet their and Responsible Cost Efficiency
environment, capable of driving business success and and international network and plans to inaugurate new
expectations. Our integrated strategy Management. delivering high quality customer services. branches and subsidiaries in Lebanon and the region.
The expansion strategy achieved very positive initial
Sound Capital Management
results, as revealed by the Bank’s presence in Senegal,
The way we manage our capital is key to our business.
Bahrain, and Cyprus through full-fledged branches and
Capital provides safety and soundness for our
in Canada through a representative office, capitalizing
Cuasntdo SmuGesrrto aFwiontcahubsle OPpetoimpliez aCtiapital Credit Libanais Group caaul ls ssottolaidmk eceharsop’li dtdaeel rpbsoa. ss Wiets et,o fr ueseumlpsa poinou rrct ogthmreom wriitsthtke,s da antosds mroecaaiiasntsteaudirn ewisni gth osbpnae ntchkiiefin cgea,c lilonyn taohdmrdoiiucti goghnr o rtweot taphir lpi,v rcaootsemp bmeacentsrkc iiinnag lt haaennsdde c ccoaorppuiotnartalr itees
on contributes to value our diversified businesses across our entities, while still markets activities. In June 2012, the Bank launched two
providing investors with good returns. We also reinforce
branches in Iraq (Baghdad and Erbil).
creation and growth
the link between risk and capital through our internal
y
onsiblefficiencgement ManageSound C through ethical banking caa cpriutacli aal dceoqmupaocny eansts oefs asmsseensts pinrgo coeusrs c. aSptriteasl sa dteesqtiunagc iys RCoesstp eoffincsieinbcley mCaonsatg Eefmfiecniet insc ay t rMadaintioangael mstreenntg th
pseRE tsoanaM tnem atipa practices, best practices tmoa ennnseurr.e growth and development in a safe and sound aret sopuorn Gsirboiulitpy. m Toordea yim, wpoer taarnec gei vthinagn o euvre cr,o arpnodr astteri ving to
C l
management and
make the right decision leading towards creating value
Prudent Risk Management and Appetite
and ensuring sustainable growth of our resources.
anDdi vEexBrpsuiafisnicnsaeitosisnon PMr uaandndea ngtA eRpimspekentti te roefs rpeosnosuibrclees m. anagement Amastptra epCnnrraogegatdehcitmh rL eeaimbnnatda nc inpau rileustuxd, rpeween,e rtc i eaphnrraeocr ceake,cn stgoesowreoinzsde .f dAoju rtbd otyghu mear ehrroinegbtao,u rratso ntou drfs i so ku r Asbpeceirnongsd siinn Cgnr oaevndaditti vLloeibo aakn nfdoa rids w oGainrygos u mtpoo, irwmee pw rcoiathvre ele fpusrlsloy.d Wmucoetn itviatiotrygr ebotyu r
a cost/income efficient ratio without compromising our
knowing our customers. The growth witnessed by
growth and image reputation.
the Bank in Lebanon and overseas over the past
few years was met by a significant investment in the
support functions particularly in the areas of Corporate
Customer Focus and Sustainable Growth
Governance, Risk Management, Audit and Internal
Sustainability in growth comes from our ability to build relationships with our existing customers and to attract new
Controls, Compliance, Anti-Money Laundering and
ones. Revenue growth is achieved when our professional advice and superior services meet our customers’ needs.
Counter Financing of Terrorism. The Bank’s AML/CFT
We offer them a wide variety of products through our traditional and electronic banking channels. Our Bank continues
team collaborates with business lines to ensure that
to expand its coverage to remain closer to customers and accompany them in their different life cycles, whether they
a risk-based approach is integrated in products and
are high net-worth individuals, corporations, small and medium-sized enterprises or institutional customers. Our
services, and across all delivery channels. Years ago,
innovation in banking products and services is made with the simplicity of processes in mind, to ensure efficient and
the Bank has implemented a comprehensive plan to
effective services across all entities of our Group.
diversify and reduce its risks on the grounds of a
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Annual Report 2012 Credit Libanais Group
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Facts and Figures
70 300,700
Branches
Lebanon 66 Customers
Limassol 1 served at Year
Manama 1 End 2012
Baghdad 1
Erbil 1
1,609
Employees at
6 Countries of Year End 2012
Geographical
Outreach
84
Lebanon
Cyprus
Bahrain
ATMs
Canada
Senegal
Iraq
24/7
Customer Service
Centre and Secure
Online Banking Services
www.creditlibanais.com
Lebanon: 1518
International: [phone]
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Annual Report 2012 Credit Libanais Group
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Group Key Financial Highlights
Strong Capital Base
As at 31 December (million LBP) 2012 2011 2010 2009 od Shareholders’ Equity (million LBP)
eri
p
BTCoautlsaatlon amcsees erS tdhseepeotsits 1110,,948913,,038913 1 09,,841846,,525042 98,,854161,,990659 87,,226635,,710686 Previous 970500 845,272 858,493 933,205 6500%%
o 600 7 40%
SLihqauriedh aosldseetrss’ equity * 16.04% 8 ,913238,,230156 7 ,845782,,439636 6 ,894852,,277329 6 ,604058,,893677 olvency rati 450 645,83 30%
S
Loans & advances to customers 3,368,166 2,979,232 2,493,188 1,947,558
pre-tax 300 20%
Income Statement Return On average ear 150 10%
nt y
Net interest income Equity (ROaE) 189,222 184,275 191,799 160,137 Curre 0 0%
Net financial income 276,387 261,214 266,581 204,974 2009 2010 2011 2012
Net profit for the year 13.73% 92,072 97,792 119,268 79,376
Liquidity ratio 77.46% 78.83% 82.03% 82.71% Sustainable Profitability and Value Creation
Return on Average Assets (ROA)* Capital Adequacy Ratio 1.00% 1.13% 1.15% 1.24% Net Financial Income (million LBP)
Return on Average Equity (ROE)* (as per Basel II) 16.04% 18.48% 18.33% 17.82% 300
7
GTortoawl tAhssets 10.62% 10.79% 9.83% 19.16% 23.07% 225000 266,581 261,214 276,38
increase 4
7
9
Customer deposits 10.62% 11.45% 17.16% 24.83% 4,
150 0
in customer deposits 2
Solvency ratio (As Basel II) 13.73% 14.15% 16.95% 12.90%
Growth of loans 13.05% 19.49% 28.02% 29.95% 100
10.79%
Loan to deposit 32.10% 31.41% 29.29% 26.81%
50
Liquidity/Assets 67.84% 69.10% 70.91% 72.72%
growth
0
* Excluding extraordinary items for the years 2010 and 2011
2009 2010 2011 2012
in total assets
Growth Trend in Banking Activity
Total Assets (billion LBP) Total Customer Deposits (billion LBP) Liquid Assets (billion LBP) Loans & Advances to Customers (billion LBP)
8750 3500
12000 12000
1086000000000 8,264 9,847 10,814 11,981 1086000000000 7,265 8,512 9,486 10,493 7653520705050000 6,009 6,983 7,472 8,128 3221050500000000 1,947 2,493 2,979 3,368
4000 4000 2500 1000
2000 2000 1250 500
0 0 0 0
2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012 2009 2010 2011 2012
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Annual Report 2012 Credit Libanais Group
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A Message From the Chairman
Rising above the challenges, Credit Libanais continues its
Chairman’s
steady growth path, with all major activity indicators of the
Address
Group reporting significant increases in 2012.
experience in the communities of operation. By the return on average assets (ROaA) of 16.04% and
same token, our Group is leading the way towards the 1% respectively in the year 2012 after adjusting for
The curtains have closed on an agitated year 2012, leaving country’s modernization by launching the e-government extraordinary expenses suffered during the year
behind a multitude of unanswered questions for most of the services related to online tax payments through our amounting to USD 4 million relevant to the tax
players in the region. In the midst of these turbulences, Lebanese subsidiary NetCommerce payment gateway, in a move adjustments related to previous years, imposed by the
banks continued to reaffirm their ever-praised immunity despite that aims to facilitate the citizens’ experience when Ministry of Finance.

the local and regional stalemate, posting a healthy balance dealing with the government.
In 2012, capital markets activities strengthened across
sheet growth of 8.04% year on year to $151.88 billion as at end
Rising above the challenges, Credit Libanais, continues the group and encompassed active sales and trading,
of December 2012, an annual increase of 8.46% in customer
its steady growth path, with all major activity indicators added to a wide range of financial markets products,
deposits to $127.66 billion, and a growth of 10.35% in loans to
of the Group reporting significant increases in 2012. CL bonds, equities, equity-linked products, commodities
$43.45 billion. The banking sector also preserved a high liquidity
level throughout the year 2012, with a primary liquidity ratio of consolidated assets reached USD 7.948 billion, with and securitized instruments.
78.19%. Similarly, Lebanese banks succeeded at maintaining customer deposits nearing USD 6.961 billion. On the
On the corporate banking front, fast decision-making
vigorous profitability levels, at the year-end 2012. lending front, customer loans rose by 13.05% during the
processes and operations are the result of our Group’s
year 2012, surpassing the USD 2.234 billion mark, with
strategy to assign experienced relationship managers
At Credit Libanais Group, the most significant developments the loans-to-deposits’ ratio firming at 32.10 %, up from
who have industry and sector experience, across the
of the year are highlighted by our expansion abroad and the
31.41 % a year earlier.
Bank’s regional management locations, thus ensuring
opening of two branches in Iraq (Erbil and Baghdad), in a move
a just-in-time and efficient customer experience. During
towards the Iraqi markets characterized with high GDP growth Credit Libanais Group reported net profits amounting
2012, we concentrated on expanding our customer
expectations (8.6% average growth rate). Locally, construction to USD 61.08 million. Net interest income attained
base with a particular emphasis on the best performing
works were launched in 2012 to build the new landmark CL Group USD 125.52 million, with net fees and commission
sectors, all the while enhancing structured and trade
Headquarters located in the Ashrafieh area, designed to optimize income expanding to USD 36.28 million, fueling as
finance loans as an additive to existing industrial and
and synergize all management teams’ efforts in one location, in an such net financial revenues of USD 184.29 million.
commercial financing activities. In fact, industrial,
ultra modern work place and environment. On the liquidity front, CL Group preserved a healthy
construction, and agriculture loans grew by 7.5% to
liquidity ratio of 76%. The Group’s shareholders’ equity
In parallel, as part of our strategy to develop and create value form some 25% of our total outstanding portfolio.
(including profits of the year) reached at yearend USD
in the societies where we operate, our Group innovated in 2012 Commercial loans grew by 33.18% representing
619.04 million, with the capital adequacy ratio reaching
additional tailor-made retail products and services catering to the approximately 75% of our total outstanding portfolio.
13.73 (computed according to Basel II regulations).
needs of the public. This move is made to facilitate the banking Moreover, our partnerships with international institutions,
experience of dynamic segments of the population, demonstrating On the profitability front, Credit Libanais Group reported such as the International Finance Corporation (IFC), the
once again Credit Libanais’ pioneering role in reshaping the banking a pre-tax return on average equity (ROaE) and a pre-tax European Investment Bank (EIB) and the Arab Trade
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Annual Report 2012 Credit Libanais Group
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A Message From the Chairman
Our strategy continues to focus on
creating long-term and sustainable
value to all stakeholders. We intend
to do so by continuing to sustain
growth through active capital,
liquidity and funding management,
and capitalizing on the continuous
development of our human capital.
Finance Program (ATFP), allow our Group to offer a wide range of in the event of business disruptions. Moreover, Our strategy continues to focus on creating long-term
other long term privileged financing programs to customers. procedures of fraud management and control, and sustainable value to all stakeholders. We intend
policies to combat money laundering and financing to do so by continuing to sustain growth through
On the retail banking front, based on the centricity of our
of the crime according to acknowledged international active capital, liquidity and funding management, and
customers at the heart of the bank activities, the retail
best practices, namely those principles published capitalizing on the continuous development of our
portfolio continued to grow across all business lines, despite
by the Basel Committee on Banking Supervision human capital. We shall also endeavor to continue to
the challenging market conditions. More than 100 retail
are also meticulously implemented to safeguard the provide excellent service to customers, while looking for
products and services covering consumer lending, accounts
interests of all our stakeholders. lucrative and attractive new markets, and assuming our
services, bancassurance, payment gateway, credit cards and
corporate responsibilities in the communities where we
technologically advanced electronic banking services, are Furthermore, other support functions witnessed
operate.
offered wherever our Group has a presence. These services are adequate development to accompany the continuous
available across a multitude of channels and through an extensive growth of the Group. In terms of developing our On a final note, I must express my profound gratitude
domestic network of 66 branches and entities in Cyprus, Bahrain, workforce, extensive trainings were designed and to shareholders for their trust, to our employees for
Senegal, Iraq and Canada. With a global increase of 9.01% presented to the wide majority of our staff, namely their relentless efforts and to our customers for their
in retail products, our housing loans showed a healthy 23.62 in IT, soft skills and core banking courses. We also confidence and loyalty. Such synergy of human and
% growth; Iskan loans increased by 10.36 %; Personal Loans enhanced our existing sophisticated e-learning financial capitals is ensuring the sustainability of value
by 10.45 %; Military Iskan loans by 21.58 %, and credit cards solution, to include more than 400 core banking and creation that Group Credit Libanais continues to witness
by 2.16 %. In terms of delivery channels, we upgraded our behavioral courses. Impressive results were achieved across the years. I am pleased to share with you our
customer relationship management (CRM) to allow us cater to our throughout the year 2012, where staff showed great major activities and highlights on the pages of the 2012
customers’ needs in a more efficient and timely manner. motivation to learn and develop. Annual Report.

In parallel, audit, control and risk management functions are Based on our strong belief that, as a socially
dynamically managed. Effective strategies and policies are well responsible institution, we can succeed only when our
established and periodically reviewed, to ensure an enhanced communities succeed, we have taken the Corporate
operational efficiency across the Group, an optimal utilization of Social Responsibly to the strategic level and shall
resources and a transparent monitoring of capital consumption. embark on identification card implementation of
In addition, a rigorous stress testing is incorporated in the capital initiatives transversally across the Group, according
Dr. Joseph Torbey
planning exercise, ensuring that the bank duly identifies and to CSR international guidelines and standards. We
Chairman General Manager
mitigates the risks to which it might be exposed. Security and believe that our goal is to conduct business while
business continuity planning processes are implemented to integrating the social, ethical and environmental
enable the Bank continue critical operations, and limit losses dimensions in all aspects of our activities.
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Annual Report 2012 Credit Libanais Group
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Financial and Economic Section
The agitated year 2012 left behind a multitude of The bleak picture of Lebanon’s political, economic, and the year, down from $3.4 billion in 2011.
Financial
unanswered questions on the regional and international social silhouette through the year 2012 has prompted
The Lebanese real estate sector did not escape the
levels. At present, the stage is set with a blurry outlook the International Monetary Fund (IMF) to downwardly
and
claws of the reigning political impasses, with the
surrounding the U.S. economy, a struggling Euro zone revise its consensus growth estimates for Lebanon
number of real estate transactions plummeting by
against the persisting sovereign debt crisis, and a for the year 2012 from 3.0% in its April 2012 World
Economic
double-digit figures (10.14%) y-o-y to 74,569 in the year
frenzied Arab world skirmishing against the recurrent Economic Outlook (WEO) report to 2.0% in its October
2012, down from 82,984 in 2011. Paradoxically, the
violent clashes. In the midst of said turbulences, the 2012 WEO report. Capital inflows to the country were
Section
aggregate value of real estate transactions managed
Lebanese economy since the second half of the year also hampered by the intensified local and regional
to gain some 3.80% on an annual basis to $9.18 billion
2012, mirrored through a series of street blockades and deadlock, keeping investors on the sideline. In figures,
during the full year 2012, comparing to $8.84 billion in
internal collisions. financial inflows to Lebanon attained $15.26 billion as
2011. It is worth highlighting that the share of foreigners
at year-end 2012, in comparison with $13.90 billion
in real estate sales transactions widened to 1.86% as
in the year 2011, remaining considerably below the
at end of December 2012, up from 1.81% as at year-
$17.04 billion figure reported as at end of year 2010,
end 2011. Similarly, Lebanon’s construction permits
and the much higher $20.66 billion reading booked
contracted by 11.00% y-o-y to 12,361,736 sqm up to
during the full year 2009. Consequently, Lebanon’s
December 2012, with cement deliveries also shedding
balance of payments (BOP) continued to linger within
to 5,308,550 tons.
negative territories, with a BOP deficit of $1.54 billion up
to December 2012 in comparison with $2.00 billion in
the year 2011. Foreign direct investments (FDIs) influx
to Lebanon were another victim of the crippling turmoil
in the region, with Barclay’s Capital projecting net FDI
inflows to Lebanon to ease to $2.3 billion by the end of
Real Estate Transactions For the Year YOY
Despite regional and local political uncertainty, social unrest and
2011 2012 % Change
economic downturn, Lebanese banks continued to reaffirm
Number of Sale Transactions 82,984 74,569 -10.14%
2012
their ever-praised immunity in , owing to historically Value of Transactions (USD Billion) 8.84 9.18 3.80%
Average Value per Transactions (USD) 106,533 123,051 15.50%
proven capabilities to absorb shocks of all sorts.
Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit
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Annual Report 2012 Credit Libanais Group
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