As one of the oldest banks in Lebanon, BLOM Bank has always been at the centre of the country’s financial system. Its universal banking services revolve around trust and credibility, built with its clients through long-term personal relationships, integrity, and the strong financial results it has consistently delivered.
The European caught up with Chairman and General Manager, Saad Azhari, to find out more about the bank and its commitment to banking in Lebanon and beyond.
Q: Outline the history of BLOM Bank?
Saad Azhari: BLOM Bank was established in 1951 and its initial activities concentrated on trade financing and commercial banking. But, of course, the bank did not stay still, and has always adopted a dynamic and first-mover strategy that transformed it over the years to a leading regional bank. In 1953, it expanded to Saudi Arabia to tap into the emerging oil-driven business activity in the Kingdom, and in the 1970s it entered into Europe and the UAE to serve the rising Lebanese and Arab expatriate communities there. Since the early 2000s it has expanded into various countries in the Arab East and the rest of the Gulf to spread its brand-name services in these promising markets. As well as these horizontal expansions, the bank undertook a process of vertical deepening that made it into a full-service bank, offering a wide menu of services and a diversified platform of innovative products and financial solutions.
Q: Highlight the broad range of services BLOM Bank provides?
SA: The bank is a universal bank with a rich spectrum of banking and financial services. As a result, its activities centre on full-service products and services in trade finance, retail and corporate banking, private and investment banking, Islamic banking, asset and wealth management, capital market operations, and insurance. The geographic spread of the bank’s services is mainly as follows: universal banking services in the Arab East; private, investment, and corporate banking services and asset management in the Gulf; and corporate and private banking services and trade finance in Europe.
Q:Who are your services directed at?
SA: BLOM Bank directs its services to a wide cross-section of individuals and companies across the countries it operates in. On the lending side, its loan portfolio reached $6.35bn in 2013 and it was structured as follows: retail 38.2 per cent; corporate 24.1 per cent; SMEs 18 per cent; project finance 11.7 per cent; real estate 5.2 per cent; syndicated loans 1.4 per cent; and securities 1.4 per cent. On the deposits side, its deposits totalled $22.6bn and they were divided as follows: retail (less than $100k) 14.8 per cent; middle (between $100k and $1m) 35.3 per cent; high net worth (HNW, more than $1m) 34.04 per cent; and corporate 15.9 per cent. Besides, the bank had $5.6bn in assets under management for its HNW clients.
Q: Have the unstable economic and political conditions affected BLOM Bank’s performance in 2013?
SA: The Syrian crisis and its spill-over into Lebanon have naturally had an effect on all Lebanese banks, including BLOM Bank. The resulting slowdown in the pace of economic activity carried over to banking activity, and the increase in needed provisions to hedge against any unfavourable credit conditions dampened bank profitability. But these hard operational circumstances are not new to Lebanese banks – they have been working under heightened conditions of risk and uncertainty since 1975 – and the resilience that has become a trade mark of Lebanese banks meant that they continued to reap decent growth and profitability. This is best reflected in BLOM Bank’s performance in 2013, which saw its assets increase to $26.2bn, up by 4.4 per cent on 2012; and its loans rise to $6.4bn, higher by 5.3 per cent. Profits also increased to $352.8bn, rising by 5 per cent and implying the highest ROAE among listed banks at 16.8 per cent. The bank also maintained a strong financial position, with a Basel III CAR of 14 per cent, an NPLs ratio of 4.9 per cent, a primary liquidity ratio of 66 per cent, and a coverage ratio of NPLs (both specific and collective) of 106 per cent.
Q: Discuss BLOM Bank’s commitment to corporate social responsibility (CSR).
SA: BLOM Bank’s motto and mission statement is “Peace of Mind”. By this the bank modestly means peace of mind not only to its stakeholders but to the community at large. Acting on this belief has made the bank the leading Lebanese bank in CSR activities through a series of highly reputed and well recognised CSR activities. Among these we mention the BLOM-MasterCard “Giving” card that funds the removal of all (425,000) landmines in Lebanon and the planting of trees instead in the affected areas – a programme that has received many accolades and is considered the first of its kind in the world. Also, the bank supports youth optimal educational and career paths through its flagship programme BLOM “Shebab”, which guides students towards these goals using a detailed electronic site, specialised seminars, and jobs fairs. In addition, and also in the realm of education, the bank sponsors two more programmes: “ProtectEd”, which promotes safety and civility in schools; and “Open Your Tomorrow”, which facilitates the use of electronic tablets among students. That is as well as funding a host of environmental, humanitarian, and cultural programmes on a regular and generous basis.
Q: Outline the Lebanese government’s strict anti-money laundering measures.
SA: The Lebanese government and Central Bank are serious about combating money laundering/terrorist financing, and their efforts in this respect are not new and have been quick and decisive. In 2001, the Lebanese Parliament passed Law 318 incriminating ML/TF activities and establishing the Special Investigation Committee, Lebanon’s financial intelligence unit in charge of investigating ML/TF activities. Also, over the years, the Central Bank of Lebanon has issued several regulatory directives aimed at combating ML/TF in accordance with current legislation and regulations that comply with FATF’s 40+9 recommendations and 25 criteria. As a result, all banks are required to have their own compliance units monitoring and reporting any suspected ML/TF operations. I am happy to say that since then Lebanon has not been on any FATF list of jurisdictions with deficiencies in anti ML/TF measures. I am happy to add BLOM Bank has consistently abided with these rules and regulations. The bank follows a strict policy regarding combating ML/TF and operates an active and diligent compliance unit to always make sure its record is free from any infringing activity.
Q: BLOM Bank has the widest foreign presence amongst Lebanese banks. Why is expansion so important?
SA: BLOM Bank has the widest foreign expansion among Lebanese banks and is present in 13 countries: Lebanon, Syria, Egypt, Jordan, Iraq, UAE, Saudi Arabia, Qatar, France, Switzerland, England, Cyprus, and Romania. Its entry into Iraq is fairly recent with an operating branch in Baghdad and an upcoming branch in Irbil. The bank has 212 banking and financial units spread in these countries through 15 subsidiaries. Foreign expansion is of strategic importance to the bank because it allows the bank to diversify its revenue base and risk profile away from the saturated Lebanese market, gives the bank an opportunity to partake in the promising emerging markets in the region, and enhances the synergies that the bank can reap from its services across different countries and clients. The bank serves the niche markets of Lebanese and Arab expatriates in Europe, and acts as one of the trusted, full-service “local” banks in the Middle East region, taking advantage of business connections, cultural similarities, and product replicability.
To find out more please visit: www.blombank.com