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THE

LEBANON BRIEF

ISSUE 816

Week of 8 – 13 April, 2013

ECONOMIC RESEARCH DEPARTMENT

Rashid Karame Street, Verdun Area

P.O.Box 11-1540 Beirut, Lebanon

T (01) 747802 F (+961) 1 737414

[email protected]

www.blom.com.lb

S A L

The Lebanon Brief Table Of Contents of 14

ISSUE 816; Week of 8 -13 April 2013

S A L

TABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTS

FINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETS 3333

Equity Market 3

Foreign Exchange Market 5

Money & Treasury Bills Markets 5

Eurobond Market 6

ECONOMIC AND FINANCIAL NEWSECONOMIC AND FINANCIAL NEWSECONOMIC AND FINANCIAL NEWSECONOMIC AND FINANCIAL NEWS 7777

Balance of Payments at $291M in Two Months 7

Port of Beirut Resilient in Q1 2013 7

The Number of Tourists Reached 168,471 in February 2013 8

Cleared Checks Reach $17.27B by March 2013 8

Commercial Banks Consolidated Total Assets Grew to $153.97B in February 2013 9

New Vehicles Sales Decreased by 0.53% Up to March 2013 10

CORPORATE DEVELOPMENTSCORPORATE DEVELOPMENTSCORPORATE DEVELOPMENTSCORPORATE DEVELOPMENTS 11111111

BLOMINVEST Bank Calls Fund Holders to General Assemblies 11

Bank Audi Elects New Board of Directors 11

FOCUS IN BRIEFOCUS IN BRIEFOCUS IN BRIEFOCUS IN BRIEFFFF 12121212

The World Bank Report: Lebanon, Good Jobs Needed 12

This report is published for information purposes only. The information herein has been compiled from, or based upon sources we believe to be

reliable, but we do not guarantee or accept responsibility for its completeness or accuracy. This document should not be construed as a

solicitation to take part in any investment, or as constituting any representation or warranty on our part. The consequences of any action taken

on the basis of information contained herein are solely the responsibility of the recipient.

The Lebanon Brief of 14


S A L

FINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETS

Equity Market

Stock Market

12/4/2013 5/4/2013 % Change

BLOM Stock Index* 1,223.99 1,218.64 0.44%

Average Traded Volume 283,091 89,766 215.37%

Average Traded Value 1,985,046 855,361 132.07%

*22 January 1996 = 1000

Activity on the Beirut Stock Exchange (BSE) received

a boost this week after the appointment of Prime

minister designate Tammam Salam. The consensual

political result enhanced investors’ faith in the equity

market leading the BLOM Stock Index up by a

weekly 0.44% to reach 1,223.99 points. Lebanon’s

leading gauge recorded a 4.70% increase since year

start and a 2.93% increase compared to its value a

year earlier. The average daily traded volume

reached 283,091 shares worth $1,985,046

compared to 89,766 shares valued at $855,361 the

previous week. With respect to the market

capitalization, it widened by $42.27M to reach

$9.55B.

On a comparative scale, the Lebanese equity

benchmark failed to outperform the Morgan Stanley

(MSCI) Emerging index that edged 1.20% up to

1,029.22 points. The S&P Pan Arab Composite

LargeMidCap and the S&P AFE40 also rose by

0.90% and 0.78% to reach 114.98 points and 56.97

points, respectively.

On the regional level, Dubai Stock Exchange was

the best performer this week adding 5.07%. Egypt

bourse followed with a corrective increase of 4.94%

after the government decision to cancel the

previewed taxes on stock dividends and investment

gains from takeovers that weighed over the

Egyptian equity market for a long period. Jordan

was the worst performer amongst other Arab Stock

Exchanges declining by 1.31%.

On the Beirut Stock exchange, the real estate sector

captured 56% of total traded value with Solidere

shares class “A” and “B” edging up by 1.75% and

1.83% to close at $13.41 and $13.39, respectively.

On the London Stock Exchange (LSE), Solidere’s

GDR shares added 0.54%, closing at $13.02.

The banking sector saw a mixed performance with

BLOM Listed and GDR shares rising by 0.36% and

1.94% to close at $8.25 and $8.95, respectively. In

addition, a cross-trade took place during the week

on Byblos Bank shares with its price closing at

$1.68, 1.82% higher than last week. Audi Listed and

GDR both lost 1.52% and 0.29% to close at $6.50

and $6.97, respectively.

Banking Sector

Mkt 12/4/2013 5/4/2013 % Change

BLOM (GDR) BSE $8.95 $8.78 1.94%

BLOM Listed BSE $8.25 $8.22 0.36%

BLOM (GDR) LSE $9.00 $8.95 0.56%

Audi (GDR) BSE $6.97 $6.99 -0.29%

Audi Listed BSE $6.50 $6.60 -1.52%

Audi (GDR) LSE $6.90 $7.00 -1.43%

Byblos (C) BSE $1.68 $1.65 1.82%

Byblos (GDR) LSE $70.00 $74.50 -6.04%

Bank of Beirut (C) BSE $19.00 $19.00 0.00%

BLC (C) BSE $1.95 $1.95 0.00%

Fransabank (B) OTC $28.00 $28.00 0.00%

BEMO (C) BSE $1.84 $1.84 0.00%

Mkt 12/4/2013 5/4/2013 % Change

Banks’ Preferred

Shares Index *

105.88 106.11 -0.22%

BEMO Preferred 2006 BSE $100.00 $100.00 0.00%

Audi Pref. E BSE $101.20 $100.30 0.90%

Audi Pref. F BSE $100.00 $100.00 0.00%

Byblos Preferred 08 BSE $102.50 $102.50 0.00%

Byblos Preferred 09 BSE $102.90 $105.10 -2.09%

Bank of Beirut Pref. E BSE $26.85 $26.85 0.00%

Bank of Beirut Pref. I BSE $25.00 $25.00 0.00%

Bank of Beirut Pref. H BSE $26.80 $26.80 0.00%

BLOM Preferred 2011 BSE $10.20 $10.20 0.00%

* 25 August 2006 = 100

1050

1100

1150

1200

1250

Apr-12 Jul-12 Oct-12 Jan-13

BLOM Stock Index HI: 1,227.46

LO: 1104.42



S A L

Real Estate

Mkt 12/4/2013 5/4/2013 % Change

Solidere (A) BSE $13.41 $13.18 1.75%

Solidere (B) BSE $13.39 $13.15 1.83%

Solidere (GDR) LSE $13.02 $12.95 0.54%

On the London Stock Exchange, BLOM’s GDR

shares gained 0.56% to $9.00 while Audi’s GDR

lost 1.43% to $6.90. As for Byblos’s GDR shares,

they fell by 6.04% to close at $70.00.

Manufacturing Sector

Mkt 12/4/2013 5/4/2013 % Change

HOLCIM Liban BSE $15.00 $15.00 0.00%

Ciments Blancs (B) BSE $3.26 $3.26 0.00%

Ciments Blancs (N) BSE $3.00 $3.00 0.00%

The Bank’s Preferred Shares Index inched 0.22%

down to stand at 105.88 points following a 2.09%

decline of Byblos Preferred 09 to $102.90, while

Bank Audi Preferred shares class “E” increased

0.90% to close by the end of this week at $101.20

noting that Audi’s Preferred shares class “D” were

delisted as of the 4th of April.

Funds

Mkt 12/4/2013 5/4/2013 % Change

Beirut Preferred Fund BSE $101.50 $101.50 0.00%

BLOM Cedars Balanced

Fund Tranche “A” ----- $7,002.70 $6,924.78 1.13%


Fund Tranche “B” ----- $5,303.78 $5,244.76 1.13%


Fund Tranche “C” ----- $5,318.60 $5,259.41 1.13%

BLOM Bond Fund ----- $9,766.18 $9,766.18 0.00%

To summarize, the improvement seen on the BSE

is likely to face serious challenges through the

coming weeks in the wake of conflicting political

interests in the formation of the new cabinet.

Retail Sector

Mkt 12/4/2013 5/4/2013 % Change

RYMCO BSE $3.10 $3.10 0.00%

ABC (New) OTC $33.00 $33.00 0.00%

Tourism Sector

Mkt 12/4/2013 5/4/2013 % Change

Casino Du Liban OTC $515.00 $515.00 0.00%

SGHL OTC $7.00 $7.00 0.00%



S A L

Foreign Exchange Market

Lebanese Forex Market

12/4/2013 5/4/2013 %Change

Dollar / LP 1,512.50 1,512.50 0.00%

Euro / LP 1,969.55 1,948.59 1.08%

Swiss Franc / LP 1,617.14 1,602.19 0.93%

Yen / LP 15.21 15.66 -2.87%

Sterling / LP 2,315.67 2,295.32 0.89%

NEER Index** 104.61 105.09 -0.46%

*Close of GMT 09:00+2 **Nominal Effective Exchange Rate; Base Year Jan 2006=100

**The unadjusted weighted average value of a country’s currency relative to all major

currencies being traded within a pool of currencies.

Demand on the US dollar stabilized over the past week as the

range at which banks exchange the currency remained

constant at $/LP 1,510.5 - $/LP 1,514.5 with a mid-price of $/LP

1,512.5. Foreign assets (excluding gold) at the Central Bank

stood at $35.33 billion as of the end March 2013, 1.47% less

than end of February’s $35.86 B. Meanwhile, the dollarization

rate of private sector deposits stood at 64.6% in February 2013

compared to 65.6% in February 2012.

Nominal Effective Exchange Rate (NEER)

The Eurozone’s industrial output for the month of February surpassed

economists’ forecasts signaling a rise from recession status and thus

strengthening the Euro against the dollar. This positive indicator was

reinforced by the ECB’s readiness to adopt additional stimulus

measures when needed. In contrast, prospects in the US qualify as

sluggish, especially after the blunt fiscal tightening that downgraded

the International Monetary Fund (IMF)’s US growth outlook from a

forecasted 2% to 1.7%. March’s US retail sales data are a case in point

that the budget cuts subdued consumption and drove employment to

its biggest deceleration in nine months. However, the euro is still

deemed vulnerable given the ongoing recession in peripheral countries

in addition to the absence of an Italian government and the ever-lasting

tensions stemming from Cyprus’s rescue package. By Friday April

12th, 2013, 12:30 pm Beirut time, the euro closed at €/$ 1.31 up by

1.08% since last week. As for the dollar-pegged LP, it depreciated to

€/LP 1,969.55 from €/LP 1948.59 recorded on Friday April 5th. The

Nominal effective exchange rate (NEER) declined by 0.46% over the

cited period to 104.61 points, while its year-to-date performance stood

at 0.77%.

Money & Treasury Bills Markets

Money Market Rates

Treasury Yields

12/4/2013 5/4/2013 Change bps

3-M TB yield 4.39% 4.39% 0

6-M TB yield 4.87% 4.87% 0

12-M TB yield 5.08% 5.08% 0

24-M TB coupon 5.84% 5.84% 0

36-M TB coupon 6.50% 6.50% 0

60-M TB coupon 6.74% 6.74% 0

12/4/2013 5/4/2013 Change bps

Overnight Interbank 2.75 2.75 0

BDL 45-day CD 3.57 3.57 0

BDL 60-day CD 3.85 3.85 0

During the week ending March 28, broad Money M3, widened by

LP708 B ($469.65 M), to reach LP160, 219 B ($106.28 B). M3’s

growth rate reached 7.50% on a year-on-year basis and 1.45%

from end of December 2012. As for M1, It expanded by LP401 B

($266 M) since currency in circulation and demand deposits

increased by LP90 B ($59.70 M) and LP311 B ($206.30 M). Total

deposits (excluding demand deposits) registered a LP305.98 B

($202.97 M) expansion , justifiable by the LP193 B regression of

term and saving deposits in LP and the $331 M increase of

deposits denominated in foreign currency. During the period 21-

28 March, broad money dollarization rate increased by a weekly 5

basis points to attain 58.54% compared to its previous level of

58.49%. According to The Central Bank, the overnight interbank

rate stood at 2.75% by the end of February 2013.

In the TBs auction held on April 4th, the Ministry of Finance

raised LP663.84 B ($440.36 M) through the issuance of

Treasury Bills. The highest demand was witnessed on the 3-

year bill capturing 99% of total subscriptions, while the 1Y

and 2Y papers accounted for 0.5% each. During the auction,

the average discount rate for the 1Y Bill and the average

coupon rates for the 2Y and 3Y notes stood at 5.08%, 5.84%

and 6.50%, respectively. New subscriptions exceeded

maturing T-bills by LP57.943 B ($38.44 M).

93

95

97

99

101

103

105

107

Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13



S A L

Eurobond Market

Eurobonds Index and Yield 11/4/2013 4/4/2013 Change Year to Date

BLOM Bond Index (BBI)* 107.910 107.880 0.03% -1.05%

Weighted Yield** 5.31% 5.33% -2 29

Weighted Spread*** 457 463 -6 27

*Base Year 2000 = 100; includes US$ sovereign bonds traded on the OTC market

** The change is in basis points ***Against US Treasuries (in basis points)

Lebanese Government Eurobonds

Maturity - Coupon

11/4/2013

Price*

4/4/2013

Price*

Weekly

Change%

11/4/2013

Yield

4/4/2013

Yield

Weekly

Change bps

2014, Apr - 7.375% 105.25 105.13 0.12% 2.00% 2.33% -32

2014, May - 9.000% 107.00 107.00 0.00% 2.17% 2.41% -25

2015, Jan - 5.875% 103.63 103.63 0.00% 3.71% 3.76% -5

2015, Aug - 8.500% 110.00 110.25 -0.23% 3.91% 3.88% 3

2016, Jan - 8.500% 110.00 109.88 0.11% 4.59% 4.69% -10

2016, May - 11.625% 121.00 121.00 0.00% 4.25% 4.33% -8

2017, Mar - 9.000% 114.75 115.00 -0.22% 4.83% 4.80% 3

2018, Nov - 5.150% 99.75 99.88 -0.13% 5.20% 5.18% 3

2020, Mar - 6.375% 103.25 103.75 -0.48% 5.80% 5.71% 8

2021, Apr - 8.250% 114.00 114.50 -0.44% 6.02% 5.95% 6

2022, Oct - 6.100% 100.88 101.25 -0.37% 5.98% 5.93% 5

2023, Jan - 6.00% 99.00 100.06 -1.06% 6.14% 5.99% 15

2024, Dec - 7.000% 106.75 107.25 -0.47% 6.18% 6.12% 6

2026, Nov - 6.600% 101.25 102.88 -1.58% 6.46% 6.28% 18

2027, Nov - 6.75% 100.75 103.50 -2.66% 6.67% 6.38% 29

• Mid Prices ; BLOMINVEST bank

The sluggish performance of the Lebanese Eurobonds market over the past period relatively stabilized this week registering

a calm activity. The BLOM Bond Index (BBI) barely edged up by 0.03% to 107.91 points as investors’ optimistic outlooks

concerning the appointment of Salam pushed them towards the risky assets market at the expense of the Lebanese

Eurobonds. Yields on the medium and long term Lebanese Eurobonds maturing in 2018 and 2023 increased by 6 basis

points (bps) and 5 bps to stand at 5.22% and 6.17%, respectively. On another front, the ministry of Finance issued

Eurobonds for $1.1 billion, of which $600 million are reopening of 2023 bearing a 6% coupon, and $500 million reopening of

2027 bearing a 6.75% coupon. Yields on the 2023 maturities were last quoted at 6.15% putting their price at a discount to

par of 98.882, while yields on the 2027 maturities were at 6.7% trading them at a premium or 100.451. In the emerging

markets, a higher demand was tracked by the JP Morgan emerging markets’ bond index that maintained its upward trend

increasing by a weekly 1.01% to stand at 673.29 points.

In the US, forecasts about the Central Bank cutting its bond purchases weighed over U.S government securities that

dropped during the past week driving yields up. Accordingly, the 5Y and 10Y US benchmark Treasury notes and bonds

yields increased by 5 bps and 4 bps to end the week standing at 0.74% and 1.82%. The respective spreads between the 5Y

and the 10Y US bonds and their comparable Lebanese Eurobonds widened each by 1 bps to stand at 448 bps and 435 bps

compared to 447 bps and 434 bps registered a week ago. The medium term spread compares well with Lebanon’s credit

default swap for 5 years (CDS) which was last quoted at 400-450 bps, compared to its previous range of 407-429 bps.

In Saudi Arabia and Dubai, 5-year CDS quotes narrowed to 60-65 bps and 205-215 bps compared to 65-70 bps and 219-229

bps, respectively. In emerging economies, Brazil’s and Turkey’s 5-year CDS quotes also narrowed to 113-115 bps and 122-

125 bps compared to 132-133 bps and 142-145 bps registered last week.

4.30%

4.80%

5.30%

5.80%

Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13

Weighted Effective Yield of Eurobonds



S A L

EEEECONOMIC AND FINANCIALCONOMIC AND FINANCIALCONOMIC AND FINANCIALCONOMIC AND FINANCIAL NEWS NEWS NEWS NEWS

Change in Net Foreign Assets

Up to February, $M

Source: BDL

Container and Transshipment Activity Through

Port of Beirut

(Measured in Twenty-Foot Equivalent Units – TEU)

Source: Port of Beirut Authorities

Balance of Payments at $291M in Two Months

Despite political and security tensions, the Balance of Payments

(BoP) remained in positive ground registering a surplus of

$290.8B during the first two months of the year. Lebanon’s BoP

recorded a deficit of $91.7M in February, compared to a surplus

of $382.5M a month earlier. Net Foreign Assets (NFA) of the

Central Bank (BdL) rose by $1,001.2M, compared to the

$1,179.9M growth in January, while NFAs of commercial Banks

diminished by $1,092.9M, following a $797.4M decline a month

previously. Accordingly, Losses in February from the trade

deficit outweighed other receipts from the external sector due

to sustained security concerns in the region, causing a monthly

decrease in net foreign assets (NFA). Up until February, NFAs of

BdL rose $2,181.1M, while NFAs of commercial banks declined

$1,890.3M.

Port of Beirut Resilient in Q1 2013

Port of Beirut’s (PoB) total revenues registered $49.92 M in the

first quarter of 2013, 25.66% more than Q12012’s $39.73 M.

Accordingly, total container activity increased by 8.73% y-o-y

during the Q12013 to reach 265,138 twenty-foot equivalent

units (TEU) compared to 243,853 TEU recorded during the same

period a year earlier. This is primarily attributed to the biggest

container activity since Q12009 reaching 168,308 TEU, a

significant 22.09% y-o-y rise outpacing the 8.65% y-o-y drop in

transshipment from 105,997 TEU up to March 2012 to 96,830

TEU up to March 2013. Transshipment slowed as neighboring

tensions deterred shipping companies from routing large

volumes through the PoB. Accordingly, CMA CGM’s

transshipment volume fell by 42.84% quarter-on quarter from

56,325 TEU to 32,196 TEU, while MSC’s transshipment volume

was 14.50% lower in March 2013 compared to March 2012.

Demand for cars ameliorated throughout the first quarter of

2013, increasing by 4.30% y-o-y to amount to 20,785 units

compared to 19,928 units in the same quarter of 2012. As for

imported and exported merchandises directed via the port of

Beirut, they registered 1920.9 tons up to March, a 17.54% y-o-y

growth when compared to last year’s 1634.2 tons. Up until

March, the number of vessels that docked at the country’s main

port reached 522, 5.88% higher than the 493 vessels that

harbored during the same period in 2012.

-162.9

283.5

664.4 714.2

-668.8

-423.9

290.8

2007 2008 2009 2010 2011 2012 2013

131,972138,970

131,669137,856

168,308

98,828

73,299

109,343 105,997

96,830

Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013

Container Activity Transhipment Activity



S A L

Arab Tourists Share of Total Tourists in Lebanon

Source: Ministry of Tourism

Value of Cleared and Returned Checks

Up to March, $B

Source: ABL

The Number of Tourists Reached 168,471 in

February 2013

The regional turmoil, the domestic bickering and the series of

kidnappings fashioned an unfavorable environment for tourism

in Lebanon during the first two months of this year. Lebanon’s

tourism sector failed to recover in February with hotels and

restaurants activity recording big losses in revenues.

Accordingly, the number of visitors up until February fell 12.9%

y-o-y to 168,471 visitors, after having decreased 5.7% y-o-y

during the same period in 2012. Arab tourists continued to

account for the bulk of vacationers in Lebanon, representing

38% of the total. However, their number decreased by 25.2%

from last year to 64,001 visitors as most GCC countries issued

travel warning banning their citizens from visiting Lebanon over

security concerns. Iraqis made up to 33% of the group, while

Jordanians and Egyptians represented 19% and 14%

respectively. Kuwaitis and Saudis accounted for 12% and 10%

respectively, whereas Emiratis represented only 2%. As for

incomers from Europe and America, they accounted for 32%

and 13% respectively. The number of European tourists slid by

2.4% y-o-y to 53,431, while the number of tourists from America

diminished to 21,868 from 22,019 in the first two months of

2013. Tourists from Asia followed with 16,518 visitors, down by

5.4% from the first two months of 2012. For the month of

February alone, the number of tourists reached 87,411, 10.4%

lower than the same month a year ago. The 50 days of

discounts promotion in Lebanon starting Jan.8 until Feb.18

helped increasing the number of tourists in February compared

to January the same year by a monthly 7.8%.

Cleared Checks Reach $17.27B by March 2013

Cleared checks activity maintained its last year level in the first

quarter despite its decline during March as consumer spending

eased amid unstable political environment. In fact, the number

of checks cleared by Banque du Liban reached 3.16M worth

$17.27B in the first quarter of 2013 compared to a total of

3.16M checks valued at $17.37B registered a year earlier.

Checks denominated in foreign currencies declined by 2.31% y-

o-y to $13.46 B, lowering the dollarization rate of checks from

79.33% to 77.96%. The value of checks denominated in

Lebanese pounds increased by 5.98% to reach $3.80B up to

March 2013. As for returned checks that account for 2.73% of

the total value of checks, they jumped by 21.58% y-o-y to

$471M. In the month of March alone, the value of cleared

checks dropped by 4.60% from March 2012 to attain $5.78B.

The value of checks denominated in foreign currencies, which

represents 77.66% of the total, edged 7.68% down to $4.47B,

while that of checks denominated in LP rose by 7.94% to

$1.29B.

36%

46%

48%

36%

44%

38%

2008 2009 2010 2011 2012 2013

12.19

16.91 16.97 17.37 17.27

0.222

0.470

0.3240.387

0.471

2009 2010 2011 2012 2013

Cleared Checks Returned Checks



S A L

Commercial Banks Assets

Up to February, $B

Source: BdL

Commercial Banks Consolidated Total Assets Grew

to $153.97B in February 2013

The Lebanese commercial banks continue to show resilient

performance, posting growth rates in most of their balance

sheets accounts although at a clearly decelerating pace. Total

consolidated assets of commercial banks as at February end

recorded an annual rise of 6.8% to reach $153.97B, growing by

1.4% during January-February compared to 2.5% during the

same period of 2012. Total claims on the private sector rose by

10.8% y-o-y to reach $38.31B, accounting for 25% of total

assets. However, claims on private sector grew by 1.1% since

December 2012, compared to a faster growth rate of 2.7%

during the same period last year, indicating sluggish progress in

domestic consumption that is further revealed through the

slight decline of imports observed over the same period. The

Lebanese commercial banks’ holdings of government securities

also increased by 10.9% y-o-y to $32.25B as treasury bills in

domestic currency rose 6.7% and bills in foreign currencies

added an annual 16.4%. On a year to date basis, claims on the

public sector switched from a decrease of 0.5% during the first

two months of 2012 to a rise of 3.6% during the same period

this year. Banks seemed to be leaning towards dollar-

denominated securities since demand on Eurobonds increased

by 12.6% on a y-t-d basis while it dropped by 0.1% over the

same period of 2012. As for the liabilities, total resident and

nonresident private sector deposits grew by 7.6% from

February 2012 to reach $126.30B with the deposits in LBP and

Foreign currencies adding 10.1% and 4.2% y-o-y to $44.65B and

$81.65B, respectively. Despite the y-o-y growth, the progression

of the total private sector deposits in LBP and Foreign

currencies decelerated from 2.34% and 1.02% during the first

two months of 2012 to 1.5% and 0.8% during the same period

of 2013, respectively. Accordingly, the dollarization rate of the

private sector deposits slid to 64.6% from 65.6% in February

2012 and 64.8% in December 2012.

.

84.16

95.1

118.27

130.06

144.11

153.97

2008 2009 2010 2011 2012 2013



S A L

New Cars Registrations

Up to March

Source: Association of Car Importers in Lebanon

New Vehicles Sales Decreased by 0.53% Up to

March 2013

According to figures released by the Association of Car

Importers in Lebanon, new passenger and commercial vehicles

registered a 0.53% drop during the first quarter of 2013 to reach

7,928 vehicles compared to 7,970 recorded a year earlier. This

slight decline came as a result of a 23% y-o-y drop in

commercial car registration which stood at 444 cars during the

first quarter that was offset by a 1.24% y-o-y rise in passenger

car registration amounting to 7,484 cars. Commercial car sales,

which are somewhat indicative of business spending appetite,

demonstrate a reduction in corporate budgeted expenditures,

possibly in reaction to the political deadlock which was

character of that period. Korean cars continue to be highly

popular with their share of total car registrations widening from

42% to 46% with 3,630 registered cars, up 7% from the first

quarter of 2012. Demand for Chinese cars surged by 136%,

allowing them to double their market share from under 1% in

Q1 2012 to almost 2% in Q1 2013. Meanwhile, demand for

European models fell 7.5% to 1,685 cars and that of Japanese

and US cars declined 10% and 5.4% to reach 1,962 and 494

respectively. Car sales breakdown according to brand ranked

Kia at the top with 2,092 vehicles sold, followed by Hyundai

with 1,538 units, Nissan (878 units) and Toyota (496 units). As

for sales breakdown by Lebanese distributors, NATCO SAL

maintained its grasp over the market with its 26.4% share.

Century Motor Co and Rasamny Younis Motor Co captured

19.4% and 11.8% of the market, while Bassoul Heneine SAL

ranked 5th and accounted for 6.9%.

6,833 6,7806,925

7,970 7,928

2009 2010 2011 2012 2013



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CORPORATE CORPORATE CORPORATE CORPORATE DEVELOPMENTSDEVELOPMENTSDEVELOPMENTSDEVELOPMENTS

List of Blominvest Funds & Performance 2012

Fund Name 2012

Performance

BLOM Cedars Balanced Fund Tranche A 3.85%

BLOM Cedars Balanced Fund Tranche B 2.41%

BLOM Cedars Balanced Fund Tranche C 3.85%

BLOM Petra Balanced Fund Class A -1.66%

BLOM Petra Balanced Fund Class B -1.65%

BLOM Pyramids Balanced Fund 31.50%

BLOM Saudi Arabia Fund 7.46%

BLOM Money Market Fund 3.12%

BLOM Bond Fund 2.7%

Source: Blominvest Asset Management Department

Net Dividends per Series of Shares

Share Series Net Dividends per Share

Preferred “D” Shares USD 0.73625

Preferred “E” Shares USD 5.7

Preferred “F” Shares USD 3.8

Common Shares LBP 572.85

Source: BSE

BLC Bank Financial Highlights

(In $M)

2011 2012 % chg

Customer's Deposits 3,622 4,292 18.50%

Net Loans & Advances to Customers

1,533 1,776 15.85%

Net Profit 48.09 33.28 -30.80%

Shareholders’ Equity 358.81 373.96 4.22%

BLOMINVEST Bank Calls Fund Holders to General

Assemblies

BLOMINVEST Bank s.a.l invites holders of its balanced funds –

Cedars, Petra, and Pyramids – as well as its Money Market Fund

to four separate general assemblies, which will be held

consecutively between 12 pm and 2pm on April 24, 2013 at the

banks’ headquarters in Verdun, Rachid Karame Street. The

meetings will include hearings of the board’s annual report and

auditor’s-findings, validation of 2012 financial statements,

agreement on the allocation of the year’s profits, and the

election of a new representative for each of the funds’

shareholders. In addition, the meeting will clear the Chairman of

administrative duties for 2012 and touch on various related

matters. Shareholders are encouraged to review the relevant

documents at the bank’s headquarters located in Verdun, Rachid

Karame Street, Beirut.

Bank Audi Elects New Board of Directors

Since the mandate of Bank Audi’s Board of Directors expired,

the Ordinary General Assembly held a meeting on April 8th, 2013

in order to re-designate Directors for a 3-year term. The new

board members are: H.E Mr. Raymond W. Audi, Dr. Marwan

Ghandour, Mr. Samir N. Hanna, Sheikha Suad H. Al Homaizi,

Sheikha Mariam N. Al Sabbah, Mr. Marc J. Audi, Dr. Freddie C.

Baz, Dr. Imad I. Itani, Mr. Mario J. Saradar, Mr. Abdullah I. Al

Hobayb and Dr. Khalil M. Bitar. This new board re-appointed H.E

Mr. Raymond W. Audi as Chairman of the board - General

Manager and Dr. Marwan Ghandour as Vice-Chairman in addition

to endorsing the re-appointment of Mr. Samir Hanna as the

Group CEO –General Manager. The bank’s Ordinary General

Assembly also announced the allocation of net dividends

(following the 5% tax rate deduction). Shareholders taken into

account are those listed in April 5th’s records.

Erratum: BLC Bank Reports 31% Decline in 2012

Profits

In the previous issue of “the Lebanon Brief”, news about BLC

bank reported that “Total shareholders’ equity registered a

30.7% drop to $33.31million compared to $48.09 million

registered in 2011”. In fact, shareholders’ equity increased by

4.22% from $358.81 million to $ 373.96 million.



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FFFFOCUS IN BRIEFOCUS IN BRIEFOCUS IN BRIEFOCUS IN BRIEF

The World Bank Report: Lebanon, Good Jobs Needed

The Role of Macro, Investment, Labor Education and Social Protection Policies

Trend & Growth in Employment by Sector

Sector

Net Job

Creation

(2004-2009)

CAGR

2004-

2009

Share of Net Job

Creation by

Sector

Agriculture -3,216 -1% -2%

Industry -12,664 -2% -8%

Construction 16,753 3% 10%

Trade 98,645 7% 61%

Transport, post, and telecom 3,109 1% 2%

Services 53,832 2% 33%

Financial Intermediation and Insurance 5,162 5% 3%

Not Available 111 5% 0%

Total 161,732 3%

Equilibrium Distribution of the Labor Force by

Employment Status

Source: CAS, World Bank, 2010 Employer-Employee Survey

The World Bank issued a new report titled “Lebanon: good jobs needed” surveying and defining the labor market dynamics

in Lebanon and building on economic models to conclude with suggested frameworks to improve job creation in the

country as well as enhancing the current opportunities. The report is the result of a 3-year close cooperation with the

Lebanese government and multiple ministries and bodies.

As there was a lack of data on the labor market, the World Bank conducted its own survey to come up with the necessary

inputs for its macro analytical framework. The survey conducted in 2010 shows that the participation rate is currently at

47% of the working age population with labor force encompassing only 70% of men and 24% of women in their working

age. Unemployment stands at a high 11% and reached more alarming levels amongst youth (34%) and women (18%),

noting that the vast majority of the unemployed are under 35 years of age.

The report’s main findings regarding the labor market in Lebanon showed that insufficient jobs were created over the past

decade as the new comers to the job market each year were 7 times higher than the number of jobs created by the

economy. While the economy was creating an average of 3,400 new jobs each year between 2004 and 2007, the report

estimated that over the next 10 year, an average of 23,000 new entrants is expected to join the labor market each year. The

gap between the number of entrants and the created jobs is due to, among other things, the fact that the growth rate of the

economy didn’t come from labor intensive sectors employing high skilled workers. Lebanon’s GDP grew between 1997 and

2009 at an average rate of 3.7% per year while employment barely achieved a growth of 1.1%.

The report also revealed unsuspected characteristics of the Lebanese labor market, such as the concentration of labor in

low productivity sectors, the reign of informal employment, the replacement of highly skilled workforce by incoming low-

skilled force, and long job search durations.

According to the report, the main contributing sectors to net jobs creation between 2004 and 2009 were trade (61%), low

productivity services sector (33%) and construction (10%). Low productivity sectors currently employ 35% of wage

employees and 61% of self-employed, and include wholesale and retail trade, repair of motor vehicle, transportation and

storage, accommodation and food services activities and real estate activities. On the other hand, higher productivity

sectors such as information and communication technologies, financial and insurances and those involving professional,

Informal wage

employees, 19%

Unemployed, 11%

Employer, 5%

Self-employed high skilled,

5%

Self-employed low skilled,

31%

Formal wage employees,

29%



S A L

scientific and technical activities actually shed jobs, currently employing 14% of wage employees and 3% of the self-

employed.

The high number of skilled graduates in Lebanon was also counterintuitive to the fact that 40% of the working force carries

no or only primary education, raising the migration issue. Despite lack of official data, estimates of outmigration ranged

between 200,000 and 400,000 over the period 1991 to 2009, incentivized by salary competition from the Gulf Cooperation

Countries and the increase in prices in Lebanon. This further enabled low skilled immigrants to replace highly skilled

workers leaving the country.

On the other hand, resident job seekers suffered from inefficient job searches and mismatches in the demand and supply of

soft skills. In fact, duration of unemployment spell remains long and highly volatile across age groups, close to 13 months

for men and 10 months for women on average. Eventually, 41% of employees still reported to have skills that do not match

at all or only somewhat match those required by their job. On the flip side of the coin, employers also reported gaps

between demanded skills and available ones. In the case of managerial positions, the main gaps were related to computer

and office equipment handling, ability to work independently, numerical skills and lack of foreign language. For the non-

managerial, the main gaps were the ability to work in a team, numerical skills, foreign language, professional

communication skills and problem solving skills.

The report also denoted the importance of the current social security status and questioned its impact on the labor market.

The current levied taxes increase the cost of labor and encourage informal wage employment and self-employment in low

productivity activities. For a middle-income country, transition rates between formal and informal employment in Lebanon

go against the tide, as 30% of both informal and formal wage employees move into self-employment every year, whereas

the opposite is less true and quite low.

To draw upon the matters raised in its survey, the report proposed corrective strategies to improve macroeconomic

conditions and investment opportunities to enhance growth potential and promote the creation of high quality jobs. Focus

was attributed to increasing government’s spending in infrastructure (although the reports suggest fiscal consolidation at

the same time to reduce borrowing needs and decrease spreads to encourage longer term productive investments),

improving business environment as well as reforming the social security system. Moreover, emphasis on Labor regulations

highlighted the need for transparent and objective techniques in setting the minimum wages levels, as well as to flex laws

for employers in the management of human resources in parallel to enforcing proper working conditions. The report also

drew attention to the necessity of reforming the social insurance system, pensions, health and unemployment benefits, and

recommended the quick adoption and implementation of the new pension law, thereby replacing the end-of-service

indemnity program by a transparent system based on a defined contribution formula.

Government intervention was encouraged on multiple levels, such as providing appropriate credit for SME and the self-

employed, reviewing tax policies that affect investment in the productive sectors, and improving commercial and intellectual

property laws.

Finally, the report generated a simulation using a General Equilibrium model of the Lebanese economy, incorporating 3

main assumptions to examine their impact on job creation. The assumptions built on (i) elimination of the pay-roll tax that

finances health insurance which was criticized for its distortion of labor demand in the formal sector, and replacing it by an

income tax, (ii) increasing investments in infrastructure (energy, transport and telecommunications), and (iii) increasing total

factor productivity through improvements in the business environment.

Results showed that the implementation of the integrated above package would lead to an increase in aggregate

investment by 10% in 2012 and up to 25% in 2015. Over the same period, the growth rate of GDP could increase by 2 to

3%. Formal labor demand would increase by 4%, leading to a reduction in unemployment of 22% initially and close to 37%

in 2015. Migration and informal employment would also decline considerably.

ErratumErratumErratumErratum: In the previous issue of “The Lebanon Brief”, the focus titled “Monetary Survey” mentioned that “ this led Net

foreign assets (NFA) excluding Gold (..) to drop $680.78 million..” The correct would be that NFA including Gold dropped

$680.78 million.

The Lebanon Brief

of 14

Your Investment Reference

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Research Department:

Riwa Daou [email protected]

Mirna Chami [email protected]

Youssef Chahine [email protected]

Maya Mantach [email protected]

Marwan Mikhael [email protected]

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