CREDIT · PDF fileIntroduction to Capital Markets and Private Banking ... Our Sustainable...

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Our Values are our compass. CL values include mutual trust and respect, customer focus, creativity, achievement, and integrity.

Mutual trust and respectWe want all staff in our working community to trust and respect each other. We should accept diversity, be open to new ways ofthinking and be prepared to help one another in times of need. The joy of success lies in sharing experiences.

Customer focusWe want to understand, anticipate and meet our customers’ present and future needs. Close cooperation with customers willensure fulfillment of their needs and their problems steer both our immediate and long-term actions.

V a l u e s

Credit LibanaisTraining Report 2005 1

CreativityWe embrace change. We continuously seek better solutions for the customers and the Bank.

High AchievementWe strive to be the best in our field, by developing products, services and solutions that reflect financial excellence.

Integrity We value each other’s ideas and opinions. We treat colleagues fairly, sincerely and courteously, irrespective of differences inbackground or beliefs.

Contents

Chairman’s Address

Human Resources Manager’s Report

Performance-Driven Culture

Spreading the ISO Culture at Credit Libanais

Employee-Management Communication Channels

HR-Employee CommunicationEmployee NewsletterValued Suggestions for Improvement

Major Training Activities

In-house Training Programs

Enhancing Credit SkillsIntroduction to Capital Markets and Private BankingIntegrated Risk Management SystemsPbViews for Performance EvaluationPotential Assistant Branch ManagerHuman Resources Culture EnhancementLetters of Credit TrainingCustomer Relationship Management: Entreprise Data WarehouseGroup Ethics and Compliance with AML best practices in the Banking Profession

External Training Programs

Statistics of the Year

Trainers’, Employees’, and Customers’ Feedback

2

4

6

8

10

101112

13

14

141415151515161616

17

18

20

Credit Libanais Group Annual Report 20052

Group Key Figures

(*) Excluding profits for the current year

As at 31 December (millionBP)

Balance Sheet

Total assets

Customer depositsShareholders' equity

Liquid assetsLoans & advances to customers

Income Statement

Net interest incomeNet financial incomeNet profit for the year

Liquidity ratioSolvency ratio (*)

Return On average Assets (ROA)Return On average Equity (ROE)

2005

4,773,222

4,026,105343,547

3,645,899899,056

83,287126,39234,932

83%25.12 %

0.91%13.61%

2004

4,521,760

3,806,371326,367

3,480,405813,779

82,873114,07728,680

84%24.09%

0.82%13.22%

2003

4,057,557

3,440,318236,765

3,091,706758,012

85,801115,10530,865

82%20.65%

1.03%18.64%

2002

3,454,376

2,871,088218,759

2,459,371777,586

74,172103,341

28,528

78%17.18%

1.03%18.21%

Strong Capital Base

Shareholders’ Equity (billion LPB)

Previous year Solvency ratio (%)

350

300

250

200

150

100

50

0

2002 2003 2004 2005

25

20

15

10

5

0

219237

326344

Credit Libanais GroupAnnual Report 2005 3

Group Key Figures

Total Assets (billion LPB)

Previous year

Growth Trend in Banking Activity

Sustainable Profitability and Value Creation

Liquid Assets (billion LPB)

Previous year

Net Financial Income (billion LPB)

Net interest income Non-interest income Previous year

Total Customer Deposits (billion LPB)

Previous year

Loans & Advances to Customers (billion LPB)

Previous year

200

150

125

100

75

50

25

0

2002 2003 2004 2005

103115 114

126

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2002 2003 2004 2005

2,459

3,4803,646

5,250

4,500

3,750

3,000

2,250

1,500

750

0

2002 2003 2004 2005

4,0574,522

4,773

1,050

900

750

600

450

300

150

0

2002 2003 2004 2005

778 758814

899

4,000

3,500

3,000

2,500

2,000

1,500

1,000

0

2002 2003 2004 2005

2,871

3,440

3,8064,026

3,454

3,092



Lebanon recorded a sad year during 2005 marked by the assassination offormer Prime Minister Rafic Hariri whose contributions to the country and itseconomy are innumerable. His tragic departure perturbed the wholeLebanese economic sector during the first quarter of the year.

As a result, 2005 was a challenging year for our strategy which proved, oncemore, its resilience and flexibility in the face of such tragic events with long-lasting economic repercussions. We were able to transform adversities into astandard everyday event which translated into a substantial growth of 5.6%in total assets and 22.3% in pre-tax profits, well above average marketperformance. The pillars of our successful strategy rest in the diversificationof our sources of income, our mastering of a sound Risk Managementstrategy, our ongoing streamlining of operations, a strong brand name, awide geographic distribution of customer base, several partnerships withmajor regional and international financial institutions, and relationships withexport development and guarantee corporations. This strategy coupled withswift but vigorous daily fine-tunings of our operations allowed us to quicklyrespond to local and regional developments.

Credit Libanais unveiled a considerable 21.8% year-on-year increase in netprofits to USD 23.17 million as at end of December 2005, up from USD19.02 million during the year 2004. The Bank’s non interest incomeexpanded markedly by 38% to USD 28.59 million. Consequently, netfinancial income revealed a healthy 10.8% annual growth to USD 83.84million. On the balance sheet front, the Bank’s total assets widened by5.56% to USD 3.16 billion as at end of December 2005. Credit Libanais’pre-tax return on average assets (ROaA) stood at 0.91% in 2005, whilepre-tax return on average equity (ROaE) ended the year at 13.61%.

Credit Libanais Investment Bank (CLIB), the Group’s medium and long terminvestment subsidiary, continued to complement the product offer of CreditLibanais Group. CLIB’s investment desk explored several businessopportunities and conducted feasibility studies covering neighboringcountries including Syria, Iraq, and Yemen.

Credit Libanais d’Assurances et de Réassurances (CLA), the Group’s insurancearm, has been rated as Lebanon’s third most profitable insurance companyaccording to industry-rating magazines, owing to the efficient managementcombined with inherent synergies with the Group’s subsidiaries.

While the Group’s long-term success has, for long, been mainly rooted in themix of core businesses namely Retail, Corporate, Investment Banking,Capital Markets, and Bancassurance, our performance has been fuelled by aSustainable Development Strategy - a strategy based on a strong commitmentto strengthen existing partnerships with each one of our stakeholders(Customers, Employees, Shareholders, Board Members, Regulators,Society,...) as part of our Corporate Governance framework.

“We regard our partnershipwith our Stakeholders,which is the core of ourSustainable DevelopmentStrategy, as a proxy forfuture growth. Althoughcautiously optimistic aboutthe near-term economic performance, Credit Libanaisshall move forward withconfidence.”



For many years now, Credit Libanais has demonstrated its leadership in Information Technology and its capacityto stay one step ahead of fast moving changes in this field. Our state-of-the-art Customer RelationshipManagement (CRM) solution is a prime example. During 2005, CRM became fully operational allowing us toprofile our customers in order to better cater to their changing needs and expectations. CRM proved indispensablefor the outstanding performance of our Retail activity. Indeed, Retail as a core activity at Credit Libanais was ableto proactively anticipate customer needs before they materialize. Our future plans are to leverage the capabilitiesof this tool for the benefit of all of our core businesses.

Our Sustainable Development Strategy, which incorporates those external and internal banking and parabankingtactics most essential for a sound long-term growth, included the creation of the Planning and Organization Unit(POU). This permanent body is formed by a team of high ranking consultants from within the Bank and professionals from the Operations Division who team up with members of a department to restructure andstreamline operations, review business processes, upgrade existing systems and downsize on resources in viewof redeploying them. Throughout 2005, POU reviewed, institutionalized and automated several functions in linewith the latest best practices in the industry.

We operate in a service industry that relies heavily on trust. In order to inspire confidence, we need to prove thatwe maintain the highest levels of business ethics namely combating Money Laundering.

Our Group harness growth by combining strong performance with a proven commitment to the communites inwhich we operate. Our social involvement is not only restricted to donations and sponsorships, it also incorporatesfunding, supporting social organizations, and/or providing a helping hand to those in need.

Looking ahead, while we expect patchy growth in a region that remains vulnerable to significant uncertainties, theprospects of the Lebanese financial sector are likely to undergo far-reaching expansions on the back of a regionalgrowth fuelled by oil price surges. These developments produce promising business opportunities that CreditLibanais is ready to seize in order to extend our footprint regionally. The foremost positions we enjoy in ourvarious activities and our proven financial strength pave the way for this new regional expansion strategy - astrategy incorporating a drive to boost operating efficiency and to maintain a stringent control of risks.

Recruiting new customers, winning their new businesses, and earning their loyalty hinges on the efforts of ourEmployees. We acknowledge that our ability to move forward rests, in great part, on our human capital. Ourrecognition also goes to our Shareholders and Board Members who consistently place the interests of CreditLibanais at the forefront of their priorities. It is to them, all, that Credit Libanais owes this exceptional performanceand through their continuous support that we will maintain our competitiveness in a fast pace of consolidation inthe regional and international financial markets.

We regard our partnership with our Stakeholders, which is the core of our Sustainable Development Strategy, asa proxy for future growth. Although cautiously optimistic about the near-term economic performance, CreditLibanais shall move forward with confidence.

Joseph TorbeyChairman & General Manager


Board of Directors Credit Libanais SAL

Dr. Joseph TorbeyChairman &

General Manager

Mr. Abdulrahman Bin MahfoozRepresenting Capital InvestmentHolding Co. (Manama - Bahrain)

H.E. Mr. MarwanHamade

Mr. Khaldoun Barakat

Mr. MohamadWajih El-Bizri

Members

Mr. Rabah Idriss

Mr. RabahJaber

Mr. Sarkis Demirdjian

Mr. Abdul-ElahMukred Ali

Mr. Abdullah SaudiAdvisor tothe Board

Capital Investments Holding - Lebanon SALMember


Major Committees

Major CommitteesMANAGEMENT COMMITTEE (MC) The Management Committee is the Bank’s chief decision-making body, tackling strategic internaland external issues of prime importance to the Bank, and formulating long-term policies and orientations in-line with the Board of Directors’ guidelines and the Group’s overall strategy.

ASSET AND LIABILITY COMMITTEE (ALCO)ALCO focuses on risk and strategic issues related to interest rate monitoring, liquidity and currencyratios, counterpart credit assessments, geographical risk allocation, capital management and marketrisks. Based on committee appraisals, the Bank’s Management develops measures and controlsaimed at mitigating risks and keeping them at acceptable levels.

CREDIT COMMITTEES Every lending activity at Credit Libanais goes through a special purpose committee assigned toensure that loans and credit limits are granted based on the Bank’s credit guidelines. The CreditPolicy Committee defines risk strategies, policies and corporate credit practices and limits for thecoherent and efficient management of different credit risk areas of the Bank.

INVESTMENT COMMITTEEIn tandem with developing plans for investment banking activities, this Committee’s responsibilitiesalso extend to identifying and assessing the major investment opportunities in the fields of mergersand acquisitions, equity and loan participation, advisory and consultancy and other issues of strategic financial importance.

OPERATIONAL RISK MANAGEMENT COMMITTEE (ORMC)The ORMC’s main objective is to make Operational Risk Management an integral part of the Bank’sdaily activities by introducing measures aimed at improving the internal control function and monitoring operational risks in view of mitigating them. These operational risks include individual,departmental, branch management, as well as internal and external factors. The ORMC alsoensures the quality review of existing written procedures and updates them in line with the Basel IIrequirements and the proven best practices nationally and internationally.

ANTI-MONEY LAUNDERING COMMITTEE (AML) The AML committee closely examines and monitors suspicious cases and takes proactive steps in theprevention of money laundering or fraudulent activities within the Bank. The Committee also reportssuspicious cases to the High Special Investigations Commission at the Central Bank of Lebanon.

AUDIT AND INTERNAL CONTROL COMMITTEE (AICC)In line with the growing importance of modern audit practices, the Committee specializes in thereview, monitoring and improvement of the Bank’s overall Internal Control environment and offersrecommendations as part of the Bank’s ongoing reforms.

SALES AND BUSINESS DEVELOPMENT COMMITTEE (SBDC) The Sales and Business Development Committee monitors and evaluates branch network performance,application of sales methodology and product profitability in anticipation of evolving market conditions.SBDC also approves the launching of new products and corporate communication campaigns.

Economic and Financial Review


Lebanese Economy and Public Sector

The year 2005 was marked by escalations inpolitical turmoils in Lebanon and the region, hampering as such, the pace of economicgrowth witnessed in the past couple of years.Nevertheless, sustained interests by foreigninvestors, particularly Arab investors, helpedalleviate the risk of an imminent recession.

Lebanon benefited from the increasing confidenceby Arab investors in the MENA region owing toimproved liquidity from increasing oil prices.Foreign Direct Investments (FDI) in Lebanonextended its upturn in 2005 with a noticeablerebound in real estate investments. Constructionpermits accumulated to around 8.46 million m2 asat end of December 2005 up from 9.16 m2 in 2004.

The monetary policy of the Central Bank ofLebanon maintained interest rates at high levelsin 2005 in an attempt to ease the pressure on theLebanese Pound. The policy also endeavored tominimize the risk of increasing deficit in thebalance of payment in an atmosphere of politicaluncertainty and fear of jeopardizing consumerconfidence in the economy thus obstructing therapid outflow of money.

On the public finance front, the budget deficitcontracted by 7.53% in 2005, standing at LBP2,798 billion, down from LBP 3,026 billion in 2004.Total government revenues fell by 1.45% year-on-year to LBP 7,405 billion, while expenditures,including debt servicing regressed by some LBP337 billion to LBP 10,203 billion as at year-end

2005. The deficit to total expenditures ratio fell to27.42% in 2005, from 28.71% in 2004.

As far as public debt is concerned, statistics reveala 7.37% annual increase in gross public debt toUSD 38.50 billion in 2005 from USD 35.86 billionin 2004. Of the total gross public debt, 49.80% isexternal while the remaining 50.20% is domestic.Public sector deposits rose to USD 3.70 billion in2005, while net public debt rose by 5.54% year-on-year to USD 34.79 billion up from USD 32.97billion in 2004. Net domestic debt constituted44.89% of net public debt in 2005, while foreigndebt increased by 4.40% to USD 19.17 billion.

Moreover, on the current account side of thebalance of payment, Lebanon’s balance of tradedeficit tightened by USD 190 million year-on-yearreaching USD 7,460 million in 2005, down fromUSD 7,650 million in 2004. Total exports rose by7.61% year-on-year to USD 1,880 million, whileimports contracted by 0.61% to USD 9,340 millionin 2005. In this context, Lebanon witnessed asubstantial expansion in its Balance of Payment(BOP) surplus reaching USD 600 million as at year-end 2005, compared to a surplus of USD 168.5million in 2004 and that of USD 3.25 billion in 2003.

On the fixed income front, the Lebanese Ministryof Finance continued to issue new Republic ofLebanon (ROL) Eurobonds and Certificates ofDeposits at attractive rates in 2005 with theobjective of lessening the debt service burdenand financing public sector growth. The CentralBank of Lebanon launched in mid-April 2005 thefirst issue of Euro CDs accumulating some USD1.7 billion in total subscriptions. The issue carries

Two thousand and five was a difficult year forLebanon and for the Lebanese economy on almostevery front. Nevertheless, sustained interests byforeign investors, particularly Arab investors, alleviated the situation.

2002 2003 2004 2005

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

1,564

3,386

1,685747

Balance of Payment (million USD)


2005 Economic and Financial Review

a coupon rate of 10% payable semi-annually anda maturity of 10 years. Furthermore, the LebaneseMinistry of Finance launched in mid June a newROL Eurobond issue divided into two series for atotal of USD 500 million: a 3-year bond yielding7.5% per annum for a total amount of USD 250million priced at USD 99.67, and an 8-year bondyielding 8.625% for a total amount of USD 250million and a price of USD 99.28. This transactionwas lead managed by BLOM Bank and CreditSuisse First Boston. Furthermore, in the domesticEurobond market, the Lebanese Ministry ofFinance had issued in end of September a new10-year ROL Eurobonds issue worth USD 750million, maturing in January 2016. The new ROLEurobonds issue will cover old debt maturing in2005, and carrying an annual coupon of 8.75%.The 10-year ROL Eurobond issue has beenassigned a long-term foreign currency rating of B-by Fitch and Standard & Poor’s and B3 by Moody’s.

International rating agencies reiterated their creditratings for the Republic of Lebanon in 2005 whilechanging the outlook to “Positive”. Rating agenciespraised current effort by the Lebanese governmentunder a multi-pillared reform program which isexpected to improve the country’s rating. Therating agencies praised the efficiency of the VATsystem in income generation to the government,considering it the most effective tax instrumentavailable to the authorities. On the monetary policyfront, international rating agencies commentedthat the pegged exchange rate regime remainsthe appropriate monetary policy at this time,particularly in ‘the widespread dollarization andcontinued uncertainties’. The reform should alsobe accompanied by financial sector reform topreserve the banking sector and to provide capitalto the private sector in order to diversify risks andattract long term capital to the country.

As far as the inflationary environment is concerned,Lebanon’s Consumer Price Index (CPI) fell sharplyby 2.78% on a yearly basis to 99.63 in December

2005, from 102.48 in December 2004; therefore,signaling a moderate contraction in the averageprice of a Lebanese consumer good-basket.

Central Bank of Lebanon’s coincident indicator,which is an index portraying the general trend inthe economy, grew by 4.97% on a yearly basis to183.5 in December 2005, from 174.8 in December2004, implying a stimulated economic activityduring the period under consideration andportraying an improvement in general economicactivity.

On the tourism front, Lebanese Ministry ofTourism statistics revealed an annual 10.87%contraction in the number of tourist arrivals toLebanon in 2005 compared to the same period in2004. More particularly, the total number oftourists reached 1,139,524 as at end of December2005, down from 1,278,469 tourists during 2004.The number of Arab tourists outpaced othertourists’ arrivals, reaching 451,430 as at end ofDecember. European tourists occupied the secondplace, reaching 311,083 visitors, followed by Asiantourists with total reported arrivals of 177,809.

Lebanese Banking Sector

The consolidated balance sheet of commercialbanks in Lebanon revealed a moderate 3.75%annual appreciation in banking sector assets toLBP 106,015 billion in 2005 from LBP 102,187billion in 2004. Total deposits, including non-residents private sector deposits, rose by 4.10%year-on-year to LBP 89,169 billion as at year-end2005, with dollarization rate expanding to 73.13%up from 70% in 2004.

The value of returned checks rose by 10.8% toLBP 1,005 billion (229,171 checks) up toNovember 2005, from LBP 907 billion (228,977checks) during the same period in 2004. Of thetotal value of returned checks, 74.14% weredenominated in foreign currencies while theremaining 25.86% were in Lebanese Pound.

Moreover, the Central Bank of Lebanon’s statisticsrevealed a 1.48% year-on-year expansion inLebanon’s gross foreign currency reserves toreach USD 11.65 billion as at year-end 2005 upfrom USD 11.48 billion in 2004.

December2004

December2005

12,000

10,500

9,000

7,500

6,000

4,500

3,000

1,500

0

Cumulative Balance of Trade Deficit (million USD)

Exports Imports Deficit

Looking ahead, the prospectsof the Lebanese financial

sector are likely to undergofar-reaching expansions

Core Banking Activity


Leadership in Selected Markets12 Retail Banking16 Corporate Banking18 Financial and Capital Markets

22 Investment Banking26 Bancassurance


Retail Banking

Retail Banking, backed by state-of-the-art e-bankingproducts, continues with its franchise expansioninside the Lebanese market to reach its peak with afull-fledged CRM in 2005.

With the emphasis placed on retail activityunder Credit Libanais forward-looking growthstrategy, Retail Banking is now well consoli-dated at the core of the Bank’s strategicactivities and plans. As a result, CreditLibanais has confirmed its status as a leadingreference in the Lebanese retail market.

Based on the principle that ‘the product is theprocess of serving customers’, the newinnovative approach to address customers’needs during their ‘24 hours a day, all thecycles of life’ was launched. The new life-cycleapproach focuses on the customer needs atevery stage of his life, as per each angle ofsegmentation analysis. Mortgage loans,consumer loans, deposit accounts, debit and

credit cards, E-banking, Small and MediumEnterprise (SME) loans and AssetManagement services are all being re-shapedunder Credit Libanais’ new approach in RetailBanking.

Moreover, Retail Banking has concentratedon product development and on increasingdelivery channel capacities and capabilities tobetter respond with integrated solutions toevolving customer needs.

Critical success factors have been determinedto achieve Retail Banking targets through theperformance matrix and branches havebeen assigned new roles to achieve targetedgrowth.



Branch Network

Currently, Credit Libanais network consists of 57 branches including a new branch inFanar, Mount Lebanon. The growth of business required the establishment of a fifth Regional Management for North Lebanon.During 2005, our International Banking Unit inLimassol was transformed into a full-fledgedbranch regulated by the Central Bank ofCyprus and subjected to European bankingstandards and regulations. Finally, theRepresentative Office in Montreal - Canadadenotes our interest in the North Americanmarket.

Channel Banking

Our e-solutions - WAP Banking, InternetBanking, SMS, ATM, Customer ServiceCenter, Phone Banking and TV Banking -with numerous services linked to each aregaining momentum year after year due totheir reliability, convenience and advantages to customers. These productsare subject to ongoing upgrading and strict security controls in line with the latest international developments in the field.

Branches have been transformed into proactiveunits for sales and customer management.

In parallel, a process of driving value through‘Yield Management in Retail Banking’ wasalso introduced to optimize yield and preventbusiness conflict. Most of the emphasis hasbeen dedicated to understanding the leveland nature of underlying customer demand inorder to make proper prioritization and salesactivity.

NetCommerce

The activity of our Internet paymentacquiring arm, NetCommerce, continuedto increase during 2005 due to the implementation of sophisticated and highlysecured Internet payment technology -“Verified by VISA” procedures andMasterCard Secure Code. Consequently,NetCommerce sales volume grew by 25% over 2004.

The Company’s strategy for 2006 is togain significant market share by acquiringnew merchants through an aggressivesales and marketing effort in the growingLebanese e-commerce market.

120

100

80

60

40

20

02004 2005

30.28%

96.16%

Iskan Loan Growth

+55.37%

2003 2004 2005

+15.13%

Sales Evolution of Retail Product

E-banking activity continued to be furtherintegrated in the life cycles of our differentcustomer segment confirming the growthacceleration registered in past years. InternetBanking and Phone Banking have increasedby 28% and 27%, respectively.

Marketing and Sales

The ongoing development of products andservices is a top priority oriented towards customer satisfaction and covering differentsectors and segments.

Enhancing our Sales ForceA new sales team was recruited to complementour existing sales force, to satisfy the need ofour growing markets and to improve our

cross-selling ratio. A sales team is dedicatedto each of our five regions and headed by aSales Team Leader. The main task of everyteam is to develop sales through sales cam-paigns customized according to the Region’sparticular needs.

Both the sales force and our 57 branches followa schedule of marketing campaigns elaboratedin the Head Office. The close monitoring andfollow up of the sales teams and branchesensure a collective effort on all fronts.


30

25

20

15

10

5

02004 2005

22%23.8%

Personal Loan Growth

Retail as a core activity atCredit Libanais was able to

proactively anticipate customer needs beforebefore they materialize



Product Development

In 2005, Credit Libanais designed severalproducts to respond to the needs of the retailmarket. These products targeted a segmentedgroup of customers, they include:

VISA Mini which is 43% smaller than aregular-sized VISA card. It is considereda convenient companion card linked toBankerNet, Ukrd or Ladies First and usedonly on Point of Sale (POS) terminals; A new local VISA Electron Vantage toreplace the old salary domiciliation product;A new international MasterCard chargecard to replace the old charge card product;Autumn Package comprising the followingproducts: VISA credit card, SMS service,Online Banking, and Phone Banking witha privileged access to the new and

improved Loyalty Scheme; andSpecial Housing Loans for public servants.

Image Consolidation ThroughMedia Advertising

Throughout 2005, Credit Libanais engaged inconsolidating corporate image through ongoingTV campaigns, sponsorships and press

ads/releases. Communication campaignswere coupled with the launching of our newTV ad, Trust, which was broadcasted on mostlocal TV stations.

Building a Strong Cross-SellingRatio

One of the main targets of the Retail Divisionand the Marketing Department for this yearwas to boost Credit Libanais cross-selling ratiofollowing the successful salary domiciliationcampaign of the public sector. To this end,several marketing campaigns were launchedbased on a database segmentation, customerbehavior and profile. The result was a substantial increase in product sales.

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Personal29% Iskan

20%

Iskan Personal4%

Ameen5%

Iskan Military1%

Car24%

Housing7%

Kafalat6%

Consumer4%

Retail Product Sales

KafalatCar

HousingAmeenIskan

Personal ConsumerIskan PersonalIskan Military


Corporate Banking

Specialized in the trading, manufacturing andservices sectors, the Corporate Division iswell-equipped to layer credit facilities andbanking services that cope with corporatecommercial needs for international and localtrading activities.

The Division is outfitted with expert RelationshipManagers committed to provide sound financialadvice and credit support to industrial andmanufacturing entities.

Our success is derived from a fundamentalcommitment to provide, through a dynamicand highly dedicated team, distinguishedquality services and financial support tocustomers. In other words, our CorporateDivision works at extending and tailoringdifferent credit packages of short-, medium-and long-term, cash and non-cash creditfacilities to finance almost all types of businessactivities.

By building a true partnership with our corporate customers based on nurturing along-term relationship and maintaining up-to-the-minute knowledge of their business, Credit Libanais has come to beviewed as a benchmark in Corporate Banking.

Credilease

Despite a difficult local and regionaleconomic environment, Credilease continues to consolidate its activities andto solidify its customer base. Leasingcontracts are customized based on thespecific needs and requirements of eachcustomer.

Its activity portfolio includes financingequipment in areas such as general contracting, hospitals, industry and transportation. Furthermore, a number ofour banking relationships are managedthrough Credilease’s leasing facilities, witha typical duration of 2 to 7 years.

Uncovered Loans41.82% Collateral

Covered Loans24.35%

Covered Loans33.83%

Collateral Covered Loans 24.35%(Mortgage + Cash Collateral + Bank Gtee + Shares)Covered Loans 33.83%(Personal Guarantee + Negative Pledge + Bills + IAIGC)Uncovered loans 41.82%

Breakdown of Corporate Portfolio by Type of Guarantee

The Corporate Division product offer includesordinary and subsidized loans, overdrafts,working capital finance, commercial draftdiscount, leasing facilities, trade finance, foreignexchange services, domestic and internationaltransfers, direct debits and standing orders.

Our Relationship Managers collaborate withall business units and bank affiliates to offercustomized solutions in varied areas of bankingand parabanking or peripheral complementaryservices.

Activity

Corporate Banking continued to grow its franchise within the Lebanese market and toattract new businesses in line with its conserva-tive risk appetite. The following increaseswere recorded by the Division during 2005:

16.4% growth in the funded and un-funded utilization implying a growth intotal outstanding facilities; and11% growth in the un-funded utilizedfacilities allowing for an increase in non-interest income of the Bank.9% increase in the number of corporatecustomers.

Lending Partnerships

Credit Libanais is engaged in partnership pro-grams with major international bodies such as:

The Export Development Canada (EDC)program, dedicated to financing andpromoting Canadian exports toLebanon;The European Investment Bank (EIB),offering eligible Lebanese firms competitive financing for industrial andtourist projects;The Arab Trade Financing Program (ATFP)promoting the export of goods of Arab origin;The Inter Arab Investment GuaranteeCorporation (IAIGC) which facilitatestrade amongst Arab countries by providing insurance guarantees forinvestment and trade;The Islamic Corporation for Insurance ofInvestment and Export Credit (ICIIEC)which, in affiliation with the Islamic Bank,guarantees exports from Islamic countries worldwide;The Saudi Fund for Development (SFD),destined to finance the trade of SaudiArabian goods and services byLebanese importers;The Cooperative Housing and Finance(CHF/USAID), which subsidizes themicro finance scheme, Ameen. Theprogram is geared towards a specificsegment of very small enterprises whichoften encounter difficulties in financing theirprojects through Lebanese banks; andThe Council for Development andReconstruction (CDR) acting for the benefit of the Economic and Social FundDevelopment (ESFD) whose aim is toalleviate poverty and mitigate the socialimpact of the economic transition on disadvantaged groups.

Several Murabaha deals were also undertakenin collaboration with major regional players inthe Islamic Banking Industry.



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•

•

•

•

•

•

•

•

•

Breakdown of Corporate Portfolioby Economic Sector

Commerce52.2%

Industry24.9%

Real Estate3.5%

Services18%

Agriculture0.4%

Commerce 52.2%Industry 24.9%Services 18%Real Estate 3.5%Agriculture 0.4%

Envisaged developmentsand growth in neighboring

countries produce promisingbusiness opportunities thatCredit Libanais is ready to

seize in order to extend ourfootprint regionally


Financial and Capital Markets

Credit Libanais’ expertise and tradingcapabilities positioned the Bank as one ofthe main players in Lebanon. During the year2005, we organized our activities with an aimto improve our coverage capabilities andbetter meet our customer expectations andneeds. Our strategy centered on revenuegrowth opportunities in order to optimizereturns while efficiently managing marketrisks.

In addition, Credit Libanais is a lead providerof sales, trading and market making servicesin every type of financial instruments includingfixed income, equities, foreign exchange andstructured products.

Our teams are formed of smart people whoaim at generating innovative solutions basedon our Bank’s values such as team spirit,respect, confidentiality, innovation and premiumquality service.

Our product offer includes:Liquidity management, money marketinstruments, foreign exchange andderivatives;Sovereign and corporate securitiesranging from high grade to high yield; Emerging markets investments, collater-alized debt obligations, securitizedobligations, equities and equity-linkedproducts;

Our objective is to structure financial solutions andoffer Capital Markets access to our customerscoupled with a continuous strive to deliver best-in-class products, services and transaction executions.

•

••

In September, Credit Libanais successfullyissued USD 60 million in Certificates ofDeposit (CD) as part of a USD 150 millionprogram which has been co-lead and managedby Deutsche Bank. The CDs have a maturityof 3 years with a fixed coupon of 6.875%.The issue was three times oversubscribeddenoting an aggressive sales and distributionstrategy.

On equity markets, we have experienced during 2005 a good improvement in the activity marked by a diversification in terms ofgeographical coverage and innovation inequity-linked structured products. Last quarterof this year witnessed a strong evolution inthe performance of the Beirut StockExchange where Credit Libanais continuedto strengthen its presence and marketshare.

By combining our fixed income, equities andforeign exchange trading capabilities, CreditLibanais offers efficiency in terms of executionand processing of transactions, allowing asmooth flow from execution to settlement.

Structured products with fixed incomeand equity underlying;Islamic banking products; andFinancing services including securitieslending and custody services.

Fixed Income Activity

Credit Libanais boosted its activities oninternational debt markets and reinforced itspresence as a major player on the LebaneseEurobonds market which translated into asignificant increase in trading volumes andmarket share. Our fixed income team offersall types of instruments ranging from highinvestment grade to yield tailored to meetthe particular investment strategy of ourcustomers.

The Bank actively participated in all the newissues of the Republic of Lebanon andcontributed to the development of a more liquidand efficient secondary market.



We are committed to providing solutions based

on innovation and value generation while

balancing customer needsand risk tolerance

•••


Private Banking and AssetManagement

At Credit Libanais, customer satisfaction iskey to our success. We have segmented ourPrivate Banking offer according to customerwealth and the level of risk tolerance.

Moreover, our products are based on an openarchitecture model enabling us to provideclients the best available products in anapproach geared to deliver the highestpossible returns.

Our objective and investment strategies havebeen focused on maximizing returns in linewith the requirements of our sophisticatedcustomers: we maintained a controlled riskprofile and adhered to high quality compliance and investments standards andpractices.

Existing synergies between different depart-ments of the Bank have been exploited withan aim to reinforce product development anddistribution capabilities. Our Private Bankingservices focus on:

Portfolio structuring and asset allocation;Development of large variety of structuredproducts and alternative investmentsenabling clients to seize attractive marketopportunities; andDevelopment of secure online platformsto enable customers to follow theiractivities, account movements and toexecute online transactions.

Our strategy centers onrevenue growth opportu-

nities in order to maximizereturns while efficientlymanaging market risks

••

•

80

70

60

50

40

30

20

10

02004 2005

19.8%

61.2%

Non-Interest Income Driven fromTreasury and Capital Markets

Safekeeping of all types of financialinstruments.

Credit Libanais’ Asset Management closelycooperates with renowned third parties inorder to offer clients flexible and attractivealternatives to traditional investments based on innovative financial engineeringtechniques.

One area of important growth during 2005was structured products which tie derivativesto investments depending on the respectiveunderlying, with the possibility of offering ourcustomers specific benefits such as capitalprotection or a guaranteed minimum rate ofreturn.

Alternative investments represent anothergrowing area in Private Banking. The mostimportant feature of these assets lies in theirlow correlation with traditional markets suchas equities or bonds. Alternative investmentsinclude instruments such as hedge, privateequity and real estate funds. These productsrepresent attractive opportunities whenmarket conditions lack clear trends anddirections.

Credit Libanais Private Banking team coversall major international, regional as well asdomestic markets, offering a diverse range ofinvestment opportunities monitored byprofessionals each within his area of expertise.Our team is supported by an in-houseResearch Unit that helps enhancing ourinvestment capabilities through a combinationof global information sharing and local decision making.

We offer a broad spectrum of Private Bankinginstruments ranging from conventional savingproducts to sophisticated financial instruments,including:

Equities, fixed income and foreignexchange;Money markets;Multi-assets class funds;Alternative investments and hedgefunds;Structured products with various underlying instruments;Capital guaranteed products;Shariaa compliant investments;Brokerage services; and



••••••••

80

70

60

50

40

30

20

10

02004 2005

30%39.8%

Financial Instruments UnderCustody

•


Investment Banking

Activity

Amidst a difficult economic environment,Credit Libanais Investment Bank SAL was ableto achieve the goals set by SeniorManagement for 2005. During this year,CLIB managed to complement the broadrange of products and services offered by theGroup’s subsidiaries through delivering long-term financial products and advisory services.

Credit Libanais Investment Bank SAL, the Group’s medium and long-term investment arm, wasincorporated in 1996 and is 99.83 percent owned by Credit Libanais. The investment bankextends its services to a wide range of medium and long-term investment and commerical bankingactivities, according to legislative decree number 50 and dated July 1983. CLIB and its Corporateand Project Finance Department are well-equipped to offer a full range of tailor-made financialservices and solutions to private and institutional clients, locally, regionally and internationally.

Commercial Banking ActivityCLIB developed a strategy centered aroundcompetitive pricing and fast service - approvalof housing loans was given in 24 hours, whilethe loan disbursement period did not exceed 35days. The result of this strategy contributed inmaintaining high market shares and stablegrowth.

Credit Libanais Investment Bank and its Corporateand Project Finance Department actively pursuednew business opportunities during 2005 throughoutthe Arab World, particularly in Syria and Yemen.

Corporate and Project Finance

CLIB strives to assist the Middle Easternbusiness community in undertaking soundfinancial decisions through the application of modern finance principles and methodologies.

Our objective is to maximize financial andstrategic opportunities in a collaborative effortwith customers. We focus on meeting theunique corporate finance needs for small,medium and large national and multinationalcompanies.

Through its high caliber team and broadnetwork of connections, the Corporate andProject Finance Department at CLIB is well-equipped to offer a full range of tailor-madefinancial based solutions to private andinstitutional clients, locally, regionally andinternationally, specifically in the followingareas:

Commercial loans increased by 10% - with a6% growth in the number of commercial files.Customer deposits at CLIB improved by 8.44%in 2005, 42% of which is denominated in foreigncurrency. Loans to deposits ratio reached18.41% in 2005 compared to 15.86% in 2004.

Investment Banking ActivityMoreover, our lending portfolio comprisessyndicated loans, project finance, tradefinance, subsidized loans, and financing ofclients’ capital expenditure.

During 2005, CLIB investment portfolio grewby 18.75% to include additional PreferredShares, Certificate of Deposits, asset-backedsecurities and Eurobonds.

Our financial services and solutions include:Loans to the industrial, tourism andagricultural sectors, subsidized by theCentral Bank of Lebanon; andOther long-term loans for hospitals,department stores, real estate development projects and housing loansfor individuals.



•

•21

18

15

12

9

6

3

0

15.86%

18.41%

2004 2005

Loan to Deposit Ratio at CLIB

The foremost positions weenjoy in our various

activities and our provenfinancial strength pave the

way for a new regionalexpansion strategy

Financial advisory services: advising onand structuring financial solutionsdesigned to meet the strategic andorganizational needs of institutionalcustomers. This includes financialassistance to clients in need for:

1. Evaluating the financial performanceof their business;2. Assessing the viability of anexpansion/investment alternative;3. Seeking financialreengineering/turnaround;


4. Opening their capital to prospectiveinvestors; and5. Mergers and acquisitions;

Strategic alliances and partneringtransactions;Debt and equity placements: advisingclients to make an informed decisionregarding the appropriate capital structure.Locating sources of finance, negotiatingand representing the company mostfavorably;Mergers and acquisitions: offering compre-hensive assistance to clients seeking tomerge with or acquire other private orpublic business units. CLIB will getinvolved in every step of the transactionincluding the:

1. Preparation of the sale;2. Determination of the strategy;

3. Company valuation;4. Research analysis;5. Determination of the best

financing structure;6. Negotiation of the contract; and7. Due diligence process;

Recapitalization and strategic advisory:structuring and arranging financing forrecapitalizations allowing a company’sshareholders to achieve significant liquidity,while positioning the company more favor-ably for continued growth and success.

AchievementsThe Corporate Finance and Advisory Unitactively pursued business opportunities in thebanking sector, particularly in the Arab World,including Lebanon, Syria, Republic of Iraq,and Yemen.

•

•

•

•

175

150

125

100

75

50

25

0

168

2004 2005

142

Total Loans at CLIB (billion LBP)

Throughout 2005, this Unit embarked in abroader market coverage to include news onthe local, regional and international financialmarkets on a consistent basis. This wassupplemented with the creation of an exten-sive database, in collaboration with theBank’s Customer Service Center, in anendeavor to broaden the network of recipients,and hence, share the Unit’s Weekly Marketcommentary with a larger community.

Research UnitThe Economic Research Unit provides theGroup’s customers as well as the Lebaneseand Arab community with a broad exposureto weekly economic and financial markethighlights.

To gain further international exposure, theUnit reached an agreement to publish itsweekly report with international news serviceproviders and providers of online financialinformation to financial institutions in the Arabregion. This has served to draw the attentionof some international analysts/investors, whileat the same time raising the Bank’s corporateimage among local and internationalinvestors.

Additionally, the Research Unit played amajor role in 2005 in helping the Group reachsound financial decisions on an internationalinvestment scale. This was achieved throughthe preparation of detailed sectoral, bankingand economic analysis of countries in theMiddle East and North Africa.



1,000

800

600

400

200

0

916

2004 2005

899

Total Deposits at CLIB (billion LBP)

Our strategy coupled withswift but vigorous daily

fine-tunings of our operations allowed us toquickly respond to local

and regional developments

Credit Libanais d’Assurances et de Reassurances (CLA) SAL, the Group’s insurance arm, wasincorporated in 1993 and is 66.97% owned by Credit Libanais Investment Bank SAL (CLIB) and33% by Agence Generale de Courtage d’Assurance SAL (AGCA). The Company is engaged in alltypes of insurance and reinsurance operations, in Lebanon and overseas.

Marine Motor Fire Casuality Life Total

100

90

80

70

60

50

40

30

20

10

0

60.57%

98.87%

55.86%

76.43%

3.42%8.05%

72.22%

81.41%

23.42%21.46%

39.17%43.76%

Loss Ratios

Year 2004 Year 2005


Bancassurance

A Year in Review

The Lebanese insurance industry recordedan 8.81% increase in premiums written in2005 compared to a 10.93% increase in 2004,mainly due to the economic and politicalsituation prevailing in the country.

CLA succeeded, once more, to achieve anoutstanding performance reflected in theconsiderable growth in premiums in all

branches of the insurance business.Another measure of growth is evident in theincrease of total assets and shareholders’equity.

Total assets increased by 44.46% reachingLBP 48,294 million in 2005 from LBP 33,430million in 2004. This growth is attributed to asignificant increase in the volume of businesswhere gross written premiums reached LBP18,546 million in 2005.

Credit Libanais d’Assurances et de Réassurances(CLA) recorded a leap of more than 13 places withinthe Lebanese insurance industry despite its youngage due to a considerable growth in premiums.

Marine Motor Fire Casuality Life

3500

3000

2500

2000

1500

1000

500

0

1979

1480

128 165552507

3,617

3,235

999962

Premium Development per Class ofBusiness (million LBP)

Year 2004 Year 2005

Our sustainable profitabilityis mainly due to efficient

management combinedwith inherent synergies

among Group’s subsidiaries

The sound performance of CLA is evidencedin the increase in shareholders’ equity fromLBP 15,976 million in 2004 to LBP 18,779million in 2005 - an annual growth of 17.55%due retention of earnings. According to saidmagazine, CLA was ranked ninth in 2004 interms of shareholders’ equity nationwide.

Performance by Class of Business

CLA recorded in 2005 a considerable growth innet premiums. Non-life business has increasedby 20.08% while the average growth in theindustry stood at 7.4%. Ranking seventeenthin 2005 among more than 50 insurancecompanies nationwide, CLA has jumpedmore than 13 places.

The slight decrease in net profits from LBP4,171 million in 2004 to LBP 4,042 million in2005 is mainly attributed to both a new taxintroduced on premiums and a general declin-ing interest rate environment which led to a22% decrease in yields on liquidity placements of the Company.

Yet, a part of this increase is attributed tosingle premium policies contracted to covercar loans and housing loans financed throughbanks over the medium- or long-term. Thetotal volume of single premium policiesamounted to LBP 11,235 million representing60% of gross premiums written in 2005mainly in the motor, fire and life businesses.

Due to a change in the accounting treatmentenforced by the Ministry of Economy andTrade, single premium volume increasedsubstantially during 2005 to include premiumsrelating to subsequent periods extending after2005, which were differed under reserve inthe balance sheet and are not reflected in theincome statement of this year.

During 2005, CLA ranked fourth nationwide interms of profits for 2004 based on after-taxfigures and ranked first between Lebaneseinsurance companies owned by banksaccording to a study prepared by Al BayanMagazine (December 2005 issue) coveringtop 150 insurance companies operating in theArab World.




MotorThe motor line of business achieved a substantial increase in net premiums during theyear under review from LBP 1,480 million in2004 to LBP 1,979 million in 2005 - an increaseof 33.71% (excluding single premium policies)attributed to policies issued for car loansfinanced by banks. Single premium policiesgenerated a premium income amounting to LBP2,147 million in 2005 and representing 52% ofthe premiums generated by this line of business.

The loss ratio for the motor class of businessis 76.43% compared to 55.86% in 2004 andto a 65% industry average.

MarineAn increase in net premiums generated hasalso been realized under the marine businessfrom LBP 128 million in 2004 to LBP 165 millionin 2005. This increase was mainly attributed tothe positive efforts of the Company MarketingTeam to acquire new and profitable businesses.

Despite this increase in net premiums, CLAmaintained an adequate risk assessmentstrategy. This strategy led to a decrease inthe loss ratio to 60.57% in 2005 from98.87% in 2004 in line with industry averageproving that the marine business acquired

during 2005 affected positively the loss ratioof this line of business.

FireIn 2005, CLA achieved a considerable growthin the net premiums generated under the firebusiness class. Premium income totaled LBP552 million, well above the LBP 507 millionachieved last year. This 8.87% increase ismainly due to fire policies issued during 2005for housing loans. In addition, single premiumpolicies issued in 2005 amounted to LBP 2,215million which represents 80% of the total fire busi-ness generated during the year. This businessis mainly generated through long-term policies.

The increase in premiums did not negativelyaffect the loss ratio which recorded a

6,000

5,000

4,000

3,000

2,000

1,000

0

4,879

1,667

3,631

1,573 1,645

3,487

2003 2004 2005

1,464

5,204 5,132

Technical Reserves (million LBP)

Unexpired RisksOutstanding ClaimsTotal Reserves



housing and car loans granted by banks overthe medium- and long-term.

The loss ratio for this line of business is23.42% a slight increase over 21.46% recorded in the year 2004 and below a 25%industry average.

CasualtyCasualty business premium income generated for year 2005 amounted to LBP998 million as compared to LBP 962 million in2004, an increase of 3.74%. The branches ofthe insurance business falling under thecasualty class are mainly hospitalization, workmen compensation, personal accident,theft on property.

The increase in net premiums is attributed tothe development of insurance products inbanking such as credit card business andBankers Blanket Bond (BBB) coverage.

Technical ReservesAt the end of 2005, a decrease in the unexpiredrisk reserves has been recorded to reachLBP 3,487 million in 2005 compared to LBP3,631 million in 2004. This decrease is due tothe fact that no premium deficiency reserveswere accounted for in 2005.

An increase in outstanding claims reserveswas calculated due to an increase in the lossratio under the motor business line. Therefore,the outstanding claims amounted to LBP 1,645million in 2005 compared to LBP 1,573 millionin the previous year, thus recording an increaseof 4.57% in outstanding claim reserves.

As a result, CLA recorded LBP 5,132 millionin total reserves for year 2005 compared toLBP 5,204 million in 2004, a slight decreaseof 1.40%.

decrease to reach 3.42% in 2005 down from8.05% in 2004 and compared to a 20%industry average.

LifeThe line of business witnessed a considerabledevelopment with respect to net premiumsgenerated for the year under review. Incomeunder the life business totaled LBP 3,617million as compared to LBP 3,235 million lastyear, an annual increase of 11,77% (excludingsingle premium policies). Single premiumpolicies were main contributors to an evenhigher increase in premiums recorded duringyear 2005 and representing 65.50% of thetotal business generated for the year andamounting to LBP 6,872 million. These singlepremium policies were issued in relation to

56.56%

0.89%

5.38%

22.25%

14.92%

Premium Breakdown into Classesof Business (million LBP)

LifeMarineMotorFireCasuality

Sustainable Development


Sound Growth, Long-term32 External Development34 Internal Development38 Customer Focus

40 Risk Management and Internal Audit44 Anti-Money Laundering45 Investing in Human Capital


External Sustainable Development

Social RoleWe are cognizant of our community role asbeing part of the way we live, work, and dobusiness every day. By being present in vitalareas such as education, arts and culture, wereinforce and confirm our civic role for theadvancement of the society we live in.

Macroeconomic RoleWe judge that our role as a financial institutiongoes beyond compliance with existing regu-lations. Therefore, we strongly believe thatthe health and solidity of the financial sectorare essential for the economic and socialdevelopment of Lebanon especially in this

Externally, our Sustainable Development Strategy is embodied in our social and economic roles. This section is dedicated to all those external banking and parabanking activities that are essential to our ongoing development in the current competitive markets.

critical period of history of our country. OurBank has been a major contributor in financingthe government in its reconstructions andinfrastructure plans. Through our investmentarm, Credit Libanais Investment Bank, wehave participated, co-managed and co-ledmost of the Lebanese sovereign issues. Thisis clear evidence that the Lebanese bankingsector is the backbone of the Lebaneseeconomy and closely tied to it.

Microeconomic roleAnother important role as a financial institutionis to offer basic financial services, providefinancial support to microfinance institutions

Although our motto ‘Close to You’ is targetedto our stakeholders, our SustainableDevelopment Strategy lays on the foundationof establishing a relationship of trust betweenall our economic players.

our strong visibility within the Lebanesebanking sector. On the other hand, the qualityof our engagement to our stakeholders is thecornerstone of our credibility. We, therefore,attach a special attention to our people andcustomers and constantly gauge their satisfaction.

CommunicationBy listening and promptly responding to allour stakeholders, we build a strong platformfor the future in line with our SustainableDevelopment Strategy. Exchange and dialogue are the cornerstones of growth andachievement. Since its implementation, theexternal feedback inbox brings customer recommendations and complaints to the forefront of our attention.

and help to limit overindebtness. In addition,our Bank is a pioneer in offering micro-financing. This function is in line with ourlong-term belief that micro-enterprises, likemultinationals, are essential to the prosperityand development of our economy. Ameen, ourmicro-finance product, is geared towards aspecific segment of very small enterpriseswhich encounter difficulties in financing theirproducts through Lebanese Banks. Anothermicro-finance program is geared towards verysmall and small enterprises with an aim toalleviate poverty and mitigate the social impactof the economic transition on disadvantagedgroups.

CultureOur commitment to sustainable developmentis reflected in our corporate values - Visionand Business Principles - that are reassertedyear after year to finally become the basis ofour culture. These values are embodied inour day to day activity with our customers andare our driving force and competitive edge.

Reputation Finally, Credit Libanais attaches a specialimportance to intangible areas of sustainablegrowth such as reputation. In evaluating ourcurrent positioning relative to competition, welook at our visibility and our credibility asbeing the basic components of our reputation.On the one hand, our social and economicroles coupled with our leading positions inselected markets such as e-banking confirm



Our Group harness growthby combining strong

performance with a proven commitment to

the communites in whichwe operate

Internal Sustainable Development

We aim at complementing the salesefforts of our Branches by establishingnew business units to meet the needs ofour customers. Our goal over the medium-term is to increase the mix of staff assignedto sales programs throughout the bank.

Below, we detail the methodology used toachieve our objective:

Leadership and Staff Development During the course of its assignment, POUwork closely with Department and BranchManagement to ensure that all assignedresources have the required knowledgeand skills to successfully perform theirresponsibilities and receive the neededleadership and guidance to succeed.

Work Station Operating Efficiency The Planning and Organization Teamprepares a comprehensive study for eachemployee and work unit to determine if

various ‘Time Management’ tools are usedefficiently in order to enhance productivity.The effective use of Intranet, voice mail, andelectronic archiving are just a few examplesof modern and efficient use of resources.

Work Schedule Most renowned financial institutions workaround the clock to serve their customersand improve operating efficiency. When weapplied this philosophy to our local envi-ronment, we created work shift schedulesto rapidly serve customers and reduceovertime and other operating expenses.

Measurable Performance Results Our employees embrace the reward for per-formance culture introduced several yearsago. The Planning and Organization Teamhelps Department Managers measure theproductivity of each employee so that salaryincreases, bonuses and promotional oppor-tunities are consistent with measurable results.

Planning and Organization Unit

During 2005, the Bank formed a strategictask force called the Planning andOrganization Unit (POU) in an effort toimprove operating efficiency. The Unitconsists of Senior Management who lead ateam of in-house consultants and workclosely with the Operations Division.POU’s strategy is to review the operatingperformance of selected Head OfficeDepartments and/or Branches and recommend structural changes to enhancerevenue generation and cost efficiency.

The key objective of POU is to reduceexpenses by improving efficiency of ourcost centers in view of reallocatingresources to other profit centers. Thisobjective is achieved through compre-hensive reviews of the existing operationof these cost centers and the generationof structural recommendations.

Internally, our Sustainable Development Strategy involves all banking andparabanking activities most essential to the long-lasting prosperity and organic growthof our Bank.



with an aim to track the processes ofcustomer transactions throughout theBank. The new system transformed theway we do business and contributed tothe enhancement of several procedures.The System tracks a transaction from themoment it leaves its originator until itreturns back to him/her. Exception reportsenable management to pinpoint at exactlywhich level a transaction is still pending.The System raises red flags every time abottleneck is encountered so that manage-ment can actively intervene to solve theproblem before its reaches the customer.

Another benefit of the System is that itautomated mail registration enabling variousparties to track and monitor their internalcorrespondence online.

Effective Quality ManagementSystem ISO 9001-2000

Credit Libanais Quality ManagementSystem (QMS) provides a framework forcontinual improvement of processes andoperations by stimulating the Bank’soperational efficiency and effectivenessthus meeting and/or exceeding customerexpectations by:

Improving business planning throughmeasurable Quality Objectives setfor Branches and Head OfficeDepartments;Greater quality awareness throughour Quality Policy, Quality Manual,Quality Procedures, and Internal andExternal Quality Audits;Improved communication through theinvolvement of Staff in the QMSprocess and by providing trainingand workshops;Reduced costs of non-quality by:

Taking the necessary action toreduce the occurrence of majorerrors or problems affecting thequality of our serviceBringing to the attention of SeniorManagement, common errors andproblems that impact customerservice or department/branch effi-ciency through the control of non-conforming products and services;Evaluating periodically our suppliersand service providers; andBuilding good habits in controllingdocuments and records;

Greater control of processes andactivities throughout the organizationby planning and conducting InternalQuality Audits, to verify whether theQMS implemented at Credit Libanaisis in compliance with the requirementsof ISO 9001:2000; andHigher Customer Satisfaction:

Through our ‘CustomerComplaints Management FollowUp System’;Through the establishment of‘Timeliness Standards’ in branchesto measure the execution ofimportant transactions. Thesestandards include the time it takesfor a customer to make a depositor withdraw funds from theiraccount. We track results andidentify corrective action whereneeded.

When our employees know how to win, theybecome highly motivated and recognizeCredit Libanais as an ‘Employer of Choice’.

Internal Communication Regular weekly and monthly staff meetingskeep employees informed on departmentand branch performance. Each employeeshould know what is expected from him/herand how he/she can grow professionallythrough continuous improvement in order tocreate job satisfaction and improve staffmorale. POU Team ensures that suchmeetings are embedded in the culture ofevery department and unit.

Error Tracking When we do things right the first time weshow pride in our work, we improve customerservice, and we avoid needless phone callsto correct mistakes. This makes life easierfor both our employees and our customers.By installing ‘Error Tracking Systems’ wehelp measure performance, upgrade train-ing wherever needed and enhance systemsand procedures to reduce common errors.

Core Competencies Another important checkpoint for thePlanning and Organization Team is tomake sure that each department hascompetent and properly trained staff toeffectively perform duties and responsi-bilities. This includes validating that workassignments are consistent with the skillsof assigned resources and proper segregation of duties is enforced bydepartment management at all times.

Mail and Tracking System

‘Mail and Tracking System’ is a manage-ment tool conceived and built in-house

•

••

•

•

•

-

-

-

-

-

-



Customer Focus

Customer care is at the heart of ourSustainable Development Strategy. 2005was the year in which we reaped the fruitof a key investment to give a major boostto customer satisfaction. It was the yearof the final implementation of ourCustomer Relationship Management(CRM) System. As of this year, our Bankwill utilize all the component of thisstrategic tool such as customer behavior,percentile analysis, product affinity as wellas communication in one direction: meetingor exceeding customer expectations.

Customer RelationshipManagement

CRM is a solution that gathers all bankinteractions with customers, analyses them,delivers them, integrates and uses them toprovide a single view of the customer from

all aspects of the business. It is, as well, abusiness strategy that selects and managesthe most valuable customer relationships.It requires a customer centric businessphilosophy and culture to support effectivemarketing, sales, and customer service.

Credit Libanais has chosen the TeradataCRM framework that consists of six logicalgrouping of product which is designedand positioned, as follow:

Analysis: analyze what business istranspiring from customer;Modeling: predict customer behaviorespecially as it pertains to customerresponses to communications andcampaigns;Communication: develop plans forcommunicating with customers andthen managing those plans;Personalization: personalize the communications down to the individualcustomer level;Optimization: optimize customercommunication by managing the frequency and number of customercommunication channels; andInteractive: deliver outbound commu-nications, respond to a customercontact with the next communicationand capture the results of all commu-nications for later analysis.

Our CRM analysis module provides ourMarketing Team with powerful tools toanalyze and understand customers and tovisualize the significant events that drivecustomer interaction with the Bank.Following is a list of the powerful functionsof the CRM module:

Define, analyze and target segmentsby behavior, demographics, location,product usage and affinities, rankingsand transactions over time;Build queries easily with graphical

••

•

•

•

•

•

•

Starting 2005, all the components of thestrategic Customer Relationship Management(CRM) tool will focus on meeting and/orexceeding customer expectations.



The communication with a targetedcustomer is done through an applicationthat will reside on the agent desktops andwill enable the:

Retrieval of customer profile;Registration of the complaints madeby customers;Response to complaints made bycustomers; andFollow up on campaigns made by CRM.

Customer Service Center

Our strong belief that customers are entitledfor excellent service is the raison d’être ofour Customer Service Center (CSC). Ahealthy team of young, dynamic profes-sionals are on the phone every day toassist our customers. They are trained toconvey messages of care in order to transmitpositive vibes which will automatically betranslated on the phone to our customers.

CSC handles customer calls, by monitoringthe performance of every call to ensurethe highest quality and professionalism.Hence, CSC Agents are trained on thebest industry practices in view of maintainingor improving the quality of our service.

During 2005, CSC was transformed froma cost center into a profit-generating unitcovering the cost of delivering superiorquality service from the direct sales activityof its Agents.

In addition, CSC collaborated with E-banking Department to revamp CreditLibanais website according to the latesttechnological developments. Our newwebsite, built in an integrated and scalableplatform, contains extensive and up-to-dateinformation about our products and services.

point and click interface, no SQL orpseudo SQL is needed;Analyze and evaluate customer groupsthrough a visual, ad hoc reporting inter-face and immediately include thesesegments in our marketing campaigns;Realize opportunities based on newlinks discovered between customersegments and attributes;Select and compare any two customersegments, campaigns, stores, catalogs, versions or offers;Paste or export all graphs andreports to windows application;Create a closed loop system by creating new customer segments forfuture marketing campaigns directlyfrom any of the analysis graphs;Define a new customer group bysimply highlighting any range or thegraph, which allows segments to becreated based on changes in behaviorover time;Capture new customer segment,freeze the segment and look atbehavioral changes before and aftertargeting. This powerful feature canbe used to evaluate the effectivenessof marketing actions applied onspecific segments; andCreate a demographic profile orpurchase profile for any customersegment displayed, which allows usto evaluate customer profiles andtheir correlation to customer behaviorand product spending.

Credit Libanais Group website received inearly 2006 the Golden Pan Arab WebAward under the Banks and FinancialInstitutions Category confirming ourleadership in e-banking technology.

Customer Care Unit

Credit Libanais strongly believes thatcustomer complaints are a very valuablesource of feedback. When they are handledproperly, our most dissatisfied customerscould be transformed into our bestambassadors. Our experience hasproven that attentive and reasonableresponse to customer complaints buildscustomer loyalty. Our Customer CareUnit is in the business of handling thosecomplaints and channels them, whenevernecessary, to Senior Management.

Ongoing Monitoring andEvaluation

Since customer satisfaction is one ofCredit Libanais’ most sought afterBusiness Principles, the MarketingDepartment regularly inspects the qualityof our customer service through mysteryshopper visits. This policy is applied to allCredit Libanais branches by means ofseveral waves per year depending on thequantitative or qualitative criterion underinspection. The aim of the mysteryshopper is to test employee productknowledge and sales skills in order toensure the quality of our service.

•

•

•

•

•

•

•

••••

CRM became fully operational allowing us

to profile our customersin order to better cater

to their changing needsand expectations


Risk Management and Internal Audit

Risk Management Function

The scope of work of the Risk ManagementDivision encompasses:

Ensuring the implementation of theBank’s strategy and policies on RiskManagement; Proactively pursuing the sound and pro-fessional implementation of strict,exhaustive and prudent RiskManagement practices in the years tocome, in line with the Basel II Accord,the Central Bank and the Banks ControlCommission requirements;

Risk Management has been for the past years an important element of Credit Libanais’ Managementphilosophy and Sustainable Development Strategy. Risk Management processes are designedalong the lines of the Central Bank of Lebanon and Banks Control Commission (BCC) directives. Itis an independent function reporting to the General Manager and the Board of Directors. RiskManagement oversees the analysis, identification, measurement, monitoring, reporting andcontrolling of risk throughout the Bank and application of Risk Management policies, guidelines andrules within principles set forth by Senior Management and approved by the Board of Directors.

Developing risk-focused policies and procedures in order to achieve the bestrisk/return ratio possible under differentmarket conditions and with the aim ofcreating and maximizing value forcustomers and enhancing return forshareholders; Maintaining an independent managementand control structure; Administrating and safeguarding docu-mentation pertaining to credit risk; and Creating a proper risk-awareness cultureamong employees, in order to achievethe goal of adequate risk recognition andmanagement.

•

•••

•

•

The ultimate goal of our Risk Managementfunction is to safeguard assets by maintaining abalance between risks and rewards in agreementwith the Bank’s philosophy and strategies.



Operational Risk with an aim to adopt moreadvanced approaches once the systems willbe upgraded to accommodate that level.

Credit Risk Management

Credit Risk is the risk of loss due to an obligoror counterparty defaulting or failing to meetcontractual obligations. The Bank’s credit riskis managed at both the counterparty and port-folio levels. The Bank has designed its CreditRisk Management practices to preserve theindependence and integrity of the riskassessment process.

Credit Libanais manages the credit risk of itscommercial customers by:

Analyzing potential risks associated witheach borrower’s facilities or transactions; Requiring that the Risk ManagementDivision reviews and provides an independ-ent assessment of commercial credit risk; Ensuring that credit risk decisions areeffected through delegated committeesand based on the risk rating of theindividual counterparty; Regularly checking that the utilization iscompatible with the assigned limits andensuring that the related risks areeffectively managed; and Continually assessing the risk-adjustedprofitability of the facilities.

The Bank manages the credit risk of its consumer portfolio by relying on preset productguidelines for credit approval. These guide-lines determine the standard risk acceptancecriteria used to evaluate and approveindividual credit transactions. They also aimat ensuring that the authority to approveindividual credit transactions is independentfrom the business originators, but involves areview by the related Product Manager.

Basel II and Risk Management

The basic idea behind Basel II Accord isstrengthening the Risk Management functionand capabilities in financial institutions ratherthan just being another mathematical andcalculation exercise. Such a process neces-sitates building an adequate Risk Managementculture and framework with the purpose ofidentifying, measuring, monitoring andcontrolling risks that the Bank will be subjectedto in the course of daily business operations.

With that in mind, the main challenge is tounderstand each aspect of every operation inorder to put in place adequate organizationalpolicies, procedures and limits to managedifferent risk aspects arising from businessactivities through adequate risk measurementtools, monitoring and reporting systems tosupport the business activities.

An additional challenge is that RiskManagement should be given adequateresources to allow it to perform its duties. It isnoteworthy to mention that Credit Libanais’Management generally supports all neededinvestment pertaining to the enhancement of theRisk Management function such as investmentsin IT modules, training and documentation.

Credit Libanais will apply the SimplifiedStandardized approach for Basel II for CreditRisk and the Basic Indicator Approach for

••

•

•

•

Risk Management policiesachieve their intended

purpose when they are clearand well communicated in

order to become embeddedin the culture of our Bank


Ratings/Portfolio Management

With the announcement of the Basel II CapitalAccord, the internal rating system has emergedas the most critical element for banks to usein the credit risk management process. TheAccord permits banks to use their internalratings to independently determine the regulatorycapital required for their credit exposures.

Commercial Portfolio Rating ToolsThe Moody’s Financial Analyst and RiskAdvisor have been used by the Bank since2003 as an internal rating system for creditscoring and credit risk assessment. ThisSystem, which is used by leading financialinstitutions worldwide, allows the Bank toassess and score credit on three levels:financial results and projections, risk ratingand pricing.

Such rating tools combine automated scoringtechniques and qualitative assessmentsaccording to the requirement of respectivecredit committees. To ensure the consistencyof the ratings applied within the Bank, constantmonitoring and performance testing are con-ducted to fine-tune the tools to the Bank’sneeds, and further enhance the managementof commercial credit portfolio throughout theinstitution.

Consumer Portfolio Rating ToolsAs a major bank in the local retail business,Credit Libanais adopted one of the latestscoring and automated technologies allowinga prompt and accurate assessment of creditapplications. As such, our customer-base isgrowing in a controlled manner, operationalcosts are reduced, risk is minimized and afaster decision is rendered to our valuablecustomers. This scoring system is adopted byover 400 major banks worldwide. Its operationalbenefits included the possibility of having

consistent control of the credit policy,consistency in the decision-making process,increase of productivity, competitive advantagein the market and proper management ofinformation systems pertaining to each product.

Market Risk

Market Risk is defined as the risk of lossresulting from an adverse market movementin value in on- and off-balance sheet positionsarising from movements in market prices,including interest rates, exchange rates,commodity prices and equity values.

The Market Risk Unit at Credit Libanais hasthe task to measure interest and foreignexchange risk arising from the positions heldby the Bank. Credit Libanais has initiated aproject to upgrade its systems to managemarket risk more professionally for its owndecision-making processes.

Operational Risk

Operational Risk is the risk of direct or indirectloss resulting from inadequate or failed internalprocesses, people, systems and/or externalevents. This definition includes legal risk butexcludes strategic and reputational risk. Moreover,Operational Risk, which is inherent to allbusiness activities, is associated with humanerror, system failure and inadequate controlsand procedures. Operational Risk includes

Risk Management is a corediscipline at Credit

Libanais and encompassesall the activities that affect

the Bank’s risk profile



The Internal Audit Division continously reviewsand updates its internal audit procedures andprograms with the aim of ensuring full compliancewith the Bank’s ethical standards, policies, plans,procedures and applicable laws and regulations.

During 2005, the Internal Audit Division hasacquired a new Audit Management System‘TeamMate’ to increase efficiency and produc-tivity for the entire audit process, including:risk assessment, scheduling, planning,

execution, review, report generation, trendanalysis, committee reporting and storage.

Compliance and Internal Control (CIC) Unitreports directly to the Financial Controller andensures a continuous and daily control ofoperations in the branches. The objective ofthis Unit is to ensure that branches are fully-compliant with the procedures and processesas defined and communicated by Managementand that sufficient and adequate built-in controlsare implemented throughout the network to ensurethat quality service is consistently delivered tocustomers in a secure and safe manner.

In view of mitigating IT Risk, the IT InternalAudit activity was outsourced to the interna-tional Audit firm Price Waterhouse Coopers(PWC). Based on regular assessmentreports, the Bank is able to detect andaddress all weaknesses in its IT systems.

errors and omissions in business activities,internal and external fraud and natural disasters.

Credit Libanais is applying policies and proce-dures to meet the standards of the BaselCommittee, ensuring the strict observance ofthe internal code of conduct and developing aninternal control culture. Compliance with legalrules, information security, fraud prevention,and contingency planning and disaster recoveryare the main subjects of the operational riskmitigation controls.

Disaster Recovery and BusinessContinuityCredit Libanais has maintained a leadingposition in the Lebanese banking sector interms of establishing a disaster recovery andbusiness continuity plan that covers businessand technology operations.

As part of its business continuity plan, CreditLibanais’ disaster recovery project was undercompletion in 2005. This project has beenachieved with hardware and network installationsat the Bank’s alternate premises identified forthat purpose. In addition, an education andawareness program for the entire organizationfollowed this project.

Compliance and Automation of aMulti-Leveled Audit Function

Internal Audit, reporting to the GeneralController, has long been a fully-independentdivision with no executive functions andreporting directly to the Board of Directors.

In-house Auditors conduct special auditassignments in branches and Head Officedepartments alike and submit reports high-lighting various areas of risk while providingguidance for corrective actions.


Anti-Money Laundering

The Anti-Money Laundering (AML) ComplianceTeam has conducted several visits during2005 to the five Regional Managements forthe purpose of raising awareness to MoneyLaundering issues, explaining the responsi-bilities under the relevant laws and regulationsand clarifying the requirements and actionsthat need be taken by Staff to comply withAML policies, procedures, and best industrypractices.

More than half of Credit Libanais employeesattended and contributed to the discussionscovering the AML-related programs. The AMLCompliance Team shall continue to visitbranches during 2006 for the same purpose.Therefore, compliance at Credit Libanais is notmerely the responsibility of the ComplianceUnit overseen by special authorized

committees. It is rather the concern of allemployees and in particular sales staff andtheir respective managers. Regular awarenessseminars are conducted with three mainprinciples in mind:

Know Your Customer (KYC) or counter-parties well before you engage in afinancial transaction;Be able to justify each and every stanceconcerning a specific transaction; andBe able to assess the economic legitimacy of each transaction.

At the same time, our Compliance Unit isactive in the daily combating of MoneyLaundering activity since its inception by:

Verifying thoroughly that all money laundering fighting provisions and regulations as well as the Procedures

•

••

•

Compliance, a multi-leveled concern, is at theheart of our core values compelling all ouremployees to engage in the fight againstMoney Laundering.



Ascertains that branches and concerneddivisions are conforming to the proce-dures’ guide and KYC filling form, incompliance with enforced Anti-MoneyLaundering laws and regulations; andReports periodically to the externalauditor all the disclosed irregularitiesand discrepancies.

At the branch level, everyone isresponsible for fighting Money Launderingincluding the Branch Manager and hisDeputy Branch Manager:

Ensures that branch’s personnel areconforming to the procedures’ guideand KYC Form, in accordance withenforced Anti-Money Laundering lawsand regulations;Monitors cash operations,incoming/outgoing transfers and anyother fraudulent transactions; andReports to the Compliance Unit anydiscernable suspected MoneyLaundering attempts.

AML-Reporter

By profiling accounts and monitoringtransaction trends, AML-Reporter helpsfinancial institutions meet regulatorycompliance and puts into place automatedsystems and processes required todetect, report and investigate money

laundering activities. AML-Reporteranalyses how money moves in, aroundand out of our Bank. It systematicallyidentifies suspect patterns of behavior,creates reports and enables us to reducethe administrative burdens and costsassociated with manual complianceprocesses.

The AML-Reporter is implemented at boththe branch level and the AML ComplianceUnit level. An online system allows bothentities to monitor accounts and analyzealerts when a suspicious customer profilebreaks a usual activity trend.

Designated Name FilteringSystem (DNFS)

DNFS software is a search engine thatsystematically reads government, black-listed names and user-defined suspectlists to identify sanctioned individuals,dignitaries, vessels, organizations andcountries.

DNFS allows us to automate the tasksrequired to manage and comply with thesuspect list. It also enables our Bank toeffectively detect, report and investigatesuspicious persons and entities.

Guides, KYC Form and WelcomeApplication Form (WAF) are beingfilled properly by concernedemployees;Observing regularly the effectivenessof prevailing Anti-Money Launderingprocedures and regulations, appraisingany progress made thereon, andsubmitting suggested amendmentsfor improvement to the AuthorizedCommittee in order to take appro-priate/necessary decisions;Revising daily/weekly cash andtransfers reports submitted bybranches and concerned departments;Reporting to Senior Managementsuspecious transactions; andProducing analytical reports periodically, to be raised to the Boardof Directors on perceptible suspiciousaccounts and noticeable doubtfultransactions.

On the Internal Audit level, a specializedUnit:

Audits cash transactions, inward/out-ward payment orders and accounts’movements;

•

•

••

• •

•

•

•

•

We operate in a serviceindustry that relies heavily

on trust. In order toinspire confidence, weneed to prove that wemaintain the highest

levels of business ethicsnamely in combating

Money Laundering


Investing in Human Capital

Investing in our Human Capital is an ongoingstrategy. To this end, new HR achievementswere recorded, several development projectswere introduced while other ongoing practicesinitialized in previous years continuedthroughout 2005. Below is a detaileddescription of our Human Resources activitywhich proves our restless pursuit to attainexcellence in HR management. Weacknowledge that by constantly improving theway we manage and develop our people, wecreate job incentive, retention and above allwe bolster their morale.

A Performance-Driven Culture

Year after year, we build on our innovativePerformance Measurement Matrix introducedin 2003. Today this Matrix is not only appliedin Branches, but also in Head Office

Departments where performance can belinked to quantifiable measures such as in thecase of Relationship Managers and CreditOfficers.

The Matrix is based on wholly quantifiablemeasures and inspired by the BanlancedScorecard concept. It relates levels ofperformance for each metric to a points value -the total of which is a maximum of 100 points.

By clearly defining the Matrix and commun-ciating its values and importance within theBank, Senior Management ensured that day-to-day activities measured were aligned withthe stragegic goals set by the Bank. Thisprocess also helped in motivating thoseEmployees responsible for driving performance.

Rewards for Employees have been allocatedbased on the Matrix since the inception of

We are committed to becoming a world-class organization through the way we deal with OurPeople - the cornerstones of our SustainableDevelopment Strategy and our greatest asset.



Ongoing Skill Development

The Bank issues every year a Training Reporthighlighting the strategy and progress of thisvital activity to the development of ourPersonnel and Bank. Training programs arereviewed annually based on the needsexpressed by operating units allowingManagers to select training modules adaptedto the required skill development. The numberof training programs rose by 2.3% during2005 while the number of trainees increasedby 1.53% excluding the ongoing training ofour next generation of Managers and monthlytraining of Sales and Customer Care Agents.

Training the Next Generation ofManagers

In 2005, Credit Libanais set up a new management program designed for qualifiedEmployees which enabled them to developtheir leadership aptitude. The ExecutiveDevelopment Program (EDP) helps academ-ically qualified and promising employees toadvance into the next level. This advancedprogram embraces a challenging learningexperience, but requires a firm personalcommitment on behalf of participants.

this project. Matrix results are communicatedvia Intranet to all Employees. This hascreated a healthy atmosphere of competitionbetween Employees and has implicateddirectly on the performance of the Bank.

Performance Appraisal

Our appraisal system puts into action theVision and Business Principles defined bySenior Management. Appraisal forms arefilled on the Group’s Intranet according to anexplicit user guide posted online. Managersand Employees alike are requested to fillannual performance appraisals and self-appraisals. This appraisal system enabled usto provide a consistent basis for assessingemployee performance and attitudes acrossthe organization.

It is to all Our Employees,that the Bank owes this

exceptional performance andthrough their continuous

support that we will maintainour competitiveness in a

fast pace of consolidation inthe regional and international

financial markets


Credit Libanais partnered with renowned academic institutions to ensure the quality ofcurriculum and education. University professorsand professionals from training institutionsreproduce the academic environment mostsuited for the development of managerial skills.

During class sessions, participants areencouraged to share and impart knowledgewith their instructors.

Encouraging InternalCommunication and Feedback

The Bank’s internal communication publication- Observer - the quarterly tri-lingual magazineis a compilation of employee contributionsand expert opinions. It is distributed to allEmployees in Head Office departments andbranches has recorded a resounding success.Observer is used promotes communicationand awareness of professional, social, ethicaland environmental responsibilities across allbusiness lines.

Employees’ suggestions continue to becanalized via Intranet address [email protected] employee has the possibility to

communicate his/her suggestions in a confidential manner directly to SeniorManagement to ensure openness andtransparency. In 2005, many suggestions

have been adopted namely the ‘MailTracking System’ enabling Management tomonitor and improve efficiency which translated into an improvement in customer satisfaction.

Recruitment

In order to maintain high-quality levels inrecruitment and to meet the specific needs ofthe Group’s Departments, hiring hasremained predominantly centralized. Thisorganization allows the Group to maintainprofessionals within its teams to ensure thatStaff complies with the codes of conductrequired in each of the businesses.

The Bank introduced in 2005 through the newInternet website a new careers section.Applicants can now submit their resumes andif their profile coincides with an existing orfuture opening, the Human ResourcesDivision will contact them to schedule a jobinterview.



Best End of Year Performance

While the Performance Matrix is the sole toolused to assess and reward quarterly employeeand branch performance, the End of YearPerformance is cumulative in nature. Everyyear, branches and Head Office departmentsare nominated for their outstanding performance throughout the year. During theAnnual Gathering, these outstanding performers receive a personalized trophyrepresenting a Senior Management acknowl-edgement for their exceptional achievements.Batroun, Nabatieh, and Jeita were honoredas the Best Large, Medium, and Small Branchrespectively. Furthermore, Credit Libanaisd’Assurances et de Reassurance (CLA) wasselected as the Best Performing Subsidiary,the Marketing Department was selected asthe Most Dynamic Team, the CustomerService Center was selected as the MostHelpful Unit and the Alternative DistributionChannels Unit of the IT Division developed in2005 the Most Useful Computer Program.

Career Development

Our growth strategy aims at recruiting leaders and managers from within by selecting talents who will be in charge of fulfilling tomorrow’s corporate targets. Every year, we review and fine-tune thecareer assessment of our Personnel.

Our aim is to build career paths according to the education, performance, ambitions and potential of our Employees in view of anticipating and driving theiradvancement.

Career Mobility

Internal recruitment has taken momentuminside the Bank driven by a clear decisionfrom the Management to capitalize first oninternal talents. Internal competition is thepreferred medium in recruitment in order tomotivate staff by providing horizontal careeropportunities. External recruiting is used onlywhen internal competition fails or in case newexpertise is sought for.

Recruiting new customers,winning their new

businesses, and earningtheir loyalty hinges on theefforts of our Employees.We acknowledge that our

ability to move forwardrests, in great part, on them

Credit Libanais Group50 Management Discussion and Analysis of Group Activities61 Auditors Report62 Consolidated Balance Sheet64 Consolidated Statement of Income

66 Consolidated Statement of Cash Flows67 Consolidated Statement of Changes of Equity68 Notes to the Consolidated Financial Statements


Group Financial ResultsCredit Libanais Investment Bank (CLIB) SAL

98 Board of Directors99 Auditors Report

100 Balance Sheet102 Statement of Income103 Statement of Cash Flows

Credit Libanais d’Assurances et de Reassurances (CLA) SAL106 Board of Directors107 Auditors Report108 Balance Sheet110 Statement of Income111 Statement of Cash Flows


Management Discussion and Analysis of Group Activities

Basis of Presentation

The following discussion and analysis has been preparedbased generally on the audited consolidated financialstatements of the Group as at and for the years ended31 December 2004 and 2005 and on selected financialinformation.

The consolidated financial statements of the Group as at31 December 2005 represent the financial position ofCredit Libanais Group which incorporates the activities ofCredit Libanais SAL together with its wholly owned sub-sidiaries, Credit Libanais Investment Bank SAL (CLIB)and Lebanese Islamic Bank SAL (LIB) and other companies directly or indirectly owned by Credit Libanais.All material inter-company transactions incurred duringthe years 2005 and 2004 were eliminated when preparingthe consolidated financial statements in accordance withregulations and standards agreed upon for consolidationpurposes.

Lebanese Banking Sector

Total Lebanese banking sector assets reached LBP106,015 billion as at 31 December 2005, compared toLBP 102,187 billion as at 31 December 2004, reflectingan annual increase of LBP 3,828 billion or 3.75% year-on-year. Total loans made by the banking sectorincreased by 2.94% in 2005 to LBP 26,109 billion as at31 December 2005 up from LBP 25,364 billion as at 31December 2004. Total customer deposits, including non-resident private deposits, held by the Lebanese bankingsector increased by 4.09% in 2005 to LBP 87,611 billionas at 31 December 2005 from LBP 84,171 billion as at 31December 2004. In addition, the deposit dollarisationrate increased to 70.0% as at 31 December 2005,compared to 73.13% as at year-end 2004.

Analysis of Financial Position

Total AssetsAs at 31 December 2005, the Group had total assets ofLBP 4,773.22 billion, compared to LBP 4,521.76 billion asat 31 December 2004, reflecting a year-on-year increaseof LBP 251.46 billion or 5.56%. This increase in totalassets, particularly in liquid assets, was substantiallymatched by increases in funding, which consisted primarilyof customer deposits. The average growth in total assetsof the Lebanese banking sector stood at 3.75% duringthe year 2005.

The Group’s share of total assets of the Lebanese bankingsector maintained the same level of 4.50% throughout theyears 2005 and 2004.

Sources of FundingThe following table sets out a breakdown of the Group’ssources of funding as at 31 December 2004 and 2005,respectively:

Customer depositsTotal customer deposits increased by 5.77% to LBP4,026.10 billion as at 31 December 2005 from LBP

As at 31 December

Banks and Financial Institutions

- Demand deposits

- Time deposits

Customer Deposits

- Demand deposits

- Time deposits

- Sight saving accounts

- Time saving accounts

Euro-Certificates of Deposit

Total Deposits

2005

55,524

14,486

41,038

4,026,105

393,997

965,244

82,435

2,584,428

185,190

4,266,737

2004

38,962

16,711

22,251

3,806,371

396,605

793,597

69,027

2,547,428

186,003

4,031,336

% Change

42.51%

-13.31%

84.43%

5.77%

-0.66%

21.63%

19.42%

1.46%

-0.44%

5.84%

- million LBP -



Eurobonds and Euro-Certificates of DepositIn July 1996, the Group issued USD 60,000,000 9%Eurobonds due 1999, which were listed on theLuxembourg Stock Exchange. This issue was a first withrespect to the listing and trading of bonds issued by aLebanese commercial bank on an international stockexchange. These Eurobonds were repaid in full at theirscheduled maturity.

On 28 June 1999, the Group established the Program fora total amount of USD 150,000,000. To date, under theProgram, the Bank has issued five series of Certificate,detailed as follows:

The Series 1 Certificates were issued in an amountof USD 60,000,000 on 28 June 1999, bore interestpayable semi-annually at a fixed rate of 8.25% andmatured on 28 June 2002, at which time they wererepaid in accordance with their terms;

The Series 2 Certificates were issued in an amountof USD 55,000,000 on 12 June 2000, bore interestpayable semi-annually at a floating rate and maturedon 12 June 2003, at which time they were repaid inaccordance with their terms;The Series 3 Certificates were issued in an amountof USD 60,000,000 on 18 July 2002, bore interestpayable semi-annually at a fixed rate of 9% andmatured on 18 July 2005, at which time they wererepaid in accordance with their terms;The Series 4 Certificates were issued in an amountof USD 60,000,000 on 15 July 2003, bear interestpayable semi-annually at a fixed rate of 6.75% andmature on 14 July 2006; andThe Series 5 Certificates were issued in an amountof USD 60,000,000 on 7 September 2005, bearinterest payable semi-annually at a fixed rate of6.875% and mature on 8 September 2008.

All of the Certificates issued under the Program to datehave been listed on the Luxembourg Stock Exchange.

Loan PortfolioAs at 31 December 2005, loans and advances to customers(net of provisions for doubtful debts and reserved interest)were LBP 899.06 billion, compared to LBP 813.78 billionas at 31 December 2004, reflecting a year-on-yearincrease of 10.48%. Over the same period, aggregateloans made by the Lebanese banking sector grew by

3,806.37 billion as at 31 December 2004. The averagegrowth in total deposits of the Lebanese banking sectorstood at 4.09% during the year 2005. Customer depositsrepresent the principal source of the Group’s funding andcomprised 84.18% and 84.35% of the Group’s totalassets as at 31 December 2004 and 2005, respectively.

As at 31 December 2005, savings accounts, which aremostly held by individuals and have average maturities ofapproximately 3 to 6 months, represented the largestportion of the Group’s customer deposits (66.2%);demand deposits, which earn the minimum balance rateoffered by the Group, represented 9.8% of total deposits;and time deposits, which are mostly held by businesses,represented 24.0% of total deposits.

The following table sets out the compositions of theGroup’s customer deposits, by currency, as at 31December 2004 and 2005, respectively:

Deposits by Currency

As at 31 December 2005, customer deposits held inforeign currencies, principally US Dollars, represented60.51% of total customer deposits as at such date,compared to 56.36% as at 31 December 2004.Year-on-year, foreign currency deposits were 13.56%higher as at 31 December 2005, compared to 31December 2004, while LBP deposits decreased by4.29% over the year 2005 and in line with an averagedecrease in LBP deposits of the Lebanese bankingsector by 6.92%. The dollarisation rate of deposits in thebanking sector was 73.13% as at year-end 2005,compared to 70.01% as at year-end 2004. The Group’sdeposits in foreign currency were lower than the sectoraverage primarily because of the Group’s retail activitiesin the Bekaa region where customers use traditionallyLebanese Pound based.

Foreign currency deposits are primarily comprised of timedeposits and savings accounts.

As at 31 December

Deposits in LBP

Deposits in F/C (USD)

Total Deposits (LBP)

2005

1,590.04

1,615.96

4,026.10

2004

1,661.26

1,422.96

3,806.37

Increase(Decrease)

(71.22)

193.00

219.37

-4.29%

13.56%

5.77%

-6.92%

8.52%

4.09%

% ChangeCL Banking

Sector

- billion LBP/million USD -

•

•

•

•

•


2.94% during the year 2005. The growth in the Group’sloan portfolio reflected primarily the extension of newloans for small and medium-sized companies (SMEs)and housing loans to individuals (which are subsidised orguaranteed by financial public institutions). The growth inthe loan volume as at year-end 2005, compared to year-end 2004, consolidated the Group’s position in the retailmarket, through the introduction of new consumerlending products resulting in the enlargement of its retailcustomer base.

The ratio of the Group’s total loans to total assets was18.8% as at 31 December 2005, compared to 18.0% asat 31 December 2004. The slight increase in the loans-to-total assets ratio underlie the lack of attractive lendingopportunities due to the difficult economic conditionsprevailing in Lebanon, in addition to the Group’s conser-vative policy in lending during these circumstances. TheGroup’s loan-to-deposit ratio remained relatively low at22.23% as at 31 December 2005, compared to 21.38%as at 31 December 2004 and compared to the averageof 30.39% for the Lebanese banking sector.

The table below sets out the composition of the Group’sloan portfolio, by currency, as at 31 December 2004 and2005, respectively:

Loans by Currency

Of the Group’s total loan portfolio, LBP 265.33 billion or29.51% were denominated in Lebanese Pounds, with theremaining 70.49% denominated in foreign currencies,principally in US Dollars, in exchange as at 31 December2005. Loans in foreign currencies represented 26.01%of total foreign currency customer deposits as at 31December 2005, compared to 27.70% of total foreigncurrency customer deposits as at 31 December 2004,and compared to the average of 34.70% for theLebanese banking sector as at 31 December 2005.

Credit Libanais Group improved the level of provisionsset against non-performing loans to support and reinforce

the loan portfolio during the difficult economic conditionsprevailing in the country through increasing thoseprovisions by an amount of LBP 12.63 billion during theyear 2005 (compared to LBP 11.03 billion during the year2004), a growth of LBP 1.60 billion over the precedingyear. Total provisions and suspended interest onnon-performing loans amounted to LBP 115.63 billion at31 December 2005 and represented 13% of the total loanportfolio, or 68% of non-performing loans. The Groupcontinues to adopt a conservative policy in terms ofprovisions on NPLs, which is relevant from the amount ofcollections and recoveries realized every year resulting inprovisions written-back to the income statement.

The following table sets out the composition of theGroup’s loan portfolio by the borrower’s economic activity,after accounting for specified loan loss provisions as at31 December 2004 and 2005:

Loans by Industry

Personal, consumer and housing loans increased to41.9% of total loans as at 31 December 2005, comparedto 36.9% as at 31 December 2004, while commerce andtrade loans decreased to 34.8% of total loans as at 31December 2005, compared to 40.8% as at 31 December2004. The Group’s industrial, housing and constructionand agriculture loans comprised 18.1%, 3.2% and 2.0%of total loans, respectively, as at 31 December 2005,compared to 16.2%, 3.7% and 2.4% of total loans,respectively, as at 31 December 2004.

LiquidityAs at 31 December 2005, Credit Libanais Group maintainedhigh liquidity levels which represented 83.4% of totalcustomer deposits and other liabilities and 76.0% of totalassets, compared to 84.3% and 76.7% respectively, as at31 December 2004. Liquidity was distributed 40.4% in

As at 31 December

Commerce and Trade

Retail (personal, consumer

and housing loans)

Industry

Construction

Agriculture

Total

2005

312,958

376,607

162,426

29,069

17,996

899,056

2004

332,381

300,018

132,058

29,795

19,527

813,779

% Change

-5.84%

25.53%

23.00%

-2.44%

-7.84%

10.48%

- million LBP-

As at 31 December

Loans in LBP

Loans in F/C (USD)

Total Loans (LBP)

2005

265.33

420.38

899.06

2004

219.69

394.09

813.78

Increase(Decrease)

45.64

26.29

85,277

20.78%

6.67%

10.48%

0.89%

3.35%

2.94%

- billion LBP/million USD -

% ChangeGroup Sector



Lebanese Pounds and 59.6% in foreign currencies at 31December 2005, compared to 45.9% and 54.1%respectively at the end of the preceding year.

Lebanese government securitiesThe following table sets out the composition of theGroup’s portfolio of Lebanese treasury bills andEurobonds as at 31 December 2005:

Pursuant to applicable Central Bank regulations, allLebanese banks were required to subscribe to non-interestbearing, two-year Lebanese treasury bills and Eurobondsissued by the Lebanese Republic in an aggregateamount equivalent to 10% of deposits in all currencies asat 31 October 2002, which subscriptions were effected in2003. As a result of this regulatory requirement, theGroup subscribed to a total amount equivalent to USD 176million in the form of non-interest earning governmentsecurities, including special Lebanese treasury bills andcertificates of deposit. As at 31 December 2004, thecarrying values of these non-interest bearing Lebanesetreasury bills and certificates of deposit were LBP 29.6billion and USD 159.5 million. All of the Group’sinvestments in these securities matured during 2005 andthere is no current requirement to re-subscribe toinvestments of such type.

The average rate of return on Lebanese Pounds ordinarytreasury bills purchased by Credit Libanais SAL andamounting to LBP 498.39 billion stood at 9.40%, whereasthis yield stood at 9.59% on similar bills purchased by theaffiliated bank CLIB and amounting to LBP 329.18 billion.The overall yield on the Group’s portfolio of treasury billsheld in Lebanese Pounds aggregated to 9.47% at 31December 2005, compared to 8.10% at the end of thepreceding year. The average yield on LebaneseGovernment treasury bills issued in foreign currencies

was 7.89% at 31 December 2005, against 7.14% at theend of the preceding year.

The following table sets out the composition of theGroup’s portfolio of Lebanese treasury bills, by maturity,as at 31 December 2005:

Investments and Marketable SecuritiesThe Credit Libanais Group held investment andmarketable securities of LBP 127.50 billion as at year-end 2005, compared to such securities of LBP 104.18billion as at year-end 2004, reflecting an increase of22.38%. This year-on-year increase reflected mainly theGroup’s purchase of preferred shares issued by otherLebanese banks, in addition to investments in bondsissued by international institutions with high credit ratings.All investments consisted of instruments and papersissued by Lebanese banks and prime companies and arequoted in regulated financial markets.

The following table sets out the composition of theGroup’s portfolio of investment and marketable securities,by type of security, as at 31 December 2005:

Average rate of return on bonds and certificates ofdeposit held in foreign currencies stood at 6.8% for theyear ended 31 December 2005, compared to 7.0% forthe year ended 31 December 2004.

Bills Maturingwithin/between/over:

6 months

7 and 12 months

13 and 18 months

19 and 24 months

3 and 5 years

over 5 years

Total Lebanese T-Bills

In LBP

23,915

16,000

44,007

85,900

657,750

----

827,572

In F/C(LBP millions)

58,309

30,857

30,150

7,085

241,069

266,827

634,297

Total portfolio

82,224

46,857

74,157

92,985

898,819

266,827

1,461,869

- million LBP -

Bonds

Certificates of Deposit

Shares

Total

In LBP

----

7,059

4.197

11,256


41,310

56,131

18,806

116,247

Total Portfolio

41,310

63,190

23,003

127,503

- million LBP-

Special Treasury Bills (at zero percent for two years)

Ordinary Treasury Bills

Plus: Accrued interest on T-Bills

Less: Interest received in advance

Total Portfolio

In LBP

----

827,572

17,260

----

844.832


----

634,297

11,113

----

645,410

Total Portfolio

----

1,461,869

28,373

----

1,490,242

- million LBP -


Shareholders’ EquityShareholders’ equity is divided into core capital (Tier I capital) and supplementary capital(Tier II capital). Tier I capital comprises paid up common share capital, reserves, retainedearnings, and reserves for unspecified banking risks, less any unfavorable change in fairvalue of available-for-sale securities.The following table sets out the composition of the Group’s shareholders’ equity as at 31December 2004 and 2005, respectively:

On 13 May 2004, the Extraordinary General Assembly of Shareholders of the CreditLibanais approved the issuance of 640 million Cumulative Preferred Shares Series “A” foran aggregate amount of USD 50 million with a seven-year term expiring on 10 August2011. The issue was effected on 10 August 2004 at a nominal value of LBP 25 for eachPreferred Share while the aggregate share premium amounted to of LBP 59,375 million.The Series A Preferred Shares, which constitute part of Tier II capital of the Group, earn anannual fixed dividend to be paid to holders, out of the distributable consolidated profits ofthe Group, in an amount equivalent to 7.5% of the total amount of the Series A PreferredShares issued. The Group has the right, in its sole discretion, to redeem the Series APreferred Shares, in whole but not in part, on the fifth anniversary of the issue date, at theissue price plus accrued and unpaid dividends and an early redemption premium equivalentto 50% of the value of the annual fixed dividends that would have been payable until theexpiry of the term of the Series “A” Preferred Shares.

As part of its risk management policy, the Group has established a special purposeinvestment account (the “Sinking Fund Account”), which will be funded on an annual basisin each of the first seven years following the issue date of the Series A Preferred Shares(assuming no early redemption) with proceeds generated from the annual consolidatedprofits in amounts equal to one-seventh or 14.285% of the total amount of the Series “A”Preferred Shares.

Capital AdequacyAs at 31 December 2005, the BIS capital adequacy ratio of the Group (excluding profits forthe year 2005) was 25.12%, compared to 24.09% as at 31 December 2004. This ratio will

- million LBP -

% Change

----

----

20.00%

5.93%

18.93%

----

-43.38%

----

----

21.80%

5.26%

7.07%

----

200480,000

16,000

20,206

94,224

13,214

(44)

6,884

59,375

7,828

28,680

326,367

243,164

83,203

200580,000

16,000

24,248

99,813

15,716

1,737

3,898

59,375

7,828

34,932

343,547

260,344

83,203

Paid in capital (common shares)Paid in capital (preferred shares)Legal reserveOther reserves and premiumsReserves for general banking risksUnrealised profits (losses) on available-for-sale securitiesRetained earningsPremium on issuance of preferred sharesRevaluation surplus accepted as supplementary capitalNet profit for the yearTotal Shareholders’ EquityComposed of:Core Capital (Tier I)Supplementary capital (Tier II)



further improve after the incorporation of the profits for the year 2005 to reach approximately28%, thus exceeding the minimum 12% required by the Central Bank of Lebanon as percircular no. 1758 dated 18 September 1999.

Asset/Liability ManagementThe Group’s consolidated balance sheet is structured in terms of percentage of totalassets as shown in the table below at 31 December 2004 and 2005:

Results of Operations

Interest IncomeThe following table sets out the principal components of the Group’s interest income, byamount and as a percentage change therein, for each of the years ended 31 December2004 and 2005, respectively:

Interest on trading and investment securities represents interest earned primarily onLebanese treasury bills denominated in Lebanese Pounds and Government and corporateEurobonds issued in foreign currencies (including principally US Dollars and Euro).Reflecting the Group’s significant portfolio of liquid assets that is largely financed bycustomer deposits gathered through the Group’s branch network, Lebanese treasury billscontinued to comprise the substantial majority of the Group’s portfolio of trading andinvestment securities in 2005 and 2004.

The overall yield on the portfolio of Lebanese treasury bills held by the Group in LebanesePounds was 9.47% as at 31 December 2005, compared to 8.10% as at year-end 2004,and the average yield on Lebanese government treasury bills issued in foreign currencieswas 7.89% as at 31 December 2005 and 7.14% as at 31 December 2004.

In 2005, the Group recovered all subscriptions to non-interest bearing, two-year Lebanesetreasury bills and CDs issued previously by the Lebanese government and aggregating toUS$176 million.

As at 31 December

Cash & banks

Treasury Bills and eurobonds

Banks & marketable securities

Net loans & advances

Fixed assets

Other debtors and receivables

Total Assets

2005

42%

31%

3%

19%

3%

2%

100%

2004

40%

35%

2%

19%

2%

2%

100%

2005

1%

85%

4%

3%

7%

100%

2004

1%

85%

4%

3%

7%

100%

Due to banks

Customer deposits

Long-term liabilities

Other creditors and payables

Shareholders’ equity

Total Liabilities & Equity

- million LBP -

% Change

7.78%

1.23%

2.76%

200469,071

227,454

296,525

200574,444

230,261

304,705

As at 31 December

Advances and overdraftsTrading and investment securities (including Lebanese government securities) and deposits with banks Total


Interest income on the Group’s loan portfolio also increased by 7.78% during the year2005 primarily due to the extension of additional loans to retail and corporate customersduring the year 2005 which increased by 10.48%. Accordingly, total interest income for theyear ended 31 December 2005 increased by 2.76% compared to total interest income forthe year ended 31 December 2004.

Interest ExpenseThe following table sets out the principal components of the Group’s interest expense, byamount and as a percentage change therein, for each of the years ended 31 December2004 and 2005, respectively:

The Group’s interest expense is principally comprised of interest paid on customer deposits, as these constitute the primary source of funding for the Group. The totalamount of interest paid on customer deposits increased in 2005, compared to 2004, by2.94% as a result of the increase in total Group’s customer deposits by 5.77% as at 31December 2005, compared to 31 December 2004.

Interest expense on Euro-Certificates of Deposit are incurred on the USD 60,000,0006.75% Series 4 Certificates due July 2006 and the USD 60,000,000 6.875% Series 5Certificates due September 2008, which were issued by the Group under a Euro-Certificates of Deposit Program amounting to USD 150 million.

Net Interest IncomeThe following table sets out the Group’s net interest income and net interest margin foreach of the years ended 31 December 2004 and 2005, respectively:

The Group’s net interest income increased by 5.57% in 2005 to LBP 93 billion for the yearended 31 December 2005 up from LBP 88.1 billion for the year ended 31 December

2004. This increase reflected principally the improvement in yields on Lebanese treasurybills and other liquid placements, which constituted the major portion of the Group’s totalassets. Net interest margin has maintained its level around 2% in 2004 and 2005.

Non-Interest IncomeThe following table sets out the Group’s non-interest income deriving from commissions,fees and other operating income for each of the years ended 31 December 2004 and2005, respectively:

- million LBP -

% Change

2.94%

-15.51%

-14.80%

1.57%

2004192,388

1,812

14,224

208,424

2005198,046

1,531

12,119

211,696

As at 31 December

Customer depositsDeposits from banksEuro-Certificates of DepositTotal

- million LBP -

% Change

2.75%

1.57%

5.57%

2004296,525

(208,424)

88,101

2.00%

2005304,705

(211,696)

93,009

2.05%

As at 31 December

Interest earnedInterest paidNet Interest IncomeNet Interest Margin (%)



The Group’s investment activities are largely conducted through the investment bankingsubsidiary, Credit Libanais Investment Bank (CLIB) SAL. Income from investments, com-prised principally of marketable securities and other variable income instruments,increased by 77.24% to LBP 1.39 billion for the year ended 31 December 2005, comparedto LBP 782 million for the year ended 31 December 2004.

Total net commissions, fees and other revenues increased by 10.86% to LBP 19.14 billionfor the year ended 31 December 2005, compared to LBP 17.26 billion for the year ended 31December 2004. Net commissions, consisting primarily of commissions and fees on accounts,fees for issuances of letters of credit and letters of guarantee, origination and commitmentfees on loans and transaction-processing, development of retail services and electronic bankingproducts and other non-interest generated revenues, as the Group continued to developits fee-based banking services, particularly electronic banking products and services.

The Group’s other operating income is principally comprised of the commissions and feesthat the Group generated from its plastic card businesses, including the sponsoring andprocessing of debit and charge cards such as Visa, MasterCard and Amex, the processingof transactions made through its network of point-of-sale (“POS”) terminals installed atlocations throughout the country and the cross-selling of related financial services, includingbancassurance products through the Group’s insurance subsidiary Credit Libanaisd’Assurances (CLA). Net fees received from credit cards increased by 1.63% to LBP 749million in 2005, compared to LBP 737 million in 2004, due to competitive market conditionsin Lebanon and aggressive pricing strategies adopted by certain competitors, which forcedthe Group to revise its commission charges on credit card acquiring services. Net profitsderiving from insurance, real estate and collection services increased year-on-year by4.59%, 122.06% and 34.67% respectively during the year 2005.

Net income from operations on transaction and portfolio securities represented mainly theprofits generated by the Group on swap transactions on Lebanese treasury bills andEurobonds that occurred during the year 2005, and the profits generated from tradingactivities on these securities. It also includes the income received in compensation of thecancellation of the Diners International franchise previously held by the Group in Lebanonand Jordan. Consequently, net income from operations on transaction and portfoliosecurities increased year-on-year by 206.07% to LBP 12.75 billion at 31 December 2005up from LBP 4.17 at the end of the preceding year.

- million LBP -

% Change

77.24%

16.34%

137.69%

10.86%

1.63%

4.59%

122.06%

34.67%

-260.75%

15.77%

206.07%

-2.68%

38.15%

2004782

18,043

(780)

17,263

737

3,573

961

375

214

5,860

4,166

3,133

31,204

20051,386

20,992

(1,854)

19,138

749

3,737

2,134

505

(344)

6,781

12,751

3,049

43,105

As at 31 December

Income from marketable securitiesCommissions receivedCommissions paidNet Commissions ReceivedNet fees received on credit cardsNet income from insurance activitiesRental income and real estate servicesFees on collection servicesNet miscellaneous operating incomeNet Other Operating IncomeNet income from operations on transaction and portfolio securitiesNet profits on foreign exchange operationsTotal Non-Interest Income


The Group’s net profit on foreign exchange operations amounted to LBP 3.05 billion at 31December 2005, a decrease by 2.68% from LBP 3.13 billion at 31 December 2004.

The Group’s non-interest income increased by 38.15% to LBP 43.11 billion at 31 December2005, up from LBP 31.20 billion at the end of the preceding year. It contributed to 34.13%of the Group’s net financial income at 31 December 2005, compared to 27.35% at 31December 2004.

Net Financial IncomeThe following table sets out the Group’s net financial income for each of the years ended31 December 2004 and 2005, respectively:

As a result of the combined effects of the foregoing, the Group’s net financial income forthe year ended 31 December 2005 was LBP 126.39 billion, compared to LBP 114.08 billionfor the year ended 31 December 2004, reflecting a year-on-year increase of 10.80%.

Staff Expenses and Related ChargesThe following table sets out the principal components of the Group’s staff expenses andrelated charges for each of the years ended 31 December 2004 and 2005, respectively:

Total staff expenses and related charges amounted to LBP 48.27 billion for the year ended31 December 2005, compared to LBP 43.85 billion for the year ended 31 December 2004,reflecting a year-on-year increase of 10.09%. This increase was largely attributable to theincrease in salaries and related charges comprised principally of the 3% annual increaseagreed between the Association of Bankers in Lebanon and the Union of Banks’ Employees,which represent the substantial majority of the Group’s employees. The increase in staffand related expenses was also due to the increase in the cost of social contributionsgranted to employees such as schooling and transportation, etc. and to the newrecruitments made by the Group in order to expand current and new business activities(such as Islamic banking) during the year 2005.

- million LBP -

% Change

5.57%

14.47%

-49.90%

38.14%

10.80%

200488,101

(11,034)

5,806

31,204

114,077

200593,009

(12,631)

2,909

43,105

126,392

As at 31 December

Net interest incomeAllowance for loan lossesProvision written-back on loansNon-interest incomeTotal Net Financial Income

- million LBP -

% Change

12.39%

27.31%

10.24%

-30.30%

5.59%

10.09%

200430,972

681

4,305

1,340

6,549

43,847

200534,809

867

4,746

934

6,915

48,271

As at 31 December

Salaries and wagesBoard of directors’ feesSocial security contributionsProvision for end of service indemnitiesOther allowances and benefitsTotal Staff Expenses and Related Charges



General Operating ExpensesThe following table sets out the principal components of the Group’s general operatingexpenses for the years ended 31 December 2004 and 2005, respectively:

General operating expenses increased by 6.97% to LBP 27.66 billion for the year ended31 December 2005, compared to LBP 25.86 billion for the year ended 31 December 2004.The increase in general operating expenses is mainly attributed to the operational cost ofopening new branches and expanding into new lines of business.

Despite the increase in staff and operating expenses, the Group’s overall cost-to-incomeratio decreased to 64.85% as at 31 December 2005, compared to 67.20% for the yearended 31 December 2004.

Profit before TaxThe following table sets out the Group’s pre-tax profit for the years ended 31 December2004 and 2005, respectively:

The Group’s pre-tax profits for the year 2005 amounted to LBP 42.13 billion (or the equivalentof USD 27.95 million), compared to LBP 34.46 (or the equivalent of USD 22.86 million) forthe year 2004, a year-on-year increase by 22.27%.

- million LBP -

% Change

2.29%

7.64%

8.17%

23.41%

34.38%

10.25%

-12.24%

6.92%

0.41%

-6.23%

17.10%

3.44%

11.04%

-2.89%

-2.26%

3.88%

94.55%

6.97%

20042,659

1,780

2,117

1,939

544

1,970

2,034

1,661

974

963

2,094

2,846

1,196

1,382

1,107

335

257

25,858

20052,720

1,916

2,290

2,393

731

2,172

1,785

1,776

978

903

2,452

2,944

1,328

1,342

1,082

348

500

27,660

As at 31 December

TaxesPremiums for the guarantees of depositsRental charges and related expensesLawyers, audit and consulting feesData processing servicesMail and telecommunications (PTT, Swift)Maintenance and repairsElectricity, water and heatingTravel and entertainmentTransportation chargesInsurance premiumsAdvertising and public relations expensesComputer maintenance and chargesOffice stationery and printingBoard of directors attendance allowancesTraining, documentation and services feesOther expensesTotal General Operating Expenses

- million LBP -

% Change

22.27%

24.60%

21.80%

200434,459

(5,780)

28,679

200542,134

(7,202)

34,932

As at 31 December

Profit before income taxIncome taxNet Profit for the Year


The Group’s net profit on foreign exchange operations amounted to LBP 3.05 billion at 31December 2005, a decrease by 2.68% from LBP 3.13 billion at 31 December 2004.

The Group’s non-interest income increased by 38.15% to LBP 43.11 billion at 31 December2005, up from LBP 31.20 billion at the end of the preceding year. It contributed to 34.13%of the Group’s net financial income at 31 December 2005, compared to 27.35% at 31December 2004.

Net Financial IncomeThe following table sets out the Group’s net financial income for each of the years ended31 December 2004 and 2005, respectively:

As a result of the combined effects of the foregoing, the Group’s net financial income forthe year ended 31 December 2005 was LBP 126.39 billion, compared to LBP 114.08 billionfor the year ended 31 December 2004, reflecting a year-on-year increase of 10.80%.

Staff Expenses and Related ChargesThe following table sets out the principal components of the Group’s staff expenses andrelated charges for each of the years ended 31 December 2004 and 2005, respectively:

Total staff expenses and related charges amounted to LBP 48.27 billion for the year ended31 December 2005, compared to LBP 43.85 billion for the year ended 31 December 2004,reflecting a year-on-year increase of 10.09%. This increase was largely attributable to theincrease in salaries and related charges comprised principally of the 3% annual increaseagreed between the Association of Bankers in Lebanon and the Union of Banks’ Employees,which represent the substantial majority of the Group’s employees. The increase in staffand related expenses was also due to the increase in the cost of social contributionsgranted to employees such as schooling and transportation, etc. and to the newrecruitments made by the Group in order to expand current and new business activities(such as Islamic banking) during the year 2005.

- million LBP -

% Change

5.57%

14.47%

-49.90%

38.14%

10.80%

200488,101

(11,034)

5,806

31,204

114,077

200593,009

(12,631)

2,909

43,105

126,392

As at 31 December

Net interest incomeAllowance for loan lossesProvision written-back on loansNon-interest incomeTotal Net Financial Income

- million LBP -

% Change

12.39%

27.31%

10.24%

-30.30%

5.59%

10.09%

200430,972

681

4,305

1,340

6,549

43,847

200534,809

867

4,746

934

6,915

48,271

As at 31 December

Salaries and wagesBoard of directors’ feesSocial security contributionsProvision for end of service indemnitiesOther allowances and benefitsTotal Staff Expenses and Related Charges



General Operating ExpensesThe following table sets out the principal components of the Group’s general operatingexpenses for the years ended 31 December 2004 and 2005, respectively:

General operating expenses increased by 6.97% to LBP 27.66 billion for the year ended31 December 2005, compared to LBP 25.86 billion for the year ended 31 December 2004.The increase in general operating expenses is mainly attributed to the operational cost ofopening new branches and expanding into new lines of business.

Despite the increase in staff and operating expenses, the Group’s overall cost-to-incomeratio decreased to 64.85% as at 31 December 2005, compared to 67.20% for the yearended 31 December 2004.

Profit before TaxThe following table sets out the Group’s pre-tax profit for the years ended 31 December2004 and 2005, respectively:

The Group’s pre-tax profits for the year 2005 amounted to LBP 42.13 billion (or the equivalentof USD 27.95 million), compared to LBP 34.46 (or the equivalent of USD 22.86 million) forthe year 2004, a year-on-year increase by 22.27%.

- million LBP -

% Change

2.29%

7.64%

8.17%

23.41%

34.38%

10.25%

-12.24%

6.92%

0.41%

-6.23%

17.10%

3.44%

11.04%

-2.89%

-2.26%

3.88%

94.55%

6.97%

20042,659

1,780

2,117

1,939

544

1,970

2,034

1,661

974

963

2,094

2,846

1,196

1,382

1,107

335

257

25,858

20052,720

1,916

2,290

2,393

731

2,172

1,785

1,776

978

903

2,452

2,944

1,328

1,342

1,082

348

500

27,660

As at 31 December

TaxesPremiums for the guarantees of depositsRental charges and related expensesLawyers, audit and consulting feesData processing servicesMail and telecommunications (PTT, Swift)Maintenance and repairsElectricity, water and heatingTravel and entertainmentTransportation chargesInsurance premiumsAdvertising and public relations expensesComputer maintenance and chargesOffice stationery and printingBoard of directors attendance allowancesTraining, documentation and services feesOther expensesTotal General Operating Expenses

- million LBP -

% Change

22.27%

24.60%

21.80%

200434,459

(5,780)

28,679

200542,134

(7,202)

34,932

As at 31 December

Profit before income taxIncome taxNet Profit for the Year


Credit Libanais Group

Consolidated Balance Sheet as at 31 December 2005

Cash & Central BankLebanese Treasury Bills & other government securitiesBonds & other fixed income securitiesMarketable securities & other variable income instrumentsBanks & financial institutions

- Current & sight accounts- Loans & time deposits

Head office, branches, parent company, foreign sister financial institutions & subsidiaries- Current accounts- Time deposits

Loans & advances to customers - Commercial loans- Current overdraft accounts- Loans and advances to related parties- Net doubtful loans

Debtors by acceptances Investment securities including investments in unconsolidated subsidiariesInvestment in companies carried under the equity methodTangible fixed assets (including revaluation surplus approved by the Central Bank)Intangible assetsOther assetsRegularization accounts & other miscellaneous debtor accountsRevaluation surplus on other fixed assetsGoodwill Total Assets

Engagements by signature received from financial intermediariesOther commitments receivedTotal Contra Accounts

Notes

(3)

(4-2f)

(5-2f)

(6-2f)

(7-2n)

(8-2j-2k)

(2s)

(8-2j-2k)

(10)

(11-2f)

(12-2c)

(13-2i)

(13-2i)

(14)

(15)

(16-2m)

(17-2c)

(28)

(29)

2005Group1,478,094

1,490,242

104,500

23,003

550,060

62,698

487,362

----

----

----

899,056

839,517

2,449

1,501

55,589

27,521

2,204

6,442

103,130

2,620

6,396

23,817

56,137

----

4,773,222

2,294

1,620,948

1,623,242

2005Bank

1,193,567

1,142,416

25,297

3,042

526,682

62,234

464,448

3,940

2,144

1,796

725,785

683,500

2,452

1,501

38,332

27,521

47,067

----

73,632

1,390

396

19,900

59,338

----

3,849,973

2,294

1,207,226

1,209,520

2004Group1,282,643

1,562,419

85,955

18,223

531,165

60,420

470,745

----

----

----

813,779

752,913

2,464

3,577

54,825

32,429

377

5,682

99,734

4,235

1,892

26,864

56,137

226

4,521,760

1,778

1,453,218

1,454,996

2004Bank887,027

1,318,551

21,149

2,109

530,583

59,938

470,645

723

648

75

664,386

620,987

2,464

3,577

37,358

32,429

43,399

----

72,491

2,148

392

20,177

59,338

226

3,655,128

1,477

1,068,907

1,070,384

- million LBP -

The attached notes are an integral part of these financial statements

Auditors Report on the Consolidated Financial Statements


- million LBP -

Banks & financial institutions- Current & sight accounts- Time deposits & borrowings

Head office, branches, parent company, foreign sister financial institutions & subsidiaries- Current & sight accounts- Time deposits & borrowings

Customers creditor accounts- Current & sight deposits- Time deposits- Savings accounts

Engagements by acceptancesLiabilities under financial instruments

- Debenture bonds- Certificates of deposit

Other liabilitiesRegularization accounts & other creditor accountsProvisions for contingencies & chargesRevaluation surplus accepted as supplementary capitalPremium on issuance of preferred sharesShare capital Reserves for general banking risksReserves & premiums (and equity differences)

- Group share- Minority interests

Unrealized profits (losses)Profits carried forward

- Group share- Minority interests

Net income for the year- Group share- Minority interests

Revaluation surplus on other fixed assetsTotal Liabilities & Shareholders’ Equity

Financing commitments given to:- Financial intermediaries- Customers

Commitments & contingencies givenTotal Contra Accounts

Notes

(18)

(19-2o)

(10)

(20-2u)

(21)

(22)

(23-2p)

(24-25-2m)

(24)

(24)

(24-2t)

(24-2r)

(24-2f)

(24)

(24)

(25 & 2m)

(26)

(27)

2005Group

55,524

14,486

41,038

----

----

----

4,026,105

393,997

965,244

2,666,864

27,521

185,190

----

185,190

38,726

6,096

26,548

7,828

59,375

96,000

15,716

124,061

118,371

5,690

1,737

3,898

4,104

(206)

34,932

33,562

1,370

63,965

4,773,222

285,527

2,436

283,091

33,539

319,066

2004Group

38,962

16,711

22,251

----

----

----

3,806,371

396,605

793,597

2,616,169

32,429

186,003

----

186,003

27,220

17,387

23,056

7,828

59,375

96,000

13,214

114,430

109,787

4,643

(44)

6,884

7,085

(201)

28,680

27,258

1,422

63,965

4,521,760

269,788

2,274

267,514

38,031

307,819

2004Bank

37,928

16,379

21,549

123,290

122,901

389

2,928,484

398,360

609,729

1,920,395

32,429

187,537

----

187,537

17,684

8,552

26,670

7,828

59,375

96,000

11,050

12,228

12,228

----

(44)

14,693

14,693

----

24,258

24,258

----

67,166

3,655,128

269,788

2,274

267,514

46,609

316,397


2005Bank

49,572

13,334

36,238

81,003

80,938

65

3,143,686

398,858

730,340

2,014,488

27,521

185,703

----

185,703

17,381

4,631

31,462

7,828

59,375

96,000

13,217

26,668

26,668

----

1,737

4,455

4,455

----

32,568

32,568

----

67,166

3,849,973

285,527

2,436

283,091

46,940

332,467


Total interest received & similar income- Interest received on Lebanese Treasury bills- Interest received on deposits & similar accounts with banks & financial institutions- Interest received on deposits in head office, branches, parent company, foreign sister

financial institutions & subsidiaries- Interest received from bonds & other fixed income instruments- Interest received from loans & advances to customers- Interest received from loans & advances to related parties- Interest received from leasing activities- Other interest received & similar income

Total interest paid & similar charges- Interest paid on deposits & similar accounts from banks & financial institutions- Interest paid on deposits from head office, branches, parent company, foreign sister

financial institutions & subsidiaries- Interest paid on deposits from customers & other creditor accounts- Interest paid on deposits from related parties - Interest paid on certificates of deposit- Interest paid on bonds and financial fixed income instruments- Interest paid on leasing activities- Other interest paid and similar charges

Net allocation to provisions for doubtful debts- Provisions for loans & advances - Provisions written back on loans & advances

Net Interest IncomeIncome from marketable securities & other variable income instruments Net commissions received

- Commissions received- Commissions paid

Profit on financial operations- Net profit from operations on transaction securities- Net profit from operations on financial fixed assets- Net profit from foreign exchange operations- Net profit from operations on financial instruments

Loss on financial operations- Net loss from operations on transaction securities- Net loss from operations on financial fixed assets- Net loss from foreign exchange operations- Net loss from operations on financial instruments

Net Income on Financial Operations

Notes

(30)

(31)

(32)

(32)

(33)

(2e)

(2e)

(34)

2005Group

304,705

114,123

110,149

----

5,989

69,295

1,780

482

2,887

(211,696)

(1,531)

----

(197,890)

----

(12,119)

----

----

(156)

(9,722)

(12,631)

2,909

83,287

1,386

19,138

20,992

(1,854)

16,507

9,218

4,038

3,251

----(707)

(505)

----

(202)

----

15,800

2005Bank234,462

86,432

83,370

1,446

588

59,516

781

----

2,329

(157,991)

(1,126)

(3,436)

(141,025)

----

(12,404)

----

----

----

(9,568)

(11,961)

2,393

66,903

13,546

17,992

19,835

(1,843)

10,256

7,071

----

3,185

----(388)

(387)

----

(1)

----

9,868

2004Group

296,525

135,961

86,219

----

5,274

61,938

2,411

878

3,844

(208,424)

(1,812)

----

(191,679)

----

(14,224)

----

----

(709)

(5,228)

(11,034)

5,806

82,873

782

17,263

18,043

(780)

8,503

5,154

----

3,349

----(1,204)

(988)

----

(216)

----

7,299

2004Bank225,408

108,027

57,145

2,297

540

53,677

913

----

2,809

(159,352)

(1,812)

(2,476)

(140,719)

----

(14,345)

----

----

----

(4,582)

(10,080)

5,498

61,474

15,789

16,348

17,109

(761)

8,085

4,975

----

3,110

----(980)

(934)

----

(46)

----

7,105

- million LBP -

Consolidated Statement of Income as at 31 December 2005



Net Income on Financial OperationsOther operating incomeOther operating chargesNet Financial IncomeGeneral operating expenses

- Staff expenses- Other operating & administrative expenses

Amortization & depreciation of tangible & intangible assetsNet allocation to provisions & recoveries on financial assetsNet allocation to provisions & recoveries on off-balance sheet commitmentsNet Operating Income (before tax)Net extraordinary result

- Exceptional income- Exceptional expenses

Income tax Share in net income of companies accounted for under the equity method

- Non-financial - Financial

Net Profit for the Year - Group share- Minority interests

Notes

(34)

(35)

(36)

(37)

(38)

(39-2i)

(2q)

(40)

2005Group

15,800

22,560

(15,779)

126,392

(75,931)

(48,271)

(27,660)

(9,509)

(82)

----

40,870

162

842

(680)

(7,202)

1,102

982

120

34,932

33,562

1,370

2005BANK

9,868

11,357

(11,170)

108,496

(66,136)

(41,917)

(24,219)

(8,930)

2,170

----

35,600

1,326

1,449

(123)

(4,358)

----

----

----

32,568

32,568

----

2004Group

7,299

20,091

(14,231)

114,077

(69,705)

(43,847)

(25,858)

(11,306)

----

----

33,066

448

894

(446)

(5,780)

946

817

129

28,680

27,258

1,422

2004BANK

7,105

11,533

(11,232)

101,017

(61,879)

(39,000)

(22,879)

(10,589)

(1,339)

----

27,210

649

1,066

(417)

(3,601)

----

----

----

24,258

24,258

----

- million LBP -



- million LBP -

Net income for the yearAdjustments to reconcile net income to net cash provided by operating activities:

- Net allocation to provisions for loans- Depreciation & amortization- Other provisions & contingencies- (Decrease) Increase in regularization accounts and other creditors- Decrease (Increase) in regularization accounts and other debtors- Decrease (Increase) in Lebanese Treasury bills (Available for sale) - (Increase) in loans and advances to customers- Decrease (Increase) in debtors by acceptances- (Increase) in other assets- Increase in banks time deposits (Liabilities over one year)- Increase in customer deposits- (Decrease) Increase in engagements by acceptances- (Decrease) Increase in other liabilities

Net Cash Provided by Operating Activities(Increase) in bonds & other fixed income instrumentsDecrease (Increase) in marketable securities & other variable income securities(Increase) in fixed assetsDecrease (Increase) in head office, branches, parent company, foreign sister financial institutions& subsidiaries (Time deposits)Decrease (Increase) in investment securities including investment in unconsolidated subsidiaries(Increase) in investment in companies carried under the equity methodDecrease (Increase) in Lebanese Treasury bills (Originated loans and held to maturity) Increase in deposits with banks (Assets over 1 year) Decrease in goodwillNet Cash Used in Investing ActivitiesDistribution for ordinary shareholdersTax on inter-group distributionsPrior year adjustment in insurance subsidiary(Decrease) Increase in liabilities under financial instruments(Decrease) Increase in unrealized profits or lossesIssuance of preferred sharesDistribution for preferred shareholdersPremiums on preferred shares issuedNet Cash Provided by Financing ActivitiesNet Increase in Cash & Cash EquivalentsCash & cash equivalents at beginning of year (note 41)Cash & Cash Equivalents at End of Year (note 41)

2005Group

34,932

11,886

5,947

3,492

(11,291)

3,047

(49,332)

(97,163)

4,908

(4,504)

8,502

219,734

(4,908)

11,506

136,756

(18,545)

(4,780)

(7,728)

----

(1,827)

(760)

121,509

(107,418)

226

(19,323)

(11,954)

(1,643)

----

(813)

1,781

----

(5,936)

----(18,565)

98,868

1,058,643

1,157,511

2005Bank

32,568

11,333

5,433

4,792

(3,921)

277

(18,198)

(72,732)

4,908

(3)

8,178

215,202

(4,908)

(302)

182,627

(4,148)

(932)

(5,817)

(1,721)

(3,668)

----

194,332

(286,388)

226

(108,116)

(11,954)

----

----

(1,833)

1,781

----

(5,936)

----(17,942)

56,569

821,554

878,123

2004Group

28,680

9,911

7,408

3,534

1,005

(7,798)

(35,758)

(65,678)

(8,607)

(89)

2,507

366,053

8,607

5,507

315,282

(18,711)

(7,917)

(11,968)

----

854

(704)

(328,820)

(132,750)

452(499,564)

(11,954)

(1,747)

----

51

(37)

16,000

----

59,375

61,688

(122,594)

1,181,237

1,058,643

2004Bank

24,258

8,957

6,665

4,616

198

(5,227)

(35,758)

(66,940)

(8,607)

(89)

2,507

245,145

8,607

4,348

188,680

(2,939)

31

(10,499)

5,404

(1,371)

----

(323,915)

(128,972)

452(461,809)

(11,954)

----

----

108

(37)

16,000

----

59,375

63,492

(209,637)

1,031,191

821,554The attached notes are an integral part of these financial statements

Consolidated Statement of Cash Flows as at 31 December 2005



- million LBP -

Consolidated Statement of Changes in Equityas at 31 December 2005

Share

Capital

80,000

----

----

----

----

16,000

----

96,000

----

----

----

----

----

----

96,000

99,909

23,092

----

----

----

----

----

123,001

11,086

----

----

----

----

----

134,087

3,601

1,042

----

----

----

----

----

4,643

1,047

----

----

----

----

----

5,690

Reserves

GroupShare

Minorityinterest

GroupShare

Minorityinterest

Profits CarriedForward

Unrea-lized

Profits(Losses)

(7)

----

----

----

(37)

----

----

(44)

----

----

1,781

----

----

----

1,737

Profit for theYear

Premiumson

PreferredShares

----

----

----

----

----

59,375

----

59,375

----

----

----

----

----

----

59,375

RevaluationSurplus as

Tier 2

7,828

----

----

----

----

----

----

7,828

----

----

----

----

----

7,828

TotalEquity

236,050

----

(11,954)

(1,747)

(37)

75,375

28,680

326,367

----

(11,954)

1,781

(1,643)

(5,936)

34,932

343,547

At 31 December 2003 (note 24)Allocation of profits for the year 2003

Distribution to ordinary shareholders

Tax on inter-group distributions

Unrealized gains on available-for-

sale portfolio

Capital increase through issuance of

preferred shares

Net profit for the year 2004

At 31 December 2004 (note 24)Allocation of profits for the year 2004

Distribution to ordinary shareholders

Unrealized gains on available-

for-sale portfolio

Tax on inter-group distributions

Distribution to preferred shareholders

Net profit for the year 2005

At 31 December 2005 (note 24)

14,044

6,742

(11,954)

(1,747)

----

----

----

7,085

16,552

(11,954)

----

(1,643)

(5,936)

----

4,104

(190)

(11)

----

----

----

----

----

(201)

(5)

----

----

----

----

----

(206)

29,545

(29,545)

----

----

----

----

27,258

27,258

(27,258)

----

----

----

----

33,562

33,562

1,320

(1,320)

----

----

----

----

1,422

1,422

(1,422)

----

----

----

----

1,370

1,370

GroupShare

Minorityinterest


1 - The Bank

Credit Libanais SAL is a Lebanese joint stock companyregistered under number 10742 at the register ofCommerce, and under number 53 on the banks’ list at theCentral Bank of Lebanon.

The Bank, together with its wholly-owned medium andlong term bank, Credit Libanais Investment Bank SALincorporated on 27 February 1996, provides a full rangeof commercial and investment banking activities through55 branches in Lebanon and one international bankingunit in Limassol - Cyprus.

The Bank’s major shareholders are Capital InvestmentHoldings-Manama and Capital Investment Holdings-Lebanon SAL (64.22% and 32.80% of ordinary sharesrespectively).

2 - Significant Accounting Policies

The significant accounting policies adopted in the preparation of the consolidated financial statements areset out below:

a) Basis of preparationThe consolidated financial statements have been prepared in accordance with International FinancialReporting Standards issued or adopted by theInternational Accounting Standards Board and interpretations issued by the International FinancialReporting Interpretations Committee and applicablerequirements of the Central Bank of Lebanon.

The consolidated financial statements are denominated inmillions of Lebanese pounds (LBP), unless otherwise stated.

b) Accounting convention The consolidated financial statements are prepared underthe historical cost convention, except for (a) the revaluationof properties in Lebanon acquired prior to 1 January 1994in compliance with law number 282 dated 31 December

1993, (b) the measurement at fair value of ready for saleand trading investment securities.

In all material respects, accounting policies were appliedon a basis consistent with the preceding year and wherenecessary, accounts have been restated to allow comparison between 2005 and 2004.

c) Principles and basis of consolidationThe consolidated financial statements have beenprepared in accordance with the Central Bank circular No 1524 dated 24 April 1997 which requiresthe consolidation of investments in banking and nonbanking subsidiaries and affiliates, as from 31December 1997;

The consolidated financial statements include theaccounts of Credit Libanais SAL and its banking andnon-banking subsidiaries and affiliates as detailedbelow. The financial statements of subsidiaries areprepared for the same reporting year as the Bank,using consistent accounting policies. Adjustmentsare made to bring into line any dissimilar accountingpolicies that may exist;

Companies in which the Bank holds a controlling voting interest or exclusive control over its management are fully consolidated. Intercompanybalances, as well as income and expense on materialintercompany transactions between fully consolidatedcompanies, are eliminated on consolidation; and

Companies controlled jointly as well as companies inwhich the Bank exercises significant influence, butnot exclusive control, are accounted for under theequity method.

The equity method applies to financial and non financial companies under joint control with otherpartners as well as to associated companies inwhich the Bank exercises a significant control overmanagement policy (usually shareholdings between20% and 50%) - see note 12. All other minorityinterests are disclosed under “investment securitiesincluding investments in unconsolidated subsidiaries“as per notes 2f & 11.

Notes to the ConsolidatedFinancial Statements as at 31 December 2005

i-

ii-

iii-

Notes to the Consolidated Financial Statements


Company Nature of Business Method of % ofConsolidation Control

Credit Libanais Investment Bank SAL Investment banking Full consolidation 99.83

Lebanese Islamic Bank SAL Islamic banking Full consolidation 99.81

Cedar’s Real Estate SAL Real estate development Full consolidation 99.92

Soft Management SAL IT solutions Full consolidation 46.99

Hermes Tourism & Travel SAL Tourism and ticketing Full consolidation 99.98

Liberty Restaurant SARL Restaurant Full consolidation 99.20

Card Promotion Company SAL Credit card operations Full consolidation* 99.21

Card Promotion Company SAL Offshore Credit card operations Full consolidation* 90.27

Card Promotion Company SAL Holding Credit card operations Full consolidation* 99.22

Crédit Libanais d'Assurances et Insurance Full consolidation 66.87

de Réassurances SAL

Business Development Center SARL Publicity and advertising Full consolidation 98.60

Capital Real Estate SAL Real estate development Full consolidation 100.00

Liberty Tower SAL Real estate development Full consolidation 99.88

Credilease SAL Leasing Full consolidation 99.24

Collect SAL Collection services Full consolidation 44.93

Liberty Executive Center SAL Business center services Equity Method 5.00

Agence Générale de Courtage Insurance brokerage Equity Method 25.86

d'Assurance SAL

International Payment Network SAL ATM Interbank payment network Equity Method 23.40

Credit Cards Management SAL Issuing and acquiring services Equity Method 28.96

NetCommerce SAL Ecommerce and payment gateway Equity Method 19.10

* Under liquidation

Goodwill and consolidation differences Goodwill arising on consolidation represents the excess of cost over the book value of the underlying net assets of theacquired subsidiaries and affiliated companies and is depreciated over a period of five years ending 31 December 2005.

Goodwill is not recorded in respect of the initial consolidation of subsidiaries which were formed by the Bank.

The list of companies included in the consolidated financial statements and the percentage held by the Bank are set out inthe table below:

iv-


d) Income recognitionInterest and similar income are recognized on an accrualbasis. Fees for services and commissions (not interestrelated) are accounted for in the income statement whenincurred.

e) Translation of foreign currency transactionsMonetary assets and liabilities denominated in foreigncurrencies are translated into Lebanese pounds at therates of exchange prevailing at the balance sheet date asdetermined by the Central Bank of Lebanon.

Transactions in foreign currencies are recorded at theexchange rates ruling at the date of the transaction.

Assets acquired in foreign currencies and held on a long-term basis are stated in Lebanese pounds at historicalrates, except those acquired as a payment in kind forloans which are recorded in the same currency as therelated loans and translated at the year-end exchangerate, in accordance with the “Banks Control Commission”circular Nº 151.

All exchange gains and losses arising on the settlementof foreign currency items are included in the statementof income.

Comparative closing exchange rates of major currenciesfor the years ending 31 December 2005 and 31December 2004 are:

f) SecuritiesThe Bank classified its portfolio of investment securities(which includes Lebanese and non-Lebanese Treasurybills, bonds and other fixed-income securities, stocks andother variable-income securities) according to the following categories:

Held-for-trading: these securities are bought forresale in the short term. They are stated in thebalance sheet at their fair value which is close to

their market value. Differences arising between thefair value of these securities and their original costare recorded in the statement of income;

Available-for-sale: these investments are boughtwith the intention not to be sold in the short term, norto be held to maturity. After initial recognition, investments which are classified as “available forsale” are re-measured at fair value. Unrealized gainsand losses on revaluation are reported as a separatecomponent of equity until the investment is sold. Incase of impairment, the cumulative gain or loss previously reported under equity is transferred to thestatement of income for the period;

Held-to-maturity: these securities are bought withthe Bank’s ability and intention to hold until maturity.They are stated in the balance sheet at their amortized cost, after taking into account any dis-count or premium on acquisition, less provision forimpairment value. Differences between amortizedcost and redemption price are prorated over the period of the securities; and

Securities classified as loans and accounts receivable:these are securities which are bought directly fromthe issuer with the Bank’s ability and intention to holdfor more than one year. They are stated in the balance sheet at their amortized cost, less provisionfor impairment value. Differences between amortized cost and redemption price are proratedover the period of the securities.

Investment securities including investment in unconsolidated subsidiaries

These are meant to be held as medium to long-terminvestments. They are stated at the lower of cost oradjusted book value based on the most recent available accounts and, where necessary, provisionsare set up accordingly (see note 11).

Dividend income is recognized when the right toreceive payment is established. Dividend receivedand gains or losses arising on disposal of thesesecurities are recorded in the statement of incomeunder “Net profit (or loss) from operations on portfolio securities”.

2005

1,507.50

1,784.13

2,600.44

1,145.87

12.85

2004

1,507.50

2,051.10

2,894.85

1,326.91

14.52

US Dollar

Euro

Sterling Pound

Swiss Franc

Japanese Yen

- LBP -

ii-

iii-

iv-

i-



g) Provision for impairmentAn assessment is made at each balance sheet date todetermine whether there is objective evidence that afinancial asset or group of financial assets may be impaired.If such evidence exists, the estimated recoverableamount of that asset is determined and any impairmentloss recognized for the difference between the recoverableamount and the carrying amount as above.

h) Fair ValueFair value is generally the amount for which an assetcould be exchanged or a liability settled in an arm’slength transaction. Many assets and liabilities are eithershort term in nature or are carried at market value andtherefore their fair value is equal to carrying value.

The fair value for investments traded in organized financialmarkets is determined by reference to Stock Exchangequoted market bid prices at the close of business on thebalance sheet date, adjusted for transaction costs necessary to realize the asset.

For investments where there is no quoted market price, areasonable estimate of the fair value is determined by reference to the current market value of another instrumentwhich is substantially the same, or is based on theexpected discounted cash flows.

The fair value for loans and advances to customers is appro-ximately equal to their net book value, after deduction ofunearned interest and provisions for bad and doubtful debts.

The Group’s management is of the opinion that the fairvalue of other financial instruments is approximatelyequal to their carrying value.

i) Use of estimatesThe preparation of the financial statements requires management to make estimates and assumptions thataffect the reported amount of financial assets and liabilities and disclosure of contingent liabilities.

These estimates and assumptions also affect the revenues and expenses and the resultant provisions aswell as fair value changes reported in equity.

In particular, considerable judgment by management isrequired in the estimation of the amount and timing offuture cash flows when determining the level of provisions

required for non-performing credit facilities as well as forimpairment provisions for unquoted investments.

Such estimates are necessarily based on assumptionsabout several factors involving varying degrees of judgmentand uncertainly and actual results may differ resulting infuture changes in such provisions.

j) Loans and advances to customers and related provisionLoans and advances to customers are stated at principaltogether with interest earned at the balance sheet date,and after deduction of unrealized interest and provisionson sub-standard and doubtful debts. These provisionsare reviewed periodically by the management of theBank, using criteria that are consistent with those of thepreceding year.

Provisions for doubtful debts are set up to cover any possiblelosses in principal and interest in the existing portfolio ofloans and advances to customers and contingent accounts.The level of provision to be constituted is based on thedifference between the book value and the present value ofthe expected future cash flows after taking into considerationthe realizable value of the guarantees provided. Theseprovisions are accounted in the statement of income.

No general provisions are requested on the loan portfolioapart from the “Reserve for general banking risks”.

Provisions on doubtful accounts are written back toincome only when the debt is restructured or repaymenteffectively resumed. Provision charges and provisionswritten back are recorded under “Net allocation to provision for doubtful debts” in the statement of incomeas explained under note 32.

Doubtful loans and advances are written-off from the balance sheet and are recorded as memorandumaccounts when all possible means of collection recourseshave been exhausted, and the possibility of any futurerecovery is considered to be remote.


k) Interest reserved on sub-standard and doubtful debtsInterest receivable from sub-standard, doubtful and badloans is reserved and deducted directly from the loanaccounts at the year-end.

l) Tangible and intangible assetsTangible and intangible assets are stated at historical costless accumulated depreciation (as per note 13 below),except for certain land and buildings owned by the Bankwhich have been revalued as explained under notes2k & 16. The net positive surplus resulting from therevaluation of assets owned by the Bank is recordedunder shareholders’ equity (note 24). No interest ischarged to the cost of non-financial fixed assets.

Maintenance, repairs and minor alterations are chargedto operating expenses as incurred.

Real estate properties acquired by the Bank in recoveryof debts are stated in the balance sheet at cost.Provision is constituted against the value of these properties that are unsold within the two-year statutorytime limit, in accordance with the Central Bank circulars,and is stated in the balance sheet under “Provisions forcontingencies and charges”. The annual provision chargeis equal to 20% of the total cost of unsold properties.

The carrying values of tangible fixed assets are reviewedfor impairment to determine whether events for changesin circumstances indicate the carrying value may not berecoverable. If any such indication exists and where thecarrying values exceed the estimated recoverable amount,the assets are written down to their recoverable amount.

DepreciationDepreciation is provided on a straight-line basis overthe estimated useful lives of all tangible and intangibleassets, except freehold land that is deemed to havean indefinite life, at the following annual rates:

m) RevaluationUsing the services of an independent appraiser and inaccordance with applicable Lebanese tax laws, the Bankproceeded in 1994 to the revaluation of its premisesacquired prior to the year 1993 and still carried in the balance sheet at the date of revaluation.

The revaluation surplus resulting from land and building,after deduction of the related tax liability computed on thebasis of 1.5% under prevailing laws, is reflected in thebalance sheet under “Revaluation surplus on other fixedassets” (see note 16).

The Central Bank of Lebanon and the Ministry of Financeapproved the revalued amounts for real estate as of 31December 1993.

n) Due from banks and other financial institutionsThese are stated at cost less any amounts written off andprovision for impairment where necessary.

o) Deposits All money market and customer deposits are carried atcost including interest, less amounts repaid.

p) Provisions for contingencies and chargesProvisions are recognized when the Bank has a presentobligation (legal or constructive) arising from a past eventand the costs to settle the obligation are both probableand able to be reliably measured.

Staff termination indemnityA provision has been set up to cover staff terminationindemnity, in accordance with Social Security Law and theLebanese Labor Law as well as the collective agreement ofLebanese banks’ employees. This indemnity is computedon the basis of one month salary for each year of service,calculated on the basis of the latest average salary. Provisionfor staff termination indemnity is stated in the balancesheet under “Provisions for contingencies and charges”.

q) Taxation and deferred taxesThe Bank is subject to Lebanese corporation tax of 15%on its taxable profits deriving from its operations inLebanon. Tax charge is payable annually by the end ofMay of the following year.

Provision for income taxes related to the period underreview is shown separately in the statement of income.

Goodwill 20%Research and development expenses 33%Key money 10%Freehold land NilFreehold buildings 2.5%Fixtures and fittings 25%Furniture and office equipment 9% to 15%Computer equipment 20%Motor vehicles 13%



r) Legal reserveAccording to local laws, the Bank must withhold 10% ofits annual net profits (after tax) as a legal reserve beforeany dividend distribution. This reserve is not available fordistribution.

s) Related party transactionsDisclosures on related party transactions are made by theBoard of Directors to the shareholders in a separate spe-cific report as required by articles 158 and 159 of the“Code of Commerce” and article 152 of the “Code ofMoney and Credit”. These related party transactions are confirmed by the auditors in a separatereport to the shareholders at the annual ordinary GeneralAssembly Meeting. Loans to related parties are disclosedseparately in the balance sheet.

t) Reserve for general banking risksIn compliance with Central Bank regulations and effectiveyear 1996, lebanese banks should appropriate from netprofit for the year a minimum of 0.2% and a maximum of0.3% from the total risk weighted assets and off balancesheet items based on rates specified by the Central Bankof Lebanon for any unspecified risks. The consolidatedratio should not be less than 1.25% of these risks at theend of the tenth financial year and 2% at the end ot thetwentieth financial year. This reserve is not available fordistribution, and is constituted in Lebanese Pounds andforeign currencies in proportion to the composition of thetotal risk weighted assets and off balance sheet items.

u) Liabilities under financial instruments Debts represented by securities (Euro-Certificates ofDeposit) are stated in the balance sheet at their nominalvalue plus accrued interest.

Issuance costs relating to these debt securities issued bythe Bank appear in the balance sheet under “regularizationaccounts (debtors)” and are amortized monthly over theterm of the related security. Interest paid on these debtsecurities is recorded in the statement of income under“Interest paid on certificates of deposit”.

v) Fiduciary assetsAssets held in trust or in a fiduciary capacity are not treat-ed as assets of the bank and are accordingly recordedunder off-balance sheet items.

w) Cash and cash equivalentsCash and cash equivalents included in the statement ofcash flows consist of cash and due from banks and financial institutions, maturing within one year from thedate of the financial statements.

x) OffsettingFinancial assets and financial liabilities are only offsetand the net amount reported in the balance sheet whenthere is a legally enforceable right to set off therecognized amounts and the Group intends to either set-

tle on a net basis, or to realize the asset and settle theliability simultaneously.

y) Books and accounts The Bank keeps proper books and accounts according toprevailing regulations.

z) Approval of accountsThe financial statements of the Bank, and the consolidatedfinancial statements of the Group, for the year ended 31December 2005 were approved by the Board of Directorsin its meeting held on 24 March 2006.


3 - Cash and Central Bank

Deposits at the Central Bank of Lebanon represent partly the cash compulsory reservecomputed on the following basis:

a) Deposits in Lebanese Pounds: 25% of current accounts and 15% of term deposits (of which 10% are non-interest earning deposits and amounting to LBP 90,224 at 31December 2005, LBP 130,407 at 31 December 2004).b) Deposits in foreign currencies: 15% on all categories of customer deposits in foreigncurrencies.

Cash Central Bank of Lebanon

- Demand deposits- Time deposits & CD up to 1 month- Time deposits & CD from 1 to 6 months- Time deposits & CD from 6 months to 1 year- Time deposits & CD over 1 year- CD at zero % for 2 years- Accrued interests on time deposits & CD

Total

Group 2005

34,340

1,443,754

103,806

115,437

199,755

133,000

840,573

----

51,183

1,478,094

Bank 2005

34,170

1,159,397

102,910

98,793

89,907

82,000

738,826

----

46,961

1,193,567

Group 2004

35,290

1,247,353

147,142

127,510

19,507

22,613

733,155

171,318

26,108

1,282,643

Bank 2004

35,228

851,799

145,530

96,346

3,000

7,537

452,437

124,350

22,599

887,027

- million LBP -

As at 31 December

4 - Lebanese Treasury Bills and 0ther Governement Securities

At fair value:Treasury bills held as available for saleAt amortized cost: Treasury bills held to maturityTreasury bills classified as loans & accounts receivableTreasury bills at zero % for two yearsTotal Treasury Bills PortfolioPlus: Accrued interest income on Treasury billsLess: Interest received in advance on Treasury billsTotalInterest income for the year

Group2005

84,569

1,377,300

----

----

1,461,869

28,373----

1,490,242

114,123

Bank2005

54,069

1,067,669

----

----

1,121,738

20,678----

1,142,416

86,432

Group2004

36,090

251,936

1,154,816

98,812

1,541,654

24,772(4,007)

1,562,419

135,961

Bank2004

36,090

235,846

939,317

88,502

1,299,755

21,617(2,821)

1,318,551

108,027

- million LBP -

As at 31 December

The Treasury bills portfolio is broken-down by maturity and by currency as follows:

Treasury bills maturing in less than 1 yearTreasury bills maturing over 1 yearTreasury Bills in LBPTreasury Bills in FCTotal Treasury Bills Portfolio

Group2005

183,151

1,278,718

827,572

634,297

1,461,869

Bank2005

154,221

967,517

498,392

623,346

1,121,738

Group2004

432,159

1,109,495

806,640

735,014

1,541,654

Bank2004

320,313

979,442

575,828

723,927

1,299,755

- million LBP -

As at 31 December



Revaluation of Treasury bills as at 31 December 2005:

Treasury bills held as available for saleTreasury bills held to maturityTotal

Nominal ValueGroup 2005

83,709

1,377,996

1,461,705

(2f)

(2f)

Fair ValueGroup 2005

84,569

1,396,393

1,480,962

Book ValueGroup 2005

84,569

1,377,300

1,461,869

- million LBP -

5 - Bonds and Other Fixed Income Securities

Bonds at amortized cost (a)- Maturing in less than one year- Maturing in more than one year Interest receivableTotal BondsCertificate of deposit at amortized cost (b)- Maturing in less than one year- Maturing in more than one yearInterest receivableTotal Certificates of DepositTotal

Group2005

76,226

23,573

52,653

1,023

77,249

26,678

4,523

22,155

573

27,251

104,500

Bank 2005

21,084

13,558

7,526

131

21,215

4,061

----

4,061

21

4,082

25,297

Group2004

37,660

----

37,660

509

38,169

46,759

12,952

33,807

1,027

47,786

85,955

Bank 2004

21,077

----

21,077

72

21,149

----

----

----

----

----

21,149

- million LBP -

As at 31 December

The Nominal Value of the treasury portfolio is divided according to original maturities, exclud-ing the related accrued interest, and deferred premiums as follows:

Treasury bills maturing in less than 1 monthTreasury bills maturing between 1 and 3 monthsTreasury bills maturing between 3 and 6 monthsTreasury bills maturing between 6 and 12 monthsTreasury bills maturing between 1 and 2 yearsTreasury bills maturing between 2 and 3 yearsTreasury bills maturing between 3 and 4 yearsTreasury bills maturing between 4 and 5 yearsTreasury bills maturing between 5 and 6 yearsTreasury bills maturing between 6 and 7 yearsTreasury bills maturing between 7 and 8 yearsTreasury bills maturing between 8 and 9 yearsTreasury bills maturing between 9 and 10 yearsTreasury bills maturing between 10 and 11 yearsTreasury bills maturing between 11 and 12 yearsTotal Treasury Bills Portfolio

Group2005

10,500

69,737

54,421

46,857

167,142

496,862

210,447

155,530

122,861

82,912

----

----

----

42,964

----

1,460,233

Bank2005

----

65,737

53,667

30,857

129,742

330,275

146,501

114,523

120,600

82,912

----

----

----

42,964

----

1,117,778

Group2004

9,000

115,450

157,410

116,468

203,451

442,739

31,065

111,142

96,976

131,726

86,898

----

----

----

35,426

1,537,751

Bank2004

----

81,013

109,973

93,032

152,951

375,885

26,473

111,142

93,961

129,465

86,898

----

----

----

35,426

1,296,219

- million LBP -

As at 31 December


6 - Marketable Securities and Other Variable Income Instruments

These are stated at the lower of cost or their probable market value as detailed under note 2f.During 2005, the group acquired additional securities for 3,015 million LBP (Bank of Beirut SAL and BLOM SAL)

Marketable securities for trading - QuotedSte. Rasamny Younes SAL

Banque du Liban et d'Outre Mer SAL

Ste. Ciment Blanc SAL

Marketable securities available for sale - QuotedSolidère SAL

Long term marketable securities - QuotedBanque du Liban et d'Outre Mer SAL

Bank of Beirut SAL

Long term marketable securities - UnquotedArab Financial Services Co. (Bahrain)Arab Trade Financing Program SAL

Ste. Des Grands Hotels du Liban SAL

Idarat Investment Holding SAL

Ste. Al-Aamal SAL

Ste. Des Constructions Immobilières SAL (SACI)Banque de l'Habitat SAL

Ste Financière du Liban SAL

Kafalat SAL

Capital Finance Company SAL

Ste Berytech SACI

Terrascapa Club SAL

Other investmentsTotal

Cost Group 2005

1,166

1,698

18

44

2,739

9,855

257

746

1,270

766

75

112

1,303

157

200

1,508

75

543

3

22,535

ProvisionGroup 2005

(806)

----

(6)

----

--

----

----

----

----

(650)

----

(82)

----

----

----

----

----

----

----

(1,544)

Net value Group 2005

360

2,897

13

140

2,845

10,465

257

746

1,270

116

75

30

1,303

157

200

1,508

75

543

3

23,003

Fair value Group 2005

360

2,897

13

140

2,739

9,855

257

746

1,270

116

75

30

1,303

157

200

1,508

75

543

3

22,287

Net value Bank 2005

360

1,526

13

140

----

----

257

746

----

----

----

----

----

----

----

----

----

----

----

3,042

Net value Group 2004

418

1,188

2

60

1,277

8,912

257

746

1,270

116

75

112

1,303

157

200

1,508

75

543

3

18,223

Net value Bank 2004

418

626

2

60

----

----

257

746

----

----

----

----

----

----

----

----

----

----

----

2,109

- million LBP -

As at 31 December

Revaluation at 31 December 2005:

Bonds- Maturing in less than one year- Maturing in more than one year Certificate of deposit - Maturing in less than one year- Maturing in more than one year

Book ValueGroup 2005

76,226

23,573

52,653

26,678

4,523

22,155

Nominal ValueGroup 2005

76,316

23,568

52,748

26,669

4,523

22,146

Fair ValueGroup 2005

76,664

23,206

53,458

27,115

4,523

22,592

- million LBP -

As at 31 December



7 - Banks and Financial Institutions

Deposits with banks mature within one year, accordingly their fair value approximates their book value.

Time deposits include an amount of LBP 4,959 as at 31 December 2005 (LBP 4,428 as at 31 December 2004) pledgedin favor of non-resident banks.

Deposits with banks and financial institutions are distributed by geographic locations according to the table below:

Demand deposits Time deposits (maturing in less than one year)Accrued interestsChecks for collectionTotal

Group 2005

36,274

486,732

630

26,424

550,060

Bank 2005

35,810

463,818

630

26,424

526,682

Group 2004

33,006

470,285

460

27,414

531,165

Bank 2004

32,524

470,185

460

27,414

530,583

- million LBP -

As at 31 December

8 - Loans and Advances to Customers (net)

Advances against real securitiesAdvances against personal guarantees and unsecured facilitiesAdvances against cash collateraland bank guaranteesTotal Loans

a) Loans are broken down according to the type of collateral as follows:

Advances & short-term loansAdvances & medium to long-term loansAdvances & loans to related partiesOthers advancesSub-standard loansLess: unrealized interestsTotal Performing LoansDoubtful debts (including reserved interest) Less: provision for doubtful debtsLess: reserved interests (Notes 9 & 2i)Net Doubtful LoansTotal

Group 2005

518,845

281,372

1,501

2,449

47,795

(8,495)

843,467

171,224

(57,458)

(58,177)

55,589

899,056

Bank 2005

521,800

134,201

1,501

2,452

34,870

(7,371)

687,453

142,119

(53,910)

(49,877)

38,332

725,785

Group 2004

488,451

225,170

3,577

2,464

47,492

(8,200)

758,954

153,093

(50,544)

(47,724)

54,825

813,779

Bank 2004

486,495

104,156

3,577

2,464

37,409

(7,073)

627,028

125,242

(46,578)

(41,306)

37,358

664,386

2005440,530

324,410

134,116

899,056

2005267,031

324,638

134,116

725,785

%49%

36%

15%

100%

%37%

45%

18%

100%

%51%

36%

13%

100%

%40%

44%

16%

100%

2004414,790

290,426

108,563

813,779

2004265,478

290,345

108,563

664,386

Group Bank Group Bank

LebanonLow risk countriesTotal

Group 2005

72,411

477,649

550,060

Bank 2005

61,847

464,835

526,682

Group 2004

61,114

470,051

531,165

Bank 2004

60,532

470,051

530,583

- million LBP -

- million LBP -

- million LBP -

As at 31 December

As at 31 December

As at 31 December


Corporate loansRetail loans

Total Loans

Group 2005

365,913

533,143

899,056

Bank 2005

317,366

408,419

725,785

Group 2004

325,272

488,507

813,779

Bank 2004

286,863

377,523

664,386

c) Loan portfolio is broken down by risk rating according to the classification defined by the Central Bank as follows:

Loans and advances to customers denominated in foreign currencies represent 70.5% oftotal loan portfolio as at 31 December 2005 (73% as at 31 December 2004), and 26% oftotal customer deposits in foreign currencies as at 31 December 2005 (28% as at 31December 2004).

The loan to deposit ratio of the Group stood at 22.33% at 31 December 2005, compared to21.38% at 31 December 2004.

d) Loans are distributed by line of business as follows:

Ordinary loans Loans under watch Sub-standard loans Less: suspended interest on sub-standard loansDoubtful loans Less: provisions and suspended interestBad loans Less: provisions and suspended interestTotal Loans

Group 2005

691,018

113,148

47,795

(8,495)

146,195

(90,621)

25,029

(25,013)

899,056

Bank 2005

560,632

99,322

34,870

(7,371)

117,090

(78,774)

25,029

(25,013)

725,785

Group 2004

625,743

93,920

47,492

(8,200)

129,172

(74,456)

23,921

(23,813)

813,779

Bank 2004

516,750

79,942

37,409

(7,073)

101,321

(64,071)

23,921

(23,813)

664,386

- million LBP -

- million LBP -

As at 31 December

As at 31 December

b) Loan portfolio is distributed by economic sector as follows:

TradeIndustryConstructionAgriculturePersonal and consumer loansMiscellaneousTotal Loans

200534.81%

18.07%

3.23%

2.00%

39.29%

2.60%

100.00%

200440.84%

16.23%

3.66%

2.40%

34.66%

2.21%

100.00%

- million LBP -

As at 31 December



9 - Provisions for Doubtful Debts

The movements in the “provisions for doubtful debts” during 2005 and 2004 were as follows:

Provisions (including reserved interest) at 1 January

Provisions constituted during this period (note 32)Interest reserved during the year on doubtful debtsProvisions relating to debts written-off & written backExchange difference on provisionsProvisions at 31 December

Group 2005

98,268

11,886

10,453

(5,004)

32

115,635

Bank 2005

87,884

11,333

8,571

(4,033)

32

103,787

Group 2004

93,090

9,911

1,581

(6,279)

(35)

98,268

Bank 2004

84,348

8,957

416

(5,802)

(35)

87,884

- million LBP -

As at 31 December

Debtors by Acceptances

10 - Debtors by Acceptances

11 - Investment Securities Including Investments in Unconsolidated Subsidiaries

These result mainly from documentary credits that the Bank has committed to settle onbehalf of its clients, against endorsement of bills by those clients.

The potential liability under acceptances is reported as a liability in the balance sheet. Therecourse against the customer in the case of a call on these commitments is reported asan offsetting asset of the same amount.

These investments are held for medium to long-term periods and include securities incompanies where the Bank does not exercise significant control and/or where the percentage of control is below 20% of voting rights.

Group 2005

27,521

Bank 2005

27,521

Group 2004

32,429

Bank 2004

32,429

Investment Securities

Group 2005

2,204

Bank 2005

47,067

Group 2004

377

Bank 2004

43,399

12 - Investments in Companies Carried Under the Equity Method

Agence Générale de Courtage d'Assurances SAL

Credit Card Management SAL

International Payment Network SAL

Net Commerce SAL

Liberty Executive Center SAL

Total

% of Control

25.86

28.96

23.40

19.10

5.00

Group 2005

3,316

1,895

1,055

165

11

6,442

Group 2004

2,613

1,808

1,047

205

9

5,682

- million LBP -

- million LBP -

- million LBP -

As at 31 December

As at 31 December

As at 31 December


13 - Intangible and Tangible Assets

Revalued assets as approved by theCentral Bank (for land and buildings)Tangible fixed assets at costAssets acquired in recovery of debtsTangible fixed assets (gross)Less: accumulated depreciation (2j)Tangible Fixed Assets (net)

Group 2005

15,982

113,839

25,238

155,059

(51,929)

103,130

Bank 2005

15,982

74,793

31,067

121,842

(48,210)

73,632

Group 2004

16,246

108,683

22,147

147,076

(47,342)

99,734

Bank 2004

16,246

72,162

27,968

116,376

(43,885)

72,491

- million LBP -

As at 31 December

Intangible assets at costLess: accumulated depreciation (2j)Intangible Assets (net)

Group 2005

14,562

(11,942)

2,620

Bank 2005

11,209

(9,819)

1,390

Group 2004

15,540

(11,305)

4,235

Bank 2004

11,038

(8,890)

2,148

- million LBP -

As at 31 December

These are stated at their adjusted value to an amount representing the bank’s interest inthe shareholders’ equity and net income of the companies concerned.



Tangible and Intangible assets of the Group are broken down by category as follows:

Tangible Fixed AssetsFreehold land & buildingsLeasehold & property improvementFurniture Office equipmentMotor vehicules Power generatorsComputer & electronic equipmentAdvances on acquisitions of fixed assetsAssets acquired in recovery of debts (a)Total Cost of Tangible AssetsFreehold land & buildingsLeasehold & property improvementFurnitureOffice equipmentMotor vehiculesPower generatorsComputer & electronic equipment Total Accumulated DepreciationNet Book Value of Tangible AssetsIntangible AssetsKey moneyLicences & FranchisePreliminary expensesResearch & developmentAdvances on intangible assetsOther intangible assetsTotal Cost of Intangible AssetsKey moneyLicences & FranchisePreliminary expensesResearch & developmentOther intengible assetsTotal Accumulated DepreciationNet Book Value of Intangible Assets

At 1 Jan. 2005

73,436

23,187

5,877

5,708

1,132

829

13,642

1,118

22,147

147,076

7,842

19,957

3,545

4,046

702

628

10,622

47,342

99,734

1,492

5,814

354

7,722

6

152

15,540

1,429

2,583

317

6,976

----

11,305

4,235

Additions

5,369

1,587

576

453

162

43

1,425

864

3,633

14,112

1,086

1,692

441

423

89

49

1,220

5,000

----

----

----

1,346

----

----

1,346

14

343

8

582

----

947

(4,538)

(17)

(18)

(76)

(86)

----

(39)

(813)

(542)

(6,129)

(225)

(16)

(12)

(65)

(59)

----

(36)

(413)

----

(1,991)

(309)

----

----

(24)

(2,324)

----

----

(309)

----

----

(309)

Transfers/ At 31 Dec. 2005Disposals

74,267

24,757

6,435

6,085

1,208

872

15,028

1,169

25,238

155,059

8,703

21,633

3,974

4,404

732

677

11,806

51,929

103,130

1,492

3,823

45

9,068

6

128

14,562

1,443

2,926

16

7,558

----

11,942

2,620

- million LBP -


14 - Other Assets

15 - Regularization Accounts and Other Miscellaneous Debtor Accounts

The “Foreign currency exchange difference” results from the conversion, at the officialexchange rate as at year-end, of the US Dollar fixed-position taken within the limit set upby the Central Bank in respect of the increase in the Bank’s shareholders’ equity. Thisfixed-position amounted to USD 52.89 million at 31 December 2005 (USD 43.61 million at31 December 2004).

The negative exchange difference of LBP 5,648 at 31 December 2005 and 2004 was fullyprovided for as shown under note 23.

StampsFinancial Assets (Share capital blocked withthe Ministry of Finance)

Total

Group 2005

396

6,000

6,396

Bank 2005

396

----

396

Group 2004

392

1,500

1,892

Bank 2004

392

----

392

Prepaid chargesOther debtorsDeferred expensesForeign currency exchange difference (see below)Total

Group 2005

9,094

8,793

282

5,648

23,817

Bank 2005

8,397

5,657

278

5,568

19,900

Group 2004

9,417

11,547

252

5,648

26,864

Bank 2004

9,975

4,386

248

5,568

20,177

Assets acquired in recovery of debts and provisions thereon are analyzed as follows:

Balance at the beginning of the year Properties acquired during the year Properties disposed during the year Assets Acquired in Recovery of DebtsBalance at the beginning of the year Provisions during the year Provisions written off during the year Provisions (note 23)

Group 2005

22,147

3,633

(542)

25,238

7,147

2,956

(506)

9,597

Bank 2005

27,968

3,263

(164)

31,067

11,944

4,305

(506)

15,743

Group 2004

16,519

7,219

(1,591)

22,147

4,102

3,065

(20)

7,147

Bank 2004

22,786

6,773

(1,591)

27,968

7,550

4,414

(20)

11,944

- million LBP -

- million LBP -

- million LBP -

As at 31 December

As at 31 December

As at 31 December



16 - Revaluation Surplus - Assets

The revaluation surplus, as explained under note (2k) and amounting to LBP 71,793 (note25), was agreed upon by the Tax Authorities. Subsequently in 1995, only the revaluationsurplus relating to Freehold land and buildings occupied by the Bank (and amounting toLBP 15,656), was approved by the Central Bank and added back to the relevant fixedassets and depreciated at the rate of 2% as detailed under note 25.

Surplus on revaluation of:Key money on leased propertiesNon-financial fixed assetsInvestments in subsidiariesGoodwill Total

Group 2005

10,736

9,410

1,771

34,220

56,137

Bank 2005

10,736

9,410

4,972

34,220

59,338

Group 2004

10,736

9,410

1,771

34,220

56,137

Bank 2004

10,736

9,410

4,972

34,220

59,338

17 - Goodwill

On 10 April 2000, Credit Libanais acquired the assets and liabilities of American ExpressBank (Lebanon). The excess of acquisition cost over the adjusted book value of the entityacquired amounted to USD 1.5 million (c/v LBP 2,261) and was shown as goodwill. Thisamount was depreciated over a period of five years according to the Central Bank ofLebanon requirements.

Goodwill on consolidationLess: accumulated depreciationNet Goodwill on ConsolidationGoodwill on acquisition of American ExpressBank (Lebanon)Less: accumulated depreciationNet Goodwill on AcquisitionTotal

Group 2005

216

(216)

----

2,261

(2,261)

----

----

Bank 2005

----

----

----

2,261

(2,261)

----

----

Group 2004

169

(169)

----

2,261

(2,035)

226

226

Bank 2004

----

----

----

2,261

(2,035)

226

226

- million LBP -

- million LBP -

As at 31 December

As at 31 December

18 - Banks and Financial Institutions

Demand depositsTime depositsFinancial institutionsAccrued interestsTotal

Group 2005

14,486

15,556

25,130

352

55,524

Bank 2005

13,334

10,756

25,130

352

49,572

Group 2004

16,711

5,105

16,952

194

38,962

Bank 2004

16,379

4,403

16,952

194

37,928

- million LBP -

As at 31 December


“Financial institutions” include cash collateral deposits from the Arab Trade FinancingProgram amounting to USD 12.8 million (c/v LBP 19,320) and aiming to finance inter-arabtrade with Lebanon through Credit Libanais SAL.

19 - Customers Creditor Accounts

Demand depositsTime deposits Saving accounts Accrued interestsTotal

Group 2005

393,997

965,244

2,646,820

20,044

4,026,105

Bank 2005

398,858

730,340

2,004,544

9,944

3,143,686

Group 2004

396,605

793,597

2,596,538

19,631

3,806,371

Bank 2004

398,360

609,729

1,911,803

8,592

2,928,484

20 - Liabilities under Financial Instruments

On 28 June 1999, Credit Libanais SAL issued a Euro-Certificate of deposit program for atotal amount of USD 150,000,000. This program was in accordance with a resolutiontaken by the Board of Directors of the Bank in its meeting held on 1 May 1999. The certificates are listed on the Luxembourg Stock Exchange. All costs relating to the issuewere depreciated over the term of the program.

The first, second and third tranches of the program were issued for an amount of USD 60million, USD 55 million and USD 60 million respectively and matured on July 2002, June2003 and July 2005.

The fourth tranche of the program was issued during 2003 for an amount of USD 60million maturing on July 2006 at a fixed rate 6.75% payable semi-annually. The fifthtranche of the program was issued during 2005 for an amount of USD 60 million maturingon September 2008 at a fixed rate of 6.875% payable semi-annually.

Certificates of deposit (fixed rate notes US$ 60,000,000 maturing 14 July 2006)Certificates of deposit (fixed rate notes US$ 60,000,000 maturing 8 September 2008)Accrued interest on Certificates of depositTotal

Group 2005

89,953

90,450

4,787

185,190

Bank 2005

90,450

90,450

4,803

185,703

Group 2004

89,953

89,470

6,580

186,003

Bank 2004

90,450

90,450

6,637

187,537

- million LBP -

- million LBP -

As at 31 December

As at 31 December



21 - Other Liabilities

22 - Regularization Accounts and Other Creditor Accounts

Margins held against documentary creditsIncome taxTaxes on interest paidTaxes on salaries and social security contributions Other taxes Other creditors - private sectorTechnical reserve for insurance companies Total

Bank 2004

8,171

837

2,280

1,020

60

5,316

----

17,684

Accrued expensesDeferred incomeInterbranch reconciling items Accrued dividendTotal

Group 2005

2,903

1,414

1,758

21

6,096

Bank 2005

1,957

1,414

1,512

21

4,631

Group 2004

4,404

10,020

2,950

13

17,387

Bank 2004

4,006

1,583

2,950

13

8,552

Group 2005

6,302

909

4,117

1,738

1,521

15,111

9,028

38,726

Bank 2005

6,302

480

3,306

1,537

306

5,450

----

17,381

Group 2004

8,171

1,280

2,877

1,180

692

10,428

2,592

27,220

23 - Provisions for Contingencies and Charges

Provision for currency fluctuationProvision for staff termination indemnities (see below)Provision for foreign exchange currency difference (see note 15)Provision for other risks and contingenciesReserve for real estate properties (under liquidation) held in recovery of debts Total

Group 2004

90

8,710

5,648

1,461

7,147

23,056

Bank 2004

59

7,813

5,568

1,286

11,944

26,670

Bank 2005

82

8,420

5,568

1,649

15,743

31,462

Group 2005

130

9,263

5,648

1,910

9,597

26,548

- million LBP -

- million LBP -

- million LBP -

As at 31 December

As at 31 December

As at 31 December

Balance as at 1 JanuaryCharge for the yearIndemnities paidBalance as at 31 December

Group 2005

8,710

881

(328)

9,263

Bank 2005

7,813

810

(203)

8,420

Group 2004

8,376

1,463

(1,129)

8,710

Bank 2004

7,695

1,247

(1,129)

7,813

- million LBP -

As at 31 December

Provision for staff termination indemnities are analysed as follows:


24 - Shareholders' Equity

Share capital, divided into:- Common shares (3,200,000,000 shares of LBP 25each, fully paid)- Preferred shares (640,000,000 preferred sharesat LBP 25 each)(*)Legal reserveOther reserves and premiumsReserve for general banking risksUnrealized profits (losses) (**)Profits carried forwardNet Profit for the yearPremium on issuance of preferred sharesSurplus relating to Freehold Land and Buildingsaccepted as part of the Shareholders' Equity (tiertwo capital)Total Shareholders' EquityShareholders' equity is distributed as follows:- Tier one- Tier twoGroup shareMinority interests Total

Bank 2005

96,000

80,000

16,000

12,151

14,517

13,217

1,737

4,455

32,568

59,375

7,828

241,848

158,645

83,203

241,848

----

241,848

Group 2005

96,000

80,000

16,000

24,248

99,813

15,716

1,737

3,898

34,932

59,375

7,828

343,547

260,344

83,203

336,693

6,854

343,547

Group 2004

96,000

80,000

16,000

20,206

94,224

13,214

(44)

6,884

28,680

59,375

7,828

326,367

243,164

83,203

320,503

5,864

326,367

Bank 2004

96,000

80,000

16,000

9,726

2,502

11,050

(44)

14,693

24,258

59,375

7,828

225,388

142,185

83,203

225,388

----

225,388

- million LBP -

As at 31 December

(*) On 13 May 2004, the Extraordinary General Assembly of shareholders approved theissuance of 640 million Cumulative Preferred Shares Series “A” for an aggregate amountof USD 50 million with a seven-year term expiring on 10 August 2011. The nominal value ofeach preferred share Series “A” is LBP 25, and the issue price is USD 0.078125 (being LBP117.7734 per share). The difference between the issue price and the nominal value con-stitutes an additional paid-up capital (share premium) amounting to LBP 59,375 million.These preferred shares earn an annual fixed dividend to be paid to the holders of thesepreferred shares out of the distributable consolidated profits of the Bank, equal to 7.5% ofthe total amount of the preferred shares issued. The issuance of these Cumulative PreferredShares (Series “A”) was materialized in August 2004 after securing the Central Bank approval.

The Bank has the right, in its sole discretion, to redeem the whole Series A preferred shareson the fifth anniversary of the issue, at the issue price plus accrued dividends in addition toan early redemption premium equivalent to 50% of the value of the annual fixed dividends thatwould have been owed and due until the expiry of the term of these Series “A” Preferred Shares.

As part of its risk management policy, the Bank has established a special purpose investmentaccount, (the “Sinking Fund Account”) with the Sinking Fund Agent, that is be funded on ayearly basis with proceeds generated from the Bank’s annual consolidated profits in equalamounts, at the level 1/7 or 14.285% of the total amount of the Series “A” preferred sharesover seven years. Funds in the Sinking Fund Account will be invested by the Sinking FundAgent on behalf of the Bank in investment grade securities, and shall be solely used forthe purpose of funding the redemption of Series “A” Preferred Shares.



As per Central Bank of Lebanon circular 49 dated 3 April 2004, Series “A” PreferredShares constitute part of Tier 2 capital of the Bank.

(**) Unrealized profits (losses) resulting from revaluation of available for sale securitiesaccordind to fair value, are analyzed as follows:

25 - Revaluation Surplus on Other Fixed Assets - Liabilities

Freehold land & buildings Investments in subsidiariesKey money on leased propertiesNon financial fixed assetsGoodwillTotalLess: Surplus relating to Freehold Land & Buildingsaccepted as part of the Shareholders' Equity (tier twocapital)Total

Group 2005

15,656

1,771

10,736

9,410

34,220

71,793

(7,828)

63,965

Bank 2005

15,656

4,972

10,736

9,410

34,220

74,994

(7,828)

67,166

Group 2004

15,656

1,771

10,736

9,410

34,220

71,793

(7,828)

63,965

Bank 2004

15,656

4,972

10,736

9,410

34,220

74,994

(7,828)

67,166

26 - Financing Commitments Given

27 - Commitments and Contingencies Given

Financial intermediariesCommitments related to letters of credit (export)CustomersCommitments related to letters of credit (import)Credit limits - unutilized balancesTotal

Group 2005

2,436

283,091

25,747

257,344

285,527

Bank 2005

2,436

283,091

25,747

257,344

285,527

Group 2004

2,274

267,514

30,155

237,359

269,788

Bank 2004

2,274

267,514

30,155

237,359

269,788

Commitments Related to Guarantees & Endorsements

Group 2005

33,539

Bank 2005

46,940

Group 2004

38,031

Bank 2004

46,609

- million LBP -

- million LBP -

- million LBP -

As at 31 December

As at 31 December

As at 31 December

Unrealized gain (loss) on available for sale treasury billsUnrealized gain on available for sale certificate of depositsUnrealized gain on available for sale marketable securitiesTotal

Group 2005

860

781

96

1,737

Bank 2005

860

781

96

1,737

Group 2004

(60)

----

16

(44)

Bank 2004

(60)

----

16

(44)

- million LBP -

As at 31 December


28 - Engagements by Signature Received

Financial Intermediaries

Group 2005

2,294

Bank 2005

2,294

Group 2004

1,778

Bank 2004

1,477

- million LBP -

As at 31 December

30 - Interest Received and Similar Income

Interest received on Lebanese Treasury billsInterest received on deposits & similar accounts with banks and financial institutionsInterest received on deposits in head office, branches, parent company, foreign sister financialinstitutions and subsidiariesInterest received from bonds and other fixedincome instrumentsInterest received from loans and advances to customersInterest received from loans and advances to related partiesInterest received from leasing activitiesOther interest received and similar incomeTotal

Group 2005

114,123

110,149

----

5,989

69,295

1,780

482

2,887

304,705

Bank 2005

86,432

83,370

1,446

588

59,516

781

----

2,329

234,462

Group 2004

135,961

86,219

----

5,274

61,938

2,411

878

3,844

296,525

Bank 2004

108,027

57,145

2,297

540

53,677

913

----

2,809

225,408

- million LBP -

As at 31 December

29 - Other Commitments Received

Personal guarantees receivedMortgages and real securities receivedMobilization bills received as guaranteeTotal

Group 2005

506,792

866,955

247,201

1,620,948

Bank 2005

443,796

621,934

141,496

1,207,226

Group 2004

463,234

781,758

208,226

1,453,218

Bank 2004

405,567

550,930

112,410

1,068,907

- million LBP -

As at 31 December

The obligations of guarantees on behalf of customers represent performance guaranteesand other letters of guarantee by which the Bank creates an irrevocable obligation to pay aspecific amount to the beneficiary in the event of customer default. Consequently, theamount which is expected to be paid is considerably lower than the total amount of theseguarantees.

Engagements by guarantees and endorsements, and for the opening of documentarycredits, are stated without deduction of the respective margins which are included in thebalance sheet under “Other liabilities”.



31 - Interest Paid and Similar Charges

Interest paid on deposits and similar accounts from banks and financial institutionsInterest paid on deposits from head office, branches, parent company, foreign sisterfinancial institutions and subsidiariesInterest paid on deposits from customers andother creditor accountsInterest paid on certificates of deposit Other interest paid and similar chargesTotal

Group 2005

1,531

----

197,890

12,119

156

211,696

Bank 2005

1,126

3,436

141,025

12,404

----

157,991

Group 2004

1,812

----

191,679

14,224

709

208,424

Bank 2004

1,812

2,476

140,719

14,345

----

159,352

- million LBP -

As at 31 December

32 - Net Allocation to Provisions for Doubtful Debts

33 - Net Commissions Received

34 - Net Income on Financial Operations

Net income from operations on financial instruments*Net profit from operations on portfolio securities Net income from foreign exchange operationsTotal

Group 2005

8,713

4,038

3,049

15,800

Bank 2005

6,684

----

3,184

9,868

Group 2004

4,166

----

3,133

7,299

Bank 2004

4,041

----

3,064

7,105

Commissions received (on letters of credit, lettersof guarantee and other commissions receivedfrom customers) Commissions paid (on various banks’ operations) Total

Group 2005

20,992

(1,854)

19,138

Bank 2005

19,835

(1,843)

17,992

Group 2004

18,043

(780)

17,263

Bank 2004

17,109

(761)

16,348

- million LBP -

- million LBP -

As at 31 December

As at 31 December

Allocation to provisions for doubtful debtsExceptional losses on doubtful debtsTotalLess: Provisions for doubtful debts no more requiredTotal

Group 2005

11,886

745

12,631

(2,909)

9,722

Bank 2005

11,333

628

11,961

(2,393)

9,568

Group 2004

9,911

1,123

11,034

(5,806)

5,228

Bank 2004

8,957

1,123

10,080

(5,498)

4,582

- million LBP -

As at 31 December


35 - Other Operating Income

Fees received on credit cardsIncome from insurance activitiesRental income and real estate servicesFees on collection services Other operating incomeTotal

Group 2005

11,916

7,655

2,134

505

350

22,560

Bank 2005

11,357

----

----

----

----

11,357

Group 2004

11,990

6,529

961

375

236

20,091

Bank 2004

11,533

----

----

----

----

11,533

36 - Other Operating Charges

Fees paid on credit cards Charges relating to insurance activities Other operating chargesTotal

Group 2005

11,167

3,918

691

15,779

Group 2005

11,167

----

3

11,170

Group 2004

11,253

2,956

22

14,231

Group 2004

11,228

----

4

11,232

- million LBP -

- million LBP -

As at 31 December

As at 31 December

37 - Staff Expenses

Salaries and wagesBoard of Directors’ feesSocial Security contributionsProvision for end of service indemnitiesOther allowances and benefitsTotal

Group 2005

34,809

867

4,746

934

6,915

48,271

Bank 2005

30,124

332

4,217

809

6,435

41,917

Group 2004

30,972

681

4,305

1,340

6,549

43,847

Bank 2004

27,336

332

3,880

1,247

6,205

39,000

- million LBP -

As at 31 December

(*) During March and April 2005, the group entered into voluntary transfer of Certificates ofDeposit issued by the Central Bank of Lebanon and of Treasury Bills issued by the LebaneseGovernment amounting in total LBP 278,272 million. The selling price was LBP 280,931 million.The net capital gain realized (LBP 2,659 million) has been recorded in the income statementunder “Net income from operations on financial instruments” during the year 2005. The transferhas been transacted at market prices with maturities varying between years 2006 and 2007.

The group considers that the original instruments qualify for derecognition due to thetransfer of the contractual rights to receive cash flows from the financial instrument togetherwith the risks and rewards of its ownership.

The transfer of these instruments was realized upon the purchase of Certificates ofDeposit and Treasury Bills for a total nominal value of LBP 287,653 million with maturitiesvarying between years 2008 and 2010. Premiums received on newly acquired financialinstruments (LBP 6,717 million) were amortized over the remaining life of these instruments,and the resulting revenue recognized in 2005 amounted to LBP 1,103 million.



38 - Other Operating and Administrative Expenses

Taxes and similar disbursementsPremium for the guarantee of depositsRental charges and related expensesLawyers, audit and consulting feesData processing servicesMail and telecommunications (PTT, swift)Maintenance and repairsElectricity, water and heatingTravel and entertainmentTransportation chargesInsurance premiumsAdvertising and public relation expensesComputer maintenance & chargesOffice stationery and printingsBoard of Directors attendance allowancesTraining, documentation and services feesOther expensesTotal

Bank 2005

1,834

1,457

2,586

1,209

1,506

1,975

1,516

1,724

805

739

2,861

2,603

1,305

1,156

378

317

248

24,219

Group 2005

2,720

1,916

2,290

2,393

731

2,172

1,785

1,776

978

903

2,452

2,944

1,328

1,342

1,082

348

500

27,660

Group 2004

2,659

1,780

2,117

1,939

544

1,970

2,034

1,661

974

963

2,094

2,846

1,196

1,382

1,107

335

257

25,858

Bank 2004

1,774

1,331

2,453

1,010

1,445

1,801

1,678

1,623

849

831

2,405

2,311

1,165

1,256

396

295

256

22,879

39 - Amortization and Depreciation of Tangible and Intangible Assets

Tangible and intangible fixed assets Fixed assets acquired in recovery of loans Amortization of goodwillTotal

Group 2005

6,251

3,023

235

9,509

Bank 2005

5,737

2,967

226

8,930

Group 2004

7,779

3,075

452

11,306

Bank 2004

7,062

3,075

452

10,589

- million LBP -

- million LBP -

As at 31 December

As at 31 December

40 - Net Profit for the Year

Consolidated net profits for the year were originated from the following group entities:

Credit Libanais SAL

Credit Libanais Investment Bank SAL

Lebanese Islamic Bank SAL

Dividend elimination between CL & CLIB Other subsidiaries and affiliates Total

Group 2005

32,568

12,453

(1,328)

(13,478)

4,71734,932

Group 2004

24,258

16,156

----

(15,724)

3,99028,680

- million LBP -

As at 31 December


41 - Cash and Cash Equivalents

Cash and Central Bank Banks and financial institutions Head office, branches, parent company, foreignsister financial institutions and subsidiariesCash and Due from Banks Less: Assets held over one year: - Cash & Central Bank (Time deposits

& CD’s over one year) Liabilities due within one year:- Banks & financial institutions (current accounts) - Banks & financial institutions (time deposits less

than one year) - Head office, branches, parent company, foreign

sister financial institutions and subsidiaries

Total Cash and Cash Equivalents

Bank 20051,193,567

526,682

3,940

1,724,189

(740,621)

(13,658)

(10,784)

(81,003)

(846,066)

878,123

Group 20051,478,094

550,060

----

2,028,154

(840,573)

(14,486)

(15,584)

----

(870,643)

1,157,511

Group 20041,282,643

531,165

----

1,813,808

(733,155)

(16,711)

(5,299)

----

(755,165)

1,058,643

Bank 2004

887,027

530,583

723

1,418,352

(452,512)

(16,379)

(4,597)

(123,290)

(596,778)

821,554

42 - Earnings per Share

Net profits for the year (in million LBP)Less: proposed dividends to preffered shareholders(in million LBP)Net Profit Related to Ordinary ShareholdersWeighted average number of ordinary shares (million shares)Earnings per commonshare (in LBP)

Group 2005

34,932

(5,936)

28,996

3,200

9.06

Bank 2005

32,568

(5,936)

26,632

3,200

8.32

Group 2004

28,680

(5,936)

22,744

3,200

7.11

Bank 2004

24,258

(5,936)

18,322

3,200

5.73

43 - Solvency Ratio (BIS Capital Adequacy Ratio)

At 31 December 2005, the solvency ratio of the Bank (excluding net profits of the year)stood at 25.12% (compared to 24.09% at 31 December 2004), thus exceeding the minimum statutory level of 12%.

This ratio is calculated in accordance with the requirements of the Lebanese monetaryauthorities, and is in line with international standards as set out in the Basle recommendations.

As at 31 December

As at 31 December

- million LBP -



44 - Risk Management

In the ordinary course of business, the Bank is exposed to a variety of risks, the most important of which are liquidity risk,interest rate risk, currency risk, credit risk and market risk. These risks are identified, measured and monitored throughvarious control mechanisms in order to price facilities and products on a risk adjusted basis and to prevent undue riskconcentrations.

a) Liquidity RiskLiquidity risk originates from the fact that short-term obligations of the Group may not be sufficiently covered by currentcash or other equivalent liquid assets. The Group considers the liquidity risk to be low as funds received are adequatelydistributed among different asset classes in order to meet future obligations. Although the majority of customer depositsare technically due within a short-term period, these deposits are generally rolled over at maturity and the resulting riskis mitigated by a wide diversification in the customer deposit base.

The Group’s ratio of liquidity stood at 90% in Lebanese Pounds and 79% in foreign currencies at 31 December 2005(compared to 94% in Lebanese Pounds and 77% in foreign currencies at 31 December 2004). The Group maintainedan overall liquidity ratio of 83% at 31 December 2005 (84% at 31 December 2004).

The Group’s consolidated assets and liabilities at 31 December 2005 are broken down by maturity according to thefollowing table:

Less than3 months

330,521

110,246

3,036

23,003

541,060

----

313,139

----

----

----

----

----

----

----

----

1,321,005

30,070

3,317,137

----

----

----

----

----

----

----

3,347,207

3 to 6months

174,000

54,421

----

----

6,000

----

79,207

27,521

----

----

----

----

----

23,539

----

364,688

----

382,189

27,521

4,290

----

6,096

----

----

----

420,096

6 to 12months

133,000

46,857

26,656

----

3,000

----

108,852

----

----

----

----

----

----

----

----

318,365

----

283,222

----

90,450

38,726

----

----

----

----

412,398

Over 1 year

840,573

1,278,718

74,808

----

----

----

397,858

----

2,204

6,442

103,130

2,620

6,396

278

56,137

2,769,164

25,454

43,557

----

90,450

----

----

26,548

343,547

63,965

593,521

Total1,478,094

1,490,242

104,500

23,003

550,060

----

899,056

27,521

2,204

6,442

103,130

2,620

6,396

23,817

56,137

4,773,222

55,524

4,026,105

27,521

185,190

38,726

6,096

26,548

343,547

63,965

4,773,222

Cash & Central BankLebanese Treasury bills & other government securitiesBonds & other fixed income securitiesMarketable securities and other variableincome instrumentsBanks & financial institutions Head office, branches, parent company, foreign sister financial institutions & subsidiaries Loans & advances to customers (net)Debtors by acceptancesInvestment securitiesInvestment in companies under equity methodTangible fixed assetsIntangible assetsOther assetsRegularization accounts & other debtor accountsRevaluation surplus on other fixed assetsTotal AssetsBanks and financial institutionsCustomers creditor accountsEngagements by acceptancesLiabilities under financial instrumentsOther liabilitiesRegularization accounts and other creditor accountsProvisions for contingencies and chargesShareholders' equityRevaluation surplus on other fixed assetsTotal Liabilities & Shareholder’s Equity

- million LBP -


b) Interest Rate RiskInterest rate risk stems from the sensitivity of earnings to future movements in interest rates applied on assets and liabilities. The Group’s management closely monitors interest rate fluctuations on a continuous basis and ensures thatassets and liabilities are matched and re-priced on a timely manner. The Group is exposed to interest rate risk as aresult of mismatches or gaps in the amounts of assets and liabilities that mature or are re-priced in a given period. The most important source of interest rate risk is deriving from the lending, funding and investing activities, where fluctuations in interest rates are reflected in interest margins and earnings.

The Group’s sensitivity to interest rate risk as at 31 December 2005 was as follows:

Cash & Central BankLebanese Treasury bills & other government securitiesBonds & other fixed income securitiesMarketable securities and other variableincome instrumentsBanks & financial institutions Head office, branches, parent company, foreign sister financial institutions & subsidiaries Loans & advances to customers (Net)Debtors by acceptancesInvestment securitiesTangible and intangible assetsOther assetsRegularization accounts & other miscellaneousdebtor accountsRevaluation surplus on fixed assetsTotal Assets Banks and financial institutionsCustomers creditor accountsEngagements by acceptancesLiabilities under financial instrumentsOther liabilitiesRegularization accounts and other creditor accountsProvisions for contingencies and chargesShareholders' equityRevaluation surplus on fixed assetsTotal Liabilities and Shareholders’ EquityInterest Rate Sensitivity GapCumulative IR Sensitivity Gap

Less than3 months

330,521

110,246

3,036

----

541,060

----

313,139

----

----

----

----

----

----1,298,002

30,070

3,317,137

----

----

----

----

----

----

----

3,347,207

(2,049,205)

(2,049,205)

3 to 6months

174,000

54,421

----

----

6,000

----

79,207

----

----

----

----

----

----313,628

----

382,189

----

4,290

----

----

----

----

----

386,479

(72,851)

(2,122,056)

6 to 12months

133,000

46,857

26,656

----

3,000

----

108,852

----

----

----

----

----

----318,365

----

283,222

----

90,450

----

----

----

----

----

373,672

(55,307)

(2,177,363)

Over 1 year

840,573

1,278,718

74,808

----

----

----

343,823

----

----

----

----

----

----2,537,922

25,454

43,557

----

90,450

----

----

----

----

----

159,461

2,378,461

201,098

Non interest earning items

----

----

----

23,003

----

----

54,035

27,521

8,646

105,750

6,396

23,817

56,137305,305

----

----

27,521

----

38,726

6,096

26,548

343,547

63,965

506,403

(201,098)

Total1,478,094

1,490,242

104,500

23,003

550,060

----

899,056

27,521

8,646

105,750

6,396

23,817

56,1374,773,222

55,524

4,026,105

27,521

185,190

38,726

6,096

26,548

343,547

63,965

4,773,222

c) Currency RiskCurrency risk results from the movements in exchange rates applied on foreign currency assets, liabilities, rights andobligations. The Group’s management closely monitors the currency risk and ensures that all regulations andrequirements set by the monetary authorities are strictly complied with.

- million LBP -



Group 2005 Group 2004

Cash and Central BankLebanese Treasury bills & other government securities Bonds & other fixed income securities Marketable securities & other variable incomeinstrumentsBanks & financial institutionsHead office, branches, parent company, foreignsister financial institutions & subsidiariesLoans & advances to customers (net)Debtors by acceptancesInvestment securities including investmentsin unconsolidated subsidiariesInvestment in companies carried under the equity methodTangible fixed assets (including revaluation surplus approved by the Central Bank)Intangible assetsOther assetsRegularization accounts & other miscellaneous debtor accountsRevaluation surplus on other fixed assetsGoodwillTotal Assets Banks & financial institutionsHead office, branches, parent company, foreignsister financial institutions & subsidiariesCustomers creditor accountsEngagements by acceptancesLiabilities under financial instrumentsOther liabilitiesRegularization accounts & other creditor accounts Provisions for contingencies and chargesShareholders' equityRevaluation surplus on other fixed assetsTotal Liabilities and Shareholders’ EquityForeign Currency Position

Lebanese Pound

595,760

844,832

7,059

4,197

17,973

----

265,331

----

2,204

6,442

67,581

2,620

6,396

20,310

56,137----

1,896,842

8,275

----1,590,029

----

----

17,714

2,046

25,518

271,321

63,965

1,978,868

Foreign Currenciesc/v (USD)

585.296

428.132

64.637

12.475

352.960

----

420.381

18.256

----

----

23.582

----

----

2.327

--------

1,908.046

31.343

----1,615.971

18.256

122.845

13.94

2.686

0.683

47.910

----

1,853.634

54.412

Lebanese Pound

764,845

814,841

----

4,282

8,199

----

219,690

----

377

5,682

71,744

4,235

1,892

22,924

56,137226

1,975,074

9,236

----1,661,260

----

----

11,219

6,927

22,149266,786

63,965

2,041,542

Foreign Currenciesc/v (USD)

343.481

495.906

57.019

9.248

346.909

----

394.089

21.512

----

----

18.567

----

----

2.614

--------

1,689.345

19.719

----1,422.959

21.512

123.385

10.614

6.939

0.60239.523

----

1,645.253

44.092

The table below shows the breakdown of assets and liabilities by currency as at 31 December 2005 and 31December 2004.

- million LBP/USD -


d) Credit RiskCredit risk is the risk of a person or an organization defaulting in the repayment of their obligations to the Group inrespect of the terms and conditions of the credit facilities granted to them by the Group. The management minimisesthis risk by spreading its loan portfolio over all economic sectors and by adopting appropriate procedures and controls toevaluate the quality of the credit facilities granted and the creditworthiness of the borrowers. The credit risk of connectedaccounts is monitored on a united basis. In addition, the effective credit appraisal procedure for examining applicationsfor credit facilities followed by the Group, adopts as the main criteria the repayment capability and obtaining sufficientcollateral. The continuous monitoring of credit accounts and the timely preventive action further minimise to a largeextent the exposure to credit risk.

Note 8 of this report shows the distribution of loan portfolio by nature of facility, by economic sector and by type ofcollateral as at 31 December 2005 and 31 December 2004.

e) Market RiskMarket risk results from fluctuations in the values of assets and liabilities due to market forces. The Group does notdeal or trade with financial instruments, commodities, indices or derivatives which are volatile by nature and largelyaffected by market forces. Therefore, there is no market risk exposure to the Group as at 31 December 2005 and 31December 2004.

45 - Comparative Figures

Certain prior year figures have been restated to conform with the presentation of the current year.

The distribution of assets, liabilities, and off-balance sheet items by geographic region was as follows:- million LBP -

As at 31 December

Group 2005

Assets

4,189,663

583,559

4,773,222

Group 2005 Liabilities andShareholder’s

Equity

4,181,662

591,560

4,773,222

Group 2005Off BalanceSheet/Credit

Side

292,364

26,702

319,066

Group 2004

Assets

3,978,303

543,457

4,521,760

Group 2004 Liabilities andShareholder’s

Equity

3,917,321

604,439

4,521,760

Group 2004Off BalanceSheet/Credit

Side

270,278

37,541

307,819

Geographical locationLebanonOutside LebanonTotal


Financial Statements



Board of Directors Credit Libanais Investment Bank SAL

Dr. Joseph TorbeyChairman &

General Manager

Members

H.E. Dr. Samir Makdessi

H.E. Mr. JacquesJoukhadarian

Dr. Mohamad Rahal

Mr. Najib Takieddine

Dr. Chafic Moharram

Mr. JoeIssa El Khoury




We have audited the accompanying balance sheet of Credit Libanais Investment Bank SAL as at 31 December 2005 and 31 December 2004, and the related statement of income and cash flows forthe years then ended. These financial statements are the responsibility of the Bank's Management.Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with International Standards on Auditing and within the limitations imposed by the Code of Money and Credit. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatements. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by Management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects and within the limitationsimposed by the Code of Money and Credit, the financial position of Credit Libanais Investment BankSAL as at 31 December 2005 and 31 December 2004 and the results of its operations and its cashflows for the year then ended in accordance with Generally Accepted Accounting Principles andapplicable local laws and regulations.

Independent Auditors Report

7 April 2006Beirut, Lebanon

Gérard ZovighianBDO Fiduciaire du Moyen-Orient

To tthe SShareholders,



*Commercial loans include sub-standard loans amounted to LBP 11,801 at 31 December 2005, after deduction of unrealized interests for LBP 1,124 at 31 December 2005 (LBP 8,956 and LBP 1,126 respectively at 31 December 2004);

**After deduction of provisions for doubtful loans amounting to LBP 2,164 and unrealized interests amounting to LBP 7,851 at 31 December 2005 (LBP 2,597 and LBP 6,248 respectively at 31 December 2004);

Balance Sheet as at 31 December 2005

- million LBP -

2005

284,182

336,586

76,129

19,962

440

440

----

82,945

79,348

3,597

168,730

153,025

15,705

64,768

2,721

1,154

1,500

1,820

1,040,937

14,005

413,740

427,745

2004

395,508

232,494

64,806

16,114

226

226

----

127,246

122,565

4,681

142,603

126,633

15,970

36,438

946

----

1,500

2,084

1,019,965

9,482

384,329

393,811

Cash & Central Bank

Lebanese Treasury bills & other government securities

Bonds & other fixed income securities

Marketable securities & other variable income instruments

Banks & financial institutions

- Current accounts

- Time deposits

Head office, branches, parent company, foreign sister financial institutions & subsidiaries

- Current accounts

- Time deposits

Loans & advances to customers (net)

- Commercial loans*

- Net doubtful loans**

Investments & loans to related parties

Tangible fixed assets

Intangible assets

Other assets

Regularization accounts & other miscellaneous debtor accounts

Total Assets

Engagements by signature received from financial intermediaries

Other commitments received

Total Contra Accounts




- million LBP -

Banks & financial institutions

- Time deposits

Head office, branches, parent company, foreign sister financial institutions & subsidiaries

- Time deposits

Customer deposits

- Sight deposits

- Time deposits

- Savings accounts

Other liabilities

Regularization accounts & other creditor accounts

Provisions for contingencies and charges

Share capital

Reserves for general banking risks

Reserves & premiums (and equity differences)

Net income for the year

Total Liabilities & Shareholders’ Equity

Financing commitments given Engagements by signature issued to:

- Financial intermediaries

- Customers

Total Contra Accounts

2004

----

----

40

40

899,283

57

203,452

695,774

1,111

570

453

80,000

2,164

20,187

16,157

1,019,965

----

603

----

603

603

2005

4,800

4,800

2,982

2,982

913,652

1,165

260,112

652,375

2,230

745

567

80,000

2,498

21,010

12,453

1,040,937

----

603

----

603

603


Statement of Income as at 31 December 2005

- million LBP -

2005

73,246

26,765

26,280

2,570

5,400

11,100

560

571

(59,120)

(405)

(585)

(51,783)

(6,347)

305

14,431

2,659

1,441

1,451

(10)

2,147

2,147

----

(143)

(118)

(25)

20,535

(5,312)

(2,569)

(2,743)

(164)

(82)

14,977

37

38

(1)

(2,561)

12,453

2004

73,773

27,091

29,073

1,419

4,197

10,387

557

1,049

(53,800)

----

(1,324)

(50,555)

(1,921)

(763)

19,210

2,748

916

935

(19)

126

97

29

(75)

(54)

(21)

22,925

(4,693)

(2,043)

(2,650)

(48)

----

18,184

49

49

----

(2,076)

16,157

Interest received & similar income

- Lebanese Treasury bills

- Deposits & similar accounts with banks & financial institutions

- Deposits in head office, branches, parent company, foreign sister financial institutions & subsidiaries

- Bonds & other fixed income instruments

- Loans & advances to customers

- Loans & advances to related parties

- Other interest received & similar income

Total Interest paid & similar charges

- Deposits & similar accounts from banks & financial institutions

- Deposits from head office, branches, parent company, foreign sister

financial institutions & subsidiaries

- Customer deposits & other creditor accounts

- Deposits from related parties

Net allocation to provisions for doubtful debts

Net Interest IncomeIncome from marketable securities & other variable income instruments

Net commissions received

- Commissions received

- Commissions paid

Profit on financial operations

- Transactions securities

- Foreign exchange operations

Loss on financial operations

- Transactions securities

- Foreign exchange operations

Net Income on Financial OperationsGeneral operating expenses

- Staff expenses

- Other operating & administrative expenses

Amortization & depreciation of tangible & intangible assets

Net allocation to provisions on financial assets

Net Operating Income (before tax)Net extraordinary result

- Exceptional income

- Exceptional expenses

Income tax

Net Profit for the Year (after tax)




Statement of Cash Flows as at 31 December 2005

- million LBP -

Net income for the year

Adjustments to reconcile net income to net cash provided by operating activities:

- Depreciation and amortization

- Provisions for doubtful loans

- Decrease (Increase) in regularization accounts and other debtors

- (Increase) in loans and advances to customers

- Increase in customers deposits

- Other provisions and contingencies

- Increase (Decrease) in regularization accounts and other creditors

- Increase (Decrease) in other liabilities

Net Cash Provided by Operating ActivitiesDecrease (Increase) in head office, branches, parent company, foreign sister financial

institutions and subsidiaries (time deposits)

Decrease (Increase) in deposits with banks (over 3 months)

Decrease (Increase) in Lebanese Treasury bills (originated loans and held to maturity)

(Increase) in bonds and other fixed income instruments

(Increase) Decrease in marketable securities & other variable income securities

Decrease (Increase) in investment securities including investment in unconsolidated subsidiaries

(Increase) in fixed assets

Net Cash Used by Investing ActivitiesDistribution of dividends

Increase (Decrease) in head office, branches, parent company, foreign sister financial

institutions and subsidiaries

Net Cash Provided by Financing ActivitiesNet Increase in Cash & Cash EquivalentsCash & Cash equivalents at beginning of year

Cash & Cash Equivalents at End of Year

2005

12,453

109

(433)

263

(25,694)

14,369

113

176

1,119

2,475

1,084

1,291

(128,628)

(11,322)

(3,848)

(28,330)

(3,038)

(172,791)

(15,000)

2,942

(12,058)

(182,374)

304,050

121,676

2004

16,157

24

692

(503)

(11)

88,796

107

(228)

(1,544)

103,490

8,958

40,930

759

(15,774)

(7,948)

228

(373)

26,780

(17,500)

16,156

(1,344)

128,926

175,123

304,049

Credit Libanais d’Assurances et de Reassurances SAL

Financial Statements


Board of Directors Credit Libanais d’Assurances et de Reassurances SAL

Mr. Jacques SehnaouiChairman &

General Manager

Members

Dr. Joseph Torbey

Mr. Khaldoun Barakat

H.E. Mr. JacquesJoukhadarian

Mr. Najib Takieddine

Dr. MohamadRahal




We have audited the accompanying balance sheet of Credit Libanais d’Assurances et deReassurances SAL as of December 31, 2005, the related income statement, the statement of cashflows and changes in shareholders’ equity for the year then ended as set out on pages 108 to 113hereafter. These financial statements are the responsibility of the company’s management. Ourresponsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on auditing. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In accordance with the requirement of the Ministry of Economy and Trade, all policies issued formore than one year were recorded during 2005, in the income statement, and a technical reservefor unexpired risk was calculated for the remaining period of the contract. These premiums werestated in the balance sheet under “deferred income” in the previous years. The financial statementsof the previous years have not been restated in order to maintain comparability between the yearspresented. This change does not affecte the overall results of the company’s operations but only alimited number of accounts.

In our opinion, the financial statements present fairly, in all material respects, the financial positionof the company as of December 31, 2005 and the result of its operations and its cash flow for theyear then ended in accordance with generally accepted accounting principles and other accountingpolicies detailed under the accompanying notes.

Independent Auditors Report

27 March 2006Beirut, Lebanon

Gérard ZovighianBDO Fiduciaire du Moyen-Orient

To tthe SShareholders,



Balance Sheet as at 31 December 2005

Net fixed assets

- Tangible fixed assets

- Intangible fixed assets

- Less: accumulated depreciation

Investment securities

- Quoted investment

- Treasury bills & certificates of deposit

Reinsurance share in technical reserves

- Unexpired risks

- Outstanding claims

- Claims incurred but not reported

Time deposits

Current assets

- Premiums receivable - Net

- Reinsurance balances receivable

- Other debtors

- Prepaid commissions

- Cash and cash equivalents

Total Assets

2005

285

633

150

(498)

11,744

12

11,732

9,564

8,440

1,108

16

21,863

4,838

634

650

4

2,067

1,483

48,294

2004

214

502

144

(432)

9,814

11

9,803

2,613

1,483

1,130

----

18,202

2,587

634

43

4

1,203

703

33,430

- million LBP -




Liabilities & Shareholders’ Equity

- Capital

- Legal reserve

- Other reserves

- Profit for the year

Provision for end of service indemnity

Reinsurance deposits

Technical reserves

- Unexpired risks

- Outstanding claims

- Reserve for claims incurred but not reported

- Reserve for loss adjustment expenses

- Premium Deficiency Reserve

Banks overdraft

Current liabilities

- Reinsurance balances payable

- Premiums payable

- Social security contributions

- Taxes payable

- Unearned commissions

- Accrued charges and other creditors

- Deferred income

Total Liabilities & Shareholders’ Equity

2005

18,779

4,370

1,457

8,909

4,043

236

815

18,593

16,948

1,565

44

36

----

2

9,869

7,595

117

19

1,181

843

114

----

48,294

2004

15,977

4,370

1,178

6,257

4,172

202

719

5,204

3,620

1,440

79

54

11

2

11,326

1,013

109

14

469

----

40

9,681

33,430

- million LBP -


Income Statement as at 31 December 2005

- million LBP -

Gross operations2005

21,721

3,620

11

(16,947)

----

8,405

(1,711)

1,441

133

(1,565)

(80)

(1,782)

6,623

Ceded operations2005

(9,701)

(1,483)

----

8,440

----

(2,744)

427

(1,130)

----

1,108

16

421

(2,323)

Net operations2005

12,020

2,137

11

(8,507)

----

5,661

(1,284)

311

133

(457)

(64)

(1,361)

4,300

Net operations2004

5,165

1,893

7

(2,137)

(11)

4,918

(661)

284

168

(311)

(133)

(653)

4,265

Premiums and Related Accounts

Premiums and accessories

Add:

- Unexpired risks reserve at the beginning of the year

- Premium deficiency reserve at the beginning of the year

Less:

- Unexpired risks reserve at the end of the year

- Premium deficiency reserve at the end of the year

Total

Claims and Related Accounts

Claims paid and others

Add:

- Outstanding claims reserve at the beginning of the year

- Other reserves at the beginning of the year

Less:

- Outstanding claims reserve at the end of the year

- Other reserve at the end of the year

Total

Technical Margin




Income Statement as at 31 December 2005

Technical margin

Other operating income

- Commissions received on ceded premiums

- Profit sharing commission

Other operating charges

- Rebates and commissions

Less:

- General expenses

- Depreciations charge

- Provisions

Net Operating Income

Net Financial Income

- Financial income

- Financial charges

Technical and Financial Income

Other non operating income

Provisions written back

Profit Before Taxation

Corporation tax

Net Profit for the Year

2005

4,300

769

190

579

(843)

(843)

(1,792)

(1,692)

(66)

(34)

2,434

1,777

2,104

(327)

4,211

2

65

4,278

(235)

4,043

2004

4,265

815

416

399

(1,112)

(1,112)

(1,590)

(1,415)

(74)

(101)

2,378

1,859

2,138

(279)

4,237

----

----

4,237

(65)

4,172

- million LBP -


Cash Flow Statement as at 31 December 2005

Operating ActivitiesProfit for the year

Adjusted by:

- Depreciation charges

- Provisions allowances

- Variation in accrued charges and other creditors

- Variation in other debtors

- Variation in reinsurance share in technical reserves

- Variation in technical reserves

- Variation in deferred income

- Variation in unearned commissions

- Variation in prepaid commissions

- Variation in premiums and reinsurance payables

- Variation in social security and taxes payable

- Variation in reinsurance receivables

- Variation in net premiums receivable

Net Cash Provided by Operating Activities

Financing activities:

- Variation in reinsurance deposits

- Dividend distributed

Net Cash used in Financing Activities

Investing activities:

- Acquisition of fixed assets

- Variation in time deposits (more than 3 months)

- Variation in Treasury bonds & certificates of deposit

Net Cash Used in Investing Activities

Net Variation in Cash and Cash Equivalents

Cash & cash equivalents at the beginning of the year

Cash & Cash Equivalents at the End of the Year

20044,172

74

82

(1)

(3)

(85)

326

2,309

----

(267)

157

20

(14)

(189)

6,581

(39)

(1,150)

(1,189)

(25)

(587)

(4,960)

(5,572)

(182)

12,829

12,647

- million LBP -

20054,043

66

34

74

----

(6,951)

13,388

(9,681)

843

(864)

6,591

716

(607)

----

7,652

96

(1,240)

(1,144)

(138)

(3,803)

(1,929)

(5,870)

637

12,647

13,284




Statement of Changes in Shareholders’ Equityas at 31 December 2005

- million LBP -

Capital

4,370

----

----

----

4,370

Legal Reserve

1,178

279

----

----

1,457

Other Reserves

6,257

2,652

----

----

8,909

Profit of theYear

4,172

(2,931)

(1,241)

4,043

4,043

Shareholders’equity

15,977

----

(1,241)

4,043

18,779

Balance as at 1 January 2005

Transfer profit for the year 2004

Dividend distributed

Profit for the year 2005

Balance as at 31 December 2005


Central Processing Department Phone : 961 1 258 106/9 Ext. 100/111Fax : 961 1 257 635/6

Help line for transfers

Correspondent Banks

Correspondent Banks


Country Bank’s name

Compagnie Algérienne de Banque - CA Bank - AlgiersArab Banking Corporation - Algiers

Westpac Banking Corporation - SydneyNational Australia Bank - SydneyHSBC Australia LTD - Sydney

Bank Austria Creditanstalt AG - ViennaRaifeissen Zentralbank Osterreich AG (RZB-Austria) - Vienna

National Bank of Bahrain - ManamaArab Banking Corporation BSC - Manama

KBC Bank NV - BrusselsFortis Bank SA/NV - BrusselsING Bank SA/NV - Brussels

Bulbank LTD - Sofia

National Bank of Canada - MontrealBank of Montreal - MontrealRoyal Bank of Canada - Montreal

Ceskoslovenska Obchodni Banka - Prague

Bank of China - BeijingJP Morgan Chase Bank NA - ShanghaiThe Bank of New York - ShanghaiCommerzbank AG - ShanghaiHSBC Bank LTD - Hong KongJP Morgan Chase Bank NA - Hong KongThe Bank of New York - Hong KongUBAF (Hong Kong) LTD - Hong Kong

Bank of Cyprus Public Company Limited - NicosiaLaiki Bank - Nicosia

Danske Bank A/S - CopenhagenNordea Bank Danmark A/S - Copenhagen

National Bank of Egypt - CairoArab International Bank - Cairo

Nordea Bank Finland PLC - Helsinki

BNP Paribas - ParisNatexis Banques Populaires - ParisUBAF - Union de Banques Arabes et Françaises - Paris

Deutsche Bank AG - FrankfurtCommerzbank AG - FrankfurtDresdner Bank AG - FrankfurtBayerische Landesbank - MunichWest LB - Düsseldorf

National Bank of Greece - AthensBank of Cyprus Public Company Limited - Athens

National Bank of Hungary - Budapest

Algeria

Australia

Austria

Bahrain

Belgium

Bulgary

Canada

Czech Republic

China & Hong Kong

Cyprus

Denmark

Egypt

Finland

France

Germany

Greece

Hungary



Holland

India

Indonesia

Italy

Japan

Jordan

Korea

Kuwait

Luxembourg

Lybia

Malta

Morocco

Norway

Oman

Poland

Portugal

Qatar

Romania

Russia

ING Bank NV - AmsterdamFortis Bank (Netherland) NV - AmsterdamFinansbank (Holland) NV - Amsterdam

State Bank of India - Mumbai

PT Bank Mandiri (Persero) - Jakarta

Banca Intesa SPA - MilanoUnicredito Italiano SPA - MilanoBanca Nazionale Del Lavoro SPA - RomeSan Paolo Imi SPA - TorinoBanca Popolare Dell Emilia Romagna - ModenaBanca Agricola Mantovana - Mantova

The Bank of Tokyo-Mitsubishi UFJ, LTD - TokyoThe Bank of New York - TokyoUBAF - Union de Banques Arabes et Françaises - Tokyo

Arab Bank PLC - AmmanJordan National Bank - AmmanHousing Bank for Trade and Finance - Amman

Korea Exchange Bank - SeoulUBAF - Union de Banques Arabes et Françaises - SeoulJP Morgan Chase Bank NA - SeoulThe Bank of New York - SeoulStandard Chartered Bank - SeoulWachovia Bank - Seoul

The National Bank of Kuwait SAK - KuwaitThe Gulf Bank KSC - Kuwait

Kredietbank SA LuxembourgeoiseBanque de l’Europe Méridionale - Luxembourg

Wahda Bank - TripoliUmma Bank - TripoliGumhouria Bank - Tripoli

Fimbank (First Int’l Merchant Bank) - SliemaHSBC Bank Malta PLC - Valetta

Banque Marocaine du Commerce Extérieur - CasablancaBanque Marocaine pour le Commerce et l’Industrie - Casablanca

DNB NOR Bank ASA - Oslo

Banque Banorabe SA - Muscat

Bank Handlowy W Warszawie SA - Varsovia

Millenium BCP - LisbonDeutsche Bank (Portugal) SA - Lisbon

Qatar National Bank - DohaMashreqbank - Doha

BLOM Bank Egypt SAE Romanian Branch - BucharestBanca Comerciala Romana - Bucharest

The Bank of Foreign Economic Affairs of the USSR - Moscow

Correspondent Banks



Al Rajhi Bank - Riyadh The National Commercial Bank - JeddahSaudi Hollandi Bank - Riyadh

JP Morgan Chase Bank NA - SingaporeThe Bank of New York - SingaporeUBAF - Union de Banques Arabes et Françaises - Singapore

Banco de Sabadell - MadridBanco de Santander Central Hispano - MadridBanco Bilbao Vizcaya Argentaria SA (BBVA) - MadridBanco Popular Espanol - Madrid

Bank of Ceylon - ColomboCommercial Bank of Ceylon LTD - Colombo

Farmers Commercial Bank - KhartoumOmdurman National Bank - Khartoum

SE Banken - StockholmNordea Bank AB (Publ) - Stockholm

UBS SA - ZurichCredit Suisse - ZurichING Bank SA/NV - GenevaHabib Bank AG Zurich - Zurich

Commercial Bank of Syria/Damascus - Via Lebanon Syrian Lebanese Commercial Bank/Beirut

JP Morgan Chase Bank NA - TaipeiThe Bank of New York - TaipeiStandard Chartered Bank - Taipei

Bangkok Bank Public Company Limited - Bangkok

Tunis International Bank - TunisUnion Bancaire pour le Commerce et l’Industrie - TunisSociété Tunisienne de Banque SA - Tunis

Yapi Ve Kredi Bankasi AS - IstanbulTurkiye Is Bankasi AS - IstanbulKoçbank AS - IstanbulFinansbank AS - IstanbulOyak Bank AS - IstanbulSekerbank TAS - Istanbul

Mashreqbank PSC - DubaiNational Bank of Abu Dhabi - Abu DhabiStandard Chartered Bank - DubaiEmirates Bank International PJSC - DubaiHabib Bank AG Zurich - Dubai

HSBC Bank PLC - LondonStandard Chartered Bank PLC - LondonBank of Beirut (UK) LTD - London

JP Morgan Chase Bank NA - New YorkThe Bank of New York - New YorkAmerican Express Bank LTD - New YorkWachovia Bank - Philadelphia

Bank for Foreign Trade of Vietnam - Hanoi

Yemen Bank for Reconstruction and Development - Sana’a

Saudi Arabia

Singapore

Spain

Sri Lanka

Sudan

Sweden

Switzerland

Syria

Taiwan

Thailand

Tunisia

Turkey

United Arab Emirates

United Kingdom

U S A

Vietnam

Yemen


Head Office and Branch Network

P.O.Box: 16-6729 Phone: 961 1 200 028/9 - 201 292 Fax: 961 1 325 713Website: www.creditlibanais.comE-mail: [email protected]

[email protected]

Sofil Center - Charles Malek Avenue - Ashrafieh 1100 2811 - Beirut, Lebanon

Phone: 961 1 900 111

Customer Service Center

P.O.Box: 11-1458 Phone: 961 1 983 150/1/2/3/4 Fax: 961 1 983 155Website: www.creditlibanais.comE-mail: [email protected]

[email protected]

Asseily Bldg. - Riad El Solh Square - Beirut Central District (BCD), Lebanon

Credit Libanais SALHead Office

Credit Libanais Investment Bank (CLIB) SALHead Office

P.O.Box: 166729 Phone: 961 1 257 628 - 257 629 - 257 630 Fax: 961 1 257 629Website: www.creditlibanais.comE-mail: [email protected]

[email protected]

Credit Libanais Bldg. - Dora - Beirut, Lebanon

Credit Libanais d’Assurances et de Reassurances (CLA) SALHead Office

Branch Network


Ashrafieh Zahret Al Ihsan St.,Sausalito Bldg.

Phone: (01) 216 540 - 204 641 Fax: (01) 204 643Branch Manager: Mr. Costi Saroufim

Raouche Hajj Toufic Nassar Bldg.

Phone: (01) 807 454 - 807 492 Fax: (01) 807 475Branch Manager: Mr. Ghassan Daouk

Badaro Badaro St., Khatoun Center

Phone/Fax: (01) 387 878/9 - 382 145Branch Manager: Ms. Randa Hauch

Rmeil Nahr St., Zoghbi Bldg.

Phone: (01) 445 684 - 443806 Fax: (01) 445 275Branch Manager: Mr. Sami El Koreh

Gefinor Clemenceau St., Gefinor Center 1st floor, Bloc C

Phone: (01) 739 830/1 Fax: (01) 740 168Branch Manager: Mr. Ahmad Kichli

Riad El Solh Beirut Central District, Riad El Solh Square, Asseily Bldg.

Phone: (01) 983 141/2/3 Fax: (01) 983 141Branch Manager: Mr. Amine Zakhour

Geitawi Bejjani Bldg.

Phone:(01) 580 715/6 Fax: (01) 582 087Branch Manager: Mr. Joseph Nakhlé

Sassine Sassine Square, Independance Ave., Credit Libanais Bldg.

Phone: (01) 332 889 - 218 608 Fax: (01) 203 007Branch Manager: Mr. Rafic Makhzoumi

Hamra Hamra St., Ghanem Bldg.

Phone:(01) 346 960 - 342 954/5 - 350 293 Fax: (01) 340 390Branch Manager: Mr. Marwan Ayache

Sofil (Main Branch) Ashrafieh, Charles Malek Ave., Sofil Center

Phone: (01) 200 028/9 - 201 292 Fax: (01) 215 044Branch Manager: Ms. Georgette Abdo

Liberty Tower Hamra, Rome St., Liberty Tower Bldg.

Phone:(01) 740 017/8/9 Fax: (01) 740 017Branch Manager: Mr. Kamal Abdel Sattar

Starco Mina El Hosn, George Picot St., Starco Center, Bloc A,1st Floor

Phone/Fax: (01) 367 582/3Branch Manager: Mr. Fawaz Al Toufaily

Mar Elias Mousaitbeh, Mar Elias St.

Phone:(01) 819 116 - 312 021 Fax: (01) 312 028Branch Manager: Mr. Nabil Khodr

Verdun (Unesco) Unesco St., Boubes Bldg.

Phone/Fax: (01) 790 511 - 790 289Branch Manager: Mr. Saad El Dine Akel

Mazraa Corniche El-Mazraa, Salam Blvd., Choueiry Bldg.

Phone: (01) 313 590 - 317435 Fax: (01) 300 937Branch Manager: Mr. Bassam Matta

Antelias Rahabneh St., Antelias Square, St. Elie Center

Phone: (04) 418 582/3 Fax: (04) 418 582Branch Manager: Ms. Nohad Torbey

Beit Mery Notre Dame St., Dr. Sawan Bldg.

Phone/Fax: (04) 871 176 - 871 916 - 871 761Branch Manager: Mr. Adib Hamouche

Bauchrieh Industrial City St., Boulghourjian Bldg.

Phone: (01) 497 332 - 497 092/260 Fax: (01) 497 332Branch Manager: Mr. Atef Renno

Bhamdoun Main St., Bhamdoun Station, Mouttawah Center

Phone: (05) 260 244/5/6/7 Fax: (05) 260 247Branch Manager: Mr. Imad Abdelnour

Beirut

Mount Lebanon


Bourj El Brajneh Zein Harb St., Yassine Bldg.

Phone: (01) 450 470/1/2 Fax: (01) 450 471Branch Manager: Mr. Nadim Hatoum

Hazmieh Jisr El Bacha Main Road, S & S Center

Phone: (05) 952 426 Fax: (05) 952 425Branch Manager: Mr. Pierre Bejjani

Broummana Main Road, Tawil Bldg.

Phone: (04) 960 664 - 960 349 Fax: (04) 862 105Branch Manager: Mr. Toufic Attieh

Jdeideh Jdeidet El Metn Highway Montelibano Bldg.

Phone: (01) 898 065 - 887 779 Fax: (01) 887 780Branch Manager: Mr. Kamal Zakhm

Dora Dora Roundabout, Bassil Bldg.

Phone: (01) 251 832 - 260 358 Fax: (01) 264 813Branch Manager: Mr. Antoine Kmeid

Fanar Fanar Roundabout, Samra Center

Phone: (01) 902 360/1/2 Fax: (01) 902 362Branch Manager: Ms. Antoinette Tannouri

Jisr Dora Highway, Karantina Bridge, Azar Bldg.

Phone: (01) 258 106/7 Fax: (01) 257 641Branch Manager: Mr. Antoine Saba

Furn El Chebbak Damascus Road, Ghaoui Bldg.

Phone/Fax: (01) 281 518/9Branch Manager: Mr. Robert Matta

Kaslik Main St., Kaslik Plaza Center

Phone: (09) 639 945 - 640 794 - 640 118 Fax: (09) 640 244Branch Manager: Mr. Joseph Kmeid

Ghobeiry Airport Blvd., Moucharafieh Square, Wazneh Bldg.

Phone: (01) 552 781/2 Fax: (01) 552 781Branch Manager: Mr. Ali Berro

Kornet Chehwan Main Road, Forum 600 Center

Phone: (04) 913 911 - 928 240 - (03) 288 870 Fax: (04) 913 911Branch Manager: Mr. Joseph Mallouk

Hadeth Adib Al Chidiac St., Kafaa’t Intersection, Wehbe Center

Phone: (05) 466 681/2 Fax: (05) 466 680Branch Manager: Mr. Youssef Chartouni

Sin El Fil Fouad Chehab Road, St. Georges Center

Phone: (01) 495 370/1 - 482 368 Fax: (01) 491 899Branch Manager: Mr. Camille Zakka

Haret Hreik Hady Nasrallah Blvd., Diab & Ayad Bldg.

Phone: (01) 278 042/9 - 278 121 Fax: (01) 278 004Branch Manager: Mr. Samir Darwiche

Zouk Jounieh Highway, Zeayter Bldg.

Phone: (09) 210 485/7 - 211 542 Fax: (09) 211 556Branch Manager: Mr. Joe Khoury

Zouk Mosbeh Geita main Road, Near Pizza hut

Phone: (09) 211082 - 210 744 - 210 711 Fax: (09) 211 083 Branch Manager: Ms. Amale Araman

Haret Sakhr Jounieh Highway, Credit Libanais Tower

Phone: (09) 636 841 - (03) 675 004 Fax: (09) 636 842Branch Manager: Mr. Elias Njeim

Bourj Hammoud Municipality Square, Mukhtarian & Sarkissian Bldg.

Phone: (01) 262 393 Fax: (01) 265 299Branch Manager: Ms. Arpie Tcheboukjian

Jbeil Main St., Kordahi & Matta Center

Phone: (09) 942 588 - 949 558 Fax: (09) 949 588Branch Manager: Mr. Richard Khalife

Chehim Main Road, El Chraifeh St., Raiif Abdallah Bldg.

Phone: (07) 242 405/6/7 Fax: (07) 242 405/6Branch Manager: Mr. Assaad El Hajjar

Mount Lebanon

Branch Network


Jeb Jannine Ismaïl Sharanek Bldg.

Phone: (08) 660 233 - 660 710 Fax: (08) 660 233Branch Manager: Mr. Souhail Sharanek

Machghara Albert Karam Bldg.

Phone/Fax: (08) 650 250 - 650 297Branch Manager: Mr. Antoine Hajjar

Zahle Hoch Al Omara, Deir Mar Chaaya Bldg.

Phone: (08) 810 142/3 - 803 200 Fax: (08) 800 459Branch Manager: Mr. Antoine Frangieh

Abdeh Abdeh Main Road, Haddad Bldg.

Phone: (06) 470 650/1/2 - (03) 583 586 Fax: (06) 470 650/1/2Branch Manager: Mr. Ghassan Raba’a

Tripoli - Tall Abdel Hamid Karame St., Kantara Bldg.

Phone: (06) 430 350/1/2 - 424 434 Fax: (06) 430 350Branch Manager: Mr. Fouad Kabbara

Amioun Koura Main Road, Azar Bldg.

Phone: (06) 952 715/6/7 Fax: (06) 952 714Branch Manager: Mr. Esper El Azar

Batroun Main Road, Juliette Adaymi Bldg.

Phone: (06) 742 074/5 Fax: (06) 642 168Branch Manager: Mr. Nidal Farah

Bint Jbeil Main Road, Charara Center

Phone: (07) 450 800/1 - (03) 675 012 Fax: (07) 450 802Branch Manager: Mr. Ayoub Khoraich

Saida Riad El Solh St., Zaatary Bldg.

Phone: (07) 721 401/2 - 751 101/2/3 Fax: (07) 721 401Branch Manager: Mr. Samih Al Kaakour

Tyr Rest House St., Farran Bldg.

Phone: (07) 742 854/5/6 Fax: (07) 742 854/5/6Branch Manager: Mr. Riad Chebli

Rachaya - Dahr El Ahmar Dib Mounzer Bldg.

Phone: (08) 591 013/4 Fax: (08) 590 303Branch Manager: Mr. Sami Najjar

Nabatieh Main Road, Sabbagh Bldg.

Phone: (07) 767 909/10/11 Fax: (07) 767 911Branch Manager: Mr. Zahi Jaffal

Tripoli - Azmi Azmi St., Haytham Center

Phone: (06) 215 900/1/2 Fax: (06) 215 900Branch Manager: Mr. Nazih Naja

Kobbe Kobbe Main Road, Yehya Center

Phone: (06) 393 900/1 Fax: (06) 393 902Branch Manager: Mr. Ali Ahmad

Bar Elias Damascus Road, Araji Bldg.

Phone: (08) 510 265/6/7 Fax: (08) 510 267Branch Manager: Mr. Wajih Araji

Ferzol Main Road, Ordre Salvatoriens Bldg.

Phone: (08) 950 540/1/2/3 Fax: (08) 950 544Branch Manager: Mr. Fares Dawalibi

Chtaura Damascus Road, Rose Massabki Bldg.

Phone: (08) 540 833 - 543 555/666 Fax: (08) 542 434 - 544 802Branch Manager: Mr. Sami Moallem

Bekaa

North

South


Phone: 357 25 376 444 Fax: 357 25 376807 Tlx: (605) 4702 CRELIB CYBranch Manager: Ms. Hayat HarfoucheE-mail: [email protected]

Limassol, Cyprus Chrysalia Court, 1st Floor, 206 Arch. Makarios III Avenue, CY 3303 - P.O.Box: 53492

Limassol Branch

Phone: 1-514 866 6688 - 1-800 864 5512 Fax: 1-514 866 6220 Office Manager: Mr. Malek Badro E-mail: [email protected]

Montreal Canada Place du Canada, 1010 de la Gauchetière Ouest # 1325, 13th Floor Montreal, Quebec H3B 2N2 Canada

Representative Office

w w w.creditlibanais.com

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