To what extent has BML been affected by the regional conflict in Syria and Egypt?
HADI NAFFI Lebanon is naturally affected by regional turmoil. The conflict in Syria has had a particularly significant impact on the Lebanese economy generally and on Lebanese banks, which have seen their business in Syria contract, and this makes risk management a more challenging task and BML was no exception in this respect.
To what extent has the international strategy changed since you became Chairman?
MAURICE SEHNAOUI It was difficult to think directly on an international presence. First of all, we had to establish the bank on a solid footing in Lebanon, and then expand internationally or regionally. Two years later, we decided to move into Cyprus with nearly a 100% shareholding in USB Bank PLC, as part of our international expansion strategy. Cyprus has all the potential to become a regional banking center in addition to being in the EU and a gateway to Russia. Despite the recession and unemployment in Cyprus following the bailout agreement in 2013, the overall macroeconomic performance has been better than initially anticipated as the economy proved to be more resilient and significantly more flexible. As a second step, in 2012, we established our representative office in Abu Dhabi claiming as such our direct and expandable presence in the Arab MENA region. This move stemmed from the bank's conviction of the UAE's advanced regional status, having achieved consecutive quality leaps, which made it an attractive hub for both Arab and foreign financial and investment institutions.
What growth metrics have you enjoyed recently?
HN Despite the problems arising from the regional situation, Lebanon's banking sector continues to grow and BML with it. In 2013, we increased our total deposits by 18%, such that they now exceed the billion-dollar mark. In parallel to that, loans to the private sector increased by 19%. We have achieved further significant growth in lending to the private sector during 1Q2014, though deposits have remained quite stable. For the year as a whole, we are forecasting a 10% increase in our deposit base and a more than 20% growth in loans to the private sector.
MS BLC is growing as a universal bank in the main fields of corporate and retail; however, we completed our service offering by including the private and investment banking arms.
Through its affiliate BLC Invest, BLC Bank proved that it is a serious player in the development of private equity in Lebanon, as it achieved the largest ever asset-backed issuance in the local capital markets. The bank, in partnership with BEMO Securitization, led and arranged a $185 million securitization transaction for Solidere SAL. Likewise, in the asset management field, we closed $35 million of our Tier 1, non-cumulative, perpetual, redeemable, series C preferred shares. This is the third issuance of preferred shares since 2010, leading to a capital increase of $135 million.