ANNUAL REPORT 07 - BLOM Bank · annual report 07. atblombank ... blom bank’s major shareholders...

ANNUAL REPORT 07

At BLOM BANK, our mission has always been tospread “Peace of Mind” in the region and all

around the world through our international network.The universal banking services provided by our group

andour concern tomaximize customer satisfaction constitutethe key elements for the success of our mission.

Dr. Naaman AZHARI - Chairman of BLOM BANK GROUPMr. Saad AZHARI - Chairman and General Manager of BLOM BANK S.A.L

CHAIRMAN’S LETTER 09GROUP CHART 11EVOLUTION OF MAIN INDICATORS 12FINANCIAL RATIOS 13BLOM BANK CUSTOMER DEPOSITS EVOLUTION 14STRONG AND CONTINUOUS GROWTH FOR THE LAST 5 YEARS 15BLOM BANK SAL BOARD OF DIRECTORS 18BLOM BANK’S MAJOR SHAREHOLDERS AND GENERAL MANAGEMENT 19BLOM BANK ORGANIZATIONAL CHART 21MANAGEMENT DISCUSSION AND ANALYSIS

1. OPERATING ENVIRONMENT 252. OVERVIEW 303. EVOLUTION OF TOTAL ASSETS 314. SOURCES OF FUNDS 325. USES OF FUNDS 356. LIQUIDITY 467. PROFITABILITY 478. DIVIDEND DISTRIBUTION AND PREFERRED SHARES REVENUES 589. CAPITAL ADEQUACY RATIO 5810. INTEREST RATE RISK 5911. RISK MANAGEMENT AND BASEL II PREPARATIONS 5912. UNIVERSAL BANKING SERVICES 6113. INFORMATION SYSTEMS AND TECHNOLOGY 6414. PEOPLE DEVELOPMENT 6715. BANK’S OPERATIONAL EFFICIENCY 6816. REGIONAL EXPANSION 68

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF BLOM BANK SAL 74CONSOLIDATED INCOME STATEMENT YEAR ENDED 31 DECEMBER 2007 75CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2007 76CONSOLIDATED CASH FLOWS STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007 78CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2007 80NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 83BLOM BANK’S WORLDWIDE CORRESPONDENT BANKS 164BLOM BANK GROUP DIRECTORY 166

SUMMARY

08

Mr. Saad AZHARI - Chairman and General Manager of BLOM BANK S.A.L

CHAIRMAN’S LETTER

True to its record, BLOM BANK has remained at the forefront of the Lebanese banking system in 2007.It proved itself once again to be a solid and successful financial institution, earning the highest levelof profits among Lebanese banks at $204.7 million. This was 13.53% higher than the 2006 level, and itwas largely a product of its managerial and financial efficiency as reflected in an effective cost toincome ratio of 34.6% -- the lowest among the leading banks. The banks’ consolidated balance sheetalso saw a significant increase, rising by 17% each for assets and deposits to reach $16,628 millionand $13,737 million respectively. Also significant was the increase in loans -- especially to serviceclients in regional markets -- to $2,772 million that lifted the loans to deposits ratio from 16.9% to20.2%. All this has happened within an operating framework that maintained high levels of liquidityand strong asset quality to better manage risk and to ensure clients’ “peace of mind”. Thus immediatenet liquidity in Lebanese Pounds and foreign currencies stood at a comfortable 105.9% and 63.2%respectively; whereas the ratios of gross non-performing loans and loan loss reserves were arespectable 7.9% and 95.55%. Also, in terms of capital adequacy and its new risk adjustmentsaccording to the standardized approach, BLOM Bank’s ratios reached healthy values of 29.05% and14.6% according to Basel I and Basel II respectively.

These achievements of BLOM BANK did not translate to the highest profitability in absolute measuresonly, but also included relative measures. In terms of returns on average assets and equity, BLOMretained the highest ratios among leading Lebanese banks at 1.33% and 15.65% respectively. Thiswas reflected in financial markets, as the price of BLOM’s GDR (Global Depository Receipts)increased by 50.5% to close the year 2007 at $90.2. In addition, the Bank’s General Assembly ofShareholders on the 9th of April 2008 approved as follows the distribution of dividends for the financialyear 2007: preferred shares 2002 issue received $15 each, and their corresponding 2004 and 2005issues $8.5 and $9.5 respectively; whereas each of the listed common shares and GDRs got theequivalent of $3.65 per share.

This commendable performance under difficult circumstances in the Lebanese economy attractedseveral awards and marks of excellence in 2007 from reputable ranking and rating institutions. TheBank was awarded “Best Bank in Lebanon” from Global Finance; “Highest Financial Strength Ratingat BBB” from Capital Intelligence; “Highest National Rating at Aa1.lb” from Moody’s; “Best TradeFinance”, “Best Foreign Exchange”, and “Best Customer Internet” Bank from Global Finance; “BestUse of Technology in the Middle East” from The Banker Middle East; and “Best Deal of the Year” fromthe Banker.

Despite the climate of political uncertainty, Lebanon’s economy managed to grow by 3% in real termsin 2007. Also noteworthy was a solid fiscal performance that saw net debt – at $39.1 billion – fall asa ratio of Gross Domestic Product to 162% and primary surplus rise as a similar ratio to 3%, an outcomeof improving tax revenues and Paris III donor support.

And, true to its history, the Lebanese banking sector was the backbone of the economy in 2007, continuingundeterred its healthy domestic growth and foreign expansion. All the basic indicators from the financialsof its domestic operations were up: assets increased by 10.6% to $82.2 billion; deposits by 11.4% to $67.5billion; loans by 11.7% to $23.9 billion; and capital by 10.5% to $6.3 billion. And the banking system hascrowned these accomplishments by continuing its sustained profitability, with net profits increasing by11.8% to $850million. But perhaps the current defining feature of the Lebanese banking sector is its foreignexpansion. The result is that there are currently 17 Lebanese banks with presence in 20 foreign countriesencompassing more than 150 banking units and corresponding to around 15% of banks’ total activities. Ofcourse, the banking system’s performance was greatly facilitated by the supervisory oversight of Banquedu Liban (BdL). Regulatory directives fromBdL ensured that banks have remained well capitalized, at morethan 12% according to Basel II; and also ensured that banks have stayed away from the asset classesthat engendered the credit crises in the US and elsewhere in late 2007. In addition, BdL continued itssound monetary management of the economy, preserving the exchange rate peg and amassing morethan $12 billion in foreign reserves, ensuring in the process both liquidity and stability in financial markets.

09

In this context, BLOM BANK’s success rests on a two-pronged strategy of geographical expansionand service diversification, so as to evolve the bank to a regional, universal Bank. BLOM BANKcurrently stands to be the Lebanese bank with the largest overseas activities, where overseasassets and profits represent 36% and 24% of total assets and profits respectively. It is present inten countries: Lebanon (BLOM BANK), Syria (Bank of Syria and Overseas, BSO), Jordan (BLOMBANK), Egypt (BLOM BANK EGYPT), UAE (BLOM BANK FRANCE), France, England, and Romania(BLOM BANK FRANCE), Cyprus (BLOM BANK), and Switzerland (BLOM BANK (SWITZERLAND)).The Bank also obtained a license to open a Representative Office in Abu Dhabi in 2007; and hasbeen granted licenses to operate an investment company in Saudi Arabia, BLOMINVEST SaudiArabia, in mid 2008, and to start a private and corporate bank in Qatar in late 2008. Also, in relation toexpansion in individual countries, BSO opened a new branch in Aleppo in 2007 that increased thenumber of branches to 10, expected to increase to 20 in 2008; two new branches were opened inJordan, and two more are planned to open in 2008, raising the total to 7.In addition, BLOM BANK EGYPT continued with its robust expansion, increasing its number ofbranches to 20 in 2007 and aiming to raise it to 30 in 2008. And not to forget Lebanon, four additionalbranches were inaugurated in 2007, and we look forward to add more new branches in 2008,mainly in the areas of Furn El Cheback, Dekwaneh, Sodeco, Choueifat, and Abbasya.

As important, geographic diversification has been coupled with a process of product and servicesdiversification to support the Bank’s universal banking model. BLOM BANK’s banking services nowinclude retail, corporate, investment, asset management, Islamic, and private banking, in addition toinsurance. This has also led to diversification in the sources of income, where fee income nowconstitutes 24% of operating income, increasing in 2007 by 19.4% compared to an increase by 11.4%in net interest income. In turn, the sources of interest income have undergone diversification andmore balance as well, comprising 42% from inter-bank deposits, 29% from government securities, and29% from customer loans. In this respect also, the activities of BLOMINVEST BANK, the investmentarm of BLOM BANK, have been upgraded and widened as a conduit to increase diversification ofservices and income. One prominent product of such widened specialization by BLOMINVEST hasbeen in the area of asset management, where it established a balanced growth fund, the BLOMCedars Balanced Fund, the first of its kind in Lebanon combining both fixed income assets and equities.

And last but not least, a notable undertaking by the Bank has been the development of a corporategovernance code in 2007, to be applied starting 2008. The Bank is fully aware of the importance ofsuch a code, not only for the healthy functioning of the institution but also for the confidence and trustthat it sheds to all stakeholders. As a result, the code is built to the highest standards, as proposed bythe Basel Committee, and covers all crucial elements that make up an effective governing system.Notable among them are those that relate to the Board of Directors, its role (effective governanceover the Bank for the benefit of shareholders), structure (majority of independent directors), andcommittees (audit, risk management, strategy, and nomination and remuneration). In addition, it coverselements of transparency and stakeholders relations, ranging from the adoption of internationallyrecognized accounting standards, public disclosure rules, code of conduct and banking ethics, tostaff, customers, and suppliers relations.

In conclusion, I would like to pledge that BLOM BANK will continue in its geographical and businessexpansion while remaining true to its core values of safety, outstanding customer service, long-termshareholder value, and responsible corporate citizenship in each of our countries of presence.I would also like to thank the managers and staff for their dedication and hard work.

Saad AzhariChairman and General Manager

10

BLOM BANK GROUP CHART

33.33%

BLOM BANK GROUP CHART

50%

BLO

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Free

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dan

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Am

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bi(R

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ative

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ce)

BLOM BANK FRANCE S.A.

Head Office: ParisBranches: London • Dubai • Sharjah

Romania (6)

99.99% BLOM BANK (SWITZERLAND) S.A.

Head Office: Geneva

100%

BLOM BANK EGYPT S.A.A.

Head Office: CairoBranches: Egypt (24)

99.37%

BLOMINVEST BANK S.A.L.

Head Office: Beirut

99.88% BLOM DEVELOPMENT BANK S.A.L.

Head Office: Beirut

66.64%

AROPE INSURANCE S.A.L.

Head Office: BeirutBranches Lebanon (9)

AROPE SYRIASyria International Insurance

Head Office: DamascusBranch Aleppo

88.56%

10%

Head Office: DamascusBranches: Syria (12)

39.00%

34%

5%BANK OF SYRIA & OVERSEAS S.A.A.

BLOMINVEST SAUDI ARABIA *10%

Head Office: Riyadh

99% BLOM BANK QATAR L.L.C *

Head Office: Doha

* Under Establishment

BLOM EGYPT SECURITIES

Head Office: Cairo

99.97%

11

EVOLUTION OF MAIN INDICATORSFINANCIAL RATIOS

TOTAL ASSETS

LBPUSD

CUSTOMER DEPOSITS

LBPUSD

TOTAL NET LIQUIDITY

LBPUSD

SHAREHOLDERS’ EQUITY

LBPUSD

CAPITAL FUNDS

LBPUSD

TOTAL LOANS AND ADVANCES

LBPUSD

NET INCOME AFTER TAX

LBPUSD

EVOLUTION OF MAIN INDICATORS (in millions)

25,067.01416,628.202

20,708.51613,736.992

15,839.11110,506.873

2,063.1851,368.614

2,092.4091,387.999

4,179.3072,772.343

308,586204.70

21,424.61114,212.014

17,690.38111,734.913

15,946.89510,578.371

1,880.3871,247.355

1,916.5441,271.339

2,996.6981,987.859

271.804180.301

2007 2006

17.00%17.00%

17.06%17.06%

-0.68%-0.68%

9.72%9.72%

9.18%9.18%

39.46%39.46%

13.53%13.53%

Change06/07

12

LIQUIDITY RATIOSNet liquidity in LBPNet immediate liquidityLiquid assets over total assets

LOANS TO DEPOSITS RATIOSLBPF/CTotal

ASSETS QUALITY - NOT INCLUDING GENERAL PROVISIONNet doubtful loans over total loansProvision over doubtful loansProvision over total loansGross doubtful loans/ Gross total loans

CAPITAL ADEQUACY RATIOSBefore dividend distributionAfter dividend distribution

PROFITABILITY RATIOSReturn on average equityReturn on average assetsEarnings per share USDDividend per common share USDDividend payout ratioRetention RatioNet asset value per common share USD

FINANCIAL RATIOS (in % or USD)

109.8%78.26%74.39%

7.96%18.96%16.94%

2.02%82.35%8.85%

10.25%

39.50%36.35%

16.81%1.38%

7.29 USD3.32 USD

45.98%54.02%

44.41 USD

105.93%63.24%63.19%

9.98%22.11%20.18%

1.68%80.40%8.19%7.92%

31.53%29.05%

15.65%1.33%

8.22 USD3.65 USD44.39%55.61%

48.77 USD

20062007

13

CUSTOMER DEPOSITS EVOLUTIONSTRONG AND CONTINUOUS GROWTH FOR THE LAST 5 YEARS

1995

2001

2002

2003

2004

2005

2006

2007

1996

1997

1998

1999

2000

14000

12000

10000

8000

6000

4000

2000

0

Years

1991

1992

1993

1994

Deposits(inmillionsofUSD)

Customer Deposits Evolution (in USD Millions)

16000

504 595 8711,259

1,605

2,686

3,3333,861

4,330

13,737

11,735

10,161

8,992

7,686

6,215

5,5255,056

14

1400

1200

1000

800

600

400

200

0

Tier I & Tier II capital (in USD Millions)

2003 2004 2005 2006 2007

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

10,835

11,918

14,212

16,628

Total assets (in USD Millions)

100

50

0

Net profits (in USD Millions)

150

16,000

8,786

2003 2004 2005 2006 2007

91.15

136.85

180.30

204.7

88.3

200

790.61

957.8

1,271.34

1,388.00

638.38

2003 2004 2005 2006 2007

18,000

250

1600

15

Strong and Continuous Growth for the Last 5 Years

BLOM BANK S.A.L BOARD OF DIRECTORSBLOM BANK S.A.L MAJOR SHAREHOLDERS AND GENERAL MANAGEMENT

Mr. Saad AZHARI

Chairmanand General Manager

H.E. Sheikh Ghassan SHAKER,Grand Officier de la Légion d’Honneur

Mr. Habib RAHAL

General Manager Mr. Joseph Emile KHARRAT

Mr. Nicolas Nicolas SAADE

Sheikh Salim Boutros EL- KHOURY

H.E Me. Youssef Selim TAKLA

Mr. Samer AZHARI

Group Secretary General

Directors

Dr. Fadi OSSEIRAN

Chairmanof the BLOM BANK GroupDr. Naaman AZHARI

Mr. Marwan JAROUDI18

BLOM BANK S.A.L Board of Directors

BLOM BANK S.A.L Major Common Shareholders

* Total common shares: 21,500,000** Starting 1998, and after the issuance of Global Depositary Receipts (GDR) by BLOMBANK Shareholders, the Bank of NewYork as Depositary, became shareholder on the Bank’s register.*** The major shareholders of Banorabe Holding are the same as in BLOM BANK S.A.L (except Bank of New York and AZAHolding).

Dr. Naaman AZHARI - Chairman of the GroupMr. Samer AZHARI - Group Secretary General

BLOM BANK General Management

Mr. Saad AZHARI - Chairman and General ManagerMr. Habib RAHAL - General ManagerMr. Amr AZHARI - General Manager

Chairman’s Advisors

Mr. Fawaz KAYAL - Sheikh Fahim MOADAD**

Mr. Elias ARACTINGI - Planning & Organization Department, Retail Banking Department

(** Fomerly Vice Governor of the Central Bank of Lebanon)

General Management Consultants

Mr. Georges SAYEGHMr. Adnan SALLAKH

Bank of New York**Banorabe Holding***AZA Holding (Azhari Family over 50%)Azhari FamilyActionnaires Unis (Azhari Family over 50%)Shaker Holdings S.A.L. (Shaker Family)Mrs. Nada AoueiniJaroudy FamilySaade FamilyKhoury FamilyOthers

11.4 %9.33 %2.86 %

34.37 %

5.39 %5 %

4.92 %

1.83 %

2.02 %20.07 %

2.81 %

% of Total Common Shares*

19

BLOM BANK GENERAL MANAGEMENTBLOM BANK’S ORGANIZATINAL CHART

DEPARTMENTS & UNITS *

Accounting

Administration

Anti Money Laundering Unit

Back Office Operations

Communication & Investor Relations

Corporate Unit

Credit

Engineering

Follow Up

Foreign Exchange

Human Resources

Information Systems

Information System Security Unit

Internal Audit

Internal Audit /Group Inspection

International Affairs & Treasury

IT Operations

Legal

Marketing

Marketing Overseas

Marketing Overseas

Recovery & General Management Secretariat Unit

Regional Marketing

Regional Marketing

Retail Credit

Retail Marketing

Risk Management

Strategic Planning & Organization

Trade Finance

* By alphabetical order

20

MANAGEMENT

Mr. Talal BABA - Senior Manager

Mr. Samih ZEINEDDINE - Senior Manager

Mr. Malek COSTA - Head of Unit

Mr. Mekhael KAZZI - Senior Manager

Dr. Gladys YOUNES - Manager

Mr. Samir KASSIS - Senior Manager

Mr.Moustapha GHALAYINI - Senior Manager

Mr. Mohamed BIZRI - Manager

Mr. Riad TABBARAH - Senior Manager

Mr. Wassim KHODR - Manager

Dr Pierre ABOU EZZE - Senior Manager

Mr. Antoine LAWANDOS - Senior Manager

Ms. Aya YAMOUT - Head of Unit

Mr. Ramzi TARABICHI - Senior Manager

Mr. Naoum RAPHAEL - Senior Manager

Mr. Grégoire AZAR - Senior Manager

Mr. Mohamed SOUBRA - Senior Manager

Me. Aimee SAYEGH - Senior Manager

Mr. Michel GHANEM - Manager

Mr. Fouad SAID - Senior Manager

Mr. Marcel ABOU JAOUDE - Manager

Mr. Charles HADDAD - Head of Unit

Mr. Elias MOKHACHEN - Senior Manager

Mr. Georges CHEDID - Senior Manager

Mr. Imad KADI - Manager

Mrs. Jocelyne CHAHWAN - Senior Manager

Mr. Gerard RIZK - Manager

Mr. Rabih HALABI - Manager

Mr. Jacques SABOUNGI - Senior Manager

BLOM BANK S.A.L Central Departments & Units

BLOM BANK’S ORGANIZATIONAL CHART

SHAREHOLDERS

BOARD OF DIRECTORS

BOARD COMMITTEES

Board Audit CommitteeBoard Risk Management Committee

Consulting, Strategy & Corporate Governance CommitteeNomination & Renumeration Committee

EXTERNAL AUDITORS

Ernst&Young-Semaan,Gholam&Co.

SOLICITORS

H.E. ME. Mohamad JAROUDIMe. Georges ABOU ZAMEL

Me. Antoine MERHEB

DEPARTMENTS/ UNITS MANAGEMENT COMMITTEES

Accounting

Administration

Anti-Money Laundering Unit

Back Office Operations

Communication & Investor Relations

Corporate Unit

Credit

Engineering

Follow Up

Foreign Exchange

Human Resources

Information Systems

Information System Security Unit

Internal Audit

Internal Audit /Group Inspection

IT Operations

Legal

Marketing

Executive Committee

Credit Committee 1

Credit Committee 2

Exceptional Credit Committee

Follow-up Credit Risk Committee

Provisions Committee

Retail Credit Committee

Assets & Liabilities Committee

Investment & Treasury Committee

Marketing Committee

Information Technology Committee

Human Resources Committee

Internal Audit Committee

Legal Committee

Operations& Internal Procedures Committee

ForeignBranches&Subsidaries Committee

Compliance Committee

Purchasing & Maintenance Committee

Marketing Overseas (2)

21

Information System Securitiy Committee

Branch Managers

53 in Lebanon,1 in Cyprus

1 in Damascus Free Zone6 in Jordan

1 Chief Representative in AbuDhabi

Recovery & General ManagementSecretariat Unit

Regional Marketing (2)

Retail Credit

Retail Marketing

Risk Management

Strategic Planning & Organization

Trade Finance

International Affairs & Treasury

MANAGEMENT DISCUSSION & ANALYSIS 2007

1. OPERATING ENVIRONMENT


Despite the political tensions, the economy recovered slowly in the year 2007 afterthe overwhelming adverse effects of the July 2006 war. This was driven mainly by thestrong external assistance that Lebanon received from the Paris III International DonorConference in January 2007. The Lebanese government presented an ambitious five-year program toParis III, designed to address the country’s fiscal deficit, maintain macroeconomic stability,promote privatization and improve living standards. While the financial assistance was partlymadeavailable, the economic reformsare still on theagenda,waiting for anend to thepolitical impasse.

Backed by the success of the Paris III conference and the financial support received, real GDPgrowth bounced back to the positive rate of 3% after a clear contraction due to the destructiveevents of July 2006. This growth was further promoted by the good performance of the construction,financial and services sectors. Despite the increase in international commodity prices and theweakening of the US dollar, inflation retreated slightly to 6% in 2007, down from the high of 7%caused by the supply shortages during the 2006 conflict.

The trade and current account deficits widened up as exports and especially importswere buoyant in 2007. Total exports increased by 23.4% to $2.8 billion and importswent up 25.7% reaching $11.8 billion. As a result of the higher trade deficit and theparticular drop in foreign direct investment (FDI), the balance of payments declinedto $2 billion from $3 billion in the previous year. The net foreign assets at the centralBank declined by $580M and the foreign debt stood at $21.3 billion, representing89.1% of GDP.

The country’s budget deficit improved by 24.5% to $2.3 billion in 2007, driven by strong VAT revenues,increasing telecom revenues as well as the Paris III grants. Nevertheless, the gaping holes inexpenditures remain increasing interest payments and transfers to EDL. Consequently, theratio of gross public debt to GDP stabilized at 173%.

Management discussion & analysis 2007

25


Financial markets showed strong resilience and monetary stability was sustained by theexchange rate peg. The average interbank rate stood at an average of 4.2% in 2007, down from4.6% a year earlier as the impact of the 2006 conflict slowly faded away. Money demandremained robust with broad money increasing by 12.5% in 2007 compared to 8.4% in 2006.Dollarization widened in 2007, registering ratios higher than those prior to the July 2006 conflict. Assuch, deposit dollarization increased from 76% in 2006 to 78.1% while dollarization of loanswent up from 84% to 84.5%. Interest rates on the Lebanese Pound declined slightly in 2007 to7.4% helped by the favourable effects of Paris III and monetary stability that outweighed anyadverse effect from the international global credit crisis. Interest rates in USD widened from4.71% to 4.75% as they were slightly affected by higher political risk. The value of clearedcheck jumped by 19.17% to $38.7 billion in 2007. Lebanese Pound denominated cleared checksaccounted for 23% of total cleared checks’ value while foreign currency denominated cleared checkrepresented 77% of the total value.

In the banking sector, the consolidated balance sheets of the commercial banks mirrored thestrong momentum of the sector. As such, the balance sheet of domestic banks stood at $82.2billion in 2007, with a yearly increase of 10.7%. The sector’s high profitability was reflected ina 12% increase over the previous year to $847M while its capitalisation went up 10.5% to $6.3billion. Customer deposits and loans rose by 11.4% and 11.7% to $67.5 billion and $23.9 billionrespectively.

The stock market recovered in 2007 despite the political impasse and global financial marketsturbulence. In fact, after a 9.5% decline in 2006, the BLOM Stock Index (BSI), Lebanon’sbenchmark index, picked up by 27% in 2007 to close at 1501.7. Market capitalisation increased32.5% to $10.2 B while total market turnover dropped by 51% to $991.8 million. On the otherside, the Eurobond market stayed dormant and witnessed very limited trading throughout theyear.

With the continuing political stalemate, the country’s rating started to slip with Standard &Poor’s downgrading Lebanon’s long term foreign currency sovereign securities from B- to CC+while Moody’s maintained its B3 rating. In the absence of an active parliament, many actionsthat was present on the Paris III reform agenda have been suspended, with the outlook of theeconomy closely depending on a possible solution to the political impasse in the country.

26

Key Indicators

Notes: Data included in “BLOM’s Environment” are based on several sources.- Public finance, public debt, interest payments and cost of debt are based on the Ministry ofFinance’s publications.- Trade balance, FX reserves, cleared checks, balance of payments and banking sector’sperformance are based on Banque du Liban’s publications.- GDP figures are based on IMF estimations.- Stock market data, interbank rate, domestic interest spread and average eurobonds yieldare based on calculations performed by the Economic Research Department at BLOMINVESTBANK s.a.l.

USD Millions or %GDP Growth RateEstimated InflationBalance of PaymentsTrade DeficitBudget DeficitLP/USDExternal DebtGross Public DebtGross FX ReservesBanks’ AssetsBLOM Stock Index

20060.0%7.0%

$2,749.5$7,117$3,040

$1,507.5$20,430$40,466$12,975$74,2931,185

20073.0%6.0%

$2,036.6$9,004$2,294

$1,507.5$21,249$42,060$12,395$82,2551,502

% Change300 b.p.-100 b.p.(25.9%)26.5%(24.5%)0.0%4.0%3.9%

(4.47%)10.72%26.8%


27

2. OVERVIEW3. EVOLUTION OF TOTAL ASSETS

2. OVERVIEW

BLOM BANK accomplished in 2007 another successful year, marked by a solid financialposition, a diversification of services on offer and an increasing regional presence.

BLOM BANK’s strong stand as the leading banking group in Lebanon was reflected by thenumber of awards accredited to it in the year 2007:

- “Best Bank in Lebanon” from Global Finance-February 2008- “Best Trade Finance in the Middle East” from Banker Middle East-January 2008- “Best Trade Finance Bank in Lebanon” from Global Finance-December 2007- “Best Foreign Exchange Bank in Lebanon” from Global Finance-December 2007- “Best Consumer Internet Bank” from Global Finance- July 2007- “Best Bank in Lebanon” from Global Finance- April 2007- “Deal of the Year in Lebanon” from the Banker-April 2007- “Best use of Technology in the Middle East” from the Banker Middle East- May 2007

BLOM BANK continued to maintain the highest financial ratings in Lebanon. As such, the Bankhas been rated by Capital Intelligence, a Middle East-specialized rating agency, “BBB-” ,which is the highest financial strength rating in Lebanon and has received the highestnational score rating “Aa1.lb” from Moody’s.

In 2007, BLOM BANK confirmed its position as the most profitable bank of Lebanon, with netprofits reaching $204.7m and as one of the largest banks in the country with total assets of$16.6bn and total customer deposits of $13.7bn at year end 2007.

In 2007 also, BLOM BANK continued with its strategy of geographic and business servicesdiversification. Foreign expansion not only spreads the risk of operating mainly in Lebanon,but also takes advantage of the economic and business opportunities opening up in theregional economies and of their liberal financial policies. In this respect, 2007 saw the Bankoperate in ten countries: Lebanon, Syria, Egypt, Jordan, UAE, France, Switzerland, England,Cyprus and Romania. In addition, the Bank has developed further its retail network byopening new branches in Egypt, Jordan and Syria. In Lebanon, the Bank inaugurated in 2007four new branches in the areas of Tabaris (Beirut), Jbeil, Mina El Hosn and Hamra Street(Retail Branch). In addition, BLOM BANK was recently awarded licenses to establish aninvestment bank in Saudi Arabia, BLOMINVEST Saudi Arabia, as well as a representativeoffice in Abu Dhabi (UAE) and a commercial and private bank in Qatar, BLOM BANK Qatar in QFC.

30


The other component of the strategy is to diversify business activities towards a universal bankingmodel. As a result, the bank has expanded the operations of its investment arm, Blominvest Bank,by enhancing its private and investment banking and capital market activities, in addition to introducingasset andwealthmanagement services. The latter aimat establishing fundsand investment vehicles forretailandhighnet-worth investors thatarediversified in theirassetcompositionandgeography. The firstof such funds is the Cedars Balanced Growth Fund that combines Lebanese fixed income andequity assets. The aim of the services diversification is a diversification in the sources of incomethat gives increasing share for non-interest income

AROPE Insurance, BLOM BANK’s subsidiary, has also witnessed a year of growth andexpansion, marked by the opening of three additional branches in Lebanon as well as onebranch in Aleppo (Syria) through AROPE Syria. In 2008, AROPE is projected to continue itsaggressive policy of expansion and will be the first to penetrate Egypt’s commercial insurancesector through “Arope Egypt for Life Insurances” and “Arope Egypt for Property Insurances”.

3. EVOLUTION OF TOTAL ASSETS

The Bank witnessed a strong growth in assets in 2007. Indeed, total assets increased byUSD2,416 million to reach USD16,628 million in 2007, thus registering a rise of 17% over theyear 2006. A large part of the growth in assets was denominated in foreign currency as aresult of the high rate of dollarization and overseas deposits growth. In addition, BLOM banksuccessfully increased its market share in terms of total assets among Lebanese banks from18.67% in the year 2006 to 20.22% in 2007.

16,000

12,000

8,000

4,000

0

Evolution of Total Assets (in USD Millions)

8,786

16,628

7,146

2002 2003 2004 2005 20072006

10,835 11,91814,212

31

4. SOURCES OF FUNDS

4. SOURCES OF FUNDS

Sources of funding fall into four main categories: customer deposits, capital funds (Tier I &Tier II), banks and financial institutions and other liabilities. The Bank’s main source of fundscame in the form of customer deposits which accounted for 82.61% of total funding in 2007.Tier I and Tier II capital constituted 8.35% of total funds for 2007, while the share of banks andfinancial institutions amounted at 6.21% in 2007.

4.1 Customer Deposits

Customer deposits increased by 17%, up from USD 11,735 million in 2006 to reach USD 13,737million in 2007. This increase is even higher than last year’s 15.49% growth of deposits andmuch larger than the 11.4% growth of the market, once again giving evidence for BLOMBANK’S outgrowth of the market.

As a result of the Bank’s network of expansion locally and regionally, foreign currencies’share of total deposits went up, standing at 84.07% of total deposits for the year 2007, slightlyup from 82.38% in 2006 and much larger than 76.35% in 2005. The increase in the share offoreign currency deposits out of total deposits can then be mainly attributed to the Bank’sregional and international growth.

� Customer Deposits

� Tier I & Tier II Capital

� Banks & FinancialInstitutions

� Other Liabilities

2006

82.53%

8.95%

6.11%2.38%

82.61%

8.35%

6.21% 2.83%

2007

32

Breakdown of sources of funds


BLOM BANK’s market share in terms of customer deposits in the Lebanese banking sectoraccounted for 20.35% in 2007, up from 19.3% in 2006.

Fiduciary deposits reached USD 2,626.293 million in 2007, increasing 42.7% year-on-year.

16,000

12,000

8,000

4,000

0

Evolution of Customer Deposits (in USD Millions)

7,686

13,737

6,215

2002 2003 2004 2005 20072006

8,99210,161 11,735

33

4. SOURCES OF FUNDS

5. USES OF FUNDS

4.2 Capitalization (Tier I & Tier II Capital)

Tier I Capital increased by 9.72% to USD 1,368.614 million at the end of 2007 compared to anincrease of 39.49% at the end of 2006. Tier I increase can be mainly attributed to retainedprofits of the year 2007 amounting to USD 204.7 million before dividend distribution.

Tier II capital continued its decreasing trend, falling by 19.2% at the end of 2007 to USD 19.385million as a result of a 30% drop in the cumulative change in fair value due to the decline infinancial assets prices.

� Tier I Capital � Tier II Capital

1600

1200

800

400

0

Tier I and Tier II Capital (in USD Millions)

484.85

2002 2003 2004 2005 20072006

84.5

553.73

84.7

696.51

94.1

894.25

63.6

1,247.35

24.0

1,368.61

19.4

34


5. USES OF FUNDS

BLOM BANK’s strategy stresses the maintenance of high asset quality and a strong portfolioof investments. The risk component, which has always been the Bank’s primary considerationwhile assessing the uses of funds, is reflected in the return on assets ratio, at 1.33% in 2007.

The share of Lebanese Pound Treasury Bills as well as other government debt securities inforeign currencies to total assets stood at 20.27% in 2007, up from 16.22% in 2006.Nevertheless, the share of cash and deposits at the Central Bank to total assets dropped to25.25% in 2007 from 29.16% in 2006, while the share of bonds and financial instruments withfixed income rose to 4.65% in 2007, up from 1.80% in 2006. On the other hand, loans granted tocustomers constituted 16.67% of total assets in 2007, up from ratio of 13.99% in 2006. The Bankplacements with other banks and financial institutions amounted to 30.07% of total assets in2007 compared to 36.19% in 2006

� Lebanese Treasury Billsand other government bonds

� Cash and Central Banks

� Banks and FinancialInstitutions

� Bonds and FinancialInstruments with Fixed Income

� Loans to Customers

� Others

2006

29.16%

1.80%

13.99%2.64%

25.25%

4.65%

16.67% 3.09%

2007

16.22%

36.19%

20.27%

30.07%

35

Breakdown of uses of funds

5. USES OF FUNDS

CashCentral banksCertificates of Deposit

Total

Distribution of Cash and Central Banks

% Amount

852,2721,8424,199

2.0254.1243.86

100.00

621,6822,4004,144

1.4940.6057.91

100.00

Amount %

End of Year 2006End of Year 2007

5.1 Cash and Central Bank

Cash and central banks reserves stood at USD 4,199 million in 2007, up 1.33% from last year.The share of subscription in certificates of deposit amounted to 43.86% of total cash andbalances with central banks, down from 57.91% in 2006. Central Banks reserves accounted forthe largest share in 2007, standing at 54.12% of total cash and balances with central banks ascompared to 40.60% in 2006; while cash represented the remaining 2.02%, slightly up from itscontribution of 1.49% in 2006.

The cash and central banks category includes non-interest bearing balances held by the Bankat the Lebanese Central Bank (Banque Du Liban) in compliance with the obligatory reserverequirements for all banks operating in Lebanon on commitments in Lebanese Pounds (calculatedon the basis of 25% of sight and 15% of term commitments). The requirement also applies to interestbearing placements at the rate of 15% of total deposits in foreign currencies, as well as thecertificates of deposit issued by the Central Bank of Lebanon.

(In USD Millions)

36


Investments held for tradingTreasury Bills and BondsAccrued Interest

Available for sale InvestmentsTreasury Bills and BondsAccrued InterestUnrealized PremiumsUnrealized Discounts

Total

Distribution of the Treasury Portfolio ( Lebanese Treasury Bills & other Governmental Bills and Bonds )

At December 31, 2006

51.0450.100.937

3,318.9883,291.218

65.8223.744

(41.796)

3,370.032

33.53132.8430.688

2,271.5572,240.045

47.0801.868

(17.436)

2,305.088


�Lebanese Treasury Bills

�Other Governmental Bondsin Foreign Currencies

2007

47.13%

52.87%

57.50%

42.50%

2006

5.2 Lebanese Treasury Bills and Other Governmental Bills and Bonds

TheBank’s portfolio of Lebanese Treasury Bills and other governmental debt securities increasedby USD 46.2% to reach USD 3,370million in 2007 from USD 2,305 million in 2006. Nevertheless, theshare of Lebanese pounds denominated treasury bills dropped to 47.13 % of the total portfolio ascompared to 57.50% in 2006. On the other hand, the foreign currency-denominated governmentbills constituted 52.87% of the total in 2007 as compared to 42.50% in 2006.

The treasury portfolio according to the new IFRS (International Financial Reporting Standards)classification that was adopted starting 1st January 2005 shows the following:

Distribution of the Treasury Bills and other Governmental Bills

(In USD Millions)

37

5. USES OF FUNDS

5.3 Bonds and financial instruments with fixed income

Bonds and financial instruments with fixed income registered a significant 202% growth in2007, up to USD 773 million in 2007 from USD 256 million a year earlier as the Bank opted for adiversification of its investments in high yielding instruments that are rated BBB or above.

This caption includes bonds and certificates of deposit that are classified as follows:- Held for trading- Available for sale- Loans and receivables

TradingBondsAccrued Interest

Available for SaleBondsLess: provision for ImpairmentAccrued Interest

Held To MaturityBondsAccrued Interest

Loans & ReceivablesCertificates of DepositAccrued Interest

Total

Distribution of Bonds and Financial Instruments with Fixed Income


44.25543.7390.516

578.563573.164

05.399

000

150.077145.3864.691

772.895

000

92.53891.450

01.088

000

163.582159.7553.826

256.120

At December 31, 2007(in USD Millions)

38


5.4 Banks and Financial Institutions

The bank’s deposits at banks and financial institutions decreased by 2.82% in 2007 to USD4.999 billion as compared to USD 5.144 billion 2006. This small decrease resulted from theBank’s investments in fixed income instruments. Nonetheless, those deposits continued torepresent the largest shares of the Bank’s assets, accounting for 30.07% of the total in 2007 ascompared to 36.17% in 2006.

Time deposits constituted 95.65% of total deposits with banks and financial institutions in 2007,slightly down from 96.12% in 2006. Like for previous years, more than 99% of the current andtime deposits are denominated in foreign currencies.

5.5 Loans and Advances to Customers

The Bank is following a conservative loan strategy in order to maintain a high asset quality.This strategy has been reflected by a ratio of net loans and advances to total deposits whichhas been successfully maintained at low levels, standing at 20.2% in 2007. Outstanding loansreached USD 2,772 million at the end of 2007, increasing 39.46% from last year driven by growthin regional loans. In comparison, local loans grew by 11.7% in 2007.

BLOM BANK’s market share in terms of total loans and advances reached 11.6% in 2007, upfrom 9.28% in 2006.

3,000

2,500

2,000

1,500

1,000

500

0

Evolution of Total Loans and Advances (In USD Millions)

1,1641,352 1,670

2,772

996

2002 2003 2004 2005 2007

1,988

2006

39

The Credit risk classification of the Bank’s Loans portfolio is as follows :

The above loan classification is in accordance to the Central Bank of Lebanon’s (Banque DuLiban’s) classification under decree N0 7159 dated November, 10th, 1998 and the decreerelated to bad debt classification dated December 2001. Below is a briefing about the basis ofloan classification defining each category’s characteristics.

- Regular Accounts

A- Unconditional: Covers accounts which display regular movements sufficient to repay theloan in accordance with the repayment schedule. The latest financial statements should beavailable and adequate collateral should be taken to cover the loan.

B- Incomplete file: as in point (A), adequate collateral and repayment on schedule are foreseen.However, the file is considered incomplete because the client is late in submitting his financialstatements.

- Special Attention Accounts

Display signs of irregular movements or exceed the credit limit on a continuous basis. Recentfinancial statements are unavailable and adverse economic conditions may affect the borrower’sability to repay the debt. Collateral has not been evaluated for the last 3 years. Such anaccount may be considered recoverable.

However, it should be closely monitored for a year, at the end of which the account is reclassified if thepreviouslymentioned conditions are not regularized.

5. USES OF FUNDS

Regular AccountsSpecial Attention AccountsNet Non-Performing AccountsNet Doubtful AccountsNet Provisions for Commercial Loans not ClassifiedBad Debt AccountsTotal

Credit Risk Classification of Total Net Loan Portfolio

2006

2,691.2546.1214.6246.56(26.55)0.00

2,772

1,894.9459.9728.5040.16(35.71)0.00

1,987.66

2007(in USD Millions)

40

- Non-performing Accounts

Covers loans which display most or all of the following:- a significant drop in the client’s profitability- a drop in the flow of cash into the account for a period exceeding 2 years, and thus resulting inrepetitive delays in repayment exceeding a period of 3 months.- a noticeable depreciation in the value of the collateral provided and repetitive delays inrepayment for a period not exceeding three months.- credit facilities are not used – partially or in whole – for the purpose specified in the loanagreement.

The credit risk committee will review the repayment schedule with the client and will keep theaccount under close observation. However, interest and commissions will be classified asunrealized until the account is regularized.

- Doubtful Accounts

Represents loans which display all of the conditions of a non-performing account in additionto having a complete lack of credit movement into the account for a period of 6 months and adelay in payments of the rescheduled loan which exceeds 3 months from the date of maturity.The Bank will make a partial provision for the loan and consider interest and commission asunrealized.

- Bad Debt Accounts

Includes all “Doubtful Accounts” which are considered unrecoverable due to the lack of acollateral or the loss of contact with the client. In this case, interest ceases to be accrued anda provision of 100% of the principal amount of the loan is made. The account is under litigationuntil a ruling by the court is made, after which it is written-off.

The improving quality of the loan portfolio was further highlighted by a decrease in the Bank’s ratioof gross doubtful debts to gross total loans to 7.92% in 2007 from 10.25% in 2006. The coverage ofdoubtful accounts dropped to 91.57% in 2007 from 98.04% in 2006

Provisions and unrealized interest for doubtful debts and non-performing accounts decreasedby USD 5.304 million to reach USD 226.984 million at the end of 2007. The amount includesprovisions for commercial loans not classified at the end of 2007 after deducting the amountof USD 9 million of provisions for doubtful loans no more required and transferring provisionswritten-off amounting to USD 34.56 million.


41

5. USES OF FUNDS

The ratio of foreign currency loans with respect to total loans went up to 92.12% in 2007 from91.72% in 2006 while the ratio of foreign currency loans to foreign currency deposits increasedto 22.11% in 2007, up from 18.86% in 2006.

The breakdown of the loan portfolio by maturities shows that medium and long term loans withmaturities exceeding one year constituted 28.5% of the bank’s outstanding net commercialloans in 2007 as compared to 17.57% in 2006, whereas short term loans, with maturities of lessthan one year, constituted 71.5% of the total net commercial loans, compared to 82.43% in2006.

As for the breakdown of the loan portfolio by economic sectors, it appears that the highestshare of loans was granted to trade and services activities, followed by construction andmanufacturing. Loans to the agriculture sector witnessed a slight increase to 0.71% of thetotal loan portfolio in 2007 from 0.60% in 2006. Loans granted to the manufacturing sectordropped to 10.42% in 2007 down from 13.01% in 2006 while trade loans decreased also from30.37% in 2006 to 24.22% in 2007 with 7.41% of the portfolio granted to retail trade and 16.81%to wholesale trade. Loan portfolio to the services sector slightly improved to 20.69% in 2007,up from 20.21% a year earlier. The construction sector witnessed a strong boom in 2007, drivenmainly by the post-war reconstruction projects, and accounted for 16.73% of the loan portfolio forthe year 2007, up from 7.19% in 2006. Loans given to freelance professions dropped further to8.08% in 2007 from 12.65% in 2006. Finally, consumer loans recorded a significant increase to19.15% in 2007, up from 15.99% in 2006.

� Agriculture and Forestry

Manufacturing

� Trade

� Services

� Construction

� Freelance Professions

� Consumer Loans

2006

20.21%

15.99%

0.60%

13.01%

20.69%

0.71%

10.42%

16.73%

2007

30.37%

12.65%

24.22%

19.15%

7.19%

8.08%

Distribution of Loans by Economic Sector

42

The analysis of the loan portfolio by type of collateral reveals that the commercial loanssecured by mortgages accounted for the largest share of the 2007 portfolio, despite a smalldrop from 29.30% in 2006 to 28.07% in 2007. Similarly, advances against personal guaranteesdecreased, representing 11.96% of the total loans portfolio in 2007, down from 16.60% in 2006.Advances against cash collateral dropped also to 17.09% in 2007 from 19.78% in 2006. On theother hand, the share of LC financing went up to 2.86% in 2007, up from 1.62% in 2006 andsyndicated loans stood at 0.27% in 2007, up from nil a year earlier. Retail loans recorded animportant increase in 2007, with its share in the total loan portfolio going up to 19.15% in 2007from 15.99% in 2006. Loans to members of staff increased to 0.20% from 0.13% while loans todirectors and related parties accounted for 2.44%, up from 0.04%. Overdraft also increased in2007, representing 17.96% of the total loans portfolio in 2007 from 16.36% in 2006.

� Advanced Against PersonalGuaranties

� LC Financing

� Syndicated Loans

� Advanced Against CashCollateral

� Retail Loans

� Loans to Member of Saff

Loans to Directors

� Overdraft

� Commercial LoansSecured by Mortages

2006

1.62%

15.99%

0.04%16.36%

2.86%

0.20%

17.96%

17.09%

2007

29.30%

0.00%

28.07%

19.15%

19.78%

0.27%

Distribution of Loans by Type of Collateral

0.13%

16.60%

2.44%


43

11.96%

6. LIQUIDITY7. PROFITABILITY

6. LIQUIDITY

BLOM BANK’s ability to maintain high liquidity levels, minimizing risks and ensuring highquality of assets, has been at the centre of liquidity management and core objectives of theGroup. The Bank has successfully maintained ample liquidity in 2007, despite a light drop inits ratio. As such, the Lebanese Pound liquidity ratio (including Lebanese governmentTreasury Bills) stood at 105.93% in 2007 compared to 109.80% in 2006, reflecting high liquiditylevels. Moreover, the immediate liquidity (cash & banks) in foreign currencies accounted for63.24% of foreign currency deposits in 2007 compared to 78.26% in 2006, a small drop mainlydue to the Bank’s regional expansion activities.

Maturity mismatch between assets and liabilities, which characterises the Lebanese bankingsector, was also noticeable in BLOM BANK accounts. In 2007, the gap was negative in thematurities from zero to one month and from 1 to 3 months, amounting to USD 4,530 million andUSD 1,872 million respectively. Afterwards, the maturity gaps turned back positive, reaching amaximum of USD 3,639 for maturities of 2 to 5 years.

Asset-Liabilities Maturity Gap

Total AssetsTotal Liabilities& Shareholder’s Equities2007 Liquidity Gap2007 Cumulative Maturity Gap

From1 to 3

Months

From3 to 6

Months

Up to1 Month

From6 Monthsto 1 Year

From2 to 5Years

Over5 Years

From1 to 2Years

Total(In USD Millions)

6,86111,391

(4,530)(4,530)

1,0152,887

(1,872)(6,402)

833517

316(6,086)

705266

439(5,647)

1,77642

1,734(3,913)

3,68748

3,639(274)

1,7511,477

2740

16,62816,628

00

46

7. PROFITABILITY

BLOM BANK was ranked first by net profits in Lebanon in 2007. In fact, the Bank recorded netprofits of USD 204.7 million for the year 2007, increasing 13.53% compared to the year 2006where net profits reached USD 180.3 million.

Return-on-average equity stood at 15.65% in 2007, down from 16.81% a year earlier.

Return-on-average assets for the year 2007 amounted at 1.33%, slightly less than 1.38% in 2006due to the larger growth in assets of 17% compared to a 13.53% rise in net profits.

Earning per share increased from USD 7.28 in 2006 to USD 8.22 in 2007.

250.00

200.00

150.00

100.00

50.00

0.00

Evolution of Net Income (In USD Millions)

88.30 91.15

136.85

204.7

83.60

2002 2003 2004 2005 2007

180.30

2006


47

7. PROFITABILITY

7.1 Net Interest Income

Net interest income registered a 12% increase in 2007 to USD 302.56 million. The growthcame as a result of a 17.9% increase in interest and similar income to USD 988.89 million in2007, despite a 20.6% increase in interest charges in 2007 to reach USD 686.326 million.

On the other hand, net interest revenue after provisions and doubtful loans, went up by15.03% to reach USD 310.148 million in 2007 as compared to USD 269.620 million in 2006.

The growth of net interest income will be further elaborated through the breakdown of netinterest income into interest and similar income, interests and similar charges, interest margin aswell as net provisions for doubtful loans.

7.1.1 Interest and Similar Income

Interest and similar income witnessed a 17.9% increase in 2007, after a hike of 35.67% in 2006.

Average interest earning assets increased by 16.1% to reach USD 13,359 million in 2007 fromUSD 11,507 million in 2006.

The below table illustrates the breakdown of average earning assets by currency at the endof 2007:

Breakdown of Average Interest Earning Assets at the End of 2007

Lebanese Treasury Bills and Other Governmental BillsDeposits with Banks and Central BanksBonds and Other Financial Instruments with FixedIncome Including Certificates of DepositLoans and AdvancesTotal

ForeignCurrencies

TotalLBP(In USD Millions)

1,367115585

1902,257

1,2485,7231,996

2,13511,102

2,6155,8382,581

2,32513,359

48

In 2007, the weights of interest and similar income components remained very similar to thoseof the year 2006. Lebanese and other government bills accounted for 19.57% of total averageinterest earning assets in 2007, decreasing modestly from 21.13% in 2006. The averagedeposits with banks and central banks stood at 43.70% of the total in 2007, up from 42.25% in2006. The share of bonds and other financial instruments with fixed income, including certificatesof deposits, accounted for 19.32%, down from 20.57% a year earlier while the weight of loans andadvances increased to 17.40% in 2007, compared to 16.04% in 2006.

The breakdown of Interest and Similar Income is detailed in the following table:

The breakdown of interest and similar income reveals a decrease in the share of LebaneseTreasury Bills and other government bills to 23.30% in 2007 compared to 25.52% in 2006. On theother hand, the portion of income generated from deposits with banks and central banksincreased to 32.79%, up from 29.69%; while the contribution of bonds and other financialinstruments with fixed income (including certificates of deposit) stood at 23.36% in 2007, downfrom 25.67% a year earlier. Finally, interest income generated from loans and advances includingrelated parties represented 20.55% of the total in 2007, increasing from 19.12% in 2006.

Lebanese Treasury Billsand Other Governmental BillsDeposits with Banks and Central BanksBonds and Other Financial Instrumentswith Fixed Income Including Certificates of DepositLoans and Advances Including Related PartiesTotal

Breakdown of Interest and Similar Income

% of Total Amount

230.407

324.262231.026

203.193988.888

23.30%

32.79%23.36%

20.55%100.00%

Amount % of Total

End of 2006End of 2007(In USD Millions)

214.092

249.140215.388

160.401839.021

25.52%

29.69%25.67%

19.12%100.00%


49

7. PROFITABILITY

� Deposits with Banksand Central Banks

� Bonds and Other FinancialInstruments with FixedIncome IncludingCertificates of Deposit

� Loans and Advances

� Lebanese Treasury Billsand Other GovernmentalBonds

2006

19.12%

32.79%

20.55%

2007

25.52%

25.67%

23.30%

26.69% 23.36%

Breakdown of Interest and Similar Income

7.1.2 Interest and Similar Charges

Interest and similar charges increased 20.6% to USD 686 million in 2007 up from USD 569million in 2006, while average interest bearing liabilities went up by 16.9% to USD 12,870million compared to USD 11,011 million a year earlier.

Deposits from customers including related parties accounted for the largest share of theaverage interest bearing liabilities, amounting to 97.40% in 2007 while deposits from banksand financial institutions represented the remaining 2.59%.

Average Interest Bearing Liabilities at the End of 2007

Deposits and Similar Accounts from Banks and Financial InstitutionsDeposits from Customers Including Related PartiesTotal

ForeignCurrencies

TotalLBP(In USD Millions)

32,1682,171

33110,36810,669

33412,53612,870

50

The breakdown of the interest and similar charges shows a modest increase in the portion ofdeposits and similar accounts from banks and financial institutions to 1.85% in 2007, up from1.56% in 2006 while the share of interest paid on customers’ deposits slightly retreated to98.15% in 2007 compared to 98.44% in 2006. Finally, charges from notes and fixed incomefinancial instruments remained nil for the second year on a row.

Breakdown of Interest and Similar Charges

Deposits & Similar Accountsfrom Banks & Financial InstitutionsNotes & Financial Instrumentswith Fixed IncomeDeposits from CustomersIncluding Related PartiesTotal

(In USD Millions)

% of Total Amount

12.678

0

673.648

686.326

1.85%

0.00%

98.15%

100.00%

Amount % of Total

End of 2006End of 2007

8.851

0

560.017

568.868

1.56%

0.00%

98.44%

100.00%

� Deposits from CustomersIncluding Related Parties

� Deposits and SimilarAccounts from Banks& Financial Institutions

� Notes and FinancialInstruments withFixed Income

2006

98.44%

1.56% 1.85%

2007

0.00%

98.15%

Distribution of Loans by Type of Collateral

0.00%


51

7. PROFITABILITY

7.1.3 Interest Margin (Before Provisions For Doubtful Loans)

The Bank’s Net Interest Income before provisions for doubtful loans rose by 11.4% in 2007 toUSD 302.56 million, while the net interest margin before provisions on doubtful loans stood at2.03% in 2007, down from 2.13% in 2006.

The ratio of interest charges to interest income increased to 69.4% up from 67.8% in 2006 dueto a larger increase in interest charges as compared to interest income.

250

200

150

100

5

0

Net Interest Income (Before Provisions) (In USD Millions)

153 157181

148

2002 2003 2004 2005 20072006

300

350

271303

2.50%

2.00%

1.50%

1.00%

0.50%

0.00%

Net Interest Margin (in percent)

2.13%1.75%

1.77%

2.34%

2002 2003 2004 2005 20072006

2.03%2.13%

52

7.1.4 Net Provisions for Doubtful Loans

The net provisions for doubtful loans increased from USD 0.536 million in 2006 to a positive balanceof USD 7.585 million in 2007.

71.0%

70.0%

69.0%

68.0%

67.0%

66.0%

Net Interest Margin (in percent)

70.91%71.25%

70.66%70.40%

2002 2003 2004 2005 20072006

69.40%

67.81%

72.0%


53

7. PROFITABILITY

7.2 Non-Interest Income

Non-interest income increased by 21.6% year-on-year, amounting at USD 92.35 million in 2007compared to USD 75.960 million in 2006.

Net commissions maintained the largest share of the total non-interest income, accounting for69.30%, decreasing slightly from 72.23% in 2006. Net income from financial operations represented28.49% of total non-interest income in 2007, registering a rise of 48% compared to 2006 due to theactive private banking and asset management operations. Other net income accounted for 2.21%of the total, decreasing 38.59% year-on-year.

Net commissionNet income fromfinancial operationsOther income

Total

Breakdown of Non-Interest Income

% of Total Amount

63.99826.313

2.04092.351

69.3028.49

2.21100.00

72.2323.40

4.37100.00

Amount % of Totalx

20062007 % Change

� Net Commissions

� Net Income From FinancialOperations

� Other Income

2006

72.23%

23.40%

4.37%

69.30%

28.49%

2.21%

2007

54.86117.775

3.32275.958

16.6548.03

(38.59)21.6

Constituents of Non-Interest Income

(In USD Millions)

54

7.3 Staff and Operating Expenses

Staff and operating expenses reached USD 139.6 million in 2007, registering a 14.85% increaseyear-on-year.

Staff (salaries and related benefits) increased by 14.89% in 2007 to USD 85.66 million whileoperating expenses went up by 14.79% to reach USD 53.94 million. Staff expenses accountedfor the largest share of staff and operating expenses with 61.36% of the total while operatingexpenses stood at 38.64% of the total.

BLOM BANK is successfully maintaining a low cost-to-income ratio, reflecting the Bank’scost-containment policy. In fact, cost-to-income ratio dropped further to 34.63% in 2007compared to 35.31% in 2006.

Staff ExpensesOperating ExpensesTotal

Distribution of Staff and Operating Expenses

% of Total Amount

85.6653.94

139.60

61.3638.64

100.00

74.5646.99

121.55

61.3438.66

100.00

Amount % of Totalx

20062007

14.8914.7914.85

% Change

35%

30%

25%

40%

45%

50%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

55%

Cost to Income Ratio

47.34%

42.56%

38.37%36.80%

38.09% 38.58%39.77%

40.93%

34.11% 35.10%

(In USD Millions)

2007

34.63%


55

8. DIVIDEND DISTRIBUTION &PREFERRED SHARES REVENUES

9. CAPITAL ADEQUACY RATIOS

10. INTEREST RATE RISK

11. RISK MANAGEMENT & BASEL II PREPARATIONS

8. DIVIDEND DISTRIBUTION &PREFERRED SHARES REVENUES

During BLOM BANK’s Annual General Assembly, on April 9th, 2008, the distribution of dividendsfor the year 2007 was approved. Preferred shares, issue 2002, will yield USD 15, while the preferredshares, issue 2004, will pay USD 8.5 and their corresponding 2005 issue will give USD 9.5. As forthe common stocks and Global Depositary Receipts (GDR), each will pay a dividend of LBP 5,500per share.

9. CAPITAL ADEQUACY RATIOS

The Bank’s capital adequacy ratio reached 31.53% (before dividend distribution) at the end of2007, a ratio which is almost four times the international ratio of 8% required by the BaselCommission. For Tier I capital alone, the capital adequacy ratio stood at 31.07% at the end of2007. After dividend distribution, the capital adequacy ratio reached 29.05% for Tier I &Tier IIand 28.60% for Tier I alone.

25.00%

20.00%

15.00%

30.00%

35.00%

35.00%

2002 2003 2004 2005 2006 2007

40.00%

Capital Adequacy Ratios (After Dividend Distribution )

29.88% 29.76%28.22%

33.23%

36.10%

29.05%

26.06% 28.02% 27.34%

30.71%

35.33%

28.60%

Tier I Capital Tier I + Tier II Capital

58

10. INTEREST RATE RISK

Interest rate risk arises from adverse movements in interest rates, affecting the interest earningassets and liabilities of the bank. Interest rate risk is well managed through the continuousre-pricing of assets and liabilities. Most assets and liabilities are repriced within one year. Withthe major parts of the Bank’s deposits re-priced within the 3 months interval, interest rate riskcontinues to be concentrated within this period, while the biggest part of Bank’s treasury billsand governmental bonds portfolio being re-priced after the 3 months period.

The bank’s interest rate sensitivity position based on contractual re-pricing arrangements asof December 31,2007 is as follows:

11. RISK MANAGEMENT & BASEL II PREPARATIONS

BLOM BANK’s responsibility for establishment of effective risk management practices andculture lies with the Board of Directors as does the setting up of the bank’s risk appetite andtolerance levels. The Board of Directors delegates through its Risk Management Committeethe day-to-day responsibility for establishing and monitoring of risk management processesacross the bank’s group to the Head of Risk Management, who is directly appointed by theBoard of Directors and works closely with the bank’s Executive Senior Management in Beirut.

Total AssetsTotal Liabilitiesand Shareholder’s EquiltyInterest Rate SensitivityGap for 2007Cumulative Interest RateSensitive Gap

Interest-Rate Sensitivity Position at the end of 2007

5,64110,647

(5,006)

(5,006)

8782,634

(1,756)

(6,762)

(In USD Millions)From1 to 3

Months

From3 to 6

Months

Up to1 Month

From6 Monthsto 1 Year

From2 to 5Years

Over5 Years

From1 to 2Years

Non-sensitive tointerest rate risk

753488

265

(6,497)

656184

472

(6,025)

1,77431

1,743

(4,282)

3,77848

3,730

(552)

1,46038

1,422

870

1,6892,559

(870)

0


59

11. RISK MANAGEMENT & BASEL II PREPARATIONS12. UNIVERSAL BANKING SERVICES

In addition to the Group’s Risk Management in Beirut, risk managers and/or risk officers wereassigned within the Group’s foreign subsidiaries or branches to report to the department andExecutive Senior Management in a manner that ensures:- Standardization of risk management functions and systems across the Group.- Regional consistency of conducted business in line with the Board’s approved riskappetite.

As regards to Basel II capital adequacy ratio calculations, the Risk ManagementDepartment started, since December 2004’s consolidated balances, to issue internalreports to Executive Management and the Board revealing multiple scenarios of capitalcharges’ calculations for credit and market risks under the Standardized approaches andfor operational risk under the Basic Indicator approach. In addition, the bank has submitted to theLebanese Banking Control Commission two Quantitative Impact Studies for the Basel 2capital adequacy calculations for June and December 2007 balances, and is maintaining aratio well above the minimum international requirement of 8%.

In December 2006, the bank acquired, through an enterprise-wide license, the Moody’s KMVRisk Advisor, a state-of-the-art credit analysis and rating system for corporate and commercialborrowers, in order to aid the bank in moving at a later stage to internal ratings-basedmeasurements under Basel II. The credit risk team is responsible for the implementation andadministration of the Moody’s Risk Advisor system along with the generation of internal ratingsfor all analyzed credit files.

In terms of market risk, the department is responsible for generating internal reportsquantifying the Bank’s liquidity risk and earnings at risk due to extreme movements ininterest rates, while daily monitoring the sensitivity of the bank’s trading portfolio of fixedincome securities to changes in market prices and/or market parameters. All abovementionedreports as well as interest rate sensitivity and liquidity gaps are reported to Executive SeniorManagement and to regulatory authorities on a monthly basis. This is done in line with thebank’s Asset & Liability Management (ALM) policy which assigns authority for its formulation,revision and administration to the Asset/Liability Management Committee (ALCO) of BLOMBANK s.a.l. The market risk team is responsible for monitoring compliance with all limitsset in the ALM Policy and is also in the process of implementing the newly acquired(October 2007) Asset & Liability Management system “Focus ALM” by Sungard, whichprovides for ALM analysis from both static and dynamic perspectives including stresstesting and extensive scenario analysis.

60


As for operational risk, the department conducted a series of operational risk assessments onhead office departments and functions and on local and foreign branches, resulting in aset of amendments on operational procedures and system processes. In addition, a lossincident reporting system has been introduced to record losses across the bank’s operatingactivities, as the bank builds up an operational risk database in line with regulatory andBasel 2 directives. The operational risk team is responsible for continuously introducingmodifications on the bank’s core banking application in relation to specificbranchoperationsand control measures. At the same time, Risk Management has broken down the bank’sinternal accounts according to Basel 2 designated business lines with losses apportionedaccordingly and in preparation for later moving on to the more advanced approaches ofoperational risk measurements.

11.1 Corporate Governance

The Board of Directors of BLOM BANK sal approved a Corporate Governance Code at theend of 2007. The Code applies to BLOM BANK sal and its Lebanese subsidiaries and affiliates.It complies not only with Lebanese laws and regulations, but also with the BaselCommittee directives on Corporate Governance for Banks.The Code covers shareholders rights and key ownership functions as well as their constitution. It alsoclarifies theBoard’sstructureandcomposition, its role,dutiesand functions. Issues related to Boardmeetings, practices and committees are discussed as well as those related to managementcommittees and the internal control system. The Code highlights the importance of stakeholdersrelations with the Bank’s own human resources as well as with customers and suppliers, andalso the prominence of banking ethics in the conduct of business.The Code is designed to enforce transparency and clarity of reporting lines in guiding theBank’s operations, policies and strategies, and in helping deliver the highest quality ofservice to the Bank’s clients and value to its shareholders.

12. UNIVERSAL BANKING SERVICES

In line with its policy of maximizing customers’ satisfaction and increasing shareholders’value, BLOM BANK has sustained the diversification of its products and services. BL0MBANK GROUP provides the following universal banking services that suit all customersneeds:- Commercial corporate banking- Private and investment banking- Retail banking- Islamic banking- Insurance products & services

61

12. UNIVERSAL BANKING SERVICES

12.1 Commercial and Corporate Banking

BLOM BANK continues to apply a conservative lending policy. Throughout 2007, the bankexpanded its credit portfolio to corporate and commercial customers especially in projectsfinance and real estate developments. In addition, the bank has financed several hotelprojects in Beirut Central District (BCD) and other promising touristic areas. BLOM BANK hasalso catered for the commercial sector, in particular trade and working capital financing.Furthermore, the bank’s policy is to expand even further in regional countries to satisfy theneeds of the Lebanese and Arab expatriates in those countries.With the collaboration of IFC, BLOM has extended unique soft loans to customers affected bythe July 2006 war with the objective of helping them overcome the consequences of thiswar and enabling them to recover their prewar financial status.

12.2 Private and investment banking

BLOM BANK provides private banking services such investment consulting and portfoliomanagement through both its investment-banking arm BLOMINVEST Bank Sal and itsGeneva-based affiliate BLOM Bank Switzerland. Some of these services are listed below:- Investment Products: includes a variety of investment funds and structural productsfocusing on Lebanese and foreign instruments. The first, BLOM Cedars Balanced Fund,launched in early 2008 and is considered the first investment vehicle of its kind in Lebanonfor its equity and fixed-income investments.- Project Finance : consists of extending medium and long term financing and in participatingin bank loan syndications.- Treasury & Capital Market Services: includes brokering on the Beirut Stock Exchange(BSE), advising on trades in international equities, trading in debt securities and dealingin the foreign exchange markets.- Investment Banking: participates in the underwriting and distribution of Lebanese andother debt instruments and provides advices on mergers and acquisitions and privatisa-tion.- Asset & Portfolio Management: covers management of portfolios of shares, bonds andterm placements in all currencies.- Research Department : produces weekly and quarterly reports on the Lebanese economy,and analyzes leading Lebanese economic sectors. In addition, it provides country reportson regional economies, especially those where BLOM Bank has a presence. It publishesas well the BLOM Stock Index (BSI), Lebanon’s first financial market index that covers allstocks quoted on the BSE, and conducts equity research on major Lebanese and regionalcompanies.

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12.3 Retail Banking

As of December 31, 2007, BLOM BANK offered more than 110 retail products, classified indifferent families:

- Payment cards: BLOM BANK offers a wide range of payment cards that target differentcustomers, provide different methods of payments and meet different purposes. As such,BLOM Visa comes in Classic, Gold and Corporate; also the Bank offers Internet cards dedicated forInternet users, Platinum and Platinum Black cards as well as Mini cards. In addition, the Bank hasbeen the pioneer in launching the first Titanium MasterCard in Lebanon. In 2007, BLOMintroduced the Alfa BLOM Mastercard, a first of its kind in Lebanon and the Middle East,offering to its holders free minutes on the Alfa Active and Alfa Classic lines. Also in 2007,a new card “Watan” was launched for the Lebanese army, internal security and nationalsecurity forces.

- Rewards programs: BLOM Golden Points Loyalty program enables customers to win avariety of gifts -such as airline tickets, free stays at the finest hotels, electronics and muchmore- by accumulating Golden points with every $100 purchases using the card. In addition tothis, BLOM Gifts Loyalty program allows cardholder to win valuable gifts for purchases atcertain merchants over a period of 6 months.

- Consumer loans: BLOM BANK customers can take advantage of a number of consumerloans on offer such as KARDI for personal loans, SAYARATI for car loans, DARATI orHousing CPH for house loans and PC loans.

- Saving plans: BLOM BANK offers DAMANATI, a retirement saving plan denominated inUS Dollar coupled with life insurance. Moreover, WALADI a savings program dedicated tochild’s education, coupled with life insurance is also offered to the Bank’s customers.

- E-banking: BLOM BANK offers to its customers phone banking services such as “AllôBLOM” ( a 24-hour customer service) as well as internet banking services such as e-BLOM.In addition, the Bank provides free of charge SMS ALERT services, enabling customers tobe alerted whenever the balance of accounts changes or whenever a transaction is beingperformed.

63

12. UNIVERSAL BANKING SERVICES13. INFORMATION SYSTEM & TECHNOLOGY

12.4 Islamic banking

Blom Development Bank (BDB), a full fledged Islamic bank , was established in February2006 and started operation in march 2007. BDB carries out all its banking and investmenttransactions in compliance with provision of the Islamic Shari’a and pursuant to theinstructions and regulations issued by Banque Du Liban and the direction of its Shari’aBoard consisting of the three prominent shari’a scholars.BDB business covers all spectrum of banking services including , acceptance of depositsprovision of various Islamic financing solutions in the form of Murabaha, Ijara , Tawaruk ,Forward lease , Wakala and istisna’a.Since its inception, BDB established relationships with major Islamic Banks andInvestment Companies operating in the region and played a major role in developing productswhich suits the requirements of its clientele; On the Retail side “Al Yassir” Restricted InvestmentAccount was introduced aiming at providing depositors with monthly profit distribution resultingfrom Sharia compliant short-term investments concluded with rated Islamic institutions.Furthermore, “Mowasalati”, car Murabaha finance as well as “Manzili” home Murabahafinance, were initiated aiming at providing Islamic wary customers with Islamic solutions tofinance their acquisitions of cars and homes based on Murabaha structure which could belater adjusted to suit an Ijara structure as per customers’ requirements.On the international financing front, BDB participated with other regional Islamic Banksin raising funds in favor of major corporations operating in the Gulf and played a major rolein the issuance of two Islamic Sukuk transactions, namely: the Wakala Sukuk to” BerberCement co “ and the Ijara Sukuk to “Dar Al Arkan”

On the collective investment front , BDB is currently exploring lot of investment opportunitiesin several asset classes and is in the process of developing products carrying acceptablereturns compared to the risks involved and shall, during the course of next year’s launch suchproducts to savvy investors.

12.5 Insurance Products & Services

Life and non-life insurance products and services are offered through our subsidaryArope Insurance in Lebanon. Our second insurance subsidary, Arope Syria, provides aswell insurance services in Syria.

13. INFORMATION SYSTEMS & TECHNOLOGY

In today’s technology-driven world, it is a well-known fact that “if you are standing still, youare falling behind”. That is the reason why we are constantly seeking to grow and evolve our

64


business by proactively using powerful information technologies.

Thus, we have been putting Information Technology, Finance and Relationship Managementin partnership using leading-edge technology deployments in order to enhance customers’experiences, enrich products and services portfolio, achieve Enterprise ApplicationIntegration (EAI), streamline business processes by transforming them into STP (StraightThrough Processing) mode, address national and international compliance and regulatoryrequirements (such as Basel II and others…) and improve systems availability and reliability.

13.1 Customer Relationship Management

During this year, we kept on developing our eBlom suite, which encompasses advancedelectronic customer relationship management (eCRM) services. Through the eBlom initia-tive, we have been interacting with our customers however, wherever and whenever theydesire.

Our eBlom suite of integrated electronic banking delivery channels consists of:

- eBlom – ALLO BLOM – the Bank’s Interactive Voice Response System

- eBlom – Internet Banking – our online banking service that offers a wide array of serv-ices in a high level of trust and security enabled by a public key infrastructure (PKI) anddigital certificates as a second factor for authentication.

- eBlom – SMS Alerts – a real-time alerting system based on delivering messages to ourcustomers’ mobile phones to inform them, instantly, about events in relation with theiraccounts or cards.

- eBlom – Contact Center – our contact center is available 24 hours a day all year long andis benefiting from continuous enhancements based on CTI and IP telephony to achieveseamless integration with the Bank’s CRM application.

- eBlom – Self Service – using the bank Network of ATMs deployed all over Lebanon andwhere additional services are being constantly planned and added.

- eBlom –Live Information Broadcasting System – a system that enables the bank tobroadcast in real-time over large LCD screens deployed at the branches live and updatesinformation covering stock quotes, foreign exchange quotes, news feeds ect...

65

13. INFORMATION SYSTEM & TECHNOLOGY14. PEOPLE DEVELOPMENT

13.2 Targeted Marketing Systems

In addition, we identified the need to provide customer-facing employees with a powerfultool that would allow them to present new products and services to customers duringtheir presence at the branch. Consequently, we introduced “T.I.P.S.” which stands forTargeted Information Processing System and which includes a teller lead referral systemcoupled with a back-office marketing management system. The aim of this tool is to increaseour marketing campaigns efficiency by improving the hit rate of marketing campaigns byoffering customers new products and services that are tailored to their needs. In addition, thissystem has the ability to send instant SMS messages containing information pertaining to ourmarketing campaigns while the customer is visiting his/her branch.

13.3 Enterprise Application Integration (EAI)

Moreover, as a financial institution that has been around for over 55 years, we have in placewell defined business processes and rules that allow us to deliver banking products andservices to our customers and to manage our internal operations. However, we identified theneed to re-organize these business processes in order to achieve a higher degree of automation.To this end, we decided to adopt the Service Oriented Architecture (SOA) framework toachieve the highest degree of integration between our different applications through the useof web-services and of a powerful and flexible workflow engine thus achieving straight-throughprocessing (STP) throughout our different systems.

This EAI framework was applied to many processes, in particular, our consumer loan processingsystem consisting of a loan origination system, a loan assessment system, and a loan grantingsystem. This high degree of automation has allowed us to drastically reduce the time toprocess a car loan from origination to final approval and to increase the volume of our car loanactivity, and consequently sustain our uncontestable leadership position in the car loan market.The success of the EAI framework implementation has led us to plan the movement of manyof the bank’s business processes into this system during the coming year.

13.4 Advanced Electronic Payment Systems

On the other hand, and based on our recently deployed EFT SWITCHwe have completely in-sourcedour ATM driving, management and monitoring activities. In addition, we became an activeplayer in the POS market thus gaining more and more on POS market share.

On the cards issuing side, we continued to develop our Information Systems infrastructure inorder to keep adding more features to our existing cards products and loyalty programs, inaddition to introducing new types of payment cards including Visa prepaid cards with onlinerefill capability, Visa EURO Cards, Credit cards with grace period, BLOM MasterCard cards,

66


Co-branded cards; and we also started issuing EMV cards. In addition, we introduced anonline card fraud monitoring system capable of sending real-time alerts to the bank call centeragents, thus enabling for immediate action and insight as well as reporting and trackingshould a fraud pattern be detected. This card fraud monitoring system drastically reducedfraud losses and incidences.

13.5 Basel II Compliance

Regarding the Basel II rules and regulations, we have taken several measures in order tobe compliant with these regulations and, in particular, we have completed the implementationof a system from MOODYS for corporate and commercial credit risk rating, and we startedthe implementation of an Assets and Liabilities management and Funds Transfer Pricingsystem in partnership with SUNGARD.

13.6 Systems High Availability

Finally, it is worth noting that we have constantly in mind our information security andavailability, where we are looking very closely at ensuring the highest possible availability forour systems, raising employees’ awareness through the development of InformationSecurity Policies and Procedures and addressing security threats and systems failureincidents pro-actively through implementing advanced preventive and detective controlsand online monitoring systems and procedures

14. PEOPLE DEVELOPMENT

The Bank has proceeded with its policy of growth through development and training ofemployees by organizing intensive in-house and external training sessions as well as therecruitment of a young and skilled workforce. In 2007, the number of the Bank’s employeesreached 2,759 compared to 2,216 in 2006.

In 2007, BLOM BANK expanded further its range of services, launching the assetmanagement department, responsible for promoting structured products, besides developingother business lines such as investment banking and brokerage.

67

13. INFORMATION SYSTEM & TECHNOLOGY14. PEOPLE DEVELOPMENT

15. BANK’S OPERATIONAL EFFICIENCY

16. REGIONAL EXPANSION

Regarding training activities and development of human resources, BLOM BANK organizedand sponsored the participation of its employees in various seminars and workshops. TheBank has also in place special training programs such as:- Manager Training Program (MTP): a five-year program where the Manager Training Officer(MTO) gets exposed to the different departments and entities within the Bank before beingassigned to a managerial position- Fast Track Program (FTP): a five-year program which promotes a fast career path for theemployees.

In 2007, the Bank conducted 6,444 employees training sessions for a total of 45,785 hours. Trainingsessions involved employees from all BLOM and BLOMINVEST departments and covered varioustopics related to banking techniques, management, marketing, information technology as well aslanguage courses.

15. BANK’S OPERATIONAL EFFICIENCY

In 2007, the net profit by branch decreased by 7.55% to USD 1,898,148 while the net profit peremployee also dropped by 8.87% to USD 74,302 compared to USD 81,538 a year earlier.

16. REGIONAL EXPANSION

BLOM BANK pursued its aggressive expansion policy, inaugurating new branches within theLebanese territory and expanding further regionally.

On the local front, in 2007, BLOM BANK opened four additional branches in the areas of Tabaris(Beirut), Jbeil, Mina El Hosn as well as a retail branch in Hamra Street. The Bank is looking forwardto expanding further its local network and is planning to inaugurate new branches within the yearOn the regional front, two new branches have been inaugurated in Jordan during the year2007 while two others should be opened in the incoming year, rising the total number of BLOMBANK branches in Jordan to six.

Number of EmployeesNumber of BranchesUSD Net Profit per EmployeeUSD Average Assets per EmployeeUSD Average Assets per BranchUSD Net Profit per Branch

Bank’s Operational Efficiency Indicators

20062007

2,759108

74,3025,154,766

131,685,1851,898,148

2,21688

81,5386,416,773

161,586,0092,053,273

68


BSO (Bank of Syria and Overseas) is also expanding in Syria and opened, in 2007, a newbranch in Aleppo. BSO is focusing on developing its branches network within Syria in 2008 andthe Bank has set the robust objective to increase the number of its branches from 10 to 20 bythe end of the year 2008.

BLOM BANK EGYPT is also expanding its network in Egypt and the number of branches inoperation has increased from 9 branches in 2006 to 20 branches in 2007. On another note, thefive branches located in Romania and previously affiliated to BLOM BANK EGYPT, have beenconsolidated with BLOM BANK FRANCE in December 2007. In 2008, the Bank is looking forwardto bringing the number of its branches in Egypt to 30, in line with BLOM BANK group’s robustexpansion strategy.

On another note, BLOM BANK was awarded license to establish a representative office inAbu Dhabi by the end of 2007 while BLOMINVEST BANK received the approval to launch inJanuary 2008 an investment bank in Saudi Arabia named BLOMINVEST Saudi Arabia. In April2008, the Bank expanded further andwas granted a license to establish a commercial and privatebank in Qatar, financial center, BLOM BANK QATAR. In addition BLOM BANK FRANCE has appliedfor a bank license in Algeria.

All in all, in the incoming years, BLOM BANK is looking forward to penetrating new Arab marketsenhancing its market accessibility and developing further its international network.

69

CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF THE BLOM BANK SALCONSOLIDATED INCOME STATEMENT Year ended 31 December 2007

74

Interest and similar incomeLebanese and other governmental treasury bills and bonds – available for saleLebanese and other governmental treasury bills and bonds – tradingDeposits and similar accounts with banks and financial institutionsBonds and other financial assets with fixed income – non tradingBonds and other financial assets with fixed income – tradingBonds and other financial assets with fixed income – fair value through profit or lossLoans and advances to customersLoans and advances to related parties

Interest and similar chargesDeposits and similar accounts from banks and financial institutionsDeposits from customers and other credit balancesDeposits from related parties

Net interest received

Net provisions less recoveries on loans and advancesProvisions for loans and advancesRecovery of provisions for loans and advances

Revenues from shares and financial assets with variable income

Net commissionsCommissions receivedCommissions paid

Profit from financial operationsProfit from trading investmentsProfit from non-trading investmentsProfit from foreign exchange operations

Loss on financial operationsLoss on trading investmentsLoss on non-trading investmentsLoss on foreign exchange operations

Net profit from financial operations

Other operating income

Other operating expenses

General and administrative expensesSalaries and related benefitsGeneral operating expenses

Depreciation and amortization of tangible and intangible assets

Net provisions less recoveries on financial fixed assets

Provision for contingent liabilities

Profit before tax

Income tax

Profit for the year

Basic/ diluted earnings per share attributable to equity holders of the parent for the year (in LL)Attributable to:Equity holders of the parentMinority interest

The accompanying notes 1 to 56 form part of these consolidated financial statements.

NOTES 2007LL million

1,264,824319,4733,271

375,578323,6491,049

-241,703

101

(857,569)(13,342)(838,657)(5,570)

407,255

(808)(19,660)18,852

1,123

76,98981,804(4,815)

45,50510,38110,03725,087

(18,706)(3,796)(514)

(14,396)

26,799

22,394

(11,675)

(183,238)(112,399)(70,839)

(16,143)

395

(1,458)

321,633

(49,829)

271,804

10,969

269,6042,200

271,804

Restated 2006LL million

1,490,749341,6005,738

488,825347,724

303245

305,553761

(1,034,637)(19,112)

(1,010,636)(4,889)

456,112

11,435(20,026)31,461

969

89,38096,007(6,627)

49,3763,84318,46927,064

(9,708)(1,820)

-(7,888)

39,668

24,618

(14,446)

(210,450)(129,133)(81,317)

(18,350)

-

(13,350)

365,586

(57,000)

308,586

12,395

303,4725,114

308,586

4

5

67

67

8

9

1011

12

13

14

CONSOLIDATED INCOME STATEMENT Year ended 31 December 2007

75

CONSOLIDATED BALANCE SHEET At 31 December 2007

ASSETSCash and balances with the Central BanksLebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeShares, securities and financial assets with variable incomeBanks and financial institutions-Current accounts-Time depositsLoans and advances to customers (*) (**)-Commercial loans-Other loans to customers-Overdraft accounts-Net debtor accounts against creditor and cash collateral accounts-Advances to related parties-Doubtful debts (net)Bank acceptancesInvestments and loans to related partiesTangible fixed assetsIntangible fixed assetsOther assetsRegularization accounts and other debit accountsGoodwill

TOTAL ASSETS

* Of which substandard loans** After deduction of:Provision for doubtful debts and provision for commercial and

consumer loans not classified at the balance sheet dateUnrealized interest on:

-Substandard loans-Doubtful debts

OFF-BALANCE SHEET ITEMSFinancial assets sold with an option to repurchaseEngagements receivedBad loans fully provided forForeign currencies to deliver against foreign currencies to receive


6,246,4063,474,920

386,1008,403

7,754,284300,789

7,453,4952,996,6982,388,501521,2418,19010,8267,40060,540

173,2603,220

219,3722,845

33,71561,40863,980

21,424,611

34,456

264,15687,59313,89973,694

-5,467,773

43,9052,144,6177,656,295


6,330,0315,080,3231,165,140

11,7257,536,533327,558

7,208,9754,179,3073,228,892848,04311,93214,3085,94070,192

245,35727,208

272,6424,459

34,216119,48760,586

25,067,014

36,285

259,20982,96814,23868,730

143,6477,088,518

28,3122,939,186

10,199,663

1516171819

20

21222324252627

20

2020

422043

The consolidated financial statements were authorized for issue in accordance with a resolution of the board ofdirectors on 18 March 2008.


76

LIABILITIES AND EQUITYLIABILITIESBanks and financial institutions-Current accounts-Time depositsCustomers' deposits-Sight deposits-Time deposits-Saving accounts-Credit accounts and cash margins against debit accounts-Related parties’ accountsEngagements by acceptancesOther liabilitiesRegularization accounts and other credit accountsProvisions for risks and charges

TOTAL LIABILITIES

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF PARENTShare capitalRevaluation reservesReserve for general banking risksReserves and premiumsCumulative changes in fair valuesTreasury sharesRetained earningsProfit for the year

MINORITY INTEREST

TOTAL EQUITY

TOTAL LIABILITIES AND EQUITY

OFF-BALANCE SHEET ITEMSFinancing commitments given to:-Financial intermediaries-CustomersBank guarantees given to:-Financial intermediaries-CustomersCommitments on term financial instrumentsFinancial assets bought with an option to resellFiduciary deposits, assets under management and custody accountsForeign currencies to receive against foreign currencies to deliver


1,308,844159,362

1,149,48217,690,3811,897,7657,874,1967,180,465662,69675,259

173,260141,067129,86964,646

19,508,067

240,00014,72759,324

1,162,79021,430(52,108)121,606269,604

1,837,37379,171

1,916,544

21,424,611

307,18613,051294,135689,52896,098593,43017,659

-2,774,3602,146,7555,935,488


1,555,914186,913

1,369,00120,708,5162,341,5949,589,7497,862,422812,788101,963245,357194,460189,79280,566

22,974,605

240,00014,72769,503

1,221,80414,497(36,122)176,454303,472

2,004,33588,074

2,092,409

25,067,014

359,37421,043338,331786,996196,378590,61834,142

143,6473,959,1362,942,5498,225,844

28

29

21303132

332334353637

44

44

43

4643

The consolidated financial statements were authorized for issue in accordance with a resolution of the board ofdirectors on 18 March 2008.



77

CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2007

OPERATING ACTIVITIESProfit before taxAdjustments for:Depreciation and amortization of tangible and intangible fixed assetsProvision for impairment of assets taken in recovery of debtsWrite-back of provision for impairment of assets taken in recovery of debtsProvision for end of service indemnity, netProvision for complementary taxes and contingent liabilities related to a subsidiary bank, net(Write-back of provision) provision for risk and charges, netProvision for outstanding claims and IBNR reserves, net(Write-back of various provisions) provisions for risks and charges, net(Write-back of provision) provision for doubtful loans and advances, netProvision for impairment of investment in a non consolidated subsidiaryUnrealized loss on shares, securities and financial assets with variable income held for tradingProfit from sale of shares, securities and financial assets with variable income not held for tradingUnrealized profit on investments related to unit-linked contractsProfit from sale of certificates of deposit – Central BanksProfit from sale of Lebanese and other governmental treasury bills and bonds not held for tradingUnrealized profit from Lebanese and other governmental treasury bills and bonds held for trading(Profit) loss on disposal of tangible and intangible fixed assetsProvision for doubtful sundry debtorsOther equity transactionsForeign currency translation reserve realized upon sale of branches in Romania

Changes in operating assets and liabilities:Lebanese and other governmental treasury bills and bonds held for tradingShares, securities and financial assets with variable income held for tradingBonds and other financial assets with fixed income held for tradingLoans and advances to customersBanks and financial institutions-debitOther assetsRegularization accounts and other debit accountsBanks and financial institutions-creditCustomers' depositsOther liabilitiesRegularization accounts and other credit accounts

Cash from operationsTaxes paidEnd of service indemnities paidProvision for risks and charges paid

Net cash from operating activities


321,633

13,7252,418(3,121)5,4981,370434169

1,3228085

3,010(472)(902)

(9,265)(484)

(9,595)80---

326,633

(23,401)7,138

-(479,524)339,099(9,027)(8,881)(4,224)

2,372,892(12,097)34,998

1,865,408(45,515)

(703)(464)

1,818,726


365,586

18,350-

(1,044)2,49113,142(240)2,507(607)

(11,435)44129

(3,034)(2,910)(14,558)

(201)(2,152)

(37)189300

(7,169)359,351

(24,249)(1,693)(66,714)

(1,171,174)(409,095)

2,409(58,281)91,021

3,018,13548,93059,923

1,848,563(53,953)(2,694)

(54)

1,791,862

12232332323232

4

67257

6

26

2

303232

CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2007

78

INVESTING ACTIVITIESLebanese and other governmental treasury bills and bonds not held for trading (1)Balances with the Central Banks (term accounts and certificates of deposit) (1)Investments and loans to related partiesPurchase of tangible and intangible fixed assetsShares, securities and financial assets with variable income not held for tradingBonds and other financial assets with fixed income not held for tradingCash proceeds from the disposal of tangible and intangible fixed assetsPurchase of an additional equity interest in a subsidiary

Net cash used in investing activities

FINANCING ACTIVITIESIssuance of common sharesSale (purchase) of treasury shares, netPremium from issuance of common sharesDividends paidMinority interest, netShare in a subsidiary’s equity before consolidation

Net cash (used in) from financing activities

Effect of exchange rate changes

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents as of 1 January

Cash and cash equivalents as of 31 December


(815,611)423,178

(144)(49,576)3,47837,98116,293(4,031)

(388,432)

30,000(52,044)374,059(117,002)15,267

219

250,499

22,570

1,703,363

7,221,549

8,924,912


(457,574)(484,133)(24,032)(84,136)1,694

(714,664)15,367

-

(1,747,478)

-12,818

-(147,245)

(773)-

(135,200)

19,432

(71,384)

8,924,912

8,853,528

3

33

37&38

39

(1) Non cash transactions in the investing activities include a decrease in certificates of deposit-Central Banksin the amount of LL 1,109,280 million (2006: increase in the amount of LL 800,784 million) against an increase inLebanese and other governmental treasury bills and bonds not held for trading for the same amount (2006:decrease in the amount of LL 800,784 million) during 2007.


79

At 31 December 2005 (as previously reported)

Correction of an error (note 40)At 31 December 2005 (as restated)Net movement in cumulative changes infair values (note 36)Currency translation differenceProfit for the year- 2006 (restated)Total income and expenses for the yearDividends’ distributions (note 38)Appropriation of 2005 profitsIssuance of common shares net of issuancecosts (note 33)Purchase of treasury shares, netGain on sale of treasury sharesDecrease in minority interest due toacquisition by the bankOtherMinority interest in share capital increaseof subsidiariesDividends on treasury shares

At 31 December 2006Net movement in cumulative changes infair values (note 36)Currency translation differenceProfit for the year- 2007Total income and expenses for the yearDividends’ distributions (note 38)Appropriation of 2006 profitsSale of treasury shares, netNet loss on sale of treasury sharesIncrease in minority due to decrease in majority shareMinority interest in dividends distribution in a subsidiaryDividends on treasury sharesForeign currency translation reserve realizedupon sale of branches in Romania (note 2)Other

At 31 December 2007

Share

capital

LL million

Revaluation

reserves

LL million

Reserve for general

banking risks

LL million

Reserves

and premiums

(Note 35)

LL million

Attributable to equity holders of the parent

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year ended 31 December 2007

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2007

210,000

-210,000

------

30,000--

--

--

240,000

-----------

--

240,000

14,727

-14,727

------

---

--

--

14,727

-----------

--

14,727

50,719

-50,719

-255

-255

-8,350

---

--

--

59,324

-305

-305

-9,874

-----

--

69,503

725,783

-725,783

-19,641

-19,641

-42,636

374,059-

64

-607

--

1,162,790

-10,962

-10,962

-58,020

-(3,168)

---

(7,169)369

1,221,804

80

Retained earnings

LL million

Profit for the year

LL million

Total

LL million

LL million LL millionCumulative

changes

in fair value

LL million

Treasury

shares

LL million

Minorityinterest

Totalequity

81,067

-81,067

(59,637)--

(59,637)--

---

--

--

21,430

(7,006)73-

(6,933)-------

--

14,497

-

--

------

-(52,108)

-

--

--

(52,108)

------

15,986----

--

(36,122)

99,238

(11,844)87,394

-398

-398

-32,979

---

-(386)

-1,221

121,606

-452

-452

-53,319

----

1,146

-(69)

176,454

202,188

-202,188

--

269,604269,604(118,223)(83,965)

---

--

--

269,604

--

303,472303,472(148,391)(121,213)

-----

--

303,472

1,383,722

(11,844)1,371,878

(59,637)20,294269,604230,261(118,223)

-

404,059(52,108)

64

-221

-1,221

1,837,373

(7,006)11,792303,472308,258(148,391)

-15,986(3,168)

--

1,146

(7,169)300

2,004,335

60,163

-60,163

(19)3,8852,2006,066

--

---

(2,334)(2)

15,278-

79,171

(264)4,8265,1149,676

----

2,141(2,871)

-

(45)2

88,074

1,443,885

(11,844)1,432,041

(59,656)24,179271,804236,327(118,223)

-

404,059(52,108)

64

(2,334)219

15,2781,221

1,916,544

(7,270)16,618308,586317,934(148,391)

-15,986(3,168)2,141(2,871)1,146

(7,214)302

2,092,409


81

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ACTIVITIES2. SIGNIFICANT ACCOUNTING POLICIES

1. ACTIVITIES

BLOM Bank SAL (the "Bank"), a Lebanese joint stock company, was incorporated in 1951 andregistered under No 2464 at the commercial registry of Beirut and under No 14 on the banks’list published by the Bank of Lebanon. The headquarters of the Bank are located in Verdun,Rashid Karameh Street, Beirut, Lebanon.

The Bank, together with its subsidiaries, BLOM INVEST Bank SAL, Arope Insurance SAL, SyriaInternational Insurance (Arope Syria) SA, BLOM Bank France SA, BLOM Bank (Switzerland)SA, Bank of Syria and Overseas SA, BLOM Bank Egypt SAE, BLOM Egypt Securities SAE,BLOM Development Bank SAL and BLOM Invest- Saudi Arabia (under establishment) (theGroup), provide all banking activities (commercial, investing and private), as well as insuranceand brokerage activities.

On 1 January 2006, the Bank’s branch in Cyprus started to be treated as a local branch and notas an international banking unit.

On 14 February 2008, the Central Bank of the United Arab Emirates licensed BLOM Bank SALto open a representative office and operate in the United Arab Emirates. This license is validfor five years.

On 12 July 2007, the Bank’s board of directors approved on the establishment of a bank in thestate of Qatar to be located in Qatar Financial Center with share capital of US$ 10 million,whereby the Bank will subscribe in 99% of its capital. On 18 February 2008, the Bank obtainedthe approval of the Central Bank of Lebanon on the establishment provided that the Bank providesthe Central Bank of Lebanon and the Banking Control Commission with the approval of theregulatory authorities in Qatar.

2. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the consolidated financialstatements are set out below:

Basis of preparation

The consolidated financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS) and general accounting plan for banks in Lebanon andthe regulations of the Bank of Lebanon and the Banking Control Commission.

84

The consolidated financial statements are prepared under the historical cost convention asmodified for the restatement of certain tangible real estate properties in Lebanon accordingto the provisions of law No 282 dated 30 December 1993, and for the measurement at fairvalue of derivatives, Lebanese and other governmental treasury bills and bonds, bonds andfinancial assets with fixed income, and shares, securities and financial assets with variableincome held for trading and available for sale, and investments related to unit-linked contracts(fair value through profit or loss).

Theconsolidated financial statementshavebeenpresented inmillionof LebaneseLira (LLmillion),whichis the functional currency of the Bank. Balances denominated in other currencies have been presentedin thousands.

Changes in accounting policies

The Group has adopted IFRS 7 Financial Instruments: Disclosures and amendments to IAS 1Presentation of Financial Statements effective for the year ended 31 December 2007 whichhas resulted in amended and additional disclosures relating to financial instruments and associatedrisks, capital and capital management.

Other accounting policies are consistent with those used in the previous year.

Future changes in accounting policies

Below is the list of standards issued but not yet effective for the year ended 31 December2007:

IAS 1 (Revised): Presentation of Financial StatementsIAS 23: Borrowing costsIFRS 8: Operating SegmentsIFRIC 9: Reassessment of Embedded DerivativesIFRIC 11: IFRS 2 – Group and Treasury Share TransactionsIFRIC 12: Service Concession ArrangementsIFRIC 13: Customer Loyalty ProgrammesIFRIC 14: IAS 19 – The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their Interaction

Management do not expect the above standards to have a significant impact on the Group’sfinancial statements when implemented in future years.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAt 31 December 2007

85


Basis of consolidation

The consolidated financial statements comprise the financial statements of BLOM Bank SALand its controlled subsidiaries drawn up to 31 December each year. The financial statementsof subsidiaries are prepared for the same reporting year as the Bank, using consistentaccounting policies.

All intra-group balances, transactions, income and expenses and profits and losses resultingfrom intra-group transactions are eliminated in full.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.Control is achieved where the Bank has the power to govern the financial and operating policiesof an entity so as to obtain benefits from its activities. The results of subsidiaries acquired ordisposed of during the year are included in the consolidated income statement from the dateof acquisition or up to the date of disposal, as appropriate.

Minority interests represent the portion of profit or loss and net assets not owned, directly orindirectly, by the Group and are presented separately in the income statement and withinequity in the consolidated balance sheet, separately from parent shareholders’ equity.Acquisitions of minority interests are accounted for using the parent entity extension method,whereby, the difference between the consideration and the fair value of the share of the netassets acquired is recognized as goodwill. If the cost of acquisition below the fair values of theidentifiable net assets acquired (i.e. a discount on acquisition), the difference is recognized directlyin the income statement in the year of acquisition.

The consolidated financial statements include the financial statements of BLOM Bank SALand the subsidiaries listed in the following table:

BLOM Bank France SA (c)BLOM Bank (Switzerland) SA(100% owned by BLOM Bank France SA)BLOM Invset Bank SALBLOM Development Bank SAL(99.98% owned by BLOM Invest Bank SAL)Bank of Syria and Overseas SA (a)Arope Insurance SALSyria International Insurance (Arope Syria) SA (b)BLOM Bank Egypt SAE (c)BLOM Egypt Securities SAE(99.8% owned by BLOM Bank Egypt SAE)

2007 %

99.998

99.99899.875

99.98039.00088.56042.0699.371

99.371

2006 %

99.998

99.99899.875

99.98039.00088.56042.0699.371

99.371

Activities

Banking activities

Banking activitiesBanking activitiesIslamic bankingactivitiesBanking activitiesInsurance activitiesInsurance activitiesBanking activities

Brokerage activities

Countryof incorporationFrance

SwitzerlandLebanon

LebanonSyriaLebanonSyriaEgypt

Egypt

86

% EQUITY INTEREST

(a) Effective 1 January 2004, theGroupobtainedcontrol, by virtue of agreementwith other investors,over Bank of Syria and Overseas SA, and consequently, the financial statements of Bank of Syriaand Overseas SA have been consolidated with those of the Group.(b) Effective 1 January 2006, theGroupobtainedcontrol, by virtue of agreementwith other investors,over Syria International Insurance (Arope Syria) SA, and consequently, the financial statementshave been consolidated with those of the Group.(c) In November 2007, Blom Bank Egypt SAE sold its branches in Romania to Blom Bank France SA.Consequently, the Group realized foreign currency translation reserve in the amount of LL7,169 million upon the sale of the branches in Romania.

Business combinations and goodwill

Business combinations are accounted for using the purchase method of accounting. This involvesrecognizing identifiable assets (including previously unrecognized intangible assets) and liabilities(including contingent liabilities but excluding future restructuring) of the acquired business at fairvalue. Any excess of the cost of acquisition over the fair values of the identifiable net assetsacquired is recognized as goodwill. If the cost of acquisition is less than the fair values of the identifiablenetassetsacquired, thediscountonacquisition is recognizeddirectly in the incomestatement in theyearof acquisition.

Goodwill acquired in a business combination is initially measured at cost being the excess of thecost of the business combination over the Group’s interest in the net fair value of the identifiableassets, liabilities and contingent liabilities acquired. Following initial recognition, goodwill is meas-ured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment, annu-ally or more frequently if events or changes in circumstances indicate that the carrying value maybe impaired.

For the purpose of impairment testing, goodwill acquired in a business combination is, from theacquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-gener-ating units, that are expected to benefit from the synergies of the combination, irrespective ofwhether other assets or liabilities of the acquiree are assigned to those units or groups of units.Each unit or group of units to which the goodwill is allocated:- represents the lowest level within the Group at which the goodwill is monitored for internalmanagement purposes; andis not larger than a segment based on either the Group’s primary or secondary reporting formatdetermined in accordance with IAS 14 Segment Reporting.


87


Where goodwill forms part of a cash-generating unit (or group of cash-generating units) andpart of the operation within that unit is disposed of, the goodwill associated with the opera-tion disposed of is included in the carrying amount of the operation when determining the gainor loss on disposal of the operation. Goodwill disposed of in this circumstance is measuredbased on the relative values of the operation disposed of and the portion of the cash-gener-ating unit retained.

When subsidiaries are sold, the difference between the selling price and the net assets pluscumulative translation differences and unamortized goodwill is recognized in the incomestatement.

Impairment is determined by assessing the recoverable amount of the cash-generating unit(group of cash-generating units), to which the goodwill relates. Where the recoverableamount of the cash-generating unit (group of cash-generating units) is less than the carryingamount, an impairment loss is recognized.

Trading investments

Trading investments include:- Lebanese and other governmental treasury bills and bonds,- Bonds and financial assets with fixed income,- Shares, securities and financial assets with variable income.These are initially recognized at cost (being the fair value given) and subsequently remeasured atfair value. All related realized or unrealized gains or losses are included in the consolidated incomestatement. Interest earned is included in interest and similar income while dividends received areincluded in revenues from shares and financial assets with variable income.

Non-trading investmentsThese are classified as follows:- Available for sale,- Investments carried at fair value through profit or loss,- Investments carried at amortized cost (loans and receivable).

Non-trading investments include:- Certificates of deposit,- Lebanese and other governmental treasury bills and bonds,- Bonds and financial assets with fixed income,- Shares, securities and financial assets with variable income,- Investments and loans to related parties,- Investments related to unit-linked contracts.

88

All investments are initially recognized at cost, being the fair value of the consideration givenincluding acquisition costs.

Premiums and discounts on non-trading investments are amortized using the effective interest ratemethod and are taken to interest income.

Available for sale

Available-for-sale financial investments are those investments which are designated as such or donot qualify to be classified as designated at fair value through profit or loss, held-to-maturity orloans and receivables.

After initial recognition, investments which are classified “available for sale” are normallyremeasured at fair value. If the Group is not able to estimate the fair value, available for saleinvestments are then carried at cost, less provision for impairment in value. Fair value changeswhich are not part of an effective hedging relationship, are reported as a separate component ofequity until the investment is derecognized or the investment is determined to be impaired. Onderecognition or impairment, the cumulative gain or loss previously reported as “cumulativechanges in fair value” within equity, is included in the consolidated income statement for the period.

That portion of any fair value changes relating to an effective hedging relationship is recognizeddirectly in the consolidated income statement.

Investments carried at fair value through profit or loss

Investments are classified as fair value through profit or loss account if the fair value of the invest-ment can be reliably measured and the classification as fair value through profit or loss account isas per the documented strategy of the Group. Investments classified as “Investments at fair valuethrough profit or loss” upon initial recognition are remeasured at fair value with all changes in fairvalue being recorded in the consolidated income statement.

Investments carried at amortised cost

Debt instruments which do not meet the definition of held to maturity and which have fixed ordeterminable payments but are not quoted in an active market are carried at amortised cost,less provision for impairment in value.


89


Derecognition of financial assets and financial liabilities

i. Financial assetsA financial asset (or, where applicable a part of a financial asset or part of a group of similarfinancial assets) is derecognised where:- the rights to receive cash flows from the asset have expired; or- the Group has transferred its rights to receive cash flows from the asset or has assumed anobligation to pay the received cash flows in full without material delay to a third party under a‘pass-through’ arrangement; and- either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b)the Group has neither transferred nor retained substantially all the risks and rewards of theasset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered intoa pass-through arrangement, and has neither transferred nor retained substantially all the risksand rewards of the asset nor transferred control of the asset, the asset is recognised to the extentof the Group’s continuing involvement in the asset. Continuing involvement that takes the form ofa guarantee over the transferred asset is measured at the lower of the original carrying amountof the asset and the maximum amount of consideration that the Group could be required to repay.

ii. Financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged orcancelled or expires. Where an existing financial liability is replaced by another from the samelender on substantially different terms, or the terms of an existing liability are substantially modified,such an exchange or modification is treated as a derecognition of the original liability and therecognition of a new liability, and the difference in the respective carrying amounts is recognisedin profit or loss.

Fair values

For investments and derivatives quoted in an active market, fair value is determined by referenceto quoted market prices. Bid prices are used for assets and offer prices are used for liabilities.

For unquoted financial instruments, fair value is determined by reference to the market value of similarinvestments, or is based on the expected discounted cash flows, or by using other techniques.

The estimated fair value of deposits with no stated maturity, which includes non-interest bearingdeposits, is the amount payable on demand.

90

Due from banks and financial institutions

These are stated at fair value of consideration given less any amountswritten off and allowance forimpairment.

Loans and advances to customers

Loansandadvancesare statedat fair valueof considerationgiven, net of suspended interest, provisionsfor doubtful debts, any amountswritten off, and allowance for impairment.

Renegotiated loans

Where possible, the Group seeks to restructure loans rather than to take possession of collateral.This may involve extending the payment arrangements and the agreement of new loan conditions.Once the terms have been renegotiated, the loan is no longer considered past due. Managementcontinuously reviews renegotiated loans to ensure that all criteria aremet and that future paymentsare likely to occur. The loans continue to be subject to an individual or collective impairmentassessment, calculated using the loan’s original effective interest rate.

Investments in associates

The Group’s investments in associates are accounted for using the equity method of accounting.An associate is an entity inwhich theGrouphas significant influenceandwhich is neither a subsidiarynor a joint venture.

Under the equitymethod, the investment in the associate is carried in the balance sheet at cost pluspost-acquisition changes in the Group’s share of net assets of the associate. Losses in excess ofthe cost of the investment in an associate are recognized when the Group has incurred obligationson its behalf. Goodwill relating to an associate is included in the carrying amount of the investmentand is not amortized. The income statement reflects the Group’s share of the results of operationsof the associate.Where there has been a change recognized directly in the equity of the associate, theGroup recognizes its share of any changes and discloses this, when applicable, in the statement ofchanges in equity. Unrealized profits and losses resulting from transactions between theGroup and theassociate are eliminated to the extent of the interest in the associate.

The reporting dates of the associate and theGroup are identical and the associate’s accounting policiesconform to those used by theGroup for like transactions and events in similar circumstances.


91


Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation and any accumulatedimpairment in value. Certain of tangible real estate properties purchased prior to 1 January1994 were restated for the changes in the general purchasing power of the Lebanese Liraaccording to the provisions of law No 282 dated 30 December 1993. The net surplus arising onrevaluation is credited to the account of revaluation reserves recognized in shareholders’equity.

Changes in the expected useful life are accounted for by changing the depreciation period ormethod, as appropriate, and treated as changes in accounting estimates.

Depreciation is calculated on a straight line basis to write down the cost of tangible fixedassets to their residual values over their estimated useful lives. Freehold land is not depreciated.The estimated useful lives are as follows:

The impact of the depreciation expense due to the change in the estimated useful lives isaccounted for prospectively.

An itemof tangible fixed assets is derecognised upon disposal orwhen no future economic benefits areexpected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated asthedifferencebetween thenet disposal proceedsand thecarryingamount of theasset) is recognised in‘Other operating income’ or ‘Other operating expenses’ in the income statement in the year the asset isderecognised.

The carrying values of tangible fixed assets are reviewed for impairment to determine whetherevents for changes in circumstances indicate the carrying value may not be recoverable. If anysuch indication exists and where the carrying values exceed the estimated recoverable amount,the assets are written down to their recoverable amount, being the higher of the fair value lesscosts to sell and their value in use.

Expenditure incurred to replace a component of an item of tangible fixed assets that isaccounted for separately is capitalised and the carrying amount of the component that isreplaced is written off. Other subsequent expenditure is capitalised only when it increasesfuture economic benefits of the related item of tangible fixed assets. All other expenditure isrecognised in the income statement as the expense is incurred.

BuildingsVehiclesFurniture, office installations and computer equipment

2007

50 years6.67 years

2 – 16.67 years

2006

40 years6.67 years

5 – 11.11 years

92

Collateral pending sale

TheGroup occasionally acquires real estate in settlement of certain loans andadvances. Such realestate is stated at the lower of the amount of the related loans and advances and the current fairvalue of such assets based on the instructions of the Control Authorities. Gains or losses on disposal,and revaluation losses, are recognized in the consolidated income statement for the period.

Intangible fixed assets

Intangible assets are initially measured at cost. following initial recognition, intangible assets arecarried at cost less any accumulated amortization and any accumulated impairment losses. Theuseful lives of the intangible assets are assessed to be either finite or indefinite. Intangible assetswith finite lives are amortized over the useful economic life and tested for impairment wheneverthere is an indication that the intangible asset may be impaired. Intangible assets with indefiniteuseful lives are not amortized but tested for impairment annually and whenever there is an indicationthat the intangible asset may be impaired.

If the carrying value of the intangible asset is more than the recoverable amount, the intangibleasset is considered impaired and is written down to its recoverable amount. The excess of carryingvalue over the recoverable amount is recognized in the income statement.

Impairement losses on intangible assets recognized in the income statement in previous periods,are reversed when there is an increase in the recoverable amount.

Amortisation is calculated using the straight-linemethod towrite down the cost of intangible assetsto their residual values over their estimated useful lives as follows:

Customer deposits

All customer deposits are carried at the fair value of the consideration received, less amounts repaid.

Taxation

(i) Current taxTaxation is provided for in accordance with the fiscal regulations of the respective countriesin which the Bank and its branches and subsidiaries operate.

Key money: the lesser of lease period or 5 yearsSoftware development cost: 2-5 years


93


Current tax assets and liabilities for the current and prior years are measured at the amountexpected to be recovered from or paid to the taxation authorities. The tax rates and tax lawsused to compute the amount are those that are enacted or substantively enacted by the bal-ance sheet date.The Bank’s profits from operations in Lebanon are subject to a tax rate of 15% after deductingthe 5% tax on interest received according to Law no. 497/2003 dated 30 January 2003.Dividends are subject to a flat 10% tax, reducible to 5% provided that the Bank is listed on aregulated stock exchange.

(ii) Deferred taxDeferred income tax is providedusing the liabilitymethodon temporary differencesat thebalance sheetdatebetweenthetaxbasesofassetsand liabilitiesandtheircarryingamounts in thefinancialstatements.Deferred income tax assets and liabilities aremeasured at the tax rates that are expected to apply in theyearwhen the asset is realized or the liability is settled, based on tax rates (and tax laws) that have beenenacted or substantively enacted at the balance sheet date.Current tax and deferred tax relating to items recognized directly in equity are also recognizedin equity and not in the income statement.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reducedto the extent that it is no longer probable that sufficient taxable profit will be available to allow allor part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessedat each balance sheet date and are recognized to the extent that it has become probable thatfuture taxable profit will allow the deferred tax asset to be recovered.

Provisions for risks and chargesProvisions are recognizedwhen theGroup has a present obligation (legal or constructive) arising fromapast event and the costs to settle the obligation are both probable and able to be reliablymeasured.

Employees’ end-of-service benefits

The Group provides end of service benefits to its employees. The entitlement of these benefits arebased upon the employees’ final salary, length of services and other local regulations where theGroup operates. The expected costs of these benefits are accrued over the period of employment.

With respect to employees based in Lebanon, the Group makes contribution to the National SocialSecurity Fund calculated as a percentage of the employees’ salaries. The Group’s obligations arelimited to these contributions, which are expensed when due.

94

Treasury shares

Own equity instruments which are acquired (treasury shares) are deducted from equity and areaccounted for at weighted average cost. No gain or loss is recognized in the income statement onthe purchase, sale, issue or cancellation of the Bank’s own equity instruments.

DerivativesDerivatives are stated at fair value.For the purposes of hedge accounting, hedges are classified into three categories:(a) fair value hedges which hedge the exposure to changes in the fair value of a recognized assetor liability;(b) cash flow hedges which hedge exposure to variability in cash flows of a recognized asset or liabilityor a forecasted transaction, and(c) hedges of the net investment in a foreign subsidiary bank.In relation to effective fair value hedges any gain or loss from remeasuring the hedging instrumentto fair value, aswell as related changes in fair value of the itembeing hedged, are recognized imme-diately in the consolidated income statement.

In relation toeffectivecash flowhedges, thegainor losson thehedging instrument is recognized initially inequity and is transferred to the incomestatement in theperiod inwhich thehedged transaction impactsthe income statement, or included as part of the cost of the related asset or liability.

In relation to effective hedges of the net investment in a foreign subsidiary bank, any gain or lossfrom remeasuring the hedging instrument to fair value is recognized immediately in equity and istransferred to the income statement once the investment is sold.

For those hedges which do not qualify for hedge accounting, any gains or losses arising fromchanges in the fair value of the hedging instrument are taken directly to the consolidated incomestatement for the period.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated orexercised, no longer qualifies for hedge accounting or is revoked by the Group. For effective fairvalue hedges of financial instruments with fixed maturities any adjustment arising from hedgeaccounting is amortised over the remaining term to maturity. For effective cash flow hedges, anycumulative gain or loss on the hedging instrument recognized in equity remains in equity until thehedged transactionoccurs. If the hedged transaction is no longer expected to occur, thenet cumulativegain or loss recognized in equity is transferred to the consolidated income statement.


95


Fiduciary assetsAssets held in a fiduciary capacity are not treated as assets of the Group and accordingly arerecorded as off balance sheet items.

Off balance sheet itemsOffbalancesheetbalances includecommitmentswhichmaytakeplace in theGroup’snormaloperationssuchascommitments for loangranting, lettersofguarantees,and lettersofcredit,withoutdeducting themargins collected and related to these commitments.

OffsettingFinancial assets and financial liabilities are only offset and the net amount reported in the balancesheet when there is a legally enforceable right to set off the recognized amounts and the Groupintends to either settle on a net basis, or to realize the asset and settle the liability simultaneously.

Financial guaranteesIn the ordinary course of business, the Group gives financial guarantees, consisting of letters ofcredit, guarantees and acceptances. Financial guarantees are initially recognised in the financialstatements at fair value, in ‘Other liabilities’, being the premium received. Subsequent to initialrecognition, the Group’s liability under each guarantee is measured at the higher of the amortisedpremium and the best estimate of expenditure required to settle any financial obligation arising asa result of the guarantee.

Any increase in the liability relating to financial guarantees is taken to the income statement in‘Provisions for loans and advances’. The premium received is recognised in the income statementin ‘Commission received’ on a straight line basis over the life of the guarantee.

Revenue recognitionInterest income and fees that are considered part of the effective interest is recognized using theeffective yield method unless there is doubt of uncollectibility. The recognition of interest incomeis suspended when loans become impaired, such as when overdue by more than 90 days.

Notional interest is recognized on impaired loans and other financial assets based on the rate usedto discount future cash flows to their net present value. Other fees receivable are recognized asthe services are provided. Dividend income is recognized when the right to receive payment isestablished.

When theGroup enters in interest rate swap contracts to change the interest rate from fixed to variable(or vice-versa), interest incomeor expense is adjusted by the net difference resulting from the swap.

96

Foreign currenciesThe consolidated financial statements are presented in Lebanese Lira which is the Bank’s functionalcurrency. Each entity in the Group determines its own functional currency and items includedin the financial statements of each entity are measured using that functional currency.

Transactions and balancesTransactions in foreign currencies are initially recorded in the functional currency at the rate ofexchange ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated into LebaneseLira or other functional currencies at rates of exchange prevailing at the balance sheet date. Anygains or losses are taken to the consolidated income statement.

Translation gains or losses on non-monetary items carried at fair value are included in equity as partof the fair value adjustment on securities available-for-sale, unless part of an effective hedging strategy.

Translation of financial statements of foreign entitiesThe assets and liabilities of foreign branches and subsidiaries are not deemed an integral part of thehead office’s operations and are translated at rates of exchange ruling at the balance sheet date.Income and expense items are translated at average exchange rates for the period. Any exchangedifferences are taken directly to a foreign currency translation adjustment reserve.

Cash and cash equivalents

Cash and cash equivalents as referred to in the Cash Flow Statement comprise balances with originalmaturities of a period of three months including: cash and balances with the Central Banks, depositswith banks and financial institutions, deposits due to banks and financial institutions, and treasurybills.

Repurchase and resale agreements

Assets sold with a simultaneous commitment to repurchase at a specified future date (repos) continueto be recognized in thebalance sheet. Amounts receivedunder theseagreements are treatedas liabilitiesand the difference between the sale and the repurchase price is treated as interest expense using theeffective yieldmethod. Assets purchasedwithacorrespondingcommitment to resell at a specified futuredate (reverse repos) are not recognized in the balance sheet. Amounts paid under these agreements aretreated as assets and the difference between the purchase and resale price is treated as interest incomeusing the effective yieldmethod.


97


Impairment and uncollectibility of financial assets

Anassessment ismadeateachbalancesheetdatetodeterminewhether there isobjectiveevidencethatfinancial assets may be impaired. If such evidence exists, any impairment loss is recognized in theconsolidated income statement.Impairment is determined as follows:(a) for assets carried at amortised cost, impairment is based on estimated cash flows that arediscounted at the original effective interest rate;(b) for assets carried at fair value, impairment is the difference between cost and fair value less anyimpairment loss previously recognized in the consolidated income statement; and(c) for assets carried at cost, impairment is the present value of future cash flows discounted at thecurrent market rate of return for a similar financial asset.For available for sale equity investments, reversal of impairment losses are recorded as increases incumulative changes in fair values through equity.For the purpose of a collective evaluation of impairment, financial assets are groupedon the basis of thebank’s reviewof credit risk characteristics such as asset type, industry, geographical location, collateraltype, past-due status and other relevant factors.

Future cash flows on a group of financial assets that are collectively evaluated for impairment are esti-matedon thebasis of historical lossexperience for assetswithcredit risk characteristics similar to thosein the group. Historical loss experience is adjusted on the basis of current observable data to reflect theeffectsof current conditions that didnotaffect theyearsonwhich thehistorical lossexperience isbasedand to remove the effects of conditions in the historical period that do not exist currently. Estimates ofchanges in futurecash flows reflect, andaredirectionallyconsistentwith, changes in relatedobservabledata from year to year (such as changes in property prices, payment status, or other factors that areindicative of incurred losses in the group and their magnitude). Themethodology and assumptions usedforestimating futurecashflowsarereviewedregularly toreduceanydifferencesbetween lossestimatesand actual loss experience.

Trade and settlement date accounting

All “regular way” purchases and sales of financial assets are recognized on the trade date, i.e. thedate that the Group commits to purchase or sell the asset. Regular way purchases or salesare purchases or sales of financial assets that require delivery of assets within the time framegenerally established by regulations.

Operating leases

Leaseswhere the lessor retains substantially all the risks and benefits of ownership of the asset areclassified as operating leases. Operating lease payments are recognized as an expenses in theincome statement on a straight-line basis over the lease term.

98

Accounting policies of subsidiary-insurance companies

The financial statementsof thesubsidiary insurancecompanieshavebeenprepared inaccordancewithInternational Financial ReportingStandards and the requirements of the regulations related to insuranceand reinsurancecompanieswhere the subsidiaries operate. The key accounting policies are as follows:

Premiums earnedNet premiums and accessories (gross premiums) are taken to income over the terms of the policies towhich they relate using the prorata temporis method for non-marine business and 25% ofgross premiums for marine business. Unearned premiums reserve represent the portion ofthe gross premiums written relating to the unexpired period of coverage.If theunearnedpremiumsreserve isnotconsideredadequate tocover futureclaimsarisingonthesepre-miums a premiumdeficiency reserve is created.

Commissions earned and paidCommissions earned are recognized at the time policies are written.Commissions paid are expensed over the terms of the policies to which they relate using thepro-rata temporis method for non-marine business and 25%of commissions paid formarine business.Deferred acquisition costs represent the portion of commissions paid relating to the unexpired period ofcoverage.

2.a SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

Judgments

In the process of applying the Group’s accounting policies, management has made the followingjudgements, apart from those involving estimations, which have the most significant effect in theamounts recognised in the financial statements:

Classification of investmentsManagement decides on acquisition of an investment whether it should be classified as held tomaturity, held for trading, carried at fair value through profit or loss account, or available for sale.The Group classifies investments as trading if they are acquired primarily for the purpose of making ashort termprofit by the dealers.

Classification of investments as fair value through profit or loss account depends on how managementmonitors theperformanceof these investments.When theyarenotclassifiedasheld for tradingbuthavereadily available reliable fair values and the changes in fair values are reported as part of profit or lossin the management accounts, they are classified as fair value through profit or loss.All other investments are classified as available for sale.


99

2. SIGNIFICANT ACCOUNTING POLICIES3. BUSINESS COMBINATION4. NET PROVISIONS LESS RECOVERIES ON LOANS AND ADVANCES

Impairment of investmentsTheGroup treats available for sale equity investments as impairedwhen there has been a significant orprolongeddecline in the fair valuebelow itscost. Inaddition, theGroupevaluatesother factors, includingnormal volatility in share price for quoted equities and the future cash flows and the discount factors forunquoted equities.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at thebalance sheet date, thathaveasignificant riskofcausingamaterialadjustment to thecarryingamountsof assets and liabilitieswithin the next financial year are discussed below:

Impairment losses on commercial loans and advancesTheGroup reviews its problem commercial loans and advances on a regular basis to assesswhether aprovision for impairment should be recorded in the consolidated income statement. In particular,considerable judgment bymanagement is required in the estimation of the amount and timing of futurecash flowswhendetermining the level of provisions required. Such estimates are necessarily based onassumptions about several factors involving varying degrees of judgment and uncertainty, and actualresultsmay differ resulting in future changes to such provisions.

In addition to specific allowances against individually significant loans and advances, the Group alsomakes a collective impairment allowance against exposures which, although not specifically identifiedas requiring a specific allowance, have a greater risk of default thanwhen originally granted. This takesinto consideration factors such as any deterioration in country risk, industry, and technologicalobsolescence, as well as identified weaknesses or deterioration in cash flows.

Impairment losses on consumer loansAnestimateof thecollectibleamount of consumer loans ismadewhencollectionof the full amount is nolonger probable. This estimation is assessed collectively and a provision applied according to the lengthof time past due, based on historical recovery rates.

Fair value of financial instrumentsWhere the fair values of financial assets and financial liabilities recorded on the balance sheetcannot be derived from active markets, they are determined using a variety of valuation techniquesthat include the use of mathematical models. The input to these models is taken from observablemarkets where possible, but where this is not feasible, a degree of judgment is required in establishingfair values. The judgments include consideration of liquidity andmodel inputs such as correlation andvolatility for longer dated derivatives.

100

3. BUSINESS COMBINATION

BLOM Bank Egypt SAE

In 2006, the Group acquired an additional 2.6% of the voting shares of BLOM Bank Egypt SAE for atotal consideration of LL 4,031 million with effective date 30 November 2005.

In 2006, BLOMBank Egypt SAE increased its ownership in BLOMEgypt Securities SAE from 67.74%to 99.37%. The total cost of acquisition is approximately LL 174 million. Net cash inflow on acquisitionamounted to LL 219 million. The Bank consolidated BLOM Egypt Securities SAE with effect from 1January 2006.

During 2006, BLOM Bank and two of its subsidiaries subscribed in 979,313 shares representing 49%of the voting shares of Syria International Insurance (Arope Syria) SA, a newly established insurancecompany in Syriawith a total investment amount of LL 14,559million.

4. NET PROVISIONS LESS RECOVERIES ON LOANS AND ADVANCES

LL million

Group’s interest (2.6%) 2,323Goodwill arising on acquisition (note 27) 1,708Cost of acquisition (net cash outflow) 4,031

Provision for doubtful loans and advances:Provision for doubtful loans and advancesProvision for doubtful consumer loansProvision for consumer loans not classified at the balance sheet date

Recoveries on loans and advances:Recoveries on doubtful and bad loans and advancesRecoveries on doubtful loans from off balance sheetRecoveries on personal loansRecoveries on commitments by signature

2007LL million

(13,394)-

(6,266)

(19,660)

18,107583

-162

18,852(808)


(12,661)(3,427)(3,938)

(20,026)

28,8522,590

19-

31,46111,435


101

5. NET COMMISSIONS6. NET PROFIT FROM TRADING INVESTMENTS7. NET PROFIT FROM NON-TRADING INVESTMENTS8. OTHER OPERATING INCOME9. OTHER OPERATING EXPENSES10. SALARIES AND RELATED BENEFITS11. GENERAL OPERATING EXPENSES

5. NET COMMISSIONS

6. NET PROFIT FROM TRADING INVESTMENTS

7. NET PROFIT FROM NON-TRADING INVESTMENTS

8. OTHER OPERATING INCOME

Commissions received:Letters of credit, guarantees and acceptancesLoans and advances to customersAsset management and correspondents’ accountsChecking accounts and transfersCustomers’ depositsCredit cardsOther services

Less: commissions paid on correspondents’ accounts

Net commissions received

2007LL million

22,08417,9317,9079,83211,9505,4466,65481,804(4,815)

76,989

2006LL million

25,44822,49410,7666,04113,6858,4319,14296,007(6,627)

89,380

Trading loss from equitiesTrading income from debt securities

2007LL million

(3,010)9,5956,585

2006LL million

(129)2,1522,023

Profit from sale of certificates of depositProfit from sale of equitiesOthers

2007LL million

9,265472(214)9,523

2006LL million

14,5583,034877

18,469

Premiums earned on insurance contractsOther miscellaneous income

2007LL million

16,1816,21322,394

2006LL million

19,7604,85824,618

102

9. OTHER OPERATING EXPENSES

10. SALARIES AND RELATED BENEFITS

11. GENERAL OPERATING EXPENSES

Board of directors’ attendance feesTaxes and feesFee for guarantee of depositsRent and related chargesElectricity and fuelProfessional feesPostage and telecommunicationsMaintenance and repairsTravel expensesInsuranceMarketing and advertisingStationery and printingsFiscal stampsOthers

2007LL million

1,0772,8755,4944,2592,4695,9867,0286,1753,262764

7,9044,6702,12916,74770,839

2006LL million

1,4162,6315,8936,2243,5947,8838,5575,6483,400727

8,1405,3262,08019,79881,317

Claims paid on insurance contractsOthers

2007LL million

11,369306

11,675

2006LL million

14,005441

14,446

Salaries and wagesSocial security contributionsProvisions for end of service indemnities (note 32)Additional indemnities paidOther allowances (including bonuses)

2007LL million

58,66710,6925,49810,62826,914112,399

2006LL million

65,21512,4122,61512,61036,281129,133


103

12. DEPRECIATION AND AMORTIZATION OF TANGIBLE AND INTANGIBLE ASSETS13. PROVISION FOR CONTINGENT LIABILITIES14. EARNINGS PER SHARE15. CASH AND BALANCES WITH THE CENTRAL BANKS16. LEBANESE AND OTHER GOVERNMENTAL TREASURY BILLS AND BONDS

12. DEPRECIATION AND AMORTIZATION OF TANGIBLE AND INTANGIBLE ASSETS

13. PROVISION FOR CONTINGENT LIABILITIES

14. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing the net profit for the year attributableto ordinary equity holders of the parent by the weighted average number of ordinary sharesoutstanding during the year.

The following reflects the income and share data used in the basic earnings per sharecomputation:

No figure for diluted earnings per share has been presented as the Bank has not issued anyinstruments which would have an impact on earnings per share when exercised.

Tangible fixed assets (note 23)Intangible fixed assets (note 24)Provision for impairment against real estate acquired in settlement of debts (note 23)

2007LL million

13,328397

2,41816,143

2006LL million

17,717633

-18,350

Provision for complementary taxes and contingent liabilitiesrelated to a subsidiary bank (note 32)Others

2007LL million

1,4553

1,458

2006LL million

13,32723

13,350

Net profit for the yearLess :Proposed dividends on preferred shares (note 38)

Minority interestNet profit attributable to equity holders of the parentWeighted average number of common sharesBasic earnings per share

2007

271,804(40,891)(2,200)228,713

20,850,72110,969

2006

308,586(40,890)(5,114)262,582

21,183,70412,395

LL million

LL million

LL million

LL million

LL

104

15. CASH AND BALANCES WITH THE CENTRAL BANKS

Cash and balances with the Central Banks include non-interest bearing balances held by the Group at theBank of Lebanon in coverage of the obligatory reserve requirements for all banks operating in Lebanon ondeposits in Lebanese Lira as requiredby the Lebanesebanking rules and regulations. This obligatory reserveis calculated on the basis of 25%of sight commitments and 15%of termcommitments.

In addition to the above, all banks operating in Lebanon are required to deposit with the Bank ofLebanon interestbearing placements at the rate of 15% of total deposits in foreign currenciesregardless of nature.

Foreignsubsidiariesarealsosubject toobligatory reserve requirementswithvaryingpercentages, accordingto the banking rules and regulations of the countries inwhich they are located.

16. LEBANESE AND OTHER GOVERNMENTAL TREASURY BILLS AND BONDS

As of 30 December 2005, the Group reclassified treasury bills and bonds denominated inLebanese Lira and in foreign currencies from investments held to maturity to investmentsavailable for sale. Accordingly, the Group is not allowed to classify investments as held tomaturity before 1 January 2008, according to IAS 39. Consequently, held to maturity investmentswere carried at fair value and reclassified as available for sale as at 31 December 2005. Thisreclassification resulted in an increase in the fair value of the available for sale investmentsas at 31 December 2005 with a corresponding increase in cumulative changes in fair valuesin the consolidated statement of changes in equity.

Available for sale investments include unquoted governmental bonds in the amount of LL132,645 million (2006: LL 243,668 million) that are stated at cost, which approximately equal tofair value.

Trading:-Treasury bills and bonds (quoted)-Accrued interest at 31 December

Available for sale:- Treasury bills and bonds- Accrued interest at 31 December

2007LL million

49,5111,03750,548

3,353,39970,973

3,424,3723,474,920

2006LL million

75,5371,41276,949

4,904,14799,227

5,003,3745,080,323

CashCentral Banks:Current accountsTime depositsAccrued interest at 31 December

Certificates of deposit – loans and receivablesAccrued interest at 31 December

2007LL million

92,767

884,5051,630,300

21,3002,536,1053,534,441

83,0933,617,5346,246,406

2006LL million

128,083

951,9222,429,799

43,9353,425,6562,718,370

57,9222,776,2926,330,031


105

17. BONDS AND FINANCIAL ASSETS WITH FIXED INCOME18. SHARES, SECURITIES AND FINANCIAL ASSETS WITH VARIABLE INCOME19. BANKS AND FINANCIAL INSTITUTIONS – DEBIT

17. BONDS AND FINANCIAL ASSETS WITH FIXED INCOME

Included in bonds and financial assets with fixed income, accrued interest up to 31 December 2007amounting to LL 15,990 million (2006: LL 7,408 million).

As of 30 December 2005, the Group reclassified bonds and financial assets with fixed income frominvestments held tomaturity to investments available for sale. Accordingly, theGroup is not allowedto classify investments as held to maturity before 1 January 2008, according to IAS 39.Consequently, held to maturity investments were carried at fair value and reclassified as availablefor sale as at 31 December 2005. This reclassification resulted in an increase in the fair value of theavailable for sale investments as at 31 December 2005with a corresponding increase in cumulativechanges in fair values in the consolidated statement of changes in equity.

Bonds and financial assetswith fixed income include unquoted available for sale investments in theamount of LL 44,331 million (2006: LL 44,213 million) and unquoted certificates of deposit in theamount of LL 16,952 million (2006: LL 38,023 million) that are stated at cost, which approximatelyequal to fair value.

18. SHARES, SECURITIES AND FINANCIAL ASSETS WITH VARIABLE INCOME

Trading investments include unquoted investments in the amount of LL 1,149 million (2006: LL 980 million)and available for sale investments include unquoted investments in the amount of LL 3,842 million (2006:LL 2,198 million) that are stated at cost due to the unpredictable nature of future cash flows and lack ofsuitable othermethods for arriving at a reliable fair value.

Trading:- BondsFair value through profit or loss:- BondsAvailable for sale:- BondsLoans and receivables:- Certificates of deposit

2007LL million

-

-

139,501

246,599386,100

2006LL million

21,244

45,470

872,185

226,2411,165,140

Trading:SharesInvestment fund

Available for sale:Shares

2007LL million

4,073875

4,948

3,4558,403

2006LL million

4,6631,8496,512

5,21311,725

106

19. BANKS AND FINANCIAL INSTITUTIONS – DEBIT

Included in banks and financial institutions - debit, time deposits amounting to US$ 620,000 thousand(2006: US$ 840,000 thousand) being guarantees against short term borrowings in the amount of Euro325,000 thousand (2006: Euro 525,000 thousand) reflected under banks and financial institutions –credit. According to the contracts entered into with these banks, the Bank can withdraw these termdeposits upon the settlement of the short-term borrowings.

Included also in banks and financial institutions - debit, time deposits amounting to US$ 1,600 thousand(2006: nil), being guarantees against two letters of credit maturing in September 2008 and amounting toUS$ 800 thousand each.

Current accounts:- Current accounts- Checks for collection- Accrued interest at 31 December

Time deposits:- Term deposits- Granted financial loans- Accrued interest at 31 December

2007LL million

231,25769,352

180300,789

7,359,69870,33523,462

7,453,4957,754,284

2006LL million

254,96672,458

134327,558

7,094,79185,93328,251

7,208,9757,536,533


107

20. LOANS AND ADVANCES TO CUSTOMERS

20. LOANS AND ADVANCES TO CUSTOMERS

Commercial loansasat31December2007 includesubstandard loansamountingtoLL36,285million(2006:LL 34,456million).

Commercial loansOther loans to customers (consumer loans)Overdraft accountsNet debtor accounts against creditor and cash collateral accountsAdvances to related partiesDoubtful debts (including consumer loans)Total loansProvision for doubtful loansProvisions for commercial loans not classified as doubtful debtsat the balance sheet dateProvision for doubtful consumer loansProvision for consumer loans not classified as doubtful debtsat the balance sheet dateTotal provisionsUnrealized interest – substandard loansUnrealized interest – doubtful loansTotal unrealised interest

Commercial loansLess:Provision for doubtful loans and provision for commercial loans notclassified as doubtful debts at the balance sheet dateUnrealized interest-substandard loansUnrealized interest-doubtful loans

Consumer loansLess:Provision for doubtful consumer loans and provision for consumer loansnot classified as doubtful debts at the balance sheet date

2007LL million

2,442,417535,0538,19010,8267,400

344,5613,348,447(210,071)

(40,017)(256)

(13,812)(264,156)(13,899)(73,694)(87,593)

2,996,6982,813,138

(250,088)(13,899)(73,694)

2,475,457535,309

(14,068)521,241

2,996,698

2006LL million

3,265,402865,79311,93214,3085,940

358,1094,521,484(215,626)

(22,272)(3,561)

(17,750)(259,209)(14,238)(68,730)(82,968)

4,179,3073,643,411

(237,898)(14,238)(68,730)

3,322,545878,073

(21,311)856,762

4,179,307

Breakdown by economic sectorAgriculture and forestryManufacturingTrade retailTrade wholesaleServicesConstructionFreelance professionsConsumer loans

2007LL million

20,187435,275161,188855,142677,833240,496423,264535,062

3,348,447

2006LL million

32,226471,274335,005760,096935,475756,436365,179865,793

4,521,484

108

Themovement of provision for doubtful loans and advances by class is as follows:

Balance at 1 JanuaryAdd:Charge for the yearForeign exchange differenceProvision transferredfrom off balance sheetProvision of acquired subsidiary -Blom Egypt Securities SAE

Less:Provisions written-offRecovery of provisionsProvision transferred tooff balance sheetForeign exchange difference

Balance at 31 DecemberIndividual provisionProvision for loansnot classified yet

Gross amount of loans individuallydetermined to be impaired

Provision fordoubtful

commercial loansand provision for

commercial loansnot classified yet

LL million

250,088

12,6615,956

25

-268,730

(6,869)(23,738)

-(225)

(30,832)237,898215,626

22,272237,898

345,829

14,068

7,365-

-

-21,433

(103)(19)

--

(122)21,3113,561

17,75021,311

12,280


consumer loansand provision forconsumer loans

not classified yetLL million

TotalLL million

264,156

20,0265,956

25

-290,163

(6,972)(23,757)

-(225)

(30,954)259,209219,187

40,022259,209

358,109

256,383

13,3941,566

-

41271,384

(5,885)(7,675)

(7,400)(336)

(21,296)250,088210,071

40,017250,088

344,305

9,009

6,266-

-

-15,275

-(1,207)

--

(1,207)14,068

256

13,81214,068

256

265,392

19,6601,566

-

41286,659

(5,885)(8,882)

(7,400)(336)

(22,503)264,156210,327

53,829264,156

344,561


commercial loansand provision for

commercial loansnot classified yet

LL million


consumer loansand provision forconsumer loans

not classified yetLL million

TotalLL million

2007 2006


109

20. LOANS AND ADVANCES TO CUSTOMERS21. BANK / ENGAGEMENTS BY ACCEPTANCES

The following is a reconciliation of the individual provision for impairment losses on loans and advancesand provision for loans not classified yet:

The movement of unrealized interest is as follows:

As required by Bank of Lebanon regulations, doubtful loans fulfilling certain conditions have been trans-ferred to off-balance sheet, together with the related provisions and unrealized interest.

Balance at 1 JanuaryAdd:Charge for the yearProvisions transferred fromoff-balance sheetDifference of exchangeProvision of acquired subsidiary-BLOM Egypt Securities SAE

Less:Provisions written offRecovery of provisionsProvisions transferredto off balance sheetForeign exchange difference

Balance at 31 December

210,327

16,088

255,956

-232,396

(6,972)(6,012)

-(225)

(13,209)219,187

53,829

3,938

--

-57,767

-(17,745)

--

(17,745)40,022

264,156

20,026

255,956

-290,163

(6,972)(23,757)

-(225)

(30,954)259,209

213,897

13,092

-1,567

41228,597

(5,885)(4,649)

(7,400)(336)

(18,270)210,327

51,495

6,568

--

-58,063

-(4,234)

--

(4,234)53,829

265,392

19,660

-1,567

41286,660

(5,885)(8,883)

(7,400)(336)

(22,504)264,156

IndividualprovisionLL million

Provision for loansnot classified yet

LL million

TotalLL million

2007 2006

IndividualprovisionLL million

Provision for loansnot classified yet

LL million

TotalLL million

Balance at 1 JanuaryAdd:Unrealized interest for the yearForeign exchange difference

Less:Recoveries of unrealized interestAmounts written-offTransferred to off-balance sheetForeign exchange difference


2007LL million

88,472

14,062-

102,534

(9,224)(1,831)(3,821)

(65)(14,941)87,593

2006LL million

87,593

12,827874

101,294

(5,114)(13,212)

--

(18,326)82,968

110

The movement of provisions against fully provided bad loans included off balance sheet accounts is asfollows:

The movement of unrealized interest included in off balance sheet accounts is summarized asfollows

21. BANK / ENGAGEMENTS BY ACCEPTANCES

Acceptances resulted from letters of credit opened for accounts of customers, with deferredpayments.

Balance at 1 JanuaryAdd:Transferred from balance sheetProvision transferred from balance sheet

Less:Provisions written-backAmounts written-offProvision transferred to balance sheet


2007LL million

13,795

7,400139

21,334

(400)(732)

-(1,132)20,202

2006LL million

20,202

-162

20,364

(2,265)(1,056)

(25)(3,346)17,018

Balance at 1 JanuaryAdd:Unrealized interest for the yearTransferred from balance sheetForeign exchange difference

Less:RecoveriesAmounts written-off

Balance at 31 DecemberTotal provisions and unrealized interest included in offbalance sheet accounts

2007LL million

22,436

1,6973,821161

28,115

(183)(4,229)(4,412)23,703

43,905

2006LL million

23,703

1,484-

18525,372

(325)(13,753)(14,078)11,294

28,312

Acceptances as of 31 December

2007LL million

173,260

2006LL million

245,357


111

22. INVESTMENTS AND LOANS TO RELATED PARTIES23. TANGIBLE FIXED ASSETS

22. INVESTMENTS AND LOANS TO RELATED PARTIES

The carrying values of the investments in subsidiaries which were not consolidated because they areimmaterial to the consolidated financial statements as at 31 December are detailed as follows:

Arope Services SAL is a dormant company. Accordingly, the carrying value of this investment was not consolidated

because it is immaterial to the consolidated financial statements as at 31 December 2007 (2006: the same).(*)The partners in their meeting dated 3 May 2005 resolved to liquidate the company and appointed a liquidator.On 29May 2006, the OrdinaryMeeting of Partners approved the completion of the liquidation processwhichwasannounced in the Official Gazette on 8 March 2007.

BLOM Invest – Saudi Arabia (under establishment)The Bank, together with BLOM Invest SAL (a subsidiary), established BLOM Invest – Saudi Arabia and contributedin 10% and 50% respectively to its capital. The regulatory institutions in Lebanon and the Kingdom of SaudiArabia approved on this investment in January 2008. BLOM Invest – Saudi Arabia is under establishment and isnot included in the consolidation of theGroup as of 31December 2007, and no pre – incorporation expenses havebeen incurred for the year then ended. It will be consolidated when established.

Investments in nonconsolidated subsidiariesand associatesBLOM Services SARLSociété de Services d’Assurances et deMarketing SALInternational Payment Network SALArope services SALBLOM Invest – Saudi Arabia (under establishment)

Investments available for saleMisr for Central, Clearing, Depository andCentral RegistryBanque de l’Habitat SALBLOM Real Estate SALSwift

Investment propertyImmobilière Foch 65 SARLLess: Provision for impairment

Lebanon

LebanonLebanonLebanon

Saudi Arabia

EgyptLebanonLebanonFrance

France

-

99.92%23.50%90.00%59.94%

-2.85%7.23%0.01%

100.00%

-

50752

-24,12024,922

-1,43122033

1,684

1,029(427)602

27,208

Country ofincorporation

2007 2007LL million

Ownership percentage

99.70%

99.92%23.50%90.00%

-

0.46%2.85%7.23%0.01%

100.00%

2006

149

50752

--

951

481,43122031

1,730

922(383)539

3,220

2006LL million

BLOM Services SARL (*)Société de Services d’Assurances et de Marketing SAL

2007LL million

212102

2006LL million

-153

Shareholders’ equity

112

23. TANGIBLE FIXED ASSETS

CostAt 1 January 2007AdditionsDisposalsTransfersTranslation differenceAt 31 December 2007DepreciationAt 1 January 2007Charge for the yearRelating to disposalsTransfersTranslation differenceAt 31 December 2007ImpairmentAt 1 January 2007Provided during the yearProvision written back during the yearTranslation differenceAt 31 December 2007Net carrying valueAt 31 December 2007

Freehold land andbuildingsLL million

156,03119,938(115)5,4141,544

182,812

27,3613,604(58)

-291

31,198

-----

151,614

3,4641,200(365)13663

4,498

1,640748(363)1439

2,078

-----

2,420

VehiclesLL million

Furniture, officeinstallations

and computerequipmentLL million

119,35931,418(8,464)1,8261,980

146,119

79,45213,365(5,129)

(32)1,33388,989

-----

57,130

31,04924,270

-(7,516)

78048,583

------

-----

48,583

25,9125,346

(11,936)-

77720,099

------

7,990-

(1,044)258

7,204

12,895

335,81582,172(20,880)

(140)5,144

402,111

108,45317,717(5,550)

(18)1,663

122,265

7,990-

(1,044)258

7,204

272,642

Advances onacquisition

of fixed assets andconstruction

in progressLL million

Fixed assetsacquired in set-tlement of debts

LL million

TotalLL million


113

Certain freehold land and buildings purchased prior to 1 January 1999 were restated for the changesin the general purchasing power of the Lebanese Lira giving rise to a net surplus amounting to LL14,727 million, which was credited to equity under “revaluation reserves”.

23. TANGIBLE FIXED ASSETS24. INTANGIBLE FIXED ASSETS

CostAt 1 January 2006Additions from the acquisitionof subsidiariesAdditionsDisposalsTransfersTranslation differenceAt 31 December 2006DepreciationAt 1 January 2006Accumulated depreciation fromthe acquisition of subsidiariesCharge for the yearRelating to disposalsTransfersTranslation differenceAt 31 December 2006ImpairmentAt 1 January 2006Provided during the yearProvision written back during the yearTranslation differenceAt 31 December 2006Net carrying valueAt 31 December 2006

Freehold land andbuildingsLL million

147,457

-6,654(970)1,3651,525

156,031

23,528

-3,652(243)201223

27,361

-----

128,670

2,929

-1,025(499)

-9

3,464

1,483

-605(450)

-2

1,640

-----

1,824

VehiclesLL million

Furniture, officeinstallations

and computerequipmentLL million

97,086

10115,480(1,411)7,106997

119,359

70,887

779,071(1,210)

-627

79,452

-----

39,907

17,560

-22,378(387)

(8,483)(19)

31,049

-

------

-----

31,049

35,843

-2,875

(12,688)12

(130)25,912

-

------

8,7342,418(3,121)

(41)7,990

17,922

300,875

10148,412(15,955)

-2,382

335,815

95,898

7713,328(1,903)

201852

108,453

8,7342,418(3,121)

(41)7,990

219,372


of fixed assets andconstruction

in progressLL million

Fixed assetsacquired in

settlement ofdebts

LL million

TotalLL million

114

24. INTANGIBLE FIXED ASSETS

CostAt 1 January 2007AdditionsTransfersTranslation differenceAt 31 December 2007AmortizationAt 1 January 2007Charge for the yearTransfersTranslation differenceAt 31 December 2007Net carrying valueAt 31 December 2007


of intangiblefixed assets

LL million

12,7481,964140911

15,763

9,90363318750

11,304

4,459

TotalLL million

-887

--

887

-----

887

Softwaredevelopment

LL million

8,305--

5648,869

5,825138

-414

6,377

2,492

Key moneyLL million

4,4431,077140347

6,007

4,07849518336

4,927

1,080

CostAt 1 January 2006AdditionsDisposalsTranslation differenceAt 31 December 2006AmortizationAt 1 January 2006Charge for the yearRelating to disposalsTransfersTranslation differenceAt 31 December 2006Net carrying valueAt 31 December 2006


of intangiblefixed assets

LL million

13,1361,140(2,442)

91412,748

9,184397(121)(201)644

9,903

2,845

TotalLL million

224-

(224)--

------

-

Softwaredevelopment

LL million

8,908886

(2,097)608

8,305

5,488180

-(201)358

5,825

2,480

Key moneyLL million

4,004254(121)306

4,443

3,696217(121)

-286

4,078

365


115

25. OTHER ASSETS

(i) Compulsory deposits represent amounts deposited with local authorities based on local regulations ofthe countries in which the subsidiaries are located, and are detailed as follows:

(ii) The unrealized profit on investments related to unit-linked contracts amounted to LL 2,910 million for theyear ended 31 December 2007 (2006: LL 902 million).

26. REGULARIZATION ACCOUNTS AND OTHER DEBIT ACCOUNTS

(i) Sundry debtors

25. OTHER ASSETS26. REGULARIZATION ACCOUNTS AND OTHER DEBIT ACCOUNTS27. GOODWILL

Compulsory deposits (i)Precious metals and stampsInvestments related to unit-linked contracts- fair value throughprofit or loss (ii)Other assets

14,903564

17,6001,14934,216

14,690512

16,7511,76233,715

2007LL million

2006LL million

BLOM Invest SALBank of Syria and Overseas SABLOM Development Bank SAL

1,5008,9034,50014,903

1,5008,6904,50014,690

2007LL million

2006LL million

Customers’ transactions between head office and branchesPrepaid expensesSundry debtors (i)Other revenues to be collectedRevaluation variance on foreign exchange forward contractsrelated to the Group’s customers (note 43) (ii)Reinsurers’ share of technical reservesTaxes paid in advance in a subsidiary bankOther accounts

28,7398,14323,1071,754

8,93512,19019,99716,622119,487

14,5108,3088,4763,557

90110,50114,565

59061,408

2007LL million

2006LL million

Sundry debtorsLess: Provision against sundry debtors

24,573(1,466)23,107

9,740(1,264)8,476

2007LL million

2006LL million

116

The movement of provision against sundry debtors is summarized as flows:

(ii) Revaluation variance on foreign exchange forward contracts“Revaluation variance on foreign exchange forward contracts hedging operations related toGroup’s customers” represents operations in which the Group is engaged to hedge foreignexchange operations for its clients. As at 31 December 2007, the revaluation of these contractsresulted in unrealized losses (2006: same).

27. GOODWILL

Impairment testing of goodwillGoodwill acquired through business combinations with indefinite lives have been allocated totwo individual cash-generating units, which are subsidiaries of the Bank, for impairment testingas follows:- BLOM Bank Egypt SAE- BLOM Bank (Switzerland) SAThe carrying amount of goodwill to each of the subsidiaries is as follows:

Key assumptions used in value in use calculationsThe recoverable amount of BLOM Bank Egypt SAE has been determined based on a value in usecalculation, using cash flow projections based on financial budgets approved by senior manage-ment covering a ten-year period. The following rates are used by the Bank.

Balance at 1 JanuaryProvided during the yearTranslation differenceBalance at 31 December

2007LL million

1,253-

111,264

2006LL million

1,26418913

1,466

Cost:At 1 JanuaryAcquisition of a subsidiaryExchange differenceAt 31 December

2007LL million

61,7581,708514

63,980

2006LL million

63,980-

(3,394)60,586

BLOM Bank Egypt SAEBLOM Bank (Switzerland) SA

2007LL million

62,989991

63,980

2006LL million

59,4801,10660,586


117

The calculation of value in use for BLOM Bank Egypt SAE is most sensitive to the following assumptions:- Interest margins;- Discount rates;- Projected growth rates;- Gross domestic product of the country where the subsidiary operates;- Local inflation rates.

Interest marginsInterest margins are based on average values achieved in the 13 months proceeding of the budgetperiod. These are increased over the budget period for anticipated market conditions.

Discount ratesDiscount rates reflect management’s estimate of return on capital employed. Discount rates are cal-culated by using the weighted average cost of capital.

Projected growth rates, GDP and local inflation ratesAssumptions are based on management analysis and published industry research.

Sensitivity to changes in assumptionsManagement believes that reasonable possible changes in key assumptions used to determine therecoverable amount will not result in an impairment of goodwill.

27. GOODWILL28. BANKS AND FINANCIAL INSTITUTIONS - CREDIT29. CUSTOMERS' DEPOSITS30. OTHER LIABILITIES

Discount rateProjected growth rate (average during the first 4 years in 2007 and 5 year in 2006)Projected growth rate beyond the four year period in 2007 and five year period in 2006

9.15300

9.15300

2007 % 2006 %

118

28. BANKS AND FINANCIAL INSTITUTIONS - CREDIT

29. CUSTOMERS' DEPOSITS

Customers' deposits include coded deposit accounts in BLOM Bank SAL and BLOM Invest BankSAL amounting to LL 76,092 million as of 31 December 2007 (2006: LL 73,182 million).

30. OTHER LIABILITIES

(i) Margins on letters of creditMargins on letters of credit represent deposits by the clients on account of documentary creditsopened by the Group on their behalf.

(ii) Income tax payableThe relationship between taxable profit and accounting profit of BLOM Bank SAL and its foreignbranches and subsidiaries is as follows:

Current accountsTerm:TermAccrued interest at 31 December

2007LL million

159,362

1,147,3702,112

1,149,4821,308,844

2006LL million

186,913

1,365,8073,194

1,369,0011,555,914

Sight depositsTime depositsSaving accountsCredit accounts and deposits against debit accountsRelated parties’ accounts

2007LL million

1,897,7657,874,1967,180,465662,69675,259

17,690,381

2006LL million

2,341,5949,589,7497,862,422812,788101,963

20,708,516

Margins on letters of credit (i)Income tax payable (ii)Distribution tax due on subsidiary’s dividends (note 40)Other taxes dueDeposits related to entities under constitutionTransactions pending between consolidated subsidiariesAdvances from customers for acquisition of securitiesSundry creditorsDividends payable

2007LL million

64,04628,07912,4269,3542,9755,8847,86810,251

184141,067

2006LL million

77,30031,98412,9849,58712,87512,78912,17024,483

288194,460


119

(*) The insurance company in Lebanon is subject to income tax at the rate of 15% calculated based ongross insurance premiums weighted differently for each class of business.

30. OTHER LIABILITIES

Profit before income taxLess: Results of the subsidiary insurance company located in Lebanon (*)Accounting profit before income taxAdd:Provisions non tax deductibleOther non tax deductible chargesUnrealized loss on difference of exchangeCapital gainOthers

Less:Dividends received and previously subject to income taxProvisions no more required and previously subject to income taxRemunerations already taxed4% of a subsidiary’s capital eligible to be tax deductibleWrite-back of provisions previously subject to income taxNon taxable incomeDifference in depreciation of fixed assetsPermanent deductible chargesOthers

Taxable profit

The effective income tax rate of the Group is approximately 15.27%(2006: 15.31%).

2007LL million

2006LL million

365,586(5,125)360,461

5,00937,1023,3762,751143

408,842

(2,194)-

(8,301)(400)

(20,552)(1,762)(2,433)(71,021)

(855)

301,324

321,633(4,874)316,759

6,29915,054

---

338,112

(329)(6,645)

-(400)

(4,732)(830)

---

325,176

120

Income tax payable is detailed as follows:

(a) Current income tax charge in the consolidated income statement is detailed as follows:

(b) During 2007, the tax authorities reviewed the Bank’s accounts in Lebanon for the years 2003 to2005 (inclusive), and the review resulted in complementary taxes and fines amounted to LL 603million, settled in full during the year ended 31 December 2007.

(c) Movement of distribution tax due recognized in the balance sheet is detailed as follows:

For more information about distribution tax due, refer to note 40.

Current income tax allocation is as follows:

Income statement:Current income tax:Current income tax charge (a)Adjustments in respect of current income tax of previous years (b)Current distribution tax due (c)

2007LL million

49,247-

58249,829

2006LL million

55,839603558

57,000

At 1 JanuaryTax expense for the yearTax paid during the yearExchange difference

At 31 December

2007LL million

23,56126,454(22,722)

786

28,079

2006LL million

28,07933,198(30,709)1,416

31,984

5% tax paid on interest revenue during the yearIncome tax on profit for the year

2007LL million

22,79326,45449,247

2006LL million

22,64133,19855,839

Balance at 1 JanuaryProvided during the year


2007LL million

11,844582

12,426

2006LL million

12,426558

12,984

Income tax-BLOM Bank SALIncome tax-foreign subsidiariesIncome tax-subsidiaries in Lebanon

2007LL million

37,9599,5682,30249,829

2006LL million

41,94013,0112,04957,000


121

Income tax paid during 2007 and 2006 reflected in the consolidated cash flow statement is detailed as follows:

31. REGULARIZATION ACCOUNTS AND OTHER CREDIT ACCOUNTS

32. PROVISIONS FOR RISKS AND CHARGES

(i) Provisions for risks and charges

The provision for risks and charges mostly represent a provision against probable taxes on interesttaken by a subsidiary insurance company in the amount of LL 1,638 million not finalized yet with theMinistry of Finance, in addition to a provision taken by a subsidiary bank in the amount of LL 1,237million against contingent liabilities.

30. OTHER LIABILITIES31. REGULARIZATION ACCOUNTS AND OTHER CREDIT ACCOUNTS32. PROVISIONS FOR RISKS AND CHARGES

Income tax paid for the years 2006 and 20055% tax paid on interest revenue during the yearAdjustments in respect of current income tax of previous years

2007LL million

2006LL million

30,70922,641

60353,953

22,72222,793

-45,515

Accrued expensesRevaluation variance on foreign exchange forward contractshedging a net investment in a foreign subsidiary bank (note 43)Transactions pending between branchesUnearned premiums and liability related to unit linked insurance contracts

2006LL million

54,399

8,4726,127

120,794189,792

32,684

3,5661,34292,277129,869

2007LL million

Provision for risks and charges (i)Provision for outstanding claims and IBNR reserves related to subsidiary-insurance companies (ii)Provision for end of service indemnities (iii)Provision for complementary taxes and contingent liabilities relatedto a subsidiary bank (iv)Provision for contingencies of correspondents’ operations related toa subsidiary bankProvision for unusual commitments related to a subsidiary bank (v)Other provision

2006LL million

3,188

9,51226,160

38,512

-2,358836

80,566

3,374

6,90326,432

24,136

8522,268681

64,646

2007LL million

Balance at 1 JanuaryCharge for the yearProvisions paid during the yearProvisions written-back during the yearExchange difference


2006LL million

3,374382(54)(622)108

3,188

3,288759(464)(325)116

3,374

2007LL million

122

(ii) Provisions for outstanding claims and IBNR reserves related to subsidiary-insurance companies

(iii) Provisions for end of service indemnities

(iv) Provision for complementary taxes and contingent liabilities related to a subsidiary bankProvision for complementary taxes and contingent liabilities related to a subsidiary bankrepresents mainly accruals for additional complementary taxes in a subsidiary resultingfrom inspection by tax authorities for the years from 1991 onwards.

Movement in provision for complementary taxes and contingent liabilities related to asubsidiary bank recognized in the balance sheet are as follows:

(v) Provision for unusual commitments related to a subsidiary bank

Balance at 1 JanuaryProvision for outstanding claims and IBNR reserves charged for the yearProvisions used during the yearExchange difference


2007LL million

6,734169

--

6,903

2006LL million

6,9032,857(350)102

9,512

Balance at 1 JanuaryCharge for the yearIndemnities paidProvisions written-backExchange difference


2007LL million

21,6645,498(703)

-(27)

26,432

2006LL million

26,4322,615(2,694)(124)(69)

26,160

Balance at 1 JanuaryCharge for the yearProvision written-back during the yearExchange difference


2007LL million

22,8681,455(85)(102)

24,136

2006LL million

24,13613,327(185)1,234

38,512

Balance at 1 JanuaryCharge for the yearExchange difference


2007LL million

9711,301

(4)

2,268

2006LL million

2,268-

90

2,358


123

33. SHARE CAPITAL

a) The Extraordinary General Meeting of Shareholders held on 30 December 2005, resolved to increasethe Bank’s capital from LL 210,000 million to LL 240,000 million by the increase of LL 30,000 millionthrough the issuance of 3,000,000 new common shares, of LL 10,000 per share. The subscription inthese shares is limited to Bank of New York to be fully settled in cash. The issuance and subscriptionin these common shares was based on the following conditions:

On 16 February 2006, the Extraordinary General Assembly of Shareholders approved the subscription ofthese common shares amounting to 3,000,000 shares, which were approved to be issued and fully paid inthe amount of LL 30,000 million plus a premium amounting to US$ 256,033 thousand (equivalent to LL 385,970million) based on US$ 85.34443 per share. The commission and the issuance costs amounted to US$ 7,590thousand (equivalent to LL 11,911 million) which was deducted from the issuance premium.

It is to be noted that the Board of Directors decided on 7 February 2006 to list the GDSs in the Beirutand Luxembourg Stock Exchanges in parallel with the current GDRs of the Bank.

b) According to the provisions of Law no 308 dated 3 April 2001, the Extraordinary General AssemblyMeeting of Shareholders held on 11 October 2002, and then the Extraordinary General AssemblyMeetings of Shareholders held on 4 June 2004 and 17 September 2005, resolved to issue preferredshares at the following conditions:

33. SHARE CAPITAL

21,500,000 common shares of LL 10,000 per share

750,000 preferred shares (2002 issue) of LL 10,000 per share750,000 preferred shares (2004 issue) of LL 10,000 per share1,000,000 preferred shares (2005 issue) of LL 10,000 per share

Total preferred shares

2007LL million

2006LL million

215,000

7,5007,50010,000

25,000240,000

215,000

7,5007,50010,000

25,000240,000

Number of issued sharesPar value of issued shares (LL 10,000 per share)Premium (denominated in US$)

3,000,000LL 30,000 millionUS$ 85.34443 as determined by the Extraordinary GeneralAssembly of Shareholders held on 13 February 2006.

124

These preferred shares (2002, 2004 and 2005 issues) are redeemable 60 days after the annualgeneral assemblies dealing with the accounts for the years 2007, 2009 and 2010 respectively atthe discretion of the Bank at issue price (LL 10,000 per share plus paid premium) in addition to anydividends declared but not paid during the years prior to the redemption year.

In the event of any liquidation, dissolution orwinding-up of theBank, the holders of series 2002, 2004 and2005 preferred shares shall be entitled to be paid out of the assets of the Bank available for distributionto its shareholders on a pro rata basis, before any payment shall be made to common shareholders.

c) On 12 May 2006, the Extraordinary General Assembly of shareholders decided to list 750,000preferred shares (2002 issue), 750,000 preferred shares (2004 issue), and 1,000,000 preferredshares (2005 issue), in addition to 7,166,667 common shares in the regulated markets in Lebanonand / or abroad.

The Beirut Stock Exchange Committee decided on 24 August 2006 to list, trade and value one thirdof the common shares and all the preferred shares (2002, 2004 and 2005 issues) issued by BLOMBank SAL as detailed above in the official market of the Beirut Stock Exchange. These four typesof shares became listed on 25 August 2006.

Number of shares

Par value of issued shares(LL 10,000 per share)

Premium(denominated in USD)Non cumulative benefits

2002 ISSUE 2004 ISSUE

750,000

LL 7,500 million

LL 105,593 million (USD70,045 thousands)An annual amount equal to11.25% of the net consolidatedprofitsoftheBank,withaminimumof USD 10 per share and not inexcess of USD 15 per share,(subject to the approval of theShareholders’ General AssemblyMeeting and the availability of anon-consolidated distributablenet income for the year).

2005 ISSUE

750,000

LL 7,500 million

LL 105,590 million (USD70,043 thousands)An annual amount for eachshare equal to USD 8.5 basedon the exchange rate on thedate of the General AssemblyMeeting, (subject to theapproval of the Shareholders’General Assembly Meetingand the availability of a non-consolidated distributable netincome for the year).

1,000,000

LL 10,000 million

LL 140,720 million (USD93,347 thousands)2005 distributions to be basedon a fixed amount of USD 3.75per share and thereafter at anannual amount equal to 6% ofthe net consolidated profit ofthe Bank, with a minimum of7.5% and a maximum of 9.5%of the issueprice (subject to theapproval of the Shareholder’sGeneral Assembly Meetingand the availability of a non-consolidated distributable netincome for the year).


125

Accordingly, the shares of the Bank listed on the Beirut and the Luxemburg Stock Exchanges are detailedas follows:

34. RESERVES FOR GENERAL BANKING RISKS

According to the Bank of Lebanon regulations, banks are required to appropriate from their annual netprofit a minimum of 0.2 percent and a maximum of 0.3 percent of total risk weighted assets and off-balance sheet accounts based on rates specified by the Bank of Lebanon to cover general banking risks.The consolidated ratio should not be less than 1.25 percent of these risks at the end of year ten (2007) and2 percent at the end of year twenty (2017). This reserve is part of the Bank’s equity and cannot be distributedas dividends. This reserve is based on the denomination (Lebanese Lira and US Dollars) of the riskweighted assets and off-balance sheet accounts.

35. RESERVES AND PREMIUMS

33. SHARE CAPITAL34. RESERVES FOR GENERAL BANKING RISKS35. RESERVES AND PREMIUMS

GDRCommon sharesPreferred shares (2002 issue)Preferred shares (2004 issue)Preferred shares (2005 issue)

2007Number of shares

2006Number of shares

7,389,6017,166,667750,000750,000

1,000,00017,056,268

7,389,6017,166,667750,000750,000

1,000,00017,056,268

At 31 December 2005Currency translation differenceAppropriation of 2005 profitsIssuance of common sharesnet of issuance costs (note 33)Transfer to non-distributable reservesGain on sale of treasury sharesTransfer to reserve for increasein share capitalOtherAt 31 December 2006Currency translation differenceAppropriation of 2006 profitsNet loss on sale of treasury sharesForeign currency translation reserverealized upon sale of branches inRomania (note 2)OtherAt 31 December 2007

13,03718,718

-

---

--

31,7551,850

--

--

33,605

94,92110

18,323

---

--

113,25431

23,250-

--

136,535

250,012-

20,982

-(44,613)

-

(6)-

226,3752,85625,848

-

(7,169)-

247,910

10,907913

-

-44,613

-

-607

57,0406,225

--

-369

63,634

5,003-

3,331

--

64

6-

8,404-

8,922(3,168)

--

14,158

---

374,059--

--

374,059---

--

374,059

Reservefor translation

differenceLL million

Legalreserve

LL million

Generalreserve

LL million

Non-distributable

reservesLL million

Reserve forincrease

of share capitalLL million

Premium onissuance of

commonshares

LL million

351,903--

---

--

351,903---

--

351,903

Premium onissuance

of preferredshares

LL million

725,78319,64142,636

374,059-

64

-607

1,162,79010,96258,020(3,168)

(7,169)369

1,221,804

TotalLL million

126

Legal reserveAccording to the Lebanese Code of Commerce and to the Money and Credit Act, banks andcompanies operating in Lebanon have to transfer 10% of their annual net profit to a legalreserve. This reserve cannot be distributed as dividends.

General reserveThe Group appropriated general reserves from its retained earnings to strengthen its equity.This reserve amounting to LL 247,910 million as at 31 December 2007 (2006: LL 226,375 million)is available for dividends distribution.

Reserve for increase of share capitalThe balance amounting to LL 14,158 million (2006: LL 8,404 million) represents a regulatoryreserve pursuant to circular no. 167 issued by the Banking Control Commission. This reservecannot be distributed as dividends.

Details of the reserve for increase of share capital are as follows:

Premium on issuance of preferred shares

Non distributable reservesDuring 2006, a subsidiary increased its share capital partially from a transfer of LL 44,613 mil-lion from general reserves.

Recoveries of provisions for doubtful debtsRevaluation reserves for fixed assets soldGain on sale of treasury shares

2007LL million

2006LL million

12,253438

1,46714,158

3,331438

4,6358,404

2002 issue (note 33)2004 issue (note 33)2005 issue (note 33)

2007LL million

2006LL million

105,593105,590140,720351,903

105,593105,590140,720351,903


127

36. CUMULATIVE CHANGES IN FAIR VALUES

According to the Bank of Lebanon regulations, banks are required to appropriate from their annual net

37. TREASURY SHARES

Movement of treasury shares recognized in the balance sheet is as follows:

The treasury shares represent Global Depository Receipts (GDR) owned by the Group. The marketvalue of one GDR was US$ 90.20 as of 31 December 2007 (2006: US$ 57.65).

The Bank refunded the distribution of dividends on the treasury shares amounting to LL 1,146 million(2006: LL 1,221 million) resulting from the distribution of dividends for all ordinary shares in 2006.

The Group realized losses of LL 3,168 million on the sale of treasury shares during the year 2007 (2006:nil). This loss is reflected under “Reserve for increase of share capital” in the “Reserves andpremiums” (note 35).

36. CUMULATIVE CHANGES IN FAIR VALUES37. TREASURY SHARES38. PAID AND PROPOSED DIVIDENDS39. CASH AND CASH EQUIVALENTS

Balance at 1 JanuaryRealized during the yearNet changes in fair values during the yearDifference on exchangeBalance at 31 December

2007LL million

2006LL million

21,430-

(7,006)73

14,497

81,067(458)

(59,607)428

21,430

At 1 JanuaryAcquisition of treasury sharesSales of treasury sharesAt 31 December

2007

414,400619,885(728,285)306,000

-52,108

-52,108

No.of common shares

AmountLL million

52,10865,189(81,175)36,122

2006

-414,400

-414,400

AmountLL million

No.of common shares

128

38. PAID AND PROPOSED DIVIDENDS

According to the resolutions of the General Assembly Meetings held during the years 2007and 2006, dividends paid were as follows:

In their meeting held on 18 March 2008, the board of directors proposed the distribution of dividends for2007 as follows:

39. CASH AND CASH EQUIVALENTS

Balances with the Central Banks include term placements with the Bank of Lebanon, which areconsidered as cash equivalent based on a contractual agreement with the Bank of Lebanon.

Preferred shares – 2002 issue: LL 22,612.50 per share(2006: LL 22,612.50 per share)Preferred shares – 2004 issue: LL 12,813.75 per share(2006: LL 12,813.75 per share)Preferred shares – 2005 issue: LL 14,321.25 per share(2006: LL 5,653.125 per share)Common shares: LL 5,000 per share (2006: LL 4,000 per share)

2007LL million

2006LL million

16,959

9,610

14,322107,500148,391

16,959

9,610

5,65486,000118,223

Common shares (LL 5,500 per share)Preferred shares – 2002 issue (LL 22,612.50 per share)Preferred shares – 2004 issue (LL 12,813.75 per share)Preferred shares – 2005 issue (LL 14,321.25 per share)

LL million

118,25016,9599,61014,32140,890159,140

Cash and balances with the Central BanksLebanese and other governmental treasury bills and bonds held not fortrading (whose original maturities are less than three month)Deposits with banks and financial institutions (whose originalmaturities are less than 3 months)

Less:Due to banks and financial institutions (whose originalmaturities are less than 3 months)

2007LL million

2006LL million

3,611,152

17,297

6,674,69110,303,140

(1,449,612)8,853,528

2,916,938

-

7,301,53710,218,475

(1,293,563)8,924,912


129

40. CORRECTION OF DEFFERRED TAX LIABILITY

During the previous years, the Bank did not provide for deferred tax liability on its share of dividenddistribution from subsidiary, BLOM INVEST BANK SAL, in accordance with International AccountingStandard No 12 (Income taxes). Accordingly, the Bank corrected comparative financial statements andincreased income tax expense by LL 558 million and LL 582 million for 2007 and 2006, respectively, anddecreased retained earnings as of 31 December 2005 by LL 11,844 million and increased deferred taxliability by LL 558 million and LL 12,426 million as of 31 December 2007 and 2006, respectively.

41. RELATED PARTIES TRANSACTIONS

The Group enters into transactions with major shareholders, directors, senior management, and theirrelated concerns, and entities controlled, jointly controlled or significantly influenced by such partiesin the ordinary course of business at commercial interest and commission rates. All the loans andadvances to related parties are performing advances and are free of any provision for possible creditlosses.

The transactions with related parties are as follows:

The board of directors and senior management remunerations are as follows:

All remunerations paid to board of directors and senior management are short in nature.

40. CORRECTION OF AN ERROR41. RELATED PARTIES TRANSACTIONS42. ENGAGEMENTS RECEIVED43. DERIVATIVES

DepositsLoans and advancesIndirect facilitiesInterest received from loansand advancesInterest paid on depositsAccounting services’ revenuesfrom a non-consolidated subsidiary

2007LL million

2006LL million

101,9635,940

58

7614,889

203

75,2597,400

25

1015,570

217

Otherrelated parties

LL million

4,215-

25

-202

203

28,0721,600

-

2051,346

-

Board of directorsand senior

managementLL million

Major shareholdersLL million

69,6764,340

33

5563,341

-

Board of directors and senior management remunerations

2007LL million

20,729

2006LL million

19,197

130

42. ENGAGEMENTS RECEIVED

43. DERIVATIVES

The following schedule shows the positive and the negative fair values of the derivatives andtheir notional amounts according to maturity. The notional amount is the amount of a derivative’sunderlying asset, reference rate or index and represents the basis for measuring the change inthe derivatives value. The notional amounts show the volume of operations at year end and donot reflect either market or credit risk.

Additionally, theGroupholds or issues currency options for trading purposes that are primarily related totheGroup’s customers operations. The notional amount of these contracts is as follows:

All these contractsmature during 2008 that are primarily related to theGroup’s customers’ operations.

Guarantees receivedPersonal guarantees received from customersMobilization billsMobilization bills (renegotiated loans)Directors’ shares in guarantee of their managementReal estate guarantees receivedCash collateral receivedTreasury bills in pledge

2007LL million

2006LL million

26,5373,379,093

51,7351,736

582,742,486783,423103,450

7,088,518

82,4532,268,645

53,4131,736

582,159,787734,773166,908

5,467,773

31 December 2007Forward contracts on foreigncurrencies for hedging purposesForward contracts on foreigncurrencies for trading purposes

31 December 2006Forward contracts on foreigncurrencies for hedging purposesForward contracts on foreigncurrencies for trading purposes

Less than3 months

LL million

3 to 12months

LL million

89,387

2,651,2922,740,679

210,793

676,561887,354

149,348

52,522201,870

-

1,259,4011,259,401

Total notionalamount

LL million

238,735

2,703,8142,942,549

210,793

1,935,9622,146,755

8,472

157,471165,943

4,397

3,5497,946

Negativefair valueLL million

Positivefair valueLL million

-

166,406166,406

831

4,4505,281

1 to 5Years

LL million

-

--

-

--

Notional amount by maturity

Currency options

2007LL million

2006LL million

34,142 17,659


131

Derivative held or issued for hedging purposesAs part of its asset and liability management, the Group uses derivatives for hedging purposes in orderto reduce its exposure to currency risk.

The Group uses forward foreign exchange contracts to hedge against specifically identified currencyrisks.

The Bank uses forward foreign exchange contracts (to sell Euros and buy US Dollars) to hedge its netinvestment in a foreign subsidiary denominated in Euro and amounting to Euro 107,904 thousand (2006:same). The notional amount of these contracts amounted to Euro 107,900 thousand as at 31 December2007 (2006: same). The forward foreign exchange contracts were revalued as of 31 December 2007 andresulted in unrealized losses of LL 8,472 million (2006: LL 3,566 million), refer to note 31. The contractsmature on 30 April 2008 at latest.

44. COMMITMENTS AND CONTINGENT LIABILITIES

Credit – related commitmentsCredit-related commitments include commitments to extend credit, standby letters of credit, guaranteesand acceptances which are designed to meet the requirements of the Group's customers.Letters of credit, guarantees (including standby letters of credit), and acceptances commit the Group tomake payments on behalf of customers contingent upon the failure of the customer to perform under theterms of the contract.Commitments to extend credit represent contractual commitments to make loans and revolving credits.Commitments generally have fixed expiration dates, or other termination clauses. Since commitmentsmay expire without being drawn upon, the total contract amounts do not necessarily represent futurecash requirements.

43. DERIVATIVES44. COMMITMENTS AND CONTINGENT LIABILITIES

132

The Group has the following credit related commitments:

Please refer to note 21 for acceptances outstanding as of 31December 2007 and 2006 respectively.

Capital and operating lease commitmentsThe commitments on capital expenditures and operating lease commitments at the balancesheet date, which were not provided for, were as follows:

Capital commitmentsTangible fixed assets purchases

Operating lease commitmentsMinimum payments for future lease contracts:During one yearMore than 1 year and less than five yearsMore than five years

Total operating lease commitments at the balance sheet date

2007LL million

2006LL million

82,172

3,53113,98013,192

30,703

48,513

2,3629,0158,649

20,026

Commitments on behalf of customers:Letters of creditLetters of guarantees

Authorized but unutilized facilities

2007LL million

2006LL million

359,374786,996

1,146,3701,358,4442,504,814

307,186689,528996,714986,641

1,983,355


133

45. SEGMENTAL INFORMATION

The Group operates in two geographic markets based on the location of its markets and customers. Thelocal market represents the Lebanese market and the international market represents markets outsideLebanon. The following table shows the distribution of the Group’s gross income, total assets and capitalexpenditure by geographical segment:

The Group’s major business segment is banking. Insurance activities represent 1.71% of profit beforeincome tax and 1% of total assets.

46. FIDUCIARY DEPOSITS, ASSETS UNDER MANAGEMENT AND CUSTODY ACCOUNTS

Fiduciary accounts include notes, checks, policies, treasury bills/bonds, shares and documents for col-lection held by the Group to the order of third parties.

Net interest receivedNet provisions less recoveries on loansand advancesRevenues from shares and financial assetswith variable incomeNet commissionsNet profit from financial operationsOther operating income

Gross income

Operating expenses and amortizationand depreciationNet provisions less recoveries on financialfixed assetsProvisions for contingent liabilities

Profit before tax

Total assets

Total liabilities

Capital expenditures

2006LL million

2007LL million

150,886

(9,428)

79443,56513,8935,464

205,174

(76,210)

395(1,455)

127,904

10,471,587

8,267,442

31,482

456,112

11,435

96989,38039,66824,618

622,182

(243,246)

-(13,350)

365,586

25,067,014

22,974,605

84,136

2007LL million

167,777

(667)

44544,73017,8568,371

238,512

(86,469)

-(13,327)

138,716

12,229,214

10,563,249

53,065

256,369

8,620

32933,42412,90616,930

328,578

(134,846)

-(3)

193,729

10,953,024

11,240,625

18,094

2006LL million

2007LL million

288,335

12,102

52444,65021,81216,247

383,670

(156,777)

-(23)

226,870

12,837,800

12,411,356

31,071

2006LL million

407,255

(808)

1,12376,98926,79922,394

533,752

(211,056)

395(1,458)

321,633

21,424,611

19,508,067

49,576

45. SEGMENTAL INFORMATION46. FIDUCIARY DEPOSITS, ASSETS UNDER MANAGEMENT AND CUSTODY ACCOUNTS47. CONCENTRATION OF ASSETS, LIABILITIES AND OFF BALANCE SHEET ITEMS

Domestic International Total

Fiduciary deposits

2007LL million

2006LL million

3,959,136 2,774,360

134

47. CONCENTRATION OF ASSETS, LIABILITIES AND OFF BALANCE SHEET ITEMS

Concentrations arisewhen a number of counter parties are engaged in similar business activities oractivities in the same geographic region, or have similar economic features that would cause theirability to meet contractual obligations to be similarly affected by changes in economic, political orother conditions. Concentrations indicate the relative sensitivity of the Group’s performancedevelopments affecting a particular industry or geographic location.

The distribution of assets, liabilities, and off-balance sheet items by geographic region was asfollows:

Geographical LocationLebanonOutside Lebanon

AssetsLL million

LiabilitiesLL million

10,953,02410,471,58721,424,611

11,240,6258,267,44219,508,067

Off-balancesheet

LL million

5,078,7023,147,1428,225,844

12,411,35610,563,24922,974,605

LiabilitiesLL million

AssetsLL million

12,837,80012,229,21425,067,014

Off-balancesheet

LL million

1,719,3224,216,1665,935,488

2007 2006


135

48. BALANCE SHEET BY CATEGORY

AssetsCash and balances withthe Central BanksLebanese and other governmentaltreasury bills and bondsBonds and financial assetswith fixed incomeShares, securities and financialassets with variable incomeDeposits with banksand financial institutionsLoans and advances to customersBank acceptancesInvestments and loansto related partiesTangible fixed assetsIntangible fixed assetsOther assetsRegularization accountsand other debit accountsOut of which:Revaluation variance on foreignexchange forward contractshedging operations relatedto the Group’s customersGoodwill

LiabilitiesDue to banks and otherfinancial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accountsand other credit accountsProvisions for risks and charges

Held fortrading

LL million

Derivativesdesignatedas hedging

instrumentsLL million

-

76,949

21,244

6,512

---

----

-

13,667-

118,372

----

---

-

-

-

-

---

----

-

---

----

8,472-

8,472

Fair valuethrough

profit or lossLL million

-

-

45,470

-

---

---

17,600

-

--

63,070

----

---

-

5,003,374

872,185

5,213

---

1,684---

-

--

5,882,456

----

---

Availablefor sale

LL million

Loansand receivables

LL million

6,330,031

-

226,241

-

7,536,5334,179,307245,357

----

-

--

18,517,469

----

---

Amortized costLL million

-

-

-

-

---

----

-

---

1,555,91420,708,516

245,357-

--

22,509,787

48. BALANCE SHEET BY CATEGORY

31 December 2007

Nonfinancial

assets andliabilities and

othersLL million

-

-

-

-

---

25,524272,6424,45916,616

105,820

-60,586485,647

---

194,460

181,32080,566456,346

TotalLL million

6,330,031

5,080,323

1,165,140

11,725

7,536,5334,179,307245,357

27,208272,6424,45934,216

105,820

13,66760,586

25,067,014

1,555,91420,708,516

245,357194,460

189,79280,566

22,974,605

136

AssetsCash and balances withthe Central BanksLebanese and other governmentaltreasury bills and bondsBonds and financial assetswith fixed incomeShares, securities and financialassets with variable incomeDeposits with banksand financial institutionsLoans and advances to customersBank acceptancesInvestments and loansto related partiesTangible fixed assetsIntangible fixed assetsOther assetsRegularization accountsand other debit accountsOut of which:Revaluation variance on foreignexchange forward contractshedging operations relatedto the Group’s customersGoodwill

LiabilitiesDue to banks and otherfinancial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accountsand other credit accountsProvisions for risks and charges

Held fortrading

LL million

-

50,548

-

4,948

---

----

-

901-

56,397

----

---

-

-

-

-

---

----

156

--

156

----

3,566-

3,566

Fair valuethrough

profit or lossLL million

-

-

-

-

---

---

16,751

-

--

16,751

----

---

-

3,424,372

139,501

3,455

---

1,730---

-

--

3,569,058

----

---

Availablefor sale

LL million

Loansand receivables

LL million

6,246,406

-

246,599

-

7,754,2842,996,698173,260

----

-

--

17,417,247

----

---

-

-

-

-

---

----

-

---

1,308,84417,690,381

173,260-

--

19,172,485

31 December 2006

-

-

-

-

---

1,490219,3722,84516,964

60,351

-63,980365,002

---

141,067

126,30364,646332,016

6,246,406

3,474,920

386,100

8,403

7,754,2842,996,698173,260

3,220219,3722,84533,715

60,507

90163,980

21,424,611

1,308,84417,690,381

173,260141,067

129,86964,646

19,508,067

Derivativesdesignatedas hedging

instrumentsLL million

Amortized costLL million

Nonfinancial

assets andliabilities and

othersLL million

TotalLL million


137

49. FAIR VALUE OF THE FINANCIAL INSTRUMENTS

The following table shows the difference between the carrying values and fair values for the financial assetsand liabilities classified in the balance sheet. This table does not show the fair values of non-financial assetsand liabilities.

The following describes the methodologies and assumptions used to determine fair values for thosefinancial instruments which are not already recorded at fair value in the financial statements:

Assets for which fair value approximates carrying valueFor financial assets and financial liabilities that are liquid or having a short term maturity (less than threemonths) it is assumed that the carrying amounts approximate to their fair value. This assumption is alsoapplied to demand deposits, savings accounts without a specific maturity and variable rate financialinstruments.

Financial assetsCash and balances with the Central BanksLebanese and other government treasurybills and bondsBonds and financial assetswith fixed incomeShares, securities and financialassets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loans to related parties

Financial liabilitiesBanks and financial institutionsCustomers’ depositsEngagements by acceptances

Total unrecognized changein unrealized fair value

Carrying valueLL million

Fairvalue

LL million

6,246,406

3,474,920

386,100

8,4037,754,2842,996,698173,2603,220

1,308,84417,690,381

173,260

6,389,936

3,474,920

384,700

8,4037,755,8273,020,631173,2603,220

1,308,84417,658,161

173,260

Unrecognizedgains (losses)

LL million

88,195

-

(1,420)

-6,6633,448

--

(3)(40,701)

-

56,182

6,418,226

5,080,323

1,163,720

11,7257,543,1964,182,755245,35727,208

1,555,91120,667,815

245,357

Fairvalue

LL million

Carrying valueLL million

6,330,031

5,080,323

1,165,140

11,7257,536,5334,179,307245,35727,208

1,555,91420,708,516

245,357

Unrecognizedgains (losses)

LL million

143,530

-

(1,400)

-1,54323,933

--

-(32,220)

-

135,386

49. FAIR VALUE OF THE FINANCIAL INSTRUMENTS

2007 2006

138

Fixed rate financial instrumentsThe fair value of fixed rate financial assets and liabilities carried at amortized cost are estimatedby comparing market interest rates when they were first recognized with current market ratesoffered for similar financial instruments. The estimated fair value of fixed interest bearing depositsis based on discounted cash flows using prevailing money-market interest rates for debts withsimilar credit risk and maturity. For quoted debt issued the fair values are calculated based onquoted market prices. For those notes issued where quoted market prices are not available, adiscounted cash flow model is used based on a current interest rate yield curve appropriatefor the remaining term to maturity.

Financial instruments recorded at fair valueThe following table shows an analysis of financial instruments recorded at fair value, betweenthose whose fair value is based on quoted market prices and those involving valuation techniqueswhere all the model inputs are observable in the market.

The unquoted financial instruments that are stated at cost approximately equal to fair value.

Financial assetsLebanese and other governmentaltreasury bills and bondsBonds and financial assets withfixed incomeShares, securities and financialassets with variable incomeInvestments and loansto related parties

2,181,751

894,568

6,734

-3,083,053

2,765,927

-

-

-2,765,927

132,645

44,331

4,991

1,684183,651

1,285,169

95,288

5,225

-1,385,682

5,080,323

938,899

11,725

1,6846,032,631

243,668

44,213

3,178

1,730292,789

Quoted marketprices

LL million

Valuationtechniques -

marketobservable

inputsLL million

UnquotedLL million

Quoted marketprices

LL million

TotalLL million

UnquotedLL million

1,946,083

-

-

-1,946,083

Valuationtechniques -

marketobservable

inputsLL million

3,474,920

139,501

8,403

1,7303,624,554

TotalLL million

2007 2006


139

50. RISK MANAGEMENT

The Bank manages its business activities within risk management guidelines as set by the Group’s “riskmanagement policy” approved by the board of directors. The Bank recognizes the role of the board ofdirectors and executive management in the risk management process as set out in the Banking ControlCommission circular 242. In particular, it is recognized that ultimate responsibility for establishment ofeffective risk management practices and culture lies with the board of directors as does the setting upof Bank’s risk appetite and tolerance levels. The board of directors delegates through its risk manage-ment committee the day–to–day responsibility for establishment and monitoring of risk managementprocess across the Bank’s group to the head of risk management, who is directly appointed by the boardof directors, in coordination with executive management at BLOM Bank SAL.

The Group is exposed to credit risk, liquidity risk, market risk and operational risk.

The board’s risk management committee has the mission to periodically (1) review and assess the riskmanagement function to the Group, (2) review the adequacy of the Bank’s capital and its allocationwithin the Group, and (3) review risk limits and reports and make recommendations to the Board.

The head of risk management undertakes his responsibilities through the “Risk ManagementDepartment”, with its employees reporting directly to the head of risk management. The risk manager isresponsible for establishing the function of the department and its employees.

BLOM Bank’s risk management department aids executive management in controlling and actively man-aging the Group’s overall risk. The department mainly ensures that:

- Risk policies and methodologies are consistent with the Group’s risk appetite.- Limits and risk across banking activities are monitored throughout the Group.

Through a comprehensive risk management framework, transactions and outstanding risk exposures arequantified and compared against authorized limits, whereas non-quantifiable risks are monitored againstpolicy guidelines as set by the Group’s “Risk Management Policy”. Any discrepancies, breaches or devi-ations are escalated to executive senior management in a timely manner for appropriate action.

50. RISK MANAGEMENT

140

In addition to the Group’s risk management in Lebanon, risk managers and / or risk officerswere assigned within the Group’s foreign subsidiaries or branches to report to the departmentand executive senior management in a manner that ensures:- Standardization of risk management functions and systems developed across the Group.- Regional consistency of conducted business in line with the board’s approved risk appetite.

In respect to Basel 2 capital adequacy ratio calculations, risk management started, sinceDecember 2004 consolidated balances, to issue internal reports to executive managementand the board revealing multiple scenarios of capital adequacy calculations for credit andmarket risks under the standardized approaches and for operational risk under the basic indicatorapproach. In addition, the Bank sent to the Banking Control Commission a quantitative impact studyfor theBasel 2 capital adequacy calculations for June 2007 balances revealing a ratiowell above theminimum international requirement of 8%.

50.1 Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation andcause the other party to incur a financial loss. The Group attempts to control credit risk bymonitoring credit exposures, limiting transactions with specific counter parties, and continuouslyassessing the creditworthiness of counter parties.

TheGroupmanages credit risk by setting limits for individual borrowers and groups of borrowers andfor geographical and industry segments. In addition the Group obtains security where appropriate.

The debt securities included in investments are mainly sovereign risk and standard gradesecurities. Analysis of investments by counterparty is provided in notes 16 and 17. For detailsof the composition of the loans and advances refer to note 20. Information on credit risk relat-ing to derivative instruments is provided in note 43 and for commitments and contingencies innote 44. The information on the Group’s net maximum exposure by economic sectors is givenin note (A) below.

The Group maintains a general credit risk policy that is in compliance with the Group’s general riskmanagement related to the Group’s credit transactions. It consists of the following:- The permissible activities, segments, programs and services that the Group intends to deliverand the acceptable limits;- The mechanism of the approval on credit-facilities;- The mechanism for managing and following up credit-facilities; and- The required actions for analyzing and organizing credit files.


141

The Group attempts to control credit risk by monitoring credit exposures, limiting transactions withspecific counter parties, and continually assessing the creditworthiness of counter parties. TheGroup’s risk management are designed to identify and to set appropriate risk limits and to monitor therisk adherence to limits. Actual exposures against limits are monitored daily, monthly and periodically. Riskmanagement is responsible for monitoring the risk profile of the Group’s loan portfolio by producinginternal reports highlighting any exposure of concern in corporate, commercial and consumer lending. TheGroup examines the level of concentration whether by credit quality, client groupings or economicsector and collateral coverage. Further, the Group monitors non-performing loans and takes therequired provisions for these loans.

The Group in the ordinary course of lending activities holds collaterals and guarantees as security tomitigate credit risk in the loans and advances. These collaterals mostly include cash collateral, quotedshares and debt securities, real estate mortgages, personal guarantees and others. In addition, the collectionunit in the Group dynamically manages and takes remedial actions for non-performing loans.

The Group uses an internal classification system based on risk ratings for its corporate and middlemarket customers. The risk rating system, which is managed by an independent unit, provides a ratingbased on client and transaction level. The classification system includes six grades, of which threegrades relate to the performing portfolio (regular credit facilities: risk rating “1” and “2” and specialmention – watch list: risk rating “3”), one grade relates to substandard loans (risk rating “4”) and twogrades relate to non-performing loans (risk rating “5” and “6”). Credit cards, personal loans, carloans, housing loans and other loans related to these loans are classified as regular as they areperforming and have timely repayment with no past dues; except for those loans that have unsettledbills due for more than 90 days. Each individual borrower is rated based on an internally developeddebt rating model that evaluates risk based on financial as well as qualitative inputs. The associatedloss estimate norms for each grade have been calculated based on the Group’s historical defaultrates for each rating. These risk ratings are reviewed on a regular basis.

As for credit rating system, the Bank is implementing the Moody’s KMV Risk Advisor for credit analysisand rating systems for corporate and commercial borrowers, in order to aid the Group in moving at a laterstage to internal rating-based measurements under Basel 2. The Bank has obtained a license fromMoody’s KMV to implement this system on the whole Group.

50. RISK MANAGEMENT

142

A- Maximum exposure to credit riskAn analysis of the Group’s financial assets before and after taking into account collateral heldor other credit enhancements, is as follows:

For on-balance sheet financial assets, the exposures set out above are based on net carryingamount as reported in the balance sheet.

Balances with the Central BanksLebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeShares, securities and financial assets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loans to related partiesOther assetsRegularization accounts and other debit accounts

Contingent liabilitiesCommitments

Total credit exposure

Gross maximumexposureLL million

Net maximumexposureLL million

6,201,9485,080,3231,165,140

11,7257,536,5334,179,307245,3572,28634,216119,487

24,576,3221,146,3701,358,4442,504,81427,081,136

6,201,9485,080,3231,165,140

11,7257,478,7901,706,143

-2,28634,216119,487

21,800,058990,776603,691

1,594,46723,394,525

2007

Gross maximumexposureLL million

Net maximumexposureLL million

6,153,6393,474,920386,1008,403

7,754,2842,996,698173,2602,26933,71561,408

21,044,696996,714986,641

1,983,35523,028,051

6,153,6393,474,920386,1008,403

7,697,1751,448,185

-2,26933,71561,408

19,265,814802,395517,852

1,320,24720,586,061

2006


143

Collateral and other credit enhancementsThe amount, type and valuation of collateral is based on guidelines specified in the risk managementframework. The main types of collateral obtained include real estate, quoted shares, cash collateral andbank guarantees.

The revaluation and custody of collaterals are performed independent of the business units.

B- Risk concentrations of maximum exposure to credit risk

50. RISK MANAGEMENT




DomesticLL million

InternationalLL million

4,567,3944,836,164163,8436,990

584,4372,322,535103,9561,65124,01950,380

12,661,369200,998

1,078,2091,279,207

13,940,576

1,634,554244,159

1,001,2974,735

6,952,0961,856,772141,401

63510,19769,107

11,914,953945,372280,235

1,225,60713,140,560

2007

TotalLL million

6,201,9485,080,3231,165,140

11,7257,536,5334,179,307245,3572,28634,216119,487

24,576,3221,146,3701,358,4442,504,814

27,081,136




DomesticLL million

InternationalLL million

5,238,0733,240,591209,6635,506

552,7521,396,537

89,4501,65132,64735,424

10,802,294191,242664,879856,121

11,658,415

915,566234,329176,4372,897

7,201,5321,600,161

83,810618

1,06825,984

10,242,402805,472321,762

1,127,23411,369,636

2006

TotalLL million

6,153,6393,474,920386,1008,403

7,754,2842,996,698173,2602,26933,71561,408

21,044,696996,714986,641

1,983,35523,028,051

144

C- Credit quality per class of financial assets

In managing its portfolio, the Group utilizes ratings and other measures and techniques whichseek to take account of all aspects of perceived risk. Credit exposures classified as “High”quality are those where the ultimate risk of financial loss from the obligor’s failure to dischargeits obligation is assessed to be low. These include facilities to corporate entities with financialcondition, risk indicators and capacity to repay which are considered to be good to excellent.Credit exposures classified as “Standard” quality comprise all other facilities whose paymentperformance is fully compliant with contractual conditions and which are not “impaired”. Theultimate risk of possible financial loss on “Standard” quality is assessed to be higher than thatfor the exposures classified within the “High” quality range.

The credit quality of financial assets is managed by the Group using internal credit ratings.The table below shows the credit quality by class of financial asset for balance sheet lines,based on the Group’s credit rating system

Lebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeShares, securities and financial assets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loans to related parties

Standardgrade

LL million

Past due butnot impaired

LL million

----

105,078--

105,078

----

35,095--

35,095

2007

Past due andimpaired

LL million

TotalLL million

----

70,192--

70,192

5,080,3231,165,140

11,7257,536,5334,179,307245,3572,286

18,220,671

Highgrade

LL million

5,080,3231,165,140

11,7257,536,5333,968,942245,3572,286

18,010,306

Neither past due nor impaired

Lebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeShares, securities and financial assets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loans to related parties

Standardgrade

LL million

Past due butnot impaired

LL million

----

60,864--

60,864

----

34,349--

34,349

2006

Past due andimpaired

LL million

TotalLL million

----

60,540--

60,540

3,474,920386,1008,403

7,754,2842,996,698173,2602,269

14,795,934

Highgrade

LL million

3,474,920386,1008,403

7,754,2842,840,945173,2602,269

14,640,181

Neither past due nor impaired


145

D- Aging analysis of past due but not impaired loans

Impairment assessmentThe main considerations for the loan impairment assessment include whether any payments of principalor interest are overdue by more than 90 days or there are any known difficulties in the cash flows ofcounterparties, credit rating downgrades, or infringement of the original terms of the contract. The Groupaddresses impairment assessment in two areas: individually assessed allowances and collectivelyassessed allowances.

Individually assessed allowancesThe Group determines the allowances appropriate for each individually significant loan or advance on anindividual basis. Items considered when determining allowance amounts include the sustainability of thecounterparty’s business plan, its ability to improve performance once a financial difficulty has arisen,projected receipts and the expected dividend payout should bankruptcy ensue, the availability of otherfinancial support and the realisable value of collateral, and the timing of the expected cash flows. Theimpairment losses are evaluated at each reporting date, unless unforeseen circumstances require morecareful attention.

Collectively assessed allowancesAllowances are assessed collectively for losses on loans and advances that are not individually significant(including credit cards, housing loans and unsecured consumer lending) and for individually significant loansand advances where there is not yet objective evidence of individual impairment. Allowances are evaluatedon each reporting date with each portfolio receiving a separate review.

50. RISK MANAGEMENT


Less than90 days

LL million

More than 90days

LL million

13,048 22,047

2007

TotalLL million

35,095


Less than90 days

LL million

More than 90days

LL million

13,792 20,557

2006

TotalLL million

34,349

146

The collective assessment takes account of impairment that is likely to be present in the portfolioeven though there is not yet objective evidence of the impairment in an individual assessment.Impairment losses are estimated by taking into consideration of the following information: historicallosses on the portfolio, current economic conditions, the approximate delay between the time a lossis likely to have been incurred and the time it will be identified as requiring an individually assessedimpairment allowance, and expected receipts and recoveries once impaired. Management isresponsible for deciding the length of this period which can extend for as long as one year. Theimpairment allowance is then reviewed by credit management to ensure alignment with the Group’soverall policy.Financial guarantees and letters of credit are assessed and provision made in a similar manner asfor loans.

E- Credit quality using external risk ratings

High gradeRisk rating class 1Risk rating class 2Risk rating class 3Risk rating class 4

Standard gradeRisk rating class 5Risk rating class 6Risk rating class 7

Sub-standard gradeRisk rating class 8Risk rating class 9

ImpairedRisk rating class 10

Unclassified

Moody’sequivalent

grades

AaaAa1 – A3

Baa1 – Baa2Baa3

Ba1Ba2 – Ba3B1 – B2

B3Caa – C

D

2007

S & Pequivalent

grades

Total riskLL million

AAAAA+ to A3

BBB+ to BBBBBB-

BB+BB to BB-B+ to B

B-CCC+ to C

-

247,5537,227,8241,013,378

74,902

-116,13211,922

9,449,028-

274,244

8,666,15327,081,136


147

50.2 Liquidity Risk

Liquidity risk is the risk that the Group will be unable to meet its liabilities when they fall due under normal andstress circumstances. Liquidity risk can be caused by market disruptions or credit downgrades which maycause certain sources of funding to dry up immediately. To limit this risk, management has arrangeddiversified funding sources in addition to its core deposit base, manages assets with liquidity in mind,maintaining a healthy balance of cash and cash equivalents and readily marketable securities.

The management of liquidity risk is currently governed by the Group’s Assets and Liabilities Managementpolicy. The main objectives converge around the following:

- Set targets and ranges for key balance sheet or income statement ratios to assure that the needed liquiditycapacity of the Group is maintained at all times, while providing sufficient flexibility to enable the Group toaddress short term fluctuations in liquidity pressures.- Provide general guidance on the sequence to be followed in drawing on the Group’s funding sources tomeet a liquidity drain.- Review the current and prospective liquidity positions and monitor alternative funding sources.- Develop parameters for the pricing and maturity distributions of deposits, loans and investments.- Promulgate a contingency liquidity plan that identifies early indicators of stress conditions and describeactions to be taken in the event of financial difficulties arising from systemic or other crises, while minimizingadverse long-term implications for the Group’s business.

In accordance with Lebanese banking rules and regulations, the Group maintains a non-interest bearingbalances at the Bank of Lebanon calculated on the basis of 25% of sight commitments and 15% of termcommitments in Lebanese Lira. Regarding foreign currencies, the Group maintains interest-bearingplacements at the Bank of Lebanon at the rate of 15% of total deposits in foreign currencies regardlessof nature. Foreign subsidiaries are also subject to obligatory reserve requirements with varying percentages,according to the banking rules and regulations of the countries in which they are locates.

The liquidity position is assessed and managed under a variety of scenarios, giving due consideration tostress factors relating to both the market in general and specifically to the Group. One of these methodsis to maintain limits on the ratio of liquid assets to customers’ deposits, set to reflect market conditions.Net liquid assets consist of cash and balances with the Central Banks, deposits with banks and financialinstitutions, Lebanese and other governmental treasury bills and bonds less deposits due to banks andfinancial institutions due to mature within the next month. The ratio during the year was as follows:

50. RISK MANAGEMENT

148

50.2.1 Analysis of financial liabilities by remaining contractual maturities

The table below summarizes the maturity profile of the Group’s financial liabilities at 31December 2007 and 2006 based on contractual undiscounted repayment obligations. As thespecial commission payments up to contractual maturity are included in the table, totals donot match with the balance sheet. The contractual maturities of liabilities have beendetermined on the basis of the remaining period at the consolidated balance sheet date tothe contractual maturity date and do not take into account the effective expected maturitiesas shown on note 50-2-2 below (maturity analysis of assets and liabilities). Repayments whichare subject to notice are treated as if notice were being given immediately. However, theGroup expects that many customers will not request repayment on the earliest date the Groupcould be required to pay and the table does not reflect the expected cash flows indicated bythe Group’s deposit retention history.

At 31 DecemberAverage during the yearHighestLowest

2007 % 2006 %

33.7933.7935.1532.29

36.4836.8337.8336.19

Due to banks and financial institutionsCustomers’ depositsEngagements by acceptances

Total undiscounted financial liabilities

Over 5years

LL million

TotalLL million

48,05212,635

-

60,687

1,558,83120,820,821

245,357

22,625,009

3 to 12months

LL million

1 to 5years

LL million

8,2951,095,153

50,400

1,153,848

12,924155,6942,254

170,872

Up to 1month

LL million

1 to 3months

LL million

1,487,14615,507,373

72,930

17,067,449

2,4144,049,966119,773

4,172,153


149

31 December 2007

The table below shows the contractual expiry bymaturity of theGroup’s contingent liabilities and commitments:

50. RISK MANAGEMENT

Due to banks and financial institutionsCustomers’ depositsEngagements by acceptances

Total undiscounted financial liabilities

Over 5years

LL million

TotalLL million

---

-

1,311,41517,768,128

173,260

19,252,803

3 to 12months

LL million

1 to 5years

LL million

12,9081,079,216

-

1,092,124

-21,775

-

21,775

Up to 1month

LL million

1 to 3months

LL million

1,298,28113,267,629

49,543

14,615,453

2263,399,508123,717

3,523,451

Contingent liabilitiesCommitmentsForeign currencies to receive against foreigncurrencies to deliver

Over 5years

LL million

TotalLL million

--

--

1,146,3701,358,444

2,942,5495,447,363

3 to 12months

LL million

1 to 5years

LL million

--

201,870201,870

--

--

Up to 1month

LL million

1 to 3months

LL million

1,146,3701,358,444

-2,504,814

--

2,740,6792,740,679

31 December 2006

2007

Contingent liabilitiesCommitmentsForeign currencies to receive against foreigncurrencies to deliver

Over 5years

LL million

TotalLL million

--

--

996,714986,641

2,146,7554,130,110

3 to 12months

LL million

1 to 5years

LL million

--

1,259,4011,259,401

--

--

1 to 3months

LL million

--

887,354887,354

2006

Up to 1month

LL million

996,714986,641

-1,983,355

150

The Group expects that not all of the contingent liabilities or commitments will be drawnbefore expiry of the commitments.

50.2.2 Maturity analysis of assets and liabilities

The table below shows an analysis of assets and liabilities analyzed according to when theyare expected to be recovered or settled. See note 50-2-1 above for the Group’s contractualundiscounted financial liabilities.

The maturity profile of the Group’s assets and liabilities as at 31 December 2007 is as follows:

ASSETSCash and balances withthe Central BanksLebanese and othergovernmental treasurybills and bondsBonds and financial assetswith fixed incomeShares, securities and financialassets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loansto related partiesTangible fixed assetsIntangible fixed assetsOther assetsRegularization accountsand other debit accountsGoodwillTOTAL ASSETS

LIABILITIESBanks and financial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accountsand other credit accountsProvisions for risks and chargesTOTAL LIABILITIESNET LIQUIDITY GAP

3,914,291

3,969,844

1,018,332

11,725395,028

1,190,8702,254

27,208272,6424,4597,123

14860,586

10,874,510

45,225143,9162,2541,633

1,13276,612

270,77210,603,738

6,330,031

5,080,323

1,165,140

11,7257,536,5334,179,307245,357

27,208272,6424,45934,216

119,48760,586

25,067,014

1,555,91420,708,516

245,357194,460

189,79280,566

22,974,6052,092,409

2,263,172

2,236,508

272,862

-42,188742,703

-

---

21

15-

5,557,469

-72,794

--

--

72,7945,484,675

772,863

599,449

700,172

11,72543,746139,110

-

27,208272,6424,4597,102

-60,586

2,639,062

45,22511,971

--

24276,612

134,0502,505,012

SubtotalLL million

2,415,740

1,110,479

146,808

-7,141,5052,988,437243,103

---

27,093

119,339-

14,192,504

1,510,68920,564,600

243,103192,827

188,6603,954

22,703,833(8,511,329)

878,256

1,133,887

45,298

-309,094309,0572,254

----

133-

2,677,979

-59,1512,2541,633

890-

63,9282,614,051

1 to 3months

LL million

3 monthsTo 1 Year

LL million

114,458

115,423

30,139

-827,810307,679119,773

---

23

15,368-

1,530,673

22,2044,112,411119,77369,211

28,957-

4,352,556(2,821,883)

303,205

760,030

106,403

-89,451985,52050,400

---

111

23,656-

2,318,776

18,9551,053,796

50,40055,498

2,815-

1,181,4641,137,312

Up to 1month

LL million

1,998,077

235,026

10,266

-6,224,2441,695,238

72,930

---

26,959

80,315-

10,343,055

1,469,53015,398,393

72,93068,118

156,8883,954

17,169,813(6,826,758)

SubtotalLL million

(2-5) yearsLL million

Over 5 yearsLL million


TotalLL million

Less Than one year More Than one year


151

The maturity profile of the Group’s assets and liabilities as at 31 December 2006 is as follows:

50.3 Market risk

Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuatedue to changes in market prices. Market risks arise from open positions in interest rate and currencyrate, all of which are exposed to general and specific market movements and changes in the levelof volatility of market rates or prices such as interest rates and foreign exchange rates.


LIABILITIESBanks and financial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accountsand other credit accountsProvisions for risks and chargesTOTAL LIABILITIESNET LIQUIDITY GAP

4,056,290

3,034,674

303,902

8,403189,462526,649

-

3,220219,3722,8456,029

37463,980

8,415,200

-5,287

--

6,68464,64676,617

8,338,583

6,246,406

3,474,920

386,100

8,4037,754,2842,996,698173,260

3,220219,3722,84533,715

61,40863,980

21,424,611

1,308,84417,690,381

173,260141,067

129,86964,646

19,508,0671,916,544

2,401,613

1,986,939

178,830

--

243,461-

----

16-

4,810,859

----

43-

434,810,816

764,869

429,466

54,132

8,4036,30186,925

-

3,220219,3722,8456,029

20663,980

1,645,748

----

3,67364,64668,319

1,577,429

SubtotalLL million

2,190,116

440,246

82,198

-7,564,8222,470,049173,260

---

27,686

61,034-

13,009,411

1,308,84417,685,094

173,260141,067

123,185-

19,431,450(6,422,039)

889,808

618,269

70,940

-183,161196,263

-

----

152-

1,958,593

-5,287

--

2,968-

8,2551,950,338

1 to 3months

LL million

3 monthsTo 1 Year

LL million

615,949

37,203

1,478

-769,183248,809123,717

---

6,144

7,787-

1,810,270

13,8083,321,788123,71755,213

15,345-

3,529,871(1,719,601)

501,454

361,973

62,400

-191,821653,964

-

----

5,469-

1,777,081

12,3901,051,578

-47,352

8,934-

1,120,254656,827

Up to 1month

LL million

1,072,713

41,070

18,320

-6,603,8181,567,276

49,543

---

21,542

47,778-

9,422,060

1,282,64613,311,728

49,54338,502

98,906-

14,781,325(5,359,265)

SubtotalLL million

TotalLL million

Less Than one year More Than one year

50. RISK MANAGEMENT

152


Over 5 yearsLL million


Risk management is responsible for generating internal reports quantifying the Group’s earningsat risk due to extreme movements in interest rates, while daily monitoring the sensitivity of theGroup’s trading portfolio of fixed income securities to changes in market prices and / or marketparameters. Interest rate sensitivity gaps are reported to executive management and to theBanking Control Commission unconsolidated on amonthly basis and consolidated (Group level) ona semi- annual basis. The Bank’s Asset and Liability Management (ALM) policy assigns authorityfor its formulation, revision and administration to the Asset / Liability Management Committee(ALCO) of BLOM Bank SAL. Risk management will be responsible for monitoring compliance withall limits set in the ALM policy ranging from core foreign currency liquidity to liquidity mismatchlimits to interest sensitivity gap limits. The Bank is also in the process of implementing the newlyacquiredAsset and LiabilityManagement system“FocusALM”aimedat automating themanagementof the Bank’s assets and liabilities from a static and dynamic perspectives including stress testing andextensive scenario analysis.

50-3-1 Interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect futureprofitability or the fair values of financial instruments. The Group is exposed to interest rate risk as aresult ofmismatchesof interest rate repricingof assets and liabilities andoff-balance sheet items thatmature or reprice in a given period. The Group manages this risk by matching the repricing of assetsand liabilities through risk management strategies.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonable possible change in interestrates, with all other variables held constant, of the Group’s income statement or statement ofchanges in equity.

The sensitivity of the income statement is the effect of the assumed changes in interest rateson the net interest income for one year, based on the floating rate non-trading financial assetsand financial liabilities held at the year end, including the effect of hedging instruments. Thesensitivity of equity is calculated by revaluing the available for sale investments, based on theassumption that there are parallel shifts in the yield curve.


153

Thesensitivityofequity isanalyzedbymaturityof theassetsorcash flowhedgeswaps.All thenon-tradingbookexposuresaremonitoredandanalyzed incurrencyconcentrationsandrelevantsensitivitiesaredisclosed in localcurrency.ThesensitivityanalysisdoesnottakeaccountofactionbytheGroupthatmightbetakentomitigatetheeffectofsuchchanges.

50. RISK MANAGEMENT

2007CurrencyLebanese LiraUnited States DollarEuroOthers

(1 – 5)years

LL million

More than 5years

LL million

(10,681)(22,967)

(73)(582)

-(11,392)

-(214)

0 to 6 monthsLL million

6 months to 1year

LL million

(4,559)(3,225)

(85)(101)

(3,777)(3,873)

(90)(101)

Increasein basis points

Sensitivity ofnet interest

incomeLL million

0.50%0.50%0.25%0.25%

(4,756)2,655735

1,049

Sensitivity of equity

TotalLL million

(19,017)(41,457)

(248)(998)


(1 – 5)years

LL million

More than 5years

LL million

11,40838,974

114591

-15,099

-218


6 months to 1year

LL million

4,6949,279169102

3,8997,844140102

Decreasein basis points


incomeLL million

-0.50%-0.50%-0.25%-0.25%

4,756(2,655)(735)

(1,049)


TotalLL million

20,00171,196

4231,013


(1 – 5)years

LL million

More than 5years

LL million

(9,004)(8,567)(198)(305)

-(3,202)

-(115)


6 months to 1year

LL million

(4,293)(1,554)

(84)(107)

(4,221)(1,554)

(84)(48)

Increasein basis points


incomeLL million

0.50%0.50%0.25%0.25%

(6,243)7,2611,1441,202


TotalLL million

(17,518)(14,877)

(366)(575)


(1 – 5)years

LL million

More than 5years

LL million

9,13315,816

406310

-4,574

-117


6 months to 1year

LL million

4,3453,21117096

4,2643,21116948

Decreasein basis points


incomeLL million

-0.50%-0.50%-0.25%-0.25%

6,243(7,261)(1,144)(1,202)


TotalLL million

17,74226,812

745571

154

Effective interest rates of financial instruments

The effective interest rates by major currencies for each of the monetary financial instru-ments are as follows:

ASSETSCentral banks and other banksLebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeLoans and advances to customers

LIABILITIESBanks and financial institutionsCustomers’ deposits

LL%

Other currencies%

4 – 58.25 – 9.2511.5 – 12.5

11 – 12

5 – 67.5 – 8.5

5 – 67.75 – 8.25

7.5 – 88 – 8.5

4.5 – 54.75 – 5.25


155

Interest rate sensitivity gap

The Group’s interest rate sensitivity position based on contractual repricing arrangements ormaturity as at 31 December 2007 has been shown in the table below.


LIABILITIES AND EQUITY

Banks and financial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accounts andother credit accountsProvisions for risks and chargesShareholders' equity


Total interest rate sensitivity gap

Cumulative interest rate sensitivity gap

1,150,879

97,900

12,829

7,226332,389188,945237,278

27,208272,6424,45934,216

119,48760,586

2,546,044

171,075905,674237,278178,323

189,79280,566

2,092,409

3,855,117

(1,309,073)

-

6,330,031

5,080,323

1,165,140

11,7257,536,5334,179,307245,357

27,208272,6424,45934,216

119,48760,586

25,067,014

1,555,91420,708,516

245,357194,460

189,79280,566

2,092,409

25,067,014

2,176,206

2,236,509

272,199

-42,188967,822

-

----

--

5,694,924

-72,794

--

---

72,794

5,622,130

(834,997)

772,863

599,449

699,866

-43,74684,740

-

----

--

2,200,664

45,22511,369

--

---

56,594

2,144,070

1,309,073

3 monthsto 1 year

LL million

279,400

716,789

100,096

-87,177933,2748,079

----

--

2,124,815

18,475986,6268,079

-

---

1,013,180

1,111,635

(9,084,131)

878,256

1,133,887

43,996

2,729309,094306,435

-

----

--

2,674,397

-47,393

--

---

47,393

2,627,004

(6,457,127)

Up to1 month

LL million

1 to3 months

LL million

984,113

217,525

7,537

1,7705,899,9481,392,262

-

----

--

8,503,155

1,298,95514,752,113

--

---

16,051,068

(7,547,913)

(7,547,913)

88,314

78,264

28,617

-821,991305,829

-

----

--

1,323,015

22,1843,932,547

-16,137

---

3,970,868

(2,647,853)

(10,195,766)

Non interestsensitive

LL million

(2 – 5)years

LL million

More than5 years

LL million

(1 – 2)years

LL million

TotalLL million

50. RISK MANAGEMENT

156

The Group’s interest rate sensitivity position based on contractual repricing arrangements ormaturity as at 31 December 2006 was as follows:


LIABILITIES AND EQUITY

Banks and financial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accounts andother credit accountsProvisions for risks and chargesShareholders' equity


Total interest rate sensitivity gap

Cumulative interest rate sensitivity gap

1,426,090

74,353

5,876

8,403299,760145,403173,260

3,220219,3722,84533,715

61,40863,980

2,517,685

159,3161,958,233173,260141,067

129,86964,646

1,916,544

4,542,935

(2,025,250)

-

6,246,406

3,474,920

386,100

8.4037,754,2842,996,698173,260

3,220219,3722,84533,715

61,40863,980

21,424,611

1,308,84417,690,381

173,260141,067

129,86964,646

1,916,544

21,424,611

2,401,613

1,822,301

152,442

--

243,461-

----

--

4,619,817

----

---

-

4,619,817

831,376

707,941

338,574

54,133

-6,30186,925

-

----

--

1,193,874

----

---

-

1,193,874

2,025,250

3 monthsto 1 year

LL million

467,325

591,076

28,639

-191,821653,964

-

----

--

1,932,825

12,3901,051,578

--

---

1,063,968

868,857

(5,716,240)

888,805

612,917

51,940

-183,161196,263

-

----

--

1,933,086

-5,287

--

---

5,287

1,927,799

(3,788,441)

Up to1 month

LL million

1 to3 months

LL million

53,132

23,526

15,075

-6,304,0581,421,873

-

----

--

7,817,664

1,123,33011,353,495

--

---

12,476,825

(4,659,161)

(4,659,161)

301,500

12,173

77,995

-769,183248,809

-

----

--

1,409,660

13,8083,321,788

--

---

3,335,596

(1,925,936)

(6,585,097)

Non interestsensitive

LL million

(2 – 5)years

LL million

More than5 years

LL million

(1 – 2)years

LL million

TotalLL million


157

50.3.2 Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rate. TheBank protects its capital and reserves by holding a foreign currency position in US Dollars representing 60% of its shareholders’equity after adjustment according to specific requirements set by the Bank of Lebanon. The Bank is also allowed to hold anet trading position not to exceed 1 percent of its net shareholders’ equity, as long as the global foreign position does notexceed, at the same time, 40 percent of its net shareholders’ equity, and that the related banks are abiding in a timely andconsistent manner with the required solvency rate (Bank of Lebanon circular number 32).The table below indicates the consolidated balance sheet detailed by currency.The following consolidated balance sheet as of 31 December 2007, is detailed in Lebanese Lira (LL) and foreign currencies,translated into LL.

ASSETSCash and balances with the Central BanksLebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeShares, securities and financial assets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loans to related partiesTangible fixed assetsIntangible fixed assetsOther assetsRegularization accounts and other debit accountsGoodwillTOTAL ASSETSOFF-BALANCE SHEET ITEMSFinancial assets sold with an option to repurchaseEngagements receivedBad loans totally provided forForeign currencies to deliver against foreign currencies to receiveTotalLIABILITIESBanks and financial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accounts and other credit accountsProvisions for risks and chargesTotal liabilitiesNET EXPOSUREOFF-BALANCE SHEET ITEMSFinancing commitments given to-Financial intermediaries-CustomersBank guarantees given to-Financial intermediaries-CustomersCommitments on term financial instrumentsFinancial assets bought with an option to resellFiduciary deposits, assets under management and custody accountsForeign currencies to receive against foreign currencies to deliver

5,222,2242,685,7801,165,140

11,3647,468,3753,849,938245,35724,755129,1983,63427,71695,67760,586

20,989,744

143,6476,423,994

21,8762,939,1869,528,703

1,523,54717,409,713

245,357142,10439,68955,325

19,415,7351,574,009

359,37421,043338,331764,674196,378568,29634,142143,647

3,949,9642,942,5498,194,350

6,330,0315,080,3231,165,140

11,7257,536,5334,179,307245,35727,208272,6424,45934,216119,48760,586

25,067,014

143,6477,088,518

28,3122,939,186

10,199,663

1,555,91420,708,516

245,357194,460189,79280,566

22,974,6052,092,409

359,37421,043338,331786,996196,378590,61834,142143,647

3,959,1362,942,5498,225,844

71,219106,10322,816

911,905,281304,94035,335

8052,68148359

7,497

2,457,310

-80,6263,345

617,397701,368

1,202,9471,296,025

35,33516,2271,698283

2,552,515(95,205)

47,191754

46,437149,86285,63564,22734,142

-89,212537,607858,014

1,528,974244,16062,3484,194

460,0461,398,545

34,0721,292

118,1543,14621,87452,81560,586

3,990,206

-1,325,884

-1,631,8982,957,782

139,5903,040,186

34,07243,63718,59153,193

3,329,269660,937

27,1381,63825,500

217,59616,086201,510

--

522,3551,739,1362,506,225

LL million

1,107,8072,394,543

-361

68,158329,369

-2,453

143,444825

6,50023,810

4,077,270

-664,5246,436

-670,960

32,3673,298,803

-52,356150,10325,241

3,558,870518,400

---

22,322-

22,322--

9,172-

31,494

3,622,0312,335,5171,079,976

7,0795,103,0482,146,453175,95022,6588,363

55,78335,365

__14,542,228

143,6475,017,484

18,531689,891

5,869,553

181,01013,073,502

175,95082,24019,4001,849

13,533,9511,008,277

285,04518,651266,394397,21694,657302,559

-143,647

3,338,397665,806

4,830,111

Total foreigncurrenciesLL million

Euro inLL million

Other foreigncurrenciesLL million

US Dollars inLL million

TotalLL million

50. RISK MANAGEMENT

Foreign currencies in Lebanese Lira

158

The following consolidated balance sheet as of 31 December 2006, is detailed in Lebanese Lira(LL) and foreign currencies, translated into LL.

ASSETSCash and balances with the Central BanksLebanese and other governmental treasury bills and bondsBonds and financial assets with fixed incomeShares, securities and financial assets with variable incomeBanks and financial institutionsLoans and advances to customersBank acceptancesInvestments and loans to related partiesTangible fixed assetsIntangible fixed assetsOther assetsRegularization accounts and other debit accountsGoodwillTOTAL ASSETSOFF-BALANCE SHEET ITEMSEngagements receivedBad loans totally provided forForeign currencies to deliver against foreign currencies to receiveTotalLIABILITIESBanks and financial institutionsCustomers’ depositsEngagements by acceptancesOther liabilitiesRegularization accounts and other credit accountsProvisions for risks and chargesTotal liabilitiesNET EXPOSUREOFF-BALANCE SHEET ITEMSFinancing commitments given to-Financial intermediaries-CustomersBank guarantees given to-Financial intermediaries-CustomersCommitments on term financial instrumentsFiduciary deposits, assets under management and custody accountsForeign currencies to receive against foreign currencies to deliver

4,882,4991,476,980386,1008,042

7,691,4892,748,615173,260

61892,3482,84527,32943,17863,980

17,597,283

4,892,15331,494

2,144,6177,068,264

1,306,73114,573,430

173,260101,92019,71538,636

16,213,6921,383,591

307,18613,051294,135663,70995,651568,05817,659

2,761,9502,146,7555,897,259

6,246,4063,474,920386,1008,403

7,754,2842,996,698173,2603,220

219,3722,84533,71561,40863,980

21,424,611

5,467,77343,905

2,144,6177,656,295

1,308,84417,690,381

173,260141,067129,86964,646

19,508,0671,916,544

307,18613,051294,135689,52896,098593,43017,659

2,774,3602,146,7555,935,488

211,87789,86010,797

821,888,249228,70791,611

569573128273

9,753991

2,533,470

71,7932,99636,257111,046

1,081,544992,99591,6119,6423,5203,560

2,182,872350,598

55,503117

55,386100,53015,91384,61717,659252,313299,536725,541

683,538225,33945,3771,523

455,889872,0948,198

4982,5122,7178,54219,08962,989

2,467,856

296,171-

1,295,4241,591,595

100,0251,841,361

8,19831,8319,74428,525

2,019,684448,172

21,944523

21,421288,25715,110273,147

-1,133,9791,262,5062,706,686

LL million

1,363,9071,997,940

-361

62,795248,083

-2,602

127,024-

6,38618,230

-3,827,328

575,62012,411

-588,031

2,1133,116,951

-39,147110,15426,010

3,294,375532,953

---

25,819447

25,372-

12,410-

38,229

3,987,0841,161,781329,9266,437

5,347,3511,647,814

73,451-

9,263-

18,51414,336

-12,595,957

4,524,18928,498812,936

5,365,623

125,16211,739,074

73,45160,4476,4516,551

12,011,136584,821

229,73912,411217,328274,92264,628210,294

-1,375,658584,713

2,465,032

Total foreigncurrenciesLL million

Euro inLL million

Other foreigncurrenciesLL million

US Dollars inLL million

TotalLL million


Foreign currencies in Lebanese Lira

159

50. RISK MANAGEMENT51. OPERATIONAL RISK52. PREPAYMENT RISK53. CAPITAL MANAGEMENT

The table below indicates the extent to which the Group was exposed to currency risk at 31December 2007 on its foreign currency positions. The analysis calculates the effects of a reasonablypossible movement of the currency rate against the Lebanese Lira, with all other variables heldconstant, including the effect of hedging instruments, on the consolidated income statement (dueto the fair value of currency sensitive non-trading monetary assets and liabilities) and equity (dueto the change in fair value of currency swaps and forward foreign exchange contracts used ascash flow hedges). The effect on equity is not significant. A negative amount in the table reflectsa potential net reduction in consolidated income statement or equity, while a positive amountreflects a net potential increase.

51. OPERATIONAL RISK

Operational risk is the risk of loss arising from systems failure, human error, fraud or externalevents. When controls fail to perform, operational risks can cause damage to reputation, havelegal or regulatory implications, or lead to financial loss. The Group cannot expect to eliminateall operational risks, but through a control framework and by monitoring and responding topotential risks, the Group is able to manage the risks. Controls include effective segregationof duties, access, authorization and reconciliation procedures, staff education and assessmentprocesses, including the use of internal audit.

52. PREPAYMENT RISK

Prepayment risk is the risk that the Group will incur a financial loss because its customers andcounterparties repay or request repayment earlier than expected, such as fixed rate housingloans when interest rate falls. The fixed rate assets of the Group are not significant comparedto the total assets. Moreover, other market conditions causing prepayment is not significantin themarkets inwhich the Group operates. Therefore, the Group considers the effect of prepaymentonnet interest income is notmaterial after taking into account the effect of any prepayment penalties.

Currency

USDEUR

Change in currencyrate % 2007

Effect onprofit before tax 2007

LL million

± 1%± 1%

± 10,328± 500

Change in currencyrate % 2006

Effect onprofit before tax 2006

LL million

± 1%± 1%

± 8,126± 693

160

53. CAPITAL MANAGEMENT

The Bank maintains an actively managed capital base to cover risks, inherent in the business.The adequacy of the Bank’s capital is monitored using, among other measures, the rules andratios established by the Bank of Lebanon and the Banking Control commission.

The Bank should maintain a required capital adequacy ratio (not less than 12%) based on thetotal tier one capital over the total risk weighted assets and off-balance sheet items.

The Bank manages its capital structure and makes adjustments to it in the light of changes ineconomic conditions and the risk characteristics of its activities. In order to maintain or adjustthe capital structure, the Bank may adjust the amount of dividend payment to shareholders, returncapital to shareholders or issue capital securities. No changes were made in the objectives, policiesand processes from the previous years.

Regulatory capital consists of Tier 1 capital, which comprises share capital, reserves and premiums,reserves forgeneralbanking risks, treasuryshares, retainedearningsandprofit for theyear lessdividenddistributed, intangibleassetsandgoodwill.Theothercomponentof regulatorycapitalTier2capital,whichincludes revaluation reserves and cumulative changes in fair values.

Regulatory capitalTier 1 capitalTier 2 capitalTotal capitalRisk weighted assetsTier 1 capital ratioTotal capital ratio

2007LL million

2006LL million

1,839,00129,224

1,868,2256,430,81128.60%29.05%

1,665,17036,157

1,701,3274,714,39835.32%36.09%


161

54. COMMITMENTS AND CONTINGENCIES55. COMPARATIVE AMOUNTS56. SUBSEQUENT EVENTS

54. COMMITMENTS AND CONTINGENCIES

a) Due to the nature of its business, the Group is a defendant in various legal proceedings.Management, after discussing with its counselors all such cases and proceedingsagainst the Group, considers that the aggregate liability or loss, if any, resulting from anadverse determination would not have a material effect on the consolidated financialposition of the Group.

b) The Bank’s books in Lebanon have not been reviewed by the tax authorities for the years2006 and 2007. The ultimate outcome of any review that may take place by the tax authoritiescannot be presently determined.

c) The Bank’s books in Lebanon have not been reviewed by the National Social Security Fund(NSSF) since 1998. The ultimate outcome of any review by the NSSF on the Bank’s books from1998 to 2007 cannot be presently determined.

55. COMPARATIVE AMOUNTS

Except for the correction of an error in note 40 to the financial statements, the followingreclassifications were just to enhance the presentation in the current year:

- Provision for real estate taken in recovery of debt was reclassified from “Provisions for risksand charges” caption to “Tangible fixed assets” caption. Comparative amounts totaling to LL11,715 million were classified accordingly.

- Other income was reclassified from “Net commission income” caption to “Other operatingincome” caption. Comparative amounts of LL 5,714 million were reclassified accordingly.

56. SUBSEQUENT EVENTS

- On 26 December 2007, the extraordinary general assembly of the shareholders of AropeInsurance SAL (a subsidiary) resolved to increase the Company’s capital from LL 21,600 million toLL 43,200 million. Accordingly, the Bank has subscribed in its share of the subsidiary’s capitalincrease in full (LL 19,129 million) on 11 February 2008.

- On 5 March 2008, the Bank obtained the preliminary approval of the Bank of Lebanon for theredemption of the 750,000 preferred shares - issue 2002 amounting to LL 7,500 million.

162

COUNTRY

Australia, SydneyBelgium, BrusselsBahrain, ManamaCanada, TorontoCanada, TorontoDenmark, CopenhagenFrance, ParisGermany, Frankfurt am MainGermany, Frankfurt am MainGermany, Frankfurt am MainItaly, MilanItaly, RomeJapan, TokyoJapan, TokyoKSA, JeddahKSA, RiyadhKuwait, KuwaitNetherlands, AmesterdamNorway, OsloQatar, DohaSpain, MadridSweden, StockholmSwitzerland, GenevaSwitzerland, ZurichSwitzerland, ZurichU.A.E, DubaiU.K, LondonU.K, London

U.S.A, New YorkU.S.A, New York

Commonwealth Bank of AustraliaFortis Bank S.A. / N.V.

National Bank of BahrainRoyal Bank of Canada

Imperial Bank of Commerce (The)Danske Bank A/S

BLOM BANK France SACommerzbank AG

Deutsche Bank AGDresdner Bank AG

Banca Intesa San Paolo SPABanca Nazionale Del Lavoro SPA

Bank of Tokyo-Mitsubishi LtdJP Morgan Chase Bank N.A.

The National Commercial BankRiyad Bank

Gulf Bank KSCABN AMRO Bank N.V.

DnB NOR Bank ASACommercial Bank of Qatar (The) (QSC)

Banco Bilbao Vizcaya Argentaria S.A. (BBVA)Skandinaviska Enskilda Banken AB

BLOM BANK Switzerland SACredit Suisse

UBS AGBLOM BANK France SABLOM BANK France SA

National WESTMINSTER BANK PLCBank of New York (The)

JP Morgan Chase Bank N.A.

CORRESPONDENT BANK

WORLDWIDE CORRESPONDENT BANKS

AUDEURBHDCADCADDKKEUREUREUREUREUREURJPYJPYSARSAR

KWDEURNOKQAREUREURCHFEUREURAEDGBPGBPUSDUSD

WORLDWIDE CORRESPONDENT BANKS

164

BLOM BANK GROUP DIRECTORY

167

170

170

170

171

171

173

173

173


166

DIRECTORY - BLOM BANK GROUP

173

173

173

167


BLOM BANK GROUP CHAIRMAN:Dr. Naaman AZHARI

LEBANON

Headquarters

Verdun – Rachid Karami St, BLOM BANK bldgP.O. Box: 11-1912 Riad El-Solh, Beirut 1107 2807,LebanonPhone: (961-1) 743300 – 738938Fax: (961-1) 738946Telex: Electronic Telex in London: 94015829Answerback BLOM GReuter: BLOMSwift Code: BLOMLBBXE-mail: [email protected]: http://www.blom.com.lbCall Center: (961-1) 753000

MOHAFAZAT BEIRUT BRANCHES

Main BranchVerdun, Rachid Karami St, BLOM BANK bldgPhone: (961-1) 738938 – 743300Fax: (961-1) 738946Email: [email protected] Manager / Branches: Mr. Walid ARISS

AchrafiehSassine SquarePhone: (961-1) 200147/8 – 320949Fax: (961-1) 320949Email: [email protected] Manager: Mr. Ara BOGHOSSIAN

Ain El-MreissehIbn Sina StPhone: (961-1) 372780 – 370830 – 373102Fax: (961-1) 370237Email: [email protected] Manager: Mr. Mahmoud MARRACH

BlissBliss St, opposite Hobeish Police Station –Ras Beirut – Al Rayess BldgPhone: (961-1) 363732/34/42Fax: (961-1) 363732Email: [email protected] Manager: Mr. Ziad SROUJI

Burj Abi HaidarBurj Abi Haidar St, Salam TowerPhone: (961-1) 310687 – 310677/8/9 - 817560Fax: (961-1) 310679Email: [email protected] Manager: Mr. Mahmoud BAYDOUN

HamraAbdel Aziz St, Daher bldgPhone: (961-1) 346290/1/2/3 – 341955 - 343503Fax: (961- 1) 744407Email: [email protected] Manager: Mr. Sami FARHAT

Hamra - Retail BranchAbdel Aziz St, Daher bldgPhone: (961-1) 747752 /59 /60Fax: (961-1) 747749Email: [email protected] Manager: Mrs. Zeina KHATTAB

IstiklalIstiklal St, Karakol El-Druze Area, next toKettaneh Palace, Salhab bldgPhone: (961-1) 738050/1 - 749624Fax: (961-1) 748337Email: [email protected] Manager: Mr. Mouhamad SIDANY

JnahBir Hassan Area, United Nations St, next toBeirut Hospital, Jaber bldgPhone: (961-1) 855903/4/5Fax: (961-1) 855906Email: [email protected] Manager: Mr. Abbas KALOT

MaaradEmir Bechir St, Hibat el Maarad bldg -DowntownPhone: (961-1) 983230/1/2/3/4Fax: (961-1) 983230Email: [email protected] Manager: Mr. Amer KAMAL

Mar EliasCorniche El Mazraa – opposite Helou’s bar-racks, Zantout bldgPhone: (961-1) 818616/7 – 818009 – 818038 -864112Fax: (961-1) 818618Email: [email protected] Manager: Mr. Mohamad Abd el wahabAl TABSH

MazraaCorniche El Mazraa, Barbir SquarePhone: (961-1) 648020/1/2 - 664337Fax: (961-1) 648020Email: [email protected] Manager: Mr. Mohammad MAWASS

NoueiriAl Noueiri Station – Hamada bldgPhone: (961-1) 630309– 658611 – 658610 - 664487Fax: (961-1) 630319Email: [email protected] Manager: Mr. Yehia ORFALI

RaouchéRaouche Blvd – Al Rayess & Bou Dagher BldgPhone: (961-1) 812603/4/5/6Fax: (961-1) 801634Email: [email protected] Manager: Mr. Mohamad MARRACHE

RmeilAshrafieh, Orthodox Hospital St, Medica CenterPhone: (961-1) 565252 – 565454 – 567140 –567141Fax: (961-1) 565252Email: [email protected] Manager: Mrs. Salma ACHKOUTY

SaifiAl Arz Street – Akar bldgPhone: (961-1) 449899 – 581683 – 586340 –566794 - 587196Fax: (961-1) 449899Email: [email protected] Manager: Dr. Ousama CHAHINE

SanayehChamber of Commerce & Industry bldgPhone: (961-1) 346042/3 – 748339 - 749623Fax: (961-1) 346043Email: [email protected] Manager: Mrs. Nahida WEHBE

Sodeco – Retail BranchSodeco Square, Damascus RoadPhone: (961-1) 611360/1Fax: (961-1) 611 362Email: [email protected] Manager: Mrs. Souraya N. Bashouti

TabarisGebran Tueini Square- Sursock TowerPhone: (961-1) 203142//3/4Fax: (961-1) 203145Email: [email protected] Manager/Branches: Ms. Claire ABOUMRAD

Tariq Al-JedidehAl Malaab Al Baladi Square – Salim bldgPhone: (961-1) 818620/1 – 309959 - 816985Fax: (961-1) 818620Email: [email protected] Manager: Mr. Khodr MNEIMNEH

VerdunVerdun St, opposite F.S.I. Barracks, Abdo bldgPhone: (961-1) 788412/3 – 800081 - 788411Fax: (961-1) 800032Email: [email protected] Manager: Mr. Hani BAWAB

Verdun - Retail BranchVerdun, Rachid Karami St, BLOM BANK bldgPhone: (961-1) 750160/1/2/3Email: [email protected] Manager: Mr. Marwan PHARAON

MOHAFAZAT MOUNT LEBANON BRANCHES

Ain El-RemanehChiyah District, Lamaa St, Next to KasarjianBarracksPhone: (961-1) 386750/1/2/3Fax: (961-1) 386750Email: [email protected] Manager: Mr. Jhonny SALIBI

AleyAl Balakine, Property of Faysal Sultane WahabPhone: (961-5) 556612/13Fax: (961-5) 556614Email: [email protected] Manager: Mrs. May Bou Alwan

AnteliasNext to the Armenian Patriarchate – KheirallahbldgPhone: (961-4) 411472 – 520210 – 410123 –411418 - 410848Fax: (961-4) 523666Email: [email protected] Manager: Mr. Laurent CHIBLI

Sin El-FilHorsh Tabet, Charles De Gaulle St, Tayar CenterPhone: (961-1) 485270/1/2Fax: (961-1) 485273Email: [email protected] Manager: Mr. Fadi EL MIR

ZalkaZalka St, Blom BANK bldg, Interior RoadPhone: (961-4) 713074/5/6Fax: (961-4) 713077Email: [email protected] Manager: Mrs. Denise JALKH

Zouk MousbehZouk Mousbih,Main St, Le Paradis Centre, Jeita’scave junctionPhone: (961-9) 226991/2/3/4/5Fax: (961-9) 226990Email: [email protected] Manager: Mr. Joseph KILADJIAN

MOHAFAZAT NORTH LEBANON BRANCHES

Tripoli - Abi SamraAl-Dinnawi Square, Khaled Darwiche bldgPhone: (961-6) 423565/6/7/8/9Fax: (961-6) 423565Email: [email protected] Manager: Mr. Abdel Rahman HOMSI

Tripoli – AzmiAzmi St, Fattal bldgPhone: (961-6) 433064 – 443550/1/2Fax: (961-6) 443550Email: [email protected] Manager: Mr. Edmond HAMATI

Tripoli – Al TellAbdel Hamid Karameh Square, Ghandour bldgPhone: (961-6) 430153 – 628200/2 - 431624Fax: (961-6) 628200Email: [email protected] Manager: Mr. China ASSI

Tripoli - ZahriehAl Tall St, Alam AL Din & Bissar bldgPhone: (961-6) 430150/2 – 423415 - 423414Fax: (961-6) 430151Email: [email protected] Manager: Mr. Fouad El HAJJ

MOHAFAZAT BEKAA BRANCHES

ChtauraMain St, Najim El Din bldgPhone: (961-8) 540078 – 542504 – 544329/30 -544914Fax: (961-8) 542504Email: [email protected] Manager: Mr. Elie FREIJI

AramounChoueifat – Al Koba, Aramoun Road, ZaynabCenterPhone: (961-5) 808591/2/3/4Fax: (961-5) 808594Email: [email protected] Manager: Mrs. Nawal Merhi ABOUDIAB

BadaroBadaro Main St - Damascus Road intersection– Buick – Khoury bldgPhone: (961-1) 615818/19/20/21 – 615826 - 615952Fax: (961-1) 615825Email: [email protected] Manager: Mr. Raoul CHERFAN

Burj Al-BarajnehAin El Sekka St – Rahal bldgPhone: (961-1) 450381/2/3/4 – 450446/7Fax: (961-1) 450384Email: [email protected] Manager: Dr. Hassan JABAK

Burj HammoudHarboyan CenterPhone: (961-1) 262067 – 266337/8 – 243604/5 –242792 - 243139Fax: (961-1) 268939Email: [email protected] Manager: Mr. Jean HOMSI

ChiyahChiyah Blvd, Round About Mar Mekhayel,Orient Center Bldg.Phone: (961-1) 270172/3/4 - 275783Fax: (961-1) 270174Email: [email protected] Manager / Branches: Mr. Abbas TLEISS

ChoueifatAL Omaraa, Main Road, Al Tiro’s JunctionPhone: (961-5) 433203/6Fax: (961-5) 433208E-mail: [email protected] Manager: Mr. Kamal SLIM

DoraBawchrieh, Tripoli Road, Banking Center bldgPhone: (961-1) 256527/28/32/37/38/39/41Fax: (961-1) 256522Email: [email protected] Manager/ Branches:Mrs. Marlène DOUMIT

ElissarBeit El Kiko, Antelias - Bickfaya RoadPhone: (961-4) 916111/2/3/4Fax: (961-4) 916115Email: [email protected] Manager: Mr. Joseph GHOUSOUB

Furn el Chebbak - Retail BranchFurn el Chebbak, Abraj Center, Main Str., BeirutPhone: (961-1) 293810 /13Fax: (961-1) 293816Email: [email protected] Manager: Mrs. Alice AHMARANI

GhobeyriCorniche El Ghobeyri - Chiah Blvd – Tohme &Jaber & Kalot bldgPhone: (961-1) 825509 – 825870 – 821895 – 856219Fax: (961-1) 820153Email: [email protected] Manager: Mrs. Magida MIKATI

Haret HreikAl Abiad Area, Sayyed Hadi Nasrallah Highway,Abou Taam & Hoteit bldgPhone: (961-1) 543662 – 543658 – 543659Fax: (961-1) 543661Email: [email protected] Manager: Mr. Ali CHRIEF

HazmiehDamascus Road, Joseph Chahine CenterPhone: (961-5) 955240/1/2/3/4Fax: (961-5) 955240Email: [email protected] Manager: Mr. Ziad KAREH

JbeilVoie 13 – Near Mar Charbel JunctionPhone: (961-9) 943702 /3 /4Fax: (961-9) 943701Email: [email protected] Manager: Mr. Zakhia SARKIS

JouniehFacing “Palais de Justice” – Next to FouadChehab PlaygroundPhone: (961-9) 638011/12/13/14Fax: (961-9) 638011Email: [email protected] Manager: Mr. Rachad YAGHI

KaslikKaslik Main St, Debs CenterPhone: (961-9) 640273 – 640095 – 636998/9 –640297Fax: (961-9) 831112Email: [email protected] Manager: Mr. Charles AOUDE

MansouriehMansourieh el Maten, Dar El Ain Plaza – NewHighwayPhone: (961-4) 532856/7/8Fax: (961-4) 532854Email: [email protected] Manager: Mr. Walid LABBAN


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ZahlehManara Center, Fakhoury & Kfoury bldgPhone: (961-8) 807680/1/2/3/4 – 805383 - 820661Fax: (961-8) 807680Email: [email protected] Manager: Mr. Marwan EL SHAKRA

MOHAFAZAT NABATIYEH BRANCH

NabatiyehNabatieh That, Hassan Kamel Al SabbahSt, Office 2000 bldgPhone: (961-7) 767854/5/6Fax: (961-7) 767857Email: [email protected] Manager: Mr. Hany HAMOUD

MOHAFAZAT SOUTH LEBANON BRANCHES

SaidaRiad Solh St, Al Zaatari & Fakhoury & Bizri bldgPhone: (961-7) 724866 – 723266 – 722801 – 739276Fax: (961-7) 722801Email: [email protected] Manager: Mr. Moufid NAJJAR

TyrMain St, Chehade bldgPhone: (961-7) 740900 – 741649 - 742903Fax: (961-7) 348487Email: [email protected] Manager: Mrs. Mayssa RAHAL

STAND BY BRANCH MANAGERS*

Mr. Ziad CHANOUHAMr. Wassim FAHSMs. Nelly HARFOUCHEMr. Antoine MATARMr. Ahmad Jamal SINNOMr. Ahmad Koussai SINNOMr. Adel THAMINE

* by alphabetical order

BRANCHES UNDER ESTABLISHMENT

Abbasya - TyrDekwanehHadathMina El Hosn branch – BeirutSin el Fil - Retail Branch

BLOM BANKBRANCHES ABROAD & REPRESENTATIVE OFFICE

CYPRUSVictory House205Z Archbishop Makarios Ave3030 LimassolP.O.Box: 53243, 3301 Limassol, CyprusPhone: (357-25) 376433/4/5Fax: (375-25) 376292Swift Code: BLOM CY 21E-mail: [email protected] Manager: Mr. Ziad EL MURR

SYRIADamascus Free Zone, Al-BaramkehPhone: (963-11) 2133170/1Fax: (963-11)2133173E-mail: [email protected] Manager: Mr. Joseph HAYEK

ABU DHABI – U.A.E.Representative OfficeAl Bateen Towers – Tower C 6 – Suite C 907-9th floorAl Bateen – Bainuna Street – Abu Dhabi – U.A.E.P.O. Box: 63040 - Al Bateen – Abu Dhabi – U.A.E.Phone: 00971-2-6676100Fax: 00971-2-6676200E-mail: [email protected]. Ramzi AKKARI - Chief Representative

JORDAN

Headquarters - JordanAmman - Al-Charif Abdel Hamid Sharaf StP.O. Box 930321 Shmeisani ,Amman 111 93Phone: (962-6) 5001200Fax: (962-6) 567 71 77Reuter: BLMJSwift Code: BLOMJOaAME-mail: [email protected]: http://www.blom.com.lb

Regional Management - JordanDr. Adnan AL AARAJGeneral Manager - JordanMr. Adnan SALLAKHConsultant for General Management in Lebanon

Heads of Departments and Units - JordanDr. Mohamed AMRO - Treasury and InvestmentMr. Mohanad BALBISSI (AL) - Financial ControlMr. Yaccoub ALEM (EL) - CreditMr. Moder KHOURDY (AL) - Client RelationshipMr. Ihab KHALIL - Sales & Retail MarketingMs. Nahla ALLOUSH - IT OperationsMr. Mohamed ALLAN - Central OperationsMr. Said OBEIDALLAH - Internal AuditMr. Nabil OBALI - Risk ManagementMr. Maan ZOABI - ComplianceMr. Hani DIRANI - Legal and CollectionMs. Mona KHOUZAI - Personnel

BRANCHES IN JORDAN

Shmeisani

Amman- Al-Charif Abdel Hamid Sharaf StP.O. Box 930321 Shmeisani- Amman 111 93Phone: (962-6) 5001200Fax: (962-6) 65277177E-mail: [email protected] Manager: : Mr. Abdeljawad Al- Owaisi

Sweifieh Branch

Abed Al Rahim Al Hajj Mohammad StP.O. Box 852112 Amman 111 85Phone: (962-6) 5864714 -5814935Fax: (962-6) 5865346Email: [email protected] Manager: Baker Haddadin

Mecca StreetTlaa El Aali - Makka Str.P.O.Box 1191, Amman, 11821 JordanPhone: (962-6) 5503130/1/2/3/4/5Fax: (962-6) 5521347E-mail: [email protected] Manager: Mohannad Younes

WihdatAl Amir Hassan St, Oum Heiran -AmmanChange to P.O. Box 110061 Amman 111 10Phone: (962-6) 4750050Fax: (962-6) 4750055Email: [email protected] Manager: Mr. Mahmoud Sadaka

JubeihaMefleh Al-lozi st.,AmmanP.O Box 2435 Amman 11941Phone: (962-6) 5336591Fax: (962-6) 5336657Email: Jubeiha @blom.com.joBranch Manager: Mr. Omar Abu Assaf

IrbidAl-Qubba Circle-IrbidP.O Box 4345 Irbid 21110Phone: (962-2) 7240006Fax: (962-2) 7240057Email: [email protected] Manager: Mr. Ahmad DABAAN

Branch Under Establishment in Jordan

Aakaba


General Management1, Rue de la Rôtisserie, Geneva, SwitzerlandP.O. Box: 3040 – CH 1211 Geneva 3 – SwitzerlandPhone: (41-22) 81771 00 (General)Fax: (41-22) 8177190SWIFT: BLOMCHGGE-mail: [email protected]: www.blombank.ch

Board of DirectorsDr. Naaman AZHARI - Honorary Chairman of the BoardMr. Saad AZHARI - ChairmanMr. André CATTIN - Vice Chairman

DirectorsDr. Warner FREYME. Peter De La GANDARAMr. Ahmad G. SHAKER

Management CommitteeMr. Antoine MAZLOUM - General ManagerMr. Thierry OTT - ManagerMrs. Eléonore DAESCHER - Deputy ManagerMr. Salim DIAB - Deputy Manager

General ManagementVerdun , Rachid Karami StBLOM BANK bldgP.O. Box: 11-1912, Riad El Solh, Beirut 11072080 LebanonPhone: (961-1) 738938 – 743300 – 348246Fax: (961-1) 738938E-mail: [email protected]: www.blominvestbank.com

Board of DirectorsMr. Saad AZHARI - Chairman & General Manager

DirectorsMessrs. BLOM BANK SALMr. Joseph KHARRATMr. Samer AZHARIMr. Marwan JAROUDIMr. Habib RAHAL

General ManagementDr. Fadi OSSEIRAN - General Manager

Senior Managers*Mr. Elie CHALHOUB - AdministrationMr. Michel CHIKHANI - Asset Management& Structured ProductsMr. Georges TABET - Private Banking& Wealth Management

Managers*Mr. Walid KADRI - Organization & BusinessDevelopmentMr. Marwan MIKHAEL - Economic ResearchMr. Nicolas PHOTIADES - Investment Banking& Corporate FinanceMr. Ramzi TOHME - Operations

* by alphabetical order

AFFILIATED BANKS & INSURANCE COMPANIES

FRANCE

Headquarters38-40 avenue des Champs-Elysées75008 Paris - FrancePhone: (33-1) 44 95 06 06Fax: (33-1) 44 95 06 00Telex : 644401 F BANOPARReuter : BANOSwift : BLOM FRPPE.mail : [email protected] : www.banorabe.com

Board of DirectorsMr. Samer AZHARIChairman & General ManagerDr. Naaman AZHARI - Honorary President andPermanent Representative of BLOM BANK S.A.L

DirectorsHE Sheikh Ghassan Ibrahim SHAKER(Grand officier de la légion d’Honneur)Mr. Christian DE LONGEVIALLEMr. Jean-Paul DESSERTINEMr. Marwan JAROUDI

General ManagementMr. Michel ADWAN - Deputy General ManagerMr. Gilbert MOINE - Senior ManagerMr. Iskandar ARAMAN - Manager Head OfficeMr. Amr TURK - Senior Manager - LondonMr. Bassem ARISS - Regional Manager - UAEMr. Jean-Pierre BAAKLINI - General Manager - Romania

BLOM BANK FRANCE BRANCHES ABROAD

UNITED ARAB EMIRATES

DubaiDeira, Al Maktoum StSheikh Ahmad Ben Rached al Maktoum bldgP.O. Box 4370 – Dubai – United Arab EmiratesPhone: (971-4) 2284655 – 2278196 General(971-4) 2224812 - ForexFax: (971-4) 2236260Telex : 45801 BANO EM – General48836 BANO FX EM – ForexSwift : BLOM AE ADE.mail : [email protected] Manager: Mr. Samir Hobeika

SharjahKhaled Lagoon, Corniche al BuhairahSheikh Nasser Bin Hamad al Thani bldgP.O. Box 5803 – Sharjah – United Arab EmiratesPhone: (971-6) 5736700 – 5736100Fax: (971-6) 5736080Telex : 68512 BANO EME.mail : [email protected] Manager : Mr. Mokhtar KASSEM

UNITED KINGDOM

London193-195 Brompton RoadLondon SW3 1LZ – EnglandPhone: (44-20) 75907777Fax: (44-20) 78237356Swift : BLOM GB 2LE.mail : [email protected] Manager : Mr. Amr TURK

ROMANIA

Headquarters - Bucharest66 Unirii Boulevard, Bloc K3, Sector 3,BucharestP.O. BOX 1-850 BucharestPhone: (004) 021/302.72.06 – 302.72.01Fax: (004) 021/318.52.14 - 318.52.03Swift : BLOM RO BUE-mail: [email protected]

General ManagementMr. Jean Pierre BAAKLINI - General ManagerMrs. Veronika PETERESCU - Deputy GeneralManager

Branches

Head Office - Bucharest66 Unirii Boulevard, Bloc K3, Sector 3,BucharestP.O. BOX 1-850 BucharestPhone: (004) 021/302.72.06 – 302.72.01Fax: (004) 021/318.52.14 - 318.52.03Swift : BLOM RO BUE-mail: [email protected] Manager: Mrs. Florentina DELLA

Victoria (Bucharest)72 Buzesti St., BucharestPhone: (004) 021/315.42.05-315.42.06Fax: (004) 021/315.42.08E-mail: [email protected] Manager: Mr. Marius VOICULET

Bucharest Hotel4 Prel. George Enescu St., Bucharest HotelP.O. Box 1-850Phone: (004) 021/312.27.51- 312.27.52Fax: (004) 021/312.27.53E-mail: [email protected] Manager: Mrs. Monica FILIP

Constanta25 Bis Mamaia Boulevard, ConstantaP.O. Box 2-89Phone: (004) 0241/510.950Fax: (004) 0241/510.951E-mail: [email protected] Manager: Mr. Mihai BUTCARU

Brasov23 Mihail Kogalniceanu St., Bloc C7, BrasovPhone: (004) 0268/547.640Fax: (004) 0268/547.641E-mail: [email protected] Manager: Mr. Hosny HESHAM

Cluj11 T. Cipariu St., ClujPhone: (004) 0364/410.277Fax: (004) 0264/450.594E-mail: [email protected] Manager: Mr. Mircea CHIOREAN

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HeadquartersDamascus – Al Harika – Bab BaridLawyers’ Syndicate BuildingP.O. Box: 3103 Damascus – SyriaPhone: (963-11) 2460560Fax: (963-11) 2460555Swift: BSOMSYDAE-mail: [email protected]

Board of DirectorsDr. Rateb AL SHALLAH - ChairmanMr. Amr AZHARI - Vice ChairmanMr. Georges SAYEGH - General Manager

DirectorsDr. Ihsan BAALBAKIMr. Ibrahim SHEIKH DIBMr. Mohamed Ramzi CHABANIMr. Mehran KHWANDAMr. Habib BETINJANEHMr. Samer AZHARIMr. Saad AZHARI

Managers - Central DepartmentsMr. Bashir YAKZAN - CreditMr. Georges HADDAD - Internal AuditMr. Samir ASMAR - AdministrationMs. Inaya SOUBRA - InternationalMs. Rima JAWAD ZEIN - Human ResourcesMr. Mohamad Yehia KHALED - Retail BankingMr. Salem MAHMOUD - InformationTechnologyMr. Michel MANNEH - OperationsMr. Shady DIAR BAKERLY - Accounting

Branches

DAMASCUS

HarikaDamascus – Al Harika, Bab BaridLawyers’ Syndicate BuildingP.O. Box: 3103 Damascus – SyriaPhone: (963-11) 2460560Fax: (963-11) 2460555Mobile: (963) 932 460560Email: [email protected] Manager: Mr. Samir BASSOUS

Damascus (Al Nejmeh Square)Damascus- Nejmeh SquareFacing Dar As Salam SchoolP.O. Box: 3103 Damascus – SyriaPhone: (963-11) 3344001Fax: (963-11) 3344021E-mail: [email protected] Manager: Mr. Fadi ISTWANI

Al KassaaDamascus, Kassaa – Brj Al Russ,FacingNational ParkP.O. Box: 3103 Damascus – SyriaPhone: (963-11) 5431350Fax: (963-11) 5431360E-mail: [email protected] Manager: Mr. Omar HAMMOUD

MEZZEHDamascus, next to Al Razi HospitalP.O. Box: 3103 Damascus – SyriaPhone: (963-11) 6132411Fax: (963-11) 6132409E-mail: [email protected] Manager: Mr. Tarek CHEHAB

ALEPPO

Al Azizieh AleppoAleppo – Azizia, Saad el Dine Al Jabiri StP.O. Box: 9966 Aleppo – SyriaPhone: (963-21) 9960- 225850- 60-70Fax: (963-21) 2249800E-mail: [email protected] Manager: Mr. Eddy BECHARA

Al Madina -AleppoSabeh Bahrat StP.O. Box: 9966 –Aleppo – SyriaPhone: (963-21) 9961Fax: (963-21) 3335377E-mail: [email protected] Manager: Mr. Amro KAYAL

LATTAKIA

LattakiaLattakia – Al Kamilia, 8th March StP.O. Box: 371 Lattakia , SyriaPhone: (963-41) 3010- 452516/9Fax: (963-41) 452573E-mail: [email protected] Manager: Mr. Bassem MERHEJ

HAMA

HamaHama – Kouwatly StP.O. Box: 820 Hama ,SyriaPhone: (963-33) 213834- 5 - 9960Fax: (963- 33) 213833E-mail: [email protected] Manager: Mr. Hussein OBEID

HOMS

HomsHoms, City Center Bldg.P.O. Box: 1377 Homs, SyriaPhone: (963-31) 9960 - 453925Fax: (963-31) 453936E-mail: [email protected] Manager: Mrs. Anna DIBE

TARTOUS

TartousTartous- Al Sawra StP.O. Box: 824 Tartous – SyriaPhone: (963-43) 9960 - 227474Fax: (963-43) 226869E-mail: [email protected] Manager: Mr. Chamel MAKARI

SWEIDA

Sweida, Tishreen Str.P.O. Box: 74 SWEIDAA - SyriaPhone: (963 –16) 9960Fax: (963-16) 233478E-mail: [email protected] Branch Manager: Mr. Abdullah N.KAMALEDDINE

DARAA

DaraaAl Mahata, Al Kouwatli Str.P.O.Box: 555 Daraa – SyriaPhone: (963-15) 9960Fax: (963-15) 233055E-mail: [email protected] Manager: Mr. Anwar EL HARESS

BRANCHES UNDER ESTABLISHMENT

Kfarsousa - DamascusAl Midan - DamascusAl Mazraa – DamascusAl Mantaka el horra – DamascusAl Mouhafaza – AleppoAl Sheikh Najjar – AleppoAl Souleimaniya – AleppoAadra

Headquarters54 Lebanon St. – MohandessenTel: (202) 33039825 – 33039824 - 33039805Fax: (202) 33039806P.O Box : 144 Al MohandessenSwift: MRBAEGCXXXWebsite: www.blombankegypt.com

Board of DirectorsMr. Saad AZHARI :ChairmanMr. Alaa El Din Ahmad SAMAHA: ManagingDirector & Chief Executive Officer

DirectorsMr. Elias ARACTINGIDr. Fadi OSSEIRANMr. Shaker ABDULLAHMr. Samir KASSISMr. Hani DANA - Chairman Advisor & SeniorCredit Officer

Assistant Managing DirectorsMrs. Maya EL KADY - RetailMr. Talal IBRAHIM - Total Quality ManagementMr. Tarek METWALLY - Institutional

Ismalia15 Street 144 Teraat Al Ismalia – in front of elRai BridgeTel: (2064) 3921758 – 3921759Fax: (2064) 3921767E-mail: [email protected] Manager: Mr. Ahmed ABD EL AAL

Heliopolis31 El Hegaz St. HeliopolisTel: (202) 22592030 – 22583120Fax: (202) 24519730 – 24519710E-mail:[email protected] Manager: Mr. Mohammed ABD ELRAHMAN

Maadi4 Street 269 from Nasr St. – New Maadi –CairoTel: (202) 25198085 – 25197960 – 25197710Fax: (202) 25199293 – 25197232E-mail: mawad.ahmed @blombankegypt.comBranch Manager: Mr. Moawad AHMED

New Maadi17/5 El Laselky - Nasr St. – New MaadiTel: (202) 27550768 – 27550778Fax: (202) 27550740E-mail: [email protected] Manager: Mrs. Hanem FAHMY

Nasr cityEl Akkad Mall – El Nasr Road – Nasr CityTel: (202) 26906801 – 26906802 – 26906804 –26906806Fax: (202) 26906803 – 26906805E-mail:[email protected] Manager: Mr. Hossam ABU ELSOWOOD

Opera4 , 4a , 6 Abdel Haak El Sonbaty – OperaSquareTel: (202) 23927885 – 23923127Fax: (202) 23925265E-mail: [email protected] Manager: Mr. Ali Ezzat KHAFAGY

6 th OctoberCentral Axis – El Madiena Commercial Center– Area No.4 – 1st District – 6th October cityTel: (202) 38320537 – 38321024 – 38321098Fax: (202) 38339279E-mail: [email protected] Manager: Mr. Mamdouh ZAYED

Abbasia109 Abbasia St.Tel: (202) 29222343 – 29222342Fax: (202) 29222350E-mail: [email protected] Manager: Mr. Hesham FOUAD


Al Hurghada7 El Mena St. Saqala Square– HurghadaTel: (2065) 3448516 – 9Fax: (2065) 3447834E-mail: [email protected] Manager: Mr. Hussein EL SWAIFY

Al Mansoura35 Saad Zaghloul St. – Touril – MansouraTel: (2050) 2309120 – 2309123 – 2309124Fax: (2050) 2309122 – 2309125E-mail:[email protected] Manager: Mr. Mohammed DAADAR

ALEXANDRIA

Stadium1 Soliman Yousri St. ( Loumomba ) – AlexandriaTel: (203) 4951641 – 45Fax: (203) 4951635 – 4951636E-mail: [email protected] Manager: Mr. Ayman TALAAT

El Shatby17 Port Said St. – El Shatby – AlexandriaTel: (203) 5934055 (10 Lines )Fax: (203) 5934058E-mail: [email protected] Manager: Mr. Ashraf TAHIO

Sporting273 El Horria Road – Sporting – AlexandriaTel: (203) 4200098 – 4270211 – 4282050 – 4279680Fax: (203) 4200094E-mail: [email protected] Manager: Mrs. Magda FAYED

Montaza414 Gamal Abd El Naser – El Mandara -AlexandriaTel: (203) 5488550 – 5488593Fax: (203) 5488713E-mail: [email protected] Manager: Mr. Ibrahim ABAZA

Sharm El SheikhNaama Bay – El Amir Abdouallah St. – MurrayMall – Sharm El SheikTel: (2069) 3603592 – 3603593 – 3603594 –3603547Fax: (2069) 3603541E-mail: [email protected] Manager: Alaa METWALLY

Branches Under Establishment

El Mansheya ( opening soon )6A Ahmed Orabi Square in front of unknownsolider – Manshia squareTel:Fax:E-mail: [email protected] Manager: Mr. Mohamed Refaat

Dokki64 Mohy El Din Abu El Ezz street

Group HeadsMr. Belal FAROUK - ComplianceMr. Talaat ABD EL AAL Al OUMDA - Human ResourcesMr. Mohamed RASHWAN - Internal AuditMr. Maher ANWAR - Legal AffairsMr. Abdel Aziz ALY - General AdministrationMr. Khaled ABDEL HAMID - Branches RegionalManagerMr. Hazem EL GOHARY - Information TechnologyMr. Gamal DIAA - Medium Size FinanceMr. Ayman EL SHALKANI - Retail Sales ManagerMr. Khaled YOUSSRY - Financial InstitutionMr. Yehia RASHED - Risk ManagementMr. Imad EL JUNDY - Central OperationMr. Mohamed EL BENDARY - Financial Control

BRANCHES in Egypt

Mohandessen54 Lebanon St. – MohandessenTel: (202) 33039817 - 33039819Fax: (202) 33039806E-mail: [email protected] Manager: Mr. Ahmed SABRY

Shoubra232 Shoubra St. – EL KhalafawyTel: (202) 2431 1409 – 732 – 485Fax: (202) 24311364 – 24312678E-mail: [email protected] Manager: Mr. Sherif TAHER

Mohie Eldin Aboul Ezz64 Mohie Eldin Aboul Ezz St. DokkiTel: (202) 37494563 – 696Fax: (202) 37494652 – 79E-mail: [email protected] Manager: Mrs. Wafaa EZZAT

Cairo15 Abu El Feda St. – Zamalik – CairoTel: (202) 27353292 – 27368045Fax: (202) 27370481 – 27358613E-mail: [email protected] Manager: Mr. Sherif SEIF EL NASR

New Cairo101 City Commercial Center – El Tagamoa ElKhames – New CairoTel: (202) 29281193 – 29281200Fax: (202)E-mail: [email protected] Deputy Manager: Mr. Hazem El Khabeery

Oroba1 Cleopatra St. El Orouba – Heliopolis – CairoTel: (202) 24144796 – 24144759Fax: (202) 24144793E-mail: [email protected] Manager: Mr. Mohamed HUSSEIN

Khalifa El Maamoun20 Al Khalifa El Maamoun St. – Manshiet El BakryTel: (202) 22575625 – 22575647 – 22575641Fax: (202) 22575651 – 22575665E-mail: [email protected] Manager: Mrs. Heba SAAD172


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Headquarters8 Geziat el Arab st. - MohandeseenTel: (202 ) 37621611 – 1764 - 1754Fax: (202) 37617680E-mail: [email protected]

Board of DirectorsMr. Alaa El DeenSAMAHA - ChairmanMr. AhmedGEMEI - Deputy Chairman&ManagingDirector

DirectorsMr. Belal Farouk TAWFEKMr. Tarek IbrahimMETWALYMrs.Maya TawfekALKADYMr. KhaledMOHAMEDMr.MohamedELBANDARY

General ManagementMr. AhmedGEMEI - Deputy Chairman&ManagingDirectorMr. Tawhed ZAHER - Chief OperatingManagerMr.Mahmoud ELGAMMAL - ComplianceOfficerMr. AhmedA. RAHMAN - Financial ControlMr. EmamWAKED -Head of Institutional Desk

HeadquartersAbdel Aziz St, Daher bldgBeirut, LebanonPhone: (961-1) 751090/1/2/3Fax: (961-1) 751094Email: [email protected]

Board of DirectorsMr. Saad AZHARI: Chairman & General Manager

DirectorsMr. Nicolas SAADEDr. Fadi OSSEIRAN

General ManagementGeneral Manager - Mr. Mouataz NATAFGI

ManagersMr. Tarek HOUSSAMI - Main Branch Manager & Head of

Retail DepartmentMr. Mustapha SIBAI - Financial Control & Investment

*

Board of DirectorsMr. Abdallah Abd Al Latif Ahmad AL FAWZAN - ChairmanMr. Mohamed Abd El Aziz Ibrahim AL AKIL- MemberMr. Wali Abd El Aziz Saleh AL SAGHIR - MemberMr. Saad Naaman AZHARI - MemberMr. Fahim Mohamed MOADAD - MemberDr. Fadi Toufic OSSEIRAN - MemberMr. Marwan Mohamed Toufic AL JAROUDI - Member

Headquarters: Riyad


*

Headquarters: Doha


HeadquartersVerdun – Rachid Karami St,BLOM BANK bldg, Arope PlazaP.O. Box: 113-5686 Beirut – LebanonPhone: (961-1) 759999Fax: (961-1) 344012Call Center: (961-1) 747555 (01) or ( 03) 1219E-mail: [email protected]: http://www.arope.com

Board of DirectorsMr. Habib RAHAL - Chairman & General ManagerMr. Fateh BEKDACHE - Vice Chairman & GeneralManager

DirectorsMr. Samer AZHARISCOR SE (Represented by Mr. Patrick LOISY)Mr. Serge OSOUFMr. Marwan JAROUDIMr. Rami HOURIEMr. Victor PEIGNET

General ManagementMr. Fateh BEKDACHE - General ManagerMs. Faten DOUGLAS - Assistant General Manager

BRANCHES

AleyAl BalakinePhone: (961 – 5) 556 613Fax: (961 – 5) 556 614

AramounChoueifat – Al Koba, Aramoun RoadPhone: (961 – 5) 808 591 / 2/ 3Fax: (961 – 5) 808 594

Bur Al BarajnehAin El Sekka RoadPhone / Fax: (961 – 1) 452 917

DoraMain Road – Cebaco CenterPhone / Fax: (961-1) 262222

JbeilVoie 13, near Saint Charbel Junction,Phone / Fax: (961 – 9) 943 701

SaidaRiad Solh Street – Fakhoury bldgPhone / Fax: (961-7) 725 303

TripoliZehrieh – Al Tall Street – Byssar bldgPhone / Fax: (961-6) 446 877

TyrMain RoadPhone: (961 – 7) 740 900 – 741 649Fax: (961 – 7) 348 487

ZahléZahlé Entrance – Manarah CenterPhone / Fax: (961-8) 818640

HeadquartersDamascus Al Rawda, Zuhair Ben Abi Salma st.Malki Bldg N18P.O. Box: 33015Phone: (963-11) 9279Fax: (963-11) 3348144E-mail: [email protected]

Board of DirectorsMr. Amr AZHARI - ChairmanMr. Fateh BECKDACHE - Vice Chairman

DirectorsMr. Samer AZHARIMr. Habib BATENJANIMr. Ibrahim EL SHEIKH DIBMr. Marwan JAROUDIMr. Hassan BAALBAKI

General ManagementMiss Faten DOUGLAS - General Manager

BRANCHES

AleppoAleppo- Azizieh- Majed Al Deen Al Jabri StreetTel: (963-21) 9279Fax: (963-21) 2118800P. O. Box: 1293

HomsCity center BuildingTel: (963-31) 9279

LattakiaAl Kamilia - 8 March StreetTel: (963-41) 475213Fax: (963-41) 475223

HamaAl Ashek Building – Al Amin StreetTel: (963-33) 9279

Al KamshliTel: (963-52) 430670Fax: (963-52) 430670

Dair Al ZoorTel : (963-51) 372828

ANNUAL REPORT 07 - BLOM Bank · annual report 07. atblombank ... blom bank’s major shareholders...

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Transcript of ANNUAL REPORT 07 - BLOM Bank · annual report 07. atblombank ... blom bank’s major shareholders...