Driven largely by tourism and construction activity, Lebanon's economy grew by an estimated 8.0% in 2010, a little up on the growth of 7.0% recorded in 2009. At the same time, its current account deficit remained stable at $3.7 billion or -10.5% of GDP, a small improvement over the -11.3% of GDP recorded in 2009. The average rate of inflation increased moderately to 3.5% from 2.5%, although on a year-to-year basis it was unchanged at 2.9%. Lebanon continues to benefit from inward capital transfers arising from expatriate Lebanese remittances and some foreign direct investment emanating from the Gulf states. Its public debt remains high at $50 billion, although much of this is held by domestic banks and the Central Bank holds over $30 billion in foreign currency reserves to ensure that it can always meet local demand for dollars.
The year saw a 10% rise in assets to $200 million at Al Baraka Lebanon, as its financings and investments portfolios rose by 84% to $123 million, marking a shift away from the inter-bank market. On the liabilities side, customer deposits including the unrestricted investment accounts grew by 13% to reach $162 million. The actual number of current and other customer accounts nevertheless grew by some 20%, reflecting the success of the bank's drive to widen its customer base. Income from jointly financed contracts and investments in turn grew, by 55% to a little less than $9 million and, after accounting for the unrestricted investment account holders’ share, the bank's share including that as Mudarib rose to over $4 million, more than double the revenue from this source in 2009. This income, together with income from its own investments and sales and banking services, amounted to a little under $8 million. Operating expenses on the other hand rose by only 2% to slightly more than $8 million, resulting in a substantially reduced operating loss of only $0.4 million which, as there was no taxation charge and only a small provision charge for the year, resulted in a net loss for the year of $0.9 million, a significant improvement over the $2.5 million loss realised in 2009.
Products introduced during the year include ATM Online services; Baraka Surf – which enables clients to access the Internet at reduced cost; Baraka Net – a rechargeable prepaid Internet card enabling clients to purchase goods and services over the Internet within a preset limit and Baraka Dental – a programme to finance dentists’ equipment and patients’ serious dental work. Several more new products are planned to be launched in 2011, amongst the most important are a credit card specifically tailored for women, featuring free gifts and store discounts among other benefits; a Hajj prepaid card carrying a variety of benefits; a Murabaha financing scheme introduced for young couples getting married to finance the ceremonies, home set-up costs and similar expenditure, featuring special discounts from photographers, travel agencies, wedding planners, etc.; Al Baraka Green – to finance the installation of solar panels to produce electricity in the home and Baraka Online – a safe Web application permitting clients to access their accounts and execute transactions from anywhere in the world.
In the meantime, implementation of the new Misys Islamic Equation core banking system has been largely completed. Full implementation in early 2011 will then enable the bank to expand its Internet banking services, including SMS banking. The bank's medium term network expansion strategy aims at increasing the number of branches from the present 7 offices to 12, whilst adding a further 11 ATM units, by 2015.
Mr. Mutasim Mahmassani
Board Member & General Manager
Rashid Karameh Street,
Verdun 2000 Centre,
Beirut, Lebanon
Tel: + 9611 808008
Fax: + 9611 806499
www.al-baraka.com
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