Fitch affirms BLOM Bank's support rating at '5'

Fitch considers that the Lebanese authorities would have a very high propensity to support BLOM if necessary, in view of its systemic importance to the banking sector and to the economy as a whole. However, the bank's Support Rating reflects the fact that given the low sovereign rating ('B-'), the sovereign's ability to provide support, although possible, cannot be wholly relied on.

Lebanese banks have so far shown a good resilience to the effects of the economic slowdown in the Mena region and BLOM's operating and net income showed strong growth during 2008 of 31% and 23%, respectively, although profitability growth slowed in Q109. The bank's profitability ratios compare well with its peers, partly due to its greater cost efficiency. Net interest income accounts for almost three quarters of the bank's operating revenues, and is largely generated from its holding of government securities and interbank deposits.

As with other Lebanese banks, BLOM's main risk is its significant exposure to the Lebanese government. About half of the bank's balance sheet consists of government securities and central bank placements with the remainder consisting of loans which account for about 20% of the balance sheet, and interbank deposits.

BLOM is the second-largest bank in Lebanon by assets, accounting for about 20% of system assets and almost a quarter of system deposits at end 2008. It offers a wide range of corporate and retail services. It operates in Cyprus, Egypt, France, Jordan, Qatar, Romania, Switzerland, Syria, the UAE and UK, and has an investment subsidiary in Saudi Arabia. BLOM's foreign operations account for about a third of the bank's assets and 27% of its profits.