Fransabank's ratings affirmed

CI also maintained Fransabank's Financial Strength Rating at BB+ as well as the Support level of 3. All the ratings carry a Stable Outlook.

Fransabank (FB) continued to improve the quality of its loan portfolio in 2009 as evidenced by a decline in non-performing loans and improved loan-loss provision coverage. FB's risk management processes have strengthened in recent years in anticipation of the Basel II Accord, which was formally adopted by Lebanon's central bank in 2009. The Bank's balance sheet is adequately capitalised following a capital increase in 2008. CI however views a stronger capital adequacy ratio prudent given Lebanon's volatile operating environment. FB's growing share of assets outside the country will over time diversify risk assets and revenue streams. Net profit continued to grow in the year under review buoyed by higher net interest income and a significant provision write-back; returns though remained relatively modest as is the case with peer banks.

FB's comfortable liquidity position rests on a stable base of customer deposits. However a considerable proportion of the Bank's liquid assets remain invested in Lebanese sovereign paper and central bank CDs as is the case with its peers. These exposures remain a cause for concern given the lack of fiscal reform in the country and the government's large debt burden. That said, Lebanon's improved international liquidity position has mitigated the sovereign's near term refinancing risks.