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WeeklyMarketWatch

IssueNo.566

September8th–September15th2017

LLEEBBAANNOONN NEWS

ECONOMIC INSIGHTS

> INDEPENDENT INSURANCE BROKERS AMASS 23% OF TOTAL ANNUAL NON-LIFE INSURANCE PREMIUMS IN LEBANON IN THE YEAR 2016 1

> BEIRUT 101ST LEAST STRESSFUL CITY WORLDWIDE 2 > AUB RANKS 41ST WORLDWIDE IN GRADUATE EMPLOYABILITY RANKINGS

FOR THE YEAR 2018 3 > IMF TEAM CONCLUDES VISIT TO LEBANON 3 > LCRP RECEIVES FUNDS OF $38 MILLION AND REACHES 21,866

VULNERABLE INDIVIDUALS AS AT END OF JULY 2017 4 > MR. RIAD SALAMEH AMONGST TOP 9 CENTRAL BANK GOVERNORS IN THE

WORLD 5 > LEBANON RANKS SIXTH IN THE MENA REGION IN EXTERNAL DEBT

RETURNS YTD AUGUST 2017 6 > COMMERCIAL BANKS’ ASSETS AT $208 BILLION AT END OF JULY 2017 7 > GROSS PUBLIC DEBT AT $76.88 BILLION IN JULY 2017 8 > CONSOLIDATED ASSETS OF FINANCIAL INSTITUTIONS AT $1.52 BILLION

IN JULY 2017 9 > COMBINED ASSETS OF INVESTMENT BANKS AT $4.86 BILLION BY JULY

2017 10 > LEBANON’S BALANCE OF PAYMENTS REGISTERS $1.02 BILLION DEFICIT

YTD JULY 2017 11 > WEIGHTED AVERAGE INTEREST RATE ON LBP DEPOSITS AT 5.56% IN

JULY 2017 11 > THE COINCIDENT INDICATOR UP BY 11.56% Y-O-Y IN JULY 2017 12 > CEMENT DELIVERIES DOWN BY 1.44% Y-O-Y BY JULY 2017 12 > NEW CAR SALES SETTLE 0.78% LOWER YTD AUGUST 2017 13 > PUBLIC SECTOR SALARIES, WAGES, & RELATED BENEFITS AT $2.87

BILLION YTD NOVEMBER 2016 14 > ABL AMENDS THE BRR ON LBP AND USD LENDING 15 > TRIPOLI PORT ACTIVITY IMPROVES BY 15.75% YTD JULY 2017 15

CORPORATE NEWS

> VALUE OF KAFALAT LOANS ATTAINS $47.82 MILLION YTD AUGUST 2017 16

MONETARY PERFORMANCE

> MONETARY AGGREGATES 17 > MONEY MARKETS 17

LEBANESE EQUITIES

> LEBANESE EQUITIES & CREDIT LIBANAIS INDICES 18

LEBANON'S ECONOMIC & FINANCIAL SECTOR INDICATORS 20 LEBANON'S RATINGS 21

INDEPENDENT INSURANCE BROKERS AMASS 23% OF TOTAL ANNUAL NON-LIFE INSURANCE PREMIUMS IN LEBANON IN THE YEAR 2016

According to Al Bayan Economic Magazine, independent insurance brokers have managed to attract some 23% ($231.73 million) of Lebanon’s total annual non-life insurance premiums in the year 2016. BEIRUT 101ST LEAST STRESSFUL CITY WORLDWIDE

Beirut was positioned as the 101st least stressful city in the world in the year 2017 Global Least and Most Stressful Cities Ranking, and came in 9th regionally with an overall score of 6.13. AUB RANKS 41ST WORLDWIDE IN GRADUATE EMPLOYABILITY RANKINGS FOR THE YEAR 2018

AUB was the only university in the region to make it on the list of the top 50 universities worldwide in terms of graduate employability, with its ranking improving from 81st-90th in 2017 to 41st in 2018. MR. RIAD SALAMEH AMONGST TOP 9 CENTRAL BANK GOVERNORS IN THE WORLD

The Lebanese Central Bank governor Mr. Riad Salameh was selected amongst the 9 best Central Bank governors in the world, achieving an “A” grade on the Central Banker Report Cards 2017 released by the Global Finance Magazine. COMMERCIAL BANKS’ ASSETS AT $208 BILLION AT END OF JULY 2017

The combined balance sheet of commercial banks widened by a shy 2.04% during the first seven months of 2017 to LBP 314,282 billion ($208.48 billion), up from LBP 307,999 billion ($204.31 billion) at end of year 2016.

TABLE OF CONTENTS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231

"BDL" Banque Du Liban "ABL" Association of Banks in Lebanon "MOF" The Lebanese Ministry of

Finance "BOP" Balance of Payment "IMF" The International Monetary Fund "Moody's" Moody's Investors Service "BSE" Beirut Stock Exchange "GDRs" Global Depositary Receipts "M1" Currency in Circulation + Demand

Deposits in LBP "M2" M1 + Other Deposits in LBP "M3" M2 + Deposits in Foreign Currencies "M4" M3+ Treasury Bills Held by Non-Banking System Including

Accrued Interests "CPI" Consumer Price Index "PPI" Producer Price Index "CLASI" Credit Libanais Aggregate Stock Index "CLFI" Credit Libanais Financial Sector Stock Index

"CLCI" Credit Libanais Construction Sector Stock Index “EIU” Economist Intelligence Unit “EOY” End of Year "P/E" Price to Earnings Multiple "P/BV" Price to Book Multiple "YTD" Year to Date "YTD Price Performance" Yield to Date Price Appreciation "LBP" The Lebanese Pound "USD" The United States Dollar "Y-O-Y" Year-on-Year "GDP" Gross Domestic Product "MENA" Middle East and North Africa

SYNOPSIS OF TERMS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231

LEBANON NEWS

Weekly Market Watch

SOURCE: AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 1

INDEPENDENT INSURANCE BROKERS AMASS 23% OF TOTAL ANNUAL NON-LIFE INSURANCE PREMIUMS IN LEBANON IN THE YEAR 2016

“Al Bayan Economic”, the specialized banking, insurance, and shipping pan-Arab monthly magazine, released in its September 2017 issue an article spotting the light on the performance of independent insurance brokers in Lebanon in the year 2016. More specifically, the magazine reported that independent insurance brokers have managed to attract some 23% ($231.73 million) of Lebanon’s total annual non-life insurance premiums in the year 2016. According to the article, however, insurance brokers have been facing fierce competition from brokerage companies that are owned by or affiliated to banking entities. The article also displays a list of 95 independent insurance brokers operating in Lebanon according to the amounts locally raised by each in terms of annual premiums in years 2015 and 2016, with “CAPE” ranking first ($25.00 million in 2015 and $23.50 million in 2016) for yet another year, followed by “WTW Gras Savoye” ($21.00 million in 2015 and $20.41 million in 2016) and “AGCA” ($14.99 million in 2015 and $14.10 million in 2016) on a respective basis. The table below depicts the name of the top 20 independent insurance brokers operating in Lebanon in terms of annual non-life premiums in years 2015 and 2016 as per “Al Bayan Economic”:

Year 2015 Year 20161 CAPE 25,000 23,5002 WTW Gras Savoye 21,000 20,4053 Agence Générale de Courtage d'Assurance (AGCA) 14,990 14,1004 ACAIR 13,000 13,0005 Nassif Assurances 12,500 13,0006 Addison Bradley 8,500 9,0007 FCR 6,730 8,8008 Bathish Insurance Agency (ABA) 6,500 7,0009 J Nassif & Co 6,800 7,00010 Ways Insurance 5,180 5,95011 Arab Assurance Advisors (AAA) 5,140 5,28012 Moussawi Insurance Brokerage (MIB) 4,900 4,90013 Mawarid 4,900 4,90014 Khazaka Insurance Group (KIG) 5,800 4,50015 Talal Chehab 3,800 4,30016 La Nationale 4,000 4,00017 Insurance & Investment Consultant (IIC) 3,765 3,54018 Business Insurance Group (BIG) 3,100 3,50019 Loyalty* 3,415 3,41520 Pins 3,150 3,150

*2015 Figures

Ranking CompanyAnnual Insurance Premiums

(USD Thouands)

Source: Al Bayan Economic Magazine, Credit Libanais Economic Research Unit

0 5,000 10,000 15,000 20,000 25,000

CAPE

WTW Gras Savoye

AGCA

ACAIR

Nassif Assurances

Addison Bradley

FCR

ABA

J Nassif & Co

Ways Insurance

23,500

20,405

14,100

13,000

13,000

9,000

8,800

7,000

7,000

5,950

USD Thousands

Annual Non-Life Insurance Premiums of Top 10 Independent Insurance Brokers in Lebanon in 2016

Source: Al Bayan Economic Magazine, Credit Libanais Economic Research Unit

LEBANON NEWS

Weekly Market Watch

SOURCE: ZIPJET, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 2

BEIRUT 101ST LEAST STRESSFUL CITY WORLDWIDE

Zipjet, a company that produces technology aimed at reducing stress in people’s lives, recently issued its year 2017 Global Least and Most Stressful Cities Ranking, in which it assesses 150 cities around the world according to their stress levels. In details, the overall country score which ranges between 1 (least stressful) and 10 (most stressful) is based on the corresponding scores in 18 sub-categories (highlighted in the below tables) grouped under the umbrella of 4 main categories, namely city, pollution, finance and people. European cities emerged as the least stressful globally and dominated the top 3 positions, with Stuttgart, Germany coming in first with an overall score of 1.00, followed by Luxembourg, Luxembourg (overall score of 1.13) and Hannover, Germany (overall score of 1.19). Regionally, Abu Dhabi (overall score of 2.27 and 19th international rank), Kuwait City (overall score of 2.48 and 23rd international rank), and Dubai (overall score of 2.95 and 32nd international rank) were classified as the least stressful cities, whereas Baghdad (overall score of 10.00 and last place internationally), Cairo (overall score of 9.53 and 146th place internationally) and Tehran (overall score of 9.10 and 145th place internationally) emerged as the most stressful ones. On its turn, Beirut positioned as the 101st least stressful city in the world, ranking 9th regionally with an overall score of 6.13. Beirut performed best in the social security sub-category with a score of 1.54 and a 9th international rank, while performing worst in the debt per capita sub category with a score of 9.88 and a 148th (third to last) international rank. This is further captured by the below analysis:

Density Green Spaces

Public Transport

Traffic Perception of Security

Sunshine Hours

Beirut's Score 3.48 8.97 7.77 4.68 6.92 2.33

Beirut's Ranking 40 131 108 62 98 21

Air Pollution Noise Pollution

Light Pollution

Unemployment Debt per Capita

Social Security

Family Purchase

Power

Beirut's Score 6.5 3.96 9.21 6.56 9.88 1.54 8.07

Beirut's Ranking 91 45 137 92 148 9 119

Mental Health Physical Health

Gender Equality

Race Equality

Beirut's Score 4.81 8.89 9.34 5.89

Beirut's Ranking 63 131 139 85

Finance

Source: Zipjet, Credit Libanais Economic Research Unit

City

Pollution

People

City Score Global Rank MENA Rank

Stuttgart, Germany 1.00 1 -

Luxembourg, Luxembourg 1.13 2 -

Hannover, Germany 1.19 3 -

Abu Dhabi, UAE 2.27 19 1

Kuwait City, Kuwait 2.48 23 2

Dubai, UAE 2.95 32 3

Doha, Qatar 4.44 60 4

Manama, Bahrain 5.15 73 5

Muscat, Oman 5.23 75 6

Jeddah, KSA 6.08 97 7

Riyadh, KSA 6.08 98 8

Beirut, Lebanon 6.13 101 9

Casablanca, Morocco 7.89 133 10

Algiers, Algeria 7.95 134 11

Damascus, Syria 8.66 140 12

Tehran, Iran 9.10 145 13

Cairo, Egypt 9.53 146 14

Baghdad,Iraq 10.00 150 15

Source: Zipjet, Credit Libanais Economic Research Unit

The 2017 Global Least & Most Stressful Cities Ranking

LEBANON NEWS

Weekly Market Watch

SOURCE: QS UNIVERSITY RANKINGS, IMF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 3

AUB RANKS 41ST WORLDWIDE IN GRADUATE EMPLOYABILITY RANKINGS FOR THE YEAR 2018

Quacquarelli Symonds (QS) recently released its year 2018 “Graduate Employability Rankings” in which it ranks 494 universities in the world according to a set of weighted criteria, namely, graduate employment rate (10%), employer reputation (30%), partnerships with employers (25%), presence of employers on campus (15%), and alumni outcomes (20%). The US dominated the top-five positions on the list with Stanford University coming in first with a score of 100, the University of California, Los Angeles (UCLA) ranking 2nd with a score of 98.5, Harvard University occupying the 3rd place with a score of 97.9, and the Massachusetts Institute of Technology (MIT) occupying the 5th place with a score of 96.4. The University of Sydney (Australia) was the only non-US university to make it to the top 5 list, ranking 4th with a score of 96.7. Locally, the American University of Beirut (AUB) was the only university in the MENA region to make it to the top 50 list, drastically improving its ranking from 81st-90th in the 2017 rankings to 41st in the rankings of the year 2018. Furthermore, AUB’s score stood at 72.0 in the graduate employability rankings for the year 2018. Moreover, the Lebanese American University (LAU) entered the list of the top 494 universities in the world in terms of graduate employability occupying a position in the 301-500 range.

IMF TEAM CONCLUDES VISIT TO LEBANON

An IMF team visited Lebanon last week (September 7 till 13) to keep track with the latest economic and financial developments in the country. The team concluded that Lebanon’s economic situation remains challenging amid the regional spillovers that are continuing to affect the country’s short-term outlook. The team also pointed out to the large budget deficit and the expanding public debt (at 148% of GDP in 2016) while expecting economic growth in real terms to remain “subdued” in 2017. In this context, the IMF delegation recommended the implementation of some fiscal measures, namely improving tax compliance, increasing taxation on fuel while concurrently downwardly revisiting spending, namely the “costly” EDL transfers. On the other hand, the team praised the country’s resilience, while lauding the passing of an electoral law and stating that the government could boost investors’ confidence by ratifying a new budget law. Finally, the delegation highlighted that the exchange rate peg remains a suitable “nominal anchor”.

University Global Rank in 2017

Global Rank in 2018 Change in Global Rank

American University of Beirut 81-90 41 + 40-49 positions

Lebanese American University - 301-500 -

Lebanese Universities in the List of the Top in Terms of Graduate Employability for the Year 2018

Source: QS University Rankings, Credit Libanais Economic Research Unit

LCRP RECEIVES FUNDS OF $38 MILLION AND REACHES 21,866 VULNERABLE INDIVIDUALS AS AT END OF JULY 2017

The United Nations High Commissioner for Refugees (UNHCR), in coordination with the United Nations Development Programme (UNDP), released on September 08, 2017 its Q2-2017 Livelihood Dashboard which highlights the progress achieved by partners involved in the Lebanon Crisis Response Plan (LCRP). The concise report stated that a total of 34 active partners were involved in the LCRP and that over $60 million in funding were accessible for the plan as at the end of July of the current year. UNHCR revealed that out of the $195.7 million required funds, LCRP has received $38 million in the first seven months of the current year while reaching a total of 21,866 individuals compared to a target of 65,557 over the concerned period. Moreover, the report also mentioned that efforts are currently being focused on the development of seven major value chains in the fields of waste management, furniture, and agro-food/dairy products through 50 interventions implemented in the North/Akkar, Bekaa, and South governorates. Furthermore, the report provided some detailed figures on the improvements made in every category/sub-category of projects being executed given the target set for each. Some additional statistics provided by the UNHCR report indicated that among the 1,300 businesses supported or established, 58% were nano enterprises, 25% micro, 11% small-medium, and the remaining 6% were cooperatives. Also, 57% of the 21,866 persons reached by the plan were females while 43% were males and 89% of the 1,814 entrepreneurs who benefitted from business management training were among the non-youth group while 11% were among the youth.

LEBANON NEWS

Weekly Market Watch

SOURCE: UNHCR, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 4

Received/ Reached

Required/ Target

38 195.721,866 65,557

No. of entrepreneurs who benefitted from business management training 1,814 10,000

No. of MSMEs/ cooperatives supported through cash and in-kind grants 668 2,750

Value of grants disbursed to MSMEs (Million USD) 2.57 17.00

No. of value chain interventions implemented 50 100No. of targeted vulnerable persons enrolled in public work projects 2,103 37,650

Value invested in public work projects (Million USD) 0.94 37.27

No. of individuals benefitting from market-based skills training 11,276 20,000

No. of people benefitting from internships, on-the-job training, or apprenticeship programmes 1,756 10,000

No. of MSMEs/ cooperatives supported or established 1,300 1,676

No. of value chains valorized and/or being upgraded 7 25

No. of vulnerable cadastres benefitting from improved infrastructure and environmental assets

76 251

Total no. of jobs created/maintained 1,181 7,908

No. of job seekers who accessed employment 573 4,000

Source: UNHCR, Credit Libanais Economic Research Unit

Category

Progress Made by Partners Involved in the LCRP as at End of July 2017

Funding Status (Million USD)

Targeted Population Groups

Activities

Outputs

LEBANON NEWS

MR. RIAD SALAMEH AMONGST TOP 9 CENTRAL BANK GOVERNORS IN THE WORLD

Global Finance Magazine recently released its Central Banker Report Cards 2017 in which it rates 83 Central Bank governors around the world along an “A” to “F” scale depending on a set of different criteria, namely inflation control, economic growth goals, currency stability and interest rate management. In this context, the Lebanese Central Bank governor Mr. Riad Salameh was selected amongst the 9 best Central Bank governors in the world, achieving an “A” grade, a privilege shared by his Australian (Mr. Philip Lowe), Taiwanese (Mr. Fai-nan Perng), and Russian (Mrs. Elvira Nabiullina) counterparts only to name a few. Other Arab Central Bank governors who were assessed by the Global Finance Magazine include Mr. Abdellatif Jouahri (Morocco) who earned an “A” grade and Mr Ziad Fariz (Jordan) who scored an “A-“grade, followed by Mr. Mubarak Rashid Al Mansoori of the United Arab Emirates who scored a “B+” grade and Mr. Tarek Amer from Egypt who also registered a “B+” grade, only to name a few. The following table sheds light on the grades of covered Arab Central Bank governors:

Weekly Market Watch

SOURCE: GLOBAL FINANCE MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 5

Central Bank Governor Country Year 2017 Grade

Year 2016 Grade

Mr. Riad Salameh Lebanon A A

Mr. Abdellatif Jouahri Morocco A A-

Mr. Ziad Fariz Jordan A- A-

Mr. Mubabrak Rashid al Mansoori U.A.E. B+ B+

Mr. Tarek Amer Egypt B+ C

Mr. Mohammad Youssef Al-Hashel Kuwait B+ B-

Mr. Ahmed Alkholifey Saudi Arabia B+ N/A

Mr. Abdulla Bin Saoud Al-Thani Qatar B B

Mr. Hamood Sangour Al Zadjali Oman B B

Mr. Chedly Ayari Tunisia B B

Mr. Mohamed Loukal Algeria B- N/A

Mr. Rasheed Al-Maraj Bahrain C B-

Mr. Ali Mohsen Ismail Iraq D CSource: Global Finance Magazine, Credit Libanais Economic Research Unit

List of Arab Central Bankers Assessed by Global Finance

LEBANON NEWS

LEBANON RANKS SIXTH IN THE MENA REGION IN EXTERNAL DEBT RETURNS YTD AUGUST 2017

According to the “High Yield & Emerging Market Profiles” report published by Merrill Lynch, the yield on Lebanon’s external debt stood at 0.16% in August 2017 (down from 0.31% in July) with the cumulative return on the external sovereign debt reaching 6.45% as at the end of the month of August 2017 up from 6.28% by July of the same year. This poises Lebanon to occupy the 6th place among 9 MENA countries included in the external debt EM sovereign bond index in terms of total yield, with Iraq topping the list and enjoying a total return of 19.13%, followed by Egypt (14.37%) and Turkey (11.79%), only to name a few. It is worth highlighting that these returns are not risk-adjusted, which explains the fact that countries offering high sovereign yields have high Option Adjusted Spreads (OAS) as sketched in the table below, lowering as such the risk adjusted returns. When factoring-in all emerging economies in the Merrill Lynch index, however, Belize emerged as the highest yield performer with a sovereign return of 56.59%, while crisis-stricken Venezuela suffered the worst yield performance (-11.77%). Lebanon’s excess return reached 3.71% YTD August 2017, ranking sixth among surveyed MENA countries, noting that Iraq recorded as well the highest excess return of 16.13% and the highest OAS of 480 bps. Furthermore, the report indicated that option adjusted spreads on Lebanon’s External Sovereign Debt widened to 451 basis points (bps) YTD August up from 437 bps by July. On the other hand, the weight assigned to Lebanon in Merrill Lynch’s Emerging Markets’ external debt index contracted to 2.66% down from 2.70% in the previous month, as captured in the following analysis:

Weekly Market Watch

SOURCE: MERRILL LYNCH, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 6

Month of July 2017

Month of August 2017

YTD July 2017

YTD August 2017

Returns (%) 0.31 0.16 6.28 6.45

Excess Return (%) 0.04 -0.78 4.49 3.71

Option Adjusted Spreads (bps) 437.0 451.0 - -

Lebanon's Weight in the Index (%) 2.70 2.66 - -Source: M errill Lynch, Credit Libanais Economic Research Unit

Lebanon's Sovereign External Debt

Country Returns (%) MENA Rank OAS (bps) Excess Return (%)

MENA Rank

Iraq 19.13 1 480 16.13 1

Egypt 14.37 2 395 10.73 2

Turkey 11.79 3 252 8.38 3

Tunisia 8.83 4 440 7.50 4

Morocco 7.69 5 154 5.82 5

Lebanon 6.28 6 451 3.71 6

Bahrain 4.85 7 355 1.84 7

Qatar 4.39 8 133 0.65 9

U.A.E. 4.24 9 107 1.36 8Source: M errill Lynch, Credit Libanais Economic Research Unit

Total Return on Sovereign External Debt in MENA Countries YTD August 2017

COMMERCIAL BANKS’ ASSETS AT $208 BILLION AT END OF JULY 2017

The combined balance sheet of commercial banks operating in Lebanon widened by a shy 2.04% (LBP 6,283 billion) during the first seven months of 2017 to LBP 314,282 billion ($208.48 billion), up from LBP 307,999 billion ($204.31 billion) at end of year 2016. On an annual basis, the combined assets of the banking sector came in 9.19% higher than the LBP 287,823 billion ($190.93 billion) level reported at end of July 2016. The sector remains highly liquid, enjoying a primary liquidity ratio of 80.38%, compared to 78.63% in the same period last year. On the funding side of the balance sheet, customer deposits (private and public sector) rose by 3.54% (LBP 8,888 billion) YTD July to LBP 259,805 billion ($172.34 billion), up from LBP 250,917 billion ($166.45 billion) at year-end 2016. Said rise came as a result of the 3.97% (LBP 7,686 billion) increase in deposits from the resident private sector to LBP 201,451 billion ($133.63 billion), accompanied by a 2.34% (LBP 1,197 billion) expansion in deposits from the non-resident private sector to LBP 52,393 billion ($34.75 billion). From a currency denomination standpoint, deposits in Lebanese Pounds progressed by 0.37% (LBP 330 billion) during the first seven months of the current year to LBP 90,017 billion ($59.71 billion), while foreign currency deposits grew at a faster pace of 5.31% (LBP 8,558 billion) to LBP 169,788 billion ($112.63 billion). In this context, the deposit dollarization rate increased to 66.89% at end of July, from 65.82% at end of year 2016 and 64.87% at end of July 2016. On an annual basis, customer deposits soared by 8.87% from LBP 238,633 billion ($158.30 billion) in July of last year. On the lending front, loans to the private sector (residents and non-residents) notched 2.51% (LBP 2,161 billion) higher YTD July 2017 to LBP 88,360 billion ($58.61 billion), up from LBP 86,199 billion ($57.18 billion) in December 2016. The loans portfolio rose by 4.54% annually, resulting in a ratio of net loans to customer deposits of 34.01%, compared to 34.35% in December and 35.42% in July of last year. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits increased to 28.62%, from 26.32% at year-end 2016 and 25.06% in July 2016. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits dropped to 36.87%, down from 38.82% in December and 41.36% in July 2016.

Weekly Market Watch

SOURCE ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 7

LEBANON NEWS

USD Billion 2012 2013 2014 2015 July-2016 2016 July-2017

Total Assets 151.88 164.82 175.70 185.99 190.93 204.31 208.48

Loans to the Private Sector 43.45 47.38 50.90 54.52 56.07 57.18 58.61

Customer Deposits, o/w: 127.66 139.17 147.64 154.95 158.30 166.45 172.34

- Resident Private Sector Deposits 100.91 107.73 114.12 119.73 122.74 128.53 133.63

- Non-Resident Private Sector Deposits 24.09 28.48 30.30 31.86 32.33 33.96 34.75

- Public Sector Deposits 2.66 2.96 3.21 3.37 3.23 3.95 3.95

Capital Accounts 12.64 14.20 15.73 16.67 17.43 18.24 18.78

Dollarization Rate 64.82% 66.14% 65.71% 64.88% 64.87% 65.82% 66.89%

Private Sector Loans/Deposits Ratio 34.04% 34.05% 34.48% 35.19% 35.42% 34.35% 34.01%

- LBP Private Sector Loans/LBP Deposits 20.84% 22.65% 23.58% 24.11% 25.06% 26.32% 28.62%

- FC Private Sector Loans/FC Deposits 41.63% 40.26% 40.53% 41.56% 41.36% 38.82% 36.87%Source: The Association of Banks in Lebanon, Credit Libanais Economic Research Unit

100.00

150.00

200.00

250.00

2012 2013 2014 2015 2016 July-2017

151.88164.82

175.70185.99

204.31 208.48

USD Billion

Evolution of Commercial Banks' Consolidated Assets

Source: ABL, Credit Libanais Economic Research Unit

GROSS PUBLIC DEBT AT $76.88 BILLION IN JULY 2017

Lebanon’s gross public debt widened by $430.51 million during the month of July 2017 to $76.88 billion, up from $76.46 billion in June. Similarly, and on an annual basis, gross public debt rose by $3.50 billion from $73.38 billion at end of July of last year. The share of the Lebanese banking sector of gross public debt fell to 44.96% in July, down from 47.03% in June. As far as debt in local currency is concerned, the latter rose by 0.78% month-on-month and by 6.29% year-on-year to $47.17 billion. Concurrently, debt in foreign currency increased by 0.22% on a monthly basis and by 2.42% on a yearly basis to $29.71 billion. The share of debt in local currency expanded to 61.35% of gross public debt by July 2017, while that in foreign currency decreased to 38.65%. Net public debt, which factors out public sector deposits, came in 4.76% higher y-o-y at $66.57 billion in July of this year, up from $63.54 billion in July of the previous year. The chart below sketches the annual evolution of Lebanon’s public debt since July 2010, resulting in a 5.98% compounded annual growth in net debt over the concerned period.

LEBANON NEWS

Weekly Market Watch

SOURCE: ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 8

Jul-2016 Jul-2017 Y-O-Y % Change

Gross Public Debt 73.38 76.88 4.76% Debt in LBP 44.37 47.17 6.29% Debt in Foreign Currency 29.01 29.71 2.42%Public Sector Deposits 9.84 10.31 4.80%

Net Public Debt 63.54 66.57 4.76%

Public Debt (USD Billion)

Source: The Association of Banks in Lebanon, Credit Libanais Economic Research Unit

Debt in LBP

61.35%

Debt in Foreign

Currency38.65%

Composition of Gross Public Debt by July 2017


0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

July-2010 July-2011 July-2012 July-2013 July-2014 July-2015 July-2016 July-2017

44.33 45.5047.31

51.1555.17

59.5763.54

66.57Billions of USD

Evolution of Net Public Debt


CONSTRUCTION PERMITS AREA AT 5.73 MILLION SQM YTD JULY 2017

The surface area of construction permits in Lebanon, which reflects the level of future supply in the real estate sector, rose to 766,158 sqm during the month of July 2017, up from 650,978 sqm in the previous month. On a cumulative basis, the surface area of construction permits increased by 16.95% y-o-y to 5,730,530 sqm by July of the current year, compared to 4,899,969 sqm during that same period last year. As far as the geographical distribution of construction permits is concerned, the Mount Lebanon region continued to control the lion’s share of the total surface area of issued permits (2,980,933 sqm <52.02%>), followed by the South (949,809 sqm <16.57%>), Bekaa (682,510 sqm <11.91%>), Nabatieh (577,043 sqm <10.07%>), and Beirut (466,594 sqm <8.14%) regions. It is worth noting that figures for the North governorate are underestimated since they exclude permits issued by the North Order of Engineers.

The Beirut governorate enjoyed the highest exploitation coefficient, which stood at 1,035 sqm per construction permit YTD July 2017, followed by the Mount Lebanon (847 sqm/transaction), Bekaa (780 sqm/transaction), North (571 sqm/transaction), South (551 sqm/transaction), and Nabatieh (462 sqm/transaction) governorates.

Weekly Market Watch

SOURCE: BDL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 9

LEBANON NEWS

July-2011 8,488,308

July-2012 7,320,180July-2013 6,031,276July-2014 7,034,739July-2015 5,718,599July-2016 4,899,969July-2017 5,730,530Source: Order o f Engineers, Credit Libanais Economic Research Unit

Evolution of Construction Permit Areas (Sqm) during the Seven-Month Period

Ending

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

July-2011 July-2012 July-2013 July-2014 July-2015 July-2016 July-2017

8,488,308

7,320,180

6,031,276

7,034,739

5,718,5994,899,969

5,730,530

Evolution of Construction Permit Areas (Sqm)

Sqm No. of Transactions

Average Sqm/Trans.

Beirut 466,594 451 1,035Mount Lebanon 2,980,933 3,518 847North* 73,641 129 571Bekaa 682,510 875 780South 949,809 1,725 551Nabatieh 577,043 1,248 462

Total 5,730,530 7,946 721* Figures for the North Governorate are underestimated since they exclude

permits issued by the North Order of Engineers

Source: Order of Engineers, Credit Libanais Economic Research Unit

Geographical Breakdown of Construction Permitsup to July 2017

Beirut8.14%

Mount Lebanon52.02%

North*1.29%

Bekaa11.91%

South16.57%

Nabatieh10.07%

Geographical Breakdown of Construction Permit Areas up to July 2017


0 200 400 600 800 1000 1200

Beirut

Mount Lebanon

Bekaa

North*

South

Nabatieh

1,035

847

780

571

551

462

Average Sqm/Construction Permit per Region up to July 2017


CONSOLIDATED ASSETS OF FINANCIAL INSTITUTIONS AT $1.52 BILLION IN JULY 2017

The consolidated balance sheet of financial institutions operating in Lebanon narrowed by LBP 11,363 million ($7.54 million) during the month of July 2017 to nearly LBP 2,289.78 billion ($1,518.92 million), down from LBP 2,301.14 billion ($1,526.46 million) in June. This is mainly attributed to the 0.47% ($3.32 million) monthly decrease in claims on the private sector to LBP 1,068.82 billion ($709.00 million), coupled with some 0.24% ($0.35 million) drop in the value of other assets to LBP 222,567 billion ($147.64 million). On an annual basis, the balance sheet of Lebanese financial institutions fell by 1.21% in July 2017, compared to a 2.55% annual hike in July 2016 and a 14.27% y-o-y drop in July 2015. On the lending front, claims on the private sector, which constitute 46.68% of the total assets of financial institutions, plunged by 10.47% when compared to the LBP 1,193.78 billion ($791.89 million) reading recorded in July of the previous year. In contrast, claims on the public sector rose by 8.07% annually from around LBP 200.69 billion ($133.13 million) in the seventh month of 2016, representing 9.47% of the total balance sheet of Lebanese financial institutions. In a related note, the compounded annual growth rate (CAGR) in the balance sheet of Lebanese financial institutions hit the 5.98% mark over the July 2011 – July 2017 period, as sketched in the chart hereunder:

USD Million Jul-2011 Jul-2012 Jul-2013 Jul-2014 Jul-2015 Jul-2016 Jul-2017Y-O-Y % Change

AssetsCash & Banks 390.04 430.69 538.88 606.34 611.75 622.27 518.40 -16.69%Claims on the Private Sector 557.78 584.29 824.60 792.44 760.93 791.89 709.00 -10.47%Claims on the Public Sector 103.35 110.14 120.78 358.73 141.82 133.13 143.88 8.07%Other Assets 21.07 19.15 -0.25 -8.61 -15.20 -9.69 147.64 -1623.81%

Total Assets 1,072.23 1,144.27 1,484.00 1,748.90 1,499.30 1,537.60 1,518.92 -1.21%LiabilitiesLiabilities to the Private Sector 239.72 271.13 347.78 312.75 254.36 279.17 156.81 -43.83%Liabilities to the Financial Sector 451.40 477.23 667.03 914.97 682.20 660.81 555.10 -16.00%Other Financial Liabilities 13.71 17.71 19.40 20.95 20.93 29.38 210.29 615.65%Capital Accounts 269.01 325.94 385.98 421.51 460.95 469.70 493.30 5.02%Other Liabilities 98.39 52.25 63.81 78.72 80.85 98.53 103.43 4.97%Total Liabilities 1,072.23 1,144.27 1,484.00 1,748.90 1,499.30 1,537.60 1,518.92 -1.21%

Financial Institutions Consolidated Balance Sheet

Source: Banque Du Liban, Credit Libanais Economic Research Unit

Cash & Banks &

Other Assets43.85%

Claims on the Private

Sector46.68%

Claims on the Public

Sector9.47%

Breakdown of Financial Institutions Balance Sheet as at End of July 2017

Source: BDL, Credit Libanais Economic Research Unit

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jul-2011 Jul-2012 Jul-2013 Jul-2014 Jul-2015 Jul-2016 Jul-2017

1,072.231,144.27

1,484.00

1,748.90

1,499.30 1,537.60 1,518.92

$ Million

Evolution of Financial Institutions' Assets


Weekly Market Watch


LEBANON NEWS

COMBINED ASSETS OF INVESTMENT BANKS AT $4.86 BILLION BY JULY 2017

According to Banque Du Liban (BDL) statistics, the combined balance sheet of investment banks operating in Lebanon widened by 3.30% during the first seven months of 2017 to just over $4.86 billion, up from around $4.71 billion at end of year 2016. This expansion owes primarily to the 4.98% increase in claims on the private sector to $1.52 billion, accompanied by some 29.40% hike in claims on the public sector to $910 million. On the liabilities side, private sector deposits fell by 2.32% YTD July to just below $2.14 billion, while liabilities to the financial sector rose by 1.89% to $900 million. Investment banks’ capital accounts soared by 14.31% in the seven-month period ended July to nearly $1.56 billion, from $1.36 billion at year-end 2016. Abiding by legislative decree number 50 and subsequent BDL circulars, investment banks operating in Lebanon have managed over the last couple of years to increase loans to the private sector at the expense of reducing their exposure to the public sector. As a result, the surplus representing the difference between loans to the private sector and claims on the public sector reached $612 million by July 2017, compared to surpluses of $747 million in the full year 2016, $868 million in 2015, $832 million in 2014, $709 million in 2013, and $419 million in 2012.

In Millions of USD 2013 2014 2015 2016 Jul-2017 % ChangeCash and Banks 1,922 1,886 2,290 2,172 2,003 -7.79%Claims on Private Sector 1,203 1,380 1,389 1,450 1,523 4.98%Claims on Public Sector 493 548 521 704 910 29.40%Other Items 368 301 354 380 426 12.02%Total Assets 3,986 4,114 4,554 4,706 4,862 3.30%

Private Sector Deposits 2,139 2,189 2,357 2,190 2,139 -2.32%Liabilities to the Financial Sector 598 637 723 883 900 1.89%Capital Accounts 1,000 1,137 1,236 1,364 1,559 14.31%Other Items 250 151 237 269 264 -2.08%Total Liabilities 3,986 4,114 4,554 4,706 4,862 3.30%Source: BDL, Credit Libanais Economic Research Unit

Evolution of Investment Banks' Combined Balance Sheet

0

200

400

600

800

1,000

1,200

1,400

1,600

2013 2014 2015 2016 Jul-2017

493548 521

704

910

1,203

1,380 1,3891,450 1,523

Investment Banks' Loans to the Private Sector v/s Claims on the Public Sector ($ Million)

Claims on Public Sector Claims on Private Sector

Starting the Year 2010, Investment Banks' Loans to the Private Sector > Claims on the Public Sector in Conformity with BDL's Directives

LEBANON’S BALANCE OF PAYMENTS REGISTERS $1.02 BILLION DEFICIT YTD JULY 2017

Lebanon’s balance of payments recorded a $100.2 million surplus during the month of July 2017, compared to monthly deficits of $757.6 million in June, $591.5 million in May and $320.9 million in April. July’s surplus can be attributed to the $1.57 billion rise in the net foreign assets at the Lebanese Central Bank which outweighed the $1.47 billion drop in the net foreign assets of banks and financial institutions. On a cumulative basis, however, Lebanon’s balance of payments settled in negative territory registering a $1.02 billion deficit in the first seven months of 2017, compared to a much larger deficit of $1.42 billion during that same period last year. This year to date deficit owes to the $2.24 billion contraction in the net foreign assets of banks and financial institutions eclipsing the $1.22 billion increase in the Central Bank’s net foreign assets. WEIGHTED AVERAGE INTEREST RATE ON LBP DEPOSITS AT 5.56% IN JULY 2017

According to BDL statistics, the weighted average interest rate on Lebanese Pound denominated deposits rose to 5.56% during the month of July 2017, up from 5.51% in June remaining however lower than the 5.57% level that was prevailing in July 2016. Concurrently, the weighted average interest rate on U.S. Dollar denominated deposits increased to 3.64% on a monthly basis, and came in higher than the 3.30% level registered in July of last year. Commercial banks’ discount and lending rate on LBP denominated loans fell to 8.33% in July, with that on USD denominated loans dropping as well to 7.25%, as elaborated hereunder:

Weekly Market Watch


LEBANON NEWS

Change in Net Foreign Assets (USD Million)

July-2016 July-2017 % Change

At the Central Bank 128.3 1,224.3 854.25%

At Banks & Financial Institutions (1,549.0) (2,240.0) 44.61%

Total (1,421.6) (1,015.4) -28.57%

For the First Seven Months of the Year Ending


-1000

-800

-600

-400

-200

0

200

400

January February March April May June July

(718.9)

362.6

(287.9)(254.9)

(861.6)

(13.0)

352.1 166.7

341.8

46.3

(320.9)

(591.5)

(758.0)

100.2

Monthly Balance of Payments Results

2016 2017

USD Million


-2000

-500

1000

July-2011 July-2012 July-2013 July-2014 July-2015 July-2016 July-2017

(786.5)

(1,342.8)(957.2)

131.0

(1,316.9) (1,421.6)(1,015.4)

USD Million

Evolution of the YTD Balance of Payments


LBP USD LBP USD LBP USD

5.57% 3.30% 5.51% 3.58% 5.56% 3.64%

5.94% 3.75% 5.88% 4.03% 5.94% 4.09%

8.32% 7.25% 8.39% 7.27% 8.33% 7.25%


July 2017

Discount & Loans Rate

Average Rate on Deposits

Term Savings & Deposits Rate

July 2016 June 2017Interest Rate Levels

2.852.79

1.511.761.911.791.92

5.555.565.585.525.445.465.61

8.408.35

7.097.277.357.257.53

0.0

5.0

YTD - July 2017201620152014201320122011

%

Evolution of LBP Lending & Deposits Yearly Average Rates

Average Yearly Spread LBP Yearly Average Rate on Deposits LBP Discount and Loans Average Yearly Rate


3.683.903.933.924.044.264.19

3.583.343.163.032.922.842.84

7.267.257.086.956.967.117.03

0.0

5.0

YTD - July 2017201620152014201320122011

%

Evolution of USD Lending & Deposits Yearly Average Rates

Average Yearly Spread USD Yearly Average Rate on Deposits USD Discount and Loans Average Yearly Rate


LEBANON NEWS

THE COINCIDENT INDICATOR UP BY 11.56% Y-O-Y IN JULY 2017

Banque Du Liban’s coincident indicator, which is an indicative measure of the country’s overall economic activity, and which comprises import of petroleum derivatives, electricity production, check clearing activity, cement deliveries, foreign passengers, foreign trade, and the M3 monetary aggregate, rose by 4.79% during the month of July 2017 to 304, up from 290.1 in June. On an annual basis, the coincident indicator came in 11.56% higher than the 272.5 reading recorded in July 2016, portraying as such an improvement in Lebanon’s overall economic activity. CEMENT DELIVERIES DOWN BY 1.44% Y-O-Y BY JULY 2017

Cement deliveries, the coincident indicator of construction activity, increased by 21.67% during the month of July 2017 to 466,360 tons, up from 383,295 tons in June. On a cumulative basis, however, cement deliveries fell by 1.44% y-o-y to 2,855,053 tons during the first seven months of 2017, compared to 2,896,676 tons a year before. Cement deliveries registered a negative compounded annual growth rate (CAGR) of 1.19% over the July 2010 – July 2017 period, mirroring the lackluster activity of Lebanon’s construction sector.

Weekly Market Watch


240

250

260

270

280

290

300

310

320

Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17

272.5

284.9 284.6 287.5

311.6

292.2297.2

305.3 306.2

317.6

308.6

290.1

304.0

Evolution of Lebanon's Coincident Indicator


July-2010 3,103,925

July-2011 3,248,415

July-2012 3,075,466

July-2013 3,197,068

July-2014 3,217,675

July-2015 2,681,657

July-2016 2,896,676

July-2017 2,855,053

Evolution of Cumulative Cement Deliveries (Tons)


0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,000

3,103,9253,248,415

3,075,4663,197,068

3,217,675

2,681,6572,896,676 2,855,053

Yearly Evolution of Cumulative Cement Deliveries


Tons

NEW CAR SALES SETTLE 0.78% LOWER YTD AUGUST 2017

According to the monthly statistics published by the Automobile Importers Association (AIA), new car sales in Lebanon reached 3,475 vehicles during the month of August, compared to 3,690 vehicles in July and 3,418 in August 2016. On a cumulative basis, new car sales contracted by 0.78% y-o-y to 25,363 cars during the first eight months of the current year, down from 25,562 cars during that same period last year. This comes as a result of the 3.15% drop in the sales of Japanese cars to 9,327 coupled with the 4.03% decrease in the sales of Korean cars to 8,604 vehicles notwithstanding the 24.83% increase in American car sales to 2,041 cars. In the same vein, Japanese cars controlled the lion’s share of new car sales in Lebanon, amassing alone 36.77% of total volume sales by end of August 2017, followed by Korean (33.92%), European (19.95%), American (8.05%), and Chinese (1.30%) cars.

The Korean “KIA” brand recorded total unit sales of 5,300 cars YTD August 2017, enjoying the highest market share of 20.90%, followed by the Korean “Hyundai” (3,274 cars <12.91%>) and Japanese “Toyota” (3,008 cars <11.86%>) brands, only to name a few.

LEBANON NEWS

Weekly Market Watch

SOURCE: AIA, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 13

August-2016 August-2017 % ChangeJapanese 9,630 9,327 -3.15%European 5,158 5,061 -1.88%Korean 8,965 8,604 -4.03%American 1,635 2,041 24.83%Chinese 174 330 89.66%Total 25,562 25,363 -0.78%

New Car Sales During the Eight-Month Period Ending

Source: AIA, Credit Libanais Economic Research UnitJapanese,

36.77%

European , 19.95%

Korean, 33.92%

American, 8.05%

Chinese, 1.30%

Breakdown of New Car Sales YTD August 2017

- 1,000 2,000 3,000 4,000 5,000 6,000

KIA

Hyundai

Toyota

Nissan

Suzuki

Chevrolet

Renault

Mitsubishi

Mazda

Mercedes

5,300

3,274

3,008

2,311

1,315

1,252

1,245

788

672

652

Top 10 New Car Sales Brands YTD August 2017

Source: AIA, Credit Libanais Economic Research Unit

PUBLIC SECTOR SALARIES, WAGES, & RELATED BENEFITS AT $2.87 BILLION YTD NOVEMBER 2016

The Lebanese Ministry of Finance recently published its “Personnel Cost Monthly Bulletin” pertaining to the payments of public salaries, wages, and related benefits for the first eleven months of the year 2016. Said payments constituted 66% of the government’s total primary spending YTD November 2016. More particularly, salaries, wages, and related benefits can be broken down into three main constituents, namely basic salaries, indemnities, and allowances. According to the Ministry of Finance, salaries & wages & related benefits of public servants rose by 2.47% y-o-y to LBP 4,320 billion ($2,865.67 million) by November 2016, up from LBP 4,216 billion ($2,796.68 million) during that same period in 2015. The annual increase in public sector payroll is a result of some 4.41% annual hike in basic salaries to LBP 3,241 billion ($2,149.92 million), coupled with an 4.12% increase in indemnities to LBP 202 billion ($134.00 million) and some 3.46% rise in in other benefits to LBP 299 billion ($198.34 million) which altogether outweighed the 8.72% yearly drop in allowances to LBP 544 billion ($360.86 million). Basic salaries accounted for 75.04% of total public sector salaries & benefits, with the share of allowances and indemnities standing at 12.60% and 4.68% on a respective basis.

Weekly Market Watch

SOURCE: MINISTRY OF FINANCE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 14

LEBANON NEWS

(USD Million)

For the Period Ending Nov-2015 Nov-2016 Nov-2015 Nov-2016 Nov-2015 Nov-2016 Nov-2015 Nov-2016 Nov-2015 Nov-2016

Military Personnel, of which: 1,315.42 1,380.43 51.08 55.72 392.04 358.21 1.33 1.33 1,759.87 1,796.35

Army 841.13 885.57 32.50 34.49 260.03 232.17 0.66 0.66 1,133.67 1,152.90

Internal Security Forces 360.86 380.76 15.92 15.92 96.19 93.53 0.66 0.66 472.97 490.88

General Security Forces 89.55 91.54 1.99 1.99 28.52 23.88 0.66 0.66 121.39 118.08

State Security Forces 23.88 23.22 0.66 3.32 7.30 7.96 0.00 0.00 32.50 34.49

Education Personnel 538.64 565.17 38.47 34.49 0.00 0.00 11.28 23.22 588.39 622.89

Civilian Personnel 204.98 204.31 39.80 43.12 2.65 2.65 23.88 24.54 271.97 274.63

Employees Cooperative - - - - - - 154.56 149.92 154.56 149.92

Customs Salaries - - - - - - - - 22.55 21.89

Total 2,059.04 2,149.92 128.69 134.00 395.36 360.86 191.71 198.34 2,796.68 2,865.67

Cumulative Breakdown of Salaries, Wages & Related Benefits

Source: Ministry of Finance, Credit Libanais Economic Research Unit

Other TotalBasic Salaries Indemnities Allowances

Basic Salaries73.61%

Indemnities4.60%

Allowances14.13%

Other7.66%

Breakdown of Salaries, Wages & Related Benefits YTD November 2015

Source: Ministry of Finance, Credit Libanais Economic Research

Basic Salaries75.04%

Indemnities4.68%

Allowances12.60%

Other7.69%

Breakdown of Salaries, Wages & Related Benefits YTD November 2016

Source: Ministry of Finance, Credit Libanais Economic Research Unit

Weekly Market Watch

SOURCE: ABL, PORT OF TRIPOLI, AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 15

LEBANON NEWS

ABL AMENDS THE BRR ON LBP AND USD LENDING

According to the Association of Banks in Lebanon (ABL)’s circular number 302/2017 dated September 14, 2017, the ABL’s Board of Directors advocated Lebanese banks to increase the Beirut Reference Rate on lending in Lebanese Pound (LBP/BRR) by 7 basis points to 8.68% effective as of the 1st of October 2017. Concurrently, the ABL’s Board of Directors recommended raising the Beirut Reference Rate on lending in U.S. Dollar (BRR/USD) by 8 basis point to 6.82%. It is worth noting that the aforementioned rates are not to be confused with the Beirut Prime Lending Rate (BPLR), yet constitute the basis for the calculation of the BPLR after factoring in liquidity cost, credit risk cost, and some profitability factor. TRIPOLI PORT ACTIVITY IMPROVES BY 15.75% YTD JULY 2017

Freight activity via the port of Tripoli soared to circa 178 thousand tons during the seventh month of the current year, up from around 122 thousand tons in June. In particular, imported freight accounted for 82.52% of total freight (147,214 tons) while export activity constituted 17.48% (31,193 tons). Similarly, on a cumulative basis, Tripoli Port freight activity rallied by 15.75% annually to 1,159 thousand tons as at end of July 2017 compared to 1,002 thousand tons reported in the same period last year. Concurrently, the number of vessels rose by 2.15% annually to 475 up from 465 by July 2016. The number of imported cars via Tripoli port also increased by 15.70% y-o-y to 3,397 compared to 2,936 cars a year before. In this context, port-related revenues (excluding VAT and customs) increased by 12.02% on an annual basis to $9.86 million YTD July 2017, up from $8.80 million in the same period of the previous year. According to Al Bayan Economic Magazine, this increase in Tripoli Port’s revenues can be mainly attributed to the fact that the port of Tripoli has become a maritime center for the reception of ship ferries that facilitate imports and exports by truck from and to a number of MENA countries, especially amid the closing of the land borders between Syria and many of its neighbor countries (i.e. Turkey, Iraq, and Jordan). It is worth noting that Tripoli port is undergoing a series of renovations including the installation of modern and advanced cranes capable of handling large vessels in its modern container berth, in addition to the expansion of the backyard of that berth in order to increase the port’s capacity. Tripoli Port

Indicators Jul-16 Jul-17 Y-O-Y % Change

Freight Activity (000 Tons) 1,002 1,159 15.75%

Number of Vessels 465 475 2.15%

Number of Imported Cars 2,936 3,397 15.70%

Port-Related Revenues ($ Million) 8.80 9.86 12.02%

For the Seven-Month Period Ending

Source: Port of Tripoli, Al Bayan Economic Magazine, Credit Libanais Economic Research Unit

Rates as of September 1, 2017

Rates as of October 1, 2017 Change (bps)

BRR on LBP Lending 8.61% 8.68% +7

BRR on USD Lending 6.74% 6.82% +8Source: A BL, C redit Libanais Economic Research Unit

6.16%6.23%6.19%

6.21%6.26%

6.24%

6.31%

6.34%

6.30%6.36%

6.54%

6.54%6.59%

6.67%6.65%6.72%

6.66%

6.79% 6.78%

6.74%

6.82%

8.70%

8.80%

8.71% 8.71%

8.61%8.66%

8.69% 8.70% 8.67%

8.68%8.71%

8.63%

8.65% 8.67%

8.65%

8.67%8.67%8.66%

8.68%

8.61%

8.68%

8.50%

8.55%

8.60%

8.65%

8.70%

8.75%

8.80%

8.85%

6.00%6.10%6.20%6.30%6.40%6.50%6.60%6.70%6.80%6.90%

Dec-15

Jan-16 Feb-16

Mar-16

Apr-16 May-16

Jun-16 Jul-16 Aug-16

Oct-16 Dec-16

Jan-17 Feb-17

Mar-17

Apr-17 May-17

Jun-17 Jul-17 Aug-17

Sep-17

Oct-17

Evolution of Beirut Reference Rate on LBP & USD Lending

BRR/USD LBP/BRR


CORPORATE NEWS

Weekly Market Watch

SOURCE: KAFALAT, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 16

VALUE OF KAFALAT LOANS ATTAINS $47.82 MILLION YTD AUGUST 2017

The number of guarantees issued by the government-subsidized program “KAFALAT” fell by 16.42% on an annual basis to 397 YTD August 2017, down from 475 during that same period last year. Concurrently, the face value of guarantees plunged by 25.54% y-o-y to just below LBP 72.10 billion ($47.82 million), from nearly LBP 96.82 billion ($64.23 million) YTD August 2016. Consequently, the average value per guarantee shed 10.91% on a yearly basis to around LBP 181.60 million ($120.46 thousand), compared to LBP 203.83 million ($135.21 thousand) by August 2016. The agricultural sector amassed yet again the bulk (42.82%) of issued Kafalat loans, followed by the industrial (33.00%) and tourism (19.40%) sectors. The “Mount Lebanon” region continued to be the largest beneficiary of Kafalat financing, detaining alone a 40.81% stake of issued Kafalat loans, followed by the “Bekaa” (20.15%), “South” (13.85%), and “North” (9.82%) regions.

Aug-2016 Aug-2017 Y-O-Y % Change

Agriculture 225 170 -24.44%

Industry 139 131 -5.76%

Tourism 85 77 -9.41%

Others 26 19 -26.92%

Total 475 397 -16.42%

Value of Guarantees($ Million) 64.23 47.82 -25.54%

Average Value per Guarantee ($000) 135.21 120.46 -10.91%

Kafalat Loans by Sector During the Eight-Month Period Ending

Source: Kafalat, Credit Libanais Economic Research Unit

Agriculture42.82%

Industry33.00%

Tourism19.40%

Others4.79%

Breakdown of Kafalat Loans by Sector YTD August 2017


Aug-2016 Aug-2017 Y-O-Y % Change

Beirut 20 22 10.00%Mount Lebanon 200 162 -19.00%South 50 55 10.00%Nabatieh 32 39 21.88%Bekaa 115 80 -30.43%

North 58 39 -32.76%

Total 475 397 -16.42%Source: Kafalat, Credit Libanais Economic Research Unit

Kafalat Loans by Region During the Eight-Month Period EndingBeirut 5.54%

Mount Lebanon40.81%

South13.85%

Nabatieh9.82%

Bekaa20.15%

North9.82%

Breakdown of Kafalat Loans by Region YTD August 2017


MONETARY AGGREGATES

All monetary aggregates ended the last week of August on a positive note. More specifically, the overall money supply, “M4”, widened by LBP 178.68 billion during the week of August 31, 2017 and by 7.52% on an annual basis to LBP 219,730 billion, noting that the non-banking sector’s Treasury bills portfolio plunged by LBP 262 billion for the week. Concurrently, Lebanese-pound denominated deposits and currency in circulation, “M1”, soared by LBP 519.17 billion week-on-week to LBP 10,102 billion on the back of some LBP 341 billion hike in money in circulation and a LBP 178 billion expansion in demand deposits. On a yearly basis, “M1” grew by 2.96%. Local currency term deposits, “M2”, also rallied by LBP 638.79 billion on a weekly basis and registered a 2.56% year-on-year increase to settle at LBP 83,485 billion. Consequently, private sector term and saving deposits denominated in LBP (“M2-M1”) rose by LBP 119.62 billion (0.16%) during the concerned week to LBP 73,384 billion, while deposits denominated in foreign currencies (“M3-M2”) shed LBP 198.11 billion (0.16%) to LBP 125,280 billion. MONEY MARKETS

The September 07th Treasury bill auction raised LBP 371.641 billion ($246.53 million), compared to LBP 743.302 billion ($493.07 million) in the auction of the previous week.

The majority of subscriptions (40.82%) was concentrated in the three-month to maturity T-bills, followed by the five-year (35.06%) and one-year (24.12%) tenure treasury securities.

Consequently, the weighted average yield on Lebanese Pound Treasury bills stood at 5.47% in the auction of September 07. The yields on the three-month, one-year, and five-year to maturity Treasury securities remained flat at 4.44%, 5.35%, and 6.74% respectively.

MONETARY PERFORMANCE

Weekly Market Watch

SOURCE: BDL, REUTERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 17

Lebanese Treasury Bills 3 Months 6 Months 12 Months 24 Months 36 Months 60 Months 84 Months 120 MonthsTreasury Yield 4.44% 4.99% 5.35% 5.84% 6.50% 6.74% 7.08% 7.46%

3 Months

6 Months

12 Months

24 Months

36 Months60 Months

84 Months

120 Months

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

0 1 2 3 4 5 6 7 8 9

On The Run Yield Curve

Mone y SupplyLBP Billion

M1 9 ,5 8 2 10 ,10 2 5 .4 2 %

M2 8 2 ,8 4 6 8 3 ,4 8 5 0 .7 7 %

M3 2 0 8 ,3 2 5 2 0 8 ,7 6 5 0 .2 1%

M4 2 19 ,5 5 2 2 19 ,7 3 0 0 .0 8 %

M2 - M1 7 3 ,2 6 4 7 3 ,3 8 4 0 .16 %

M3 - M2 12 5 ,4 7 8 12 5 ,2 8 0 - 0 .16 %Source: Banque Du Liban, Credit Libanais Economic Research Unit

August 2 4 , 2 0 17 August 3 1, 2 0 17 % Cha nge

150,000

200,000

250,000

August 24,2017

August 31,2017

219,552 219,730208,325 208,765

Money Supply - LBP Billion -

M4 M3


Lebanese Treasury Bills

Yield (%)Face Value (in billions

of LBP)

% of Total Face Value

3 Months 4.44% 151.718 40.82%12 Months 5.35% 89.640 24.12%60 Months 6.74% 130.283 35.06% Total 371.641 100.00%Source: Reuters, Credit Libanais Economic Research Unit

September 07, 2017

s

LEBANESE EQUITIES

Activity on the Beirut Stock Exchange remained subdued for yet another week amid the absence of block trades. In fact, the number of shares changing hands rose to 684,258 shares, compared to 264,944 shares last week, with traded value increasing to just below $3.92 million, from nearly $3.15 million a week before. Trades were mainly concentrated in listed banking stocks, which accounted for 88.35% of total weekly volume.

Concurrently, the average daily trading volume rose to 136,852 shares this week, from 88,315 shares last week. However, the average daily trading value narrowed to around $0.78 million, from $1.05 million a week earlier. Three losers and five gainers were screened this week, dragging the BSE’s market capitalization down by 0.16% week-on-week to $11.41 billion and the Credit Libanais Aggregate Stock Index (“CLASI”) 0.20% lower to 1,098.06.

In the real estate sector, trades mainly consisted of Solidere “A” and “B” shares (11.65% of total traded volume), with the price of Solidere “A” shedding 2.08% to $8.01 and that of Solidere “B” dropping by 5.24% to $7.77. In this context, the Credit Libanais Construction Sector Stock Index (“CLCI”) ended its week 2.78% lower at 451.10.

In the banking sector, Byblos Bank listed shares amassed the highest concentration of trades (71.89% of total traded volume) on a thin turnover ratio of 0.09%. The Credit Libanais Financial Sector Stock Index (“CLFI”) ended its week 0.32% higher at 1,512.65 as a result of the 0.87% appreciation in the price of BLOM Bank listed shares to $11.60 and the 0.40% rise in the price of BLOM Bank GDRs to $12.70.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 18

Credit Libanais Week of Week of Weekly YTDIndices 7-Sep-17 15-Sep-17 % Change % ChangeCredit Libanais AggregateStock Index <.CLASI> 1,100.32 1,098.06 -0.20% -5.19%

Credit Libanais FinancialSector Stock Index <.CLFI> 1,507.89 1,512.65 0.32% -1.57%

Credit Libanais ConstructionSector Stock Index <.CLCI> 463.98 451.10 -2.78% -20.20%

1,000

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1,100

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1,200

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Credit Libanais Aggregate Stock IndexWeekly Performance

CLASI

CLASI 0.20%

.CLASI Credit Libanais Aggregate Stock Index

Value Daily % Chng Daily Net Chng

1,098.06 -0.506% -5.58

Yr.High Year Hi.Date Yr.Low Year.Lo.Date

1,193.28 31-Mar-17 1,086.36 26-Apr-17

Life High Life Hi.Date Life Low Life.Lo.Date

1,801.01 7-Jul-08 836.11 25-Mar-09

Friday, September 15, 2017

1,300

1,350

1,400

1,450

1,500

1,550

1,600

1,650

1,700

15-S

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Credit Libanais Financial Sector Stock IndexWeekly Performance

CLFI

CLFI 0.32%

400

450

500

550

600

650

700

15-S

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Credit Libanais Construction Sector Stock IndexWeekly Performance

CLCI

CLCI 2.78%

The weighted average price to earnings (P/E) multiple of listed stocks ended its week lower at 8.103x while the weighted price to book (P/BV) metric settled higher at 0.875x based on the closing prices of Friday’s session.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 19

Previous Last % ChangeValue Traded ($) 3,149,936 3,915,230 24.30%Volume Traded 264,944 684,258 158.27%Average Daily Trading Value ($) 1,049,979 783,046 -25.42%Average Daily Trading Volume 88,315 136,852 54.96%Market Cap - BSE ($) 11,432,136,295 11,414,092,976 -0.16%Weighted Average P/E 8.219 8.103 -1.41%Weighted Average P/BV 0.874 0.875 0.11%Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Activity Analysis

Source: BSE, Credit Libanais Economic Research Unit

0

2

4

6

8

10

Sep 7, 2017 Sep 15, 2017

8.219 8.103

0.874 0.875

Evolution of Beirut Bourse Comparable Benchmarks

P/E P/BV

P/E P/BV

Solidere A $8.01 -2.08% 53,618 7.84% $430,632 11.00% 100,000,000 801,000 17.41 0.66 -22.83% - - -Solidere B $7.77 -5.24% 26,066 3.81% $206,105 5.26% 65,000,000 505,050 16.89 0.64 -26.00% - - -BLC Bank $0.93 0.00% - - - - 71,033,333 66,061 5.81 0.47 -6.06% - - -BLC Bank Preferred Class "B" $100.00 0.00% - - - - 550,000 55,000 n.a n.a 0.00% 7.00% 6.65% 6.65%BLC Bank Preferred Class "C" $100.00 0.00% - - - - 350,000 35,000 n.a n.a 0.00% 6.75% 6.41% 6.41%BLC Bank Preferred Class "D" $100.00 0.00% - - - - 750,000 75,000 n.a n.a 0.00% 1.84% 1.75% 1.75%Bank Audi - Listed Shares $5.95 0.00% 5,550 0.81% $33,054 0.84% 399,749,204 2,378,508 6.33 0.80 -12.50% 8.40% 7.98% -4.52%Bank Audi GDR $6.00 0.00% 8,320 1.22% $49,990 1.28% 119,924,761 719,549 6.38 0.80 -7.69% 8.33% 7.92% 0.22%Bank Audi Preferred "F" $104.00 0.00% - - - - 1,500,000 156,000 n.a n.a 1.46% 5.77% 5.48% 6.94%Bank Audi Preferred "G" $100.50 -0.69% 1,994 0.29% $200,397 5.12% 1,500,000 150,750 n.a n.a -1.66% 5.97% 5.67% 4.01%Bank Audi Preferred "H" $101.20 0.00% - - - - 750,000 75,900 n.a n.a -1.08% 6.42% 6.10% 5.03%Bank Audi Preferred "I" $101.20 0.00% - - - - 2,500,000 253,000 n.a n.a 1.20% 2.96% 2.82% 4.02%Bank Of Beirut - Listed Shares $18.80 0.00% 8,869 1.30% $166,737 4.26% 17,746,417 333,633 9.95 1.13 0.00% 3.53% 3.35% 3.35%Bank Of Beirut Priority Shares 2014 $21.00 0.00% - - - - 4,762,000 100,002 11.11 1.26 0.00% 7.16% 7.00% 7.00%Bank Of Beirut Preferred "H" $25.35 0.20% 14,920 2.18% $378,222 9.66% 5,400,000 136,890 n.a n.a -3.43% 6.90% 6.56% 3.13%Bank Of Beirut Preferred "I" $25.35 0.40% 6,000 0.88% $152,100 3.88% 5,000,000 126,750 n.a n.a -3.43% 6.66% 6.32% 2.90%Bank Of Beirut Preferred "J" $25.30 0.00% - - - - 3,000,000 75,900 n.a n.a -3.62% 6.42% 6.10% 2.48%Bank Of Beirut Preferred "K" $25.25 0.00% - - - - 4,000,000 101,000 n.a n.a 0.00% 2.26% 2.14% 2.14%Byblos Bank - Listed Shares $1.60 0.00% 491,921 71.89% $791,174 20.21% 565,515,040 904,824 9.41 0.68 -5.88% 8.29% 7.88% 1.99%Byblos Bank Preferred Class 2008 $102.00 0.99% 4,000 0.58% $406,400 10.38% 2,000,000 204,000 n.a n.a -0.58% 7.84% 7.45% 6.87%Byblos Bank Preferred Class 2009 $102.00 0.00% 3,899 0.57% $397,348 10.15% 2,000,000 204,000 n.a n.a 0.69% 7.84% 7.45% 8.14%Byblos Bank GDR $80.00 0.00% - - - - 1,309,078 104,726 9.41 0.68 0.00% 8.29% 7.88% 7.88%BEMO Bank - Listed Shares $1.55 0.00% - - - - 51,400,000 79,670 7.05 0.75 -8.82% 3.42% 3.25% -5.57%BEMO Bank Preferred Class 2013 $99.50 0.00% - - - - 350,000 34,825 n.a n.a 0.25% 7.04% 6.68% 6.94%BLOM Bank GDR $12.70 0.40% 16,901 2.47% $214,051 5.47% 73,896,010 938,479 6.08 1.10 15.45% 7.83% 7.44% 22.90%BLOM Bank Listed Shares $11.60 0.87% 42,200 6.17% $489,020 12.49% 215,000,000 2,494,000 5.55 1.00 9.43% 8.58% 8.15% 17.58%RYMCO Class "B" $3.25 0.00% - - - - 10,920,000 35,490 14.77 1.67 0.00% 3.29% 3.12% 3.12%Holcim Liban $12.51 0.00% - - - - 19,516,040 244,146 6.42 1.21 6.47% 20.09% 19.09% 25.56%Ciment Blancs Bearer $3.85 0.00% - - - - 4,217,101 16,236 10.13 1.68 18.46% 12.58% 11.95% 30.41%Ciment Blancs Nominal $1.82 0.00% - - - - 4,782,899 8,705 4.79 0.79 15.92% 26.61% 25.28% 41.20%

Lebanese Equities

Net Dividend

YieldClosing

Weekly %Change

Weekly Volume Traded

% of Weekly Volume Traded

% of Weekly Value Traded

Gross Dividend

Yield

Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

YTD Total Net Return

YTD Price Perf.

Note: n.a stands for not applicable

Market Capitalisation

($000)BEIRUT STOCK EXCHANGE

Weekly Value Traded

Total Listed Shares

LEBANON’S MAIN INDICATORS

Weekly Market Watch

SOURCE: BDL, ABL, MOF, IMF, CAS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 20

2010 2011 2012 2013 2014 2015 2016 2017

M ACROECONOM IC INDICATORS

GDP (Current Prices) ($ Billion) 38.01 40.08 44.10 47.60 49.87* 50.80* 51.99* 53.92*

Real GDP Growth Rate 8.00% 0.90% 2.80% 2.50% 2.00%* 1.00%* 1.00%* 2.00%*

GDP per Capita (Current Prices) ($) 8,756 9,144 9,966 10,655* 11,058* 11,156* 11,309* 11,616*

Net Foreign Direct Investment ($ Billion) 4.28 3.39 3.16 2.70 2.91 2.34

FDI/GDP Ratio 11.26% 8.46% 7.16% 5.67% 5.83% 4.61%

INDUSTRY

Industrial Exports ($ Million) 3,291 3,530 3,567 3,384 3,150 2,956 2,527 1,012.8 (3)

Import of Industrial Machinery ($ Million) 227 239 288 300 269 234 236 92.9 (3)

TOURISM

Total Number of Tourists 2,167,989 1,655,051 1,365,845 1,274,362 1,354,647 1,517,927 1,688,357 649,841 (3)

Growth in Tax-Free Spending 21% 10% -6% 4% 8% 2% -9% 6% (4)

REAL ESTATE

Value of Real Estate Transactions ($ Million) 9,479 8,841 9,175 8,708 8,952 8,006 8,482 5,387 (5)

Number of Real Estate Sales Transactions 94,202 82,984 74,569 69,198 70,721 63,386 64,248 39,910 (5)

Construction Permits (000 sqm) 15,187 13,890 12,362 10,527 11,159 10,294 9,935 5,731 (5)

Cement Delivery (000 tons) 5,227 5,550 5,309 5,831 5,517 5,043 5,265 2,855 (5)

TRANSPORTATION

Beirut Port: Freight Activity (000 Tons) 6,469 6,677 7,225 8,268 8,281 7,240 8,737 3,600 (3)

Beirut Airport: Number of Passengers (million) 5.55 5.65 5.96 6.26 6.57 8.22 7.61 5.54 (6)

FOREIGN TRADE

Imports ($ Million) 17,964 20,158 21,280 21,228 20,494 18,069 18,705 10,998 (5)

Exports ($ Million) 4,253 4,265 4,483 3,936 3,313 2,952 2,977 1,652 (5)

Trade Balance ($ Million) (13,711) (15,893) (16,797) (17,292) (17,181) (15,117) (15,729) (9,346) (5)

BALANCE OF PAYM ENTS

Net Foreign Assets at the Financial Sector ($ Million) 3,325 (1,996) (1,537) (1,127) (1,407) (3,354) 1,238 (1,116) (4)

Foreign Assets ($ Billion) 30.85 32.24 35.74 35.29 37.86 37.09 40.71 42.87 (6)

PUBLIC FINANCE

Government Expenditures ($ Million) 11,336 11,675 13,321 13,640 13,952 13,528 14,867 2,007 (1)

Government Revenues ($ Million) 8,414 9,333 9,396 9,420 10,879 9,576 9,923 1,845 (1)

Budget Primary Deficit / Surplus ($ Million) 1,203 1,662 (110) (240) 1,307 724 21 331 (1)

Total Deficit ($ Million) (2,894) (2,342) (3,925) (4,220) (3,073) (3,952) (4,944) (162) (1)

Deficit / GDP Ratio 7.61% 5.84% 8.90% 8.87% 6.16% 7.78% 9.54%

Debt Service / GDP Ratio 10.85% 9.99% 8.21% 7.96% 8.78% 9.21% 9.58%

Net Public Debt ($ Billion) 45.01 46.35 49.12 53.18 57.30 61.54 65.42 66.57 (5)

Gross Public Debt/GDP Ratio 138.39% 133.89% 130.80% 133.36% 133.36% 138.41%* 143.87%* 149.17%*

M ONETARY AGGREGATES & INFLATION

M4 ($ Billion) 97.31 103.50 110.00 117.41 124.53 131.17 139.20 145.76 (6)

(M2-M1) ($ Billion) 35.66 35.82 39.32 40.56 43.27 46.25 47.95 48.68 (6)

Monetization Level (M2/GDP Ratio) 103.46% 99.32% 99.44% 95.68% 97.40% 102.46% 105.06%

Change in CPI (%) 6.19% 4.27% 4.68% 2.05% -1.66% -3.40% 3.14% 3.12% (5)

BANKING SYSTEM

Number of Commercial Banks 54 54 54 56 55 53 50 50 (2)

Number of Branches 912 948 962 985 1,020 1,039 1,056 1,054 (2)

Total Assets ($ Million) 128,925 140,576 151,883 164,821 175,697 185,989 204,311 208,479 (5)

Total Deposits ($ Million) 108,601 117,703 127,657 139,166 147,637 154,951 166,446 172,342 (5)

Loans to the Private Sector ($ Million) 34,929 39,375 43,452 47,381 50,899 54,224 57,180 58,614 (5)

Customer Loans/ Deposits 32.16% 33.45% 34.04% 34.05% 34.48% 34.99% 34.35% 34.01% (5)

Dollarization Rate 63.24% 65.92% 64.82% 66.14% 65.71% 64.88% 65.82% 66.89% (5)

Exchange Rate (LBP to USD) 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50

Recap of Lebanon's Major Indicators

* Figures Reflect IM F Estimates

(1) As at End of February, 2017, (2) As at End of M arch, 2017, (3) As at End of M ay, 2017, (4) As at End of June, 2017, (5) As at End of July, 2017, (6) As at End of August, 2017

LEBANON’S RATINGS

Rating Agency Tenor Rating

Long- Te rm B-

Short- Te rm B

Moody's Inve stors Se rvic e Long- Te rm B3

Long- Te rm B-

Short- Te rm B

Source: Fitch Ratings, M oody's Investors Service, S&P Global Ratings

Sta ble

Republic Of Lebanon Sovereign Ratings

Outlook

Sta nda rd & Poor's Globa l Ra tings

Fitc h Ra tings

Sta ble

Sta ble

Rated Banks

Long Term Foreign Currency

Outlook Long Term

IDR

Outlook Long-Term Counterparty Credit Rating

Short-Term Counterparty Credit Rating

Outlook

Bank Audi B3 Stable B- Stable B- C Stable

BLOM Bank B3 Stable - - B- - Stable

Byblos Bank B3 Stable B- Stable - - -

BankMed - - - - B- C Stable

Moody's Investors Service Fitch Ratings

Source: Fitch Ratings, M oody's Investors Service, S&P Global Ratings

S&P Global Ratings

Lebanese Banks' Latest Ratings

Weekly Market Watch

SOURCE: FITCH, MOODY’S, S&P RATINGS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 21

CONTACTS

RESEARCH

Fadlo I. Choueiri, CFA

[email protected]

961-1-608 000 EXT: 1280 Jad Abi Haidar, CFA [email protected] 961-1-608 000 EXT. 1283

Joelle Samaha [email protected] 961-1-608 000 EXT. 1281 Mayda Zaarour [email protected] 961-1-608 000 EXT. 1282

Nagham Abdel Ahad [email protected] 961-1-608 000 EXT. 1284

MONEY MARKETS DESK

Robert Araman

[email protected]

961-1-608 000 EXT. 0760

This document is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. This document does not constitute an offer or invitation to subscribe to or purchase any security, and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. Reasonable care has been taken to ensure that the facts stated herein are accurate and the estimates, opinions and expectations contained herein are fair and reliable.

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231 22

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