WEEKLY MARKET WATCH - Credit Libanais...Weekly Market Watch SOURCE: REAL ESTATE REGISTRY, CREDIT...

ECONOMIC RESEARCH UNIT

ISSUE NO. 303 NOVEMBER 14TH 2011 – NOVEMBER 25TH 2011

WEEKLY MARKET WATCH

Credit Libanais

TABLE OF CONTENTS

REAL ESTATE SALE TRANSACTIONS

DOWN BY 14.50% Y-O-Y UP TO

OCTOBER 2011 The number of real estate

transactions tumbled by 14.50%

year-on-year to 66,143 as at the end

of October in comparison with

77,360 transactions a year before.

INSURANCE PREMIUMS UP BY 14%

UNTIL SEPTEMBER 2011 The Association of Insurance

Companies in Lebanon (“ACAL”)

released its third quarter

performance report for the year 2011

in which it reported a 14% year-on-

year increase in written insurance

premiums to $904.40 million as at

the end of September 2011.

LEBANON RANKS 31ST WORLDWIDE

IN THE UNCTAD LINER SHIPPING

CONNECTIVITY 2011 INDEX The “Review of Maritime Transport

2011” report published by UNCTAD

classified Lebanon among the 10

countries (on a global scale) having

achieved the highest growth with

respect to the container port traffic

during the year 2009 (15.39%

annual growth) to reach 994,601

TEU.

CUSTOMS COLLECTIONS DOWN BY

12.38% YEAR-ON-YEAR UP TO

OCTOBER 2011

Figures released by the Lebanese

Customs unveil a 12.38% annual

contraction in customs collections to

around $2.52 billion during the first

ten months of the year 2011 down

from $2.87 billion a year earlier.

Weekly Market Watch

ECONOMIC RESEARCH UNIT SOFIL CENTER – BEIRUT - LEBANON TEL: 01-200028/9 FAX: 01-326786

LLEEBBAANNOONN NEWS

ECONOMIC INSIGHTS

> Real Estate Sale Transactions Down by 14.50% y-o-y Up To October 2011 1

> Insurance Premiums Up By 14% Until September 2011 2 > Lebanon Ranks 31st Worldwide In The UNCTAD Liner

Shipping Connectivity 2011 Index 3 > Lebanon Ranks 14th in the Region and 222nd

Worldwide in the 2011 Q3 Nation Brand Perception Index 4 > Customs Collections Down by 12.38% Year-on-Year up to

October 2011 5 > CDR October 2011 Progress Report 6 > Balance of Trade through October 2011 7 > Public Debt Breakdown Through September 2011 8 > Cleared Checks up to October 2011 9 > Lebanon’s Consumer Price Index In October 2011 10 > Construction Permits Up To October 2011 11 > Lebanon’s Balance of Payments Up To The third Quarter

of 2011 12 > Interest Rates’ Activity in September 2011 12 > Tax-Free Shopping Up To October 2011 13 > New Car Sales Up To October 2011 14 > Tripoli Port Activity Through September 2011 15 > Banque Du Liban's Reserves In the First Half of

November 2011 16 > Consolidated Balance Sheet of Financial Institutions

Through September 2011 17

CORPORATE NEWS

> BLC Bank’s Financial Performance Up To The Third Quarter of 2011 18

MONETARY PERFORMANCE

> Monetary Aggregates 19 > Money Markets 19

FIXED INCOME

> Lebanon Completes Voluntary 2012 Debt Exchange 20

LEBANESE EQUITIES

> Lebanese Equities & Credit Libanais Indices 21

Lebanon's Economic & Financial Sector Indicators 23

Lebanon’s Ratings 24

"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 "P/E" Price to Earnings Multiple "P/BV" Price to Book Multiple "YTD" Year To Date "YTD Price Performance" Yield to Date Price Appreciation

"Forex" Foreign Exchange "LBP" The Lebanese Pound "USD" The United States Dollar "Yen" The Japanese Yen "GBP" The British Pound/ Sterling Pound "CHF" The Swiss Franc "Y-O-Y" Year-On-Year "GDP" Gross Domestic Product "MENA" Middle East and North Africa "FOMC" Federal Open Market Committee

“LE” Livre Egyptienne – Egyptian Pound

“SAR” Saudi Arabian Riyal “AED” United Arab Emirates Dirham “BD” Bahraini Dinar

Weekly Market Watch


SYNOPSIS OF TERMS

Weekly Market Watch

SOURCE: REAL ESTATE REGISTRY, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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ECONOMIC INSIGHTS LL ee bb

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REAL ESTATE SALE TRANSACTIONS DOWN BY 14.50% Y-O-Y UP TO OCTOBER 2011

The repercussions of the regional tensions since the onset of the year 2011 and domestic political squabbling on the Lebanese economy did not go unnoticed, with the real estate sector demonstrating a sluggish activity when compared to the same period last year. More specifically, the number of real estate transactions tumbled by 14.50% year-on-year to 66,143 as at the end of October in comparison with 77,360 transactions a year before. Value of real estate transactions was no exception, shedding $0.83 billion on a twelve-month basis to $6.84 billion up to October 2011. It is worth highlighting that the share of foreigners in real estate sales transactions represented a shy 2.02% of total sales transactions during the first ten months of the year 2011, down from 2.04% in the full-year 2010 and 2.53% in the full-year 2009. Average value per real estate sales transaction, however, notched up by 4.35% on an annual basis to $103,460 up from $99,147 in the same period last year. The average value per sales transaction in Beirut continues to water down owing to a shift in buyers’ appetite from the capital to the more affordable suburbs of Metn and Kesserwan, as illustrated below:

Real Estate Transactions YOY

October 2010 October 2011 % Change

Number of Sale Transactions 77,360 66,143 -14.50%

Value of Transactions (USD Billion) 7.67 6.84 -10.78%

Average Value per Transactions (USD) 99,147 103,460 4.35%

Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit

For The Ten-Month Period Ending


3.14

4.20

6.48 6.79

9.48

6.84

50,140

67,04181,665 83,622 94,320

66,143

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2006 2007 2008 2009 2010 YTD October 2011

Value of Transactions ($ Billion) Number of Transactions

$ BillionEvolutionof Value & Volume of Real Estate Transactions

3.13%

2.45% 2.38%2.53%

2.04% 2.02%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2006 2007 2008 2009 2010 YTD October 2011

Sales to Foreignersas a Percentage of Total Sales

Historical Evolution of Average Value per Transaction Accross Different Lebanese Regions

$229,332

$262,181

$295,033

$314,941

$369,696

$488,665

$475,802

$69,798

$70,031

$103,037

$118,546

$153,064

$169,946

$169,458

$61,713

$52,172

$78,536

$84,290

$94,325

$97,515

$97,078

$57,303

$52,746

$71,345

$78,245

$103,397

$96,006

$96,528

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000

2006

2007

2008

2009

2010

YTD Sep 2011

YTD Oct 2011

Baabda Kesserwen Metn Beirut


Weekly Market Watch

SOURCE: ACAL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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INSURANCE PREMIUMS UP BY 14% UNTIL SEPTEMBER 2011

The Association of Insurance Companies in Lebanon (“ACAL”) released its third quarter performance report for the year 2011 in which it reported a 14% year-on-year increase in written insurance premiums to $904.40 million as at the end of September 2011. Said increase was fueled by some 29% hike in “Life Insurance Premiums” coupled with a 15% upswing in “Fire Insurance Premiums”. The report also highlighted a rise in the share of non-life insurance premiums to 74.9% as of September 2011, in comparison with 72.1% in the full year 2010. The share of life insurance premiums, however, slowed to 25.1% during the first nine months of 2011, down from 27.9% in the full year 2010. Furthermore, the report uncovered that “Medical Insurance” premiums represented the bulk (29.8%) of written premiums in the Lebanese insurance sector, followed by “Motor Insurance” (27.4%), “”Life Insurance” (25.1%), “Fire Insurance” (7.1%), “Workmen Insurance” (3.0%) and “Cargo Insurance” (2.7%). Finally, the report indicated that insurance indemnities paid on policyholders claims rose by 11% on an annual basis to $390.39 million, with the share of “Medical Claims” and “Motor Claims” representing 44.5% and 30.3% on a respective basis.

Medical Insurance

29.8%

Life Insurance25.1%

Motor Insurance27.4%

Fire Insurance7.1%

Workmen Insurance

3.0%

Cargo Insurance

2.7%

Others4.9%

Breakdown of Insurance Premiums by Segment Up To The Third Quarter of 2011

Source: ACAL, Credit Libanais Economic Research Unit

Medical Insurance

44.5%

Life Insurance12.1%

Motor Insurance30.3%

Fire Insurance4.5%

Workmen Insurance

3.6%

Cargo Insurance

2.6%

Others2.4%

Breakdown of Insurance Claims by Segment Up To The Third Quarter of 2011


0%

5%

10%

15%

20%

25%

30%

Life Insurance

Fire Insurance

Medical Insurance

Workmen Insurance

Cargo Insurance

Motor Insurance

29%

15% 14%11% 11%

4%

Insurance Premiums Growth Per Segment Up to The Third Quarter of 2011


Life Insurance

25.1%

Non-Life Insurance

74.9%

Breakdown of Insurance Premiums Up To the Third Quarter of 2011


Weekly Market Watch

SOURCE: UNCTAD, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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ECONOMIC INSIGHTS

LEBANON RANKS 31ST WORLDWIDE IN THE UNCTAD LINER SHIPPING CONNECTIVITY 2011 INDEX

The United Nations Conference On Trade And Development (“UNCTAD”) published on the 23rd of November, 2011 the “Review of Maritime Transport 2011” report in which it assesses the maritime markets, economies and businesses, and tracks any developments in the international seaborne trade. As unveiled by the report, the prevailing blurry outlook surrounding the world economy along with the natural disasters and the political squabbling are negatively affecting the activity of the maritime sector across the globe. According to the report, the world container port throughput registered a 13.3% annual increase during 2010 to end the year at 531.4 million TEUs (20-foot equivalent unit). Regarding the maritime regulatory framework, the report commented that several legal issues governing the international seaborne trade have been implemented during the year 2010 and the first half of 2011. The report also features a key seaborne trade index, namely the Liner Shipping Connectivity Index (“LSCI”), which by definition measures the connectivity of a country to maritime shipping and its accessibility to global trade. Overall, the report positioned China once again first among 162 countries in terms of its liner shipping connectivity index (score: 152.06), followed by Hong Kong (score: 115.27), Singapore (score: 105.02) and Germany (score: 93.32).

When accounting for the Western Asian countries, the United Arab Emirates topped the list of most connected countries in the region to the global maritime shipping (ranking 16th globally; score: 62.50), preceding Saudi Arabia (ranking 17th globally; score: 59.97), Oman (ranking 21st globally; score: 49.33), Turkey (ranking 25th globally; score: 39.40), and Lebanon (ranking 31st globally; score: 35.09).

On the local front, the report classified Lebanon among the 10 countries (on a global scale) having achieved the highest growth with respect to the container port traffic during the year 2009 (15.39% annual growth) to reach 994,601 TEU. Nevertheless, the preliminary estimated figures for the year 2010 indicated that Lebanon had probably witnessed a negative growth of 4.57% in its port throughput when compared to the country’s maritime activity in the year 2009. Moreover, the report commented that a fleet of 43 ships entered the Lebanese ports in January 2011, with a total carrying capacity of 130 thousands deadweight ton. Said merchant fleet was allocated over one oil tanker, 3 bulk carriers, 32 general cargo ships and 7 fleets of other types.

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2008 2009 % Change 2008-2009

Total Fleet Oil Tankers Bulk Carriers

General Cargo Ships

Container Ships

Other Types

Bahrain 269,331 239,705 -11.00% 215 7 2 3 4 199

Iraq - - - 3 2 0 0 0 1

Jordan 582,515 674,525 15.80% 19 1 0 5 0 13

Kuwait 961,684 854,044 -11.19% 201 19 2 15 6 159

Lebanon 861,931 994,601 15.39% 43 1 3 32 0 7

Oman 3,427,990 3,768,045 9.92% 44 1 0 8 0 35

Qatar 400,000 410,000 2.50% 116 6 3 2 13 92

Saudi Arabia 4,652,022 4,430,676 -4.76% 322 48 0 19 4 251

Syria 610,607 685,299 12.23% 46 - 5 27 - 14

Turkey 5,218,316 4,521,713 -13.35% 1,334 186 101 494 41 512

United Arab Emirates 14,756,127 14,425,039 -2.24% 530 43 5 83 7 392

Yemen 492,313 382,445 -22.32% 50 4 0 4 0 42

TEU1: 20-foot equivalent unit

Western Asian Countries

Container Port Traffic (in TEUs1)

Source: UNCTAD, Credit Libanais Economic Research Unit

Merchant fleets by types of ship, as at January, 2011 (number of ships)

0 20 40 60 80 100 120 140 160

Qatar

Iraq

Kuwait

Bahrain

Yemen

Jordan

Syria

Lebanon

Turkey

Oman

Saudi Arabia

United Arab Emirates

148

129

114

86

77

69

68

31

25

21

17

16

Source: UNCTAD, Credit Libanais Economic Research Unit

2011 UNCTAD Liner Shipping Connectivity Index Global Rankings

Weekly Market Watch

SOURCE: EASTWEST COMMUNICATIONS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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LEBANON RANKS 14TH IN THE REGION AND 222ND WORLDWIDE IN THE 2011 Q3 NATION BRAND PERCEPTION

INDEX

East West Communications, a leading Washington-based company developing nation branding indexes and reports, released its nation brand perception index for the third quarter of 2011 in which it ranked 200 countries around the globe based on the frequency each country has been mentioned in the international media and the “overall quality of media and the prominence of the country.” The “Nation Brand Perception Index” scores hover between 0 and 100 with a score of [0-49] reflecting a negative perception, [50-79] indicating a neutral perception and [80-100] signifying a positive perception. Lebanon scored 40.530 during the third quarter of 2011, ranking 14th on a regional basis and 222nd on a global basis, slipping from the 190th global place it occupied in the second quarter of 2011 (score: 29.869) and the 174th place in the first quarter of 2011 (score: 43.215). In terms of volume of mentions only (i.e. excluding quality of media and prominence of the country), Lebanon ranked 50th worldwide with 2,749 mentions, in comparison with 13,521 mentions during the same quarter last year. Malaysia occupied the 1st place worldwide with a score of 83.237 in the third quarter of 2011, unchanged from its ranking in the previous quarter, followed by South Korea (82.167) and France (79.644) respectively. On a regional basis, Kuwait topped the list, with an index score of 62.773, followed by the United Arab Emirates (61.002) and Qatar (53.959).

Country Region Score2011 Q3 Regional

Rank

2011 Q3 Global Rank

Malaysia Asia 83.237 1 1

South Korea Asia 82.167 2 2

France Europe 79.644 1 3

Kuwait MENA 62.773 1 13

UAE MENA 61.002 2 14

Qatar MENA 53.959 3 34

Morocco MENA 53.647 4 36

Jordan MENA 48.947 7 188

Algeria MENA 48.637 8 192

Saudi Arabia MENA 45.779 10 206

Turkey MENA 45.432 11 210

Lebanon MENA 40.530 14 222

Egypt MENA 35.608 16 226

Libya MENA 23.079 18 231

Iraq MENA 18.332 19 232

Syria MENA 4.069 20 235Source: East West Communications, Credit Libanais Economic Research Unit

Nation Brand Perception Index

0 20 40 60 80

Kuwait

UAE

Qatar

Morocco

Jordan

Algeria

Saudi Arabia

Turkey

Lebanon

Egypt

Libya

Iraq

Syria

62.773

61.002

53.959

53.647

48.947

48.637

45.779

45.432

40.530

35.608

23.079

18.332

4.069

MENA Region's 2011 Q3 Nation Brand Perception Index

Weekly Market Watch

SOURCE: LEBANESE CUSTOMS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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CUSTOMS COLLECTIONS DOWN BY 12.38% YEAR-ON-YEAR UP TO OCTOBER 2011

Figures released by the Lebanese Customs unveil a 12.38% annual contraction in customs collections to around $2.52 billion during the first ten months of the year 2011 down from $2.87 billion a year earlier. Said drop is mainly attributed to the 22.24% drop in customs revenues to $1,264 million, with VAT revenues correcting upwards for the first time on a cumulative basis this year to $1,253 million.

The Port of Beirut continued to account for the bulk (81.38% <$2.05 billion>) of customs collections followed, and at quite a distance, by the Beirut International Airport (7.95% <$200.11 million>) and the Tripoli Port (4.81% <$120.97 million>). The average customs tariff rate dwindled to 5% in October 2011, from 8% in the previous month, in comparison with 8% in the preceding year.

Port of Beirut81.38%

BIA7.95%

Tripoli Port4.81%

Others5.86%

Breakdown of Customs Collectionsper Custom Offices In the Ten Months of 2011

Source: Lebanese Customs, Credit Libanais Economic Research Unit

Port of Beirut 2,047.63

Beirut Internaitonal Airport ("BIA") 200.11

Tripoli Port 120.97

Others 148.70

Total 2,517.41

Breakdown of Customs Collection up To October 2011 ($ Million)


0

500

1,000

1,500

2,000

2,500

3,000

October‐07 October‐08 October‐09 October‐10 October‐11

738 837

1,536 1,6261,264

7911,046

1,1481,247

1,253

Custom Revenues VAT Revenues

1,529

1,883

2,6842,873

2,517

Breakdown of Aggregate Customs CollectionsUSD Million


Weekly Market Watch

SOURCE: CDR, ALMUSTAQBAL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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CDR OCTOBER 2011 PROGRESS REPORT

According to the Council for Development & Reconstruction (CDR) October 2011 Progress Report, the CDR has managed to secure some $10.348 billion in financing in the form of grants, soft loans, commercial loans and export credits during the period ranging between the year 1992 and 2010. The value of completed contracts aggregated to $7.200 billion during the aforementioned period, constituting around 69.58% of the value of total awarded contracts, with the remaining $3.148 billion allocated to works in progress. The above-stated CDR project financing was mainly geared towards projects in the transportation (25%), solid waste (15%), electricity (14%) and drinking water & sanitation (14%) sectors. Foreign financing neared the $198 million mark during the full year 2010, $129 million out of which is in the form of donations, and the remaining $69 million being in the form of loans. The report also spotted the light on the Reconstruction Program, with the share of foreign financing under the umbrella of this program exceeding $50 million and distributed over some 24 financing sources, namely the Arab Fund for Economic and Social Development, the International Bank for Reconstruction and Development, the Kuwaiti government and Kuwait’s Fund for Arab Economic Development, the European Union, Qatar, Japan and others.

In Progress30.42%

Completed69.58%

Status of Awarded Contracts As of Year-End 2010

Electricity14%

Transportation25%

Drinking Water & Sanitation

14%

Landline & Post8%

Solid Waste15%

Education10%

Public Health3%

Other Sectors11%

Breakdown of Financing By Sector During the 1992-2010 Period

Weekly Market Watch

SOURCE: HIGHER CUSTOMS COUNCIL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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ECONOMIC INSIGHTS BALANCE OF TRADE THROUGH OCTOBER 2011

On the current account side of the balance of payment, Lebanon’s balance of trade deficit widened by $2.11 billion year-on-year to $13.33 billion as at the end of October 2011, according to statistics published by Lebanon’s Higher Customs Council. This is attributed to some $2.24 billion annual increase in imports to around $16.92 billion, which eclipsed the relatively timid $133 million increase in exports to around $3.58 billion.

The United States of America leapfrogged Italy to lead the list of exporting countries to Lebanon with a share of $1,792 million (10.59% of Lebanon’s imports) of the total imports’ bill. Switzerland, on the other hand, topped the list of countries importing from Lebanon with a total imports’ invoice of $421 million (11.76% of Lebanon’s exports). Nevertheless, Lebanon’s exports’ activity to neighboring Arab countries still suffers from the continuous decline in consumer demand on the back of the ongoing regional political unrest. This justifies the 66%, 21%, 20% and 7% annual contraction in Lebanese exports to Egypt, Iraq, the U.A.E and Syria on a respective basis. On the imports’ front, fears from radiation contamination since Japan’s earthquake in March 2011 were the main driver behind the 35% annual dip in imports from Japan to $335 million in the first ten months of the year 2011. Exports of “pearls, precious or semi-precious stones” topped the list of exported goods, with a share of 34.85% ($1,248 million), followed by “base metals & articles of base metals” ($471 million <13.15%>) and “machinery & mechanical appliances” ($444 million <12.40%>). On the other hand, imports of “mineral products” accounted for the bulk of total imported goods ($3,945 million <23.32%>), followed by “machinery & mechanical appliances” ($1,790 million <10.58%>), “pearls, precious or semi-precious stones” ($1,754 million <10.37%>), and “chemical products” ($1,455 million <8.60%>).

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Balance of Trade YOY(US$ Million) October 2010 October 2011 % ChangeExports 3,448 3,581 3.86%Imports 14,674 16,915 15.27%Trade Deficit (11,226) (13,334) 18.78%

Source: Higher Customs Council, Credit Libanais Economic Research Unit

For The Ten-Month Period Ending

-16,000-14,000-12,000-10,000-8,000-6,000-4,000-2,000

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

October 2010 October 2011

USD MillionCumulative Balance of Trade Deficit

Exports Imports Deficit

United States $1,792 million 10.59%

Italy $1,551 million 9.17%

China $1,359 million 8.03%

France $1,261 million 7.45%

Germany $935 million 5.53%


Major Import Sources

Switzerland $421 million 11.76%

UAE $280 million 7.82%

Saudi Arabia $257 million 7.18%

Turkey $245 million 6.84%

Iraq $175 million 4.89%


Major Export Destinations

ProductValue

($ Million)% ofTotal

Pearls, Precious or Semi-Precious Stones

1,248 34.85%

Base Metals & Articles of Base Metal

471 13.15%

Machinery & Mechanical Appliances

444 12.40%

Prepared Foodstuffs 307 8.57%

Others 1,111 31.02%

Total Exports 3,581 100%


Breakdown of Exports by Product in the First Ten Months of the Year 2011

ProductValue

($ Million)% ofTotal

Mineral Products 3,945 23.32%

Machinery & Mechanical Appliances

1,790 10.58%

Pearls, Precious or Semi-Precious Stones 1,754 10.37%

Chemical Products 1,455 8.60%

Others 7,971 47.12%

Total Imports 16,915 100%


Breakdown of Imports by Product in the First Ten Months of the Year 2011

Weekly Market Watch

SOURCE: MOF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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PUBLIC DEBT BREAKDOWN THROUGH SEPTEMBER 2011

According to statistics published by the Association of Banks in Lebanon (“ABL”), gross public debt was up by 1.78% on a monthly basis to LBP 81,927 billion ($54.35 billion) as at the end of September 2011, up from LBP 80,496 billion ($53.40 billion) in August. The Lebanese banking sector continues to control the lion’s share (52.2%) of the government’s local currency debt, followed by Banque Du Liban (32.3%), and the non-banking sector (15.5%). As far as external debt is concerned, sovereign debt in the form of Republic of Lebanon Eurobonds constituted 86.9% of foreign currency debt, followed by debt from multilateral agreements (6.9%), bilateral facilities (4.8%), and Paris II donors support (1.1%). The average maturity of domestic debt denominated in the local currency rose to 937 days as at the end of September, carrying a weighted interest rate of 6.94% per annum, up from 876 days in August when the weighted annual interest rate was higher at 6.99%. External debt denominated in foreign currency carried a maturity of 5.24 years up to September in comparison with 5.30 years up to August, with the weighted interest rate remaining almost flat at 7.10%.

Banks52.2%

BDL32.3%

Non-Banking Sector15.5%

Breakdown of Domestic Debt by Holder - September 2011

Source: ABL, Credit Libanais Economic Research Unit

Source: ABL, Credit Libanais Economic Research Unit

Eurobonds, 86.9%

Multilateral, 6.9%

Bilateral,4.8%

Paris II Loans, 1.1%

Others, 0.3%

Breakdown of External Debt by Type - September 2011

Breakdown of Gross Public Debt (USD Billion) Sept-2010 Aug-2011 Sept-2011

Monthly % Change

Y-O-Y % Change

Domestic Debt by Holder 29.87 32.13 33.36 3.85% 11.70%

- Banks 18.34 15.55 17.42 12.00% -5.04%

- Banque Du Liban 6.39 11.37 10.78 -5.24% 68.59%

- Non-Banking Sector 5.14 5.20 5.17 -0.64% 0.66%

External Debt by Type 20.99 21.27 20.98 -1.35% -0.03%

- Eurobonds 17.88 18.40 18.23 -0.90% 1.96%

- Multilateral 1.47 1.51 1.45 -4.13% -1.46%

- Bilateral 0.99 1.04 1.01 -3.37% 2.09%

- Paris II Loans 0.31 0.26 0.23 -9.57% -26.69%

- Others 0.34 0.64 0.63 -1.35% 87.43%

Gross Public Debt 50.86 53.40 54.35 1.78% 6.86%

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

Weekly Market Watch

SOURCE: ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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CLEARED CHECKS UP TO OCTOBER 2011

According to ABL statistics, the value of cleared checks firmed at LBP 90,587 billion (10,841,708 checks) during the first ten months of the year 2011, up from LBP 85,432 billion (10,724,756 checks) during the same period last year. Of the total value of cleared checks, 80.29% was denominated in foreign currencies in comparison with 80.30% a year earlier. The value of returned checks increased by LBP 10 billion (0.55%) on an annual basis to LBP 1,828 billion, with the number of returned checks rising by 7.11% to 218,026 up to October 2011. This is further illustrated in the following section: The ratio of returned number of checks to number of cleared checks advanced to 2.01% in the first ten months of the year 2011 up from 1.90% during the same period last year. On a positive note, the share of returned checks’ value of total cleared checks value fell to 2.02% down from 2.13% in the same period last year.

Billion Number Billion Number Value Volume

LBP-Denominated LBP 16,823 2,902,886 LBP 17,846 3,101,827 6.08% 6.85% Returned LBP-Denominated LBP 229 46,210 LBP 258 51,165 12.66% 10.72%

Foreign Currency-Denominated $45.497 7,821,870 $48.236 7,739,881 6.02% -1.05% Returned Foreign Currency-Denominated $1.054 157,337 $1.030 166,861 -2.28% 6.05%

Total Cleared Checks LBP 85,432 10,724,756 LBP 90,587 10,841,708 6.03% 1.09%Total Returned Checks LBP 1,818 203,547 LBP 1,828 218,026 0.55% 7.11%Source: Association of Banks in Lebanon, Credit Libanais Economic Research Unit

Check Clearing Activity October 2010 October 2011 Y-o-Y % Change

LBP-Denominated

28.61%

Foreign Currency-

Denominated71.39%

Breakdown of Clearing Activity By Volume

LBP-Denominated

19.71%

Foreign Currency-

Denominated80.29%

Breakdown of Clearing Activity By Value

2.13%

1.36%

2.32%

2.02%

1.45%

2.14%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Total LBP FC

YTD October 2010 YTD October 2011

Returned Checks as a Percentage of Cleared Checks (Value)

1.90%

1.59%

2.01%2.01%

1.65%

2.16%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Total LBP FC

YTD October 2010 YTD October 2011

Returned Checks as a Percentage of Cleared Checks (Number)

Weekly Market Watch

SOURCE: CAS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

10


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LEBANON’S CONSUMER PRICE INDEX IN OCTOBER 2011

According to the Central Administration of Statistics (“CAS”), Lebanon’s annual inflation, as captured by the annual change in the consumer price index (“CPI”), hit the 3.5% mark during the month of October 2011. More specifically, October’s CPI reached 117.0 up from 113.0 a year before. Said rise is mainly attributed to the 9.7% appreciation in water, electricity, gas and other fuel prices coupled with a 4.3% increase in the price of food & non-alcoholic beverages, the index’s largest constituent, added a 5.3% rise in transportation costs and a 7.6% appreciation in education costs. Lebanon’s CPI extended its upturn for a third consecutive month in October, posting a 0.7% monthly appreciation on the back of the 7.5% increase in education costs added the 9.3% rise in alcoholic beverages & tobacco’s prices, which counterbalanced the 2.0% contraction in transportation costs. The following section captures the fluctuation in Lebanon’s consumer basket’s key constituents on a monthly and yearly basis:

Monthly (September 2011-October 2011)

y-o-y (October 2010-October 2011)

Weight

Food & Non-Alcoholic Beverages 0.5% 4.3% 19.9%Alcoholic Beverages & Tobacco 9.3% 9.9% 2.1%Clothing & Footwear 1.7% -5.5% 6.2%Housing 0.0% 0.0% 16.2%Water, Electricity, Gas & Other Fuels -0.5% 9.7% 9.5%Furnishings, Household Equipment & Routine Household Maintenance

0.1% 5.0% 3.9%

Health -1.5% 2.4% 6.8%Transportation -2.0% 5.3% 12.3%Communication 0.0% -0.1% 4.8%Recreation, Amusement, and Culture 2.5% 4.6% 3.7%Education 7.5% 7.6% 7.7%Restaurant & Hotels 0.6% 4.7% 2.7%Miscellaneous Goods & Services 0.0% 2.0% 4.2%Consumer Price Index 0.7% 3.5% 100.0%Source: Central Administration o f Statistics, Credit Liabanais Economic Research Unit

Price Volatility in October 2011

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Food &

Non-A

lcoholic

Bev

erag

es

Alc

oholic

Bev

erag

es &

Tobacc

o

Clo

thin

g &

Footw

ear

Housi

ng

Wate

r, E

lect

rici

ty, G

as &

Oth

er Fu

els

Furn

ishin

gs,

House

hol

d E

quip

men

t &

Routine

House

hold

Main

tenan

ce

Health

Tra

nsp

ort

atio

n

Com

munic

atio

n

Recr

eation

, A

muse

ment

, and C

ulture

Educa

tion

Rest

aura

nt &

Hote

ls

Mis

cella

neou

s G

oods

& S

erv

ices

4.3%

9.9%

-5.5%

0.0%

9.7%

5.0%

2.4%

5.3%

-0.1%

4.6%

7.6%

4.7%

2.0%

0.5%

9.3%

1.7%

0.0%

-0.5%

0.1%

-1.5%-2.0%

0.0%

2.5%

7.5%

0.6%0.0%

Monthly & Y-O-Y Price Volatility In October 2011

Y-O-Y Monthly

Weekly Market Watch

SOURCE: ORDER OF ENGINEERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

11


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CONSTRUCTION PERMITS UP TO OCTOBER 2011

Lebanon’s registered construction permits, which reflect the level of future supply in the real estate sector, fell to 1,012,777 sqm during the month of October 2011, from 1,173,893 sqm in October 2010, and this according to statistics released by Lebanon’s Order of Engineers. On a cumulative basis, Lebanon’s construction permits eased by 7.63% on an annual basis to 11,526,242 sqm as at the end of October 2011 in comparison with 12,478,913 sqm up to October 2010. As far as the geographical distribution of construction permits is concerned, the Mount Lebanon region topped the list with a total of 6,949,219 sqm (60.29%) up to October 2011, followed by the South (1,346,875 sqm <11.69%>), Beirut (1,105,327 sqm <9.59%>) and the Bekaa (1,070,845 sqm <9.29%>) regions. This undoubtedly validates the finding that there has been a shift in developers’ appetite to markets that are more affordable to residential end-users, on the back of the unprecedented increase in real estate prices in the Beirut region and the scarcity of land in prime locations in the capital. Obviously, Beirut continues to lead other regions in terms of the average exploitation factor per construction permit on the scale of 1,360 sqm per permit, followed by the Mount Lebanon (948 sqm/transaction), North (922 sqm/transaction) and Bekaa (706 sqm/transaction) regions.

Oct-2006 6,227,770

Oct-2007 6,302,816

Oct-2008 8,209,735

Oct-2009 8,343,073

Oct-2010 12,478,913

Oct-2011 11,526,242Source: Order o f Engineers, Credit Libanais Economic Research Unit

Evolution of Construction Permits (Sqm) For the Ten-Month Period Ending

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

Oct-2006 Oct-2007 Oct-2008 Oct-2009 Oct-2010 Oct-2011

6,227,770 6,302,816

8,209,7358,343,073

12,478,913 11,526,242

Evolution of Cumulative Construction Permits (Sqm)

Sqm N. of Transactions

Average Sqm/Trans.

Beirut 1,105,327 813 1,360

Mount Lebanon 6,949,219 7,328 948

North 145,664 158 922

Bekaa 1,070,845 1,517 706

South 1,346,875 2,261 596

Nabatyeh 908,312 1,645 552

Total 11,526,242 13,722 840

Source: Order of Engineers, Credit Libanais Economic Research Unit

Geographical Breakdown of Construction PermitsThrough October 2011

Beirut9.59%

Mount Lebanon60.29%

North1.26%

Bekaa9.29%

South11.69%

Nabatyeh7.88%

Geographical Breakdown of Construction Permits Through October 2011


0 200 400 600 800 1,000 1,200 1,400

Beirut

Mount Lebanon

North

Bekaa

South

Nabatyeh

1,360

948

922

706

596

552

Average Sqm/Construction Permit Per Region Through October 2011


Weekly Market Watch

SOURCE: BDL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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LEBANON’S BALANCE OF PAYMENTS UP TO THE THIRD QUARTER OF 2011

Lebanon’s balance of payments recorded a deficit of $301.7 million during the month of September 2011 in comparison with a deficit of $450.8 million in August, and a surplus of $186.4 million in September 2010. On a cumulative basis, the balance of payments reached a deficit nearing $1.54 billion during the first three quarters of the year 2011, in comparison with a surplus in excess of $2.94 billion during the same period last year. This owes particularly to some $3.5 billion annual contraction in capital inflows to Lebanon to around $9.65 billion up to September, in comparison with $13.12 billion registered a year earlier. INTEREST RATES’ ACTIVITY IN SEPTEMBER 2011

According to BDL statistics, the average interest rate on Lebanese Pound denominated deposits rose to 5.58% in September 2011 comparing to 5.53% in August, yet remained below the 5.70% level that prevailed in September 2010. Concurrently, the average interest rate on U.S. Dollar denominated deposits came in higher at 2.84% in September, from 2.80% in August and 2.78% in September 2010. Nevertheless, commercial banks’ discount and lending rate notched down on both on LBP and USD denominated loans to 7.37% and 6.58% on a respective basis, as elaborated below:

Balance of Payments For the Nine-Month Period Ending Y-O-Y

In Millions of USD Sep-2010 Sep-2011 % Change

Central Bank 3,069.6 1,967.5 -35.90%

Banks & Financial Institutions (129.0) (3,506.0) 2617.83%

Total 2,940.30 (1,539.00) -152.34%Source: Banque Du Liban, Credit Libanais Economic Research Unit

0.0

5.0

10.0

Sep-09 Nov-09 Jan-10 Mar-10May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11May-11 Jul-11 Sep-11

%

Evolution of LBP Lending & Deposits Rates

Spread LBP Average Rate on Deposits LBP Discount and Loans rate

Source: BDL, Credit Libanais Economic Research Unit

0.0

5.0

10.0

15.0

Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11

%

Evolution of USD Lending & Deposits Rates

Spread USD Average Rate on Deposits USD Discount and loans rate


LBP USD LBP USD LBP USD5.70% 2.78% 5.53% 2.80% 5.58% 2.84%

5.96% 3.21% 5.81% 3.22% 5.85% 3.26%

8.11% 7.24% 7.53% 7.16% 7.37% 6.58%

Source: Banque Du Liban, Credit Libanais Economic Research Unit

In September 2010 In August 2011 In September 2011

Discount & Loans Rate

Average Rate on Deposits

Term Savings & Deposits Rate

Interest Rate Levels

‐800

‐600

‐400

‐200

0

200

400

600

800

1000

-44.3

758.5

263.9

424.4

-194.8

105.8

993.7

446.7

186.4

-772.1

103.3269.6

-198.6

-445.2

563.8

-307.3-450.8

-301.7

Monthly Evolution In Lebanon's Balance of Payments

2010 2011

USD Million

Source: Banque Du Liban, Credit Libanais Economic Research Unit-2,000.0

-1,000.0

0.0

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

Sep-2005 Sep-2006 Sep-2007 Sep-2008 Sep-2009 Sep-2010 Sep-2011

-191.7

2,247.3

580.0

2,213.1

4,842.1

2,940.3

-1,539.0

USD Million

Cumulative Balance of Payments


Weekly Market Watch

SOURCE: GLOBAL BLUE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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TAX-FREE SHOPPING UP TO OCTOBER 2011

Global Blue, one of the world’s leaders in Tax Refund services, published the “Insights into Tourist Spending” report for the first ten months of the year 2011 in which it highlighted that Lebanon’s tax-free spending rose by 8% when compared to the same period last year. More particularly, spending by Syrian nationals rose by 18% on an annual basis, accompanied by a 16% and 10% increase in spending by U.A.E. and French tourists on a respective basis. On the other hand, spending by Egyptian tourists fell markedly by 13% up until October 2011 with Jordanian and Saudi tax-free spending following suit, skidding 10% and 4% respectively. The lion’s share of spending goes to Saudi Arabian tourists (20%), followed by UAE (11%), Kuwaiti (9%) and Syrian (8%) visitors. As for the breakdown of spending, “Fashion & Clothing” articles accounted for 74% of tourist spending up until October, followed by “Watches” (9%), “Home & Garden” (4%) and “Department Stores” (4%). On the geographical distribution of spending front, the capital Beirut continues to outperform other regions, attracting some 83% of total spending, followed by Metn (13%), Kesserwan (2%) and Baabda (1%).

-15%

-10%

-5%

0%

5%

10%

15%

20%

Saudi A

rabia

Kuw

ait

UA

E

Jord

an

Egypt

France

Qata

r

Syri

a

-4%-3%

16%

-10% -13%

10%

-1%

18%

Annual Growth in Spending Up To October 2011

Source: Global Blue, Credit Libanais Economic Research Unit

0%

2%

4%

6%

8%

10%

12%

14%

January

Febru

ary

Marc

h

Apri

l

May

June

July

August

Septe

mber

Oct

ober

11%

1%0% 0%

3%

6%

13%

4%

8% 8%

YTD Annual Growth in Spending - 2011

Saudi Arabia20%

Kuwait9%

UAE11%Egypt

6%Syria8%

Other46%

Total Spending Distribution by Area of Residence up to October 2011


Fashion & Clothing 74%Watches 9%Home & Garden 4%Department Stores 4%Souvenirs & Gifts 3%Consumer Electronics & Household Appliances 2%Others 4%Total 100%Source: Global Blue, Credit Libanais Economic Research Unit

Total Spending Distribution by Category up to October 2011

Beirut83%

Metn13%

Kesserwan2%

Baabda1% Others

1%

Spending Distribution by Area up to October 2011


Weekly Market Watch

SOURCE: AAI, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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NEW CAR SALES UP TO OCTOBER 2011

According to statistics released by the Association of Automobile Importers (AAI), new car sales in Lebanon rose by 9.88% y-o-y to 3,125 vehicles during the month of October 2011 in comparison with 2,844 vehicles in October 2010. On a cumulative basis, new car sales fell by 3.31% on a yearly basis to 27,473 vehicles up to October 2011, from 28,413 vehicles in the same period last year. More specifically, sales of Japanese cars plummeted by 27.12% to 8,125 accompanied by some 11.88% drop in European car sales to 5,779 vehicles, outweighing as such the sharp 31.81% increase in the sales of Korean cars to 11,611. Korean cars continued to outperform other brands, with a market share of 42.26%, followed by Japanese (29.57%), European (21.04%), American (6.36%) and Chinese (0.77%) cars.

The Korean “KIA” brand led the list of new car sales in Lebanon (7,100 cars <25.84%>) during the first ten months of the year, followed by the Japanese “Nissan” brand (4,901 cars <17.84%>), and the Korean “Hyundai” brand (4,504 cars <16.39%>), as illustrated by the chart below:

Oct-2010 Oct-2011 % Change

Japanese 11,148 8,125 -27.12%

European 6,558 5,779 -11.88%

Korean 8,809 11,611 31.81%

American 1,681 1,746 3.87%

Chinese 217 212 -2.30%

Total 28,413 27,473 -3.31%

Source: AAI, Credit Libanais Economic Research Unit

New Car Sales During the Ten-Month Period Ending

Japanese, 29.57%

European , 21.04%

Korean, 42.26%

American, 6.36%

Chinese , 0.77%

Breakdown Of New Car Sales Up To October 2011

0

1000

2000

3000

4000

January February March April May June July August September October

1,797 1,745

2,497

3,182 3,341 3,3303,747

2,906 3,024 2,844

1,944 1,852

2,687 2,585 2,669

3,474 3,3452,827 2,965 3,125

Monthly Evolution of New Car Sales in Lebanon

2010 2011

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

KIA

Nissan

Hyundai

Chevrolet

Toyota

Renault

Peugeot

Mercedes

Mitsubishi

Volkswagen

7,1

00

4,9

01

4,5

04

1,2

12

1,1

60

97

27

60

61

65

38

51

3

Top 10 New Car Sales Brands Up To October 2011

Source: AAI, Credit Libanais Economic Research Unit

Weekly Market Watch

SOURCE: TRIPOLI PORT, ALMUSTAQBAL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

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TRIPOLI PORT ACTIVITY THROUGH SEPTEMBER 2011

The Tripoli Port freight activity rose by 26.51% on an annual basis to 1,208.892 thousand tons up to the end of the third quarter of 2011, from 955.560 thousand tons during the same period last year. The number of vessels rose by 2.33% to 395 up to September. Concurrently, Tripoli port revenues came in 9.85% higher y-o-y at $7.95 million as at the end of September in comparison with $7.23 million in the same period in 2010. The director of the Tripoli Port, Mr. Ahmad Tamer, praised the positive performance of the port in spite of regional turbulences, particularly in Syria.

During the month of September alone, freight activity widened to 199.466 thousand tons in comparison with 84.113 thousand tons in September 2010, with imports representing some 76.43% of total freight activity. The share of “Coal” imports through the Tripoli port stood at 39.64% (60,438 tons), followed by “Iron” (37,872 tons <24.84%>), “Wood” (29,418 tons <19.30%>), “Gypsum” (5,200 tons <3.41%>), and “Salt” (3,450 tons <2.26%>). As for exports through the Tripoli port, “Iron” accounted for 56.87% (26,735 tons) of total exports during the month of September, followed by “Phosphate” (15,717 tons <33.43%>) and “Cement” (4,449 tons <9.46%>).

Tons % of Total

Coal 60,438 39.64%

Iron 37,872 24.84%

Wood 29,418 19.30%

Gypsum 5,200 3.41%

Salt 3,450 2.26%

Others 16,080 10.55%

Total 152,458 100%

Source: Tripoli Port, AlMustaqbal Newspaper

Breakdown of Imports Through Tripoli Port in September 2011

Coal39.64%

Iron24.84%

Wood19.30%

Gypsum3.41%

Salt2.26%

Others10.55%

Breakdown of Total Imports Through Tripoli Port In September 2011

Source: Port of Tripoli, Credit Libanais Economic Research Unit

Iron56.87%

Phosphate33.43%

Cement9.46%

Cars0.21%

Furniture0.01% Others

0.01%

Breakdown of Total Exports Through Tripoli Port In September 2011

Source: Port of Tripoli, Credit Libanais Economic Research Unit

Tons % of Total

Iron 26,735 56.87%

Phosphate 15,717 33.43%

Cement 4,449 9.46%

Cars 101 0.21%

Furniture 3 0.01%

Others 3 0.01%

Total 47,008 100%

Source: Tripoli Port, AlMustaqbal Newspaper

Breakdown of Exports Through Tripoli Port in September 2011

Tripoli Port YOY

Indicators % Change

Freight Activity (000 Tons) 26.51%

Number of Vessels 2.33%

Revenues ($ Million) 9.85%

Source: Tripoli Port, AlMustaqbal Newspaper, Credit Libanais Economic Research Unit

7.23 7.95

1,209

For The Nine-Month Period Ending

Sep-2010 Sep-2011

386 395

956

Weekly Market Watch


16


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BANQUE DU LIBAN'S RESERVES IN THE FIRST HALF OF NOVEMBER 2011

The Lebanese Central Bank published its mid November balance sheet in which it conveys a 0.55% ($176.23 million) bi-weekly appreciation in Lebanon’s foreign assets (foreign currency reserves) portfolio to $32.19 billion, up from $32.01 billion as at the end of October. On an annual basis, foreign assets were up by 4.16% from $30.90 billion in mid November 2010. Concurrently, gold reserves appreciated by $392.87 million (2.47%) on a bi-weekly basis to $16.30 billion, yet stand 29.29% ($3.69 billion) higher than last year’s $12.61 billion reading. Total reserves (gold and foreign assets) came in $4.98 billion higher during the one-year period ending November 15, 2011 at $48.48 billion, comparing to $43.51 billion in mid November 2010. This is further elaborated in the table below: The Central Bank’s balance sheet expanded by 0.97% on a bi-weekly basis to $72.33 billion as at mid November, fueled by the 1.19% increase in total reserves to $48.48 billion, coupled with a 0.21% and 0.14% rise in loans to the public sector and loans to the local financial sector to $0.09 billion and $1.40 billion on a respective basis, added the 0.09% increase in the securities portfolio value to $11.49 billion.

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Mid Nov-05

Mid Nov-06

Mid Nov-07

Mid Nov-08

Mid Nov-09

Mid Nov-10

Mid Nov-11

11.5213.49 12.53

18.96

26.98

30.90 32.19

$ Billion

Evolution of Banque Du Liban's Foreign Assets


0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

Mid Nov-05

Mid Nov-06

Mid Nov-07

Mid Nov-08

Mid Nov-09

Mid Nov-10

Mid Nov-11

4.315.69

7.426.71

10.23

12.61

16.30$ Billion

Evolution of Banque Du Liban's Gold Reserves


$ Billion Mid Nov-05 Mid Nov-06 Mid Nov-07 Mid Nov-08 Mid Nov-09 Mid Nov-10 Mid Nov-11

Gold 4.31 5.69 7.42 6.71 10.23 12.61 16.30

Foreign Assets 11.52 13.49 12.53 18.96 26.98 30.90 32.19

Total Reserves 15.83 19.18 19.94 25.67 37.21 43.51 48.48


$ BillionMid

November 2010

End of October

2011

Mid November

2011

Bi-weekly (%)

Y-O-Y (%)

Total Reserves 43.51 47.91 48.48 1.19% 11.44%

Securities Portfolio 8.40 11.48 11.49 0.09% 36.72%

Loans to Public Sector 0.14 0.09 0.09 0.21% -35.91%

Loans to Local Financial Sector 0.75 1.39 1.40 0.14% 85.61%

Valuation Adjustment 0.00 0.00 0.00 0.00% 0.00%

Other Assets 8.21 10.53 10.64 1.07% 29.56%

Fixed Assets 0.27 0.23 0.23 0.24% -13.13%

Total Assets 61.28 71.63 72.33 0.97% 18.02%

Currency in Circulation Outside BDL 1.98 2.05 2.05 0.34% 3.75%

Financial Sector Deposits 42.60 47.61 48.19 1.21% 13.12%

Public Sector Deposits 5.24 6.63 6.36 -4.06% 21.44%

Valuation Adjustment 7.02 10.38 10.74 3.48% 53.06%

Other Liabilities 2.28 2.17 2.19 0.81% -3.68%

Capital Accounts 2.17 2.79 2.79 0.00% 28.53%

Total Liabilities 61.28 71.63 72.33 0.97% 18.02%

Source: Banque Du Liban, Credit Libanais Economic Research Unit Total

Reserves67.03%

Securities Portfolio15.88%

Loans to Public Sector

0.13%

Loans to Local Financial Sector1.93%

Valuation Adjustment

0.00%Other Assets

14.71%Fixed Assets

0.32%

Breakdown of BDL's Total Assets As At Mid November 2011


Weekly Market Watch


17


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CONSOLIDATED BALANCE SHEET OF FINANCIAL INSTITUTIONS THROUGH SEPTEMBER 2011

The consolidated balance sheet of financial institutions operating in Lebanon fell by LBP 4.10 billion ($2.72 million) on a monthly basis to LBP 1,672.38 billion ($1,109.37 million) as at the end of September 2011, down from LBP 1,676.48 billion ($1,112.09 million) in August. This owes primarily to the 3.66% contraction in claims on the private sector to LBP 840.86 billion ($557.78 million). Year-on-year, financial institutions’ assets rose by 18.92%, from LBP 1,406.30 billion ($932.87 million) in September 2010, while accelerating at a compounded annual growth rate (CAGR) of 15.48% since the month of September 2005. It is worth highlighting that the number of financial institutions incorporated in Lebanon has widened from 29 in the year 2004 to 52 as at the end of the first quarter of the year 2011. On the lending front, claims on the private sector, which constitute the bulk (50.28%) of financial institutions’ balance sheet, expanded by 7.75% year-on-year to LBP 840.86 billion ($557.78 million), from LBP 780.35 billion ($517.65 million) by the end of September 2010.

0

200

400

600

800

1,000

1,200

Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11

467.81569.89 593.22

895.41 890.18 932.87

1,109.37$ Million

Evolution of Financial Insitutions' Assets

Source: BDL, Credit Libanais Economic Research Unit Cash & Banks38.27%

Claims on the private sector

50.28%

Claims on the public sector

9.51%

Other assets1.93%

Breakdown of Financial Institutions' Balance Sheet in September 2011


USD Million Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11

Y-O-Y % Change

Sep10-Sep11

Assets

Cash & Banks 147.38 191.52 184.99 277.80 278.08 290.90 424.60 45.96%

Claims on the private sector 225.90 251.11 293.29 468.55 448.72 517.65 557.78 7.75%

Claims on the public sector 81.09 103.42 93.03 123.45 132.63 104.09 105.55 1.40%

Other assets 13.44 23.84 21.91 25.61 30.75 20.23 21.43 5.90%

Total Assets 467.81 569.89 593.22 895.41 890.18 932.87 1,109.37 18.92%

Liabilities

Liabilities to the private sector 68.91 94.17 82.64 203.29 180.36 211.46 265.51 25.56%

Liabilities to the financial sector 203.21 236.05 260.00 388.69 357.63 353.74 459.10 29.79%

Other financial liabilities 7.10 8.05 8.09 8.48 10.18 12.42 15.71 26.50%

Capital Accounts 141.95 177.57 191.24 225.95 252.75 259.38 279.45 7.74%

Other liabilties 46.64 54.05 51.26 69.00 89.26 95.87 89.61 -6.53%

Total Liabilities 467.81 569.89 593.22 895.41 890.18 932.87 1,109.37 18.92%Source: BDL, Credit Libanais Economic Research Unit

Financial Institutions Consolidated Balance Sheet

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

18

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BLC BANK’S FINANCIAL PERFORMANCE UP TO THE THIRD QUARTER OF 2011

BLC Bank released its un-audited third quarter financial performance reporting some 12.79% annual increase in net after tax profits to $37.00 million up to the month of September 2011, from $32.81 million during the same period last year. The Bank’s net interest income rose by a staggering 49.80% to $69.07 million with net fees and commission income rallying by 45.22% to $12.83 million. On the balance sheet front, the Bank’s consolidated assets expanded by 37.86% during the first nine months of 2011 to around $4.28 billion, from $3.10 billion in the last quarter of 2010. Customer deposits skyrocketed by 39.36% year-to-date to around $3.63 billion, with loans & advances firming at $1.49 billion. The ratio of customer loans to customer deposits widened aggressively to 41.21% up from 26.42% in the full year 2010. On the profitability front, BLC Bank’s annualized returns on average equity (ROaE) and average assets (ROaA) reached 17.71% and 1.34% on a respective basis.

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32.81

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BLC Bank's Net Profits

BLC Bank

in Millions of USD Year-End 2010End of the Third Quarter of 2011

YTD % Change

Key Balance Sheet FiguresTotal Assets 3,101.02 4,275.12 37.86%Total Equity 262.87 294.37 11.98%Loans & Advances 687.47 1,494.20 117.35%Customer Deposits 2,602.01 3,626.15 39.36%

Ratios (%)Loans/Customer Deposits 26.42% 41.21%ROaA 1.59% 1.34%ROaE 18.45% 17.71%

in Millions of USDUp to the Third Quarter of 2010


y-o-y % Change

Key P&L FiguresNet Interest Income 46.11 69.07 49.80%Net Fees and Commission Income 8.84 12.83 45.22%Net Financial Revenues 58.60 87.48 49.28%Net Profits 32.81 37.00 12.79%Source: BSE, Credit Libanais Economic Research Unit

MONETARY AGGREGATES

On the monetary front, the overall money supply “M4” rose a slim $75.26 million during the week of November 10, 2011, to $102.26 billion, lagging behind the weekly increase of $112.79 million registered since the beginning of the year. The expansion in the “M4” monetary aggregate during the aforementioned week came in spite of the $34.49 million week-on-week contraction in non-banking sector treasury bills. Lebanese-pound denominated deposits and currency in circulation “M1” was down by 1.18% for the week to $3.65 billion on the back of the $29.19 million contraction in money in circulation coupled with the $14.59 million drop in demand deposits. Local currency term deposits “M2” added $72.41 million for the week, yet fell by 0.97% on a twelve-month basis to settle at $38.93 billion. Consequently, private sector term and saving deposits denominated in LBP (“M2-M1”) advanced by $116.09 million to $35.28 billion, with deposits denominated in foreign currencies (“M3–M2”) rising by a shy $36.95 million to $58.25 billion. MONEY MARKETS

On the money market front, the November 17th Treasury bill auction raised LBP 714.605 billion ($474.03 million), up from LBP 147.894 billion ($98.11 million) in the previous week.

The bulk of subscriptions was concentrated in the three-year to maturity T-bills, constituting alone 81.85% of total aggregate subscriptions, followed by the two-year (16.38%) and one-year (1.77%) to maturity securities.

The weighted average yield on Lebanese Pound Treasury bills rose to 5.82% during the November 17th auction in comparison with 5.79% during the latest auction of same maturities held on the 3rd of November 2011. This is mainly attributed to investors’ increasing appetite for longer maturity Treasury bills, with the share of the three-year to maturity T-bills standing at 81.85% in the current auction in comparison with 79.49% in the November 3, 2011 auction. The yields on the one-year, two-year and three-year to maturity T-bills remained unchanged at 4.81%, 5.34% and 5.94% respectively.

Weekly Market Watch

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

19

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cc ee MONETARY PERFORMANCE

3 Months

6 Months 12 Months24 Months

36 Months 60 Months

84 Months

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On The Run Yield Curve

Lebanese Treasury Bills

Yield (%) Face Value ( in billio ns o f

LB P )

% of Total Face Value

Lebanese Treasury Bills

Yield (%) Face Value ( in billio ns o f

LB P )

% of Total Face Value

3 Months 3.93% 10.324 6.98% 12 Months 4.81% 12.635 1.77%

6 Months 4.50% 37.783 25.55% 24 Months 5.34% 117.063 16.38%

60 Months 6.18% 99.787 67.47% 36 Months 5.94% 584.907 81.85%

Total 147.894 100.00% Total 714.605 100.00%

Source: Reuters, Credit Libanais Economic Research Unit

November 10, 2011 Auction November 17, 2011 Auction

Certificates Of Deposits 45 Days 60 DaysInterest Rate/Period 3.57% 3.85%

Lebanese Treasury Bills 3 Months 6 Months 12 Months 24 Months 36 Months 60 Months 84 Months

Treasury Yield 3.93% 4.50% 4.81% 5.34% 5.94% 6.18% 7.60%

M oney SupplyUSD M illion

M 1 3,697 3,654 -1.18%M 2 38,857 38,930 0.19%M 3 97,073 97,183 0.11%M 4 102,185 102,260 0.07%

M 2-M 1 35,160 35,276 0.33%

M 3-M 2 58,216 58,253 0.06%Source: Banque Du Liban, Credit Libanais Economic Research Unit

November 3, 2011 November 10, 2011 % Change

6,000

26,000

46,000

66,000

86,000

November 3, 2011

November 10, 2011

102,185 102,26097,073 97,183

Money Supply - USD Million -

M4 M3Source: BDL, Credit Libanais Economic Research Unit

LEBANON COMPLETES VOLUNTARY 2012 DEBT EXCHANGE

The Lebanese Republic successfully completed this week the exchange of year 2012 maturing Eurobonds, exchanging in total $668.72 million and €420.94 million of face value notes with longer maturity notes. Furthermore, the Lebanese Republic managed to issue for cash new notes totaling $206.28 million and €24.058 million, thus raising the aggregate face value of issued notes (exchange of 2012 maturing Eurobonds plus newly issued notes) to $875 million and €445 million. The following table illustrates the details of the exchange and new issue transaction: As depicted by the above table, the participation rate in the voluntary Eurobond exchange was 64.30%, varying across different tranches and hovering between 51.17% and 78.53%. It is worth noting that the new Eurobond notes carry remarkably lower coupons than the previous ones, the thing which comes in line with the Ministry of Finance’s objective to refinance sovereign debt at lower rates in an endeavor to tame debt service and ease the budget deficit.

Maturity Date

Coupon Principal (in

millions)

Amount Exchanged (in millions)

Percentage Exchanged

Maturity Date

Coupon Amount Issued via Exchange (in millions)

Amount of New Notes Issued

(in millions)

Total Notes Issued (in millions)

Mar-12 7.500% $600 $307.05 51.17% Nov-26 6.60% $235.54 $139.46 $375.00

Apr-12 5.875% € 535.64 € 420.94 78.59% Nov-18 5.35% € 420.94 € 24.06 € 445.00

Sep-12 7.750% $600 $361.67 60.28% Nov-19 5.45% $433.18 $66.82 $500.00

Total 64.30% $1,229.63 $238.34 $1,467.96

Source: M inistry of Finance, Credit Libanais Economic Research Unit

Original Notes New Notes

FIXED INCOME

Weekly Market Watch

SOURCE: CREDIT LIBANAIS CAPITAL MARKETS, CREDIT LIBANAIS RESEARCH UNIT

20

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LEBANESE EQUITIES

The Beirut Stock Exchange posted a moderate rebound in trading activity this week with 657,723 shares changing hands, in comparison with 430,138 shares the week before. The bulk of trades revolved around Byblos Bank listed shares with a total of 227,926 shares traded, representing 34.65% of total BSE traded volume for the week, yet with a shy turnover ratio of 0.04%.

Concurrently, value traded rose by $0.93 million to $5.88 million, the bulk of which (58.57%) corresponds the share of listed banking stocks.

The average daily trading value came in higher at around $1.47 million this week, up from $0.99 million last week, with the average daily trading volume increasing to 164,431 shares compared to 86,028 shares in the previous week. The week was marked by six losers and two gainers, dragging as such the Credit Libanais Aggregate Stock Index (“CLASI”) into negative grounds (down by 0.77%) at 1,010.05 on Friday, recording a new year low of 1,008.48 on Wednesday. This is captured by the 0.68% weekly contraction in market capitalization to around $10.22 billion.

In the real estate sector, both Solidere “A” and “B” sustained their losing streak, recording new lows of $13.42 and $13.47 on a respective basis. Consequently, the Credit Libanais Construction Sector Stock Index (“CLCI”) settled 0.60% lower at 711.30.

In the banking sector, the Credit Libanais Financial Sector Stock Index (“CLFI”) came in 0.84% lower for the week at 1,191.00. BLC Bank and Bank BEMO were factored out of the list of active banking stocks for the week, in spite of the release of satisfactory third quarter performance results for BLC Bank.

Weekly Market Watch

SOURCE: CREDIT LIBANAIS ECONOMIC RESEARCH UNIT, BSE

21

LEBANESE EQUITIES

Credit Libanais Previous Closing Weekly

Indices 18-Nov-2011 25-Nov-2011 % ChangeCredit Libanais Aggregate Stock Index <.CLASI> 1,017.90 1,010.05 -0.77%

Credit Libanais Financial SectorStock Index <.CLFI>

1,201.13 1,191.00 -0.84%

Credit Libanais ConstructionSector Stock Index <.CLCI> 715.61 711.30 -0.60%

Source: Credit Libanais Economic Research Unit

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CLASI

CLASI 0.77%

.CLASI Credit Libanais Aggregate Stock Index

Value Daily % Chng Daily Net Chng1,010.05 0.012% 0.12Yr.High Year Hi.Date Yr.Low Year.Lo.Date1,365.36 11-Jan-11 1,008.48 23-Nov-11Life High Life Hi.Date Life Low Life.Lo.Date1,801.01 7-Jul-08 836.11 25-Mar-09

Friday, November 25, 2011

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CLCI

CLCI 0.60%

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Weekly Market Watch

SOURCE: CREDIT LIBANAIS ECONOMIC RESEARCH UNIT, BSE

22

The weighted average price to earnings (P/E) and price to book (P/BV) multiples of the Beirut Bourse ended their week lower at around 8.15 and 1.11 on a respective basis.

LEBANESE EQUITIES (CTD.)

Previous Last % Change

Value Traded ($) 4,952,512 5,881,682 18.76%Volume Traded 430,138 657,723 52.91%Average Daily Trading Value ($) 990,502 1,470,421 48.45%Average Daily Trading Volume 86,028 164,431 91.14%Market Cap - BSE ($) 10,288,388,684 10,217,921,709 -0.68%Weighted Average P/E 8.208 8.153 -0.67%Weighted Average P/BV 1.115 1.107 -0.69%

Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Activity Analysis

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8.21 8.15

1.115 1.107

Evolution of Beirut Bourse Comparable Benchmarks

P/E P/BV

Closing Weekly Weekly Weekly Total Market Leading P/BV YTD Price

%change Volume Value Listed Capitalisation P/E Perf.Traded Traded Shares ($000)

Solidere A $13.42 -1.68% 201,781 $2,729,784 100,000,000 $1,342,000 12.15 1.28 -28.96%Solidere B $13.47 -0.15% 67,698 $909,652 65,000,000 $875,550 12.20 1.28 -27.39%BLC Bank $1.81 0.00% - $0 51,033,333 $92,370 8.23 1.21 9.04%Bank Audi - Listed Shares $5.86 -2.01% 104,852 $616,633 348,477,114 $2,042,076 5.92 0.99 -29.06%Bank Audi GDR $6.30 -2.17% 1,000 $6,300 99,581,430 $627,363 6.36 1.07 -30.00%Bank Audi Preferred "D" $10.30 -0.48% 1,000 $10,300 12,500,000 $128,750 n.a n.a -1.44%Bank Audi Preferred "E" $100.00 0.00% 4,700 $470,000 1,250,000 $125,000 n.a n.a -0.50%Bank Of Beirut - Listed Shares $19.45 0.00% - $0 16,822,467 $327,197 14.30 1.95 4.57%Bank Of Beirut Preferred "D" $26.00 0.00% 4,800 $124,800 4,000,000 $104,000 n.a n.a -1.89%Bank Of Beirut Preferred "E" $26.00 0.00% 500 $13,000 2,400,000 $62,400 n.a n.a 1.96%Bank Of Beirut Preferred "H" $25.00 0.00% - $0 5,400,000 $135,000 n.a n.a 0.00%Byblos Bank - Listed Shares $1.60 0.00% 227,926 $362,131 565,515,040 $904,824 6.67 0.77 -14.89%Byblos Bank Preferred Class 2008 $101.00 0.00% 1,750 $176,750 2,000,000 $202,000 n.a n.a -2.88%Byblos Bank Preferred Class 2009 $101.00 0.00% 1,242 $125,442 2,000,000 $202,000 n.a n.a -0.98%Byblos Bank GDR $80.00 0.00% - $0 1,309,078 $104,726 6.67 0.77 -5.88%BEMO Bank - Listed Shares $2.47 0.00% - $0 51,400,000 $126,958 19.00 1.70 -20.32%BEMO Bank Preferred $100.00 0.00% - $0 200,000 $20,000 n.a n.a 0.70%BLOM Bank GDR $7.90 0.00% - $0 73,896,010 $583,778 5.45 1.02 -23.67%BLOM Bank Listed Shares $7.43 0.13% 34,036 $252,887 215,000,000 $1,597,450 5.12 0.96 -20.96%BLOM Bank Preferred Class 2011 $10.12 -0.10% 3,438 $34,793 20,000,000 $202,400 n.a n.a 1.20%RYMCO $2.50 0.00% - $0 10,920,000 $27,300 20.51 1.29 -7.41%Holcim Liban $16.40 2.82% 3,000 $49,210 19,516,040 $320,063 11.0 1.53 -3.53%Ciment Blancs Bearer $3.35 0.00% - $0 6,000,000 $20,100 11.84 1.98 21.82%Ciment Blancs Nominal $1.72 0.00% - $0 3,000,000 $5,160 6.08 1.02 244.00%Beirut Preferred Fund $103.80 0.00% - $0 325,756 $33,813 n.a n.a -0.19%Note: n.a stands for not applicableSource: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Lebanese Equities

BEIRUT STOCK EXCHANGE

Weekly Market Watch

SOURCE: BDL, ABL, IMF, BILANBANQUES, CREDIT LIBANAIS RESEARCH UNIT

23

LEBANON’S MAIN INDICATORS

2003 2004 2005 2006 2007 2008 2009 2010 2011

M ACROECONOM IC INDICATORS

GDP ($ Billion) 20.08 21.79 21.86 22.44 25.06 30.08 34.93 39.25 41.46*

Real GDP Growth Rate 3.20% 7.50% 1.00% 0.60% 7.50% 9.30% 8.50% 7.50% 1.5%*

GDP Per Capita ($) 5,421 5,805 5,824 5,969 6,666 7,900 9,054 10,044 10,474*

Net Foreign Direct Investment ($ Billion) 2.99 1.99 2.79 2.68 3.38 4.33 4.84 4.96 1 (5)

FDI/GDP Ratio 14.89% 9.15% 12.76% 11.94% 13.47% 14.39% 13.86% 12.64%

INDUSTRY

Industrial Exports ($ Million) 1,087 1,467 1,667 1,738 2,361 2,994 2,645 3,291 2,353 (8)

Import of Industrial Machinery ($ Million) 109 142 137 130 163 188 199.13 227.15 159.42 (8)

TOURISM

Total Number of Tourists 1,015,793 1,278,469 1,139,524 1,062,635 1,017,072 1,332,551 1,851,081 2,167,989 1,126,755 (8)

Growth in Tax-Free Spending N.A N.A 2% -15% 17% 56% 13% 21% 8% (10)

REAL ESTATE

Value of Real Estate Transactions ($ Million) 2,882.6 2,883.0 3,295.9 3,120.3 4,174.8 6,443.7 6,958.4 9,478.8 6,843 (10)

Number of Real Estate Sales Transactions 47,118 50,582 50,057 49,051 65,681 80,018 83,465 94,202 66,143 (10)

Construction Permits (000 sqm) 7,196 7,719 7,928 7,532 7,919 14,281 11,509 15,187 11,526 (10)

Cement Delivery (000 tons) 2,704 2,729 3,040 3,423 3,945 4,219 4,897 5,227 3,699 (8)

TRANSPORTATION

Beirut Port: Freight Activity(000 Tons) 4,767 5,060 4,476 4,226 5,318 5,746 5,769 6,469 5,625 (10)

Beirut Airport: Number of Passengers (million) 2.72 3.2 3.18 2.74 3.41 3.87 4.74 5.55 3.71 (8)

FOREIGN TRADE

Imports ($ Million) 7,168 9,397 9,340 9,398 11,815 16,137 16,242 17,964 16,915 (10)

Exports ($ Million) 1,524 1,747 1,880 2,283 2,816 3,478 3,484 4,253 3,581 (10)

Trade Balance ($ Million) (5,644) (7,650) (7,460) (7,115) (8,999) (12,658) (12,758) (13,711) (13,334) (10)

BALANCE OF PAYM ENTS

Balance of Payments ($ Million) 3,385 168 747 2,792 2,037 3,460.60 7,899.00 3,325.20 (1,539) (9)

Foreign Assets ($ Billion) 12.18 11.48 11.66 12.97 12.39 19.73 28.30 30.85 32.19 (12)

P UBLIC FINANCE

Government Expenditures ($ Million) 7,027 6,992 6,768 7,880 8,350 9,922 11,388 11,336 6,767 (8)

Government Revenues ($ Million) 4,415 4,984 4,912 4,853 5,804 7,000 8,428 8,414 5,933 (8)

Budget Primary Deficit / Surplus ($ Million) 1,515 1,851 1,802 1,335 1,787 2,730 3,380 1,203

Total Deficit ($ Million) (2,612) (2,008) (1,856) (3,027) (2,546) (2,921) (2,960) (2,894) (834) (8)

Deficit / GDP Ratio 13.01% 9.22% 8.61% 13.49% 10.16% 10.10% 8.48% 7.37%

Debt Service / GDP Ratio 16.33% 12.43% 10.88% 13.47% 13.08% 12.16% 11.56% -10.51%

Net Public Debt ($ Billion) 31.36 32.98 34.76 37.42 39.02 41.50 44.11 45.01 45.80 (9)

Gross Public Debt/GDP Ratio 168.50% 167.00% 175.70% 179.90% 167.80% 162.50% 146.46% 133.99%

M ONETARY AGGREGATES & INFLATION

M4 ($ Billion) 46.63 49.63 51.59 56.08 63.56 72.58 87.08 97.31 102.26 (11)

(M2-M1) ($ Billion) 15.51 15.22 14.27 13.37 14.11 21.93 31.14 35.66 35.28 (11)

Monetization Level (M2/GDP Ratio) 87.90% 80.27% 74.24% 69.39% 65.76% 85.55% 97.95% 100.20%

change in CPI (%) 3.00% 1.70% -2.60% 5.60% 9.30% 6.36% 4.20% 6.19% 3.5% (10)

BANKING SYSTEM

Number of Commercial Banks 52 53 54 54 54 53 53 54 54 (3)

Number of Branches 809 799 825 830 847 860 885 912 924 (3)

Total Assets ($ Million) 59,895 67,786 70,325 76,179 82,255 94,255 115,250 128,925 138,423 (9)

Total Deposits ($ Million) 49,362 55,835 58,117 61,541 68,059 78,663 96,821 108,601 115,100 (9)

Loans to the Private Sector ($ Million) 14,929 15,934 16,230 17,201 20,425 25,039 28,374 34,929 38,762 (9)

Customer Loans/ Deposits 30.24% 28.54% 27.93% 27.95% 30.01% 31.83% 29.31% 32.16% 33.68%

Dollarization Rate 65.02% 68.78% 71.71% 75.16% 77.34% 69.57% 64.46% 63.24% 66.25%

Net Profit - After Tax ($ Million) 448.30 463.42 580.47 753.51 961.99 1,214.81 1,428.92 1,820.62

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 1,507.50

* Figures Reflect IM F Estimates

(1) As At End of January, 2011, (2) As At End of February, 2011, (3) As At End of M arch 2011, (4) As At End o f April 2011, (5) As At End of M ay, 2011, (6) As At End of June 2011, (7) As At End of July, 2011

(8) As At End of August, 2011, (9) As At End of September, 2011, (10) As At End of October, 2011, (11) As At November 10, 2011, (12) As At M id November, 2011

Recap of Lebanon's Major Indicators

Rating Agency Tenor Rating

Standard & Poor's Long-term B

short-term B

Moody's Investors Service Ltd Long-term B1

Fitch IBCA Ltd Long-term B

short-term B

Source: Ministry of Finance: Debt & Debt Markets Reports, Moody's Investors Service, Standard & Poor's

Stable

Republic Of Lebanon Sovereign Ratings

Outlook

Stable

Stable

LEBANON’S RATINGS

Weekly Market Watch

MOF, MOODY’S, CAPITAL INTELLIGENCE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT

24

Rated Banks

Long Term Foreign Currency

Financial Strength

OutlookLong Term

Foreign Currency

Outlook

Bank Audi-Saradar B1 D- Negative B Stable

BLOM Bank B1 D- Negative B Stable

Credit Libanais - - - B Stable

Byblos Bank B1 D- Negative B Stable

BBAC - - - B Stable

Fransabank - - - B Stable

Bank of Beirut B1 D- Negative - -

Sources: Moody's Investors Service, Capital Intellgince

Lebanese Banks' Latest Ratings

Capital IntelligenceMoody's Investors

Service

s

CONTACTS RESEARCH Fadlo I. Choueiri, CFA [email protected] 961-1-200 028 EXT: 235 Jad Abi Haidar [email protected] 961-1-200 028 EXT. 251 Rim Fayad [email protected] 961-1-200 028 EXT. 230 Joelle Samaha [email protected] 961-1-200 028 EXT. 232

Jessica Basbous [email protected] 961-1-200 028 EXT. 275

MONEY MARKETS DESK Robert Araman [email protected] 961-1-200 028 EXT. 116 FX DESK Christian Hajjar [email protected] 961-1-200 027 CAPITAL MARKETS DESK Gaith Mansour [email protected] 961-1-322 191

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.

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