Dynamic File

CSCBANK S.A.L.
CONSOLIDATED FINANCIAL STATEMENTS

AND INDEPENDENT AUDITORS’ REPORT
YEAR ENDED DECEMBER 31, 2018
CSCBANK S.A.L.
CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT
TABLE OF CONTENTS
Page
Independent Auditors’ Report 1-4
Consolidated Financial Statements:
Consolidated Statement of Financial Position 5
Consolidated Statement of Profit or Loss 6
Consolidated Statement of Profit or Loss and Other Comprehensive Income 7
Consolidated Statement of Changes in Equity 8
Consolidated Statement of Cash Flows 9
Notes to the Consolidated Financial Statements 10-85

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2
3
4
CSCBANK S.A.L.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
December 31,
ASSETS Notes 2018 2017
LBP’000 LBP’000
Cash and deposits with central banks 5 32,522,504 38,073,366

Deposits with banks and financial institutions 6 127,939,441 177,418,278
Investment securities 7 110,248,468 107,019,444
Settlements due from banks and financial institutions 8 31,289,039 35,479,856
Loans, advances and other receivables 9 38,905,206 36,958,350
Investments in associates 10 10,764,657 13,059,469
Investment property 12 2,621,056 2,542,508
Property and equipment 13 40,250,701 32,920,846
Intangible assets 14 4,363,808 3,412,581
Other assets 15 1,608,541 2,327,687
Goodwill 40 283,847 283,567
Regulatory blocked funds 11 6,000,000 6,000,000
Total Assets 406,797,268 455,495,952
LIABILITIES
Settlements due to banks and financial institutions 16 65,775,433 67,408,388

Deposits from banks and financial institutions 17 78,974,439 112,873,649
Customers’ deposits at amortized cost 18 26,240,881 27,382,618
Creditors’ operating accounts 19 29,795,646 35,505,891
Creditors’ operating accounts - related parties 20 1,497,075 1,670,636
Borrowings from banks 21 2,803,021 19,106,315
Accounts payable and other creditors 22 3,459,320 3,071,567
Other liabilities 23 3,696,509 4,740,478
Provisions 24 6,903,080 6,841,980
Total Liabilities 219,145,404 278,601,522
EQUITY
Capital 25 100,000,000 100,000,000
Legal and other reserves 27 4,101,482 8,950,993
Retained earnings 61,940,663 50,720,249
Foreign currency translation reserve ( 81,690) ( 82,647)
Profit for the year 20,512,702 15,989,043
Equity attributable to equity holders of the Bank 186,473,157 175,577,638
Non-controlling interests 39 1,178,707 1,316,792
Total Equity 187,651,864 176,894,430
Total Liabilities and Equity 406,797,268 455,495,952
Financial instruments with off-balance risk

Standby letters of credit 37 25,936,527 26,143,498
Fiduciary accounts 35 7,336,439 9,290,505
THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS
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CSCBANK S.A.L.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Year Ended
December 31,
Notes 2018 2017
LBP’000 LBP’000
Commission and fee income 28 95,617,993 88,785,096

Commission and fee expense 29 ( 61,473,795) ( 57,965,974)
Net commission and fee income 34,144,198 30,819,122
Interest income 30 13,483,111 14,936,053

Less: Tax on interest ( 535,296) ( 80,328)
Interest income (net of tax) 12,947,815 14,855,725
Interest expense 31 ( 3,001,359) ( 3,599,504)
Net interest income 9,946,456 11,256,221
Gain on financial assets at fair value

through profit or loss 32 9,371,819 4,408,523
Dividend income from financial assets at fair value
through other comprehensive income 9 - 795,000
Share of profit of associates 10 1,346,022 1,949,526
Impairment on investment in associates 10 ( 327,026) -
Dividend income and gain on sale of subsidiaries 40 - 90,234
10,390,815 7,243,283
Net financial revenues 54,481,469 49,318,626
Write-back of/(allowance for) credit losses 6,9&43 1,001,474 ( 940,475)
Net financial revenues after allowance for credit losses 55,482,943 48,378,151
Salaries and related charges 33 ( 21,430,857) ( 20,388,008)

General and administrative expenses 34 ( 9,937,595) ( 8,832,597)
Depreciation and amortization expenses 12,13&14 ( 4,735,270) ( 4,433,109)
Write-back of/(allowance for) impairment of fixed assets 12&13 220,771 ( 220,771)
(Allowance for)/write-back of provision for contingencies, (net) 24 ( 17,805) 1,530,113
Other income 1,307,645 1,038,438
Other expense ( 276,195) ( 409,786)
( 34,869,306) ( 31,715,720)
Profit before income tax 20,613,637 16,662,431
Income tax expense 22 ( 11,778) ( 407,474)
Attributable to:
Equity holders of the Bank 20,512,702 15,989,043
Non-controlling interests 89,157 265,914
20,601,859 16,254,957
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CSCBANK S.A.L.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year Ended
December 31,
Notes 2018 2017
LBP’000 LBP’000
Other comprehensive income (“OCI”):
Items that will not be reclassified subsequently to profit or loss:

Change in fair value of financial assets at fair
value through other comprehensive income - 212,558
- 212,558
Items that may be reclassified subsequently to profit or loss:

Foreign currency translation adjustment 957 ( 2,937)
957 ( 2,937)
Total comprehensive income for the year 20,602,816 16,464,578
Attributable to:
Equity holders of the Bank 20,513,659 16,198,664
Non-controlling interests 89,157 265,914
20,602,816 16,464,578
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CSCBANK S.A.L.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity Attributable to Equity Holders of the Bank

Change in Fair Value of
Legal and Financial Assets at Fair Foreign Currency Non-
Other Retained Value through other Translation Profit for Controlling
Capital Reserves Earnings Comprehensive Income Reserve the year Total Interests Total
LBP’000 LBP’000 LBP’000 LBP’000 LBP’000 LBP’000 LBP’000 LBP’000 LBP’000
Balance as at January 1, 2017 100,000,000 6,995,910 38,966,556 ( 212,558) ( 79,710) 18,514,419 164,184,617 1,056,553 165,241,170
Total comprehensive income for 2017 - - - 212,558 ( 2,937) 15,989,043 16,198,664 265,914 16,464,578
Allocation of 2016 profit - 2,003,027 16,511,392 - - ( 18,514,419) - - -
Dividend distribution (Note 26) - - ( 4,800,007) - - - ( 4,800,007) - ( 4,800,007)
Effect of disposal of a subsidiary - - 65,820 - - - 65,820 - 65,820
Other movements - ( 47,944) ( 23,512) - - - ( 71,456) ( 5,675) ( 77,131)
Balance as at December 31, 2017 100,000,000 8,950,993 50,720,249 - ( 82,647) 15,989,043 175,577,638 1,316,792 176,894,430
Transfer from legal and other reserves - ( 4,890,300) 4,890,300 - - - - - -
Transfer from regulatory deferred
liability (Note 23) - - 1,167,200 - - - 1,167,200 - 1,167,200
Effect of first time adoption of
IFRS 9 (Note 2 & 43) - - ( 5,940,837) - - - ( 5,940,837) 32,640 ( 5,908,197)
100,000,000 4,060,693 50,836,912 - ( 82,647) 15,989,043 170,804,001 1,349,432 172,153,433
Total comprehensive income for 2018 - - - - 957 20,512,702 20,513,659 89,157 20,602,816
Allocation of 2017 profit - 354,793 15,634,250 - - ( 15,989,043) - - -
Dividend distribution (Note 26) - - ( 5,000,000) - - - ( 5,000,000) - ( 5,000,000)
Dividend distribution to non-controlling
interests (Note 39) - - - - - - - ( 687,420) ( 687,420)
Transfer from legal and other reserves - ( 314,360) 314,360 - - - - - -
Increase in non-controlling interest due to
capital increase (Note 39) - - - - - - - 425,115 425,115
Gain on sale of financial assets at fair value
through other comprehensive
income (Note 7C) - - 161,061 - - - 161,061 - 161,061
Other movements - 356 ( 5,920) - - - ( 5,564) 2,423 ( 3,141)
Balance as at December 31, 2018 100,000,000 4,101,482 61,940,663 - ( 81,690) 20,512,702 186,473,157 1,178,707 187,651,864
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CSCBANK S.A.L.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended
December 31,
Notes 2018 2017
LBP’000 LBP’000
Cash flows from operating activities:
Profit for the year before income tax 20,613,637 16,662,431
Adjustments:
Write-back of/(allowance for) credit losses 6,9&43 ( 1,001,474) 940,475
Net provisions for contingencies and employees’
end-of-service indemnity 24 406,862 ( 1,088,313)
Write-back of/(allowance for) impairment of fixed assets 12&13 ( 220,771) 220,771
Impairment on investment in associates 10 327,026 -
Depreciation and amortization 12,13&14 4,735,270 4,433,109
Interest income ( 12,947,815) ( 14,855,725)
Interest expense 3,001,359 3,599,504
Gain on sale of financial assets at fair value through profit or loss 32 ( 153,592) ( 378,922)
Share of profit of associates 10 ( 1,346,022) ( 1,949,526)
Effect of liquidation of a subsidiary 40 - 65,820
Change in fair value of financial assets at fair value through profit or loss, net ( 7,188,316) ( 3,161,151)
Decrease/(increase) in central banks deposits 5,993,972 ( 6,988,338)
Decrease in deposits with banks and financial institutions 58,141,696 2,404,887
Decrease/(increase) in financial assets at fair value through profit or loss 5,790,138 ( 19,495,383)
(Decrease)/increase in deposits from banks and financial institutions ( 30,208,251) 17,642,057
Net change in settlements due from/due to banks and financial institutions 2,557,862 ( 20,437,970)
Increase in loans, advances and other receivables ( 4,870,578) ( 3,897,643)
Decrease/(increase) in other assets 719,146 ( 591,340)
Interest received 13,658,583 15,369,373
Interest paid ( 3,496,992) ( 2,973,163)
Income tax paid ( 407,474) ( 733,802)
(Decrease)/increase in customers’ deposits at amortized costs ( 1,147,815) 4,290,368
Decrease in creditors’ operating accounts ( 5,710,245) ( 15,399,825)
Increase in accounts payable and other creditors 387,753 479,643
(Decrease)/increase in creditors’ operating accounts – related parties ( 173,561) 488,057
Increase in other liabilities 518,927 608,048
Settlement of provisions 24 ( 388,204) ( 124,378)
Foreign currency translation reserve and other movements ( 9,421) ( 358,766)
Net cash provided by/(used in) operating activities 47,581,700 ( 25,229,702)
Cash flows from investing activities:
Increase in investments in associates - ( 376,422)
Dividend received 3,317,576 1,789,568
Effect of acquisition of a subsidiary 40 - ( 672,553)
Settlement to previous shareholders of acquired subsidiary 40 - ( 5,280,531)
Proceeds from sale of investment securities 1,432,761 -
Increase in investment securities ( 3,244,750) ( 8,306,112)
Increase in property and equipment and intangible assets ( 12,863,550) ( 6,454,570)
Net cash used in investing activities ( 11,357,963) ( 19,300,620)
Cash flows from financing activities:
Dividends paid 26&39 ( 5,687,420) ( 4,800,007)
Net change in non-controlling interests 39 425,115 ( 5,675)
(Decrease)/increase in borrowing from banks 21 ( 16,310,684) 11,576,019
Net cash (used in)/provided by financing activities ( 21,572,989) 6,770,337
Net increase/(decrease) in cash and cash equivalents 14,650,748 ( 37,759,985)
Cash and cash equivalents – beginning of year 39 ( 1,304,047) 36,455,938
Cash and cash equivalents – end of year 39 13,346,701 ( 1,304,047)
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CSCBANK S.A.L.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
CSCBank S.A.L. (the “Bank”) is a Lebanese joint stock company registered in Lebanon under commercial
registration No.62620 on August 20, 1992 and was registered at the Central Bank of Lebanon as a
financial institution under Number 30 on March 17, 2001.
Prior to June 30, 2010, the Bank was incorporated as a financial institution. On June 30, 2010, the Central
Bank of Lebanon approved the conversion of the financial institution into a specialized bank under the
name of CSCBANK S.A.L. As a result, the financial institution was removed from the list of financial
institutions and was registered at the Central Bank of Lebanon as a bank under Number 133.
The Bank’s and its subsidiaries’ (collectively the “Group”) current operations are to extend credit facilities
from deposits and from its own funds as well as from the funds obtained from banks and financial
institutions, in addition to issuing, acquiring, managing, and marketing credit cards and other types of
cards in local as well as international markets, and conducting fiduciary operations, financial
intermediation, and establishment and management of mutual investment funds and management of the
electronic clearing system with the Central Bank of Lebanon.
The Bank’s headquarters are located in Beirut.
CSCBank S.A.L. is subject to the regulations provided in decree number 50 dated July 15, 1983 and the
Central Bank of Lebanon decision number 6101 dated February 8, 1996.
The Bank operates within the following guidelines:
(a) The objective is exclusive utilization of resources in medium and long-term loans, in investment in
securities and in issuing medium and long-term letters of guarantee subject to sufficient collaterals.
Advances and loans are considered medium or long-term if maximum 15% of the loan balance will
be repaid within the first two years; otherwise the loan will not qualify as medium and long-term
debt.
(b) The Bank is prohibited from accepting deposits with less than six-month maturity. However, the
Bank has the right to provide the depositor the permission to withdraw before maturity. In this
case, the Bank will automatically be subject to a penalty interest payable to the Central Bank of
Lebanon computed on the drawn balance at the rate of 5% and for the remaining period until
maturity.
Furthermore, the Bank will be required to deposit an amount equivalent to the drawn balance with
the Central Bank of Lebanon. This deposit will be blocked for the remaining period to maturity
and will not generate interest.
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(c) The Bank can place its available liquidity in short-term placements (less than one year) in the form
of deposits with banks, fiduciary facilities to financial institutions or as Lebanese treasury bonds.
Moreover, the Bank can borrow or receive deposits from banks, financial institutions, and
insurance companies for less than six-month maturity period.
(d) Investment in property, plant and equipment and non-current equity securities should not exceed
the Bank equity. However, the Bank can carry additional investments in non-current equity
securities not to exceed 50% of the total deposits and borrowings with maturities greater than five
years.
(e) Loans should be provided only against real or bank guarantees. The Bank is entitled to provide
clean loans to the public sector, to the government, or to large companies based on the approval of
the Central Bank of Lebanon and on a case-by-case basis. Under no circumstance should the value
of the loan extended to customers exceed 60% of the appraisal value of the guarantees in kind
provided. Also, the aggregate balance of the loans extended to one debtor or a group of related
companies should not exceed 20% of the Bank’s equity.
(f) The total medium and long-term loans and investments in LBP in the private sector should not
drop under 10% of the Bank’s obligations in LBP, that include equity, deposits and debts.
(g) The Bank’s total investments and loans to the public sector, in any currency, should not exceed:
- Its investments and participations in the private sector, in Lebanese mixed companies, and in
shares or investment funds that do not invest in Lebanese treasury bills.
- Its investments in financial intermediation operations as a market maker on condition that the
respective bonds are liquidated within a six-month period.
(h) The Bank has the right to issue debentures and bonds up to six times its equity, as directed by
article Number 125 of the Commercial Law following the approval of the general assembly.
Interest paid on these bonds is tax exempt.
(i) According to tax regulations, the Bank is exempt from income tax for the first seven fiscal years
from the date of its conversion into a bank. The Bank becomes subject to income tax starting the
eighth fiscal year. For income tax calculation an amount equivalent to 4% of the Bank’s paid up
capital is considered as a deductible change. In case there is a deficit in the taxable income in any
year, this deficit cannot be carried forward to the next year. Accrued taxes on profit are recorded in
the statement of financial position net of paid withheld taxes on interest income.
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2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRSS)
2.1 New and amended IFRS Standards that are effective for the current year
The following new and revised IFRSs and amendments to IFRSs and Interpretations, which became effective for
annual periods beginning on or after January 1, 2018, have been adopted in these consolidated financial statements.
2.1.1 IFRS 9 Financial Instruments
In the current year, the Group has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related
consequential amendments to other IFRS Standards that are mandatorily effective for an accounting period that
begins on or after January 1, 2018. Transition provisions of IFRS 9 allow an entity not to restate comparatives.
Additionally, the Group adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures that
were applied to the disclosures about 2018 and to the comparative period.
IFRS 9 introduced new requirements for:
a. Classification and measurement of financial assets
The Group early adopted IFRS 9 (2009) and IFRS 9 (2010) with respect to classification and measurement
requirements of its financial assets and financial liabilities.
On January 1, 2018 the Group adopted IFRS 9 (July 2014) and therefore reassessed the classification and
measurement of its financial assets and financial liabilities that have not been derecognised as at January 1, 2018
and has not applied the requirements to instruments that have already been derecognised as at January 1, 2018.
All recognised financial assets that are within the scope of IFRS 9 are required to be measured subsequently at
amortised cost or fair value on the basis of the entity’s business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets. Refer to Note 3.
Debt instruments that are measured subsequently at amortised cost or at FVTOCI are subject to impairment. See (b)
below.
The impact on the classification of financial assets and their carrying amounts is disclosed under section (d) below.
b. Impairment of financial assets
In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an
incurred credit loss model under IAS 39. The expected credit loss model requires the Group to account for expected
credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since
initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have
occurred before credit losses are recognised.
The new impairment model applies to all financial assets measured at amortised cost (including debts instruments
measured at FVTOCI). It also applies to certain loan commitments and financial guarantee contracts but not to
equity investments.
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The Group applies three-stage approach to measuring expected credit losses (ECL) on financial assets carried at
amortised cost and debt instruments classified as FVTOCI. Assets migrate through the following three stages based
on the change in credit quality since initial recognition.
Stage 1: 12 months ECL

Stage 1 includes financial assets that did not experience a significant increase in credit risk since the initial
recognition or that have low credit risk. For these assets, ECL are recognised on the gross carrying amount of the
asset based on the expected credit losses that result from default events that are possible within 12 months after the
reporting date. Interest is computed on the gross carrying amount of the asset.
Stage 2: Lifetime ECL

Stage 2 includes financial assets that have had a significant increase in credit risk (SICR) since initial recognition
but that do not have objective evidence of impairment. For these assets, lifetime ECL are recognised, but interest is
still calculated on the gross carrying amount of the asset. Lifetime ECL are the expected credit losses that result
from all possible default events over the expected life of the financial instrument.
Stage 3: Lifetime ECL

Stage 3 includes financial assets that have objective evidence of impairment at the reporting date. For these assets,
lifetime ECL are recognised.
The impact of the adoption of IFRS 9 impairment model on the Group’s financial assets and their carrying values
and equity is disclosed in section (d) below.
c. Hedge accounting
IFRS 9 incorporates new hedge accounting rules that align hedge accounting with risk management practices. IFRS
9 does not cover guidance on macro hedge accounting as IASB is working on it as a separate project. IFRS 9
includes an accounting policy choice to defer the adoption of IFRS 9 hedge accounting and to continue with IAS 39
hedge accounting. The Group, however, has elected to adopt the new hedge accounting provisions of IFRS 9.
The existing hedging relationships continue to qualify and be effective under the IFRS 9 hedge accounting
provisions and did not have any transition impact on the Group financial statements.
d. Transition
Changes in accounting policies resulting from the adoption of IFRS 9 have been applied retrospectively, except as
described below.
- As permitted by the transitional provisions of IFRS 9, the Group elected not to restate comparative figures.
Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption
of IFRS 9 are recognised in retained earnings as at January 1, 2018. Accordingly, the information presented
for 2017 does not reflect the requirements of IFRS 9 and therefore is not comparable to the information
presented for 2018 under IFRS 9.
- The following assessments have been made on the basis of the facts and circumstances that existed at the
date of initial application.
• The determination of the business model within which a financial asset is held.
• The designation of certain investments in equity instruments not held for trading as at FVTOCI.
• If a debt security had low credit risk at the date of initial application of IFRS 9, then the Group has
assumed that credit risk on the asset had not increased significantly since its initial recognition.
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Impact of change in classification and measurement
Except for the financial statement captions listed in the below table, there have been no changes in the carrying amounts of assets and liabilities on application
of IFRS 9 (2014) as at January 1, 2018.
Classification under IFRS 9 (2010) Classification under IFRS 9 (2014)

(December 31, 2017) Remeasurement (January 1, 2018)
Category Amount Reclassification ECL Category Amount
LBP’000 LBP’000 LBP’000 LBP’000
Financial assets:
Cash and deposits with central banks Amortized cost 38,073,366 - ( 220,178) Amortized cost 37,853,188
Deposits with banks and financial institutions Amortized cost 177,418,278 - ( 2,810,959) Amortized cost 174,607,319
Financial assets at fair value through profit or loss FVPL 58,739,998 33,953,769 - FVPL 92,693,767
Loans, advances and other receivables Amortized cost 36,958,350 - ( 2,711,691) Amortized cost 34,246,659
Financial assets at amortized cost Amortized cost 13,053,977 - ( 110,507) Amortized cost 12,943,470
Financial assets at fair value through other
comprehensive income FVOCI 35,225,469 ( 33,953,769) - FVOCI 1,271,700
359,469,438 - ( 5,853,335) 353,616,103
ECL provision on unutilized limits – Note 43 ( 54,862)
Net impact on equity ( 5,908,197)
The increase in impairment allowances when measured in accordance with IFRS 9 expected credit losses model compared to IAS 39 incurred loss model
amounts to net impact of approximately LBP5.9billion.
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2.1.2 IFRS 15 Revenue from contracts with customers
In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers (as amended in
April 2016) which is effective for an annual period that begins on or after January 1, 2018. IFRS 15 introduced
a 5‑step approach to revenue recognition. The impact of IFRS 15 is not material on the consolidated financial
statements of the Group.
2.1.3 Other IFRSs and amendments
In the current year, the Group has applied a number of amendments to IFRS Standards and Interpretations
issued by the International Accounting Standards Board (IASB) that are effective for an annual period that
begins on or after January 1, 2018. Their adoption has not had any material impact on the disclosures or on the
amounts reported in these consolidated financial statements.
 Annual Improvements to IFRS Standards 2014 – 2016 Cycle amending IFRS 1 and IAS 28.
 Amendments to IFRS 2 Share Based Payment regarding classification and measurement of share
based payment transactions.
 Amendments to IAS 28 Investments in Associates and Joint Ventures: The amendments clarify
that the option for a venture capital organization and other similar entities to measure investments
in associates and joint ventures at FVTPL is available separately for each associate or joint
venture, and that election should be made at initial recognition.
 In respect of the option for an entity that is not an investment entity (IE) to retain the fair value
measurement applied by its associates and joint ventures that are IEs when applying the equity
method, the amendments make a similar clarification that this choice is available for each IE
associate or IE joint venture.
 Amendments to IAS 40 Investment Property: Amends paragraph 57 to state that an entity shall
transfer a property to, or from, investment property when, and only when, there is evidence of a
change in use. A change of use occurs if property meets, or ceases to meet, the definition of
investment property. A change in management’s intentions for the use of a property by itself does
not constitute evidence of a change in use.
 IFRIC 22 Foreign Currency Transactions and Advance Consideration: The interpretation

addresses foreign currency transactions or parts of transactions where:
• there is consideration that is denominated or priced in a foreign currency;
• the entity recognizes a prepayment asset or a deferred income liability in respect of that
consideration, in advance of the recognition of the related asset, expense or income; and
• the prepayment asset or deferred income liability is non-monetary.
Other than the above, there are no other significant IFRSs and amendments that were effective for the first time
for the financial year beginning on or after January 1, 2018.
2.2 New and revised IFRS in issue but not yet effective and not early adopted
At the date of authorisation of these financial statements, the Group has not applied the following new and
revised IFRS Standards that have been issued but are not yet effective:
15
Effective for
Annual Periods
New and revised IFRSs Beginning on or After
Annual Improvements to IFRS Standards 2015–2017 Cycle amending IFRS 3, January 1, 2019
IFRS 11, IAS 12 and IAS 23.
Amendments to IFRS 9 Financial Instruments: January 1, 2019

Relating to prepayment features with negative compensation. This amends the
existing requirements in IFRS 9 regarding termination rights in order to allow
measurement at amortized cost (or, depending on the business model, at fair
value through other comprehensive income) even in the case of negative
compensation payments.
IFRS 16 Leases January 1, 2019

IFRS 16 specifies how an IFRS reporter will recognize, measure, present and
disclose leases. The standard provides a single lessee accounting model,
requiring lessees to recognize assets and liabilities for all leases unless the
lease term is 12 months or less or the underlying asset has a low value. Lessors
continue to classify leases as operating or finance, with IFRS 16’s approach to
lessor accounting substantially unchanged from its predecessor, IAS 17.
Amendments to IAS 28 Investment in Associates and Joint Ventures: January 1, 2019

Relating to long-term interests in associates and joint ventures. These
amendments clarify that an entity applies IFRS 9 Financial Instruments to
long-term interests in an associate or joint venture that form part of the net
investment in the associate or joint venture but to which the equity method is
not applied.
IFRIC 23 Uncertainty over Income Tax Treatments January 1, 2019
The interpretation addresses the determination of taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates, when there is
uncertainty over income tax treatments under IAS 12. It specifically considers:
 Whether tax treatments should be considered collectively;
 Assumptions for taxation authorities' examinations;
 The determination of taxable profit (tax loss), tax bases, unused tax
losses, unused tax credits and tax rates; and
 The effect of changes in facts and circumstances.
Amendment to IFRS 3 Business Combinations relating to definition of a January1, 2020
business
Amendments to IAS 1 and IAS 8 relating to definition of material January 1, 2020
IFRS 17 Insurance Contracts January 1, 2021

IFRS 17 requires insurance liabilities to be measured at a current fulfillment
value and provides a more uniform measurement and presentation approach for
all insurance contracts. These requirements are designed to achieve the goal of
a consistent, principle-based accounting for insurance contracts. IFRS 17
supersedes IFRS 4 Insurance Contracts as of 1 January 2021.
Amendments to IFRS 10 Consolidated Financial Statements and IAS 28

Effective date deferred Investments in Associates and Joint Ventures (2011):
indefinitely. Adoption is Relating to the treatment of the sale or contribution of
assets from and still permitted investor to its associate or joint venture.
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The directors anticipate that these new standards, interpretations, and amendments will be adopted in the
Group’s financial statements as and when they are applicable and adoption of these new standards,
interpretations and amendment, except for IFRS 16, may have no material impact on the consolidated financial
statements of the Group in the period of initial application. Management is still in the process of assessing the
impact of IFRS 16 and therefore an estimate of any impact on the consolidated financial statements as of
January 1, 2019 cannot be reasonably determined at present.
3. SIGNIFICANT ACCOUNTING POLICIES
Statement of Compliance:
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB).
Basis of Preparation and Measurement:
The consolidated financial statements have been prepared on the historical cost basis except for the
following:
- Financial assets and liabilities at fair value through profit and loss are measured at fair value.
- Equity securities at fair value through other comprehensive income are measured at fair value.
- Derivative financial instruments are measured at fair value.
Assets and liabilities are grouped according to their nature and are presented in an approximate order
that reflects their relative liquidity.
The principal accounting policies adopted are set out below:
A. Basis of Consolidation:
The consolidated financial statements of CSCBank S.A.L. incorporate the financial statements of the
Bank and entities (including structured entities) controlled by the Bank and its subsidiaries. Control is
achieved when the Group:
 has power over the investee;

 is exposed, or has rights, to variable returns from its involvement with the investee; and
 has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
17
When the Group has less than a majority of the voting rights of an investee, it has power over the
investee when the voting rights are sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Group considers all relevant facts and circumstances in
assessing whether or not the Group’s voting rights in an investee are sufficient to give it power,
including:
 the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of
the other vote holders;
 potential voting rights held by the Group, other vote holders or other parties;
 rights arising from other contractual arrangements; and
 any additional facts and circumstances that indicate that the Group has, or does not have, the
current ability to direct the relevant activities at the time that decisions need to be made, including
voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases
when the Group loses control of the subsidiary. Income and expenses of a subsidiary acquired or
disposed of during the year are included in the statement of profit or loss and other comprehensive
income from the date the Group gains control until the date the Group ceases to control the subsidiary.
Non-controlling interest represent the portion of profit or loss and net assets of subsidiaries not owned
directly or indirectly by the Group. Profit or loss and each component of other comprehensive income
(OCI) are attributed to the equity holders of the Group and to the non-controlling interests, even if this
results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If the Group loses control over a subsidiary, it:
 Derecognizes the assets (including goodwill) and liabilities of the subsidiary;
 Derecognizes the carrying amount of any non-controlling interests;
 Derecognizes the cumulative translation differences recorded in equity;
 Recognizes the fair value of the consideration received;
 Recognizes the fair value of any investment retained;
 Recognizes any surplus or deficit in profit or loss; and
 Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of
the related assets or liabilities.
18
The consolidated subsidiaries as at December 31, 2018 comprise:
Ownership Ownership
Company Name Percentage Date Activity
2018 2017
% %
CSC Finance S.A.L. 100 100 2010 Financial Institution

CSC S.A.L. (Holding) 100 100 2003 Holding
- CSC24seven.com Ltd 100 100 2003 Financial Institution
- CSC Overseas Development Ltd. 100 100 2003 Financial Intermediary
- CSC Egypt SAE (Under Liquidation) 50 + 1 share 50 + 1 share 2005 Financial Intermediary
- CSC Jordan Ltd 60 60 2005 Financial Intermediary
- CSC Europe Ltd (sold) - 100 2006 Financial Intermediary
- CSC Jordan Overseas Ltd 60 60 2008 Financial Intermediary
- SYS Services Ltd 84 84 2008 Financial Intermediary
- Amwal Financial Investment 60 60 2017 Real Estate Management
- Davito Investment Ltd.
(Inception date November 20, 2017) 100 100 2017 Financial Intermediary
- CCTK Inventors LLC
(Inception date December 19, 2017) 100 100 2017 Financial Intermediary
Further information on the financial position and performance of material partly owned subsidiaries is
included under Note 41 as required by IFRS12 Disclosures of Interest in Other Entities.
B. Business Combinations:
Acquisitions of businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the
acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to
the former owners of the acquiree and the equity interests issued by the Group in exchange for control
of the acquiree. Acquisition-related costs other than those associated with the issue of debt or equity
securities are generally recognized in profit or loss as incurred.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognized in profit or loss.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. When the excess is negative, the Group re-assesses whether it has
correctly identified all of the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment
still results in an excess of the fair value of net assets acquired over the aggregate consideration
transferred, then the gain is recognized in profit or loss.
Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries and
associates are identified separately from the Group’s equity therein.
19
Non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the entity's net assets in the event of liquidation may be initially measured either
at fair value or at the non-controlling interests' proportionate share of the recognized amounts of the
acquiree's identifiable net assets. The choice of measurement basis is made on a transaction-by-
transaction basis. Other types of non-controlling interests are measured at fair value or, when
applicable, on the basis specified in another IFRS.
When the consideration transferred by the Group in a business combination includes assets or
liabilities resulting from a contingent consideration arrangement, the contingent consideration is
measured at its acquisition-date fair value and included as part of the consideration transferred in a
business combination. Changes in the fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with corresponding adjustments against
goodwill. Measurement period adjustments are adjustments that arise from additional information
obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date)
about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not
qualify as measurement period adjustments depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates
and its subsequent settlement is accounted for within equity. Contingent consideration that is classified
as an asset or a liability is remeasured at subsequent reporting dates in accordance with IFRS 9
Financial Instruments, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as
appropriate, with the corresponding gain or loss being recognised in profit or loss.
When a business combination is achieved in stages, the Group’s previously held equity interest in the
acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is
recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date
that have previously been recognised in other comprehensive income are reclassified to profit or loss
where such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in
which the combination occurs, the Group reports provisional amounts for the items for which the
accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see
above), or additional assets or liabilities are recognised, to reflect new information obtained about
facts and circumstances that existed at the acquisition date that, if known, would have affected the
amounts recognised at that date.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.
C. Foreign Currencies:
The consolidated financial statements are presented in Lebanese pounds (“LBP”), which is the
Group’s reporting currency. However, the primary currency of the economic environment in which
the Group operates (functional currency) is the U.S. Dollar (“USD”). The exchange rate of the USD
against the LBP has been constant for several years.
20
In preparing the financial statements of each individual group entity, transactions in currencies other
than the entity's functional currency (foreign currencies) are recognized at the rates of exchange
prevailing at the dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign currencies are retranslated at the rates
prevailing at the date when the fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognized in profit or loss in the period in which they
arise except for exchange differences on transactions entered into in order to hedge certain foreign
currency risks, and except for exchange differences on monetary items receivable from or payable to a
foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future,
which are recognized in other comprehensive income, and presented in the translation reserve in
equity. These are recognized in profit or loss on disposal of the net investment.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the
Group's foreign operations are translated into Lebanese Pound using exchange rates prevailing at the
end of each reporting period. Income and expense items are translated at the average exchange rates
for the period, unless exchange rates fluctuate significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are
recognized in other comprehensive income and accumulated in equity (attributed to non-controlling
interests as appropriate). Such exchange differences are recognized in profit or loss in the period in
which the foreign operation is disposed of.
In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing
control over the subsidiary, the proportionate share of accumulated exchange differences are re-
attributed to non-controlling interests and are not recognized in profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the
acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and
translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences
arising are recognized in other comprehensive income.
D. Financial Instruments:
Financial assets and financial liabilities are recognised in the Group’s statement of financial position
when the Group becomes a party to the contractual provisions of the instrument.
Recognised financial assets and financial liabilities are initially measured at fair value. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities
(other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are
recognised immediately in profit or loss.
21
If the transaction price differs from fair value at initial recognition, the Group will account for such
difference as follows:
 If fair value is evidenced by a quoted price in an active market for an identical asset or liability
or based on a valuation technique that uses only data from observable markets, then the
difference is recognised in profit or loss on initial recognition (i.e. day 1 profit or loss)
 In all other cases, the fair value will be adjusted to bring it in line with the transaction price
(i.e. day 1 profit or loss will be deferred by including it in the initial carrying amount of the
asset or liability).
Central Bank of Lebanon Circular # 143 dated November 7, 2017 prohibits recognition of day one
profits on designated non-conventional transactions concluded between the Central Bank of Lebanon
and banks and whose purpose is to secure yield adjustment to maturity on certain designated financial
assets as part of the Central Bank’s monetary policy. The Group recognized the designated financial
assets at amortized cost. These non-conventional transactions with the Central Bank of Lebanon
consist of non-transferable non-negotiable agreements.
After initial recognition, the deferred gain or loss will be released to profit or loss on a rational basis,
only to the extent that it arises from a change in a factor (including time) that market participants
would take into account when pricing the asset or liability.
E. Financial Assets:
All financial assets are recognised and derecognised on a trade date where the purchase or sale of a
financial asset is under contract whose terms require delivery of the financial asset within the
timeframe established by the market concerned, and initially measured at fair value, plus transaction
costs, except for those financial assets classified as at FVTPL. Transaction costs directly attributable to
the acquisition of financial assets classified as at FVTPL are recognised immediately in profit or loss.
All recognised financial assets that are within the scope of IFRS 9 are required to be subsequently
measured at amortised cost or fair value on the basis of the entity’s business model for managing the
financial assets and the contractual cash flow characteristics of the financial assets.
Specifically:
 Debt instruments that are held within a business model whose objective is to collect the
contractual cash flows, and that have contractual cash flows that are solely payments of
principal and interest on the principal amount outstanding (SPPI), are subsequently measured
at amortised cost;
 Debt instruments that are held within a business model whose objective is both to
collect the contractual cash flows and to sell the debt instruments, and that have
contractual cash flows that are SPPI, are subsequently measured at FVTOCI;
 All other debt instruments (e.g. debt instruments managed on a fair value basis, or held
for sale) and equity investments are subsequently measured at FVTPL.
22
However, the Group may make the following irrevocable election / designation at initial recognition of
a financial asset on an asset-by-asset basis:
 The Group may irrevocably elect to present subsequent changes in fair value of an equity
investment that is neither held for trading nor contingent consideration recognised by an
acquirer in a business combination to which IFRS 3 applies, in OCI; and
 The Group may irrevocably designate a debt instrument that meets the amortised cost or
FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an
accounting mismatch (referred to as the fair value option).
Classification of Financial Assets:
All recognized financial assets are measured in their entirety at either amortized cost or fair value,
depending on their classification.
Debt Instruments:
Non-derivative debt instruments that meet the following two conditions are subsequently
measured at amortized cost, less impairment loss (except for debt investments that are
designated as at fair value through profit or loss on initial recognition):
 They are held within a business model whose objective is to hold the financial assets in
order to collect the contractual cash flows, rather than to sell the instrument prior to its
contractual maturity to realize its fair value changes, and
 The contractual terms of the financial asset give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount outstanding.
Debt instruments which do not meet both of these conditions are measured at fair value
through profit or loss (“FVTPL”). In addition, debt instruments that meet the amortized cost
criteria but are designated as at FVTPL are measured at FVTPL.
Even if a debt instrument meets the two amortized cost criteria above, it may be designated as
at FVTPL upon initial recognition if such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise arise from measuring assets or
liabilities or recognizing the gains and losses on them on different bases.
Equity Instruments:
Investments in equity instruments are classified as at FVTPL, unless the Group designates an
investment that is not held for trading as at fair value through other comprehensive income
(“FVTOCI”) on initial recognition (see below).
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with
any gains or losses arising on re-measurement recognized in profit or loss.
23
On initial recognition, the Group can make an irrevocable election (on an instrument-by-
instrument basis) to designate investments in equity instruments at “FVTOCI”. Investments in
equity instruments at FVTOCI are measured at fair value. Gains and losses on such equity
instruments are recognized in other comprehensive income, accumulated in equity and are
never reclassified to profit or loss. Only dividend income is recognized in profit or loss unless
the dividend clearly represents a recovery of part of the cost of the investment, in which case it
is recognized in other comprehensive income. Cumulative gains and losses recognized in other
comprehensive income are transferred to retained earnings on disposal of an investment.
Designation at FVTOCI is not permitted if the equity investment is held for trading.
A financial asset is held for trading if:
 it has been acquired principally for the purpose of selling it in the near term; or
 on initial recognition it is part of a portfolio of identified financial instruments that the

Group manages together and has evidence of a recent actual pattern of short-term
profit-taking; or
 it is a derivative that is not designated and effective as a hedging instrument or a

financial guarantee.
Impairment
Policy applicable up to December 31, 2017:
Financial assets that are measured at amortized cost are assessed for impairment at the end of each
reporting period. Financial assets are considered to be impaired when there is objective evidence that,
as a result of one or more events that occurred after the initial recognition of the financial assets, the
estimated future cash flows of the asset have been affected.
Objective evidence of impairment could include:
 significant financial difficulty of the issuer or counterparty; or

 breach of contract, such as a default or delinquency in interest or principal payments; or
 it becoming probable that the borrower will enter bankruptcy or financial re-organization; or
 the disappearance of an active market for that financial asset because of financial difficulties; or
 significant or prolonged decline in fair value beyond one business cycle that occurred after the
initial recognition of the financial asset or group of financial assets which impacted the estimated
future cash flows of the investment.
For certain categories of financial asset, such as loans and advances, assets that are assessed not to be
impaired individually are, in addition, assessed for impairment on a collective basis. This provision is
estimated based on various factors including credit ratings allocated to a borrower or group of
borrowers, the current economic conditions, the experience the Group has had in dealing with a
borrower or group of borrowers and available historical default information, as well as observable
changes in national or local economic conditions that correlate with default on loans and advances.
24
The amount of the impairment loss recognized is the difference between the asset’s carrying amount
and the present value of estimated future cash flows reflecting the amount of collateral and guarantee,
discounted at the financial asset’s original effective interest rate.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized, the previously recognized
impairment loss is reversed through profit or loss to the extent that the carrying amount of the
investment at the date the impairment is reversed does not exceed what the amortized cost would have
been had the impairment not been recognized.
Policy applicable effective January 1, 2018:
The Group recognises loss allowances for ECLs on the following financial instruments that are not
measured at FVTPL:
 deposits at banks;
 loans and advances to customers;
 debt investment securities;
No impairment loss is recognised on equity investments.
With the exception of Purchased or Originated Credit Impaired (POCI) financial assets (which are
considered separately below), ECLs are required to be measured through a loss allowance at an
amount equal to:
 12-month ECL, i.e. lifetime ECL that result from those default events on the financial
instrument that are possible within 12 months after the reporting date, (referred to as Stage 1);
or
 full lifetime ECL, i.e. lifetime ECL that result from all possible default events over the life of
the financial instrument, (referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a financial instrument if the credit risk on that
financial instrument has increased significantly since initial recognition. For all other financial
instruments, ECLs are measured at an amount equal to the 12-month ECL.
ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as
the present value of the difference between the cash flows due to the Group under the contract and the
cash flows that the Group expects to receive arising from the weighting of multiple future economic
scenarios, discounted at the asset’s effective interest rate (EIR).
 for undrawn loan commitments, the ECL is the difference between the present value of the
difference between the contractual cash flows that are due to the Group if the holder of the
commitment draws down the loan and the cash flows that the Group expects to receive if the
loan is drawn down; and
The Group measures ECL on an individual basis, or on a collective basis for portfolios of loans that
share similar economic risk characteristics. The measurement of the loss allowance is based on the
present value of the asset’s expected cash flows using the asset’s original EIR, regardless of whether it
is measured on an individual basis or a collective basis.
25
Credit-impaired financial assets
A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are
referred to as Stage 3 assets. Evidence of credit-impairment includes observable data about the
following events:
 significant financial difficulty of the borrower or issuer;

 a breach of contract such as a default or past due event;
 the lender of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower a concession that the lender would not
otherwise consider;
 the disappearance of an active market for a security because of financial difficulties; or
 the purchase of a financial asset at a deep discount that reflects the incurred credit losses.
It may not be possible to identify a single discrete event—instead, the combined effect of several
events may have caused financial assets to become credit-impaired. The Group assesses whether debt
instruments that are financial assets measured at amortised cost or FVTOCI are credit-impaired at each
reporting date. To assess if sovereign and corporate debt instruments are credit impaired, the Group
considers factors such as bond yields, credit ratings and the ability of the borrower to raise funding.
Purchased or originated credit-impaired (POCI) financial assets
POCI financial assets are treated differently because the asset is credit-impaired at initial recognition.
For these assets, the Group recognises all changes in lifetime ECL since initial recognition as a loss
allowance with any changes recognised in profit or loss. A favourable change for such assets creates
an impairment gain.
Definition of default
Critical to the determination of ECL is the definition of default. The definition of default is used in
measuring the amount of ECL and in the determination of whether the loss allowance is based on 12-
month or lifetime ECL, as default is a component of the PD which affects both the measurement of
ECLs and the identification of a significant increase in credit risk.
The Group considers the following as constituting an event of default:

 the borrower is past due more than 90 days on any material credit obligation to the Group; or
 the borrower is unlikely to pay its credit obligations to the Group in full.
The definition of default is appropriately tailored to reflect different characteristics of different types
of assets. Overdrafts are considered as being past due once the customer has breached an advised limit
or has been advised of a limit smaller than the current amount outstanding.
26
When assessing if the borrower is unlikely to pay its credit obligation, the Group takes into account
both qualitative and quantitative indicators. The information assessed depends on the type of the asset,
for example in corporate lending a qualitative indicator used is the breach of covenants, which is not
relevant for retail lending. Quantitative indicators, such as overdue status and non-payment on another
obligation of the same counterparty are key inputs in this analysis. The Group uses a variety of sources
of information to assess default which are either developed internally or obtained from external
sources.
Significant increase in credit risk
The Group monitors all financial assets, issued loan commitments and financial guarantee contracts
that are subject to the impairment requirements to assess whether there has been a significant increase
in credit risk since initial recognition. If there has been a significant increase in credit risk the Group
will measure the loss allowance based on lifetime rather than 12-month ECL.
In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the Group compares the risk of a default occurring on the financial instrument at the
reporting date based on the remaining maturity of the instrument with the risk of a default occurring
that was anticipated for the remaining maturity at the current reporting date when the financial
instrument was first recognised. In making this assessment, the Group considers both quantitative and
qualitative information that is reasonable and supportable, including historical experience and
forward-looking information that is available without undue cost or effort, based on the Group’s
historical experience and expert credit assessment including forward-looking information.
Modification and derecognition of financial assets
A modification of a financial asset occurs when the contractual terms governing the cash flows of a
financial asset are renegotiated or otherwise modified between initial recognition and maturity of the
financial asset. A modification affects the amount and/or timing of the contractual cash flows either
immediately or at a future date. In addition, the introduction or adjustment of existing covenants of an
existing loan would constitute a modification even if these new or adjusted covenants do not yet affect
the cash flows immediately but may affect the cash flows depending on whether the covenant is or is
not met (e.g. a change to the increase in the interest rate that arises when covenants are breached).
When a financial asset is modified the Group assesses whether this modification results in
derecognition. In accordance with the Group’s policy a modification results in derecognition when it
gives rise to substantially different terms.
The Group derecognises a financial asset only when the contractual rights to the asset’s cash flows
expire (including expiry arising from a modification with substantially different terms), or when the
financial asset and substantially all the risks and rewards of ownership of the asset are transferred to
another entity. If the Group neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises its retained interest in
the asset and an associated liability for amounts it may have to pay. If the Group retains substantially
all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing for the proceeds received.
27
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount
and the sum of the consideration received and receivable and the cumulative gain/loss that had been
recognised in OCI and accumulated in equity is recognised in profit or loss, with the exception of
equity investment designated as measured at FVTOCI, where the cumulative gain/loss previously
recognised in OCI is not subsequently reclassified to profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to
repurchase part of a transferred asset), the Group allocates the previous carrying amount of the
financial asset between the part it continues to recognise under continuing involvement, and the part it
no longer recognises on the basis of the relative fair values of those parts on the date of the transfer.
The difference between the carrying amount allocated to the part that is no longer recognised and the
sum of the consideration received for the part no longer recognised and any cumulative gain/loss
allocated to it that had been recognised in OCI is recognised in profit or loss. A cumulative gain/loss
that had been recognised in OCI is allocated between the part that continues to be recognised and the
part that is no longer recognised on the basis of the relative fair values of those parts. This does not
apply for equity investments designated as measured at FVTOCI, as the cumulative gain/loss
previously recognised in OCI is not subsequently reclassified to profit or loss.
Write-off
Loans and debt securities are written off when the Group has no reasonable expectations of recovering
the financial asset (either in its entirety or a portion of it). This is the case when the Group determines
that the borrower does not have assets or sources of income that could generate sufficient cash flows to
repay the amounts subject to the write-off. A write-off constitutes a derecognition event. The Group
may apply enforcement activities to financial assets written off. Recoveries resulting from the Group’s
enforcement activities will result in impairment gains.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for ECL are presented in the statement of financial position as follows:
 for financial assets measured at amortised cost: as a deduction from the gross carrying amount
of the assets;
 for debt instruments measured at FVTOCI: no loss allowance is recognised in the statement of
financial position as the carrying amount is at fair value. However, the loss allowance is
included as part of the revaluation amount in the investments revaluation reserve;
 for loan commitments and financial guarantee contracts: as a provision; and
 where a financial instrument includes both a drawn and an undrawn component, and the Group
cannot identify the ECL on the loan commitment component separately from those on the
drawn component: the Group presents a combined loss allowance for both components. The
combined amount is presented as a deduction from the gross carrying amount of the drawn
component. Any excess of the loss allowance over the gross amount of the drawn component is
presented as a provision.
28
F. Financial liabilities and equity:
Debt and equity instruments that are issued are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.
A financial liability is a contractual obligation to deliver cash or another financial asset or to exchange
financial assets or financial liabilities with another entity under conditions that are potentially
unfavourable to the Group or a contract that will or may be settled in the Group’s own equity
instruments and is a non-derivative contract for which the Group is or may be obliged to deliver a
variable number of its own equity instruments, or a derivative contract over own equity that will or
may be settled other than by the exchange of a fixed amount of cash (or another financial asset) for a
fixed number of the Group’s own equity instruments.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds
received, net of direct issue costs.
Repurchase of the Group’s own equity instruments is recognised and deducted directly in equity. No
gain/loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own
equity instruments.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial
liabilities’.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) held for trading, or (ii)
it is designated as at FVTPL.
A financial liability is classified as held for trading if:
 it has been incurred principally for the purpose of repurchasing it in the near term; or
 on initial recognition it is part of a portfolio of identified financial instruments that the Group
manages together and has a recent actual pattern of short-term profit-taking; or
 it is a derivative that is not designated and effective as a hedging instrument.
29
A financial liability other than a financial liability held for trading or contingent consideration that may
be paid by an acquirer as part of a business combination may be designated as at FVTPL upon initial
recognition if:
 such designation eliminates or significantly reduces a measurement or recognition

inconsistency that would otherwise arise; or
 the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with the
Group’s documented risk management or investment strategy, and information about the
grouping is provided internally on that basis; or
 it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits
the entire hybrid (combined) contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains/losses arising on remeasurement
recognised in profit or loss to the extent that they are not part of a designated hedging relationship. The
net gain/loss recognised in profit or loss incorporates any interest paid on the financial liability and is
included in the ‘net income from other financial instruments at FVTPL’ line item in the profit or loss
account.
However, for non-derivative financial liabilities that are designated as at FVTPL, the amount of
change in the fair value of the financial liability that is attributable to changes in the credit risk of that
liability is recognised in OCI, unless the recognition of the effects of changes in the liability’s credit
risk in OCI would create or enlarge an accounting mismatch in profit or loss. The remaining amount of
change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a
financial liability’s credit risk that are recognised in OCI are not subsequently reclassified to profit or
loss; instead, they are transferred to retained earnings upon derecognition of the financial liability.
For issued loan commitments and financial guarantee contracts that are designated as at FVTPL all
gains and losses are recognised in profit or loss.
In making the determination of whether recognising changes in the liability’s credit risk in OCI will
create or enlarge an accounting mismatch in profit or loss, the Group assesses whether it expects that
the effects of changes in the liability’s credit risk will be offset in profit or loss by a change in the fair
value of another financial instrument measured at FVTPL. This determination is made at initial
recognition.
Fair value is determined as described below.
Other financial liabilities
Other financial liabilities, including deposits and borrowings, are initially measured at fair value, net
of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the
effective interest method.
30
The effective interest method is a method of calculating the amortised cost of a financial liability and
of allocating interest expense over the relevant period. The EIR is the rate that exactly discounts
estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period, to the net carrying amount on initial recognition. For details on EIR see
the “net interest income section” above.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or have expired. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is recognised in profit or loss.
When the Group exchanges with the existing lender one debt instrument into another one with
substantially different terms, such exchange is accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. Similarly, the Group accounts for
substantial modification of terms of an existing liability or part of it as an extinguishment of the
original financial liability and the recognition of a new liability. It is assumed that the terms are
substantially different if the discounted present value of the cash flows under the new terms, including
any fees paid net of any fees received and discounted using the original effective rate is at least 10 per
cent different from the discounted present value of the remaining cash flows of the original financial
liability.
G. Offsetting:
Financial assets and liabilities are set-off and the net amount is presented in the consolidated statement
of financial position when, and only when, the Group has a legal right to set-off the amounts or intends
either to settle on a net basis or to realize the asset and settle the liability simultaneously.
H. Financial guarantee contracts:
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in
accordance with the terms of a debt instrument.
Financial guarantee contracts issued by a group entity are initially measured at their fair values and, if
not designated as at FVTPL and not arising from a transfer of a financial asset, are subsequently
measured at the higher of:
 the amount of the loss allowance determined in accordance with IFRS 9; and
 the amount initially recognised less, where appropriate, cumulative amount of income
recognised in accordance with the Group’s revenue recognition policies.
Financial guarantee contracts not designated at FVTPL are presented as provisions on the consolidated
statement of financial position and the remeasurement is presented in other revenue.
The Group has not designated any financial guarantee contracts as at FVTPL.
31
I. Derivative financial instruments
Derivatives, such as foreign exchange forward contracts, interest rate swaps, cross currency interest
rate swaps and credit default swaps, are initially recognised at fair value at the date a derivative
contract is entered into and are subsequently remeasured to their fair value at each statement of
financial position date. The resulting gain/loss is recognised in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of the
recognition in profit or loss depends on the nature of the hedge relationship. The Group designates
certain derivatives as either hedges of the fair value of recognised assets or liabilities or firm
commitments (fair value hedges), hedges of highly probable forecast transactions or hedges of foreign
currency risk of firm commitments (cash flow hedges), or hedges of net investments in foreign
operations (net investment hedges).
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a
negative fair value is recognised as a financial liability.
J. Hedge accounting:
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk
and interest rate risk in fair value hedges, cash flow hedges, or hedges of net investments in foreign
operations as appropriate. Hedges of foreign exchange risk on firm commitments are accounted for as
cash flow hedges. The Group does not apply fair value hedge accounting of portfolio hedges of interest
rate risk. In addition the Group does not use the exemption to continue using IAS 39 hedge accounting
rules, i.e. the Group applies IFRS 9 hedge accounting rules in full.
At the inception of the hedge relationship, the Group documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for
undertaking various hedge transactions.
Policy applicable up to December 31, 2017:
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the
hedging instrument that is used in a hedging relationship is highly effective in offsetting changes in
fair values or cash flows of the hedged item.
At each hedge effectiveness assessment date, a hedge relationship must be expected to be highly
effective on a prospective basis and demonstrate that it was effective (retrospective effectiveness) for
the designated period in order to qualify for hedge accounting. A formal assessment is undertaken to
ensure the hedging instrument is expected to be highly effective in offsetting the designated risk in the
hedged item, both at inception and at each quarter end on an ongoing basis.
32
A hedge is expected to be highly effective if the changes in fair value or cash flows attributable to the
hedged risk during the period for which the hedge is designated are expected to offset in a range of
80% to 125% and are expected to achieve such offset in future periods. Hedge ineffectiveness is
recognized in the consolidated statement of profit or loss in “Net results on financial instruments at
fair value through profit or loss”. For situations where that hedged item is a forecast transaction, the
Group also assesses whether the transaction is highly probable and presents an exposure to variations
in cash flows that could ultimately affect the consolidated statement of profit or loss.
Policy applicable effective January 1, 2018:
Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the
hedging instrument is effective in offsetting changes in fair values or cash flows of the hedged item
attributable to the hedged risk, which is when the hedging relationships meet all of the following
hedge effectiveness requirements:
 there is an economic relationship between the hedged item and the hedging instrument;
 the effect of credit risk does not dominate the value changes that result from that economic
relationship; and
 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the
hedged item that the Group actually hedges and the quantity of the hedging instrument that the
Group actually uses to hedge that quantity of hedged item.
The Group rebalances a hedging relationship in order to comply with the hedge ratio requirements
when necessary. In such cases discontinuation may apply to only part of the hedging relationship. For
example, the hedge ratio might be adjusted in such a way that some of the volume of the hedged item
is no longer part of a hedging relationship, hence hedge accounting is discontinued only for the
volume of the hedged item that is no longer part of the hedging relationship.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio
but the risk management objective for that designated hedging relationship remains the same, the
Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the
qualifying criteria again.
In some hedge relationships the Group designates only the intrinsic value of options. In this case the
fair value change of the time value component of the option contract is deferred in OCI, over the term
of the hedge, to the extent that it relates to the hedged item and is reclassified from equity to profit or
loss when the hedged item does not result in the recognition of a non-financial item. The Group’s risk
management policy does not include hedges of items that result in the recognition of non-financial
items, because the Group’s risk exposures relate to financial items only.
The hedged items designated by the Group are time-period related hedged items, which means that the
amount of the original time value of the option that relates to the hedged item is amortised from equity
to profit or loss on a rational basis (e.g. straight-line) over the term of the hedging relationship.
33
In some hedge relationships the Group excludes from the designation the forward element of forward
contracts or the currency basis spread of cross currency hedging instruments. In this case a similar
treatment is applied to the one applied for the time value of options. The treatment for the forward
element of a forward and the currency basis element is optional and the option is applied on a hedge by
hedge basis, unlike the treatment for the time value of the options which is mandatory. For hedge
relationships with forwards or foreign currency derivatives such as cross currency interest rate swaps,
where the forward element or the currency basis spread is excluded from the designation the Group
generally recognises the excluded element in OCI.
Fair value hedges
The fair value change on qualifying hedging instruments is recognised in profit or loss except when
the hedging instrument hedges an equity instrument designated at FVTOCI in which case it is
recognised in OCI.
The carrying amount of a hedged item not already measured at fair value is adjusted for the fair value
change attributable to the hedged risk with a corresponding entry in profit or loss. For debt instruments
measured at FVTOCI, the carrying amount is not adjusted as it is already at fair value, but the part of
the fair value gain or loss on the hedged item associated with the hedged risk is recognised in profit or
loss instead of OCI. When the hedged item is an equity instrument designated at FVTOCI, the hedging
gain/loss remains in OCI to match that of the hedging instrument.
Where hedging gains/losses are recognised in profit or loss, they are recognised in the same line as the
hedged item.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof)
ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when
the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted
for prospectively. The fair value adjustment to the carrying amount of hedged items for which the EIR
method is used (i.e. debt instruments measured at amortised cost or at FVTOCI) arising from the
hedged risk is amortised to profit or loss commencing no later than the date when hedge accounting is
discontinued.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging
instruments that are designated and qualify as cash flow hedges is recognised in the cash flow hedging
reserve, a separate component of OCI, limited to the cumulative change in fair value of the hedged
item from inception of the hedge less any amounts recycled to profit or loss.
Amounts previously recognised in OCI and accumulated in equity are reclassified to profit or loss in
the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item.
If the Group no longer expects the transaction to occur that amount is immediately reclassified to
profit or loss.
34
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof)
ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when
the hedging instrument expires or is sold, terminated or exercised, or where the occurrence of the
designated hedged forecast transaction is no longer considered to be highly probable. The
discontinuation is accounted for prospectively. Any gain/loss recognised in OCI and accumulated in
equity at that time remains in equity and is recognised when the forecast transaction is ultimately
recognised in profit or loss. When a forecast transaction is no longer expected to occur, the gain/loss
accumulated in equity is reclassified and recognised immediately in profit or loss.
Hedges of net investments in foreign operations
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any
gain/loss on the hedging instrument relating to the effective portion of the hedge is recognised in OCI
and accumulated in the foreign currency translation reserve.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated
in the foreign currency translation reserve are reclassified to profit or loss in the same way as exchange
differences relating to the foreign operation.
K. Investments in Associates:
An associate is an entity over which the Group has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee, but is not control or
joint control over those policies.
The considerations made in determining significant influence are similar to those necessary to
determine control over subsidiaries.
The results and assets and liabilities of associates, except where the Group has control over the
associates’ financial and operating policies, are incorporated in the consolidated financial statements
using the equity method of accounting, except when the investment is classified as held for sale, in
which case it is accounted for under IFRS 5 Non-current Assets Held-for-Sale and Discontinued
Operations. Under the equity method, an investment in an associate is initially recognized in the
consolidated statement of financial position at cost and adjusted thereafter to recognize the Group’s
share of the profit or loss and other comprehensive income of the associate. When the Group's share of
losses of an associate exceeds the Group's interest in that associate, the Group discontinues
recognizing its share of further losses. Additional losses are recognized only to the extent that the
Group has incurred legal or constructive obligations or made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable
assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is
recognized as goodwill. The goodwill is included within the carrying amount of the investment. Any
excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent
liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.
35
The entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount
(higher of value in use and fair value less costs to sell) with its carrying amount, Any impairment loss
recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss
is recognized in accordance with IAS 36 to the extent that the recoverable amount of the investment
subsequently increases.
The Group discontinues the use of the equity method from the date when the investment ceases to be
an associate or when the investment is classified as held for sale. When the Group retains an interest in
the former associate or joint venture and the retained interest is a financial asset, the Group measures
the retained interest at fair value at that date and the fair value is regarded as its fair value on initial
recognition. The difference between the carrying amount of the associate at the date the equity method
was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part
interest in the associate is included in the determination of the gain or loss on disposal of the associate.
In addition, the Group accounts for all amounts previously recognised in other comprehensive income
in relation to that associate on the same basis as would be required if that associate had directly
disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other
comprehensive income by that associate would be reclassified to profit or loss on the disposal of the
related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a
reclassification adjustment) when the equity method is discontinued.
When the Group reduces its ownership interest in an associate but the Group continues to use the
equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had
previously been recognised in other comprehensive income relating to that reduction in ownership
interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or
liabilities.
When a Group entity transacts with an associate of the Group, profits and losses resulting from the
transactions with the associate are recognised in the Group’s consolidated financial statements only to
the extent of interests in the associate that are not related to the Group.
The financial statements of the associates are prepared for the same reporting period of the Group.
L. Investment Property:
Policy applicable to the Jordanian subsidiary:
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are stated at amortized cost, less accumulated depreciation and any
impairment loss. Depreciation on investment property, other than Land is calculated systematically
using the straight-line method over the estimated useful life using an annual rate of 2%.
36
Classification of properties
The Group determines whether a property is classified as investment property or stock of property as
follows:
 Investment properties comprise land and buildings that are not occupied for own use by, or in the
operations of, the Group, nor for sale in the ordinary course of business, but are held primarily to
earn rental income and/or capital appreciation. These buildings are substantially rented to tenants
and not intended to be sold in the ordinary course of business.
Transfers are made to or from investment property only when there is a change in use. For a transfer
from investment property to stock of property, the property’s deemed cost for subsequent accounting is
its fair value at the date of change in use.
M. Property and Equipment:
Property and equipment are stated at historical cost, less accumulated depreciation and any impairment
loss.
Depreciation of property and equipment, other than land and advance payments on capital expenditures,
is calculated systematically using the straight-line method over the estimated useful lives of the related
assets using the following annual rates:
Years
Buildings 33 - 50
Freehold improvements 17
Computer equipment 5 - 10
Technical equipment 5 - 10
Office equipment 10
Furniture and fixtures 10 - 13
Other properties and equipment 5 - 10
An item of property and equipment is derecognized upon disposal or when no future economic benefits
are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is recognized in
the consolidated statement of profit or loss in the year the asset is derecognized.
N. Intangible Assets other than Goodwill:
Intangible assets consisting of computer software are amortized over a period of five years and are
subject to impairment testing. Subsequent expenditure on software assets is capitalized only when it
increases the future economic benefits embodied in the specific asset to which it relates. All other
expenditure is expensed as incurred.
37
O. Goodwill:
Goodwill arising on an acquisition of a business is carried at cost as established at the date of

acquisition of the business. Refer to Note 3B for the measurement of goodwill at initial recognition.
Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses, if
any.
For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating
units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less
than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the
basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is
not reversed in a subsequent period.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
The Group's policy for goodwill arising on the acquisition of an associate is described under
Note 3(K) “Investments in associates”.
P. Impairment of Tangible and Intangible Assets (Other than Goodwill):
At each statement of financial position date, the carrying amounts of tangible and intangible assets are
reviewed to determine whether there is any indication that these assets have suffered an impairment
loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent
of impairment provision required, if any.
Recoverable amount is defined as the higher of:

- Fair value that reflects market conditions at the statement of financial position date, less cost
to sell, if any. To determine fair value the Group adopts the market comparability approach
using as indicators the current prices for similar assets in the same location and condition.
- Value in use: the present value of estimated future cash flows expected to arise from the
continuing use of the asset and from its disposal at the end of its useful life, only applicable
to assets with cash generation units.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying
amount of the asset is reduced to its recoverable amount. An impairment loss is recognized
immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case
the impairment loss is treated as a revaluation decrease.
38
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined had
no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of
an impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
In this connection, the recoverable amount of the Group’s owned properties and of properties acquired
in satisfaction of debts, is the estimated market value, as determined by real estate appraisers on the
basis of market compatibility by comparing with similar transactions in the same geographical area
and on the basis of the expected value of a current sale between a willing buyer and a willing seller,
that is, other than in a forced or liquidation sale after adjustment for illiquidity and market constraints.
The impairment loss is charged to income.
Q. Employees' Benefits:
Obligations for contributions to defined employees’ benefits are recognized as an expense on a current
basis.
Employees' End-of-Service Indemnities: (Under the Lebanese Jurisdiction)
The provision for staff termination indemnities is based on the liability that would arise if the
employment of all the staff were terminated at the statement of financial position date. This provision
is calculated in accordance with the directives of the Lebanese Social Security Fund and Labor laws
based on the number of years of service multiplied by the monthly average of the last 12 months
remunerations and less contributions paid to the Lebanese Social Security National Fund.
Retirement benefits: (under non Lebanese jurisdiction)
The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial
valuation involves making assumptions about discount rates, expected rate of return on plan assets,
future salary increases, mortality rates and future pension increases where necessary. The Group sets
these assumptions based on market expectations at the reporting date using best-estimates for each
parameter covering the period over which obligations are to be settled. Due to the long-term nature of
these plans, such estimates are subject to significant uncertainty.
R. Provisions:
Provisions are recognized when the Group has a present obligation as a result of a past event, and it is
probable that the Group will be required to settle that obligation. Provision is measured at the best
estimate of the consideration required to settle the obligation at the statement of financial position
date.
39
Where a provision is measured using the cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessments of the time value of money and,
where appropriate, the risks specific to the liability.
When some or all of the economic benefits required to settle a provision are expected to be recovered
from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement
will be received and the amount of the receivable can be measured reliably.
S. Deferred Restricted Contributions:
Restricted contributions derived from special and non-conventional deals arrangement concluded with
the regulator are deferred until designated conditions for recognition are met. At the time income is
received, it is deferred under “regulatory deferred liability” and applied to the designated purpose
according to the regulator’s requirements.
T. Revenue and Expense Recognition:
Fees and commission income and expense on cards’ activity that are not integral to the effective interest
rate on a financial asset or liability are recognized as the related services are performed.
Fees and commission income and expense that are integral to the effective interest rate on a financial
asset or liability (i.e. commissions and fees earned on the loan book) are included under interest income
and expense, respectively.
Interest income and expense are recognized on an accrual basis, taking account of the principal
outstanding and the rate applicable, except for non-performing loans and advances for which interest
income is only recognized upon realization. Interest income and expense include the amortization
discount or premium.
Interest income and expense presented in the statement of profit or loss include:
- Interest on financial assets and liabilities at amortized cost.

- Fair value changes in qualifying derivatives, including hedge ineffectiveness, and related hedged
items when interest rate risk is the hedged risk.
Net trading income presented in the statement of profit or loss includes:
- Interest income and expense on the trading portfolio.

- Dividend income on the trading equities.
- Realized and unrealized gains and losses on the trading portfolio.
Interest income on financial assets measured at fair value through profit or loss and interest income on
the trading portfolio are presented separately in the statement of profit or loss.
40
Other net income from financial assets measured at fair value through profit or loss, other than those held
for trading, includes:
- Dividend income.
- Realized and unrealized fair value changes.
- Foreign exchange differences.
Dividend income is recognized when the right to receive payment is established. Dividends on equity
instruments designated as at fair value through other comprehensive income in accordance with IFRS 9,
are presented in other revenue, unless the dividend clearly represents a recovery of part of the investment,
in which case it is presented in other comprehensive income.
U. Income Tax:
As discussed under Note 1 above, the Bank is exempt from income tax for the first seven fiscal years
from the date of its conversion into a bank. For income tax calculation an amount equivalent to 4% of
the Bank’s paid up capital is considered as a deductible change. In case there is a deficit in the taxable
income in any year, this deficit cannot be carried forward to the next year. Accrued taxes on profit are
recorded in the statement of financial position net of paid withheld taxes on interest income.
Income tax expense represents the sum of the tax currently payable and deferred tax. Income tax is
recognized in the statement of profit or loss except to the extent that it relates to items recognized in
other comprehensive income (OCI), in which case it is recognized in OCI.
Current tax is the expected tax payable on the taxable income for the year, using rates enacted at the
statement of financial position date. Income tax payable is reflected in the consolidated statement of
financial position net of taxes previously settled in the form of withholding tax.
Up to October 26, 2017, certain debt securities invested by the Group are subject to tax withheld by
the issuer. This tax is deducted at year-end from the corporate tax liability not eligible for deferred tax
benefit, and therefore, accounted for as prepayment on corporate income tax and reflected as a part of
income tax provision.
During 2017, Lebanese tax amendments and new taxes and duties were issued as per Law No. 64
dated October 26, 2017. These amendments include, but are not limited to, an increase in the Lebanese
corporate income tax from 15% to 17% to be applied effective on October 27, 2017 onwards. In
addition, the above mentioned withheld tax by the issuer is not allowed anymore to be deducted from
the annual corporate income tax amount and is considered as a deductible expense for the purpose of
calculating the corporate taxable income.
The subsidiaries of the Bank are subject to tax in accordance with tax laws applicable in their
respective tax jurisdictions.
41
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax base used in the computation of taxable profit, and are
accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognized for all taxable temporary differences and deferred tax assets are recognized to the extent
that it is probable that taxable profits will be available against which deductible temporary differences
can be utilized.
V. Fiduciary Accounts:
All fiduciary accounts are held on a non-discretionary basis and related risks and rewards belong to the
account holders. Accordingly, they are reflected as off-balance sheet accounts.
W. Cash and Cash Equivalents:
Cash and cash equivalents comprise balances with maturities of a period of three months or less
including: cash and balances with the Central Banks, deposits with Banks and financial institutions,
and deposits due to banks and financial institutions.
X. Dividends on Ordinary Shares
Dividends on ordinary shares are recognized as a liability and deducted from equity when they are
approved by the Bank’s shareholders. Interim dividends are deducted from equity when they are
declared and no longer at the discretion of the Group.
Dividends for the year that are approved after the reporting date are disclosed as an event after the
reporting date.
4. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 3, the directors are
required to make judgments, estimates and assumptions about the carrying amounts of revenues,
expenses, assets and liabilities and the accompanying disclosures, and the disclosure of contingent
liabilities that are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision affects both current and future
periods.
A. Critical accounting judgments in applying the Group’s accounting policies:
In the process of applying the Group’s accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect in the
amounts recognized in the financial statements.
42
Going Concern:
The Group’s management has made an assessment of the Group’s ability to continue as a going
concern and is satisfied that the Group has the resources to continue in business for the foreseeable
future. Furthermore, management is not aware of any material uncertainties that may cast significant
doubt upon the Group’s ability to continue as a going concern. Therefore the consolidated financial
statements continue to be prepared on the going concern basis.
Business model assessment:
Classification and measurement of financial assets depends on the results of the SPPI and the business
model test (Refer to the financial assets sections of note 3). The Group determines the business model
at a level that reflects how groups of financial assets are managed together to achieve a particular
business objective. This assessment includes judgement reflecting all relevant evidence including how
the performance of the assets is evaluated and their performance measured, the risks that affect the
performance of the assets and how these are managed. The Group monitors financial assets measured
at amortized cost or fair value through other comprehensive income that are derecognized prior to their
maturity to understand the reason for their disposal and whether the reasons are consistent with the
objective of the business for which the asset was held. Monitoring is part of the Group’s continuous
assessment of whether the business model for which the remaining financial assets are held continues
to be appropriate and if it is not appropriate whether there has been a change in business model and so
a prospective change to the classification of those assets.
Significant increase of credit risk:
As explained in note 3, ECL are measured as an allowance equal to 12-month ECL for stage 1 assets,
or lifetime ECL assets for stage 2 or stage 3 assets. An asset moves to stage 2 when its credit risk has
increased significantly since initial recognition. IFRS 9 does not define what constitutes a significant
increase in credit risk. In assessing whether the credit risk of an asset has significantly increased the
Group takes into account qualitative and quantitative reasonable and supportable forward looking
information. Refer to note 3 and note 41 for more details.
Establishing groups of assets with similar credit risk characteristics:
When ECLs are measured on a collective basis, the financial instruments are grouped on the basis of
shared risk characteristics. The Group monitors the appropriateness of the credit risk characteristics on
an ongoing basis to assess whether they continue to be similar. This is required in order to ensure that
should credit risk characteristics change there is appropriate re-segmentation of the assets. This may
result in new portfolios being created or assets moving to an existing portfolio that better reflects the
similar credit risk characteristics of that group of assets. Re-segmentation of portfolios and movement
between portfolios is more common when there is a significant increase in credit risk (or when that
significant increase reverses) and so assets move from 12-month to lifetime ECLs, or vice versa, but it
can also occur within portfolios that continue to be measured on the same basis of 12-month or
lifetime ECLs but the amount of ECL changes because the credit risk of the portfolios differ.
43
Models and assumptions used:
The Group uses various models and assumptions in estimating ECL. Judgement is applied in
identifying the most appropriate model for each type of asset, as well as for determining the
assumptions used in these models, including assumptions that relate to key drivers of credit risk. See
note 3 and note 41 for more details on ECL.
B. Key Sources of Estimation Uncertainty:
The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
The Group based their assumptions and estimates on parameters available when the consolidated
financial statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances arising beyond the
control of the Group. Such changes are reflected in the assumptions when they occur.
Impairment loss on financial instruments (applicable up to December 31, 2017):
Specific impairment for credit losses is determined by assessing each case individually. This method
applies to classified loans and advances and the factors taken into consideration when estimating the
allowance for credit losses include the counterparty’s credit limit, the counterparty’s ability to generate
cash flows sufficient to settle its advances and the value of collateral and potential repossession.
Loans and advances that have been assessed individually and found not to be impaired and all
individually insignificant loans and advances are then assessed collectively, in groups of assets with
similar risk characteristics, to determine whether provision should be made due to incurred loss events
for which there is objective evidence but whose effects are not yet evident.
The collective assessment takes account of data from the loan portfolio (such as credit quality, levels
of arrears, credit utilization, loan to collateral ratios, etc.), concentrations of risks, economic data and
the performance of different individual groups.
Establishing the number and relative weightings of forward-looking scenarios for each type of
product/market and determining the forward looking information relevant to each scenario:
When measuring ECL the Group uses reasonable and supportable forward looking information, which
is based on assumptions for the future movement of different economic drivers and how these drivers
will affect each other.
Probability of default:
PD constitutes a key input in measuring ECL. PD is an estimate of the likelihood of default over a
given time horizon, the calculation of which includes historical data, assumptions and expectations of
future conditions.
44
Loss Given Default:
LGD is an estimate of the loss arising on default. It is based on the difference between the contractual
cash flows due and those that the lender would expect to receive, taking into account cash flows from
collateral and integral credit enhancements.
Determining Fair Values:
The determination of fair value for financial assets for which there is no observable market price
requires the use of valuation techniques as described in Note 44. For financial instruments that are
traded infrequently and have little price transparency, fair value is less objective, and requires varying
degrees of judgment depending on liquidity, concentration, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument.
Unobservable inputs are used to measure fair value to the extent that observable inputs are not
available, thereby allowing for situations in which there is little, if any, market activity for the asset or
liability at the measurement date. However, the fair value measurement objective should remain the
same; that is, an exit price from the perspective of market participants. Unobservable inputs are
developed based on the best information available in the circumstances, which may include the
reporting entity's own data.
5. CASH AND DEPOSITS WITH CENTRAL BANKS
December 31, 2018

Accounts
Accounts in Foreign
in LBP Currencies Total
LBP'000 LBP'000 LBP'000
Cash on hand and Automated Teller
Machines (ATM) 809,399 604,572 1,413,971
Current accounts with Central Bank of
Lebanon 2,834,540 8,379,817 11,214,357
Current accounts with other central banks - 7,425 7,425
3,643,939 8,991,814 12,635,753
Time deposits with Central Bank of Lebanon - 20,063,401 20,063,401

- 20,063,401 20,063,401
Allowance for expected credit losses – Note 43 - ( 176,650) ( 176,650)

3,643,939 28,878,565 32,522,504
December 31, 2017

Accounts
Accounts in Foreign
LBP'000 LBP'000 LBP'000
Cash on hand and Automated Teller
Machines (ATM) 745,456 736,003 1,481,459
Current accounts with Central Bank of
Lebanon 5,352,718 5,750,311 11,103,029
Current accounts with other central banks - 7,422 7,422
6,098,174 6,493,736 12,591,910
Time deposits with Central Bank of Lebanon - 25,481,456 25,481,456

6,098,174 31,975,192 38,073,366
45
Time placements with the Central Bank of Lebanon include the equivalent in foreign currencies of
LBP20billion as at December 31, 2018 (LBP25.4billion as at December 31, 2017) deposited in
accordance with local banking regulations which require banks to maintain interest earning placements
in foreign currency to the extent of 15% of customers’ deposits in foreign currencies, certificates of
deposit and loans obtained from non-resident financial institutions.
Cash and deposits with central banks are all classified as stage 1.
6. DEPOSITS WITH BANKS AND FINANCIAL INSTITUTIONS
December 31, 2018

Accounts
Accounts in Foreign
LBP'000 LBP'000 LBP'000
Current non-interest bearing accounts:
Resident banks and financial institutions 106,829 2,495,801 2,602,630
Resident related banks 1,555,516 410,480 1,965,996
Non-resident banks and financial institutions - 16,943,752 16,943,752
1,662,345 19,850,033 21,512,378
Time deposits:
Resident banks and financial institutions 34,112,573 61,182,244 95,294,817
Resident related banks - 9,817,069 9,817,069
Non-resident banks and financial institutions - 183,684 183,684
34,112,573 71,182,997 105,295,570
Allowance for expected credit losses – Note 43 ( 463,585) ( 1,191,140) ( 1,654,725)
Accrued interest receivable 1,551,026 1,235,192 2,786,218

Total 36,862,359 91,077,082 127,939,441
46
December 31, 2017
Accounts
Accounts in Foreign
LBP'000 LBP'000 LBP'000
Current non-interest bearing accounts:
Resident banks and financial institutions 87,452 1,890,716 1,978,168
Resident related banks 1,204,873 254,558 1,459,431
Non-resident banks and financial institutions - 12,232,251 12,232,251
1,292,325 14,377,525 15,669,850
Time deposits:
Resident banks and financial institutions 42,779,937 37,103,780 79,883,717
Resident related banks 1,212,095 77,231,862 78,443,957
Non-resident banks and financial institutions - 184,539 184,539
43,992,032 114,520,181 158,512,213
Provision against deposits with banks

and financial institution - ( 141,957) ( 141,957)
Accrued interest receivable 1,873,483 1,504,689 3,378,172

Total 47,157,840 130,260,438 177,418,278
Time deposits with resident banks and financial institutions include an amount of LBP16.5billion as of
December 31, 2018 (LBP12.5billion in 2017) pledged against standby letters of credit issued in favor
of international credit card companies and regional switches.
Provision against deposits with banks and financial institutions represents allowances recorded against
current accounts from a non-resident bank. The Group recorded the allowance under the consolidated
statement of profit or loss in 2017.
Deposits with banks and financial institutions are in their majority classified as stage 1.
Time deposits as at December 31, 2018 and 2017 bear the following maturities and average interest
rates:
December 31, 2018
Accounts in Foreign
Maturity LBP Currencies
LBP’000 LBP’000
First quarter of 2019 21,803,573 41,022,799

Second quarter of 2019 12,309,000 10,813,418
Third quarter of 2019 - 19,346,780
34,112,573 71,182,997
47
December 31, 2017
Accounts in Foreign
Maturity LBP Currencies
LBP’000 LBP’000
First quarter of 2018 28,927,272 53,310,223

Second quarter of 2018 9,950,474 42,749,992
Third quarter of 2018 2,114,286 15,444,966
Fourth quarter of 2018 - 3,015,000
First quarter of 2019 3,000,000 -
43,992,032 114,520,181
Accrued interest receivable is segregated as follows as at December 31, 2018 and 2017:
December 31,
2018 2017
LBP’000 LBP’000
Non-related parties 2,657,873 2,661,247

Related parties 128,345 716,925
2,786,218 3,378,172
7. INVESTMENT SECURITIES
December 31,
2018 2017
LBP’000 LBP’000
Financial assets at fair value through profit or loss (A) 94,091,052 58,739,998
Financial assets at amortized cost ( B ) 16,157,416 13,053,977
Financial assets at fair value through other
comprehensive income (C) - 35,225,469
110,248,468 107,019,444
A. Financial assets at fair value through profit or loss

December 31,
2018 2017
LBP’000 LBP’000
Quoted equity securities 253,638 667,418

Investments in funds 27,282,623 22,535,063
Unquoted equity securities 60,383,633 19,723,939
Unquoted preferred shares 4,349,138 5,479,763
Unquoted debt securities 1,818,315 2,638,125
Certificate of deposits issued by local bank - 7,537,500
Accrued interest receivable 3,705 158,190
94,091,052 58,739,998
48
The unrealized gain on financial assets at fair value through profit or loss amounted to LBP7.2billion
in 2018 and was recorded under “Gain on financial assets at fair value through profit or loss” in the
consolidated statement of profit or loss (unrealized gain of LBP3.2billion in 2017) (Note 32).
During 2018, the board of directors’ of the Group has elected to reclassify unquoted investment
securities in local banks, previously classified at initial recognition as financial assets at fair value
through other comprehensive income in the amount of LBP34billion, to financial assets at fair value
through profit or loss, effective January 1, 2018. The carrying amounts of these securities
approximated their fair value (Note 7C).
Dividend income from financial assets at fair value through profit or loss during the year 2018
amounted to LBP2billion recorded under “Gain on financial assets at fair value through profit or loss”
in the consolidated statement of profit or loss (LBP867million in 2017) (Note 32).
B. Financial assets at amortized cost
December 31, 2018

Counter Value
of Foreign Currencies
Expected Accrued
Amortized Credit Losses Interest
Cost (Note 43) Receivable Total
LBP’000 LBP’000 LBP’000 LBP’000
Lebanese Government bonds 12,056,016 ( 151,090) 108,998 12,013,924
Certificates of deposit issued by the
Central Bank of Lebanon 4,070,250 ( 25,892) 99,134 4,143,492
16,126,266 ( 176,982) 208,132 16,157,416
December 31, 2017

Counter Value
of Foreign Currencies
Accrued
Amortized Interest
Cost Receivable Total
LBP’000 LBP’000 LBP’000
Lebanese Government bonds 8,811,266 73,328 8,884,594
Certificates of deposit issued by the
Central Bank of Lebanon 4,070,250 99,133 4,169,383
12,881,516 172,461 13,053,977
49
Financial assets at amortized cost include an amount of LBP8.21billion as of December 31, 2018
(LBP12.9billion in 2017) pledged against standby letters of credit issued in favor of international
credit card companies and regional switches.
Financial assets at amortized cost are segregated over remaining periods to maturity as follows:
December 31, 2018

Counter Value of Foreign Currencies
Remaining period Nominal Amortized
to maturity Value Cost Fair Value Yield
LBP’000 LBP’000 LBP’000 %
Lebanese Government Bonds:

- Up to one year 5,728,500 5,501,473 5,532,527 5.45
- 1 year to 3 years 5,276,250 5,122,418 5,034,913 5.80
- 3 years to 5 years 1,432,125 1,432,125 1,238,788 6.10
12,436,875 12,056,016 11,806,228
Certificates of deposit issued by the Central

Bank of Lebanon:
- 3 years to 5 years 4,070,250 4,070,250 3,743,283 6.40
4,070,250 4,070,250 3,743,283
December 31, 2017

Counter Value of Foreign Currencies
Remaining period Nominal Amortized
to maturity Value Cost Fair Value Yield
LBP’000 LBP’000 LBP’000 %
Lebanese Government Bonds:

- Up to one year 5,140,183 5,140,183 4,902,239 5.24
- 1 years to 3 years 2,261,250 2,238,958 2,149,531 5.80
- Beyond 5 years 1,432,125 1,432,125 1,315,171 6.10
8,833,558 8,811,266 8,366,941
Certificates of deposit issued by the Central

Bank of Lebanon:
- Beyond 5 years 4,070,250 4,070,250 3,743,283 6.40
4,070,250 4,070,250 3,743,283
C. Financial assets at fair value through other comprehensive income
During 2018, the Group sold equity security for the total consideration of LBP1.41billion, and
realized a capital gain of LBP161million. The gain was recorded under “Retained earnings” in the
consolidated statement of changes in equity.
During 2017, the Group acquired an equity stake of 1.76% in a local bank for a consideration of
LBP7.6billion fully settled in 2017. During 2018, these equity securities were reclassified to
financial assets at fair value through profit or loss (Note 7A).
50
During 2016, the Group acquired an equity stake of 2.26% in a local bank for a consideration of
LBP26.4billion fully settled in 2016. These shares were pledged against a borrowing granted from a
local bank in the amount of LBP15billion (Note 21). During 2018, these equity securities were
reclassified to financial assets at fair value through profit or loss (Note 7A).
8. SETTLEMENTS DUE FROM BANKS AND FINANCIAL INSTITUTIONS
December 31,
2018 2017
LBP’000 LBP’000
Due from banks and financial institutions – non-related 26,002,916 30,993,164

Due from banks and financial institutions – related parties – Note 38 5,286,123 4,486,692
31,289,039 35,479,856
Settlements due from banks and financial institutions represent mainly amounts paid by the Group
related to the transactions conducted by the cardholders who are customers of the client banks and
financial institutions and amounts billed by the Group to these banks and financial institutions for the
services rendered. These transactions are generated and settled according to the conditions of the
contracts signed between both parties. These balances are non-interest bearing and the settlement
period does not exceed one month.
9. LOANS, ADVANCES AND OTHER RECEIVABLES
December 31,
2018 2017
LBP’000 LBP’000
(a) Loans and advances to customers 35,766,373 35,319,172

(b) Loans and advances to related parties – Note 38 3,138,833 1,639,178
38,905,206 36,958,350
51
(a) Loans and advances to customers
December 31, 2018
Expected Net
Credit Losses Carrying
Gross Amount (Note 43) Value
LBP'000 LBP'000 LBP'000
Retail and other:

Stage 1 18,359,277 ( 115,317) 18,243,960
Stage 2 1,777,577 ( 308,162) 1,469,415
Stage 3 1,415,331 ( 1,415,331) -
21,552,185 ( 1,838,810) 19,713,375
Corporate:
Stage 1 5,010,852 ( 2,534) 5,008,318
Stage 2 7,210,256 ( 2,629,112) 4,581,144
Stage 3 6,761,363 ( 316,025) 6,445,338
18,982,471 ( 2,947,671) 16,034,800
Accrued interest receivable 18,198 - 18,198

40,552,854 ( 4,786,481) 35,766,373
December 31, 2017

Gross Amount
net of Unrealized Impairment Net Carrying
Interest Allowance Value
LBP'000 LBP'000 LBP'000
Performing loans and advances - retail:

- Medium term loans and advances 442,835 ( 230,059) 212,776
- Credit cards 17,855,289 ( 877,583) 16,977,706
- Loans to employees 882,055 ( 13,233) 868,822
19,180,179 ( 1,120,875) 18,059,304
Non-performing loans and advances - retail:

- Substandard 778,923 ( 36,328) 742,595
- Doubtful and bad loans 779,485 ( 779,485) -
1,558,408 ( 815,813) 742,595
Performing loans and advances - corporate:

- Medium term loans 16,636,764 ( 119,491) 16,517,273
16,636,764 ( 119,491) 16,517,273
37,375,351 ( 2,056,179) 35,319,172
52
The movement of impairment allowance is summarized as follows:
2017
Balance at January 1 ( 589,222)

Additions ( 320,044)
Write-backs 75,490
Effect of changes in exchange rates 17,963
Balance at December 31 ( 815,813)
The movement of provision for loans collectively assessed for impairment is summarized as follows:
2017
LBP’000
Balance at January 1 ( 664,982)

Additions ( 932,842)
Write-backs 378,878
Effect of change in exchange rates 411
Balance at December 31 ( 1,218,535)
(b) Loans and advances to related parties

December 31,
2018 2017
LBP’000 LBP’000
Loans and advances to related parties (b.1) 1,608,376 1,639,178

Dividends receivable from an associate (b.2) 1,530,457 -
3,138,833 1,639,178
(b.1) This caption represents loans and advances granted to shareholders and other related parties.
These balances are denominated in U.S. Dollar.
(b.2) On December 31, 2018, the general assembly of a Jordanian associate approved a dividend
distribution to shareholders of which the amount of JOD722,000 (C/V LBP1.5billion) represents the
Group’s share.
53
10. INVESTMENTS IN ASSOCIATES
December 31,
% of Ownership
Country 2018 2017 2018 2017
% % LBP'000 LBP'000
A2A Holding Ltd Cyprus 40 40

7,506,864 9,178,101
Arab Company for Internet Services Ltd Jordan 40 40
Credit Card Management Company S.A.L. Lebanon 20 20 2,573,168 2,494,861
IMC Telecom WLL Bahrain 32.6 32.6

684,625 1,386,507
IMC Telecom Inc. USA 32.6 32.6
10,764,657 13,059,469
A2A Holding Ltd. and Arab Company for Services Ltd are managed as one business and their
activities are complementary and inter-related. The Group recognized its share in the associates’ profit
for the year ended December 31, 2018 in the amount of LBP1.34billion recorded under “Share of
profits of associates” in the consolidated statement of profit or loss (share in gain of LBP1.45billion
for the year ended December 31, 2017).
During 2018, the Group recognized its share in the gain of Credit Card Management Company S.A.L.
for an aggregate amount of LBP378million recorded under “Share of profits of associates” in the
consolidated statement of profit or loss (share in gain of LBP408million for the year ended
December 31, 2017).
During 2017, the Group acquired an additional 9.2% equity stake of both IMC Telecom W.L.L. and
IMC. Telecom Inc. for a total aggregate consideration in the amount of LBP380million. As a result,
the Group’s equity stake increased to 32.6% in both entities. The Group share in the loss of these
associates amounted to LBP375million and was recognized and recorded under “Share of profits of
associates” in the consolidated statement of profit or loss (share in gain of LBP98million for the year
ended December 31, 2017). During 2018, the Group recorded an impairment on investment in
associates in both IMC Telecom W.L.L. and IMC Telecom Inc. amounting to LBP275million and
LBP52million, respectively, recorded under “Impairment on investment in associate” in the
consolidated statement of profit or loss.
Summarized financial information in respect of the Group’s associates is set out below:
Group’s Share
2018 2017 2018 2017
LBP’000 LBP’000 LBP’000 LBP’000
Total assets 26,284,691 27,606,503 7,545,001 8,031,999

Total liabilities 8,355,557 4,789,414 2,847,174 1,385,804
Net assets 17,929,134 22,817,089 4,697,827 6,646,195
Total revenue 34,055,399 55,579,419 11,197,833 18,173,301

Total profit for the year 4,145,244 5,888,072 1,346,022 1,949,526
54
11. REGULATORY BLOCKED FUNDS
Regulatory blocked funds represent a non-interest earning compulsory deposit placed with the
Lebanese Treasury. This deposit is refundable in case of cessation of operations, according to Article
132 of the Money and Credit Law.
12. INVESTMENT PROPERTY

Land Building Total
LBP’000 LBP’000 LBP’000
Cost:
Balance as at January 1, 2017 - - -
Effect of acquisition of a
subsidiary - Note 40 1,135,789 1,539,012 2,674,801
Effect of foreign currency exchange
differences ( 2,026) ( 2,746) ( 4,772)
Balance as at December 31, 2017 1,133,763 1,536,266 2,670,029
differences 2,079 2,816 4,895
Balance as at December 31, 2018 1,135,842 1,539,082 2,674,924
Accumulated depreciation:
Effect of acquisition of a subsidiary - 23,086 23,086
differences - ( 42) ( 42)
Balance as at December 31, 2017 - 23,044 23,044
Additions - 30,767 30,767
differences - 57 57
Impairment:
Effect of acquisition of a subsidiary - 104,664 104,664
differences - ( 187) ( 187)
Reversal of impairment - ( 104,664) ( 104,664)
differences - 187 187
Balance as at December 31, 2018 - - -
Net book value:

As at December 31, 2018 1,135,842 1,485,214 2,621,056
As at December 31, 2017 1,133,763 1,408,745 2,542,508
55
13. PROPERTY AND EQUIPMENT
This caption consists of the following:
Freehold/ Advances on
Leasehold Computer Technical Office Furniture Property and
Buildings Improvements Equipment Equipment Equipment and Fixtures Other Equipment Total
LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000
Cost:
Balance as at January 1, 2017 18,067,384 13,481,376 19,347,226 4,793,178 2,167,302 929,655 1,433,104 92,178 60,311,403
Additions - 1,058,959 1,837,677 27,150 105,935 30,582 25,487 1,469,807 4,555,597
Effect of acquisition of a
subsidiary - Note 40 2,967,276 - - - - - - - 2,967,276
Transfers - 955,073 - - - - - ( 955,073) -
Adjustments and disposals - - - - - - ( 15,069) - ( 15,069)
differences ( 5,292) ( 1,730) ( 2,589) - ( 729) ( 112) ( 167) - ( 10,619)
Balance as at December 31, 2017 21,029,368 15,493,678 21,182,314 4,820,328 2,272,508 960,125 1,443,355 606,912 67,808,588
Additions - 735,314 2,273,358 - 154,078 261,335 9,992 7,529,883 10,963,960
Transfers 391,950 7,403,668 216,608 - 13,756 110,813 - ( 8,136,795) -
Adjustments and disposals - ( 61,067) ( 54,063) - ( 64,033) ( 8,867) - - ( 188,030)
differences 5,428 1,564 1,529 - 324 110 78 - 9,035
Balance as at December 31, 2018 21,426,746 23,573,157 23,619,748 4,820,328 2,376,633 1,323,516 1,453,425 - 78,593,553
Accumulated depreciation:
Balance as at January 1, 2017 2,816,510 6,433,433 15,448,388 3,998,798 1,592,051 627,848 687,259 - 31,604,287
Additions 365,697 820,273 1,527,452 163,495 127,814 50,155 100,454 - 3,155,340
Effect of acquisition of a subsidiary 25,608 - - - - - - - 25,608
Adjustments and disposals - - - - - - ( 11,308) - ( 11,308)
differences ( 45) ( 446) ( 876) - ( 621) ( 70) ( 28) - ( 2,086)
Balance as at December 31, 2017 3,207,770 7,253,260 16,974,964 4,162,293 1,719,244 677,933 776,377 - 34,771,841
Additions 400,480 1,153,205 1,772,986 146,328 125,866 60,834 96,536 - 3,756,235
Transfers - ( 45,062) 34,108 - 1,719 9,235 - - -
Adjustments and disposals - ( 60,234) ( 54,063) - ( 64,035) ( 8,079) - - ( 186,411)
differences 66 256 533 - 274 36 22 - 1,187
Balance as at December 31, 2018 3,608,316 8,301,425 18,728,528 4,308,621 1,783,068 739,959 872,935 - 38,342,852
Impairment:
Balance as at January 1, 2017 - - - - - - - - -
Effect of acquisition of a subsidiary 116,107 - - - - - - - 116,107
Effect of foreign currency
exchange differences ( 206) - - - - - - - ( 206)
Balance as at December 31, 2017 115,901 - - - - - - - 115,901
Reversal of impairment ( 116,107) - - - - - - - ( 116,107)
differences 206 - - - - - - - 206
Balance as at December 31, 2018 - - - - - - - - -
Net book value:

As at December 31, 2018 17,818,430 15,271,732 4,891,220 511,707 593,565 583,557 580,490 - 40,250,701
As at December 31, 2017 17,705,697 8,240,418 4,207,350 658,035 553,264 282,192 666,978 606,912 32,920,846
56
14. INTANGIBLE ASSETS
Computer
Software
LBP'000
Cost:
Balance as at January 1, 2017 18,218,813
Additions 1,903,629
Effect of changes in exchange rate ( 632)
Balance as at December 31, 2017 20,121,810
Additions 1,899,590
Disposal ( 60,058)
Effect of changes in exchange rate 263
Accumulated amortization:
Balance as at January 1, 2017 15,480,610
Additions 1,229,075
Effect of changes in exchange rate ( 456)
Additions 948,268
Disposal ( 59,835)
Effect of changes in exchange rate 135
Net book value:

As at December 31, 2018 4,363,808
As at December 31, 2017 3,412,581
15. OTHER ASSETS
December 31,
2018 2017
LBP’000 LBP’000
Prepaid expenses 1,386,994 2,174,247

Other debit balances 221,547 153,440
1,608,541 2,327,687
57
16. SETTLEMENTS DUE TO BANKS AND FINANCIAL INSTITUTIONS
December 31,
2018 2017
LBP’000 LBP’000
Settlements due to banks and financial institutions - non-related 59,770,106 61,153,965

Settlements due to banks and financial institutions
- related parties – Note 38 6,005,327 6,254,423
65,775,433 67,408,388
Settlements due to banks and financial institutions represent non-interest bearing balances due to
several banks resulting mainly from the automated teller machines transactions.
These balances are generated and settled in accordance with the contractual terms between these banks
and the Group.
17. DEPOSITS FROM BANKS AND FINANCIAL INSTITUTIONS
December 31,
2018 2017
LBP’000 LBP’000
Banks’ and financial institutions’ current accounts 26,653,012 29,842,260

Blocked accounts (a) 51,725,449 81,933,700
78,378,461 111,775,960
Accrued interest payable 595,978 1,097,689
78,974,439 112,873,649
(a) Blocked accounts are balances deposited with the Group by bank issuers of credit cards, in
guarantee of the credit facilities granted on these cards.
Deposits from banks and financial institutions include an amount of LBP57.9billion as at

December 31, 2018 (LBP107.6billion in 2017) with right of set-off against settlements due from banks
and financial institutions.
58
18. CUSTOMERS’ DEPOSITS AT AMORTIZED COST
Customers’ deposits are allocated by currencies as follows:
December 31, 2018

Accounts
Accounts in in Foreign
LBP Currencies Total
LBP'000 LBP'000 LBP'000
Customers’ deposits 1,204,535 24,936,463 26,140,998

Accrued interest payable - 99,883 99,883
1,204,535 25,036,346 26,240,881
December 31, 2017

Accounts
Accounts in in Foreign
LBP Currencies Total
LBP'000 LBP'000 LBP'000
Customers’ deposits 1,430,079 25,858,734 27,288,813

Accrued interest payable - 93,805 93,805
1,430,079 25,952,539 27,382,618
19. CREDITORS’ OPERATING ACCOUNTS

December 31,
2018 2017
LBP’000 LBP’000
Due to companies, merchants and points of sale 1,235,608 1,686,467

Debit cards 28,560,038 33,819,424
29,795,646 35,505,891
Creditors operating accounts are short-term non-interest bearing accounts, mostly denominated in
foreign currencies.
"Due to companies, merchants and points of sale" mainly represents the balances due to resident and
non-resident merchants, as a result of credit card transactions, settled according to the respective
merchants' contractual terms.
"Debit cards" represents pledged funds received against credit facilities granted to customers using
these cards.
59
20. CREDITORS’ OPERATING ACCOUNTS – RELATED PARTIES
This caption represents non-interest bearing current credit accounts with related parties.
“Creditors operating accounts - related parties" as at December 31, 2018 and 2017 represents
operational accounts with associates and other related parties.
21. BORROWINGS FROM BANKS
This caption represents borrowings from banks and consists of the following:
December 31, 2018 December 31, 2017

Average Average
Maturity Amount Interest Rate Amount Interest Rate
LBP'000 % LBP'000 %
First quarter of 2018 - - 15,075,000 4.70

First quarter of 2022 2,803,021 8.75 4,031,315 7.75
2,803,021 19,106,315
The movement of borrowings from banks for the years 2018 and 2017 was as follows:
2018 2017
LBP’000 LBP’000
Balance January 1, 19,106,315 7,537,500

Withdrawals - 19,326,073
Settlements including interest ( 16,310,684) ( 7,750,054)
Effect of change on exchange rates 7,390 ( 7,204)
Balance December 31, 2,803,021 19,106,315
Borrowings in the amount of LBP15.1billion as at December 31, 2017 were covered by pledged
unquoted shares in a local bank in the amount of LBP26.4billion (Note 7C).
Interest expense on borrowings from banks amounted to LBP230million for the year 2018
(LBP926million during 2017) and is recorded under interest expense in the consolidated statement of
profit or loss (Note 31).
60
22. ACCOUNTS PAYABLE AND OTHER CREDITORS

December 31,
2018 2017
LBP’000 LBP’000
Charge back payable 325,528 338,291

Taxes payable (a) 502,012 300,154
Due to National Social Security Fund (b) 275,687 255,938
Suppliers of fixed assets, software and other 2,356,093 2,177,184
3,459,320 3,071,567
(a) Taxes payable consist of the following:

December 31,
2018 2017
LBP’000 LBP’000
Income tax payable (a.1) 6,629 31,608

Tax on capital – Holding entity (a.1) 5,000 5,000
Withheld tax on salaries and attendance fees 261,309 246,755
VAT payable 1,379 735
Other taxes 227,695 16,056
502,012 300,154
(a.1) The below represents the reconciliation of income tax:

December 31,
2018 2017
LBP’000 LBP’000
Income before income tax 20,613,637 16,662,431

Income from subsidiaries ( 16,114,730) ( 13,319,323)
4,498,907 3,343,108
Add: Non-deductible expenses 538,856 52,404
Less:
Non-taxable income ( 1,522,292) ( 643,551)
Exempted income - bank -
4% of capital of the bank ( 4,000,000) ( 4,000,000)
Taxable income - -
Non-refundable withheld tax - 370,501

Tax expense on subsidiaries 6,778 31,973
Tax on capital - Holding entity 5,000 5,000
Income tax expense 11,778 407,474
Taxes paid ( 149) ( 370,866)
Taxes payables (a.1) 11,629 36,608
61
( a.2 ) Under Article 14 of Legislative Decree No. 50 issued on July 15, 1983, applicable to specialized
banks, the Bank is exempt from tax on profits for the first seven financial years effective
July 1, 2010, the date of its conversion into a specialized bank.
For income tax calculation an amount equivalent to 4% of the Bank’s paid up capital is
considered as a deductible change. In case there is a deficit in the taxable income in any year,
this deficit cannot be carried forward to the next year. Accrued taxes on profit are recorded in
the statement of financial position net of paid withheld taxes on interest income.
The Bank’s tax returns for the years 2014 to 2018 and the Groups’ Lebanese entities tax returns
for the years 2014 until 2018 are still subject to examination and final assessment by the tax
authorities. Management is of the opinion that additional tax liability, if any, will not be
material.
(b) The Group’s Lebanese entities’ Social Security declarations after March 1, 2011 are still
subject to examination and final assessment by the National Social Security Fund.
Management is of the opinion that additional liabilities, if any, will not be material.
23. OTHER LIABILITIES
December 31,
2018 2017
LBP’000 LBP’000
Accrued expenses 3,513,155 3,384,531

Deferred revenues 130,771 152,971
Regulatory deferred liability (a) - 1,167,200
Deferred tax 52,583 35,776
3,696,509 4,740,478
(a) In accordance with the Central Bank of Lebanon Intermediary Circular number 446 dated
December 30, 2016, banks should record the surplus derived from sale of Lebanese
Government Bonds in Lebanese Pound against investment in medium and long term
certificates of deposit in foreign currency issued by the Central Bank of Lebanon under
deferred liability which is regulated in nature, and shall be appropriated, among other things,
after deducting the relevant tax liability, to collective provision for credit risks associated with
the loan book at a minimum of 2% of the credit risk weighted assets, and that in anticipation of
implementation of IFRS 9 for Impairment, as and when quantified effective on January 1,
2018.
In light with the above, during 2018, the Group allocated the total balance of this regulatory
deferred liability to retained earnings to offset the expected credit loss that resulted from the
application of IFRS 9, in accordance with the Central Bank of Lebanon requirements as
indicated above.
62
24. PROVISIONS
December 31,
2018 2017
LBP’000 LBP’000
Provision for employee’s end-of-service indemnity (a) 6,541,333 6,540,480

Provision for contingencies (b) 319,305 301,500
Expected credit loss provision on unutilized limits – Note 43 42,442 -
6,903,080 6,841,980
(a) The movement of employees' end-of-service indemnity provision was as follows:
2018 2017
LBP’000 LBP’000
Balance - beginning of the year 6,540,480 6,223,058

Additions (Note 33) 389,057 441,800
Settlements ( 388,204) ( 124,378)
Balance - end of the year 6,541,333 6,540,480
(b) The movement of provision for contingencies was as follows:
2018 2017
LBP’000 LBP’000
Balance - beginning of the year 301,500 1,831,613

Additions 319,305 358,031
Write backs ( 301,500) ( 1,888,144)
Balance - end of the year 319,305 301,500
25. CAPITAL
Capital amounting to LBP100billion as at December 31, 2018 and 2017 consisted of 4,000,000 shares
of LBP25,000 each, authorized and fully paid.
26. DIVIDEND DISTRIBUTION
In its meeting held on July 27, 2018, the General Assembly of Shareholders approved the distribution
of dividends in the amount of LBP5billion (a dividend of LBP1,250 per share). These dividends were
fully paid during 2018.
63
In its meeting held on July 28, 2017 the General Assembly of Shareholders approved the distribution
of dividends in the amount of LBP4.8billion (a dividend of LBP1,200 per share). These dividends
were fully paid during 2017.
27. LEGAL AND OTHER RESERVES
December 31,
2018 2017
LBP’000 LBP’000
Legal reserves ( A ) 4,101,482 4,060,693

Reserve for general banking risks ( B ) - 4,890,300
4,101,482 8,950,993
A. Legal reserves:
The Group’s Lebanese entities transfer 10% of their annual net income to legal reserve until such
reserve reaches one third of capital, as required by the Lebanese Code of Commerce and Money and
Credit Law. This reserve is not available for distribution.
B. Reserve for general banking risks:
The reserve for general banking risks is constituted according to local banking regulations, from net
profit, on the basis of a minimum of 2 per thousand and a maximum of 3 per thousand of the total risk
weighted assets, off-balance sheet risk and global exchange position as defined for the computation of
the solvency ratio at year-end. This reserve should reach 1.25% of total risk weighted assets, off-balance
sheet risk and global exchange position at year 10 and 2% of that amount at year 20. This reserve is
constituted in Lebanese Pounds and in foreign currencies in proportion to the composition of the Group’s
total risk weighted assets and off-balance sheet items. This reserve is not available for distribution.
In accordance with BDL Basic Circular #143 issued in November 2017, by the end of the year 2017,
banks are no longer required to setup reserves for general banking risks and other reserves for credit
risks. Banks are required to appropriate the excess, if any, after implementation of IFRS 9 impairment on
January 1, 2018, to general reserves designated for capital increase. During 2018, the Group allocated the
balance of the reserve to retained earing to offset the allowance for expected credit losses resulting from
the application of IFRS 9.
64
28. COMMISSION AND FEE INCOME
Year Ended
December 31,
2018 2017
LBP’000 LBP’000
Commissions earned from issuance of cards

and ATM network usage 33,532,994 32,687,632
Commissions earned from cardholders’
spending and merchants 55,116,355 51,073,811
Other commissions earned 6,968,644 5,023,653
95,617,993 88,785,096
29. COMMISSION AND FEE EXPENSE
Year Ended
December 31,
2018 2017
LBP’000 LBP’000
Clearing and commissions fees paid to International and
Regional Switches and ATM network usage 36,694,112 35,719,796
Commissions paid on cardholders’ spending 22,119,104 20,197,616
Other commissions paid 2,660,579 2,048,562
61,473,795 57,965,974
30. INTEREST INCOME
2018
Interest Tax on Net interest
income interest income
LBP'000 LBP'000 LBP'000
Interest on deposits with banks and financial institutions 7,137,650 ( 442,806) 6,694,844
Interest on deposits with banks and financial institutions
– related parties – Note 38 1,128,207 ( 75,174) 1,053,033
Interest on investments in financial assets at amortized cost 1,075,910 ( 17,316) 1,058,594
Interest on loans and advances to customers 4,071,336 - 4,071,336
Interest on loans and advances to customers
– related parties – Note 38 70,008 - 70,008
13,483,111 ( 535,296) 12,947,815
65
2017
Interest Tax on Net interest
income interest income
LBP'000 LBP'000 LBP'000
Interest on deposits with banks and financial institutions 6,979,736 ( 80,328) 6,899,408
Interest on deposits with banks and financial institution
– related parties – Note 38 2,962,697 - 2,962,697
Interest on investments in financial assets at amortized cost 819,635 - 819,635
Interest on loans and advances to customers 4,049,679 - 4,049,679
– related parties – Note 38 124,306 - 124,306
14,936,053 ( 80,328) 14,855,725
31. INTEREST EXPENSE
Year Ended
December 31,
2018 2017
LBP’000 LBP’000
Interest on due to banks and

financial institutions 2,013,953 2,102,267
Interest on customers’ deposits 757,752 570,874
Interest on borrowings from banks – Note 21 229,654 926,363
3,001,359 3,599,504
32. GAIN ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Year Ended
December 31,
2018 2017
LBP’000 LBP’000
Dividend income – Note 7A 2,029,911 867,457

Realized gain from sale of securities 153,592 378,922
Net unrealized gain from securities – Note 7A 7,188,316 3,162,144
9,371,819 4,408,523
66
33. SALARIES AND RELATED CHARGES
Year Ended
December 31,
2018 2017
LBP’000 LBP’000
Salaries and other benefits 16,727,457 15,841,869

Transportation and other benefits 2,329,232 2,183,956
Social Security contributions 1,985,111 1,920,383
Provision for end-of-service indemnity – Note 24 389,057 441,800
21,430,857 20,388,008
Salaries and related charges include key management compensation in the amount of LBP3.06billion
for 2018 (LBP3.08billion for 2017) (Note 38).
34. GENERAL AND ADMINISTRATIVE EXPENSES
Year Ended
December 31,
2018 2017
LBP’000 LBP’000
Miscellaneous taxes and fees 971,087 643,334

Telecommunication (a) 568,361 581,685
Water, electricity and fuel 638,820 625,352
Studies, professional fees and training 1,910,022 1,555,964
Maintenance, security and other building expenses 3,188,688 2,967,273
Travel, accommodation and entertainment 865,009 839,214
Software and other licensing fees 34,993 -
Stationery and printing 323,967 204,391
Insurance, security and money transfer 115,012 104,966
Transportation and shipping 222,606 261,442
Publicity and advertising 412,477 326,577
Rent and related services 35,086 72,098
Subscriptions and conferences 157,686 124,570
Attendance fees to the members of the board of directors 375,525 375,525
Other 118,256 150,206
9,937,595 8,832,597
(a) This account includes the amount of LBP133million in 2018 (LBP132million in 2017) paid to a
related party for telecommunication services (Note 38).
67
35. FIDUCIARY ACCOUNTS
December 31,
2018 2017
LBP’000 LBP’000
Non-discretionary deposits 7,336,439 9,290,505

7,336,439 9,290,505
The non-discretionary fiduciary deposits are invested according to the contractual terms with the
account holders and for their account.
36. MEMO ACCOUNTS
December 31,
2018 2017
LBP Million LBP Million
Facilities extended and not utilized 999,334 988,485

of which facilities extended covered by contracts with
banks and financial institutions 950,886 927,103
Assets under custody 233,624 198,709
Non-utilized credit facilities extended to individual customers and banks resulting from the issuance of
revolving credit cards and charge cards. Facilities to the extent of LBP951billion as at
December 31, 2018 are subject to contractual terms signed with banks to settle the dues to the Group
within limited time periods (LBP927billion as at December 31, 2017).
In addition, the banks and each of the cardholders of the banks are jointly and severally liable for all
charges incurred by the Group as a consequence of the use of the cards. In case of default of one or
more banks, the Group has recourse against the cardholders of such bank for the dues incurred by the
cardholders and not yet settled to the Bank.
The total commitments related to the extended facilities do not necessarily represent future cash
requirements, since the Group does not expect these funds to be drawn at one time, noting that the
Group is continuously collecting utilized amounts from banks and the payment period varies between
daily and monthly according to the agreements with the banks.
Assets under custody represent the receivables of credit card facilities granted to banks’ customers and
managed by the Group, on behalf of those banks. These receivables amounted to LBP234billion as at
December 31, 2018 (LBP199billion as at December 31, 2017). A commission fee is paid to the Group
for the management of these receivables.
68
37. COMMITMENTS AND LIABILITIES
Standby letters of credit have been issued in favor of international credit card companies as well as
regional switches for the amount of LBP25.9billion (counter value of USD17,204,993 as at December
31, 2018 (LBP26.1billion counter value of USD17,342,287 in 2017), to guarantee any shortage in the
credit facilities coverage granted by the above mentioned companies for credit card operations.
Accordingly, the Group could be liable for the risks of these letters of credit, since the Group operates
through issuing, marketing and managing those credit cards based on contracts signed between the
Group and the international credit card companies.
38. BALANCES / TRANSACTIONS WITH RELATED PARTIES
In the ordinary course of its activities, the Group conducts transactions with related parties, shareholders,
directors, subsidiaries and associates. Balances with related parties consist of the following:
Statement of Financial Position:

December31,
2018 2017
LBP’000 LBP’000
Deposits with banks and financial institutions – Note 6 11,911,410 80,620,313

Settlements due from banks and financial institutions – Note 8 5,286,123 4,486,692
Loans, advances and receivables – Note 9 3,138,833 1,639,178
Settlements due to banks and financial institutions – Note 16 6,005,327 6,254,423
Creditors’ operating accounts – Note 20 1,497,075 1,670,636
Statement of Profit or Loss:

Year Ended
December31,
2018 2017
LBP’000 LBP’000
General and administrative expenses – Note 34 132,826 132,288

Key management remunerations – Note 33 3,055,358 3,076,363
Commission and fees income 9,303,378 8,128,014

Commission and fees expense 2,983,943 2,663,212
Interest on deposits with banks and
financial institutions (net of tax) – related parties – Note 30 1,053,033 2,962,697
– related parties – Note 30 70,008 124,306
69
39. NOTE TO THE STATEMENT OF CASH FLOWS
Cash and cash equivalents as presented in the statement of cash flows comprise the following:
December 31,
2018 2017
LBP’000 LBP’000
Cash and deposits with central banks (Note 5) 13,454,401 12,834,641

Current accounts with banks and financial institutions (Note 6) 21,512,378 15,669,850
Time deposits with banks and financial institutions 5,032,934 33,722
Deposits from banks and financial institutions (Note 17) ( 26,653,012) ( 29,842,260)
Net cash and cash equivalents 13,346,701 ( 1,304,047)
Time deposits with banks and financial institutions and due to banks and financial institutions
represent balances with original maturities of 90 days or less from their origination.
The movement of non-controlling interests for the years 2018 and 2017 was as follows:
2018 2017
LBP’000 LBP’000
Balance January 1 1,316,792 1,056,553

Non-cash movements:
Share in total comprehensive income for the year 89,157 265,914
Cash movements:
Dividends distribution ( 687,420) -
Effect of IFRS 9 implementation 32,640 -
Effect of capital increase of a subsidiary 425,115 -
Other movement 2,423 ( 5,675)
Balance December 31 1,178,707 1,316,792
The following non-cash transactions were excluded from the statement of cash flows:
 Reclassification of unquoted investment securities previously classified as fair value through

other comprehensive income to financial assets at fair value through profit or loss in the amount
of LBP34billion (Note 2).
 Effect of first time adoption of IFRS 9 impairment measurement in the amount of LBP5.9billion
(Note 2).
 Allocation of the regulatory deferred liability in the amount of LBP1.2billion from other
liabilities to retained earnings to offset the expected credit loss allowance resulted from the
application of the IFRS 9 (Note 23).
 Gain on sale of equity securities classified at fair value through other comprehensive income
amounting to LBP161million (Note 7C).
70
40. ACQUISITIONS, LIQUIDATION AND DISPOSALS OF SUBSIDIARIES
During the year 2017, the Group disposed off the Cypriot subsidiary “CSC Europe Ltd.” at net book
value.
During 2017, the Group reacquired the previously sold subsidiary “KH Financial Services Ltd”, and
re-disposed it, resulting in a gain amounting to LBP90million recorded under the consolidated
statement of profit or loss.
During the year of 2017, the Group acquired 60% of “Amwal Financial Investment Ltd.” in Jordan for
a total consideration of Jordanian Dinar 2.76million (C/V LBP5.3billion) in excess of the fair value of
net assets by an amount of LBP284million (JOD133,648) recorded under goodwill as at
December 31, 2017.
Analysis of assets and liabilities over which control was acquired:

Unaudited
June 30, 2017
LBP’000
ASSETS
Loans, advances and receivables 25,737
Property and equipment 2,968,172
Investment properties 2,675,608
Total Assets 5,669,517
Unaudited
June 30, 2017
LBP’000
LIABILITIES
Operating liabilities – shareholder accounts 5,280,531
Total Liabilities 5,280,531
Net assets acquired 388,986

Net purchase price 672,553
Goodwill 283,567
41. MATERIAL PARTLY - OWNED SUBSIDIARIES
CSC Jordan Ltd and CSC Jordan Overseas Ltd are material partly – owned subsidiaries of the Group.
Financial information of the subsidiaries are provided below:
2018 2017
% %
Portion of equity interests held by non-controlling interests

- CSC Jordan Ltd 40 40
- CSC Jordan overseas Ltd 40 40
- Amwal Financial Investment Ltd. 40 40
71
The summarized financial information of the subsidiaries is provided below. This information is based on amounts before inter-company
eliminations:

Amwal Financial CSC Jordan Amwal Financial CSC Jordan
CSC Jordan Ltd Investments Ltd Overseas Ltd CSC Jordan Ltd Investments Ltd Overseas Ltd
LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000
Total Assets 9,980,155 5,620,007 333,003 10,404,530 5,549,714 1,250,820

Total Liabilities 5,917,703 5,017,967 38,704 6,872,437 5,212,945 3,255
Total Equity 4,062,452 602,040 294,299 3,532,093 336,769 1,247,565
Attributable to non- controlling interest - 40% 1,624,981 240,816 117,720 1,412,837 134,708 499,026
Profit for the year ( 620,543) 264,653 403,485 ( 250,347) ( 87,735) 820,750
Attributable to non- controlling interest - 40% ( 248,217) 105,861 161,394 ( 100,139) ( 35,094) 328,300
Summarized statement of profit or loss:

Commissions and fees revenues 4,636,128 - 954,220 4,164,274 - 1,070,694

Commissions and fees expense ( 2,677,910) ( 21,947) ( 213,277) ( 2,592,138) ( 36) ( 219,941)
Interest income 1,014 - 53,637 15,529 - 11,523
Interest expense ( 59,171) ( 241,385) ( 308,600) ( 269,473) - ( 33,404)
Staff costs ( 742,926) - - ( 642,630) - -
Administrative expenses ( 1,014,370) ( 69,289) ( 82,495) ( 589,184) ( 41,609) ( 8,122)
Impairment of fixed assets - 220,781 - - ( 220,771) -
Rent income - 487,141 - - 283,933 -
72
Summarized statement of financial position:

ASSETS
Deposits with banks and financial institutions 2,645,749 18,378 333,003 5,598,589 157,406 1,250,820
Loans, advances and other receivables 4,789,694 - - 2,781,584 - -
Property and equipment 1,568,799 2,949,233 - 1,242,186 2,820,520 -
Investment properties - 2,621,056 - - 2,542,508 -
LIABILITIES
Settlement due to banks and financial institutions 268,210 - - 180,030 - -

Operating liabilities - associate and related parties 5,312,462 2,127,962 - 2,100,201 5,145,484 -
Borrowing from banks - - - 4,031,315 - -
Accounts payable and other creditors 181,829 38,381 - 327,533 23,352 -
73
42. CAPITAL MANAGEMENT
The Group’s objectives when managing capital are to comply with the capital requirements set by the
Central Bank of Lebanon, the Group’s main regulator, to safeguard the Group’s ability to continue as a
going concern and to maintain a strong capital base.
Risk weighted assets and capital are monitored periodically to assess the amount of capital available to
support growth and optimally deploy capital to achieve targeted returns.
The Central Bank of Lebanon requires each bank or banking group to hold a minimum level of
regulatory capital of LBP10billion for the head office and LBP500million for each local branch and
LBP1.5billion for each branch abroad. In addition, the Group is required to observe the minimum
capital adequacy ratio set by the main regulator at 15% as at December 31, 2018.
The Group monitors the adequacy of its capital using the methodology and ratios established by
Central Bank of Lebanon. These ratios measure capital adequacy by comparing the Group’s eligible
capital with its balance sheet assets, commitments and contingencies, and notional amount of
derivatives at a weighted amount to reflect their relative risk.
The Group’s capital is split as follows:
Tier I capital: Comprises share capital after deduction of treasury shares, shareholders’ cash
contribution to capital, non-cumulative perpetual preferred shares, share premium, reserves from
appropriation of profits and retained earnings. Goodwill and cumulative unfavorable change in fair
value of securities at fair value through other comprehensive income are deducted from Tier I Capital.
Tier II capital: Comprises qualifying subordinated liabilities, cumulative favorable change in fair
value of securities at fair value through other comprehensive income and revaluation surplus of owned
properties.
Certain investments in financial and non-financial institutions are ineligible and are deducted from
Tier I and Tier II.
Furthermore, various limits are applied to the elements of capital base: Qualifying Tier II capital
cannot exceed 100 % of Tier I capital and qualifying short term subordinated loan capital may not
exceed 50% of Tier I capital.
The Group has complied with the regulatory capital requirement throughout the period.
During 2016, the Central Bank of Lebanon issued Intermediary Circular no. 436 by which it amended
Basic Circular 44 related to the minimum Capital Adequacy Ratios (CAR). These ratios are set to
increase gradually between December 2016 and December 2018 as shown in following table:
Common
Tier 1 Tier 1 capital Total capital
capital ratio ratio ratio
Year ended 31 December 2015 8.0% 10.0% 12.0%

74
The Group’s consolidated capital adequacy ratio, based on the Central Bank of Lebanon directives
applicable as at December 31, 2018 and 2017 amounted to 27.4% and 23.6% respectively, and is
determined as follows:
2018 2017
In million In million
of LBP of LBP
Total regulatory capital 135,819 126,608
Credit risk 263,011 318,936

Market risk 141,126 127,423
Operational risk 91,761 90,178
Risk-weighted assets 495,898 536,539
Capital adequacy ratio 27.4% 23.6%
43. FINANCIAL INSTRUMENTS
a – Credit Risk
Credit risk is the risk of financial loss to the Group if the counterparty to a financial instrument fails to
discharge an obligation. Financial assets that are mainly exposed to credit risk are deposits with banks,
loans and advances to customers and other banks and investment securities. Credit risk also arises
from off-balance sheet financial instruments such as letters of credit and letters of guarantee.
Concentration of credit risk arises when a number of counterparties are engaged in similar business
activities, or activities in the same geographic region, or have similar economic features that would
cause their ability to meet contractual obligations to be similarly affected by changes in economic,
political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the
Group’s performance affecting a particular industry or geographical location.
Concentrations of credit risk indicate the relative sensitivity of the Group’s performance to
developments affecting a particular industry or geographical location. The Group limits the impact of
concentration risk in exposure by setting progressively lower limits for longer tenors and taking
security, where considered appropriate, to mitigate such risks.
Management of credit risk
The Group attempts to control credit risk by monitoring credit exposures, limiting transactions with
specific counterparties, and continually assessing the creditworthiness of counterparties. The Group’s
risk management policies are designed to identify and to set appropriate risk limits and to monitor the
risks and adherence to limits. Actual exposures against limits are monitored daily. In certain cases the
Group may also close out transactions or assign them to other counterparties to mitigate credit risk.
75
The Group seeks to manage its credit risk exposure also through diversification of lending activities to
ensure that there is no undue concentration of risks with individuals or groups of customers in specific
locations or business. It also takes collateral when appropriate and also seeks additional collateral from
the counterparty as soon as impairment indicators are noticed for the relevant individual loans and
advances.
Management monitors the market value of collateral, requests additional collateral in accordance with
the underlying agreement and monitors the market value of collateral obtained during its review of the
adequacy of the allowance for impairment losses.
The Group regularly reviews its risk management policies and systems to reflect changes in markets
products and emerging best practices.
The table below reflect the Group’s exposure to credit risk:
December 31,
2018 2017
LBP’000 LBP’000
Cash and deposits with central banks 31,285,183 36,591,907

Deposits with banks and financial institutions 127,939,441 177,418,278
Settlement due from banks and financial institutions 31,289,039 35,479,856
Loans, advances and other receivables 38,905,206 36,958,350
Investment securities 17,975,731 15,692,102
Regulatory blocked funds 6,000,000 6,000,000
Other assets 113,106 108,984
Total assets 253,507,706 308,249,477
76
Credit Quality
1. Maximum exposure to credit risk
December 31, 2018

Cash and Deposits with Loans, Financial assets Financial assets Settlements due
deposits with banks and financial advances and at amortized at fair value from banks and
Concentration by Region central banks institutions other receivables cost through profit or loss financial institutions Total
LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000
Lebanon 32,515,079 111,044,288 32,537,816 16,157,416 42,834,499 30,172,750 265,261,848

Middle East 7,425 11,631,224 6,336,190 - 203,512 93,195 18,271,546
Europe - 1,821,158 31,200 - 48,109,656 101,881 50,063,895
Other - 3,442,771 - - 2,943,385 921,213 7,307,369
32,522,504 127,939,441 38,905,206 16,157,416 94,091,052 31,289,039 340,904,658
December 31, 2017

Financial assets
Financial assets at fair value
Cash and Deposits with Loans, Financial assets at fair value through other Settlements due
deposits with banks and financial advances and at amortized through profit comprehensive from banks and
Concentration by Region central banks institutions other receivables cost or loss income financial institutions Total
LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000
Lebanon 38,065,944 165,755,052 34,034,889 13,053,977 17,572,453 33,953,770 30,874,542 333,310,627

Middle East 7,422 8,034,238 2,877,378 - 236,041 1,271,699 1,038,968 13,465,746
Europe - 2,614,611 46,083 - 38,263,042 - 3,465,895 44,389,631
Other - 1,014,377 - - 2,668,462 - 100,451 3,783,290
Total 38,073,366 177,418,278 36,958,350 13,053,977 58,739,998 35,225,469 35,479,856 394,949,294
77
2. Movement of expected credit loss allowance during 2018 is as follows:
December 31, 2018

Cash and Deposits with Financial assets
deposits with banks and financial Loans, and at amortized Unutilized
central banks institutions other receivables cost limits Total
Opening balance - 141,957 2,056,179 - - 2,198,136

Effect of IFRS 9 adoption 220,178 2,810,959 2,711,691 110,507 54,862 5,908,197
220,178 2,952,916 4,767,870 110,507 54,862 8,106,333
Additions 26,658 448,523 2,097,600 90,608 - 2,663,389
Write-backs ( 70,186) ( 1,672,555) ( 1,885,569) ( 24,133) ( 12,420) ( 3,664,863)
Transfer to off-balance sheet - - ( 193,420) - - ( 193,420)
Difference of exchange - ( 74,159) - - - ( 74,159)
Ending balance 176,650 1,654,725 4,786,481 176,982 42,442 6,837,280
78
b. Liquidity Risk:
Liquidity risk is the risk that an institution will be unable to meet its net funding requirements.
Liquidity risk can be caused by market disruptions or credit downgrades, which may cause
certain sources of funding to dry up immediately. The Group is managing its assets and
liabilities in a way to provide and maintain a sufficient rate of liquidity. The majority of the
Group’s financial assets and liabilities carry short term maturities and their maturities are
disclosed under the related notes.
Financial liabilities by maturity:
December 31, 2018

Accounts with Up to 3 months to 3 to 5
No Maturity 3 months 1 Year Years Total
LBP'000 LBP'000 LBP'000 LBP’000 LBP’000
FINANCIAL LIABILITIES
Settlements due to banks and

financial institutions 65,775,433 - - - 65,775,433
Deposits from banks and financial
Institutions 595,978 61,464,574 16,913,887 - 78,974,439
Customers’ deposits at amortized cost 1,131,127 - 25,109,754 - 26,240,881
Creditors’ operating accounts 29,795,646 - - - 29,795,646
Creditors’ operating accounts
related parties 1,497,075 - - - 1,497,075
Borrowing from banks - - - 2,803,021 2,803,021
Accounts payable and other creditors 2,957,308 - - - 2,957,308
101,752,567 61,464,574 42,023,641 2,803,021 208,043,803
December 31, 2017

Accounts with Up to 3 months to 3 to 5
No Maturity 3 months 1 Year Years Total
LBP'000 LBP'000 LBP'000 LBP’000 LBP’000

financial institutions 67,408,388 - - - 67,408,388
institutions 1,097,689 46,019,310 65,756,650 - 112,873,649
Customers’ deposits at amortized cost 2,439,212 - 24,943,406 - 27,382,618
Creditors’ operating accounts 35,505,891 - - - 35,505,891
Creditors’ operating accounts
related parties 1,670,636 - - - 1,670,636
Borrowing from banks - 15,075,000 - 4,031,315 19,106,315
Accounts payable and other creditors 2,771,413 - - - 2,771,413
110,893,229 61,094,310 90,700,056 4,031,315 266,718,910
79
c. Market Risk:
Market risk is the risk that the fair value or future cash flows of a financial instrument will be
affected because of changes in market prices such as interest rate, equity prices, foreign
exchange and credit spreads.
Currency Risk:
The Group is exposed to exchange risk associated with the effects of fluctuations in prevailing
foreign currency exchange rates on its financial position and cash flows.
Below is the segregation of assets and liabilities between Lebanese Pound and foreign currencies base
accounts as at December 31, 2018 and 2017:
December 31, 2018

LBP US Dollar Other currencies Total
LBP'000 LBP'000 LBP'000 LBP'000
ASSETS
Cash and deposits with central banks 3,643,939 19,604,130 9,274,435 32,522,504
Deposits with banks and financial
institutions 36,862,359 34,021,736 57,055,346 127,939,441
Investment securities 35,074,862 72,526,684 2,646,922 110,248,468
Settlements due from banks and
financial institutions 16,543,177 13,209,201 1,536,661 31,289,039
Loans, advances and other receivables - 31,616,577 7,288,629 38,905,206
Investments in associates 826,647 8,661,297 1,276,713 10,764,657
Investment property - - 2,621,056 2,621,056
Property and equipment 31,263,838 4,468,831 4,518,032 40,250,701
Intangible assets 1,839,233 2,365,140 159,435 4,363,808
Other assets 8,544 1,304,448 295,549 1,608,541
Goodwill - - 283,847 283,847
Regulatory blocked funds 6,000,000 - - 6,000,000
Total Assets 132,062,599 187,778,044 86,956,625 406,797,268
LIABILITIES
Settlements due to banks and financial

institutions 27,843,467 27,974,230 9,957,736 65,775,433
institutions 21,212 26,118,227 52,835,000 78,974,439
Customers’ deposits at amortized cost 1,204,535 20,857,220 4,179,126 26,240,881
Creditors’ operating accounts 2,425,761 18,302,723 9,067,162 29,795,646
Creditors’ operating accounts –
related parties 186 ( 5,929,874) 7,426,763 1,497,075
Borrowings from banks - - 2,803,021 2,803,021
Accounts payable and other creditors 531,388 2,310,026 617,906 3,459,320
Other liabilities 435,569 3,127,970 132,970 3,696,509
Provisions 3,458,114 3,444,966 - 6,903,080
Equity 179,279,626 10,581,937 ( 2,146,699) 187,651,864
Total liabilities and equity 215,199,858 106,724,425 84,872,985 406,797,268
Net Foreign Exchange Risk ( 83,137,259) 81,053,619 2,083,640 -
80
December 31, 2017
LBP US Dollar Other currencies Total
LBP'000 LBP'000 LBP'000 LBP'000
ASSETS
Cash and deposits with central banks 6,098,174 19,864,255 12,110,937 38,073,366
Deposits with banks and
Investment securities 33,953,769 66,660,436 6,405,239 107,019,444
Loans, advances and other receivables ( 620,357) 33,759,426 3,819,281 36,958,350
Investments in associates 748,372 7,003,112 5,307,985 13,059,469
Investment property - - 2,542,508 2,542,508
Property and equipment 23,619,957 5,238,183 4,062,706 32,920,846
Intangible assets 1,148,861 2,218,832 44,888 3,412,581
Other assets 8,701 2,016,980 302,006 2,327,687
Goodwill - - 283,567 283,567
Regulatory blocked fund 6,000,000 - - 6,000,000
Total assets 133,902,034 196,516,395 125,077,523 455,495,952
LIABILITIES
Deposits from banks and
financial institutions 11,252 29,213,697 83,648,700 112,873,649
Customers’ deposits at amortized cost 1,430,079 19,519,754 6,432,785 27,382,618
Creditors’ operating accounts 2,299,148 17,435,860 15,770,883 35,505,891
Creditors’ operating
accounts – related parties 187,621 ( 626,266) 2,109,281 1,670,636
Borrowings from banks - 15,075,000 4,031,315 19,106,315
Accounts payable and other
creditors 509,186 1,895,357 667,024 3,071,567
Other liabilities 1,512,810 3,056,538 171,130 4,740,478
Provisions 3,602,215 3,239,765 - 6,841,980
Equity 168,310,379 11,495,967 ( 2,911,916) 176,894,430
Total liabilities and equity 206,922,532 128,076,119 120,497,301 455,495,952
Net Foreign Exchange Risk ( 73,020,498) 68,440,276 4,580,222 -
Interest Rate Risk:

The Group is exposed to various risks associated with the effects of fluctuations in the prevailing
levels of market interest rates on its financial position and cash flows. The Group is exposed to interest
rate risk as a result of mismatches or gaps in the amounts of assets and liabilities that mature or re-
price in a given period. The structure of the financial statements presented below, show interest
sensitivity which reflect the mismatches in the sources and application of funds between assets earning
interest rates over medium to long term period versus short term funding.
81
Interest sensitivity analysis:
December 31, 2018

Non-Interest Up to 3 months to 1–3 3–5 Over 5
Earning 3 months 1 year Years Years Years Total
LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP’000
FINANCIAL ASSETS
Cash and Central Banks 1,421,396 31,101,108 - - - - 32,522,504
Institutions 4,682,278 96,113,620 27,143,543 - - - 127,939,441
Investment securities 88,299,704 5,822,498 5,501,473 5,122,418 5,502,375 - 110,248,468
financial institutions 31,082,118 206,921 - - - - 31,289,039
Loans, advances and other receivables 7,733,473 23,408,005 61,474 7,228,197 474,057 - 38,905,206
Investments in associates 10,764,657 - - - - - 10,764,657
Other Assets 221,547 - - - - - 221,547
Regulatory blocked funds 6,000,000 - - - - - 6,000,000
Total assets 150,205,173 156,652,152 32,706,490 12,350,615 5,976,432 - 357,890,862
financial institutions 65,775,433 - - - - - 65,775,433
Institutions 27,248,990 - 51,725,449 - - - 78,974,439
Customers deposits at amortized cost 1,244,478 - 24,996,403 - - - 26,240,881
Creditors’ operating accounts 29,795,646 - - - - - 29,795,646
Creditors’ operating accounts -
related parties 1,497,075 - - - - - 1,497,075
Borrowings from banks - - - 2,803,021 - - 2,803,021
Total liabilities 125,561,622 - 76,721,852 2,803,021 - - 205,086,495
Net Assets 24,643,551 156,652,152 ( 44,015,362) 9,547,594 5,976,432 - 152,804,367
82
December 31, 2017
Non-Interest Up to 3 months to 1–3 3–5 Over 5
Earning 3 months 1 year Years Years Years Total
LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP'000 LBP’000
FINANCIAL ASSETS
Cash and Central Banks 1,488,881 36,584,485 - - - - 38,073,366
institutions 5,030,148 96,113,412 73,274,718 3,000,000 - - 177,418,278
Investment securities 79,079,908 15,058,020 5,140,183 2,238,958 1,432,125 4,070,250 107,019,444
financial institutions 35,282,067 197,789 - - - - 35,479,856
Loans, advances and other receivables 1,574,581 17,998,041 2,716,730 3,964,343 10,704,655 - 36,958,350
Investments in associates 13,059,469 - - - - - 13,059,469
Other Assets 108,984 - - - - - 108,984
Regulatory blocked funds 6,000,000 - - - - - 6,000,000
Total assets 141,624,038 165,951,747 81,131,631 9,203,301 12,136,780 4,070,250 414,117,747
financial institutions 67,408,388 - - - - - 67,408,388
institutions 30,939,949 - 81,933,700 - - - 112,873,649
Customers deposits at amortized cost 2,557,556 - 24,825,062 - - - 27,382,618
Creditors’ operating accounts 35,505,891 - - - - - 35,505,891
Creditors’ operating accounts -
related parties 1,670,636 - - - - - 1,670,636
Borrowings from banks - 15,075,000 - - 4,031,315 - 19,106,315
Total liabilities 138,082,420 15,075,000 106,758,762 - 4,031,315 - 263,947,497
Net Assets 3,541,618 150,876,747 (25,627,131) 9,203,301 8,105,465 4,070,250 150,170,250
83
44. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between Levels in the hierarchy by re-assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on
the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above.
The summary of the Group’s classification of each class of financial assets and liabilities and their fair
values are as follows:
December 31, 2018
Fair Value
Carrying Value Level 1 Level 2 Level 3 Total
LBP’000 LBP’000 LBP’000 LBP’000 LBP’000
Financial Assets measured at
Fair value through profit or loss:

Quoted equity securities 253,638 253,638 - - 253,638
Investments in Funds 27,282,623 - 27,282,623 - 27,282,623
Unquoted equity securities 60,383,633 - - 60,383,633 60,383,633
Unquoted Preferred Shares 4,349,138 - - 4,349,138 4,349,138
Unquoted debt securities 1,818,315 - - 1,818,315 1,818,315
Investment securities at amortized cost:

Lebanese Government bonds 12,056,016 - 12,056,016 - 12,056,016
Certificates of deposits 4,070,250 - 4,070,250 - 4,070,250
Loans, advances and other receivables 38,905,206 - 38,905,206 - 38,905,206
149,118,819 253,638 81,737,340 66,551,086 148,542,064
December 31, 2017

Fair Value
Carrying Value Level 1 Level 2 Level 3 Total
LBP’000 LBP’000 LBP’000 LBP’000 LBP’000
Financial Assets measured at
Fair value through profit or loss:

Quoted equity securities 667,418 667,418 - - 667,418
Investments in Funds 22,535,063 - 22,535,063 - 22,535,063
Unquoted equity securities 19,723,939 - - 19,723,939 19,723,939
Unquoted Preferred Shares 5,479,763 - - 5,479,763 5,479,763
Unquoted debt securities 2,638,125 - - 2,638,125 2,638,125
Certificates of deposits issued by local banks 7,537,500 - - 7,537,500 7,537,500
Investment securities at amortized cost:

Lebanese Government bonds 8,811,266 - 8,366,941 - 8,366,941
Certificates of deposits 4,070,250 - 3,743,283 - 3,743,283
Loans, advances and other receivables 36,958,350 - 36,958,350 - 36,958,350
Investment securities at fair value through

other comprehensive income:
Unquoted equity securities 35,225,469 - 33,953,769 1,271,700 35,225,469
143,647,143 667,418 105,557,406 36,651,027 142,875,851
84
Valuation techniques, significant unobservable inputs, and sensitivity of the input to the fair value
The following table gives information about how the fair values of financial assets and financial
liabilities, are determined (Level 2 and Level 3 fair values) and significant unobservable inputs used:
December 31, 2018 & 2017
Valuation
Financial Assets Date of Valuation Technique and key Inputs
At fair value through profit or loss:
Unquoted equity securities December 31, 2018 & 2017 Net Asset Value and price to Book of
recent transactions
Unquoted preferred shares December 31, 2018 & 2017 Management estimate based on
unobservable input related to market
volatility and liquidity
Unquoted debt securities December 31, 2018 & 2017 DCF at market discount rate in an inactive
Market
Investments in funds December 31, 2018 & 2017 Net asset value provided by fund manager
Certificate of deposit issued by local bank December 31, 2017 DCF at a discount rate determined based on
the yield curve applicable to Lebanese
treasury bonds.
At fair value through other comprehensive income:

Unquoted equity securities December 31, 2017 Price to Book of recent transactions
At amortized cost:
Lebanese government bonds December 31, 2018 & 2017 DCF at a discount rate determined based on
the yield curve applicable to Lebanese
treasury bonds, adjusted for illiquidity
Certificates of deposit issued by the December 31, 2018 & 2017 DCF at a discount rate determined based on
Central Bank of Lebanon observable yield curves at the measurement
date.
Loans, advances and other receivables December 31, 2018 & 2017 DCF at market discount rate.
There have been no transfers between Level 1, Level 2 and Level 3 during the period.
The carrying value of investment properties held at amortized cost approximates the fair value at year
end.
The directors consider that the carrying amounts of cash and deposits with central banks, deposits with
banks and financial institutions, settlement due from/due to banks and financial institutions, loans to a
financial institution, borrowings from banks, customers deposits at amortized cost and other liabilities
approximate their fair values due to the short-term maturities of these instruments.
45. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements for the year ended December 31, 2018 were approved and
authorized for issue by the Board of Directors on June 28, 2019.
85
BT 31353/DTT
September 26, 2017
Dr. Marwan Kaddoura

General Manager
CSCBANK S.A.L.
Beirut, Lebanon
Dear Dr. Kaddoura,
Kindly find enclosed 2 additional copies of each of the following reports in connection with our audit
of CSCBANK S.A.L. for the year ended December 31, 2016:
1. Consolidated financial statements and independent auditors’ report (in English)

2. Financial statements and independent auditors’ report (in Arabic)
3. Report in accordance with Article 158 of the Lebanese Code of Commerce and 152 of the
Money Credit Law (in Arabic)
4. Report in Accordance with Decree 1983 (in Arabic)
Please accept our best regards.
Very truly yours,

DELOITTE & TOUCHE
Nada A. Maalouf
Received by :
Signature :
Date :
Engagement Quality Control Review Docket Audit Services
Client Name: CSCBank S.A.L.

Engagement Number: BT 31353/DTT
Document Title: Consolidated Financial Information and Independent Auditors’ Report
Period Covered by Document: Year Ended December 31, 2018
What is the Date of Audit Report:
Type of Document:
Proposal: Report: √ Other (specify):
Language :
Arabic: English: √ Other (specify):
Signatures:
Prepared by: Date:
Typed by: MA Date: 13/5/2019

File Location: Audit Report 2018
Reviewed by: Date:
Partner: Date:
Quality Control Review: Date:
Proofread/Referenced: Date:
Discussion Copy Issued Date:
Report Signed and Approved for Release: Date:

Distribution: Nr. Copies Date Delivered
Client:
Workpaper File:
Central File:
Other:
Total:
To be completed by the Partner on the engagement YES NO N/A Comments
Has greater than normal or much greater than normal engagement
risk been identified?
If the answer to the above question was “yes,” has the Reputation and
Risk Leader (or designee) concurred in our response to the greater
than normal engagement risk?
If much greater than normal engagement risk was identified, has a
specific review of the workpapers been performed by an independent
partner?
Does the audit file include documentation of communications with
Management and/or Those Charged With Governance, in writing,
(e.g. Management Letter, other written communications to
Management, TCWG or Regulatory Bodies), and, if no such
communications are considered necessary, documentation of this?
2
YES NO N/A Comments
Is the audit report to be dated on or after the date of completion of
the EQCR? If NO, please discuss with Quality Control Reviewer
and document the explanpation in the box below.
Has this engagement been included on the exemption list for
Principal acting as Engagement Partner?
 If the answer to the above question is YES, has RRL
approval been received and documented
Is this engagement exempt from EQCR under the criteria specified in
the DTME Exemption policy?
If the answer to the above question was “yes” a Partner independent of the engagement must complete the
following:
To be completed by Partner independent of the engagement:
I have read the DTME ‘Exemptions from Engagement Quality Control Review’ Policy and confirm that this
engagement does not need an EQCR.
Signature: Date:
To be completed by the Quality Control Reviewer (“QCR”)
YES NO N/A Comments
Is this client either a PIE, GTN, MGTN or a large non-PIE client or
group?
If the client is a PIE, GTN, MGTN or a large non-PIE client or group
have you documented your review in a memo and filed it in the
working papers?
If the client is not a PIE, GTN, MGTN or a large non-PIE client or
group have you documented your review by completing the EQCR
checklist and filing it in the working papers?
Have you evidenced your review of the file by signing as a minimum
the following sub-phases: DRMS, 1210, 1211, 1213, 1310, 1410,
1570, 1580X, 1810, consultation memos, 2202, 2320, 2330, 2340,
2350, 2360, 2370, 2390, Audit report and FS, and all external
communications, where appropriate?
In connection with performing the review of the report described above, I have read the financial statements (or
other financial information) and our report thereon and have performed an objective review of the matters that I
considered to be the significant accounting, auditing and reporting considerations, including significant risks and
judgments made.
My review included appropriate discussions with the engagement partner/manager and a review of the documents
described above and any additional working papers that I considered necessary in the circumstances. All
significant matters arising as a result of this review have been resolved to my satisfaction, and the conclusions
reached in resolving any differences of opinion were resolved in accordance with Firm guidelines.
Signature: Date:
To be completed by the Engagement Partner
I confirm that other documents arising in connection with this engagement that may require an EQCR (e.g.
Management Letter, other written communications to Management, TCWG or Regulatory Bodies) have been
submitted for EQCR, with a separate EQCR docket.
I have reviewed this report docket and am satisfied that all necessary reviews have been completed prior to the
issuance of this report. Any exceptions have been discussed and documented and, in my opinion, no additional
exposure to the Firm arises as a result of such exceptions.
Signature: Date:

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CSCBANK S.A.L.

CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors’ Report 1-4

Consolidated Financial Statements:

Consolidated Statement of Financial Position 5

Consolidated Statement of Profit or Loss 6

Consolidated Statement of Profit or Loss and Other Comprehensive Income 7

Consolidated Statement of Changes in Equity 8

Consolidated Statement of Cash Flows 9

Notes to the Consolidated Financial Statements 10-85

Cash and deposits with central banks 5 32,522,504 38,073,366

Settlements due to banks and financial institutions 16 65,775,433 67,408,388

Financial instruments with off-balance risk

Fiduciary accounts 35 7,336,439 9,290,505

Commission and fee income 28 95,617,993 88,785,096

Interest income 30 13,483,111 14,936,053

Gain on financial assets at fair value

Net financial revenues 54,481,469 49,318,626

Write-back of/(allowance for) credit losses 6,9&43 1,001,474 ( 940,475)

Salaries and related charges 33 ( 21,430,857) ( 20,388,008)

Profit for the year 20,601,859 16,254,957

Other comprehensive income (“OCI”):

Items that will not be reclassified subsequently to profit or loss:

Items that may be reclassified subsequently to profit or loss:

Total comprehensive income for the year 20,602,816 16,464,578

Equity Attributable to Equity Holders of the Bank

The Bank’s headquarters are located in Beirut.

The Bank operates within the following guidelines:

2.1.1 IFRS 9 Financial Instruments

IFRS 9 introduced new requirements for:

a. Classification and measurement of financial assets

b. Impairment of financial assets

Stage 1: 12 months ECL

Stage 2: Lifetime ECL

Stage 3: Lifetime ECL

Classification under IFRS 9 (2010) Classification under IFRS 9 (2014)

ECL provision on unutilized limits – Note 43 ( 54,862)

Net impact on equity ( 5,908,197)

2.1.3 Other IFRSs and amendments

 IFRIC 22 Foreign Currency Transactions and Advance Consideration: The interpretation

Amendments to IFRS 9 Financial Instruments: January 1, 2019

IFRS 16 Leases January 1, 2019

Amendments to IAS 28 Investment in Associates and Joint Ventures: January 1, 2019

Amendments to IAS 1 and IAS 8 relating to definition of material January 1, 2020

IFRS 17 Insurance Contracts January 1, 2021

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation and Measurement:

The principal accounting policies adopted are set out below:

 has power over the investee;

CSC Finance S.A.L. 100 100 2010 Financial Institution

Classification of Financial Assets:

A financial asset is held for trading if:

 on initial recognition it is part of a portfolio of identified financial instruments that the

 it is a derivative that is not designated and effective as a hedging instrument or a

Policy applicable up to December 31, 2017:

Objective evidence of impairment could include:

 significant financial difficulty of the issuer or counterparty; or

Policy applicable effective January 1, 2018:

No impairment loss is recognised on equity investments.

 significant financial difficulty of the borrower or issuer;

Purchased or originated credit-impaired (POCI) financial assets

The Group considers the following as constituting an event of default:

Significant increase in credit risk