Commercial Bank Project

   
SUBJECT: Annual Report 2018 Credit Libanais
  SAL & Bank Of Beirut
   
  YEAR : 2019-2020
   

 
         
           
 Management discussion and analysis

: Similarities
Presented outside Lebanon •:

CL : Cyprus, Bahrain and Iraq

BOB: Sydney, Oman, UK, Germany and Cyprus

.Respect and follow guidelines provided by the Central Bank

.Provide activities: retail, corporate, investment and private banking •

Satisfy customers’ needs.

Strategy based on sustainable and profitable growth .

Priority for the Corporate Social Responsibility (CSR) .

Both offer e-banking.

Count on the permanent support of their customers , shareholders and employees .

.Deliver both the call center , e-banking and mobile banking to maintain the high customer loyalty
 Management discussion and analysis

Dissimilarities
Bank Of Beirut Credit Libanais SAL
Established in 1963 Established in 1961

Chairman: SALIM SFEIR Chairman: DR. JOSEPH TORBEY

Values: -Customer centricity Values: -Team Spirit

-Professionalism -Responsibility

-Leadership -Innovation

-Pro-Activity -Commitment

External Auditors: External Auditors:

-DFK International -DFK International

- Deloitte & Touche -KPMG

Management discussion and analysis
Bank Of Beirut Credit Libanais
Overview includes creating a sustainability
Overview includes increasing quality, speed,
strategy, developing business culture and
and efficiency of service
. performance
Financial Highlights on Balance sheet include Financial Highlights on Balance sheet include

Assets        Assets       

Liabilities      Liabilities     

Shareholders’ equity      Shareholders’ equity     

Including deposits, loans and profits loans and advances to customers

Financial Highlights on income statement Financial Highlights on income statement

Net Interest Income Net Interest Income

Net Financial Income    Net Financial Income   

Net Operating Income Net Profit Of The Year

Net Profit Of The Year ROA and ROE

 Accounting Procedures
:Similarities
• Same basis of preparation and consolidation
• Both use the 1st level in measuring fair value ( IFRS13_Market based )
• FV measurement ( lowest level input significant to the FV measurement )

Differences:
• Credit Libanais :- Exchange difference on monetary assets
- Liabilities are taken to Net results on financial instruments at
FVTPL
• BOB: - Briefly mentions the operating lease agreement
Bank Of Beirut SAL Similarities IFRS 9 Credit Libanais Similarities IFRS 9

introduces IFRS in more details by mentioning the history

from 2010 till 2013 and the new recognition of IFRS9 Introduces IFRS9 briefly

applied the standard retrospectively applied the standard retrospectively

The changes in measures arising on initial application will The changes in measures arising on initial application will
be incorporated through an be incorporated through an
adjustment to opening retained earnings or reserves adjustment to opening retained earnings or reserves
.(as applicable) as at 1 January 2018 .(as applicable) as at 1 January 2018

The assessment is preliminary because not all transition The assessment is preliminary because not all transition
work has been finalized. The actual impact of work has been finalized. The actual impact of

adopting IFRS 9 on 1 January 2018 may change adopting IFRS 9 on 1 January 2018 may change

Bank Of Beirut SAL Dissimilarities IFRS 9 Credit Libanais Dissimilarities IFRS 9

Ifrs 9 has no impact on Credit Libanais because they have
- an excess provision
BOB IFRS 9: Classification & Measurement Credit Libanais IFRS 9 : Classification & Measurement
Introduction of new measurement category (FVOCI) for Introduction of new measurement category (FVOCI) for
financial assets that satisfy the contractual cash flow financial assets that satisfy the contractual cash flow
characteristics characteristics

BOB IFRS 9: Impairment Credit Libanais IFRS 9 : Impairment

IT Mention the 3 stages of ECL : Stage 1 (12-month ECL
applies to all financial assets that have not IT Mention the 3 stages of ECL :
experienced a significant increase in credit risk), • PD
Stage 2 (amount equal to the default probability • Loss Given Default (LGD)
weighted • Exposure At Default
lifetime ECL will be recorded stage
Key Considerations
Key Considerations instrument type,
Some of the key concepts in IFRS 9 that have the credit risk grading’s,
most significant impact and require a high level of industry;
judgment such as macroeconomics factor, expected
life …. geographic location of the borrower.

BOB IFRS 9: Hedge Accounting Credit Libanais IFRS 9 : Hedge Accounting

incorporated hedge accounting that was aligned with risk
management does not have hedged items
- measured at FVOCI.
No impact on financial statements No impact on financial statements
 Risk disclosure
The main risks that are arising from the Group’s financial instruments are:
• Credit risk
• Liquidity risk
• Interest rate risk
• Foreign currency risk

1. Credit risk is the risk that a customer or counterparty will default on its
contractual obligations resulting in financial loss to the Group. Credit risk
mainly arises from loans and advances to customers and other banks,
investments in debt securities and derivatives that are an asset position.
2. Liquidity risk is the risk that the Group will be unable to meet its net
funding requirements. Liquidity risk can be caused by market disruptions
or credit downgrades
3. Interest rate risk arises when there is a mismatch between positions,
which are subject to interest rate adjustment within a specified period.
4. Foreign exchange risk is the risk that changes in foreign currency rates will
affect the Group’s income or the value of its holdings of financial
instruments. The objective of foreign currency risk management is to
manage and control foreign currency risk exposure within acceptable
parameters while optimizing the return on risk.

Bank Of Beirut
•Identify, measure and manage the risks
effectively across all business lines
•Set appropriate limits in line with
defined risk appetite
•Ensure control and monitor adherence
to the limits
•Allocate capital among these
businesses properly
Bank Of Beirut
•Interest Rate Risk in the Banking Book
•Market Risk - Stress Testing
- •Interest sensitivity gap
A- Credit Risk :
Credit Libanais
•Derivative financial instruments
•Credit-related commitments risk
•Analysis of maximum exposure to
credit risk and collateral and
other credit enhancements
•Collateral and other credit
enhancements
B-Market Risks
Credit Libanais
•Interest rate risk
•Interest rate sensitivity
 C-Liquidity Risk
Bank Of Beirut Credit Libanais
•Contingency Funding Plan •The net liquid assets consist of cash and all
balances with the Central Bank of Lebanon
•The Liquidity Coverage Ratio and Net Stable Funding •Regulatory ratios and limits
Ratio
•The Liquidity Coverage Ratio •the liquidity position is also monitored through
internal limits, such as the loans-to-deposits
ratio

D-Operation Risk
Bank Of Beirut Credit Libanais
•Risk Identification: identifying the root causes of •Operational risk is the risk of loss arising from
incidents that may cause losses systems failure, human error, fraud or
external events.
•Risk Monitoring and Controlling: identifying the •staff training and assessment processes,
factors that change the impact of the risk to including the use of internal audit
keep them under control
• Risk Assessment: identifying the impact of the -
risks