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Annual Report 2008 - PDF 9 by wulinqing

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ANNUAL REPORT
“Leading the way in tough times”




                    B a n k i n g   G r o u p
Contents
             At a Glance                                            1   Vision Statement
             Group Key Figures                                      2
             Chairman’s Address                                     4
             Financial and Economic Section                         8   Credit Libanais
                                                                        is the preferred bank in Lebanon - for customers and
             Corporate Governance                                  12   talented employees
             Commitment to Corporate Governance                    14
             Board of Directors                                    17   Credit Libanais'
             Major Committees                                      18
                                                                        core values are customer focus, innovation, teamwork
             Governance Structure                                  20
             Organizational Chart                                  21   and reward for performance

             Core Banking Activity                                 22
                                                                        Credit Libanais'
             Retail Banking                                        24   purpose is to enhance shareholder value
             Corporate Banking                                     30
             Financial and Capital Markets                         32
             Credit Libanais Investment Bank sal (clib)            36   Credit Libanais
                                                                        is primarily a retail bank and serves selected
             Corporate Social Responsibility:                           corporate customers
              Our Triple Bottom Line                               40
             Economic Sustainability of Core Banking Activity 42
              - Customer Focus                                     44
              - Risk Management & Control                          48
              - Compliance & the Prevention of Money Laundering    68
              - Internal Audit                                     72
              - Organization, Planning & Startegy                  76
              - Investing in our Human Capital                     80
             Social and Environmental Sustainability               86


             Financial Results                                     98
                                                                                                                              Launching of
             Credit Libanais Group                                101                                                         the investment
                                                                                                                              banking arm
             Credit Libanais Investment Bank (clib)               198                                                         of the Group
             Credit Libanais d’Assurances                                                                                     through the
                                                                                                                              majority owned
              et de Reassurances (cla)                            212                                                         subsidiary
                                                                                                                              “Credit
             List of Correspondent Banks                          224                    Acquired                             Libanais
                                                                                         Intercontinental                     Investment
                                                                                         Bank                                 Bank”
             List of Branches                                     228
                                                                        1961             1977
                                                                                        1977           1994 19891996
                                                                                                     1985                 1997
                                                                                                                   1994 2000
                                                                        Establishment                       Acquired both     First issuance   Acquired the
                                                                        of the Bank                         First Phœnician   of Euro CD       operations
                                                                                                            Bank and          listed on        of American
                                                                                                            Capital Trust     international    Express Bank,
                                                                                                            Bank              markets by       Lebanon
                                                                                                                              a Lebanese
                                                                                                                              bank




           Annual Report 2008                                                                                                    Credit Libanais Group
                     Business Principles
                     We Serve                      We deliver superior customer service. We gain customer satisfaction with service that
                                                   exceeds customer expectations.
Our Identity


                     We Act                        We are action-oriented and encourage personal initiative.
                                                   Can Do and Will Do are basic attitudes of all employees.

                     We Perform                    We have a performance-oriented culture. Rewards are commensurate
                                                   with performance.

                     We Improve                    We increase productivity each year. Revenue and profit per employee are key measures
                                                   of Bank performance.

                     We Innovate                   We embrace change. We continuously seek better solutions for our customers and the Bank.

                     We Cooperate                  We function as a team. Cooperation among individuals and units is fundamental
                                                   to delivering all Bank services to customers.

                     We Communicate                We are open. We encourage continual dialogue across all units and levels.

                     We Empower                    We emphasize delegation. Acceptance of personal accountability permeates our
                                                   corporate culture.

                     We Build                      We continuously upgrade our skills. Commitment to self-development and training
                                                   are cornerstones of our competitive advantage.

                     We Respect                    We value each others’ ideas. We treat colleagues fairly, sincerely and courteously,
                                                   regardless of differences in background.




           Issuance of
           the second
           tranche of                                  Issuance of
           three-year                                  cumulative           Issuance of
           Euro CD                                     Preferred            three-year Euro     Performed a USD         Launching of
           listed on                                   Shares               CD listed on        102 million capital     banking operations
           international                               maturing in          international       increase by existing    in the Kingdom of
           markets                                     2011                 markets             shareholders            Bahrain

          2002
         2000              2001 20032002              2004
                                                      2003             2004 2005 2005           2006
                                                                                                2006              2007 2007 2008             2009
                                Issuance of the        Acquired ISO         Launching of        Implemented an          Turned affiliated    The Bank
                                third tranche          9001:2000            Islamic banking     Employee Stock          leasing company      successfully
                                of three-year          Certification        operations in       Ownership Plan for      Credilease into a    managed, with
                                Euro CD listed         for Quality          Lebanon through     a total consideration   Lebanese financial   Credit Suisse &
                                on international       Management           the Bank’s          of 5.7% of the Bank’s   institution          Byblos Bank, the
                                markets                System               subsidiary          common shares                                2009 Republic
                                                                            “Lebanese Islamic   Acquired the Golden                          of Lebanon
                                                                            Bank”               Pan Arab Corporate                           voluntary exchange
                                                                                                Website Award                                transaction for a
                                                                                                                                             total consideration
                                                                                                                                             of some USD 2.3
                                                                                                                                             billion




                                                                                                                                                                   1
Group Key Figures
                                                                        19.34%
                                                                           pre-tax
                                                                       Return On average
                                                                         Equity (ROaE)




                          As at 31 December (million LBP)                              2008          2007              2006              2005

                          Balance Sheet

                          Total assets                                               6,714,788      5,692,783       5,205,458         4,773,222

                          Customer deposits                                          5,819,845      4,819,536       4,354,298         4,026,105
                          Shareholders’ equity                                         581,947        544,776         531,379           343,547
                          Liquid assets                                              4,933,660      4,279,904       3,991,046         3,645,899
                          Loans & advances to customers                              1,498,676      1,150,331          958,635           899,056

                          Income Statement

                          Net interest income                                          144,092       107,623           104,628            83,287
                          Net financial income                                         177,514       141,852           138,584           126,392
                          Net profit for the year                                       77,754        46,048            44,802            34,932
                          Liquidity ratio                                                    81%        84%               86%                83%
                          Solvency ratio (*)                                            27.5 %        31.5 %           35.7 %             25.1 %
                          Return On average Assets (ROaA)                                    1.5%         1%            1.06%              0.91%
                          Return On average Equity (ROaE)                              19.34%         11.93%           14.30%            13.61%

                          (*) Excluding profits for the current year




                                                                        27.5%                           20.76%                    17.95%
                                                                   Capital Adequacy Ratio                   increase                    growth
                                                                         (as per Basel I)            in customer deposits            in total assets
                                                                               or

                                                                       13.32%
                                                                         (as per Basel II)




                    Annual Report 2008                                                                                           Credit Libanais Group
                                                                                                                                     Group Key Figures




Growth Trend in Banking Activity

   8000                                                                      8000

                                                               6,714

                                                                                                                                      5,819
   6000                                         5,693                        6000
                                  5,205
                 4,773                                                                                                       4,820
                                                                                                              4,354
                                                                                              4,026
   4000                                                                      4000




   2000                                                                      2000




      0                                                                         0

                2005             2006          2007           2008                           2005            2006          2007      2008

          Total Assets (billion LBP)                                                 Total Customer Deposits (billion LBP)


                                                                                                                                      1,498
   7000                                                                      1400


   6000                                                                      1200                                          1,150


   5000                                                                      1000                                   959
                                                               4,933
                                                                                               899
                                                4,280
   4000                            3,991                                      800
                  3,646

   3000                                                                       600


   2000                                                                       400


   1000                                                                       200


      0                                                                         0
                2005              2006         2007           2008                           2005              2006       2007       2008
          Liquid Assets (billion LBP)                                                Loans & Advances to Customers (billion LBP)



          Strong Capital Base                                                       Sustainable Profitability and Value Creation
                                  35.7%
    600                                                                35%    180

                                                                                                                                       177
                                                  31.5%
    500                                                        27.5% 30%      150                                             142
                                                                                                               139

                                                                                               126
               25.1%
                                                                       25%
    400                                                                       120

                                                                       20%
    300                                                                        90

                                                                       15%

    200                                                                        60
                                                                       10%

    100                                                                        30
                                                                       5%


      0                                                                0%       0
                2005             2006          2007           2008                           2005            2006          2007      2008
          Shareholders’ Equity (billion LBP)                                        Net Financial Income (billion LBP)



                                                          Previous year       Current year            Solvency ratio



                                                                                                                                                         3
                                          In what was a dismal year for global finance, year 2008 also conversely
Chairman’s Address




                                          served to confirm the resilience of the Lebanese financial sector. And it
                                          must be said that this resilience is not due to a combination of random
                                          circumstances, but rather the perseverance and hard work aimed at building
                                          a confidence-inspiring model which has been tested live for thirty years.
                                          Most recently, the Lebanese banking sector weathered the major financial
                                          markets crash, which created world tensions, a change in the perception
                                          of banking risks, and a liquidity crisis that required the interventions of
                                          governments and Central Banks. Together these problems have put the
                                          viability of the free market model into question and will eventually require
                                          the redefinition of banking for 2009 and beyond.

                                          Still, the Lebanese banking sector was well prepared on several fronts.
                                          On the economic front, it was mainly due to the prudent framework of the
                                          Lebanese regulatory authorities and the prevailing credit and investment
                                          regulations which kept important liquidity in the banking sector, strictly
                                          limited investment in structured products and subprime securities and
                                          shielded banks from exposure to wholesale financial markets. Furthermore,
                                          the stability of the Lebanese Pound against the US Dollar revitalized
                                          confidence and reduced inflation and helped dedollarization. In harmony
                                          with this regulatory framework, Lebanese banks maintained interest rates
                                          at appropriate levels in 2008 to support ongoing deposit inflows and a
                                          strengthening of the country’s foreign reserves.

                                          Altogether, these measures have helped maintain confidence in the
                                          Lebanese economy and financial system, allowing for a steep build-up of
                                          international reserves during the global financial crisis. The Central Bank’s
                                          foreign exchange reserves rose to USD 19.73 billion in December 2008,




                     Annual Report 2008                                                                   Credit Libanais Group
                                                                           Year 2008
                                                             served to reconfirm the
                                                          resilience of the Lebanese
                                                                        financial sector


up from USD 12.39 billion at the end of 2007 – an increase which places
Lebanon in a good position to buffer against shocks.

In recognition for outstanding performance in a time of crisis, Moody’s
Invested Service upgraded Lebanon’s sovereign rating from B3 to B2 on
April 1, 2009, in spite of the world crisis. According to the ratings agency, the
primary reasons for this review action were the substantial improvement in
external liquidity, the proven resistance of the public finances to shocks,
and the willingness and ability of Lebanon’s resilient banking system to
finance fiscal deficits.

On the political scene, year 2008 also witnessed the birth of the Doha
Accord, which translated into an improvement in the overall political
climate: the election of President Suleiman and the birth of a national unity
government. A solution was made possible due to internal and regional
determinations to settle the political crisis. This power-sharing formula
was also tested live on the ground during the Gaza War, during which
time Lebanon was unified and remained uninvolved. The new political
landscape allowed Lebanon to successfully hold the legislative elections
of June 2009.

Amidst this landscape, the Lebanese real GDP recorded a growth rate of
around 8% in 2008, tourist arrivals increased by 31%, and total banking
sector assets have grown by a robust 14.59%. Concurrently, customer
deposits at Lebanese banks rallied by 15.58%, with the dollarization rate
dwindling to 68.79%, down from 76.46% in 2007.

As far as Credit Libanais is concerned, the Bank unveiled an astounding
70.52% annual increase in net profits to USD 52.09 million as at year-end




                                                                                           5
                     2008. Net interest income during the period added a healthy 33.41% to USD
                     95.24 million, while net financial income rose by 24.98% to USD 117.61
                     million. On the balance sheet front, the Bank’s total assets expanded by
                     17.95% to USD 4.45 billion through December 2008. Customer deposits
                     rallied by 20.76% to USD 3.86 billion, while shareholders’ equity (including
                     profits of the year) advanced by 6.58% to USD 386.03 million. Credit
                     Libanais’ pre-tax return on average equity (ROaE) to common shareholders
                     ended the year 2008 at 19.3%, while pre-tax return on average assets
                     (ROaA) settled at 1.5%. The Bank’s loans to deposits’ ratio increased to
                     25.75% in 2008 from 23.86% in 2007. The Bank’s BIS Capital Adequacy
                     Ratio firmed at around 27.5%. During the year, it is noteworthy to mention
                     that Credit Libanais reimbursed its Eurobond issue using the excess flux
                     of liquidity without resorting to the tapping of international markets.

                     Our strategy is to become the retail bank of choice in Lebanon while
                     focusing on select corporate clients. To implement corporate strategy, we
                     continuously build on our range of products, engage in selected regional
                     expansion, deliver value to our clients and offer opportunities to our
                     employees.

                     At a time of significant market turmoil, it was primordial to have a resilient,
                     yet flexible strategy. On the strategy deployment front, we believe that our
                     holistic approach to credit, operational and market risks paid off in 2008.
                     The risk management team proved its mettle with its juggling between
                     international requirements, regulatory framework and internal regulations
                     to formulate a comprehensive and effective strategy to safeguard our
                     operations. Our strategic alliances with several lending partnerships and
                     international agencies diversified our sources of low-cost funds and helped
                     us to alleviate the economic burden on our customers.




Annual Report 2008                                                                    Credit Libanais Group
                                                                               Chairman’s Address




                Credit Libanais
                used lessons from
        the past to build towards
                    a better future


Organically, we maintained the ongoing restructuring of our operations
along a more efficient and customer-centered approach. In 2008, Retail
Banking, which accounted for 65% of the Bank lending activity, increased
its market share by 36.1% and witnessed a better repartition of risk and
improved margins. At the same time, the Corporate Banking portfolio grew
by 7% in terms of customers and its activity volume grew by 16.3%.

Armed with conservative risk management strategies and continuously
upgrading our processes and procedures within a sound regulatory
banking environment, Credit Libanais looks to the future with confidence.
We believe that every market challenge is a new opportunity. We proved
that we have indeed learned well from past adversities. More importantly,
we used those lessons to build towards a better future. Sheltered from the
international crisis, Lebanon – whose real GDP growth was among the top
15 countries in 2008, as banking deposits accounted for around 270% of
GDP and banking assets accounted for around 330% of GDP – witnesses
today a true opportunity to build a modern and dynamic economy that
fosters job creation and improves purchasing power.

I would like to thank our Shareholders for their continuous support and
trust. To our employees, I would like to say: our performance and resilience
was made possible because of you.




                                            Joseph Torbey
                                      Chairman & General Manager




                                                                                                    7
                                  The resilience
                                            of the
                                        Lebanese
                                 financial sector
                                    is not due to
                                  a combination
                                       of random
                                 circumstances,
                                       but rather
                                            to the
                                   perseverance
                                 and hard work
                                 that have gone
Financial and Economic Section




                                     into building
                                   a confidence-
                                         inspiring
                                           model.




                                                      The Lebanese economy experienced mixed fortunes during 2008 as a consequence of a varied level of
                                                      political stability coupled with a roller-coaster trend adopted by global equity and commodity markets.
                                                      The first part of the year, extending to May, witnessed escalating political tensions which peaked during
                                                      the military clashes between different Lebanese factions in the first half of May. Standard & Poor’s, the
                                                      international ratings agency, downgraded as such Lebanon’s long-term Sovereign foreign currency
                                                      rating from “B-” to “CCC+” in early February, while Moody’s Investors Service reaffirmed Lebanon’s
                                                      “Negative” outlook in mid February. The frantic rally in commodity prices to record highs further aggravated
                                                      the situation. More particularly, the price of oil, mainly driven by speculative motives, burgeoned to
                                                      an all time high, breaking the USD 147 per barrel mark in July 2008 and compelling the Lebanese
                                                      government to remove its subsidy on the gasoline tank, which reached a record LBP 33,300/tank.




                                 Annual Report 2008                                                                                         Credit Libanais Group
The unprecedented rise in fuel prices coupled with the steep      and stringent regulations promulgated by the Lebanese
appreciation of the Euro against the USD to an all time high of   Central Bank. Consequently, Moody’s Investors Service
USD 1.6038 in mid-July induced high inflationary pressures        upgraded Lebanon’s outlook from “Stable” in the early
on the Lebanese economy, prompting the government                 post-Doha accord period to “Positive” in early December
to raise the minimum wage level and subsequent wage               and hailed the Central Bank’s effective monetary policy
brackets by LBP 200,000.                                          and efficient regulatory framework. Moreover, Lebanese
                                                                  banks were spared the downgrade frenzy applied to most
The Doha Accord in May, however, came to put an end to            international banks due to their exposure to the so-called
the military clashes and re-order political turmoil. The Doha     “toxic assets”. The Lebanese Pound maintained its stability
Accord was followed by the election of a consensus President      against the U.S. Dollar for another successive year with the
and by the formation of a national unity government, restoring    deposit dollarization rate regressing to 68.79% as at end
as such political stability and confidence in the economy.        of 2008 from 76.46% a year earlier, thanks to the renewed
Concurrently, the Lebanese stock market gained some               level of confidence in the Lebanese economy.
stimulus with the Credit Libanais Aggregate Stock Index
                                                                  In this context, the Lebanese banking sector has witnessed a
(CLASI), hitting its record high of 1,801.01 points on July 7,
                                                                  unique inflow of foreign remittances in 2008 from Lebanese
2008. Other signs of economic recovery were reflected by a
                                                                  expatriates living namely in the Gulf region, with some
rebound in the number of tourist arrivals (including Lebanese
                                                                  43.1% reported annual expansion in foreign inflows to USD
expatriates) to Lebanon, propelling hotel occupancy rates to
                                                                  5.65 billion through July 2008, up from USD 3.95 billion in
a healthy level.
                                                                  the same period in 2007. In the second half of 2008, and
The Lebanese real estate sector was no exception,                 notwithstanding the global financial turmoil which struck
witnessing an unprecedented rally in construction material        financial institutions worldwide, the Lebanese banking sector
prices including steel, cement and wood, which altogether         preserved its solid standing with some USD 500 million
translated into a steeper real estate price curve. This has       reported influx during the one-week period which followed
lured investors’ speculative desires, spurring demand for         the bankruptcy filing of Lehman Brothers, according to the
real estate in prime locations and transforming Beirut into       Lebanese Central Bank Governor.
a gigantic construction field. Thus, construction permits         Lebanese banks pursued their regional expansion strategy
rocketed by 80.30% year-on-year to 14.28 million sqm through      in 2008, posting a healthy 14.59% annual increase in total
December 2008, thanks to the influx of petrodollars from          consolidated assets to USD 94.26 billion as at end of
Arab investors and remittances from Lebanese expatriates          December according to the Association of Banks in Lebanon,
willing to own an apartment or a piece of land in their mother    from USD 82.25 billion in 2007. Concurrently, customer
country.                                                          deposits followed suit, posting a robust 15.58% annual
                                                                  appreciation to USD 78.66 billion with the dollarization rate
The month of September was marked by the start of the
                                                                  slowing down to 68.79% from 76.46% in December 2007.
global financial crisis that plagued several international
banking systems across the globe and stirred a wave of                                 Activity of the Lebanese Banking Sector
bankruptcy filings. This has dragged global equity and
commodity markets into a precipitous slide and pushed                       100.00                                                  100.00 %


major world economies into recessionary periods despite                      80.00                                                  80.00 %


several global multi-billion dollar bailout plans. The                       60.00                                                  60.00 %

Lebanese equity market moved in tandem with global equity                    40.00                                                  40.00 %

markets with the Credit Libanais Aggregate Stock Index                       20.00                                                  20.00 %

plunging below the 1,000 level to a year-low of 973.53 on                     0.00                                                  0.00 %
                                                                                      Dec-04   Dec-05   Dec-06   Dec-07    Dec-08
December 15, 2008. The Lebanese financial and banking
systems, however, remained unscathed, thanks to the strict           Deposits (USD billion)        Loan/Deposits rate

                                                                     Loans (USD billion)           Dollarization rate (Deposits)




                                                                                                                                               9
                             The soundness of the banking sector was further reflected         99 million for Support through Civil Society Organizations
                             by the outlook upgrade by the international ratings agency,       (CSOs).
                             Capital Intelligence, to “Stable” on Bank Audi Saradar,
                             BBAC, BLOM Bank, Byblos Bank, Credit Libanais and                 Consequently, Lebanon’s balance of payment remained on
                             Fransabank in late July. In its December rating update,           positive grounds in 2008, aggregating to USD 3,461.5 million
                             Moody’s Investors Service also praised the Lebanese               in total surplus compared to that of USD 2,036.6 million in
                             banking sector’s resilience in the face of the global turmoil,    the year 2007. Consequently, Lebanon’s foreign currency
                             preserving its “B3” long-term bank deposits’ rating and “D-“      reserves gathered steam in 2008, reaching its record high
                             financial strength rating with “Stable” outlook.                  of USD 19.73 billion as at year-end, dwarfing the USD 12.39
                                                                                               billion accumulated in 2007.
                             On the Public Finance Front, Lebanon’s fiscal deficit
                             (budgetary and treasury) widened to USD 2.92 billion up           As far as public debt is concerned, statistics released by
                             to December 2008 from USD 2.54 billion in the previous            the Lebanese Ministry of Finance show an annual 11.85%
                             year. The budget, however, recorded a primary surplus of          expansion in gross public debt to USD 47.01 billion as
                             USD 597 million through December 2008. Government                 at year-end, up from USD 42.03 billion in 2007. Of the
                             revenues rose markedly by 21.19% to USD 7.03 billion              total gross public debt, 44.96% is external debt while the
                             while expenditures (including debt servicing) soared by           remaining 55.04% is domestic debt.
                             19.23% to USD 9.95 billion. The increase in revenues owes
                                                                                               On the international front, the record appreciation of the Euro
                             in part to the staggering 28.98% upsurge in VAT revenues.
                                                                                               coupled with the rally in world oil and energy prices have
                             Consequently, the deficit to total expenditures’ ratio watered
                                                                                               fuelled global inflationary pressure until the third quarter of
                             down to 29.35% as at year-end 2008 from 30.49% a year
                                                                                               the year. This has instigated Lebanon’s Consumer Price
                             earlier.
                                                                                               Index (CPI) to escalate by 11.15% through October 2008
                                                                                               to 123.65, markedly amplifying the value of Lebanese
                                                                                LBP Billion
                                                                                               imports by 37.51% during the same period. Inflation,
                                                                                               however, was suppressed in the final two months of 2008
   Public Finance                            For the One-Year Period Ending      YOY           due to the depressed global commodity price levels and the
                                             December 2007 December 2008      % Change         aggravation in the world recession, ending the year as such
   Revenues                                      8.749           10,603         21.19%
                                                                                               at 6.36%, up at 120.81 from a reading of 113.59 in 2007.
   Expenditures (including debt servicing)       12,587          15,007         19.23%
   Debt servicing                                5,304           4,940          -6.86%         On the current account side of the balance of payment,
   Budget deficit                               (3,838)          (4,404)        14.75%
                                                                                               Lebanon’s balance of trade has prolonged its historical deficit
   Deficit / Total Expenditures                 30.49%          29.35%
                                                                                               for another consecutive year, standing at USD 12,659 million
Source: The Lebanese Ministry Of Finance                                                       as at end of December 2008, up from USD 8,999 million in
                             On the capital account side of the balance of payment,            2007. Lebanese exports rose by 23.51% on an annual basis
                             the Lebanese government managed to secure some USD
                                                                                                               Beirut International Airport Total Passengers
                             5.384 billion from International Donors through December
                             31, 2008 out of USD 7.53 billion in total Paris III pledges. Of              4,400,000
                                                                                                          4,000,000
                             the total foreign aids, USD 2.133 billion was geared towards                 3,600,000
                                                                                                          3,200,000
                             budgetary support, USD 1.431 billion to provide support to                   2,800,000
                                                                                                          2,400,000
                             the private sector, USD 1.047 billion for project financing,                 2,000,000
                                                                                                          1,600,000
                                                                                                          1,200,000
                             USD 43 million for Support through the Central Bank, USD                       800,000
                                                                                                            400,000
                             326 million was reserved for In-Kind contribution, USD 306                           -
                                                                                                               Dec    01   02   03   04   05   06   07   08
                             million for Support through the United Nations and USD




                       Annual Report 2008                                                                                                           Credit Libanais Group
                                                                    Financial and Economic Section



to USD 3,478 million, outweighed by a larger 36.58% growth
in imports to USD 16,137 million. Nevertheless, the deficit
in Lebanon’s balance of trade was fully offset by the robust
surplus in the balance of payments’ capital account due to
the astounding level of foreign inflows.

On the tourism front, Beirut International Airport (BIA) activity
expanded by 22.08% during the full year 2008. The total
number of passengers traveling through the Beirut Airport
accumulated to 3.87 million through December, including
transit travelers. Total arrivals burgeoned by 21.22% on
an annual basis to 1,939,761 with the number of departing
passengers following suit, up by 22.94% to 1,929,846. In
related news, the number of tourist arrivals to Lebanon
gained a staggering 31% momentum in 2008 to 1,332,557,
way above the 1,017,072 level registered in the same period
in 2007.

            Breakdown of Departing Passengers By Nationality




              29.09%



                                                         52.93%




               17.97%




   Arabs         Lebanese          Other nationalities




                                                                                                     11
                                          Corporate Governance
Commitment to Corporate Governance   14
Board of Directors                   17
Major Committees                     18
Governance Structure                 20
Organizational Chart                 21
                                         Definition of Corporate Governance
Commitment to Corporate Governance
                                         Corporate governance is defined by the Organization for Economic Cooperation and Development (OECD) as “a set of
                                         relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance
                                         also provides the structure through which the objectives of the company are set and through which the means of attaining
                                         those objectives and monitoring performance are determined. Good corporate governance should provide proper incentives
                                         for the board and management to pursue objectives that are in the interests of the company and its shareholders and should
                                         facilitate effective monitoring. The presence of an efficient corporate governance system, both within an individual company
                                         and across an economy as a whole, helps to provide a degree of confidence that is necessary for the proper functioning of a
                                         market economy.”

                                         Banking Corporate Governance
                                         Banks are at the front line of corporate governance since they are responsible for the introduction of new practices and
                                         innovative approaches and instruments. By strengthening the corporate governance framework in the banking system, a
                                         cascading effect to advance corporate governance in the non-bank corporate sector is developed through the creation of
                                         incentives for the rest of the corporate sector to practice good corporate governance.
                                         According to the Basel Committee on enhancing corporate governance for banking organizations, “corporate governance
                                         involves the manner in which the business and affairs of banks are governed by their boards of directors and senior management,
                                         which affects how they:
                                         • Set corporate objectives;
                                         • Operate the bank’s business on a day-to-day basis;
                                         • Meet the obligations of accountability to their shareholders and take into account the interests of other recognized stakeholders;
                                         • Align corporate activities and behavior with the expectation that banks will operate in a safe and sound manner, and in
                                           compliance with applicable laws and regulations; and
                                         • Protect the interests of depositors.”
                                         Transparency is important because it allows shareholders and other stakeholders and market participants to effectively monitor
                                         and properly hold accountable the Board of Directors and Senior Management. It creates confidence and an environment of
                                         trust within the economy.

                                         Banking Corporate Governance and the Lebanese Regulator
                                         Although there is no corporate governance code exclusively focusing on banks, the Central Bank of Lebanon has issued
                                         several regulations and has thus created a framework for corporate governance for banks. It is noteworthy to mention that the
                                         Central Bank of Lebanon, the Association of Banks in Lebanon and the Lebanese Transparency Association are all actively
                                         engaged in promoting a culture of corporate governance.
                                         The Central Bank of Lebanon is the prime regulator in the area of corporate governance. Indeed, basic circular No. 77 dealing
                                         with the internal audit, basic circular No. 81 dealing with lending, investments and partnerships, basic circular No. 83 dealing
                                         with anti-money laundering followed by basic circular No. 106 covering corporate governance were all subsequently issued in
                                         order to cover this topic. These circulars aimed to regulate these functions by establishing the appropriate committees to create
                                         a reporting system and provide the board of directors with the necessary tools to manage the bank and take the appropriate
                                         decisions. To this end, Credit Libanais abides by all circulars mentioned above and is fully compliant with Central Bank of
                                         Lebanon requirements.
                                         Credit Libanais spares no effort to stay in line with international regulations in terms of corporate governance. The Bank is also
                                         actively engaged in the implementation of Basel II requirements by means of regular meetings of the Basel II Committee and
                                         its subsequent reporting. More information about Basel II implementation is available in the risk management section.




                                     Annual Report 2008                                                                                                Credit Libanais Group
                                                                                         Corporate Governance




Corporate Governance at Credit Libanais

• The Bank is run by a Board of Directors which sets the strategy and vision of the institution. This Board is elected
  for a three-year mandate during the General Assembly. The Credit Libanais Board consists of leading
  businessmen from Lebanon and the Gulf. There exists a clear segregation of duties between the Board
  of Directors and the Bank shareholders. Credit Libanais Management is committed to regular reporting
  and transparency before the Board to enable it to act for the benefit of the institution and for preserving
  the investment of our Shareholders. Several committees have been installed according the Central Bank’s
  regulations and Basel II requirements to ensure that Credit Libanais Management is bound by systematic
  reporting to its Board of Directors - more information about Bank committees is available in the major
 committees section.

• The Group’s risk management framework is based on the principle of “three lines of defence”. The first line
 of defence is the business, which is accountable for the ownership, day-to-day management and control
 of all risks at an operational level and for implementing processes and testing key controls in compliance
 with Group policies. The second line of defence is Group functions, primarily consisting of Group Risk
 Management, Group Compliance and Group Finance including Group Asset and Liability Management.
 These functions are responsible for the implementation and maintenance of the operational risk framework,
 tools and methodologies, and for oversight and challenge on the adequacy of the risk and control processes
 operating in the business. The third line of defence is Group Audit, which is responsible for independently
 assessing the adequacy and effectiveness of key controls and ensuring compliance with Group policies.

The main responsibilities of the Group Risk Management functions of the business units are to:
  - Oversee all credit, market and operational risk matters and ensure compliance with local laws;
  - Implement review and control policies on all risk portfolios;
  - Manage concentrations by setting limits at portfolio level;
  - Manage single event/single obligor risk by setting limits;
  - Set provisions for loan losses within delegated authority; and
  - Establish and maintain operational risk control discipline.

A key component of risk management is ensuring that Credit Libanais’ reputation is preserved and enhanced
through the Bank’s choice to engage responsibly in the right business activities with the right clients. The
Group Asset and Liability Management (ALM) function is structured outside the Risk Management function.
ALM supports the capital management process, which is governed by the Group ALCO. ALM is responsible
for the development of the Group’s policies for liquidity risk, the hedging of foreign exchange exposures of
capital investments abroad, managing capital ratios, and the Group-wide capital requirements. The compliance




                                                                                                                         15
function within the Group performs the independent oversight role, on behalf of the Managing Board, with
respect to those core processes, related policies and procedures that seek to ensure that the Group adheres to
industry specific laws and regulations in letter and spirit. Group Finance responsibilities include the preparation
of the budget, performance reporting and the process to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with the
new trends in the international accounting standards, namely the international financial reporting standards
(IFRS 7).

• Our employee handbook sets the rights and duties of employees. It also incorporates Credit Libanais’ code
of conduct, which outlines the basic principles of business ethics and requirements to ensure that the Bank’s
activities are conducted with integrity and honesty. By making our beliefs public and acting on them, we help
nurture a culture of trust amongst all our employees. To that end, we have made the employee handbook
available to all employees on our intranet website, and all new recruits to Credit Libanais are given a copy
of the handbook to acquaint them with the Bank’s culture and to facilitate their integration into the internal
environment.

• Years ago, we installed the matrix performance system in order to make the remuneration of our quantitative
functions transparent, and every quarter, the performance and remuneration of these functions is made public.
Branches and other head office departments have seen their performance evaluated according to this matrix,
which has in turn instigated and strengthened a culture of performance. Performance measures also make
clear to employees what the management strategy is and how to approach it.

• We have installed a Disciplinary Council to regulate any untoward behavior within the Bank’s environment,
be it ethical or otherwise, and empowered it to take corrective action in order to ensure that our culture of
trust is disseminated amongst employees. Depending on the misdemeanor, employees are transferred to the
Disciplinary Council either directly or following several warning letters issued by the HR Division.

• Budget control mechanisms regulate our procurement. We introduced invitations to tender years ago.
Purchases are carried out based on a bidding call, qualifying to bid committees, screening committees,
compliance committees and delivery acceptance committees. This combination purchasing and budget control
system ensures more transparency in the purchasing process and gives equal opportunities to suppliers while
ensuring that Credit Libanais receives best quality over price ratios.

• Our reporting strategy consists of constantly updating our Internet website for information relevant to all our
stakeholders. Indeed, some information is updated daily and others weekly, monthly or quarterly. Since 2007,
our Annual Report has become richer in terms of the specific type of information sought after by our stakeholders
and currently includes a social and environmental section to report on all Credit Libanais Corporate Social
Responsibility (CSR) endeavors. Furthermore, we are abiding by all reporting guidelines set by the legislators
and our immediate regulators. We are committed to corporate governance and we aim to increase our reporting
year after year; our goal is to be transparent and remain the trusted partner of choice for our stakeholders.




    Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                              Corporate Governance

Credit Libanais




                      Board of Directors

                                               Members




                  Dr. Joseph Torbey   Chairman &              H.E. Mr. Marwan          Mr. Khaldoun             Mr. Mustafa
                                      General Manager         Hamade                   Barakat                  Darwish




                                 Capital Investment              Capital Investments
                                 Holding                         Holding
                                 (Manama-Bahrain)                (Lebanon)




                                                                                                        Mr. Abdullah Saudi
                                                                                                        Advisor to
                                                                                                        the Board




                     Mr. Mohamad            Mr. Rabah Jaber      Mr. Rabah Idriss          Mr. Sarkis           Mr. Abdul-Elah
                     Wajih El-Bizri                                                        Demirdjian           Mukred Ali




                                                                                                                                     17
                      Executive Committee
                      The Executive Committee acts as an advisory body on all issues relating to the Bank’s general policies. It also assumes the
                      responsibility of coordinating between Management and the Board of Directors, along with providing suggestions in connection
                      with local, regional and global banking activities. During its meetings, the Committee reviews all operational activities, including
                      those relating to the previous period, and establishes the objectives to be devised for the future.
Major Committees


                      Audit Committee
                      This Committee was created to enable the Board of Directors to perform its duties in an informed and transparent manner. It
                      consists of three active Board members who sit together with the Head of Internal Audit and other senior managers to review
                      the internal and external audit reports as well as the internal regulations. The Audit Committee reviews the audit reports on
                      information security, accounting and financial control, risk management, information systems, doubtful loans and management
                      compliance with Board directives. The purpose is to ensure that the Bank complies and respects all the Board, national regulators
                      and Basel II requirements.

                      Credit Policy Committee
                      This Committee is headed by the Chairman and includes two members of the Board as well as the heads of risk management.
                      The Committee meets at least twice a year - more often if needed - in order to set the Bank’s lending policy and ensure that
                      it is in line with Board strategy. It defines risk strategies, policies and corporate credit practices and limits for the coherent and
                      efficient management of the Bank’s different credit risk areas.

                      Management Committee (MC)
                      The Management Committee is the Bank’s chief decision-making body, tackling strategic internal and external issues of prime
                      importance to the Bank and formulating long-term policies and orientations in line with the Board of Directors’ guidelines and
                      the Group’s overall strategy.

                      Asset and Liability Committee (ALCO)
                      ALCO manages and controls the Bank balance sheet by identifying, measuring and managing the financial risks inherent in the
                      balance sheet and income statements. This Asset and Liability Management (ALM) process encompasses all those activities of
                      the Bank having an impact on the on- and off-balance sheet items. The Committee aims to align the individual line of business
                      objectives with the overall balance sheet objectives of the Bank. Its responsibilities also extend to identifying and assessing
                      major investment opportunities in the fields of mergers and acquisitions, equity and loan participation, advisory and consultancy
                      and other issues of strategic financial importance.

                      ISO Executive Committee
                      The Committee guarantees the development and implementation of the Bank’s Quality Management System (QMS) and
                      assists in the continual improvement and long-term effectiveness of a quality system that impacts the performance of every
                      member of the Bank. The ISO Executive Committee ensures that the quality policy remains efficient and complies with business
                      requirements. It also provides a framework for establishing and reviewing quality objectives.

                      Training and Development Committee
                      The Training and Development Committee is responsible for developing strategies and development activities for Credit
                      Libanais staff. It sets the general guidelines for planning career path and for continuous learning opportunities. The Committee
                      also forecasts the yearly budget to be allocated for training and development.

                      Banking Group Information Technology Steering Committee
                      This Committee sets the Group’s IT strategy according to the IT Master Plan. It also sets standards and testing procedures for
                      IT projects. The Committee is responsible for acquiring new IT systems and ensuring that they abide by IT security and user
                      acceptance guidelines. In a nutshell, this Committee’s main purpose is to ensure the good functioning and development of IT
                      systems for the seamless carrying out of Bank operations and expansion plans.




                   Annual Report 2008                                                                                                 Credit Libanais Group
                                                                                                                Corporate Governance



Basel II Committee
The purpose of this Committee is to ensure that adequate efforts and coordination are deployed for the implementation of the
Basel II framework within the Credit Libanais Group. The Committee is also responsible for proposing to the Board of Directors
those necessary steps and courses of action which will ensure full compliance with Basel II requirements. It recommends the
appropriate solvency ratios covering up the regulatory and economic risks of the Bank.

Foreign Entities Committee
The purpose of this Committee is to approve the annual business plans of foreign entities, to review their quarterly business
performance, to compare them to preset benchmarks and evaluate their risk exposure. The Committee also reviews their
financials in accordance with applicable laws and regulations and follows up on their internal audit reports, reviews the reports
of the host country’s control bodies and provides the Board of Directors with an official report as well as a brief update on
operations. The Committee places great emphasis on the ongoing monitoring of risk management, anti-money laundering,
information security, internal and external audit reports and the internal procedures of Credit Libanais’ foreign entities.

Business Continuity Planning (BCP) Committee
The ever changing business environment, fast evolving best practices and technology, and the unstable political and economic
environment were all pressing conditions to create a proactive Business Continuity Planning and Management task force. The
primary objectives of BCP are to continue to serve our customers efficiently and in a timely manner, to safeguard the interests
of our stakeholders and to mitigate any negative effects that an eventual disruption could have on our Bank’s strategic plans,
operations, reputation, liquidity, market position and ability to remain in compliance with the applicable laws and regulations.

Banking Group Information Security Committee
This Committee draws up the information security strategy of the Bank and sets all its related technical security standards and
procedures. It also ensures the sound adoption and execution of the recommendations of the Information Security Officer,
installs proper and safe procedures for the destruction of old information and ensures proper application of sound practices in
order to guarantee a secure information environment at every communication channel and unit level.

Credit Committees
Every lending activity at Credit Libanais goes through a special credit committee assigned to ensure that loans and credit
limits are granted based on the Bank’s credit guidelines. Depending on the size and type of the loan, it is transferred to the
committee with the relevant authority of reviewing the subject’s credit file, which of course operates according to the existing risk
management guidelines in line with the credit policy set by the Credit Policy Committee. The Credit Risk Manager is an integral
part of the credit approval process and of monitoring the adequate implementation of the credit committees’ decisions.

Anti-Money Laundering Committee (AML)
The AML Committee closely examines and monitors suspicious cases and takes proactive steps in the prevention of
money laundering or fraudulent activities within the Bank. The Committee also reports suspicious cases to the High Special
Investigations Commission at the Central Bank of Lebanon. It is responsible for ensuring that a culture of AML is disseminated
through regular updates of procedures and training of employees.

Sales and Business Development Committee (SBDC)
The Sales and Business Development Committee monitors and evaluates branch network performance, application of sales
methodology and product profitability in anticipation of evolving market conditions. SBDC also approves the launching of new
products and corporate communications campaigns.




                                                                                                                                        19
Governance Structure                   Sets and Approves Overall Group Strategy

                                                                                   BOARD OF DIRECTORS



                                                    Audit                                                                                              Executive                     Credit Policy
                                                                                     GENERAL MANAGER
                                                  Committee                                                                                            Committee                      Committee

                                                • Reviews external                                                                                   • Advises on general           • Sets credit strategy
                                                  audit reports                                                                                        policies                       policy




                                                                                                   Reporting and Control
                                                • Reviews internal                                                                                   • Coordinates                  • Defines concentration
                                                  regulations                                                                                          between BOD and                risk
                                                                                                                                                       Management                   • Defines related party
                                                • Ensures
                                                  compliance                                                                                         • Reviews                        risks
                                                                                                                                                       operational activities       • Sets internal rating
                                                                                                                                                     • Establishes future             model valuation
                                                                                                                                                       objectives



                                       Performance Monitoring



                                        Management   Credit   ALCO   AML      Basel II                                                          Foreign              ISO                   Business
                                         Committee Committees      Committee Committee                                                          Entities           Committee              Continuity
                                                                                                                                               Committee                                   Planning
                                                                                                                                                                                          Committee


                                        • Translates         • Approves loans • Manages        • Examines                  • Implements        • Approves          • Guarantees           • Serves
                                          strategy into                         balance          and monitors                Basel II            business plan       QMS                    customers
                                          action             • Monitors         sheet            suspicious                                                                                 in a timely
                                                               lending                                                       framework         • Reviews           • Assesses
                                                                                                 cases                                                                                      manner
                                        • Monitors             guidelines     • Aligns                                     • Proposes to         performance         quality policy
                                          strategy rollout                      business       • Creates a                   BOD plans for                                                • Safeguards
                                                             • Abides by risk   objectives       culture of                                    • Evaluates risk    • Provides               interests
                                        • Decides on           management                                                    compliance          exposure            framework
                                                                                with             compliance
                                          strategic issues     criteria         balance                                    • Recommends                              for quality          • Mitigates
                                                                                               • Trains                                        • Reviews             objectives             disruption
                                        • Formulates                            sheet                                        solvency ratios     financials
                                                                                objectives       employees                                                                                  effect
                                          long term policies
                                                                                • Identifies
                                                                                  major
                                                                                  invest-
                                                                                  ment
                                                                                  oppor-
                                                                                  tunities



                                       Quality Assurance Review

                                                                                          INTERNAL AUDIT


                                                                            • Ensures compliance with procedures and regulations
                                                                            • Evaluates and improves effectiveness of risk, control and governance
                                                                            • Provides advice and adds value to business units




                       Annual Report 2008                                                                                                                                       Credit Libanais Group
                                                                        Corporate Governance




                       CHAIRMAN & GENERAL MANAGER
Organizational Chart
                                                           Financial Control
                                                           Central Accounting
                                         FINANCE           Reconciliation
                                                           Information Technology
                                                           Administration & Support Services
                                                           Trade Finance
                                   OPERATIONS & SYSTEMS    Central Processing
                                                           Methods & Procedures
                                                           Automated Payments
                                                           Treasury Back Office
                                                           Anti-Money-Laundering (AML),
                                                             Compliance & Quality
                                     HUMAN RESOURCES
                                                           Money Markets
                                                           Foreign Exchange
                                    TREASURY & CAPITAL     Bank Investment Portfolio
                                        MARKETS            Treasury Middle Office
                                                           Capital Markets & Private Banking
                                                           Regional Branch Management*




                                                                                                    *Riad El Solh Hamra Kaslik
                                                                                                           Bekaa/South North
                                                           Retail Lending Products
                                      RETAIL BANKING       Commercial Retail Lending (SME)
                                                           Marketing & Advertising
                                                           Information
                                                           Bancassurance

                                                           Project Management Office
                                   ORGANIZATION PLANNING   Business Continuity Planning
                                        & STRATEGY
                                                           Merchant Relationships
                                                           Fraud Management & Control
                                         E-BANKING         Card Operations
                                                           Market & Products Development
                                                           Alternative Distribution Channels
                                                           Online Banking
                                                           Customer Relationshio Manager (CRM)

                                                           Corporate Credit Administration &
                                  CREDIT RISK MANAGEMENT    Control
                                                           Financial Institutions Credit
                                                            Administration & Control
                                                           Retail Credit Administration & Control
                                                           Corporate Credit Analysis
                                                           Retail Credit Analysis

                                                           Market Risk Management
                                   MARKET & OPERATIONAL    Operational Risk Management
                                     RISK MANAGEMENT       Information Security

                                                           Financial Institutions
                                    CORPORATE BANKING
                                                           Corporate & Medium Sized Business
                                                           VIP Banking
                                                           Public Relations



                                                                                                                                 21
                                                  Core Banking Activity
Retail Banking                               24

Corporate Banking                            30

Financial and Capital Markets                32

Credit Libanais Investment Bank sal (clib)   36
                    Our strategy
                   is to become
                 the Retail Bank
                        of Choice
                      in Lebanon
                       by building
                        our range
                    of products,
                         engaging
                       in selected
                          regional
                     expansions,
                        delivering
                          value to
                       customers
                     and offering
                   opportunities
                            to our
                     employees.




                                      Retail Banking Strategy
Retail Banking




                                      In a market where the anticipation of expectations is primal to the goal of satisfying evolving
                                      customer needs, Credit Libanais’ strategy is deployed by:
                                         • Continuing to expand a customer focused balance sheet and income statement;
                                         • Enlarging the focus to expand consumer and Small and Medium Enterprise (SME) banking
                                           segments;
                                         • Concentrating more deeply on yield management for retail products linked to all client cycles
                                           of life;
                                         • Ensuring growth in fee and commission income; and
                                         • Further increasing operational efficiency.




                 Annual Report 2008                                                                                      Credit Libanais Group
                                                                                                        Core Banking Activity




                                                                             Our outstanding retail
                                                                          performance and increase in
                                                                         market share translated into a
                                                                         59% increase in total sales and
                                                                          a 35% increase in revenues
                                                                         along an improved repartition
                                                                                    of risks



In order to keep pace with the growth of our activities, our branches are undergoing an architectural transformation
in keeping with the imperative of the more customer-focused concept, using innovative ideas to boost marketing
activities.


A Year in Review
As a core activity of the Bank, Retail Banking scored another excellent performance, further consolidating its share of
total lending of the Group, climbing to 61.65%. The harmonic growth recorded a 7% increase in customer accounts, a
59% increase in total sales and a 35% increase in revenues. The strong growth was supported by the total deposits
boost of 21%, much higher than the banking sector’s average.

Retail Banking recorded a strong growth in all business lines – 138% in car loans, 56% in Kafalat, 36% in retail commercial
lending, 22% in personal loans, 22% in Iskan, 21% in consumer loans, 30% in housing loans and 46% in microfinance
– confirming its status as a Lead Retail Bank and becoming a reference point in the industry. Credit Libanais’ positioning
is maintained based on a superior service quality for its customers through products constantly developed according to
evolving needs.

Despite an impressive growth, Retail Banking maintained and even improved its portfolio quality. Average percentage of
total unpaid on total products’ portfolio fell from 0.55% in the previous year to 0.35% in 2008.
This performance was made possible due to a segmented in-depth analysis of customer requirements using the
extensive branch network, the multi-channel integrated platform and the advanced technological infrastructure.
Altogether, these tools enabled the Division to tailor products and services and market them to the right customer via
automated campaigns.

The organic growth translated into the opening of new branches to bring up their number to 61 in addition to two
international branches – one in Limassol, Cyprus and another in Manama, Bahrain – as well as a Representative Office
in Montreal, Canada.

The pioneering role of Credit Libanais has been confirmed once again with its unvarying status as a leader in the acquiring
business. According to VISA International, Credit Libanais’ market share accounts for 57.5% of the total acquiring market
in Lebanon, marking an increase of 22% in terms of number of transactions and 37% in terms of volume.

Today, Credit Libanais’ number of Automated Teller Machines (ATM) across the country has reached 72, with the number
of transactions increasing by 11% in 2008 and their subsequent volume by 16%.

In order to maintain the quality of service and improve customer satisfaction, periodical independent research and ongoing




                                                                                                                                25
   mystery shopper visits have been conducted. In view of creating a culture of sales and customer orientation, a
   performance matrix is implemented in the branch. This matrix rewards branches based on performance, which in turn
   improves the overall employee morale.


   Retail Commercial Lending
   Retail Commercial Lending is the lending branch of the Bank responsible for businesses whose turnover is less than
   USD 2 million. Within the Lebanese economy, this segment accounts for the biggest market share. In order to respond
   to the increased business activity, the Retail Commercial Lending Department was enlarged and segmented in 2008 to
   account for three new Units headed by a Senior Account Manager each, and incorporating a group of Junior Account
   Managers. This new composition enabled the Department to better satisfy the increased activity and its corresponding
   needs in order to better follow regional and geographic requirements.

   As a result of the strategy to expand Small and Medium Enterprise (SME) banking segment, the net outstanding balance
   of Retail Commercial Lending recorded registered an important 41,6% compared to the previous year on funded basis
   and a 34% growth on unfunded basis, further reducing Non Performing Loans (NPL), already at a very low level and well
   below market average. The Retail Commercial Lending portfolio accounts for 65% of the commercial lending portfolio
   of the Bank.

   Retail Commercial Lending aims to provide SMEs with the proper environment and confidence they need, as well as a
   full range of services and calibrated innovative solutions. It has been offering solutions responding to specific customer
   needs, and consequently providing competitive advantages to small and medium size enterprises, which play a strategic
   role in the Lebanese economy within different segments, sectors and regions. Packages oriented to support tourism,
   farmers’ seasonal needs, wholesale activities, tourism construction sector, private health sector, franchise support and
   static and transportation sectors were created after a careful analysis of customer needs and expectations with the
   development of new products and services.

   In 2008, special attention was paid to appropriate long term financing with and without subsidized formulas in order to
   support programs focused on entrepreneurs with new ideas to be turned into ventures or on counterparties that just want
   to expand their businesses.

   Based on their total assets, sales volume, exports, number of employees, rate of production growth, market position,
   management style and customer profiles, Retail Commercial lending met the most diverse range of customer requests,
   offering products and services tailored specifically to the unique requirements of each commercial customer. Fulfilling
   Credit Libanais’ vocation of being a bank that personally knows its customers and understands their needs, the Bank
   responded by providing the highest quality service in the shortest amount of time, offering proactive solutions. Retail
   Commercial Lending also coordinated with both short and long term facilities for current and long term investment
   requirements also through privileged facilities – subsidized or not, risk sharing or not – signed with primary international
   institutions such as IFC, BEI, Arab Trade Finance Program, etc.




Annual Report 2008                                                                                               Credit Libanais Group
                                                                                                            Core Banking Activity




Alternative Distribution Channels (ADC)
This Department encompasses Automatic Teller Machines (ATM) monitoring, e-banking services, corporate Internet
and intranet website development and update, Internet banking accounts, SMS campaign management, Customer
Complaints, Customer Service Center (CSC), delinquent bills follow-up, and other vital branch support functions.
Our strategy is to maintain our pioneering role in e-banking services by introducing new and improved features, and
by reducing online fees in order to continuously increase subscribers and attract new customers. Our main focus is
providing high quality service and introducing innovative methods of banking communication for further interaction with
customers. By so doing, ADC helps to attract new customers, improving customer service and quality, retaining and
building loyalty.
Having originally operated in a customer service center, agents of the ADC Department recognize that superior customer
service is a key differentiator in the competitive financial services marketplace, and that their vision and commitment
surely impact customers’ experiences in a positive way.
ADC continually strives to raise the bar in the electronic banking field. Accordingly, every effort is made to improve the
e-banking services, particularly the Internet banking portal and SMS service, by constantly adding useful features and
privileges aimed at saving customers’ time and money and easing their daily financial dealings.
The Bank’s CSC acts primarily as a virtual branch, handling inbound call requests, performing real-time transactions
and offering valuable marketing and sales support services to the Bank. The CSC has also strengthened its Customer
Care Unit, through which it handles customer complaints. In addition to improving options for non-branch banking, the
Bank has developed “Best Practices” and “Timeliness Standards” in an attempt to improve customer experience in the
Bank’s branches and to shorten customer waiting times. To enhance our customers’ satisfaction and in an effort of being
“Closer to our customers”, we have extended the CSC working hours from 8 AM till 12 PM daily, including weekends
and holidays.
Our Internet banking subscribers became more aware of the necessity of the service. Subscriptions increased by 33%
compared to the previous year while the number of operations rose by 39%. Internet banking has soared during this
year, which in turn improved the profitability of this channel by 19%. During 2008, several operations were reviewed
in order to make it easier and cheaper for our customers to use Internet banking, including check book requests, the
reduction of cost on stopping payment on a check, same-day funds transfer and foreign exchange value dates, and
the increase of the foreign exchange transfer limit. In an effort to enable branch employees to explain Internet banking
usage and features, an online banking module has been put in place for branches in order to make the demonstration
live and simple. Branches can also perform Personal Identification Number (PIN) activation to grant customers instant
access to our services.
The Website Development and Upgrade Unit has incorporated a new chat module into our corporate website. This
pioneer step within the industry has received very positive feedback from customers. The Unit has also overhauled the
intranet website during 2008 to transform it into a true internal communication channel, both interactive and informative.
The intranet website is due for launching in early 2009.
                                                                                            E-banking Sales Evolution
The SMS banking service was upgraded to allow customers to be notified
                                                                                   35%
upon the settlement of bills, salary reception, inward transfers reception,
                                                                                   30%
balance inquiry and direct and check withdrawal.
                                                                                   25%
In 2008, the ATM interface has also been updated to a more modern                  20%

design with brighter colors, reflecting the evolving spirit of Credit Libanais’    15%

distribution channels.                                                             10%

                                                                                   5%
In addition, several trainings were conducted during this year: internally to
                                                                                   0%
telemarketing agents regarding teleselling skills and externally to branches               Online       Phone           SMS

concerning the selling of E-Banking services.
                                                                                          2007       2008




                                                                                                                                    27
   Bancassurance
   Credit Libanais offers bancassurance products in coordination with Credit Libanais d’Assurances et de Reassurances
   (CLA), the insurance arm of the Group. The full range of products includes insurance plans such as car insurance, travel
   insurance and life insurance, as well as savings plans for retirement and children’s education plans for university. CLA
   products are designed according to the needs of Bank customers with a view to making Credit Libanais a one stop-shop
   for all their needs. Bancassurance products are regularly upgraded according to the best industry standards, enabling
   CLA to rank among the most profitable players.

   Bancassurance products are a fully integrated system within the retail activities of the Bank, with an impressive cross
   selling ratio in 2008. During 2008, policies issued at the branch level increased by 45.6%.


   Marketing and Business Development
   This Department encompasses the Sales Unit, the Product Development Unit, the Product Commercial Development
   Unit, the Marketing Research Unit, the Segmentation and Campaigns Management Unit and the Advertising Unit.

   Strategy
   In order to successfully compete in today’s volatile business markets and better serve the needs of customers, Credit
   Libanais’ sales strategy is based on market segmentation analysis, enabling the Bank to target those niche markets that
   exhibit similar needs and purchase behavior.

   Applying a market segmentation approach proved very effective in increasing sales. It has improved market share
   through the design of responsive products to meet the needs of the marketplace, the development of effective and
   promotional tactics and campaigns, and the fine-tuning of current marketing strategies.

   Business and Marketing Development continued to prosper and provide a mix of new services and products across
   many levels by expanding and diversifying its products and targeting new potential customers.

   Achievements during 2008
   Always seeking to reward its clients, Credit Libanais was an integral partner of all VISA International campaigns launched
   during 2008. Those participations have significantly motivated Credit Libanais cardholders to increase the use of their
   VISA cards and win valuable prizes.

   In order to develop Credit Libanais’ cardholders’ choices for gift selection, new merchants were added to the Credit
   Libanais card loyalty program. The wide range of products offered to card users when they redeem points accumulated
   with card usage enhanced the loyalty scheme performance and encouraged commitment to the Bank.

   The mystery shopper scheme has become embedded in Credit Libanais’ development and performance evaluation
          Cross-selling Ratio Quarterly Evolution   strategy. These visits aim at assessing and measuring customer service
                                         Total Bank
     2.95                                           standards. We view mystery shopper campaigns as an investment in quality
      2.9
                                                    customer service. The Department developed a mystery shopper policy
     2.85
      2.8                                           which enabled our Bank to obtain hard objective management data about
     2.75                                           customer service levels. Mystery shopper allows for a sampling of Credit
      2.7
     2.65
                                                    Libanais services, ongoing waves and product focus, and also enables the
      2.6                                           employees to regularly test their product knowledge and sales abilities.
     2.55
      2.5                                                     Credit Libanais contributed to enhancing the Internal Security Forces (ISF)
             1st       2nd       3rd       4th       Year
            Quarter   Quarter   Quarter   Quarter   Average

               2007         2008




Annual Report 2008                                                                                                         Credit Libanais Group
                                                                                                             Core Banking Activity




capabilities and supporting their mission through several            products. The Bank continued to promote its products through
sponsorships such as the international anti-drug day campaign        the military institutions by offering personal loans and iskan
and the Cavalry Unit of the ISF.                                     products. Moreover, a special school loan was conceived for
                                                                     the military institutions, officers, soldiers and fixed members,
In parallel, the marketing partnership campaigns were
                                                                     enabling them to get credit facilities for tuitions and securing
launched and developed with key retail players in the market,
                                                                     school and university scholarships for their children on time
such as hotels. Those were part of an integrated marketing
                                                                     without any delay once refunded by their institution.
communication that centered on a niche market, built
awareness and increased sales market share.                          Advertising
Sales Unit                                                           Credit Libanais’ image and brand name are vital assets
                                                                     conveyed through advertising techniques that help bring
In collaboration with Customer Relationship Management
                                                                     these values to the public’s attention and through multi-
(CRM), the Department created sales campaigns tailored
                                                                     channel delivery in managing customer communication. The
specifically to meet the objectives of the Group. Customer
                                                                     adopted advertising tools seek to build up Credit Libanais’
Management System (CMS) tools were used to launch
                                                                     image and improve its standing in the market in order to
campaigns aimed at enhancing the Group’s products portfolio
                                                                     maintain a top quartile performance among peers. We believe
through a strict database segmentation strategy based on our
                                                                     that Credit Libanais draws closer to its customers through a
existing customers. These campaigns resulted in a cross-
                                                                     combined strategy of sponsorships, press advertisements and
selling ratio of 2.76 in 2008 up from 2.67 in 2007 for total Bank
                                                                     press releases as well as a below-the-line strategy of direct
sales – compared to 2.91 in 2008 up from 2.82 in 2007 for            marketing techniques and other informative tools such as “Did
branches sales alone.                                                You Know” letters.
The Sales Unit complements the existing sales force at the           Seeking to build up and improve its image, Credit Libanais
branch level in their direct and indirect sales efforts. This        has always proved its capabilities in the banking industry. Its
strategy was instrumental in contributing to the improvement         diversified products portfolio enabled it to appeal to a broad
of the cross-selling ratio. Each of our five regions is assigned     range of consumers through advertising on billboards, TV
a Sales Unit headed by a team leader to coordinate new               stations, press advertisements in magazines and newspapers
developments as well as the sales efforts in marketing               in addition to press releases.
the Bank’s products. Both Sales Unit staff and the staff of
                                                                     Window poster displays are progressively continuing through
Credit Libanais’ 60 branches followed a rigorous schedule
                                                                     all Credit Libanais branches, unveiling customers’ needs and
of marketing campaigns undertaken with the aim of reaching
                                                                     creating on-site awareness of brands. Advertising campaigns
present goals.                                                       were implemented for cards, housing, Iskan, Kafalat and
The Unit follows a very elaborate market-driven strategy             consumer loans for public and private sectors, creating the
centered on turning salespeople into customer experts and            most effective relation with Credit Libanais customers on the
ensuring that customers receive an adequate level of service.        long run and increasing the perceived level of satisfaction
                                                                     through these promotional efforts.
Achievements
In 2008, the sales force team increased its participation in the
overall Bank results particularly in the car loan, consumer loan,   NetCommerce
                                                                    NetCommerce is the epayment arm of the Group. The Company is in the business
salary domiciliation and housing loan markets by establishing
                                                                    of offering payments gateways to online businesses in order to accept payment
new channels of distribution.                                       on the net. NetCommerce’s sales volume is continuously increasing due to the
Credit Libanais remains a pioneer in terms of the Lebanese          expansion of our ecommerce merchant network, and the implementation of
                                                                    sophisticated and highly secured Internet payment technology provided to local
Army Institution. Other military institutions such as the
                                                                    merchants in the Lebanese market. Sales activity grew 18% over 2008 despite
Lebanese Customs, Civil Defence, and the General Security           tough market conditions. The Company’s forecast and expectations for 2009 are
were also successfully targeted with a wide range of customized     to gain significant market share by acquiring new merchants through an aggressive
                                                                    sales and marketing effort in the growing Lebanese e-commerce market.




                                                                                                                                                    29
                     Corporate Banking
  We engage
     in select
   corporate
relationships
  with prime
   customers
     with the
 aim of com-
prehensively
servicing our                            Definition
    markets.                             The Corporate Banking Division is responsible for businesses with annual turnover exceeding
                                         USD 2 million. It is built around relationships nurtured by a group of dedicated managers who are
                                         also experienced bankers with in-depth knowledge of the Bank’s products and services.
                                         Relationship Managers are committed to understanding the particularities of each business,
                                         enabling the Bank to be a true and effective partner with vested interest in finding banking
                                         solutions that help customers prosper. Relationship Managers collaborate with all business
                                         units and affiliates to offer customized solutions and packages in different areas of banking and
                                         parabanking or peripheral complementary services.


                                         Corporate Banking Strategy
                                         The Corporate Division plays an important role in jumpstarting the economy by making those
                                         special loans contracted by our lending partners accessible to select corporate customers in the
                                         aim of alleviating the economic strain on businesses.
                                         The Division has concentrated on expanding its corporate customer-base with a particular
                                         emphasis on best performing sectors. It aims at growing its market share and assets in these
                                         sectors through a customer-driven approach based on offering tailored products and services
                                         essential to growing customer businesses, and thus strengthening relationships with them
                                         through this concerted focus on relationship management.
                                         Management believes that Corporate Banking’s competitive advantages lie in the following areas:
                                          • Fast decision-making processes and operations based on the Division’s strategy of having
                                            experienced relationship managers with industry/sector experience;
                                          • Fast credit process decision-making;
                                          • Relevant expertise which allows the Division to offer tailor-made products and efficient
                                            services;
                                          • High-quality and professional service with rigorous follow-up of customer business to enable
                                            them to compete and prosper; and
                                          • 24/7 access to banking information through internet banking and Interactive Voice Recording
                                          (IVR) banking.




Annual Report 2008                                                                                                   Credit Libanais Group
                                                                                                                      Core Banking Activity




Credilease
Credilease is the leasing arm of the Group. As a financial institution, the company expanded its leasing activities organically in 2008 at
the same time as it introduced additional services to meet the growing demand of Lebanon’s consumer finance market.
During the year, Credilease also strengthened its leasing market share in Lebanon through a competitive pricing policy, flexible lending
retaining sound credit policies, and an extensive marketing strategy across Credit Libanais’ wide branch network.
After the major restructuring of 2007, the Company saw its assets grow by 50% during 2008 while total income increased by 13%.




A Year in Review
During a year that began very differently from how it ended, Corporate Banking maintained vigilance in reviewing and
assessing lending risk. Indeed, our conservative risk appetite and our full abidance to best practices in lending paid off
in 2008. During this year, our portfolio grew without compromising its quality.
Two thousand and eight is the year during which Corporate Banking proved that it was prepared to benefit from the
business boom opportunities witnessed during the first eight months. Subsequently, the Division – maintaining the same
conservative risk appetite – increased its number of commercial relationships by 7% and developed its lending portfolio
by 16% to account for 35% of the Group’s total lending portfolio. In return, documentary credit rose by 64% compared
to 2007.
One Relationship Manager is assigned to handle the doubtful loans (rated 3 & 4) in adherence with Central Bank of
Lebanon circulars. This effectively enables the Bank to reengineer the facilities, optimizing recovery and allowing the
company to stay in business. Another important benefit of this function is that it saves on the expenses of legal processes
and seizure. As a result, major settlement and recovery achievements were recorded during 2008.
During this period, the Bank also concentrated its efforts on the utilization of new and existing lending partnerships
contracted by major international lending partners with a view to making long term financing affordable to more corporate
customers.
The remuneration of Relationship Managers is based on the scientific matrix, which sets predefined performance
measures for appraisal. These criteria are transparent and well-communicated to Relationship Managers as well as fully
aligned with the Bank’s strategy.

           Distribution of Portfolio by Sector                                                           Trade Finance Growth



                                                25.10%
                                                                                               80%

                                                                                               60%

  55.37%                                                                                       40%

                                                                                               20%
                                                    12.67%                                      0%
                                                                                                             2007   2008


                                            3.67%
                                    3.18%

   Trade     Real Estate    Other       Industry         Services




                                                                                                                                              31
                                 The prevailing
                                      credit and
                                     investment
                                     regulations
                                             kept
                                       important
                                 liquidity in the
                                banking sector,
                                 strictly limited
                                     investment
                                   in structured
                                   products and
                                        subprime
                                  securities and
                                shielded banks
                                from exposure
                                   to wholesale
Financial and Capital Markets




                                         financial
                                         markets.




                                                     This Division incorporates the Treasury Management, Forex Management, Trading Activity,
                                                     Private Banking and Middle Office Departments.
                                                     During 2008, Credit Libanais’ expertise and trading capabilities positioned the Bank as one of the
                                                     main players on the Capital Markets in Lebanon. The Division extended considerable resources
                                                     towards developing new market segments and coverage in order to meet our customer’s
                                                     expectations and needs. The comprehensive approach to developing solutions for clients
                                                     integrates global research, sales, trading, origination, distribution and much more.
                                                     The Bank is a recognized global house in Fixed Income, Equities, Foreign Exchange and
                                                     Structured products that are delivered by a team of professionals through a sales marketing
                                                     platform.




                                Annual Report 2008                                                                                      Credit Libanais Group
                                                                                                       Core Banking Activity




                                                                              The stability of the
                                                                               Lebanese Pound
                                                                            revitalized confidence,
                                                                             reduced inflation and
                                                                            helped dedollarization




During this year, financial markets have been very challenging and most traditional investment approaches (Equity,
Fixed Income, and Money Market) failed to deliver optimal results in the face of the devastated worldwide financial
markets and world recessionary environments.

Accordingly, Credit Libanais has extensively developed new approaches focusing mainly on deposit linked-products and
foreign exchange in order to capture the interest of retail and corporate customers.

Overall, despite the deep financial crisis, the Lebanese banking sector continued to perform smoothly; thanks to the
efficient regulatory framework established by the Central Bank of Lebanon that protected Lebanese banks and their
clients from the disastrous effects of the financial turmoil as well as the sound risk management approach applied by
Lebanese banks.

Fixed Income Markets
During this year of deep crisis, Credit Libanais reinforced its presence as a major player on the Lebanese Eurobonds
market which translated into a significant increase in trading volumes and market share. In fact, Lebanon’s fixed income
markets have not been affected by the worldwide financial and credit crisis.

Equity Markets
In 2008, we concentrated our efforts on the BSE (Beirut Stock Exchange), where the effects and impacts of the financial
crisis were less violent than on the rest of the world’s stock exchanges.

Our comprehensive approach to developing solutions for clients by combining our Fixed Income, equities and foreign
exchange trading capabilities in addition to the perfect integration of our expertise in research, sales, origination and
distribution activities paved the way for a high level of efficiency in terms of execution and processing of transactions.




                                                                                                                               33
Our Financial and Capital Markets                        Private Banking and Asset
coverage includes:                                       Management
                                                         Credit Libanais offers personalized portfolio engineering
  • Liquidity management, money markets instruments      and diversification advice to a select clientele of high
    and foreign exchange;                                net-worth individuals with everything tailored to their
  • Fixed income securities ranging from high grade to   specific needs. A careful selection of high performing and
    high yield;                                          innovative products are proposed according to clients’
  • Emerging markets investments and products;           segmentation, based on each client’s level of risk tolerance,
  • Islamic banking products; and                        diversification objectives, risk/return expectations and
  • Financing services including custody services.       portfolio constraints.

                                                         Our private bankers have the requisite knowledge,
                                                         commitment, and resources to succeed. They seek out
                                                         opportunities in complex and diversified financial markets,
                                                         managing their clients’ assets in a highly disciplined,
                                                         professional and ethical manner. They are supported by
                                                         targeted and ongoing systems in new technology that
                                                         provide them with fast access to information and ensure
                                                         timely client reporting.

                                                         The year 2008 was largely hampered by the world financial
                                                         crisis. Nevertheless, we have been able to maintain our
                                                         development pace, thanks to:
                                                         - Leveraging of synergies between the Bank’s various
                                                         divisions through the extensive use of our Client
                                                         Relationship Management Platform.
                                                         - Strong development of our product offers, focusing on
                                                         deposit-linked products in addition to other investment
                                                         vehicles:
                                                             • Equities, fixed income and foreign exchange;
Assets under                                                 • Money markets;
Management                                                   • Multi-asset class funds;
                                                             • Alternative investments and hedge funds;
increased by                                                 • Structured products with various underlying instruments;
28% in 2008                                                  • Capital protected products;
                                                             • Shariaa compliant investments;




       Annual Report 2008                                                                        Credit Libanais Group
                                                                                                          Core Banking Activity




    • Brokerage services; and
    • Safekeeping of all types of financial instruments.
- Enhancing our services through more sophistication in terms of:
    • Portfolio structuring and asset allocation;
    • The development of a large array of structured deposits with various underlying enabling clients to seize attractive
      market opportunities;
    • Launching of a new Middle Office platform in order to provide customers with sophisticated reporting and accounts
      movements; and
    • The improvement of our E-Banking platform enabling clients to perform online FX transactions.
- The Credit Libanais team is supported by an in-house Research Unit that helps enhance our investment capabilities
through a combination of global information sharing and local decision making.

The Asset Management team uses a structured framework to develop, implement, and monitor long-range investment
plans that help clients allocate their assets more efficiently and invest in a variety of complementary strategies. These
investments are designed to meet the needs of high net worth individuals, corporations and other organizations.

Our Advisory group helps clients develop investment strategies, screen appropriate investments and monitor these
investments on an ongoing basis. Our primary concern remains the underlying quality of each investment and how it
fits into clients’ portfolios. This consultative approach in selecting investments with clients helps ensure that the applied
strategy is in harmony with their investment objectives.

The Credit Libanais Asset Management Department closely cooperates with renowned third parties in order to offer clients
flexible and attractive alternatives to traditional investments based on innovative financial engineering techniques.



                                        TREASURY & CAPITAL MARKETS


          Treasury                           Capital                  Private Banking                Research &
          & Foreign                          Markets                      & Asset                    Publications
          Exchange                                                     Management

       • Liquidity                       • Trading &                   • Product                    • Daily FX Snapshot
         Management                        Investment                    Development &              • Daily Market
       • Asset & Liability               • Product                       Sales                        Snapshot
         Management                        Development &               • Portfolio Advisory         • Weekly Market
       • Money Markets                     Structuring                 • Asset Allocation             Analysis
       • FX Trading                      • Portfolio Advisory          • Brokerage Services
                                         • Asset Allocation
                                         • Brokerage Services




                                                                                                                                  35
                       Credit Libanais Investment Bank sal (clib)
     Corporate
     strategy is
complemented
   by the wise
    investment
       policy of
   CLIB, which
                                                                    Purpose and Incorporation
     has grown
                                                                    Credit Libanais Investment Bank sal (CLIB) acts as the true investment arm of Credit Libanais.
  to become a                                                       CLIB detected and analyzed several local and regional mandates and was instrumental in
 major source                                                       achieving the most non-organic growth opportunities for the Group. These opportunities involve
                                                                    the establishment and investment in Group subsidiaries covering activities such as insurance,
 of income for
                                                                    real estate, electronic commerce, electronic payment and much more. In 2008, net profits deriving
    the Group.                                                      from investment banking activity accounted for 20.56% of the Group’s consolidated net profits.
    CLIB spots                                                      CLIB was incorporated in 1996 and is 99.83% owned by Credit Libanais. The investment Bank
  and analyzes                                                      extends its services to a wide range of medium and long-term investment and commercial
                                                                    banking activities, according to legislative decree number 50, dated July 1983. Through its
      corporate
                                                                    various departments and in spite of the political and economic uncertainties, Credit Libanais
         finance                                                    Investment Bank continued to successfully seek new business opportunities for the Group as
  mandates for                                                      well as for private and institutional clients, locally, regionally and internationally with a view to
                                                                    preserving its market positioning among specialized banks in Lebanon.
     the Group
  as well as for                                                    Objective and Strategy
    customers.                                                      CLIB’s objective is to strengthen its position in equity project financing and advisory, and to
                                                                    continue to provide a comprehensive range of investment banking services through:
                                                                       • Use of the Bank’s capital to participate in selected projects to generate additional revenues;
                                                                       • Playing an active role in the upcoming privatizations of state assets in Lebanon (Electricité du
                                                                         Liban, MEA, telecoms, etc.);
                                                                       • Striving to screen new investment opportunities both domestically and regionally with
                                                                         the endeavor of weighing CLIB’s exposure to the private sector more favorably;
                                                                       • Engaging in asset management activities, including structuring private equity real estate
                                                                         transactions, open-ended mutual and balanced funds, etc. using the support of the Credit
                                                                         Libanais’ capital markets and private banking staff and infrastructure; and
                                                                       • Financing housing and construction projects, which create cross-selling opportunities for
                                                                         retail (housing loans, etc.).


                                                                    A Year in Review
                                                                    In line with the Group’s strategic objectives of expanding commercial banking activities, the Bank
                                                                    is pursuing its efforts in sustaining and widening its client base, which remains the institution’s




  Annual Report 2008                                                                                                                               Credit Libanais Group
                                                                                                           Core Banking Activity




                                                  BOARD OF DIRECTORS


             Market &                                       Chairman                                   Head of Internal
          Operational Risk                               General Manager                                   Audit
             Manager



                Credit Risk                              Deputy General
                 Manager                                    Manager




           Corporate        Economic         Treasury
                                                             Operations        Legal                             Credit
           Finance &        Research         & Capital                                        Accounting
                                                                               Affairs                         Department
          Advisory Unit       Unit           Markets



most valuable asset. CLIB contributes to the Group’s development and expansion, focusing on services rendered in
capital markets, corporate finance, investment banking, retail banking, medium and long-term loan programs and term
deposit accounts. The Bank’s financial markets represent one of its main pillars, ensuring a sustainable income mainly
from non-interest related sources, offering tailor-made and personalized service to its clientele through close follow-up
on portfolios and markets conditions.

CLIB was able to improve its position in 2008 among investment banks in Lebanon by assuring a growth of 17.94%
in commercial loans in 2008, 15.77% for housing loans and 14.27% for customer deposits. Concurrently, CLIB’s total
assets rose by 9.65%.


Corporate Finance and Advisory Department
Notwithstanding the unstable political and economic environment that reigned in the first half of the year 2008, the
Corporate Finance and Advisory Department at Credit Libanais Investment Bank sustained its active role in supporting
the Credit Libanais Group in the areas of prospecting new business ventures, financial assessment of investment
opportunities in the pipeline, and business planning for upcoming endeavours. The Doha Accord in May and the
subsequent election of a consensus President which was followed by the formation of a national unity government acted
in favour of Lebanon’s investment environment as of the second half of the year. This has propelled the Department’s
investment deal flow, particularly in the form of participation in private equity funds that invest in Lebanese joint stock
companies.

Backed by a team of investment professionals, the department activated its corporate advisory scope more aggressively,
particularly in the areas of financial valuations, private placements, and domestic and foreign joint ventures and synergistic
partnerships for the Group’s affiliated companies.

Lebanon’s proven resilience since the third quarter of the year and its immunity from the global financial crisis which
struck nations around the globe helped restore investor confidence in the Lebanese economy, thus channelling new
investments into the country and fuelling corporate advisory.




                                                                                                                                   37
                                                                              Sheltered from the 2008 financial
                                                                               crisis, Lebanon witnesses a true
                                                                                opportunity to build a modern
                                                                             and dynamic economy that fosters
                                                                                 job creation and improves
                                                                                       purchasing power




   In its capacity as advisor to the Group’s investment arm, the department strove to expand the portfolio of private equity
   investments previously made by Credit Libanais Investment Bank through screening financially rewarding opportunities,
   particularly in the real estate sector.

   Services
   The Corporate Finance and Advisory unit at CLIB is well equipped to offer a full range of tailor-made financial services
   and solutions to private and institutional clients, locally, regionally and internationally, specifically in the following areas:
   - Financial advisory services: advising on and structuring financial solutions designed to meet the strategic and
   organizational needs of institutional clients. This includes assistance to clients in need of:
         • Evaluating the financial performance of their businesses;
         • Assessing the viability of an expansion/investment alternative;
         • Seeking financial reengineering/turnaround;
         • Opening their capital to prospective investors; and
         • Merging with/acquiring another business unit.
   - Strategic alliances and partnering transactions;
   - Debt and equity placements: helping clients make an informed decision regarding the appropriate capital structure of
   their companies, locating and negotiating with sources of finance and advising on how to position the company most
   favorably;
   - Mergers and acquisitions: offering comprehensive assistance to clients seeking to merge with or acquire other private
   or public business units. CLIB will get involved in every step of the transaction including:
   • The preparation of the sale;
   • The determination of the strategy;
   • The company valuation;
   • The research;
   • The determination of the best financing structure;
   • The negotiation of the contract; and
   • The due diligence.
   - Recapitalization and strategic advisory: structuring and arranging financing for recapitalizations, to allow a company’s
   shareholders to achieve significant liquidity while positioning the company more favorably for continued growth and
   success.




Annual Report 2008                                                                                                   Credit Libanais Group
                                                                                                             Core Banking Activity




 Research Unit
 The Economic Research Department at Credit Libanais Investment Bank shines a spotlight on the major developments
 of economic and capital markets domestically, regionally and globally. The department is also active in publishing
 sector specific researches. In October 2008, the Research Department published a real estate paper that sheds
 light on Lebanon’s real estate and construction sector, its possible correlation with the global crisis, and the sector’s
 future prospects. During the last quarter of the year, the department issued a “guide to investing in Lebanon” research
 publication that clearly highlights Lebanon’s investment drivers and attractions, economic pillars and tax and investment-
 related incentives.

 The Department’s weekly newsletter and daily published equity index benchmarks assist local and regional stock market
 enthusiasts in making sound investment decisions. The Department’s sectoral indices help investors understand historical
 trends in listed stocks on the Beirut Stock Exchange (BSE) and to visualize any imminent direction in the market.

 The Research Department continued to broaden the scope of financial and money market news coverage in 2008, while
 at the same time expanding its database of subscribers, in collaboration with the Bank’s call center and international and
 regional financial portals and newswires.

 Additionally, the Research Department sustained its efforts in analyzing international investment opportunities by
 thoroughly reviewing and studying statistical, market and economic indicators in pre-selected industries in the World in
 an endeavor to uncover imminent opportunities prior to making any investment-related decisions.

 The Economic Research Department at Credit Libanais continued to monitor the daily performance activity of the BSE
 through its three stock market indices, namely the Credit Libanais Aggregate Stock Index (CLASI), the Credit Libanais
 Financial Sector Stock Index (CLFI), and the Credit Libanais Construction Sector Stock Index (CLCI).

 The following table portrays the performance of all three indices during 2008:

                                                          Indices Performance
             Inception   Inception   Value on   Value on % Change        % Change     Year       Year      All Time     All Time
               Date        Value     January    December  in 2008          since      High       Low        High          Low
                                      1, 2008    31, 2008                Inception
    CLASI     Oct-06      1,000      1,143.80    975.63       -14.70%     -2.44%     1,801.01    973.53    1,801.01     861.93
     CLFI     Oct-06      1,000      1,125.35   1,036.49       -7.90%     3.65%      1,666.64   1,035.67   1,666.64     869.14
     CLCI     Oct-06      1,000      1,169.93    855.93       -26.84%     -14.41%    1,948.82    848.11    1,984.82     806.41




2,000 -
1,800 -
1,600 -
1,400 -
1,200 -
1,000 -
  800 -
  600 -
  400 -
  200 -
            CLASI                 -2.44%             CLCI                  -14.41%              CLFI                  +3.65%
    0-
          18-Oct-06 -
          07-Dec-06 -
          03-Jan-07 -
          21-Mar-07 -
          10-May-07 -
          29-Jun-07 -
          18-Aug-07 -
          07-Oct-07 -
          26-Nov-07 -
          15-Jan-08 -
          05-Mar-08 -
          24-Apr-08 -
          13-Jun-08 -
          02-Aug-08 -
          21-Sep-08 -
          10-Nov-08 -
          30-Dec-08 -


                                                18-Oct-06 -
                                                07-Dec-06 -
                                                03-Jan-07 -
                                                21-Mar-07 -
                                                10-May-07 -
                                                29-Jun-07 -
                                                18-Aug-07 -
                                                07-Oct-07 -
                                                26-Nov-07 -
                                                15-Jan-08 -
                                                05-Mar-08 -
                                                24-Apr-08 -
                                                13-Jun-08 -
                                                02-Aug-08 -
                                                21-Sep-08 -
                                                10-Nov-08 -
                                                30-Dec-08 -


                                                                                             18-Oct-06 -
                                                                                             07-Dec-06 -
                                                                                             03-Jan-07 -
                                                                                             21-Mar-07 -
                                                                                             10-May-07 -
                                                                                             29-Jun-07 -
                                                                                             18-Aug-07 -
                                                                                             07-Oct-07 -
                                                                                             26-Nov-07 -
                                                                                             15-Jan-08 -
                                                                                             05-Mar-08 -
                                                                                             24-Apr-08 -
                                                                                             13-Jun-08 -
                                                                                             02-Aug-08 -
                                                                                             21-Sep-08 -
                                                                                             10-Nov-08 -
                                                                                             30-Dec-08 -




                                                                                                                                     39
                                                          Corporate Social Responsibility:
                                                          Our Triple Bottom Line
Economic Sustainability
 of Core Banking Activity                            42
 . Customer Focus                                    44
 . Risk Management                                   48
 . Compliance & the Prevention of Money Laundering   68
 . Internal Audit                                    72
 . Organization, Planning & Strategy                 76
 . Investing in our Human Capital                    80
Social and Environmental Sustainability              86
                                                     The economic
                                                      responsibility
                                                         of our core
                                                             banking
                                                            activities
                                                     involves those
                                                            activities
Corporate Social Responsibility at Credit Libanais




                                                           which act
                                                          as support
                                                      functions and
                                                          contribute
                                                        indirectly to
                                                     our long-term
                                                        survival as a
                                                     major industry
                                                              player.




                                                               Sustainable development is the ability to manage today’s resources without having to compromise the ability of future
                                                               generations to meet their own needs. The International Finance Corporation (IFC) has put a recent emphasis on
                                                               private sector sustainability; it defines it as ‘…the creation of not just financial and economic value but also long-term
                                                               environmental and social value for a wide range of stakeholders – including shareholders, employees, customers,
                                                               suppliers, communities and public-sector partners – with a particular consideration for the needs of future generations.
                                                               Corporate Social Responsibility (CSR) is the overall contribution of a business to sustainable development. Indeed, in
                                                               the daily management of its business, Credit Libanais aims to consider the triple bottom line of the activities it engages
                                                               in, i.e. economic, social and environmental.
                                                               We have dedicated the first part of this report to those day-to-day banking activities that directly affect our bottom line.
                                                               The second part is dedicated to social and environmental considerations. Although the economic sustainability of our




                                                     Annual Report 2008                                                                                              Credit Libanais Group
core banking activity means our day-to-day running of the business, we have incorporated new disclosures in line with Basel II
regulations and as per the recommendation of the Central Bank of Lebanon. We aim to move towards full compliance with Basel II
bankwide. We also encourage employee participation in finding new and innovative sustainable solutions which optimise our operating
efficiency. We look forward to adopting best industry standards in order to manage the Bank in a sustainable manner.

We need to incorporate CSR considerations into all levels of our business, both upstream in our purchasing and sourcing procedures,
and downstream in the environmental impact of our financing activities and in our relationship with customers. Although we acknowledge
that we belong to an industry which makes a significant contribution to economic and social progress, we realize that we operate within
a late-mover economy into these principles. We aim to continually adapt ourselves to the demands of the societies in which we operate
and to regularly improve through increased transparency and involvement from different players.




                                                                                                                                          43
                        Customer Focus
    We operate
                                         Close to our Customers
   within an age                         Credit Libanais has grouped its commercial customers into retail commercial and corporate
      where the                          customers depending on the turnover of each business. As for individuals, the Bank segmented
     customer is                         its retail customers according to their financial needs, level of working relationship with the Bank
                                         and demographic qualities. Based on the results of this exercise, it tailored its services for each
viewed as King.                          of these customer segments. Customer Relationship Management has indeed allowed us to live
 Consequently,                           up to our motto, “Close to You”, and conduct targeted campaigns to respond to customer needs
  in each of our                         and expectations.

    activities we                        Retail customers with high asset portfolios are transferred directly to the private banking section,
                                         which offers its services based on the principle of close contact with customers, customer
 place the well-                         solutions and privileged offers.
    being of our                         Youth banking is one of the basic building blocks of Credit Libanais’ long-term customer relations.
customers first.                         The aim is to meet the financial and non-financial needs of young people and to be present in
                                         areas of importance in their world. In order to reach this target, we have developed special
                                         products and services such as pre-paid cards, computer loans, various insurance plans, etc.

                                         In addition to these services, Credit Libanais reaches a wide range of customers through salary
                                         and tuition payments. We offer special financial services to those customers through the salary
                                         packages domiciliation.

                                         Customer Care at the Heart of Bank Culture
                                         Customer Service Agents as part of the Call Center are trained to recognize that superior
                                         customer service is a key differentiator in the competitive financial services marketplace, and
                                         that their vision and commitment surely impact customers’ experiences in a positive way.

                                         The mystery shopper scheme has become embedded in the Credit Libanais development and
                                         performance evaluation strategy. This policy is applied to all Credit Libanais branches in several
                                         waves per year, depending on the quantitative or qualitative criterion under inspection. The
                                         aim of the mystery shopper is to test employee product knowledge and sales skills in order to
                                         continuously ensure the high quality of our service. We view mystery shopper campaigns as an
                                         investment in quality customer service. The Bank developed a mystery shopper policy which
                                         enabled it to obtain hard objective management data about customer service levels. Ongoing
                                         waves of mystery shoppers allow for a sampling of Credit Libanais services and enable the
                                         employees to regularly test their product knowledge and sales abilities.

                                         Management regularly measures customer satisfaction and carries out activities to meet their
                                         requirements. Customer satisfaction surveys covering all customer segments are conducted
                                         periodically: the findings are used as the basis for decisions made by the business units. Through
                                         measuring and assessing customer satisfaction, Credit Libanais also incorporates comments
                                         and views received from customers.
                                         Branches play an important role, acting as central pillars in terms of creating customer satisfaction,
                                         which in turn impacts on the parameters included in the monthly branch matrix scoring. Together,
                                         mystery shoppers and performance measurements by means of quarterly scores has ensured




   Annual Report 2008                                                                                                    Credit Libanais Group
                                                                                                       Economic Sustainability




   When weathering the
 financial crisis, we adjust
 our operations to make it
easier for our clients to do
     business with us



 that our branches, which constitute our primary contact with customers, are more customer oriented than ever before.
 At the Head Office level, the Customer Care Unit handles complaints and a closer follow-up with branches and
 departments. And the customers are now more informed and aware about our customer care unit and its ability to
 permanently solve their complaints. As a result, the number of complaints treated by the Customer Care unit reached
 97 in 2008.


 Ongoing Monitoring of Customer Satisfaction
 Customer satisfaction is one of Credit Libanais’ most sought after Business Principles. Aside from the in-house measuring
 and monitoring tools, such as the employee performance matrix and the mystery shopper, we advertise our complaints
 inbox to make it easy for our customers to reach us. A more sophisticated pull campaign to familiarize our customers with
 the highest levels of customer service is the use of courtesy and product maturity campaigns.

 Customer Satisfaction Campaigns
 Courtesy Campaigns
 These campaigns are conducted to welcome Credit Libanais’ new customers. A few days after a customer opens an
 account in a Credit Libanais branch, the Customer Care Unit communicates with him/her to seek feedback and evaluate
 their first experience with the Bank. The customer care agent then checks his/her contact details and introduces the
 Customer Service Center, its opening hours and purpose. As a result of the customer segmentation, several cross selling
 opportunities are made available during this call. If the first interaction of the new customer at the branch level was not
 positive, the Customer Care Unit has all the tools and expertise to ensure that this new customer feels welcome and king.

 Product Maturity Campaigns
 Customers who have a maturing personal, car or consumer loan receive special attention from Credit Libanais. Indeed,
 the Marketing Division in collaboration with the Customer Relationship Management (CRM) has launched many product
 and awareness campaigns.




                                                                                                                                 45
   It is important to note that all these campaigns prepared by the Marketing Division with the collaboration of CRM are
   crucial and important for the following reasons: first, they prove to our customers that Credit Libanais is well aware of
   their needs and follows them through every major turn in their lives. More importantly, these campaigns help our Bank
   retain its most valuable customers.
   These strategic campaigns present people with the products they are searching for. Our objective is not only to satisfy
   customers but to earn the privilege and the trust of having customers coming back again or referring other customers
   or their friends to us.


   Customer Focus Culture at the Branch Level
   Our branch environment consists of splitting daily activities into front and back office activities. The aim is to improve
   customer satisfaction, hence creating loyalty as well as to reduce workload and costs.
   A branch’s front office activities are split between teller and Customer Relationship Agent (CRA) activities. The teller’s
   job consists of tasks such as check and cash deposits, check withdrawal, payment of various fees, settlement of various
   bills, and a variety of other simple transactions that do not take more than 5 minutes or so. The CRA’s activities include
   opening various accounts, applying for loans and cards and similar activities that concentrate mainly on sales.
   Branch back office comprises the handling of complex transactions such as letters of credit, collections and letters of
   guarantee. As a result, Credit Libanais was able to achieve significant cost reduction and improve customer satisfaction,
   and the process is ongoing with a view to ensuring further benefits.

   Quality Unit
   The Quality Management System (QMS) provides a framework for continual improvement in achieving the quality
   objectives set for the organization, which are aiming to enhance customer satisfaction. A QMS is a “management system
   to direct and control an organization with regards to quality”. It is a system that focuses on customer satisfaction and
   delivering high quality service.
   Updating our Quality Policy was the basic coverage this year to maintain both customer and business requirements,
   which will result in the continuous fulfillment of customer needs. The Credit Libanais policy is to achieve this through the
   continuous improvement of the Bank’s activities, made possible by the planning, setting and implementation of specified
   and measurable quality objectives by Management as well as the regular review of the effectiveness of the management
   system via the Management review process.
   This commitment to quality is based on the implementation of a management system that reflects the business
   requirements of the Bank. This management system is defined in a management manual (also updated this year), which
   provides clear standards and guidelines for all the appropriate areas of the Bank’s activities.

   ISO 9001-200 Certification
   During their audit visit in 2008, Societe Generale de Surveillance (SGS) auditors highlighted a significant improvement in
   the Bank’s Quality Management System since its 2003 inception in their report. Year 2008 was a major improvement – not
   even one minor non-conformity was noted on the report. Therefore the audit team recommended, based on the results
   of the audit and the system’s demonstrated state of development and maturity, that management system certification be
   continued. Some general observations were raised, and these focused primarily on how to further improve our Quality
   Management System. The audit team concluded that Credit Libanais has established and maintained its management
   system in line with the requirements of the requisite standards.

   Achievements of the Quality Unit
   • Updated the Quality Policy and uploaded the revised copy on the intranet website;




Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                Economic Sustainability



• Updated the Quality Manual and all the quality procedures,
  and uploaded it on the intranet website;                            QMS Principles
• Updated all forms, documents and records concerning the
  Quality Department;                                                    • Customer focus;
• Created a new format for generic procedures, which will be             • Leadership;
  used in all branches and departments;
                                                                         • Involvement of people;
• Undertook internal audit visits for all the departments
  incorporated within the QMS system;                                    • Process approach;
• Supplier evaluation: created a summary concerning all                  • System approach to management;
  evaluated suppliers;                                                   • Continual improvement;
• Customer satisfaction reports through mystery shopper and
                                                                         • Factual approach to decision-making; and
  complaints are followed up on a monthly basis;
• Following up on the monthly materials and services issued              • Mutually beneficial supplier relationship.
  by the branches and ensuring that all non-conformities
  have been resolved on a month-by-month basis with the
  concerned department;                                               Benefits of QMS:
• Following up on non-conformities issued by the Bank and
  preparing reports for the ISO Committee;                              • Improved business planning;
• Documents and procedures have been revised, updated and               • Greater quality awareness;
  controlled for the majority of Credit Libanais’ departments;          • Improved communicaion;
• Integrated new departments/divisions as well as branches
                                                                        • Higher customer satisfaction;
  within the QMS ISO 9001-2000:
    • Market and Operational Risk Division;                             • Reduced costs; and
    • CRM department;                                                   • Greater control of processes and
    • Financial Management Division;                                      activities throughout the organization.
    • Electronic Archiving Department;
    • Administration and Support Department;
    • Methods and Procedures Department;
    • Treasury Back Office Department;
    • New branches; and
    • Starting the incorporation of sister companies within the
      QMS ISO 9001-2000.

Awards and Recognition
Credit Libanais Group was awarded the 2008 Bizz Award in
Dubai, one of the most prestigious business awards worldwide.
This Award was given in recognition of the Bank’s pioneering
role in business management, systems development and
quality in providing services and products. Bizz Awards
honours the most distinguished and successful businesses
and fosters healthy competition amongst business peers.

Organized by the World Confederation of Businesses
(WORLDCOB), an international leader in the development
and recognition of business management, the internationally
renowned awards were offered to Arab and Middle East
companies as well as some in Malaysia. It is noteworthy
to mention that Credit Libanais was the only institution
representing Lebanon.                                             2008 Golden Award for Excellence and Business Prestige




                                                                                                                           47
                          Risk Management
           The risk
     management
 team proved its
   mettle with its
juggling between
     international
   requirements,
         regulatory
       framework
      and internal
   regulations to
      formulate a
  comprehensive
     and effective
        strategy to                         Function and Strategy
    safeguard our                           The Risk Management Division is fully independent from the commercial lines of business; it
       operations.                          reports directly to the Chairman General Manager of the Bank and involves the management
                                            of major activities through an integrated strategic risk planning and process review. The Risk
                                            Management Division works towards the elaboration of a comprehensive risk management
                                            system, including measuring, aggregating, monitoring, and controlling activity-inherent business
                                            risks such as credit, market, and operational, which fall under the task of optimally allocating the
                                            economic capital of the Bank.

                                            Our business activities expose us to a wide variety of risks in virtually all aspects of our operations.
                                            We manage these risks by seeking to ensure that all business activities and transactions provide
                                            an appropriate balance of return for the risk assumed and remain within our risk appetite.

                                            Our management of risk is supported by sound risk management practices and effective risk
                                            management frameworks. The cornerstone of these frameworks is a strong risk management
                                            culture, supported by a robust set of policies, procedures and limits, which involve our risk
                                            management professionals, business segments and other functional teams. This partnership
                                            is designed to ensure the ongoing alignment of business strategies and activities within our risk
                                            appetite.

                                            Our risk appetite framework provides a structured approach, defining the amount and type of
                                            risk we are able and willing to accept in the pursuit of our business objectives. The risk appetite
                                            framework includes:
                                                • Identification of regulatory constraints that restrict our ability to accept risk and help us
                                                  define our risk capacity, which represents the maximum amount and type of risk we can
                                                  accept;




     Annual Report 2008                                                                                                      Credit Libanais Group
                                                                                                             Economic Sustainability




 At a time of significant
turmoil, it is vital to have
 a resilient yet flexible
             strategy


     • Establishment and regular confirmation of self-imposed constraints and drivers where we have chosen to limit the amount
       of risk we undertake;
     • Translation of risk appetite into risk limits and tolerances that guide our businesses in their risk taking activity; and
     • Periodic measurement and monitoring of our risk profile, which compares actual exposure to our risk limits and
       tolerances.

  We apply the following six overarching principles in the identification, monitoring and management of risk throughout the
  organization:
  (i) Balancing risk and reward is achieved through (a) aligning risk appetite with business strategy, (b) diversifying risk,
     (c) pricing appropriately for risk, and (d) mitigating risk through preventive controls;
  (ii) Management of risk is shared at all levels of the organization. Business management is accountable for all risks
     assumed in their operations, with direction and oversight provided by Group Risk Management. The business segments
     also have responsibilities for the management of risk. These responsibilities include (i) accountability for their risks, (ii)
     alignment of business strategy with risk appetite and (iii) identification, control and management of their risks;
  (iii) Effective decision making is based on a strong understanding of risk;
  (iv) All business activities are conducted with a view to not risking our reputation;
  (v) Assuring that services we provide are suitable for and understood by our clients; and
  (vi) Applying appropriate judgment as a mandate throughout the organization to manage risk.

  The Risk Mangement at the Credit Libanais Group covers Credit Libanais, Credit Libanais Investment Bank, Credilease
  and Lebanese Islamic Bank.


  Group Risk Management Framework and Governance
  The Group’s risk management framework is based on the principle of “three lines of defence”. The first line of defence is the
  business, which is accountable for the ownership, day-to-day management and control of all risks at an operational level
  and for implementing processes and testing key controls in compliance with Group policies. The second line of defence
  is Group functions, primarily consisting of Group Risk Management, Group Compliance and Group Finance including
  Group Asset and Liability Management. These functions are responsible for the implementation and maintenance of
  the operational risk framework, tools and methodologies, and for oversight and challenge on the adequacy of the risk
  and control processes operating in the business. The third line of defence is Group Audit, which is responsible for
  independently assessing the adequacy and effectiveness of key controls and ensuring compliance with Group policies.

  The main responsibilities of the Group Risk Management functions of the business units are to:
    • oversee all credit, market and operational risk matters and ensure compliance with local regulatory framework;
    • implement review and control policies on all risk portfolios;
    • manage concentrations by setting limits at portfolio level;




                                                                                                                                       49
      • manage single event/single obligor risk by setting limits;
      • set provisions for loan losses within delegated authority; and
      • establish and maintain operational risk control discipline.
   A key component of Risk Management is ensuring that Credit Libanais’ reputation is preserved and enhanced through
   choosing to engage responsibly in the right business activities with the right clients. The Group Asset and Liability
   Management (ALM) function is structured outside the Risk Management function. ALM supports the capital management
   process that is governed by the Group ALCO. ALM is responsible for the development of the Group’s policies for liquidity
   risk, the hedging of foreign exchange exposures of capital investments abroad, managing capital ratios, and the Group
   wide capital requirements. The compliance function within the Group performs the independent oversight role, on behalf
   of the Managing Board, with respect to those core processes, related policies and procedures that seek to ensure that the
   Group is in conformity with industry specific laws and regulations in letter and spirit. Group Finance responsibilities include
   the preparation of the budget, performance reporting and the process of providing reasonable assurance regarding the
   reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the
   new trends in international accounting standards, namely the International Financial Reporting Standards (IFRS 7).


   Basel II - Solvency Supervision and Capital Adequacy Framework
   In November 2005, the Basel Committee on Banking Supervision (BCBS) endorsed the publication of the “International
   Convergence of Capital Measurement and Capital Standards: a Revised Framework”, commonly referred to as the Basel
   II accord. The Central Bank of Lebanon set the compliance date in the Lebanese banking industry for January 2008.

   The Basel II accord provides three approaches of increasing sophistication to the calculation of credit risk capital charge:
   the Standardized Approach, the Foundation Internal Ratings Based approach (FIRB), and the Advanced Internal Ratings
   Based Approach (AIRB). Basel II also introduced, for the first time, capital requirements for operational risk and for
   market risk. The new capital framework is structured around three pillars:
   • Pillar 1 sets out minimum regulatory capital requirements, that is, the minimum amount of capital banks must hold
   against credit, operational and market risks;
   • Pillar 2 introduces the key principles for supervisory review of an institution’s risk management framework and,
   ultimately, its internal capital adequacy. It sets out specific oversight responsibilities for the Board of Directors and senior
   management, thus reinforcing principles of internal control and other corporate governance practices. Pillar 2 requires
   banks to put an internal capital adequacy assessment process (ICAAP) in place; and
   • Pillar 3 aims to bolster market discipline through the improved disclosure of Banks.

   The Basel II convergence went live in Lebanon on 1 January 2008. The implementation process of the Basel II capital
   adequacy framework is closely followed up by the Central Bank and the Banking Control Commission in Lebanon




Annual Report 2008                                                                                                  Credit Libanais Group
                                                                                                         Economic Sustainability




(BCCL) on a quarterly basis with regular reporting by the Lebanese banks for their consolidated activities. The regulatory
authorities have also published a set of circulars establishing clear-cut requirements.

Effective 2008, our Group has adopted the Standardised Approach. In addition, in our preparation for the adoption of the
Foundation IRB approach in the future (starting 2013, if authorized by the Banking Control Commission), we are in the
process of collecting data on ratings and defaults in order to be able to go through a calibration and validation exercise
in line with Basel requirements, and to calculate the respective Probability of Default (PDs).

Group Risk Management and Capital Adequacy
At Credit Libanais, capital adequacy and Risk Management are closely aligned. The Bank undertakes a regular
assessment of its internal capital requirements based on a quantification of the material risks to which it is exposed. This
assessment includes the use of stress tests to assess whether the Group’s capital resources are adequate to maintain
the Bank’s Capital Adequacy Ratio (CAR) above the minimum requirements throughout particular scenarios. The results
of the internal capital assessments are reviewed by the Group’s Risk Committee and the Group’s Asset and Liability
Committee (Group ALCO) and are used to ensure the adequacy of the Group’s available capital resources, based on
target and minimum capital requirements, as set in the risk appetite framework.

In this context, the Bank has so far invested significant efforts to comply with the new capital accord requirements aligned
with the Bank’s Board of Directors’ mandate to foster an advanced, bank-wide risk culture via strategic projects and
systems. This has shown the Bank ready for independent reporting at each branch and subsidiary as well as at a fully
consolidated level.

• Pillar 1
In line with the regulatory guidance, Credit Libanais started by applying the standardized approach for the computation
of the regulatory capital charge for credit and market risks and the basic indicator approach (BIA) for operational risk.
The Bank has been preparing quarterly regulatory and internal quantitative impact studies (QISs) since September
2006, both for pillar 1 and with potential adjustments as part of pillar 2. On the other hand, the Bank is preparing to
move towards more sophisticated but risk sensitive methods. Multiple scenarios of capital charge calculations are being
reported to the Group ALCO and to the Board of Directors whilst maintaining a Capital Adequacy Ratio (CAR) of 13.32%
as at December 2008, well above the minimum capital adequacy ratio (CAR) of 8%.

• Pillar 2
As part of pillar 2, the Bank ensures that the risk management function is well organized and supported in order to facilitate
the implementation of risk policies and the management of the Bank’s overall risks. Effective strategies and policies are
being established and reviewed, periodically aiming at maintaining adequate levels of both internal capital and own funds




                                                                                                                                   51
   through an emerging Internal Capital Adequacy Assessment Process (ICAAP) as required by the Central Bank Basic
   Circular No. 119 dated 21 July 2008. The Bank’s response to the Supervisory Review and Evaluation Process (SREP)
   has been shown in its close monitoring of the other types of risks which are partly covered or not covered at all under
   the first pillar.

   • Pillar 3
   As regards pillar 3, the Bank is preparing to disclose a major set of the applicable tables mandated by the Basel II
   accord while at the same time maintaining close interaction with the International Financial Reporting Standards (IFRS).
   Credit Libanais already discloses a significant amount of risk-related information, and believes that a more transparent
   environment will be beneficial to all banks in the industry.

   Capital Resources and Minimum Capital Requirements Information
   • Capital and Regulatory Capital Ratios
   The Bank ensures that its capital levels exceed at all times the minimum capital requirements established by the regulatory
   guidelines according to the international standards of the Bank for International Settlements (BIS). The definition adopted
   by the BIS distinguishes between three types of capital. Tier 1 capital consists of common shareholders’ equity and non-
   cumulative preferred shares, the eligible amount of innovative instruments and non-controlling interests, less goodwill.
   Tier 2 capital consists of preferred shares not eligible for Tier 1 capital, the eligible portion of subordinated debentures,
   the eligible general allowance for credit risk as well as the eligible amount of innovative instruments that could not be
   included in Tier 1 capital. A third tier of capital is intended specifically to cover market risk, which is also covered by Tier
   1 capital. Total regulatory capital is the sum of all capital net of investments in companies subject to significant influence
   and first-loss protection with respect to asset securitization. Under the requirements of the Basel II accord, the capital of
   insurance companies held by the Bank and investments in entities over which the Bank exercises significant influence
   are deducted in equal parts from Tier 1 and Tier 2 capital. However, on a provisional basis, regulators are allowing
   100% of these amounts to be deducted from Tier 2 capital for all investments made before January 1, 2007. This
   transitional period ended on 31 October 2008 for entities over which the Bank exercises significant influence and will end
   on 31 October 2011 for insurance companies. Capital ratios are calculated by dividing the previously described tiers of
   capital described by the Bank’s Risk-Weighted Assets (RWA). Credit, market and operational risks are considered in the
   calculation of risk-weighted assets for regulatory purposes.




Annual Report 2008                                                                                                  Credit Libanais Group
                                                                                                              Economic Sustainability



         Credit Libanais conducts fully consolidated regulatory reporting. Following is a summary of the Bank’s capital position:
Regulatory Capital Resources                                                                                                 million LBP

 as at 31 December 2008

 Tier 1 capital resources
 Permanent share capital                                                                                                       234.000
 Profit and loss account and other reserves (taking into account interim net losses)                                           188.815
 Share premium account                                                                                                                 0
 Investment in own shares                                                                                                              0
 Intangible assets                                                                                                              (2.387)
 Minority interests                                                                                                                    0
 Core Tier 1 capital                                                                                                           420.428
 Perpetual non-cumulative preference shares                                                                                            0
 Other Tier 1 capital                                                                                                          420.428
 Excess limits for non innovative Tier 1 instruments -                                                                                 0
 Excess limits for innovative Tier 1 instruments -                                                                                     0
 Net losses on equities held in available-for-sale financial asset category -                                                 (12.553)
 Material holdings -                                                                                                                   0
 Tier 1 deductions                                                                                                            (12.553)
 Total Tier 1 capital after deductions                                                                                         407.875
 Tier 2 capital resources
 Tier 2 capital instruments                                                                                                     83.203
 50:50 Tier 2 deductions                                                                                                               0
 Other Tier 2 deductions -                                                                                                             0
 Total Tier 2 capital after deductions                                                                                          83.203
 Total Tier 3 capital                                                                                                                  0
 Deduction for Tiers 1 and 2 capital -                                                                                        (12.553)
 Total risk weighted assets                                                                                                  3.686.738
 Tier 1 ratio                                                                                                                  11.06%
 Total Tier ratio                                                                                                              13.32%

         The tables below set out the minimum capital requirements and associated risk weighted assets for Credit Libanais with
         separate disclosures for the credit risk, market risk and operational risk requirements.
         All figures are as at 31 December 2008, unless otherwise stated:
Minimum Capital Requirements                                                                                                 million LBP

 as at 31 December 2008

 Credit risk                                                                                                                   268.303
 Market risk                                                                                                                        4.094
 Operational risk                                                                                                               22.541
 Total                                                                                                                         294.938


Risk Weighted Assets                                                                                                         million LBP

 as at 31 December 2008

 Credit risk                                                                                                                 3.353.789
 Market risk                                                                                                                    51.182
 Operational risk                                                                                                              281.768
 Total                                                                                                                       3.686.738




                                                                                                                                            53
Credit Risk: Minimum Capital Requirements                                                                                                million LBP

  as at 31 December 2008

  Basel II - standardised -                                                                                                         268.303


Credit Risk: Standardized Minimum Capital Requirements by Exposure Class                                                                 million LBP

  as at 31 December 2008                                   Exposure Value           Risk Weighted Assets                 Capital Change
  Central governments and Central Banks                               4.131.207                       1.831.685                           146.534
  Banks                                                                 578.159                        155.767                               12.461
  Public sector institutions                                              1.816                          1.816                                   145
  Corporates                                                            436.890                        419.509                               33.561
  Retail                                                                719.531                        512.168                               40.973
  Residential Mortage Loans                                             326.015                        114.106                                  9.128
  Claims secured by Commercial Real Estate (CRE)                         19.528                         19.527                                  1.562
  Other                                                                 457.020                        299.211                               23.937
  Securitisation positions standardised approach                              0                              0                                     0
  Total                                                               6.670.166                       3.353.788                           268.303


Market Risk: Trading Book and Other Business Minimum Capital Requirements 2008                                                           million LBP

  as at 31 December 2008
  Total capital charge for general equity position risk                                                           217
  Total capital charge for specific equity position risk                                                          217
  Total capital charge for foreigh exchange risk                                                                  3,661
  Total trading book capital requirements                                                                         4,095
  Total trading book notional risk weighted assets                                                                51,188


Operational Risk: Minimum Capital Requirements Calculated as per the Basic Indicator Approach 2008                                       million LBP

  as at 31 December 2008

  Pillar 1 operational risk minimum capital requirement                                                                             22.541


   Credit Risk Management
   Credit risk is the risk of loss associated with a counterparty’s inability or unwillingness to fulfill its payment obligations.
   Credit risk may be direct (issuer, debtor, obligor) or indirect to a second obligor (guarantor).

   We offer a wide range of credit products and services to individuals and business clients within Lebanon, Bahrain and
   Cyprus. Core products offered include loans, residential and commercial mortgages, credit cards, lines of credit and
   letters of credit. Most of the lending facilities extended by the Group are based on floating interest rates and comprise
   overdraft facilities granted for a period of one year that are renewable on a yearly basis for facilities rated BDL 1, and
   semi-annually for facilities rated BDL 2.

   Our credit offerings are a significant driver of overall business performance. The failure to effectively manage credit
   risk across the group and all products, services and activities can have a direct, immediate and material impact on our
   earnings and reputation.

   Our credit risk management principles are guided by the six overall risk management principles discussed in the
   Risk Management overview section. In particular, the following two principles are complemented by the items




Annual Report 2008                                                                                                      Credit Libanais Group
                                                                                                             Economic Sustainability




below with respect to credit risk management.

The effective balancing of risk and return is achieved through:
   • Ensuring that credit quality is not compromised for growth;
   • Diversifying credit risks in transactions, relationships and portfolios;
   • Using our credit risk rating and scoring systems, policies and tools;
   • Pricing in accordance with risk taken;
   • Applying consistent credit risk exposure measurements; and
   • Mitigating credit risk through preventive and detective controls.

Our business activities are conducted with a view to not risking our reputation. Therefore, there are certain types of
clients and transactions that we avoid in order to maintain our reputation, such as:
   • Granting credit to entities subject to economic sanctions;
   • Credit transactions that facilitate illegal activity, or contribute to misleading financial statements or regulatory
     reporting;
   • Credit transactions involving undocumented agreements, disbursements or funds transfers; and
   • Granting credit to a business or individual engaged in activities inconsistent with generally accepted standards of
     ethical behaviour in the community.

Given the potential for credit risk to significantly impact our earnings, it is critical that we accurately quantify credit risk at
both the individual and one obligor and portfolio levels. This allows us to effectively estimate expected credit losses and
minimize unexpected losses in order to manage and limit earnings volatility.

Our credit risk exposures are classified as corporate, Small and Medium Enterprises (SME), and retail products portfolios.
The retail product portfolio is comprised of residential mortgages, personal, credit card and small business loans. This
categorization of exposures is consistent with Basel II guidelines, which require banks to disclose their exposures based
on how they manage their business and risks.

Credit Risk Rating System
The corporate and SME credit risk rating system is designed to measure and identify the risk inherent in our credit activities
in an accurate and consistent manner. Each obligor is assigned a Borrower Rating (BR), which reflects an assessment
of the credit quality of the obligor. The assignment of BR is based on the evaluation of obligor business and financial
performance against several risk factors. We use risk criteria, which present a structured process for the consistent
identification and analysis of material information needed to assess obligors in various industry sectors. Generally, the
key risk factors assessed include industry, markets, firm competitiveness, company strategy and management quality,
and financial performance.




                                                                                                                                       55
   The Moody’s Financial Analyst and Risk Advisor have been used by the Bank since 2003 as an internal ratings system
   for credit scoring and credit risk assessment. This system, which is used by leading financial institutions worldwide,
   allows the Bank to assess and score credit on two levels: financial results and projections, and risk rating.

   Such ratings tools combine automated scoring techniques and qualitative assessments, ultimately approved by
   authorized credit committees. To ensure the consistency of the ratings applied within the Bank, constant monitoring and
   performance testing are conducted to fine-tune the tools to the Bank’s needs, and further enhance the management of
   commercial credit portfolio throughout the institution.

   Moody’s internal ratings system for assessing obligor and transaction risk for retail and corporate commercial loans is
   employed in the acquisition of new clients or in reviewing of existing clients. The following table maps the risk level versus
   Moody’s risk rating:


                 Risk Level                  Moody’s Risk Rating
       Low                                           1–3
       Medium                                        4–7
       High                                          8 – 10



   Credit Review
   We ensure that our credit risk rating system and methodologies are subject to internal review on a regular basis. The
   review processes provide confirmation that our system properly identifies factors that help discriminate risk, appropriately
   quantify risk, produce measures of risk that respond to changes in the macro-economic and credit environments, and are
   consistent with regulatory requirements and our ratings philosophy.
   We ensure that there is proper separation of responsibilities between:
   (i) transaction, origination and approval, which take place within the business segments, and (ii) design, development
   and maintenance of the risk rating methodologies, which take place within Credit Risk Management.

   Credit Risk Policies and Control
   Our enterprise-wide credit risk policies are developed, communicated and maintained by Credit Risk Management.
   These policies set out the minimum requirements for the prudent management of credit risk in a variety of transactional
   and portfolio management contacts.

   Credit Risk Policies
   Our credit risk policies have evolved over many years as the organization has grown in geographic scope and product
   complexity, and have been refined based on experience, regulatory influences and innovations in risk management and




Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                          Economic Sustainability




are managed under five major categories as follows:
   • Credit Risk Assessment includes policies related to credit risk analysis and risk rating;
   • Credit Risk Mitigation includes credit structuring, collateral and guarantees;
   • Credit Risk Approval includes credit risk limits and exceptions;
   • Credit Documentations focuses on documentation and administration; and
   • Credit Review and Deterioration includes monitoring and review.

Lending Policies and Procedures
The Bank adopts a sophisticated method in its credit analysis, considering a wide range of factors for approving a loan.
To that end, the Bank implements policies and follows strict procedures for credit approval and review that include
financial analysis and cash flow projections with respect to commercial customers. The Credit Department is divided
between corporate, SME and retail products lending. In addition, some of the medium and long-term lending is arranged
by the Bank’s subsidiaries. All credit approval decisions are taken within authorized credit committees designated by the
Board of Directors for facilities exceeding USD 200,000, and by the Chairman – General Manager for facilities below
USD 200,000.

1- Corporate and SME Lending
For commercial loans, the Bank’s credit approval process is either initiated by the branch or the Account Manager (AM)
for SME clients with turnover below USD 2 million or total facilities below USD 500,000 and by a Relationship Manager
(RM) for corporate clients with turnover above USD 2 million or total facilities exceeding USD 500,000. The credit
presentations are submitted by the AMs/RMs on the Bank’s standard form to the relevant credit committee.

The credit committees are subdivided for SME facilities and corporate facilities based on the total aggregate amount
of the clients’ total facilities and corresponding rating. The members of the credit committees depend on the type and
amount of the clients’ facilities, and can include the Head of Retail Banking Division, the Head of Corporate Banking
Division, the Corporate Credit Manager and others. For most facilities exceeding USD 200,000, the Chairman - General
Manager of the Bank chairs the corresponding credit committee in the presence of the Head of Credit Risk Management.
An independent credit review and analysis is submitted with the recomendation of the credit risk management analysts
for all corporate and SME facilities prior to the committee meeting.

Once approved, all files, whether relating to a corporate or SME facility, are transferred to the respective Credit
Administration and Control Department for review, in order to ascertain that all the required conditions of approval of the
relevant credit committee are in place, and that the credit meets the terms of acceptance according to the Bank’s policies
or, in the event of any deviations, that approvals are granted for such deviations. The respective Credit Administration and
Control Department is also responsible for receiving and reviewing all collateral and contractual documentation relating to
borrowers and to ensure compliance with the specified conditions as for the approval, prior to the disbursment of any facility.




                                                                                                                                    57
                                                                              By arming ourselves with
                                                                           conservative risk strategies and
                                                                             continuously upgrading our
                                                                          processes and procedures within
                                                                          a sound regulatory environment,
                                                                             Credit Libanais looks to the
                                                                               future with confidence.


   When the review is complete, the respective Credit Administration and Control Department inputs the credit limits into
   the Bank’s computer system, thus making the limit(s) available for use by the borrower.
   Once granted, the ongoing review and accounting for loans are the responsibility of the respective AM/RM and branch
   manager. The Credit Department at both the Retail and Corporate Banking Divisions and the branch manager are
   responsible for the monitoring and performance of the facilities and checking that the funds are used for the purpose
   stated in the loan application. Regular visits are made to the premises of borrowers and every loan is submitted for a
   thorough review and reassessment by the AM/RM at least once a year. Review and renewal of facilities are subject to the
   same approval process as the original granted facilities, and are carried out at least once a year. The respective Credit
   Departments are also responsible for monitoring the markets in which the Bank’s borrowers operate in order to foresee
   any significant developments that might affect, either adversely or favourably, the performance of the borrowers.

   2- Retail Products Lending
   For retail products loans, the Bank’s credit approval process begins at the branch level, where applications are submitted
   in a standard form. The application includes the details and purpose of the required facility (e.g., consumer, car, personal
   and housing loan…), the proposed source and schedule of repayment (e.g., salary and employer introduction letter) and
   any proposed guarantee or security (e.g., third party guarantor). All the retail lending products are based on standard
   product criteria yearly reviewed by the Credit Lending Policy Committee based on the performance of the products.
   The branch manager then forwards the application with his/her observations to the regional manager who is responsible
   for branches within a specific geographical area. The regional manager reviews the application, performs his/her
   preliminary credit assessment and forwards the application with his/her recommendation to the Retail Products Credit
   Department. The Retail Products Credit Department acts as the central unit for the review and analysis of all retail
   products credit applications submitted by retail customers and gathered through the Bank’s branch network. At the Retail
   Credit Department, the application is reviewed and analyzed by a credit officer. Further review is conducted by the Retail
   Credit Manager and approvals are granted by a product credit committee upon a favourable recommendation by the
   latter in conjunction with the Retail Banking Division Head.

   3- Related Party Loans
   Pursuant to the Central Bank’s Basic Decision No. 7776 dated 21 February 2001, and its amendments, advances and
   credit facilities to directors of banks, or to companies having common directors with a bank or to principal shareholders
   or their close relatives, must be authorized by an Assembly of Shareholders of the bank and approved by the Board of
   Directors and be fully secured in line with Article 152 of the Code of Money and Credit. They must also not exceed in
   aggregate 5% of the shareholders’ equity of the bank, provided, however, that banks may grant advances and credit
   facilities to related parties up to 2% of the shareholders’ equity without having to meet the conditions specified in the
   above mentioned Article, and must be made on normal commercial terms. The Bank is in compliance with Article 152 of
   the Code of Money and Credit.




Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                          Economic Sustainability




Credit Risk Limits
Limits are used to ensure our portfolio is well diversified and within our risk appetite as approved by the Board of
Directors. Our credit limits are established at the following levels to ensure adequate diversification and to reduce
concentration risk:
   • One obligor limit;
   • Geographic (country and region) limits;
   • Industry sector limits; and
   • Product and portfolio limits.

Credit Risk Mitigation
We seek to mitigate our exposure to credit risk through a variety of means, including structuring of transactions and
collateral. The policies and processes that are in place regarding the monitoring of the effectiveness of our credit risk
mitigation are discussed below.

Structuring of Transactions
Proper structuring of a credit facility is a key factor in mitigating risk at the transaction level and often includes the
use of eligible guarantees, security and covenants. We use credit policies and procedures to set out requirements for
structuring transactions. Retail products guidelines set out appropriate product structuring and client criteria.

Collateral
We generally require obligors to pledge collateral as security when we advance credit. This provides some protection
in case of default. Real estate, liquid assets, cash, bonds and government securities are examples of the eligible
collateral securities. The extent of risk mitigation provided by collateral depends on the amount, type and quality of the
collateral taken. Specific requirements relating to collateral valuation and management are documented in our credit risk
management policies. Valuation of collateral is done periodically and is compared to our collateral positions.

In accepting collateral in the form of mortgages or company shares against loans, the Bank normally requires that the
value of the collateral varies between 125% and 200% of the covered loan. Before the renewal of any loan, the related
file is reviewed by the Bank and the collateral is appraised by independent and professional appraisers approved by the
Bank.

Loan Classification and Provisioning
Before 1998, no specific rules were imposed by the Lebanese regulatory authorities in relation to loan provisioning. On
10 November 1998, the Central Bank issued Basic Circular No. 58, which requires all banks and financial institutions in
Lebanon to classify loans according to risks in five categories: (i) ordinary/regular accounts; (ii) accounts to be followed-up
and regularised; (iii) less than ordinary/sub-standard accounts; (iv) doubtful accounts; and (v) bad or ailing accounts.




                                                                                                                                    59
   Basic Circular No. 58 more specifically defines as follows:
   i) “Regular accounts” are accounts that systematically respect all engagements and conditions relative to granted lines;
   ii) “Accounts to be followed up and regularised” otherwise known as “Watch Clients” are accounts that show deficiencies
   in cash flow and profitability, outdated financial statements and outdated revaluation of security (more than three years).
   These accounts are considered recoverable due to the creditworthiness and solvency of the borrower and/or the
   adequacy of collateral;
   iii) “Sub-standard accounts” are accounts that show severe declines in profitability and/or cash flows for two consecutive
   years, severe decline in the value of security, delays of less than three months in the repayment of principal or interest and/
   or inappropriate use of proceeds. The steps to be taken are implementation of an action plan to regularise deficiencies
   and excesses, close follow-up on the file, deferral of the recognition of interest to income awaiting the regularisation of
   deficiencies and reversal of interest on unpaid amounts for more than 90 days;
   iv) “Doubtful accounts” are accounts that display most of the criteria of “sub-standard accounts” albeit with a higher
   degree of severity. Partial provision should be allocated against the loan and all interest and commission should be
   reversed from the income statement; and
   v) “Bad or ailing accounts” otherwise known as “Bad or Non Performing Loans” are accounts that display most of the
   criteria of “doubtful accounts” and denote a very limited or non-existent capacity of reimbursement. Full provisions should
   be allocated against the loan and all interest and commissions should be reversed from the income statements.
   Loans classified as “regular accounts” are reviewed on an annual basis; loans classified as “accounts to be followed-up
   and regularized” are reviewed on a semi-annual basis.
   Full compliance with Central Bank of Lebanon Basic Circular No. 58 became compulsory in July 1999, and the Bank
   believes that it has satisfied all related requirements.
   The Banking Control Commission retains the right to periodically review the entire loan portfolio of every bank and has
   power to impose provisions relating to loans if it assesses them as doubtful or inadequately secured.
   A general provision for retail product loans is based principally on delinquencies, historical loss rates and the overall
   volume of the retail lending portfolio.
   Customer advances (other than retail products loans) receive a non-accrual status immediately if, in the opinion of the
   Bank’s management, principal or interest is not likely to be paid in accordance with the terms of the loan agreement or
   when principal or interest is 90 days or more past due. Effective as at the date on which a loan receives a non-accrual
   status, interest income (including interest accrued but not collected) ceases to be accrued in the statement of income
   and is allocated as “unearned interest”. In comparison, the Central Bank considers a loan to be “non-performing” if partial
   or full provisions are required in respect thereof in accordance with the Central Bank’s loan classification regulations
   (i.e., loans classified as “sub-standard accounts,” “doubtful accounts” or “bad or ailing accounts”). A non-performing
   loan (according to Central Bank standards) must be provisioned for based on estimated losses and the value of any
   collateral.




Annual Report 2008                                                                                                 Credit Libanais Group
                                                                                                            Economic Sustainability




Since October 1998, the Central Bank has required banks to maintain, on an annual basis, a general reserve (which
is included in Tier 1 capital and charged against net profits) for unidentifiable risks in an amount equal to a minimum of
0.2 % and a maximum of 0.3 % of a bank’s total risk weighted assets, as determined by reference to the Central Bank’s
capital adequacy requirements. This reserve is required to reach 1.25 % of risk weighted assets after a period of ten
years and 2 % of risk weighted assets after 20 years. In addition to the Banking Control Commission’s periodic reviews,
the Bank’s external auditors conduct an annual review of the Bank’s loan portfolio in line with their defined procedures.

Settlement Risk
Our trading activities may give rise to risk at the time of settlement of those trades. Settlement risk is the risk of loss
due to the failure of a counterparty to honour its obligations to deliver cash, securities or other assets as contractually
agreed.
For many types of transactions, we mitigate settlement risk by closing the transaction through a clearing agent, which
effectively acts as a stakeholder for both parties, only settling the trade once both parties have fulfilled their sides of the
bargain. Where no such settlement system exists, the simultaneous commencement of the payment and the delivery
parts of the transaction is common practice between trading partners (free settlement). In these cases, we may seek to
mitigate our settlement risk through the execution of bilateral payment netting agreements. Acceptance of settlement
risk on free settlement trades requires approval from the Financial Institutions Credit Committee, either in the form of
pre-approved settlement risk limits, or through transaction-specific approvals. We do not aggregate settlement risk limits
with other credit exposures for credit approval purposes, however, we take the aggregate exposure into account when
we consider whether a given settlement risk would be acceptable

Country Risk
Credit Libanais defines country risk as the risk of loss due to country-specific events or circumstances. Country risk can
materialise by way of credit, market and operational losses. With respect to credit risk, the specific country risk is that
the government imposes transfer and/or convertibility measures that prevent an obligor to repay its foreign currency
obligations to the Group. Hence the risk of default or late payment may be caused by the inability of an obligor to repay
(credit risk) or by government measures (transfer and convertibility risk). Given the relationship between credit and
country risk, both are managed in an integrated manner. Country limits are approved and reviewed at the Asset and
Liability Management Committee (ALCO) level.

Portfolio Diversification and Management
The Bank is exposed to credit risk under both its commitments to a particular borrower, and through the sectoral distribution
(activity sector) of its commitments and the exposure of its various credit portfolios to geographical, concentration and
settlement risks.
The Bank’s approach to controlling these diverse risks begins with optimizing the diversification of its commitments. The
management criteria set out in its internal policies and procedures include measures designed to maintain a healthy
degree of diversification of credit risk in its portfolios. These instructions are mainly reflected in the application of various
limits on the scope of its commitments: credit approval limits by level, limits on counterparty credit concentration and
credit concentration limits by industry, country, region and type of financial instruments. Compliance with these limits is
monitored through periodic reports submitted by the Finance Division and the Risk Management divisions to the Board
of Directors.
The criteria established for portfolio diversification and the specific limits set for economic, industrial or geographical
sectors are based on the findings of sector-based studies and analyses conducted by economists and the Bank’s Risk
Management Group, and are approved by the Credit Policy Committee. Continuous analyses are performed in order to
anticipate problems with a sector or borrower before they materialize as defaulted payments.




                                                                                                                                      61
   Market Risk Management
   Market risk is defined as the risk that movements in financial market prices will decrease the value of the Bank’s trading
   portfolios. Credit Libanais is exposed to market risk through its trading activities, which are carried out both for customers
   and on a proprietary basis. There are several major sources of market risk including interest rate, foreign exchange,
   equity price, commodities, credit spread, volatility risks and correlation risks. Market risk includes market liquidity risk,
   which is the risk that the Bank cannot easily offset or eliminate a position without significantly affecting the market price
   because of inadequate market depth or market disruption. In any trading activity, market risk arises from both open
   (unhedged) positions and from imperfect correlation between market positions that are intended to offset one another.
   The overall objective of managing market risk is to avoid unexpected losses on the back of changes in market prices and
   to optimise the use of market risk capital.

   The Bank looks to manage these potential exposures on a daily basis within pre-defined limits for each of the major
   types of market risk established within the Bank’s policies and commensurate with the risk appetite defined by the Board
   of Directors. Furthermore, the Market Risk Management Department conducts, on a periodical basis, identification,
   quantification and management reports in order to gain timely and accurate exposure understanding.

   Interest Rate Risk in the Trading and the Non-trading (Banking) Book
   Credit Libanais defines interest rate risk as the risk that the interest income of the Group fluctuates due to a change in
   interest rates and that the change in value of the Group’s financial assets in the banking book – representing financial
   assets other than those categorised as trading assets – does not match the change in the value of the Group’s liabilities
   due to a change in interest rates. Interest rate risk arises primarily from the fact that the re-pricing period of the Group’s
   assets typically exceeds the re-pricing period of the Group’s liabilities (maturity mismatch).

   Treasury activity and mismatches between the re-pricing of assets and liabilities in its retail and commercial banking
   operations account for most of the non-trading interest rate risk.

   The interest rate risk the Bank is exposed to in its banking book is assessed from both, the net interest income and the
   Economic Value of Equity (EVE) perspectives using a number of methods, including interest rate re-pricing gap analysis
   according to BCCL circular No. 250 dated 23 May 2006, duration gap analysis, etc. On the other hand, the management
   of interest rate risk in the trading book is achieved through mark-to-market, limit establishment, exposure and sensitivity
   analyses.

   Foreign Exchange Risk (Currency Risk)
   Non-trading currency risk derives from the Group’s investments in overseas subsidiaries, associates and branches.
   Credit Libanais does not maintain material non-trading open currency positions in line with local regulatory requirements,
   other than the structural foreign currency translation exposures arising from its investments in foreign subsidiaries and
   associated undertakings and their related currency funding.

   Credit Libanais applies various hedging strategies to manage and minimise adverse effects arising from these exposures.
   The Bank’s policy in relation to structural positions is to selectively hedge the structural foreign currency exposure arising
   from net asset value, including goodwill, in foreign subsidiaries, equity accounted investments and branches, except
   where doing so would materially increase the sensitivity of the Group’s regulatory capital ratios to currency movements.
   The policy requires structural and capital ratio foreign exchange positions to be reviewed regularly by the Group’s
   Asset and Liability Committee (ALCO). Foreign exchange differences arising in the translation of foreign operations
   are recognised directly in equity together with the effective portion of foreign exchange differences arising on hedging
   instruments.




Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                          Economic Sustainability




Equity Position Risk
This is the risk of holding or taking positions in equities in the trading book. The Bank has established a comprehensive
transaction and position-based limits framework against which regular monitoring is performed.

Liquidity Risk and Funding Management
Credit Libanais defines liquidity risk as the risk arising from the Group’s potential inability to meet its obligations when
they become due, without incurring unacceptable losses. Conversely, liquidity risk also manifests itself in the form of
opportunity losses due to holding excess liquidity relative to liabilities. The Credit Libanais approach to liquidity is that
its business liquidity profile should be sufficient for the Group to continue for at least 30 days under a very severe
firm specific crisis, such as no access to new capital funding and drawings under committed facilities. In dealing with
liquidity risk, the Bank’s rule is that liquidity prevails over profitability. Liquidity risk management is performed by the
Group’s Asset and Liability Committee (Group ALCO). The Market Risk Management Department in coordination with
the Treasury Department submits its proposals for the optimization of the structure of assets and borrowed funds and
on risk mitigation through the diversification of funding sources, aiming at maintaining a healthy balance of cash, cash
equivalents, and liquid instruments.

The liquidity management policy establishes specific gap limits and includes cash flow projections and emergency
funding mechanisms. The monitoring and control of liquidity risk is established on an ongoing basis and involves balance
sheet ratio analysis and the measurement of the cash flow gaps and stress testings.

Stress Testing - Pre-emptive Rather than Reactive to Global Tumoil
During the year 2008, the Bank introduced extensive stress testing as an anticipatory measure to the unprecedented
strains starting summer 2008, which have confirmed the validity of the Bank’s proactive efforts at this level. Throughout
the international market turbulence, the Bank’s stress testing program was being refined and its components softly
defined without neglecting bank-wide risk concentrations. For credit risk management purposes, the Bank performs
stress tests to assess the impact of changes in general economic conditions on the Bank’s credit exposures as well as
the impact on the creditworthiness of the Bank’s portfolio. Among other things, the results of these stress tests enable us
to assess the impact of significant changes in the frequency and/or severity of operational risk events.

For liquidity risk management purposes, we perform stress tests and scenario analyses to evaluate the impact of sudden
stress events on our liquidity position in response to a specific or general market particular liquidity crisis. Several stress
testing scenarios are established through quantitative analysis of the liquidity impact of such an event. The Bank keeps
a liquidity buffer to mitigate liquidity risk through the provision of standby liquidity in the form of unencumbered assets,
Central Bank eligible instruments and short term placements with credible correspondent Banks.


Operational Risk Management
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems,
or from external events. When controls fail to perform, operational risk can cause damage to reputation, have legal or
regulatory implications, or lead to financial loss.

Organizational Set-up
Operational Risk Management is an independent Risk Management function within the Bank. On the other hand, the
Operational Risk Management Committee is a permanent sub-committee of the Risk Executive Committee and is
composed of representatives from Operational Risk Management and Operations Officers from the several Business
Divisions and infrastructure functions. The Operational Risk Management Committee oversees all operational risk




                                                                                                                                    63
   management issues and approves our Group standards for identification, assessment, tracking, reporting and monitoring
   of operational risks inherent in the Bank’s activities.

   Operational Risk Management is responsible for defining the operational risk framework, related policies and the
   management of cross divisional and cross regional operational risk while the responsibility for implementing the framework
   as well as the day-to-day operational risk management lies with our business divisions and infrastructure functions.
   Based on this business partnership model, we ensure close monitoring and high awareness of operational risk.

   The Operational Risk Management Department’s work also consists of conducting a series of operational risk
   assessments on both Head Office and branches functions, resulting in a set of amendments on operational procedures
   and system processes.

   In Credit Libanais, we manage operational risk based on a Group-wide consistent framework that enables us to determine
   our operational risk profile in comparison with our risk appetite and to define risk mitigation measures and priorities. We
   apply a number of techniques to efficiently manage the operational risk in our business, and we are in the course of
   implementing a number of projects and tools, namely:
   • Operational risk data collection process
   As per BCCL circular No. 252 and starting March 2007, the Operational Risk Management Department developed a
   procedure under which it launched the collection process on operational loss events/probable events/near misses. This
   has resulted so far in building up an ample operational risk database. The resulting financial losses are being mapped
   within the seven loss events and the eight business lines of the new capital accord in order to smooth the reporting
   progress. The guiding principle in operational risk management is that management, at all levels in the organization,
   is responsible for directing and managing operational risks. Operational risk management coordinators are assigned
   throughout the Bank to assist line management in fulfilling this responsibility and to act as the eyes and ears of the
   Operational Risk Management Department.
   • Risk and Control Self-Assessment (RCSA) and Key Risk Indicators (KRIs)
   Line management needs information to enable it to identify and analyze operational risk, implement mitigation measures
   and determine the effectiveness of the latter. The Bank is looking at implementing a number of programmes and tools
   to support line management. These include Risk self-assessment, which is defined as a structured approach that helps
   line management to identify and assess risks and take mitigating actions for risks that are identified as unacceptable.
   Risks are assessed with the assistance of facilitators, who are usually operational risk management staff or external
   consultants for some particular businesses. The Bank’s approach consists of helping the business and support lines to
   identify and assess operational risk and related controls inherent in their existing or new products, processes, activities or
   systems. This is paramount to enhancing the internal controls in the Bank. In addition, KRI provides early warning signals
   on the level of operational risk in the Bank’s activities and allows building trend analysis over-time to trigger necessary
   actions whenever required. Our objective is to capture action points resulting from risk analysis, lessons learned, self-
   assessments, risk workshops or risk indicators and to monitor the progress of the operational risk action points on an
   on-going basis. Ultimately, we need to capture the residual operational risk after mitigation in “Risk Acceptances”.
   • Policies and procedures
   A set of policies and procedures are implemented and are in the process of being further enhanced in order to outline the
   Bank’s operational risk strategy and governance. These policies depict the sound values of operational risk management
   practices the Bank is adopting, the roles and responsibilities of the various actors responsible for governing and managing
   operational risk, as well as the tools required to assess the Bank’s vulnerability to operational risk.
   • Capital adequacy
   As per the Central Bank of Lebanon basic circular No. 104 and BCCL circular No. 257, the capital charge required




Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                      Economic Sustainability




to cover the operational risk is calculated using Basel II Basic Indicator Approach (BIA). Nevertheless, arrangements
have been put in place to move towards the Standardized Approach for capital charge calculation. For that reason,
accounts for booking operational losses and profits on the P&L have been proposed by the Operational Risk Management
Department as an achievement of a Basel II qualifying criterion.

Information Security Risk Management
Information is an asset that, like other important business assets, is essential to an organization’s business and
consequently needs to be suitably protected. Whatever form the information takes, or means by which it is shared or
stored, it should always be appropriately protected.

The information security department reports to the Operational Risk Management and its primary objective is to
safeguard the Bank’s information assets. During this year, the Bank enhanced the management techniques to more
proactive approaches. In fact, the concerned business management became deeply aware and concerned about
threats, vulnerabilities and attacks against the Bank’s information assets. Credit Libanais’ management decided to
further strengthen the Information Security Risk Management; thus talented and experienced security professionals
joined the Department, creating more awareness of the threats to information security.

As a first task, the team devised a security program based on ISO 27001 security standard and best practices, consisting of
a well defined approach that fits Credit Libanais’ security needs and which also met with the following main objectives:
   • Confidentiality;
   • Integrity; and
   • Availability.
The new approach has adopted stands on three pillars, all equally important: management, technical and operational
controls. Management controls reflect the management intentions, support and contribution towards information security.
Technical controls are materialized by the implementation of the security tools and products that fit Credit Libanais
requirements. Operational controls are represented by the security activities performed by each staff member. Excellent
performance and great achievements were accomplished during the year 2008 for the Information Security Department
despite the limited time for launching the new security program.

Many security tasks listed in the program were accomplished, in particular:
   • Developing detailed information security policies based on ISO 27001 intended for divisions and departments head
     and IT and published on the intranet website;
   • Establishing information security policy essentials based on ISO 27001 intended for all staff members and published
     on the intranet website;




                                                                                                                                65
      • Implementing security awareness material and launching the security awareness program across the Bank;
      • Devising new security standards for windows servers and network devices and additional security standards for
        the server rooms located at the branches and departments;
      • Embarking onto a full assessment program of the security of the Bank servers and network devices;
      • Defining and implementing change management processes; and
      • Creating a stronger information security awareness among the Bank’s senior management and staff.


   Reputational Risk
   Within our risk management processes, we define reputational risk as the risk that publicity concerning a transaction,
   counterparty or business practice involving a client may negatively impact the public’s trust in our organization. The Bank
   seeks to ensure that staff is constantly aware of the potential repercussions of their actions on the Bank’s reputation and
   image. In addition to the previously discussed operational risk management initiatives, a variety of mechanisms are in
   place to support sound reputational risk management, including codes of professional conduct applicable to all staff and
   an appropriate training program, as well as various committees that assess risk whenever new products are introduced
   within the business units.

   Business Risk
   Business risk describes the risk we assume due to potential changes in general business conditions, such as our market
   environment, client behaviour and technological progress. This can affect our results if we fail to adjust quickly to these
   changing conditions.

   Business risk is driven by the volatility of the revenue stream and the extent to which costs are fixed or vary with
   revenues. Business risk is managed by way of the regular budget and investment processes.


   Business Continuity Plan
   The Bank’s main objective is to be able to respond and react to the needs of its customers, and provide high availability
   of services at any time under any circumstances.

   The Bank’s Business Continuity Plan has grown into a well developed program after its successful launch in 2006. Until
   this date, the project has accomplished its purpose in covering business and technology operations.

   The past two years have seen the Bank reinforcing its Business Continuity Plan in order to maintain it at a high level
   of quality and standards. The main objective is always to prevent any unforeseen events that can lead to a business
   disruption, or to compromising the Bank in achieving its objectives and strategic plans.

   Our recovery strategies identify the most efficient way to recover a business or supporting function and to ensure its
   continuity in case of interruption, including disaster, or other major incidents or business disruptions. Adequate strategies
   are developed and implemented for the following organizational resources in each and every critical area:
      • People (Staff resources including numbers, skills and knowledge);
      • Facilities (Work site, geography, and facilities required);
      • IT and Telecom (Supporting technology, plant and equipment);
      • Information and documents (Provision of information to allow the activity to continue effectively); and
      • Supplies (External services and suppliers).

   The Business Continuity plan is regularly tested and rehearsals are mandatory. Exercising is essential to develop
   teamwork, competence, confidence and knowledge which are vital at the time of an eventual incident.




Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                        Economic Sustainability




Finally, all organizations change over time, therefore the Business Continuity Plan is dynamic enough in order to be
maintained in line with the Bank’s evolution.



Environment Dimension of our Lending Activity
The International Finance Corporation (IFC)
Through its agreement with IFC, Credit Libanais regularly strives to enhance and adhere to sound banking principles and
promote environmentally and socially reliable development across the full range of its activities. The way in which the
Bank addresses this mandate and its general principles is through ensuring that all IFC loans granted to clients undergo
environmental and social appraisal along with the financial, economic and legal analysis of clients prior to granting any
facilities.

The basic objective is to ensure that the environmental and social implications of a potential client are identified and
assessed early in the Bank’s planning and decision making process and those environmental considerations are
incorporated into the preparation and approval of facilities. The procedures outline how the Bank incorporates these
objectives into its overall appraisal process and, during implementation, at a practical level. The procedures summarize
the nature of environmental appraisal and monitoring activities undertaken during different stages of a project life cycle
and the responsibilities for carrying them out. The purpose of such procedures is to improve the decision making process
and to ensure that the loan under consideration is socially and environmentally sound and sustainable.

European Investment Bank (EIB)
All projects financed by the Bank through the European Investment Bank (EIB) are also required to be acceptable in
environmental terms. Credit Libanais is in full acceptance and compliance with the EIB’s environmental objectives,
namely to:
    • Preserve, protect and improve the quality of the environment;
    • Protect human health, in relation to the environment;
    • Ensure the prudent and rational utilization of natural resources and to conserve nature; and
    • Promote measures to deal with regional or worldwide environmental problems, notably climate change and access
      to potable water and sanitation.

In doing so, both banks apply the principles of “prevention”, “precaution” and “polluter countries”, as enshrined in
European Community policy.

As a result, all projects requesting financing from the EIB are required to fill in an Environmental Survey covering both the
environmental and the social impact of the project being financed. The environmental impact is related to the effect of the
project on the air, land, water, nature, natural resources and built environment. The social impact is related to the effect
on health, safety, society and cultural heritage. There are certain projects in certain industries in which an Environmental
Impact Assessment, to be carried out by an independent qualified assessor, is required, usually for those projects which
are considered to have a higher risk of impacting the environment.

The Environmental Impact Assessment should include an overall assessment of the project which should summarize the
net environmental impact of the project over its life cycle, with a rating (acceptable, acceptable with minor reservations,
or acceptable with major reservations). Such projects would be separately appraised by the EIB. In the coming years, it
will be the Bank’s strategy to include the same process in the assessment of its entire lending portfolio for environmental
compliance, by including this in the standard procedures for reviewing any credit facilities granted or to be granted, in
line with the above objectives.




                                                                                                                                  67
                           Compliance and the Prevention of Money Laundering
        As financial
  intermediaries,
 banks recognize
        their direct
  impact on illicit
        operations.
        Lebanon in
       general, and
Credit Libanais in                                                             Compliance Culture
 particular abide                                                              Banking compliance in the twentieth century is neither an option nor a duty. It is rather the only
       by the latest                                                           way to conduct business within a multifaceted risk environment. At Credit Libanais, compliance
                                                                               has become the norm. It is not only the responsibility of the Group’s dedicated compliance
      international                                                            officers, but also concerns every staff member in each area of activity.
     directives for                                                            The Bank is exposed every day to a multitude of threats. To counter these risks, the Compliance
   the prevention                                                              Department has developed a strict body of compliance doctrines and rules of good conduct that
          of money                                                             comply with the highest professional standards.

        laundering.
                                                                               AML Compliance Unit
                                                                               One of the adverse impacts of financial crime is that it not only negatively reflects on individuals
                                                                               and the commercial sector, but on national economic systems as a whole. Banks also face
                                                                               a number of risk factors associated with these illegal activities, including hard costs such as
                                                                               financial loss and soft costs associated with reputation and customer attrition. The Anti-Money-
                                                                               Laundering (AML) Compliance Unit’s primary target is to deter and detect financial crimes –
                                                                               including fraud, computer crimes, identity theft, money laundering, and financing of terrorist
                                                                               activity.

                                                                               The major challenges of today’s Compliance Unit are staying abreast of rapidly changing
                                                                               regulations and dealing with the regulatory pressure on financial institutions. This requires constant
                                                                               cooperation with the regulators and a significant investment in terms of time and resources on
                                                                               analysis and implementation of guidelines. The Compliance Unit is also concerned with adjusting
                                                                               internal policies and ensuring that adequate staff education and training take place.

                                                                               The AML Compliance Unit follows a number of basic process steps:
                                                                                 1- Developing a corporate anti-money laundering program which includes documented policies
                                                                                    and procedures, the designation of compliance officers and a training and education program
                                                                                    for the Bank’s employees;
                                                                                 2- Monitoring activities in order to identify transactions that are suspicious or outside the risk
                                                                                    profile parameters either set by legislation or in accordance with the Bank’s risk assessment
                                                                                    policies; and
                                                                                 3- Reporting suspicious transactions to the Central Bank Special Investigation Unit, investigating
                                                                                    the details surrounding the suspicious transactions and documenting the resolution.




      Annual Report 2008                                                                                                                                       Credit Libanais Group
                                                                                                         Economic Sustainability




Compliance is neither an option
  nor a duty; it is rather the
 only way to conduct business
  within a multifaceted risk
        environment




   Specific Responsibilities of the AML Compliance Unit
   The Compliance Department has the following specific responsibilities:
    - To identify, document and assess compliance risks associated with customer’s activities on a pro-active basis;
    - Assess the appropriateness of the Bank’s compliance procedures and guidelines, promptly follow up any identified
      deficiencies and, where necessary, formulate proposals for amendments;
    - Provide guidance and advice to staff in cooperation with the Legal Department and relevant business units on the
      appropriate implementation of the relevant laws, rules and standards through internal policies and procedures;
    - Assist Management and line managers in educating staff on compliance issues, and act as a contact point within the
      Bank for compliance queries from staff members; and
    - Monitor compliance by performing sufficient and representative compliance risk assessment and testing.This includes
      performing spot checks to test compliance with policies and procedures, making enquiries into deficiencies and/or
      breaches and carrying out investigations.


   Compliance Management Tools
   The latest tools are available to the Department to enable it to assume its responsibilities and to exercise its functions
   properly, namely in terms of AML:

   AML-Reporter
   By profiling accounts and monitoring transaction trends, AML-Reporter helps financial institutions meet regulatory
   compliance and puts into place those automated systems and processes required to detect, report and investigate
   money laundering activities. AML-Reporter analyzes how money moves in, around and out of our Bank. It systematically
   identifies suspect patterns of behavior, creates reports and enables us to reduce the administrative burdens and costs
   associated with manual compliance processes.




                                                                                                                                   69
  An Alert Management and Check Surveillance Tool within AML-Reporter
  The AML-Reporter is implemented at both the branch level and the AML Compliance Unit level. An online system allows
  both units to monitor accounts and analyze alerts when a suspicious customer profile breaks a habitual activity trend.

  Designated Name Filtering System (DNFS)
  The DNFS software is a search engine that systematically reads government black-listed names and user-defined suspect
  lists to identify illicit individuals, dignitaries, vessels, organizations and countries. DNFS allows us to automate the tasks
  required to manage and comply with the suspect list and enables our Bank to effectively detect, report and investigate
  suspicious persons and entities.


  Achievements of the AML Compliance Unit
  During 2008, several routine tasks were conducted which ensured that Credit Libanais vigilantly monitors its customer
  transactions in line with the most advanced and internationally recognized AML procedures, which included:
     • Updating of all policies and procedures related to AML on intranet website;
     • Treating 4,050 alerts initiated by the AML Reporter system;
     • Checking one-by-one 46,750 Cash Transaction Slip (CTS) received from branches;
     • Answering 48 correspondences and/or questionnaires to foreign and local banks related to AML issues and queries;
     • Closing 62 inquiries initiated by the Special Investigations Commission (SIC);
     • Thoroughly studying 40 suspicious cases;
     • Reporting 7 cases to the SIC of the Central Bank of Lebanon;
     • After the internal audit visit, taking corrective action for major observations raised in the audit report;
     • Checking all outward transfers on the DNFS software at the Central Processing Department (CPD) level for senders,
       beneficiaries and intermediary banks;
     • Checking all inward transfers on the DNFS software at the CPD level for senders, beneficiaries and intermediary and
       sender banks;
     • Daily matching for new customers against foreign and local lists;
     • Weekly matching on updated lists against the entire customer base;
     • Matching OFAC and OCC lists against the entire customer base; and
     • Matching the entire customer base of the Bahrain branch against foreign and local lists.

  AML Compliance Officer
  Misconduct, fraud, and money laundering are just a few of the many challenges that compliance officers face. A successful
  compliance officer is someone who abides by the Bank’s corporate culture, which places emphasis on compliance, and
  who possesses the ability to manage compliance risks while allowing business development. AML compliance officers:
    - Have substantial knowledge in the relevant AML regulations and legislative authority;
    - Promote reasonable burden of internal controls;
    - Continue to re-evaluate processes and controls; and
    - Are responsive to internal auditors’ recommendations.




Annual Report 2008                                                                                              Credit Libanais Group
                                                                      Economic Sustainability




Compliance Committee
The Compliance Committee ensures that important compliance
issues are coordinated and communicated throughout the
Bank. Its responsibilities are to determine priorities for the
Compliance Department and approve a compliance program
on the basis of a proposal from the Head of Compliance. In so
doing, the Compliance Committee ensures coordination of the
Compliance Department’s activities with the legal service, risk
control, internal audit and other units involved in compliance at
the Bank. The Compliance Committee also serves as the vehicle
for informing and advising the Bank’s Executive Committee on
material compliance matters.

Responsibilities for Compliance
Compliance responsibilities are not only limited to Compliance
Officers but shared among all staff members as well as across
various units of the Bank, the most notable of which are the
following:
   - Management and line managers have primary responsibility
     for compliance at the Bank;
   - The Compliance Unit identifies and assesses compliance
     risks, guides and educates staff on compliance issues,
     performs a monitoring and reporting role in cooperation with
     other units at the Bank such as Risk Management, Legal,
     and others;
   - Risk Control monitors the Bank’s financial risks (credit risk,
     market risk and liquidity risk) and ensures compliance with
     the respective policies and limits; and
   - Internal Audit reviews the adequacy of controls established
     to ensure compliance with policies, plans, procedures and
     business objectives, in accordance with the Internal Audit
     policies.




                                                                                                71
                        Internal Audit
  Internal Audit
has the duty of
   policing bank
     activities at
every level and
ensuring order
 with a view to
    progressing
towards a solid
          future.
                                         Role
                                         Internal Auditing is defined by the Institute of Internal Auditors as “an independent, objective
                                         assurance and consulting activity designed to add value and improve an organization’s
                                         operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined
                                         approach to evaluate and improve the effectiveness of risk management, control and governance
                                         processes.”

                                         The definition of internal audit goes beyond examining accounting controls, records, financial
                                         statements and reports, to include standards to be followed by organizations and parties
                                         performing internal audit activities and to provide quality criteria against which the performance
                                         of these services can be evaluated.


                                         Mission Statement
                                         The Internal Audit Division (IAD) has the responsibility to strengthen Credit Libanais’ business risk
                                         control by providing comprehensive and independent professional audit services and consulting
                                         with all divisions and entities within the Bank, and to assist management in maintaining proper
                                         control over the Bank’s assets while adding value to the overall business performance.


                                         Objectives
                                         Main Objectives
                                            • To align the audit activities with the bank’s strategy;
                                            • To add value to the business risk control framework;
                                            • To ensure proper implementation of risk management procedures and methodologies and
                                              the efficient functioning of the internal control framework; and
                                            • To complete full coverage of the audit areas mentioned in the audit year plan, considering
                                              the following threats that an audit might face:
                                                - Time planned for audit reviews may be exceeded specifically in areas to be audited for
                                                  the first time; and
                                                - Additional time spent on audits to investigate unexpected matters and special cases
                                                  referred to by management.




   Annual Report 2008                                                                                                   Credit Libanais Group
                                                                                                 Economic Sustainability




Credit Libanais looks
 to the future with
     confidence




Other Objectives
  • To provide consultancy services regarding organizing and improving the risk control framework;
  • To stimulate objectivity, uniformity, comparability and transparency;
  • To accelerate and promote improvements;
  • To fulfill and properly handle all management requests and special assignments in a timely manner;
  • To meet the auditable units’ expectations and assessments;
  • To conduct independent audit reviews and evaluations;
  • To conduct adequate testing and review of information systems; and
  • To appraise management for:
     - Effectiveness of measures taken to assess and manage risks;
     - Reliability, consistency and integrity of data;
     - Measures taken to safeguard assets, documents and records;
     - Compliance with policies, laws and regulations; and
     - Respect of code of conduct and the bank’s values.



                                       HEAD OF GROUP INTERNAL AUDIT


                   TeamMate                                                               Performance
                                                                                          Measurement
                  Administrator                                                               Unit


         Branch        Head          Back          Credit         E-Banking    IT Audit      Bank        Overseas
          Audit        Office        Office        Audit            Audit                 Subsidiaries   Operations
                       Audit         Audit                                                   Audit         Audit



                                         Retail     Non    Commercial
                                        Products Performing Facilities
                                                   Loans




                                                                                                                           73
   Value Driver
   The following drivers are considered to be key factors to achieving the objectives:

   Methodology
     • Use of risk-based approach, analysis models, audit methods and tools. Based on the risk analysis, emphasis is put
       on the areas where the highest risks are considered; and
     • Introduction of departmental checklists and self assessment control principles.

   Staffing
      • Introduce personal development plans for every auditor. Training and education is part of the personal development
        plan, and key performance indicators are applied and monitored; and
      • The recruitment of additional qualified staff will be required in 2009. Competence profiles will become available for
        audit. All audit staff will be matched against these competence profiles.


   Organization
   Scope
   The Internal Audit Division (IAD) covers all Credit Libanais local and overseas branches, head office departments,
   centralized services units, products, processes, as well as other affiliated companies of the Group. The primary focus of
   the Division is on the following areas:
      - Branch operations;
      - Financial reporting;
      - Treasury activities and operations, and market risk management;
      - Lending activities and products, including monitoring and credit risk management;
      - Management information systems and information technology, including security and control aspects surrounding
        computer systems under development; and
      - All other activities, including human resources, administrative functions and operational risk management.

   Staffing
   The IAD is structured around specialized audit departments that supervise and audit the activities of business units.
   These departments include Branch Audit, Head Office Audit, Credit Audit, E-banking & Cards Audit, IT Audit, Back-Office
   Audit, Overseas Audit, other affiliated banks (Credit Libanais Investment Bank and Lebanese Islamic Bank). Audit Unit
   Heads manage a team composed of senior and junior auditors, and report hierarchically to the Head of IAD who in turn
   reports to the Board of Directors, through the Audit Committee.


   Review of 2008 Audit Activities
   Branch Audit
   Forty one branches (out of a total 60 local branches) were covered during 2008, noting that the remaining un-audited
   branches will be given higher priority in the 2009 year plan. Branches were rated according to the level of internal control
   exercised by branch management and to the operational risks inherent to their activities.
   This Unit also helped in the parameterization of branch operations under the new core system acquired by the Bank.
   It also assisted in the issuance of new procedure notes and policies that improved the internal control framework and
   enhanced management supervision over branch operations.

   Head Office Audit
   This Unit covered 19 centralized departments scheduled in the 2008 year plan, located among the different business
   divisions and support functions.




Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                         Economic Sustainability




Credit Audit
This Unit covered 9 credit assignments scheduled in the 2008 year plan and ranged between retail products, retail and
corporate commercial facilities and credit risk management processes.

Overseas Audit
This Unit covered the audit of the Limassol branch operations during 2008. A report was issued and discussed with
local management and communicated to the Central Bank of Cyprus. This unit also reviewed the regulatory reporting
requirements and issued a clearance in that respect to the local banking authorities.

Bahrain branch, which was opened in November 2007, will be audited during 2009 after a full year of operations.

Back-Office Audit
This Unit exercises an off-site audit over the MIS reports, operations and activities of branches, and exchanges inquiries
with branch management for particular deficiencies. This unit liaises closely with the branch audit unit which enhances
the internal audit function.

Follow-up and Review
A timely follow-up is conducted by the respective audit units on all audit observations raised in the internal audit reports
to ensure their implementation within the agreed-upon timeframe. A review report is submitted to management and to
the audit committee on a quarterly basis showing the compliance of auditable units with the audit recommendations and
their current status.


Major Achievements
   • Implementation of the “TeamMate” audit tool to gradually include all the audit assignments;
   • Transfer of competencies from the internal audit division to other business units to fill senior positions and to handle
     business responsibilities where appropriate;
   • 380 training hours were invested in our audit team through attending internal and external sessions pertaining to
     different business and banking topics;
   • Standardization of the audit reports, including the introduction of a systematic rating methodology of audit observations
     and the assignment of an overall audit rating for the auditable units; and
   • Introduction of new tools and techniques to better manage and properly allocate the audit resources and to enhance
     the internal audit function within the Group.




                                                                                                                                   75
                          Organization, Planning and Strategy
        Without a
   clear strategy,
       businesses
  would navigate
   purposelessly.
              The
    Organization,
     Planning and
Strategy Division
     ensures that
  Credit Libanais
  remains faithful
to the long-term
    development
                                                                Introduction
      track set by                                              In the run up to the adaptations to a new global market and within the framework of a
     Mangement.                                                 highly complex and changing environment, strategic and business planning is an essential
                                                                management practice. Strategy is about being aware and being in control of the change agenda.
                                                                The environment in which banks operate nowadays has three main external strategic drivers,
                                                                namely regulation, competition and the increasing role and pressure of external market forces.
                                                                Such challenges have unilateral impacts on the institutions and pave the way for innovative and
                                                                proactive banking strategies adapted to the profile of each organization.

                                                                It is therefore helpful to think of strategy as a route on a map. It only works well if:
                                                                    • We all know where we are today;
                                                                    • We all know where we want to be tomorrow; and
                                                                    • We all use the same road map.


                                                                Mission and Objectives
                                                                Concerned with the Bank’s organizational development and structural set up, Credit Libanais
                                                                created a new division in 2007: “Organization, Planning and Strategy”. The mission of the
                                                                Strategic Planning Division is to facilitate the process of formulation, review and implementation
                                                                of goals and objectives in line with the corporate strategy on a regular basis. Strategic plans
                                                                would set the direction of the organization and would provide the framework for other operational
                                                                processes. The major responsibilities of the Division include:
                                                                  a. Facilitation of the development of the strategic plan for the Bank;
                                                                  b. Revision and monitoring of the implementation of the strategic plans on regular basis;
                                                                  c. Coordinating mission and support to the Bank’s foreign entities and subsidiaries; and
                                                                  d. Corporate Management Projects: initiation, support and follow-up on their successful
                                                                     implementation.




     Annual Report 2008                                                                                                                          Credit Libanais Group
                                                                                                          Economic Sustainability




Additionally, one of the main objectives of this Division is to take the time to pursue the roots of any organizational and
structural problem and to create an improvement plan that will meet the unique needs of the Bank. The result envisioned
is improved service and product quality, a stronger competitive position and an improved bottom line.

In 2008, the financial services industry was shaken by the most severe global financial crisis in recent history. This urged
the leaders of the G20 countries to gather in Washington to discuss efforts to strengthen economic growth and deal with
the financial crisis.

The major principles they agreed upon focused on greater transparency and strengthened accountability, enhanced
regulation and supervision and improved international cooperation and reform of the international financial institutions.
Vigorous intervention by governments and central banks around the world is continuously undertaken to rescue the
financial institutions, reduce systemic risks and restore confidence in the financial markets.

In the context of the tighter regulatory supervision and in line with our Bank client focused integrated bank strategy, Credit
Libanais continued to enhance its positioning in this changing and more challenging environment. In fact, we believe that
banks will move in the near future to less risky business models and will review their loan portfolios, putting increased
focus on their core franchises, keeping in mind that the current market environment will provide better opportunities to well
capitalized and properly organized financial institutions, with strong internal controls and risk management processes.

In this context, our strategy in 2008 was to keep a well diversified business model and maintain the following priorities:
   • Enhance our risk management processes by implementing a comprehensive plan to diversify and reduce our
     risks;
   • Ensure a strong liquidity based on a diversified client deposits base and some long term debts as the main source
     of our funding sources; and
   • Maintain a strong capital base. Our BIS tier 1 ratio was 13.32 as at the end of 2008 well above the regulatory
     requirements.

In addition, we remain committed to the integrated client-focused model, which enables us to most effectively deliver
the best class services to our large client base, while continuing to enhance our operating efficiency. In 2009, we will
continue to focus our attention on the still challenging and changing world financial markets environment. Furthermore,
we aim for profitable growth through a diversified business mix with a more conservative risk return profile. To achieve
this, our objectives are to concentrate on the following major issues:
   • Client focus: we shall continue to strengthen our key client’s coverage and concentrate on clients with multiple product
     needs. This will include high net-worth clients, individuals, corporate clients, small and middle sized companies and
     institutional clients. In this respect, we will develop our banking products to targeted clients, in accordance with their
     needs and improve further the cross selling potential and collaboration among the different bank businesses;
   • Improved management of the capital allocation through a more disciplined approach towards monitoring and
     developing the business portfolio based on the risk/return goals. This shall include a general reduction in risk capital
     usage and the exit of certain investment activities;
   • Cost efficiency: our target is to improve our cost efficiency ratio. We target a cost income/ratio of 53% without
     compromising on our growth and image reputation. For this purpose, the business owners will be driven to improve
     their involvement to pursue the implementation of their respective business plans and to strive towards execution of
     the continuous improvement and excellence in client services;
   • People: we continue to undertake significant efforts to attract, develop and retain top talent in order to deliver
     an outstanding working environment, thus ensuring excellence in client services. New projects have been launched
     to promote an enhanced culture with respect to compensation, designed to reflect the performance of the individuals
     and closely align the interests of the employees with those of the shareholders. A set of key performance indicators




                                                                                                                                    77
                          was developed for our entire branch network and has been in place for over 4 years now; it
                          is currently expanding to cover all our bank businesses, ensuring as such a transparent and
                          efficient model which will allow for a better management of our human capital base. Career
                          path is a major focus with organized, focused training at all levels;
                        • Expansion to new regional markets: the Group has been shaped in the last two years in
                          preparation for additional expansions in new markets to allow for its international deployment
                          and grow its balance sheet. Through a combination of an organic growth and acquisitions, the
                          Group is aiming at building up a position as a universal bank, offering products and services
                          that are suited to a broad and diversified base of individuals and business customers; and
                        • Strong involvement in the business channels in the preparation of the strategic planning
                          which is becoming a continuous executive management activity, which enfolds virtually
                          every aspect of the Bank’s operations. Goals and objectives are more precisely articulated
                          and strategic planning concepts have expanded to encompass all Bank activities.


                     Credit Libanais Group Strategic Objectives
                     Each year, Credit Libanais produces a consolidated five-year strategic plan and a consolidated
                     one-year operational plan. The strategic planning phase in Credit Libanais begins with the Board
                     of Directors setting the strategic directions for the Bank, based on information collected from the
                     different business divisions and a common vision for the Bank’s future. The approved corporate
                     objectives of the Bank are then announced to all the senior management who will take an active
                     role in devising individual SMART objectives for all their teams, thus ensuring all the entities are
                     pulling in the same direction.

                     The follow-up on the Bank budget and business plan is regularly established with strict
                     implementation deadlines and accountabilities. Corrective actions and measures are immediately
                     implemented to ensure timely achievement of objectives and goals at all the levels.

                     Ultimately, the success of the strategic planning rests on tireless attention to the strict compliance
                     with the targets set and the consistent follow-up components that are the main tasks of the
                     “Organization, Planning and Strategy Division”, which was implemented in the year 2007 and
                     which is actively strengthening its role in the Bank.




Annual Report 2008                                                                                   Credit Libanais Group
                                                                                                      Economic Sustainability




Project Management Office (PMO)
The PMO reports to the Organization, Planning & Strategy                      The diversity of our
Division and is in charge of coordinating directly with the               business across multiple
General Manager’s Office in order to ensure that the Board’s               products, markets and
strategic decisions are adequately implemented in the Bank             geographies is a significant
through active project management.                                    competitive advantage and
The fundamental principle is that each project management                has enabled us to deliver
structure has four layers, which revolve around the following           solid results in the face of
areas:
                                                                               market disruptions
  1- Corporate or program management;
  2- Direction of the project (Project Board);
  3- Day-to-day management of the project (Project manager); and
  4- Team management and product delivery (Team Managers).

The first of these instigates a project, identifies a valid and
existing business case for the project and defines its overall
constraints. The project management team, which comprises
the other three layers, then manages and implements the
project. Technical, administrative and librarian support is
provided by the PMO, as well as strict follow up with respect to
set deadlines and the decision-making process.                        SMART Objectives
This new project management technique proved to be successful
in the Bank. In fact, several major projects were launched and         • Specific (objectives should specify what
implemented during the year 2008:                                       we need to achieve);
   • The New Appraisal project, which was also supported               • Measurable (to be able to measure
     by external professionals, leaders in human resources              whether we can meet our objectives);
     management;                                                       • Achievable (are the set objectives
   • The Management by Objectives project, where the SMART
                                                                        attainable, achievable);
     objectives culture is being integrated in the appraisal
     process and reflects the major corporate goals to be              • Relevant (can we realistically achieve the
     devised at all levels to increase ownership and enhance            objectives with the available resources,
     the implementation;                                                and will they lead to the desired result); and
   • The Intranet project, which was launched with the major           • Time Bound (when the objectives will be
     objective of improving the internal communication in the
                                                                        accomplished/completed).
     bank from top management to employees and vice versa;
   • The preparation for the regional expansion projects to new
     markets, namely to Senegal, Iraq and Bahrain;
   • Several IT projects, launched in order to improve the
     technology support on all fronts; and
   • Payment Card Industry Data Security Standards (PCI DSS)
     compliance project, the primary focus which is to ensure the
     security of cardholder data and any network component,
     server, or application that is included in or connected to the
     cardholder data environment.




                                                                                                                                79
                          Investing in our Human Capital
      Our Human
    Capital is our
    most valuable
         asset. To
     that end, we
  constantly seek
      out for best
industry practices
  to maintain our
      best talents.
                                                           Strategies
                                                           Our people are our most valuable assets. Based on this motto, the Human Resources (HR)
                                                           Division strives for excellence in attracting, recruiting and maintaining high calibre employees. It
                                                           is committed to improving and enhancing our HR management effectiveness and Credit Libanais’
                                                           organizational infrastructure through effective hiring, management training programs, definition of
                                                           roles and responsibilities for all job levels and improvement of overall internal communication.


                                                           A Year in Review
                                                           Reorganization of the HR Function
                                                           During the year 2008, the HR Division has undergone many significant achievements and
                                                           improvements. We started with the restructuring of the HR Division: strengthening our
                                                           organizational infrastructure, realigning the HR business functions, reassigning existing staff and
                                                           hiring new ones to manage our daily business activities. During 2008, the HR Division was
                                                           divided into three departments:
                                                           1. Compensation and Benefits Department, previously the Personnel Department;
                                                           2. Training and Development Department; and
                                                           3. Recruitment and Evaluation Department.

                                                           Employee Handbook Update
                                                           Our employee handbook sets the rights and duties of employees. It also incorporates Credit
                                                           Libanais’ code of conduct, which outlines the basic principles of business ethics and requirements
                                                           to ensure that the Bank’s activities are conducted with integrity and honesty. By making our
                                                           beliefs public and acting on them, we help nurture a culture of trust amongst all our employees.

                                                           To that end, we have made the employee handbook available to all employees on our intranet
                                                           website, and all new recruits to Credit Libanais are given a copy of the handbook to acquaint
                                                           them with the Bank’s culture and to facilitate their integration into the internal environment. The
                                                           employee handbook was revised and updated to better describe Credit Libanais’ culture and
                                                           values, policies, programs and benefits. The new version will better answer the questions about
                                                           employment with the Bank.




     Annual Report 2008                                                                                                                  Credit Libanais Group
                                                                                                         Economic Sustainability




 Our aim in the years to
 come will be centered
on the triple bottom line:
  economic, social and
     environmental



 Job Description Update
 Every position in Credit Libanais has a very specific job description. In an attempt to keep Credit Libanais employees
 updated on their required job responsibilities, HR designed an electronic job description form. During the process,
 all heads of departments reviewed the job descriptions with their employees who then signed their copies. Human
 Resources is also in the process of reviewing the job descriptions before entering data into the Human Resources
 Information System (HRIS).

 Central Bank of Lebanon Circular Requirement No. 103
 In line with its strategy to promote and regulate the Lebanese banking and financial sectors, the Central Bank of Lebanon
 issued Circular No. 103, in which it adopted a system of regulated functions for banking and finance practitioners. Said
 Circular identified a series of qualifications referred to as Banking and Finance Qualifications (BFQ) to be passed by
 these practitioners according to their functions.

 In order to meet Central Bank of Lebanon requirements as per circular No. 103, we classified employees depending on
 their status as exempt and non-exempt from compulsory examination. In an attempt to help our people save on study
 time, we arranged study group sessions at the training center in addition to two additional review sessions with external
 trainers.

 Summer Internship
 Two hundred and seventy four candidates were selected to undergo a summer internship at the Bank. Before being
 assigned to their relative departments/branches, they attended an introductory session in which they were given an
 overview of the Bank and its products and services, and got acquainted with its code of conduct and the internship
 process. At the end of their internship, interns were asked to provide feedback by filling out an assessment report.
 Managers were also requested to assess the interns at their branches or departments.


 Retention and Career Development
 Internal Redeployment
 Internal recruitment has gained momentum within the Bank, driven by a clear decision from Management to capitalize
 on internal talent first. Internal competition is the preferred medium in recruitment in order to motivate staff by providing
 horizontal career opportunities. The Bank systematically favors the internal redeployment of employees whose positions
 have been eliminated. Employees involved in redeployment programs are provided with specific assistance in terms of
 mobility and retraining. The Group offers help in drawing up a personal development profile, provides information on
 available posts and gives financial assistance in the case of relocations.




                                                                                                                                   81
  Credit Libanais has expanded in line with its strategy of organic growth in the last decade. This expansion was
  accompanied by an increase in the number of employees commensurate with its growth. In the face of this challenge,
  Human Resources management has become increasingly complex and vast. Human Resources strives to tackle a
  number of strategic challenges concurrently in order to take the Group into the future, among which:
     • Staying abreast of the Group’s progress in several domains;
     • Elaborating and nurturing a culture of diversity;
     • Working towards making Credit Libanais an appealing employment environment both internally in order to retain talents
       and externally so as to attract them;
     • Relentlessly pursuing employee and management development;
     • Continuing to successfully use the internal promotion method to fill vacant positions. As a matter of fact, many
       positions are advertised internally and receive numerous applications. This practice has contributed to raising morale
       among employees and encouraging competition for new positions. Internal recruitment is not only cost effective,
       but it is considered by many employees a door from within to compete and excel. It improves and enhances the
       employees’ awareness of the organization strategy, provides career development opportunities for promising staff,
       increases retention of good talents and creates a culture of high performance and quality in a productive and
       competitive environment; and
     • Maintaining and enhancing the Executive Development Program (EDP), which entailed two years of hard work and
       constant impressive development. The program was developed as a proactive approach to assess our future needs
       and prepare the right profiles for future positions.

  External Recruitment
  Since acquiring and upgrading talent by hiring qualified people has been a very difficult and time consuming aspect of
  the HR Department, we developed and implemented a structured and cost effective employment process. The process
  includes a properly defined position description and defined core competencies for every vacant position. In a continuous
  effort to improve our selection process, a series of tests and interviews are conducted. For a more effective selection
  system, there is a close collaboration between the recruitment manager, business owner and the HR head. We also
  participated in several job fair events at universities and other professional bodies such as ESA, USJ, AUB, Sagesse,
  OAU, ESIG, Hire Lebanese and other.


  Orienting New Recruits to the Credit Libanais Culture
  Since the foundation for achieving effective communication should be laid through a formalized orientation program, and

  44.7% of employees
  fall between the ages of
  25-40, while
  40% fall between
  40-60



Annual Report 2008                                                                                             Credit Libanais Group
                                                                                                         Economic Sustainability

           Breakdown by Training Chapter
                        1%
                                9.2%




                                           11.3%


   42.6%
                                              6.5%
                                                     Others               Information Technology

                                                     Risk Management      Auditing & Finance
                                           12.2%
                                                     Banking Operations   Leadership & Management

                                                     Marketing & Sales
                        17.3%



as part of our new recruitment and induction process, the following set of topics were presented to every new employee
hired:
  1- Introduction to Credit Libanais including vision, mission, organizational chart, rules of conduct, dress code, main
     activities etc;
  2- General product knowledge: an overview of Credit Libanais products and features;
  3- Overview of Credit Libanais d’Assurances et de Reassurances products and insurance on Credit Libanais granted
     loans; and
  4- AML rules and procedures.


Succession Planning
Our human capital is our most valuable asset. The HR Division is dedicated to developping this capital and investing in
their potential. The succession plan will ensure that there are highly qualified people in key positions in the Bank, not just
today, but tomorrow, next year and many years from now.
To ensure continuity, HR has embarked upon a mission that will ensure the success of the Bank in the future. An attempt
towards establishing a well-designed succession plan was the accomplishment of the Executive Development Program
One (EDP 1), which entailed two years of hard work and constant impressive development and ended in February 2008.
EDP 1 will be followed by EDP 2. These programs were intended as a proactive approach to assess our future needs
and prepare the right profiles for future positions.

Second Wave of the Executive Development Program (EDP)
A comprehensive Terms of Reference (TOR) was developed by the Training and Development Department that provided
an organizational mechanism for the EDP 2 and suggested an objective selection process. The TOR included indicative
course outlines, criteria for selecting candidates and the related budget.
The program is composed of core business and soft skills courses. Its duration is limited to one year. Applicants took the
written exam which was comprised of a series of multiple choice banking and management questions together with an
essay question in both Arabic and English. An interview then followed for final selection.


Employee Training
Credit Libanais places great emphasis on the professional development of its staff, and aims to tailor its career



                                                                                                    Employee Repartition:
                                                                                                           55.3% males
                                                                                                                  and
                                                                                                         44.7% females


                                                                                                                                   83
  management, mobility and training policies to suit the needs of individuals and the requirements of its business entities.
  In such a universe, the aim is to offer employees a coherent, varied and motivating career path that benefits both the
  employee and the Bank. Credit Libanais also offers its employees the opportunity to enroll in in-house training programs.
  The range of courses on offer is extended and adapted each year to cater to the professional needs of Group staff, both
  in terms of technical and managerial training.

  Training Needs Assessment
  A training needs assessment survey was designed and applied to figure out the training requirements of the employees,
  especially at the branch level. Combined with the results of the performance appraisal audit reports, mystery shopper
  reports and direct managerial requests, the outcome of the survey formed the basis for the development of a training
  plan.

  Induction of Newly Hired Tellers
  The Training and Development Department has established a focus group composed of Assistant Branch managers,
  auditors and training coordinators in order to develop and test a simulation program that guides newly appointed tellers.
  A first draft of the material to be used in the simulation sessions was produced. The material is now under revision.

  Training Plan
  A comprehensive training plan for the year 2009 was developed. The plan identified the training topics, learning
  objectives, audience and cost. Trainers will be selected from among experienced staff in the Bank concerning banking
  related topics. External trainers will provide soft skills topics.

  Training Sessions
  Training is conducted internally and externally. A special training report is seperately issued on a yearly basis to account
  for all the training activities of 2008. The collected training material was re-classified and entered into the computerized
  information system. More material is to be entered in the year 2009.

  Rehabilitation of the Haret Sakhr Training Center
  In line with the Bank policy to decentralize the training activities, the Training Center at Haret Sakhr was rehabilitated.
  It was equipped with the necessary supplies and tools that any professional training session requires. The Center will
  target the managers and staff of the North and Kaslik regions. The first training session was scheduled for February
  2009. It was a joint effort between the Training and Development Department and the North Regional Management.


  A Culture of Performance
  As of 2004, Credit Libanais has adopted a new culture for performance evaluation based on key performance measures
  aligned with the strategic goals and objectives of the Bank. The purpose of this approach was to foster a performance-
  driven culture inside Credit Libanais, which will lead to achieving the best possible results and to rewarding the most
  outstanding performers among the troops.

  The process started with setting up and defining a branch evaluation matrix that is based on wholly quantifiable measures
  and contains four perspectives, inspired by the balanced scorecard concept.

  Year after year, we have extended this innovative concept to other business units, applying the culture not only to
  measuring branch performance, but also to appraising other Head Office departments such as Relationship Managers
  and Account Managers. Other business units will be added to the process at a later stage.




Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                      Economic Sustainability




We also ensured that the culture of rewarding performance does not remain a static process, but rather becomes a
dynamic living concept. Several changes are incorporated into the matrix from time to time to re-align and guide the
efforts of business in the Bank’s strategic direction. Most recently, in line with Management‘s decrees with regards to
bringing in new deposits and increasing the growth rate of this source of funding, additional points were assigned to the
measures relating to customer deposits. As such, we ensured that branches are pushing forward towards achieving this
short-term objective and that financial compensation is given to branches that meet this objective.

Through the use of an automatic system called Pbviews from Performancesoft to measure and reward business
performances, our intention is to encourage communication, transparency and accountability. In addition to this, all
business units are able to track and monitor their individual performance on a monthly basis and align their activities and
actions with corporate strategy.

In 2008, the Compensation and Benefits Department upgraded employee access and HR services on the intranet to
make the system more user-friendly and richer in information.

Encouraging Internal Communication
The Role of the Intranet
Be it intranet, email or intranet corporate website, employees and managers alike use it as their prime medium of internal
communication. Policies and procedures are communicated via email and then posted on the intranet website for future
reference and accessibility. Furthermore, reports are distributed via intranet only to those employees and managers with
privileged access.

Corporate Informative Publications
The Group’s internal communication publication - the quarterly magazine, Observer - is sent to all Group employees in
English, French and Arabic. This publication is rounded out by internal communication articles that convey corporate
strategy.

Employees are always kept abreast of the latest regional and/or international developments in the banking industry
through the daily Foreign Exchange Snapshots of FX Snapshots, Market Snapshots, Weekly Market Watch, Monthly
Economic Report, and Credit Libanais Indices. These publications are posted either on the intranet or internet and/or
sent by intranet email or SMS.

Upward Communication
Not only does Credit Libanais feed information to its employees through internal communication channels, but it
also encourages them to communicate. Employees’ suggestions continue to be channeled via intranet address to
suggestionrecommendation@creditlibanais.com.lb
In addition, every employee has the opportunity to communicate his/her suggestions in a confidential manner directly to
Senior Management to ensure openness and transparency.




More than
                                                                                                                55.7%
60% of employees                                                                                    of total employees
have at least                                                                                             are deployed
a bachelor degree                                                                                           in branches



                                                                                                                                85
                                               Our strategic
                                               alliances with
                                            several lending
                                                partnerships
                                                         and
                                                international
                                                     agencies
                                             diversified our
                                                   sources of
                                            low-cost funds
                                                  and helped
Societal and Environmental Sustainability




                                              us to alleviate
                                              the economic
                                            burden on our
                                                  customers.




                                                      While continuously aiming for better business results and gaining extensive support from its clients, Credit Libanais
                                                      is an active participant in public life, upholding the development of the nation and contributing to the development
                                                      of the society at large.


                                                      Credit Libanais’ Sustainability Pledge
                                                      Credit Libanais’ commitment to sustainability goes beyond the economical sustainability of its core banking
                                                      activity. Indeed, the Bank acts as an accountable corporate citizen and is well aware of its responsibility to the
                                                      environment and society at large. As a source of major wealth creation and development, the banking industry
                                                      makes a significant contribution to economic and social progress. This places us under increased scrutiny, and
                                                      means that our responsibility to society as a whole is perceived differently from that of other businesses.




                                            Annual Report 2008                                                                                              Credit Libanais Group
Community Involvement
The Bank is committed to contributing to the prosperity of the communities where it operates. We support:
   • economic growth in communities where we do business;
   • initiatives that help build well-being, wealth and capacity; and
   • resources to promote economic self-sufficiency.

Microfinancing to Build Capacity
Small and very small loans are the building blocks in assisting people to help themselves earn their livelihoods. From this perspective,
Credit Libanais has partnered with numerous local, regional and international agencies to make the financing of very small businesses
possible within the Lebanese economy. In 2008, our portfolio of microcredit grew by 46%.




                                                                                                                                           87
Lending Partnerships to Facilitate Access to Capital
We have partnered and continue to seek new alliances with lending institutions with a view to giving access to capital to more and
more people within the communities in which we operate. Such partnerships can take the form of risk sharing, capital allocation or
import guarantees. Whenever possible, we try to match these funds with existing subsidies in the Lebanese market in order to lower
the cost of borrowing on our customers. Such partnerships include Export Development Canada (EDC), European Investment Bank
(EIB), Arab Trade Financing Program (ATFP), Inter Arab Investment Guarantee Corporation (IAIGC), Islamic Corporation for Insurance
of Investment and Export Credit (ICIIEC), Saudi Development Fund (SDF), Cooperative Housing and Finance (CHF) and United States
Agency for International Development (USAID), Economic and Social Fund Development (ESFD) through the Council for Development
and Reconstruction (CDR), International Finance Corporation (IFC) and the Global Trade Finance Program (GTFP) under IFC.

Transparent Procurement
On the procurement side, we introduced invitations to tender years ago. Purchases are made based on a bidding call, qualifying to bid
committees, screening committees, compliance committees and delivery acceptance committees. The installation of this purchasing
system several years ago has allowed the Bank to give an equal opportunity to all suppliers based on the quality of their goods and
services. This budget control system provides more transparency in the purchasing process and gives equal opportunities to suppliers
while ensuring that Credit Libanais receives best quality over price ratios.

Donations and Sponsorships
Donations and sponsorships are the cornerstone of our involvement in the communities within which we operate. Our selected cultural
activities and promotion of young talent have made important contributions to society and in return had a positive impact on our
business. At Credit Libanais, we are committed to making a lasting social impact through looking forward and giving responsibly. Our
priority areas for funding include:
• Cultural and social events and exhibitions such as touristic, public awareness and civic duty development; and
• Sports and donations and contributions to student activities such as job fairs, sports events, kermises and rally papers.

Such actions bring us closer to our communities and/or clients and enable us to leverage our partnerships with them which has a
double reward for us. First, we help them proposer, which translates indirectly into Credit Libanais prosperity. Second, we differentiate
ourselves as a leading organization which deals with successful clients within a prosperous community.

Responsible Employer
We have long believed that employees are Credit Libanais’ most valuable asset. Hiring and retaining qualified employees has been
a core competence which is evidenced in our vision statement: Credit Libanais is the preferred bank in Lebanon for customers and
talented employees. Continuous training, Executive Development Programs (EDP), internal recruitment, competitive and transparent
performance matrix, honouring of best performers, face-lifting our appraisals, share ownership program and improved internal
communication via the intranet are all proven strategies to nurture our talent and further encourage commitment to the Bank.

Continuous Training
Credit Libanais places great emphasis on the professional development of its staff, and aims to tailor its career management, mobility
and training policies to suit the needs of individuals and the requirements of its business entities. In such a universe, the aim is to offer
employees a coherent, varied and motivating career path that benefits both the employee and the Bank. Credit Libanais also offers its
employees the opportunity to enroll in in-house training programs. The range of courses on offer is extended and adapted each year
to cater to the professional needs of Group staff, both in terms of technical and managerial training.

Executive Development Programs (EDP)
After the introduction of the fast track program, the Bank introduced a new management program in 2005 designed for qualified
employees which enabled them to develop their leadership aptitude. The Executive Development Program (EDP) helps academically




    Annual Report 2008                                                                                                 Credit Libanais Group
                                                                                               Social and Environmental Sustainability



qualified and promising employees to advance to the next level. This advanced program embraces a challenging learning experience,
but requires a firm personal commitment on behalf of participants. Wave one of EDP was completed in 2008 and another wave was
recruited for 2009. This long-term investment in our human capital has proved to be very efficient and effective in preparing our future
middle managers.

Internal Redeployment
Internal recruitment has gained momentum inside the Bank, driven by a clear decision from Management to capitalize on internal talent
first. Internal competition is the preferred medium in recruitment in order to motivate staff by providing horizontal career opportunities.
The Bank systematically favors the internal redeployment of employees whose positions have been eliminated. Employees involved in
redeployment programs are provided with specific assistance in terms of mobility and retraining. The Group offers help in drawing up a
personal development profile, provides information on available posts and gives financial assistance in the case of relocations.
Credit Libanais has expanded in line with its strategy of organic growth in the last decade. This expansion was accompanied by an
increase in the number of employees commensurate with its growth. In the face of this challenge, human resources management
has become increasingly complex and vast. The Human Resources Department strives to tackle a number of strategic challenges
concurrently in order to take the Group into the future, among which are:
   • Staying abreast of the Group’s progress in several domains;
   • Elaborating and nurturing a culture of diversity;
   • Working towards making Credit Libanais an appealing employment brand both internally in order to retain talents and externally
     so as to attract them;
   • Relentlessly pursuing employee and management development; and
   • Continuing to successfully use the internal promotion method to fill vacant positions. As a matter of fact, many positions are
     advertised internally and receive numerous applications. This practice has contributed to raising morale among employees and
     encouraging competition for new positions. Internal recruitment is not only cost effective, but is also considered by many employees
     a door from within through which to compete and excel. It improves and enhances the employee’s awareness of the organization
     strategy, provides career development opportunities for promising staff, increases retention of good talents and creates a culture
     of high performance and quality in a productive and competitive environment.

Competitive and Transparent Performance Matrix
In 2004, Credit Libanais introduced a new culture for performance evaluation based on key performance measures aligned with the
strategic goals and objectives of the Bank. The purpose of this approach was to foster a performance driven culture inside Credit
Libanais that will lead to achieving the best possible results and to rewarding the most outstanding performance among the troops.
The process started with setting up and defining a branch evaluation matrix, which is based on wholly quantifiable measures and
contains four perspectives, inspired by the balanced scorecard concept.
Year after year, we have extended this innovative concept to other business units, applying the culture not only to measuring branch
performance, but also to appraising other Head Office departments such as Relationship Managers and Credit Officers. Other business
units will be added to the process at a later stage.
We also ensured that the culture of rewarding performance does not remain a static process, but rather becomes a dynamic living
concept. Several changes are incorporated into the matrix from time to time to re-align and guide the efforts of the business in the
Bank’s strategic direction. Most recently, in line with Management‘s decrees with regards to bringing in new deposits and increasing
the growth rate of this source of funding, additional points were assigned to the measures relating to customer deposits. As such, we
ensured that branches are pushing forward towards achieving this short-term objective and that financial compensation is given to
branches that meet this objective.
Through the use of an automatic system called Pbviews from Performancesoft to measure and reward business performances, our
intention is to encourage communication, transparency and accountability. In addition to this, all business units are able to track and




                                                                                                                                              89
monitor their individual performance on a monthly basis and align their activities and actions with corporate strategy.

Honouring Best Performers
In addition to recognizing the performance of our employees every quarter though the performance matrix, the annual honouring
ceremony has become an awaited ritual. Every year, during the annual gathering of the Bank, Credit Libanais honours the best
performers based on their performance throughout the year. Different criteria are used for the honouring based on the yearly
performance. The aim remains to use a comprehensive approach to acknowledge performance. A Credit Libanais trophy is distributed
to best performers.

Face-lifting our Appraisals
For several years now, Credit Libanais has adopted a performance appraisal system which stipulates that employees must carry out
their own self appraisal which is then followed by an appraisal by their respective managers. These online documents are then sent to
the HR Division and thoroughly reviewed and used as the basis for promotion and career path growth.

Following the major restructuring of our appraisals in 2007, we have identified three core tasks that align the human resources function
with the strategic challenge of developing the Bank’s human capital for sustainable competitive advantage: building, linking and
bonding. Credit Libanais will continue to demonstrate its commitment towards the development of its valuable and talented employees,
trying its best to attract, develop and retain exceptional people.

Employee Share Ownership Program
During this year, the Bank extended a grace period to employees with regards to their Credit Libanais shares. The Stock Ownership
Program, introduced in 2006 thanks to the generous contribution of our shareholders, has been administered by the Bank since its
creation. The program consists of ceding stocks to employees at a discount to book value and is conceived so that the dividends paid
cover the cost of debt during the first years, with employees then free to keep or sell their shares at the end of the loan period.

Improved Internal Communication
Several internal communication mediums are used to foster communication in both directions: upwards and downwards. These media
are constantly being reviewed and upgraded to respond to the needs of the Bank and its employees and to stay abreast of the latest
technological innovations.

The Role of the Intranet
Be it intranet email or the intranet corporate website, employees and managers alike use it as their prime medium of internal
communication. Policies and procedures are communicated via email and then posted on the intranet website for future reference and
accessibility. Furthermore, reports are distributed only via intranet to those employees and managers with privileged access. A new
comprehensive intranet website will be launched in 2009. The new generation of interactive intranet website would put Credit Libanais
at the forefront of internal communication.

Corporate Informative Publications
The Group’s internal communication publication - the quarterly magazine, Observer - is sent to all Group employees in English, French
and Arabic. This publication is rounded out by internal communication articles that convey corporate strategy. Employees are always
kept abreast of the latest regional and/or international developments in the banking industry through the daily Foreign Exchange
Snapshots of FX Snapshots, Market Snapshots, Weekly Market Watch, Monthly Economic Report, and Credit Libanais Indices. These
publications are posted either on the intranet or Internet and/or sent by intranet email or SMS.

Upward Communication
Not only does Credit Libanais feed information to its employees through internal communication channels, but it also encourages




    Annual Report 2008                                                                                               Credit Libanais Group
                                                                                                 Social and Environmental Sustainability



them to communicate. Employees’ suggestions continue to be channeled via intranet address to suggestionrecommendation@
creditlibanais.com.lb. In addition, every employee has the opportunity to communicate his/her suggestions in a confidential
manner directly to Senior Management to ensure openness and transparency.

Environment Conservation
Our strategy centers on directing our efforts toward three priorities:
  • Reducing the intensity of our environmental footprint;
  • Promoting environmentally responsible business activity; and
  • Offering environmental products and services.
The environment dimension has only recently been added to our lending jargon. We do believe that although this green finance is still
an industry in its infancy worldwide and especially in Lebanon, Credit Libanais should regularly review and update its lending strategies
to align them with industry standards in terms of Social and Responsible Investment (SRI). We are committed to regularly reviewing our
processes and operations with a view to conserving our environment and reducing our footprint, as well as that of our customers and
the communities we operate in. Last but not least, we are watching the environmental markets closely for those future opportunities
which have two-pronged benefits: offering economical incentive for the Bank while at the same time alleviating our footprint and that
of our customers and/or communities.

The International Finance Corporation (IFC)
Through its agreement with IFC, Credit Libanais regularly strives to enhance and adhere to sound Banking principles and promote
environmentally and socially reliable development across the full range of its activities. The way in which the Bank addresses this
mandate and its general principles is through ensuring that all IFC loans granted to clients undergo environmental and social appraisal
along with the financial, economic and legal analysis of clients prior to granting any facilities.

The basic objective is to ensure that the environmental and social implications of a potential client are identified and assessed early
in the Bank’s planning and decision making process and those environmental considerations are incorporated into the preparation
and approval of facilities. The procedures outline how the Bank incorporates these objectives into its overall appraisal process and
during implementation at a practical level. The procedures summarize the nature of environmental appraisal and monitoring activities
undertaken during different stages of a project life cycle and the responsibilities for carrying them out. The purpose of such procedures
is to improve the decision making process and to ensure that the loan under consideration is socially and environmentally sound and
sustainable.

European Investment Bank (EIB)
All projects financed by the Bank through the European Investment Bank (EIB) are also required to be acceptable in environmental
terms. Credit Libanais is in full acceptance and adherence with the EIB’s environmental objectives, namely to:
    • Preserve, protect and improve the quality of the environment;
    • Protect human health, in relation to the environment;
    • Ensure the prudent and rational utilization of natural resources and to conserve nature; and
    • Promote measures to deal with regional or worldwide environmental problems, notably climate change and access to potable
      water and sanitation.

In doing so, both banks apply the principles of “prevention”, “precaution” and “polluter countries”, as enshrined in European Community
policy.

As a result, all projects requesting financing from the EIB are required to fill in an Environmental Survey covering both the environmental
and the social impact of the project being financed. The environmental impact is related to the effect of the project on the air, land,
water, nature, natural resources and built environment. The social impact is related to the effect on health, safety, society and cultural
heritage. There are certain projects in certain industries in which an Environmental Impact Assessment, to be carried out by an




                                                                                                                                              91
  independent qualified assessor, is required, usually for those projects which are considered to have a higher risk of
  impacting the environment.
  The Environmental Impact Assessment should include an overall assessment of the project which should summarize the
  net environmental impact of the project over its life cycle, with a rating (acceptable, acceptable with minor reservations,
  or acceptable with major reservations). Such projects would be separately appraised by the EIB. In the coming years, it
  will be the Bank’s strategy to include the same process in the assessment of its entire lending portfolio for environmental
  compliance, by including this in the standard procedures for reviewing any credit facilities granted or to be granted, in
  line with the above objectives.


  Sustainable Products and Services
  1-Microcredit
      • One of our most successful products is a micro credit product with the Cooperative Housing and Finance
        (CHF/USAID) called Ameen. The program is geared towards a specific segment of very small enterprises which
        often encounter difficulties in financing their projects through Lebanese banks. Our Bank has been a pioneer in
        offering micro-financing. This activity is in line with our long-term belief that micro-enterprises, like multinationals,
        are essential to the prosperity and development of our economy. The Cooperative Housing and Finance (CHF/
        USAID) subsidy and Credit Libanais’ competitive interest rate both make this product appealing to micro-enterprises;
      • Another important addition to our coproate loans is Tanmiat El Ruwwad (TEL). Unlike other loans, TEL Business Loan
        combines technical assistance and financial support for liberal professionals and small businesses in collaboration
        with the Entrepreneurial Development Foundation; and
      • The Economic and Social Fund for Development financed by the European Union and in collaboration with Credit
        Libanais provides credit to micro and small enterprises (existing and start-up businesses). This type of financing
        helps in creating job opportunities and feeds community development through making the acquisition of machinery
        and equipment, raw materials, business needs and spare parts, contracted works or working capital possible.

  2-Environment Product
      • In its endeavour to integrate the environmental element at each level of its relationship with its stakeholders, Credit
        Libanais has created the energy system product, which consists of lending homeowners with a 0% interest rate
        for the first year. This product exemplifies Credit Libanais’ commitment to its environment through a willingness to
        take pioneering steps.

  3-Banking Inclusion
      • In 2008, Credit Libanais continued its banking inclusion strategy based on salary domiciliation. This practice enables
        Credit Libanais to make a bank account available to more and more Lebanese people in towns across Lebanon
        and mainly in remote areas. At the same time, this product enables the private and public sectors to pay employees
        via a bank account, to create automation of their work and thereby reduce their operating costs.
        Consequently, new account holders draw their salaries via Credit Libanais. Through salary domiciliation, we offer
        the most competitive package deal to salaried employees. Payroll account holders are treated as a special customer
        segment and targeted with tailor-made products.

     4-Supporting the Public Sector
      • In collaboration with PCdealNet and Hyperdist, Credit Libanais launched special offers on Toshiba and HP laptops
        targeting the military institutions such as the Ministry of Defence, Army School, Internal Security Forces, General Security,




Annual Report 2008                                                                                                    Credit Libanais Group
                                                                                                Social and Environmental Sustainability



Societal and Economic Sustainability at Credit Libanais
Numerous products have been created under this umbrella and aim to serve the society we operate in and alleviate the harm
on our environment. These products and services have been developed throughout the years and aim at distinguishing Credit
Libanais as a responsible business partner. Below is a list of those products and services developed to prove that we try every
day to get closer and closer to each one of our stakeholders.




     Civil Defence and Lebanese Customs. The aim of this product was to help the public sector instil a culture of general
     knowledge and provide access to technology for its members;
   • A special military school loan was conceived for the military institutions, officers, soldiers and fixed members enabling them
     to get credit facilities for tuition and to help settle school and university scholarships for their children on time without any
     delay once they are refunded by their institution;
   • The Army School, Internal Security Forces and the General Security officers also have the opportunity to benefit from a
     special domiciliation offer as well as from credit cards allowing them to profit from credit facilities at an amount up to
     3 times their salaries. Special ATMs have been put in place or are in the process of installation to service this growing
     market segment which is vital to the prosperity of Lebanon, knowing that Credit Libanais has been the foremost pioneer
     for Lebanese Army institutions among all other Lebanese banks for the past 3 years – hence 50% of the members of the
     ISF and 25% of the army personnel are Credit Libanais clients. The other military institutions were also encouraged to
     broaden their banking business with Credit Libanais through the same strategy implemented with the Army and ISF. Our
     main target in 2009 is also to expand to all military sectors;
   • Public sector customers were also offered Vantage Credit Cards enabling them to take advantage of flexible instalments
     with a monthly minimum repayment of 5% only;
   • The members of the organizations of the Ministry of National Defence were also granted the military Iskan loan, in
     collaboration with the military housing system and the Public Corporation for Housing, in order to secure decent housing
     for military institution members. Due to the impact of the campaign, the total portfolio increased by 9% over 2008; and
   • The public sector was also targeted through special personal loan campaigns conducted in order to reach niche markets
     by offering more possibilities and greater flexibility for financing any purchase or expenses without restriction.

  5-Youth Segment
   • Youth Card or Ukrd is a debit card for Credit Libanais’ younger generation of customers. Its purpose is to initiate our young
     customers to the banking life in order to transform them into knowledgeable future customers. This product was launched
     with a young and appealing ad and a university catalogue to act as an advisor for the advanced education of our future
     customers;
   • Lebanese have for long believed that their strongest asset throughout the years has been the quality of their education.
     To this end, Credit Libanais has created a 0% interest School Loan to allow parents with average incomes to secure their
     children’s education;
   • In today’s technological age, Credit Libanais realizes that everyone needs to have a computer handy. Our PC loan
     allows customers to acquire Toshiba laptops and benefit from special credit facilities and a free carrying case; and
   • Our support of academic life consists of donations and contributions to student activities such as job fairs, sports events,
     kermises and rally papers.




                                                                                                                                          93
   6-Subsidized Business Loans
      • Kafalat loan is a small business for those customers with limited income to allow them to run their businesses successfully.
        Credit Libanais has partnered with Kafalat SAL to disburse subsidized loans to small and medium businesses. We believe
        that the right financing helps our less fortunate customers start up or expand their businesses. The Kafalat loan is optimal
        for the financing of new projects or for improving productivity. Small and medium businesses in the following sectors are
        entitled to the Kafalat loan: industry, agriculture, tourism, handcrafts and specialized skills;
      • Credit Libanais has developed a line of credit with the Council for Development and Reconstruction (CDR) acting for the
        benefit of the Economic and Social Fund Development (ESDF) and whose aim is to alleviate poverty and mitigate the
        social impact of the economic transition of disadvantaged groups; and
      • In its efforts to work towards achieving social justice, Credit Libanais has contracted a line of credit and a credit risk sharing
        agreement with the IFC. The Bank has paved the way for more development agreements with the IFC after the Bank
        conformed with all the IFC requirements. The IFC credit was packaged with another interest subvention from the Central
        Bank of Lebanon which made it very appealing to the businesses affected directly or indirectly by the Israeli aggression
        of 2006.

   7-Housing Loans
      • Credit Libanais has also been thinking about the Lebanese Diaspora who remains attached to their roots. It created the
        expatriate housing loan to help cover the cost of buying, constructing or refurbishing a residence in their home country;
      • Housing loans called Iskan, granted through the Public Housing Institute (PHI). Iskan is a housing loan made available
        to low- and mid-income families to make housing a must and not a luxury. PHI enables these families to have access to
        housing loans from Credit Libanais and pays the interest on these loans on their behalf. At the end of the loan period,
        home owners pay back the interests on these loans to the PHI in convenient instalments. In 2008, our portfolio of Iskan
        housing loans grew by 22%; and
      • Credit Libanais Home Loan was created with preferential interests rates and a repayment period between three to thirty
        years in equal monthly instalments to serve the needs of its clientele.

   8-Extraordinary Contributions
      • Association of Banks in Lebanon (ABL) and the Central Bank of Lebanon helped in engineering the Lebanese public debt
        following the Paris II Conference. Numerous Lebanese banks including Credit Libanais contributed to a voluntary reverse
        swap operation by granting Lebanon a two-year free-of-interest loan. This exceptional initiative not only contributed to
        improving Lebanon’s sovereign rating, but was also beneficial to the country as a whole and to the banking sector in
        particular;
      • In 2007, Credit Libanais waived the debt of the Lebanese martyr soldiers owed to the Bank. This initiative came by means
        of a letter addressed to the Lebanese Army General announcing that the martyrs’ heirs were not liable for the debts of their
        late loved ones and family supporters;
      • Credit Libanais donated several motorcycles to the Internal Security Forces with a view to helping this body maintain order
        in the country. This donation was very important to Credit Libanais because it embodied our belief that the private sector
        is an active contributor to the public sector.
      • Our involvement in the societies we engage in consists of donations such as a generous contribution to the endowment
        of the Institute of Money and Banking of the American University of Beirut (AUB). As one of the most prestigious educational
        centers in the Middle East, contributing to the development of AUB is regarded as essential to preserving Lebanon as the
        Middle Eastern academic reference, to developing more and more prominent Lebanese financiers and bankers and to the
        improvement of the Lebanese society as a whole;
      • Another very major contribution was one to the National Foundation for Heritage for the renovation of the Beirut National




Annual Report 2008                                                                                                 Credit Libanais Group
                                                                                              Social and Environmental Sustainability




     Museum. This donation was instrumental to the major renovations and helped to preserve our national heritage;
   • More and more forests, mountains and rural land are destroyed every year by wildfires. During 2008 and in collaboration
     with the Association of Banks in Lebanon, Credit Libanais participated in the collective initiative by Lebanese banks to
     support the Lebanese Government under the auspices of the Ministry of Interior. This contribution came in the form of
     donations to supply firefighters with aerial and ground equipment to combat ravaging fires; and
   • Credit Libanais was the only Lebanese bank to actively participate in the creation of the Internal Security Forces Cavalry
     Unit. As has been the case throughout the years, the Bank’s tight collaboration with the Internal Security Forces institution
     has resulted in the birth of this Unit. Its purpose is to maintain order and safeguard stability in a peaceful manner in case
     of public riots.

9- Employee Contribution to Society
    • A large number of employees voluntarily dedicated a small portion of their monthly salary to the Children’s Cancer Center.
    This contribution came as a sign of good will directly from employees to society.

10-Social Community Involvement
   • Sponsorships of cultural and social events and exhibitions, sports and donations and contributions to student activities
     such as job fairs, sports events, kermises and rally papers. Every year the Bank engages in sponsoring events in Lebanese
     villages and remote areas to promote social gatherings and preserve and revive cultural and traditional patrimony. Credit
     Libanais also contributed to cheering the communities with which it engages by participating in the decoration of end of
     year festivities.
   • Every year, Credit Libanais sponsors the anti-drug campaign launched by the Internal Security Forces on the occasion of
     international anti-drug day. This awareness campaign is aimed at discouraging drug use;

11-Female Segment
   • Credit Libanais surgery loans have brought an affordable opportunity to every person interested in undergoing plastic or
     cosmetic surgery, Lasic, Orthodontia, Otorhinolaryngology (ORL) surgeries and more; and
   • Ladies’ Card is a debit card targeting Credit Libanais’ female customers. It operates electronically and enables women to
     access their accounts directly at no interest charge. This card, with its feminine design, was exclusively created to entice
     women to request to carry a personal bank card and be proud to use it. Since its creation this product has seen a lot of
     demand;

12-Islamic Products
    • The Bank offers through its subsidiary a panoply of Islamic banking products covering auto, housing, consumer goods
      and cards.

13-Employee Well-being
   • Collective convention: Abidance by the collective convention which stipulates family, education, medical care, transportation
     and food allowance as well as marriage and maternity bonuses; and
   • After the successful completion of the Executive Development Program (EDP) wave one, the Bank has embarked on wave
     two of this internal initiative of hard work. The program was developed as a proactive approach to assess our future needs
     and prepare the right profiles for future positions.




                                                                                                                                        95
  Procurement Flowchart Via Invitations to Tender

        Senior Management
       approval of supplier list

                                                                 Credit Libanais sal
     administration department

         Receives bids from                                                                                       Department requesting a
         different suppliers                                                                                             purchase

                                                                                    Specifications book



                                 committee                                                                        yes       Put down the offer
           Reaches an agreement on a                                                              Offer
                    supplier                                                                     refused




                                                                                                                  no
                                     budget control                 budget unit         purchasing department

                 Lack of              Budget
                                                            Engagement note                Processing
                  funds              availability
no


         yes




         Need Financial Controller approval



               budget unit                     department                                           budget unit

                                   Acceptance and
          Control                                                                 Payment note
                                  receipt of supplies




                                                                accounting unit



                                                            Payment




Annual Report 2008                                                                                                        Credit Libanais Group
                                                                                       Social and Environmental Sustainability




Lending Partnerships

Credit Libanais is engaged in partnership programs with major international bodies in an effort to alleviate the burden of
borrowing on its corporate and retail customers alike. These partnerships include:

• The Export Development Canada (EDC) program, dedicated to financing and promoting Canadian exports to
  Lebanon;

• The European Investment Bank (EIB) facility channeled through the Central Bank of Lebanon, offering eligible Lebanese
  firms competitive financing for industrial and touristic projects;

• The Arab Trade Financing Program (ATFP) promoting the export of goods of Arab origin;

• The Inter Arab Investment Guarantee Corporation (IAIGC) which facilitates trade amongst Arab countries by providing
  insurance guarantees for investment and trade;

• The Islamic Corporation for Insurance of Investment and Export Credit (ICIIEC) which, in affiliation with the Islamic
  Bank, guarantees exports from Islamic countries worldwide;

• The Saudi Fund for Development (SFD), designed to finance the trade of Saudi Arabian goods and services by Lebanese
  importers;

• The Cooperative Housing and Finance (CHF/USAID), which subsidizes the micro finance scheme, Ameen.
  The program is geared towards a specific segment of very small enterprises which often encounter difficulties in
  financing their projects through Lebanese banks;

• The Council for Development and Reconstruction (CDR) acting for the benefit of the Economic and Social Fund
  Development (ESFD) whose aim is to alleviate poverty and mitigate the social impact of the economic transition on
  disadvantaged groups;

• The International Finance Corporation (IFC) whose purpose is to increase access to finance for private sector companies
  and individuals who were adversely affected directly and indirectly as a result of the aggression on Lebanon. The line
  should cover any new expansion or rehabilitation project consisting of the production or provision of services, including
  investment in fixed and current assets as well as intangible assets. It might also cover a provision of working capital;

• The International Finance Corporation (IFC) Risk Participation Agreement which covers all economical sectors.
  The purpose of the agreement is to originate and administer SME loans to private borrowers that conduct businesses
  primarily in Lebanon. IFC extends its guarantee to up to 50% of the loan that will be granted;

• Global Trade Finance Program (GTFP) under IFC, which aims to enhance trade between Lebanon and all its
  counterparties in both imports and exports; Islamic Development Bank (IDB) for the financing of the imports of eligible
  goods by Lebanese SMEs from member and non-member countries; and

• European Investment Bank (EIB) intends to help SMEs as well as large corporations finance small and medium sized
  projects as well as large ones. Said projects could be carried out by private sector companies or by commercially run
  public sector entities based in Lebanon.

Several Murabaha deals were also undertaken in collaboration with major regional players in the Islamic banking
industry.




                                                                                                                                 97
                                                       Financial Results
Credit Libanais Group
Management Discussion and Analysis
 of Group Activities                             101
Auditors’ Report                                 115
Consolidated Balance Sheet                       116
Consolidated Statement of Income                 118
Consolidated Statement of Cash Flows             119
Consolidated Statement of Changes in Equity      120
Notes to the Consolidated Financial Statements   122
Annual Report 2008   Credit Libanais Group
                                                                                                                             Group Financial Results




                        Management’s Discussion and Analysis of Financial Condition
Credit Libanais Group
                        and Results of Operations
                        Basis of Presentation
                        The following discussion and analysis has been prepared based generally on the audited consolidated financial statements of
                        the Group as at and for the years ended 31 December 2007 and 2008 and on selected financial information.
                        The consolidated financial statements of the Group as at 31 December 2008 represent the financial position of Credit Libanais
                        Group which incorporates the activities of Credit Libanais sal together with its wholly owned subsidiaries, Credit Libanais
                        Investment Bank sal (CLIB) and Lebanese Islamic Bank sal (LIB) and other companies directly or indirectly owned by Credit
                        Libanais sal. All material inter-company transactions incurred during the years 2007 and 2008 were eliminated when preparing
                        the consolidated financial statements in accordance with regulations and standards agreed upon for consolidation purposes.

                        Lebanese Banking Sector
                        Total Lebanese banking sector assets reached LBP 142,090 billion (or USD 94.26 billion) as at 31 December 2008, compared
                        to LBP 123,999 billion as at 31 December 2007 (or USD 82.26 billion), reflecting an annual increase of LBP 18,091 billion or
                        14.59% year-on-year. Total loans to private sector made by the Lebanese banks increased by 22.59% in 2008 to LBP 37,748
                        billion (or USD 25.04 billion) as at 31 December 2008 up from LBP 30,791 billion as at 31 December 2007. Total customer
                        deposits, including non-resident private deposits, held by the Lebanese banking sector increased by 15.58% in 2008
                        to LBP 118,584 billion (or USD 78.66 billion) as at 31 December 2008 from LBP 102,599 billion as at 31 December 2007. In
                        addition, the deposit dollarization rate decreased to 69.57% as at 31 December 2008, compared to 77.34% as at year-end 2007.

                        Analysis of Financial Position
                        Total Assets
                        As at 31 December 2008, the Group had total assets of LBP 6,714.79 billion, compared to LBP 5,692.78 billion as at 31
                        December 2007, reflecting a year-on-year increase of LBP 1,022.01 billion or 17.95%. This increase in total assets, particularly
                        in liquid assets, was substantially matched by increases in funding, which consisted primarily of customer deposits and
                        shareholders’ equity. The average growth in total assets of the Lebanese banking sector stood at 14.59% during the year 2008.
                        It is to be noted that the Group reimbursed the last tranche of its Euro-Certificates of Deposit amounting to USD 60 million and
                        maturing in September 2008 on time without being able to issue a new tranche due to inadequate circumstances that prevailed
                        in the markets as a result of the international financial crisis.
                        The Group’s share of total assets of the Lebanese banking sector reached 4.73% at year-end 2008, compared to 4.59% at
                        year-end 2007.

                        Sources of Funding
                        The following table sets out a breakdown of the Group’s sources of funding as at 31 December 2007 and 2008, respectively:
                                                                                                                                              million LBP

                         As at 31 December                                 2007                          2008                  Percentage change
                         Banks and Financial Institutions                 59,198                        95,566                       61.43%
                             - Demand Deposits                            14,368                        33,799                       135.24%
                             - Time Deposits                              44,830                        61,767                       37.78%
                         Customer Deposits                               4,819,537                     5,819,845                     20.76%
                             - Demand deposits                            495,808                      639,568                       29.00%
                             - Time deposits                              993,721                      1,359,006                     36.76%
                             - Sight saving accounts                      109,961                      136,899                       24.50%
                             - Time saving accounts                      3,220,047                     3,684,372                     14.42%
                         Euro-Certificates of Deposit                     92,409                          ---                           ---
                         Total                                           4,971,144                     5,915,411                     18.99%



                                                                                                                                                            101
Customer Deposits
Total customer deposits of the Group increased by 20.76% to LBP 5,819.85 billion as at 31 December 2008 from LBP 4,819.54 billion
as at 31 December 2007, outperforming the average growth rate in total deposits of the Lebanese banking sector which stood at
15.58% during the year 2008. Customer deposits represent the principal source of the Group’s funding and comprised 84.66% and
86.67% of the Group’s total assets as at 31 December 2007 and 2008, respectively.

As at 31 December 2008, savings accounts, which are mostly held by individuals and have average maturities of approximately 3
to 6 months, represented the largest portion of the Group’s customer deposits (65.66%); demand deposits, which earn the minimum
balance rate offered by the Group, represented 10.99% of total deposits; and time deposits, which are mostly held by businesses,
represented 23.35% of total deposits.

The following table sets out the compositions of the Group’s customer deposits, by currency, as at 31 December 2007 and 2008,
respectively:

                                                         Deposits         Deposits         Increase           Percentage change
 As at 31 December                                        2007             2008           (Decrease)         Group         Sector
 In LBP (LBP billion)                                     1,634.42         2,505.22         870.80           53.28%            55.20%
 In foreign currency (converted into USD million)         2,112.85         2,198.76          85.91            4.07%             3.99%
 Total (LBP billion)                                      4,819.54         5,819.85        1,000.31          20.76%            15.58%



Year-on-year, foreign currency deposits were 4.07% higher as at 31 December 2008 compared to 31 December 2007, while LBP
deposits increased by 53.28% over the year 2008, compared to an increase of 55.20% on LBP deposits in the Lebanese banking
sector. As at 31 December 2008, customer deposits held in foreign currencies, principally US Dollars, represented 56.95% of total
customer deposits as at such date, compared to 66.09% as at 31 December 2007. This decrease in the Group’s dollarization rate
of deposits in 2008 is in line with the banking sector which decreased to 69.57% as at year-end 2008 from 77.34% as at year-end
2007, as a result of some customers shifting their deposits from foreign currency to Lebanese Pound. The Group’s deposits in foreign
currency were lower than the sector’s average primarily because of the Group’s retail activities in rural areas (Bekaa region) where
customers traditionally use the Lebanese Pound as the functional currency.

Foreign currency deposits are primarily comprised of time deposits and savings accounts.

Loans Portfolio
As at 31 December 2008, loans and advances to customers (net of provisions for doubtful debts and reserved interest) amounted to
LBP 1,498.68 billion, compared to LBP 1,150.33 billion as at 31 December 2007, reflecting a year-on-year increase of 30.28%. Over
the same period, aggregate loans to the private sector made by Lebanese banks grew by 22.59% during the year 2008. The growth in
the Group’s loans portfolio primarily reflected the extension of housing loans to individuals and commercial facilities to SMEs, which are
subsidised or guaranteed by financial public institutions. The growth in the loans volume as at year-end 2008, compared to year-end
2007, consolidated the Group’s position in the retail market, through the introduction of new consumer lending products resulting in the
enlargement and diversification of its retail customer base.

The ratio of the Group’s total loans to total assets was 22.32% as at 31 December 2008, compared to 20.21% as at 31 December 2007.
The slight increase in the loans-to-total assets ratio stems from the lack of attractive lending opportunities due to the difficult economic
conditions prevailing in Lebanon, in addition to the Group’s conservative policy in lending during these circumstances. The Group’s




    Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                            Group Financial Results




loans-to-deposits ratio remained relatively low at 25.75% as at 31 December 2008, compared to 23.87% as at 31 December 2007 and
compared to the average of 32.19% for the Lebanese banking sector.

The table below sets out the composition of the Group’s loans portfolio, by currency, as at 31 December 2008 and 2007, respectively:


   Loans by Currency                                                                     Increase           Percentage change
   As at 31 December                                       2007            2008         (Decrease)         Group         Sector
   In LBP (LBP billion)                                   370.01           440.46           70.45          19.04%          20.95%
   In foreign currency (converted into USD million)       517.63           701.97          184.34          35.61%          22.85%
   Total (LBP billion)                                    1,150.33        1,498.68         348.35          30.28%          22.59%


Of the Group’s total loans portfolio, LBP 440.46 billion or 29.39% were denominated in Lebanese Pounds, with the remaining 70.61%
denominated in foreign currencies, principally in US Dollars, in exchange as at 31 December 2008. Loans in foreign currencies
represented 31.93% of total foreign currency customer deposits as at 31 December 2008, compared to 24.50% of total foreign
currency customer deposits as at 31 December 2007, and compared to the average of 40.06% for the Lebanese banking sector as at
31 December 2008.

Credit Libanais Group improved the level of provisions set against non-performing loans (NPLs) to support and reinforce the loans
portfolio during the difficult economic conditions prevailing in the country through increasing those provisions by an amount of LBP
12.72 billion as provision charge during the year 2008 and before deduction of the write back provision (compared to LBP 9.81 billion
during the year 2007). Total provisions and suspended interest on non-performing loans amounted to LBP 120.04 billion at 31/12/2008
and represented 7.42% of the total loan portfolio, or 84% of non-performing loans. The Group continues to adopt a conservative policy
in terms of provisions on NPLs, as confirmed by the amount of collections and recoveries realized every year resulting in substantial
provisions written-back to the income statement for LBP 11.58 billion during the year 2008, compared to LBP 1.97 billion during the
year 2007.

The following table sets out the composition of the Group’s loans portfolio by the borrower’s economic activity, after accounting for
specified loan loss provisions as at 31 December 2007 and 2008:
 Loans by Industry                                                                                                         million LBP

   As at 31 December                                         2007                         2008                 Percentage change
   Retail (personal, consumer and housing loans)            558,600                      793,869                      42.18%
   Commerce and Trade                                       332,791                      393,515                      18.25%
   Industry                                                 209,245                      275,590                      31.71%
   Construction                                             26,458                        26,407                      -0.19%
   Agriculture                                              23,237                        9,295                       -60.39%
   Total                                                   1,150,331                    1,498,676                     30.28%


Personal, consumer and housing loans increased to 52.97% of total loans as at 31 December 2008, compared to 48.56% as at 31
December 2007, while commerce and trade loans decreased to 26.26% of total loans as at 31 December 2008, compared to 28.93%
as at 31 December 2007. The Group’s industrial, construction and agriculture loans comprised 18.38%, 1.76% and 0.63% of total
loans, respectively, as at 31 December 2008, compared to 18.19%, 2.31% and 2.01% of total loans, respectively, as at 31 December
2007.




                                                                                                                                         103
Liquidity
As at 31 December 2008, Credit Libanais Group maintained high liquidity levels which represented 81% of total customer deposits and
other liabilities and 73% of total assets, compared to 84% and 75% respectively, as at 31 December 2007. Liquidity was distributed on
the basis of 48% in Lebanese Pounds and 52% in foreign currencies at 31 December 2008, compared to 35% and 65% respectively
at the end of the preceding year.

As a result of the international financial crisis that affected the majority of banks operating all over the world, the Group considered the
risk exposures maintained with its bank correspondents and accordingly redistributed the liquidity held and the credit limits granted to
them in such a way as to avoid high concentration of liquidity with a single correspondent and to deal with prime banks that can benefit
from their government’s financial support.

Lebanese Government Securities
The following table sets out the composition of the Group’s portfolio of Lebanese Treasury Bills and Eurobonds as at 31 December 2008:
                                                                                                                                  million LBP

 As at 31 December 2008                                     In LBP                         In FC                         Total
 Ordinary Treasury Bills                                   1,979,543                      785,233                      2,764,776
 Plus: Accrued interest on Treasury Bills                    47,689                        13,789                       61,478
 Less: Interest received in advance                         (2,779)                          ---                        (2,779)
 Total                                                     2,024,453                      799,022                      2,823,475



The average rate of return on Lebanese Pounds ordinary Treasury Bills subscribed by Credit Libanais sal and amounting to LBP
1,605.4 billion stood at 9.26%, whereas this yield stood at 9.99% on similar bills subscribed by the affiliated bank CLIB and amounting
to LBP 374.14 billion. The overall yield on the Group’s portfolio of Treasury Bills held in Lebanese Pounds aggregated to 9.40% at 31
December 2008, compared to 9.59% at the end of the preceding year. The average yield on Lebanese Government Treasury Bills
issued in foreign currencies was 7.86% at 31 December 2008, compared to 7.84% at the end of the preceding year.
The following table sets out the composition of the Group’s portfolio of Lebanese Treasury Bills, by maturity, as at 31 December 2008:
                                                                                                                                  million LBP

  As at 31 December 2008                                  In LBP                          In FC                         Total
  Less than 6 months                                      404,310                        11,996                        416,306
  Between 7 and 12 months                                  56,985                        92,191                        149,176
  Between 13 and 18 months                                111,512                        101,024                       212,536
  Between 19 and 24 months                                224,930                          ---                         224,930
  Between 3 and 5 years                                  1,181,806                       355,561                      1,537,367
  Over 5 years                                               ---                         224,461                       224,461
  Total Lebanese Treasury Bills                          1,979,543                       785,233                      2,764,776



Investments and Marketable Securities
The Group held investments and marketable securities amounting to LBP 111.03 billion as at year-end 2008, compared to LBP 103.38
billion as at year-end 2007, reflecting an increase of LBP 7.65 billion or 7.40%. All investments consisted of instruments and papers
issued by Lebanese banks and prime local and international companies and are quoted in regulated financial markets.




    Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                            Group Financial Results




The following table sets out the composition of the Group’s portfolio of investments and marketable securities, by type of instrument,
as at 31 December 2008:
                                                                                                                              million LBP

   As at 31 December 2008                                         In LBP                In FC                        Total
   Bonds                                                            ---                 73,848                       73,848
   Certificates of Deposit                                          ---                 29,686                       29,686
   Shares                                                         4,581                 2,913                         7,494
   Total Investment and Marketable Securities                     4,581                106,447                       111,028



Average rate of return on bonds and Certificates of Deposit held in foreign currencies stood at 9.06% for the year ended 31 December
2008, compared to 9.10% for the year ended 31 December 2007.

Shareholders’ Equity
Shareholders’ equity is divided into core capital (Tier I) and supplementary capital (Tier II). Tier I capital comprises paid-up common
share capital, reserves, retained earnings, and reserves for unspecified banking risks, less any unfavorable change in fair value of
available-for-sale securities.

The following table sets out the composition of the Group’s shareholders’ equity as at 31 December 2007 and 2008, respectively:
                                                                                                                              million LBP

   As at 31 December                                                      2007            2008                 Percentage change
   Paid in capital (23,400,000 common shares)                        234,000             234,000                        ---
   Paid in capital (1,600,000 preferred shares)                       16,000              16,000                        ---
   Legal reserve                                                      32,964              39,775                     20.66%
   Other reserves and premiums                                       125,614             121,810                      -3.03%
   Reserves for general banking risks                                 21,104              24,281                     15.05%
   Unrealised profits (losses) on available-for-sale securities       (1,874)            (12,553)                   -100.00%
   Retained earnings                                                      3,717           13,677                    +100.00%
   Premium on issuance of preferred shares                            59,375              59,375                        ---
   Revaluation surplus accepted as supplementary capital                  7,828           7,828                         ---
   Net profit for the year                                            46,048              77,754                     68.85%
   Total Shareholders’ Equity                                        544,776             581,947                      6.83%
   Composed of:
   Core capital (Tier I)                                             461,573             498,744                      8.05%
   Supplementary Capital (Tier II)                                    83,203              83,203                        ---



In May 2006, Credit Libanais increased its share capital by LBP 154 billion through the issuance of 15,400,000 new common shares
subscribed in cash by its common shareholders.

In August 2004, Credit Libanais issued 1,600,000 cumulative “Series A” preferred shares for an aggregate amount of USD 50 million
with a seven-year term expiring on 10 August 2011. The issue was effected at a nominal value of LBP 10,000 for each Preferred
Share, while the aggregate share premium amounted to of LBP 59.37 billion. Preferred Shares constitute part of the Group’s Tier II




                                                                                                                                            105
capital, and earn an annual fixed dividend to be paid to holders, out of the distributable consolidated profits of the Group, in an amount
equivalent to 7.5% of the total amount of the preferred shares issued. The Bank has the right, in its sole discretion, to redeem the
Series A Preferred Shares, in whole but not in part, on the fifth anniversary of the issue date, at the issue price plus accrued and unpaid
dividends and an early redemption premium equivalent to 50% of the value of the annual fixed dividends that would have been payable
until the expiry of the term of the Series A Preferred Shares.

As part of its risk management policy, the Bank has established a special purpose investment account (the “Sinking Fund Account”),
which is funded on an annual basis in each of the first seven years following the issue date of the Series A Preferred Shares (assuming
no early redemption) with proceeds generated from the annual consolidated profits in amounts equal to one-seventh or 14.285% of the
total amount of the Series A Preferred Shares.

Equity assets ratio reached 8.67% as at 31 December 2008, compared to 9.57% at year-end 2007.

Capital Adequacy
As at 31 December 2008, the BIS capital adequacy ratio of the Group (excluding profits for the year) was 27.5%, compared to 31.5%
as at 31 December 2007. This ratio will further improve after the incorporation of the profits for the year 2008 to reach approximately
31.8%, thus exceeding the minimum 12% required by the Central Bank of Lebanon as per circular No. 1758 dated 18 September
1999.

During 2008, the Group conducted a quantitative impact study to assess the implications of the Basel II Accord on the shareholders’
equity of the Group. The capital adequacy ratio stood at 14% at year-end 2008 (compared to the minimum required 8%), after taking
into consideration the credit, market and operational risks of the Group.

Asset/Liability Management
The Group’s consolidated balance sheet is structured in terms of percentage of total assets as shown in the table below at 31
December 2007 and 2008:


 Assets as at 31 December                  2007           2008       Liabilities as at 31 December             2007              2008
 Cash and banks                            39%             30%       Due to banks                               1%                1%
 Treasury Bills and Eurobonds              34%             42%       Customer deposits                          85%              87%
 Banks and marketable securities            2%             2%        Long-term liabilities                      2%                 ---
 Net loans and advances                    21%             22%       Other creditors and payables               3%                3%
 Fixed assets                               2%             2%        Shareholders’ equity                       9%                9%
 Other debtors and receivables              2%             2%
 Total Assets                              100%           100%       Total Liabilities and Equity              100%              100%




    Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                            Group Financial Results




Results of operations
Interest Income
The following table sets out the principal components of the Group’s interest income, by amount and as a percentage change therein,
for each of the years ended 31 December 2007 and 2008, respectively:
                                                                                                                           million LBP

   As at 31 December                                       2007                         2008                  Percentage charge
   Trading and investment securities (including
                                                          175,268                      216,701                      +23.64%
   Lebanese government securities)
   Deposits with banks                                    120,259                       98,313                      -18.25%
   Advances and overdrafts                                90,345                       115,280                      +27.60%
   Total                                                  385,872                      430,294                      +11.51%


Interest on trading and investment securities represents interest earned primarily on Lebanese Treasury Bills denominated in Lebanese
Pounds and Government and corporate Eurobonds issued in foreign currencies (including principally US Dollars and Euro). Reflecting
the Group’s significant portfolio of liquid assets that is largely financed by customer deposits gathered through the Group’s branch
network, and by the capital increase of LBP 154 billion that occurred during the year 2007, Lebanese Treasury Bills continued to
comprise the substantial majority of the Group’s portfolio of trading and investment securities in 2008 and 2007.

The overall yield on the portfolio of Lebanese Treasury Bills held by the Group in Lebanese Pounds was 9.40% as at 31 December
2008, compared to 9.59% as at year-end 2007, and the average yield on Lebanese government Eurobonds issued in foreign currencies
was 7.86% as at 31 December 2008 and 7.84% as at 31 December 2007.

Interest income on deposits with banks decreased by 18.25%, compared to 2007. This was due to the relative decrease in interest
rates applied to the international money markets during the year 2008, and to a shift in the liquidity of the Group towards investments
in local sovereign papers.

Interest income on the Group’s loans portfolio also increased by 27.60% during the year 2008 primarily due to the extension of
additional loans to retail and corporate customers during the year 2008 which increased by LBP 348.35 billion or 30.28%.
Accordingly, total interest income for the year ended 31 December 2008 increased by 11.51% compared to total interest income for
the year ended 31 December 2007.

Interest Expense
The following table sets out the principal components of the Group’s interest expense, by amount and as a percentage change therein,
for each of the years ended 31 December 2007 and 2008, respectively:
                                                                                                                           million LBP

   As at 31 December                                           2007                       2008                 Percentage change
   Customer deposits                                          262,065                    277,661                     +5.95%
   Deposits from banks                                         2,126                      3,106                      +46.10%
   Euro-Certificates of Deposit                                6,218                      4,293                      -30.96%
   Total                                                      270,409                    285,060                      5.42%




                                                                                                                                          107
The Group’s interest expense is principally comprised of interest paid on customer deposits, as these constitute the primary source
of funding for the Group and aggregate to 87% of total assets at 31 December 2008. The total amount of interest paid on customer
deposits increased in 2008, compared to 2007, by 5.95% as a result of the increase in total Group customer deposits by 20.76% as at
31 December 2008, compared to 31 December 2007, and of the drop in the agregate cost of the deposits subsequent to the decrease
in the interest rates applied on the international money markets during the year 2008.

Interest expense on Euro-Certificates of Deposit is incurred on the USD 60,000,000 6.875% Series 5 Certificates that matured on
September 2008, which were originally issued by the Group under a Euro-Certificates of Deposit Program amounting to USD 150
million.

Net Interest Income
The following table sets out the Group’s net interest income and net interest margin for each of the years ended 31 December 2007
and 2008, respectively:
                                                                                                                              million LBP

 As at 31 December                                           2007                        2008                 Percentage change
 Interest earned                                            385,872                     430,294                     +11.51%
 Interest paid                                              (270,409)                  (285,060)                     +5.42%
 Net interest income                                        115,463                     145,234                     +25.78%
 Net Interest Margin (%)                                     2.12%                       2.34%



The Group’s net interest income increased by 25.78% in 2008 to LBP 145.23 billion for the year ended 31 December 2008 up from LBP
115.46 billion for the year ended 31 December 2007. This increase principally reflected the improvement in the level of liquid assets as
a result of the growth in customer deposits. Net interest margin increased during the year 2008 by 22 bps to 2.34% at year end 2008,
compared to 2.12% during 2007.




   Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                             Group Financial Results




Non-interest Income
The following table sets out the Group’s non-interest income deriving from commissions, fees and other operating income for each of
the years ended 31 December 2007 and 2008, respectively:
                                                                                                                                million LBP

   As at 31 December                                          2007                         2008                  Percentage charge
   Income from marketable securities                          2,151                        3,582                       66.53%
   Commissions received                                      24,316                        29,923                      23.06%
   Commissions paid                                          (3,563)                       (8,123)                     100.00%
   Net commissions received                                  20,753                        21,800                       5.05%
   Net income from insurance activities                       3,694                        3,908                        5.80%
   Rental income and real estate services                     1,109                        2,034                       83.41%
   Fees on collection services                                573                           913                        59.34%
   Net miscellaneous operating income (losses)                224                          (1,249)                      -100%
   Net other operating income                                 5,600                        5,606                        0.11%
   Net income (loss) from operations on
                                                              2,276                        (2,235)                      -100%
   trading and transaction securities
   Net income from financial fixed assets
                                                               ---                           ---                          ---
   and portfolio securities
   Net profits on foreign exchange operations                 3,449                        4,669                       35.38%
   Total Non-Interest Income                                 34,229                        33,422                       -2.35%



The Group’s investment activities are largely conducted through the investment banking subsidiary, Credit Libanais Investment Bank
(CLIB) sal. Income from investments comprised principally of marketable securities and other variable income instruments, increased
by 66.53% to LBP 3.58 billion for the year ended 31 December 2008, compared to LBP 2.15 billion for the year ended 31 December
2007. This increase is due to dividends received from investments in financial institutions and companies outside the Credit Libanais
Group.

Total net commissions, fees and other revenues increased by 5.05% to LBP 21.80 billion for the year ended 31 December 2008,
compared to LBP 20.75 billion for the year ended 31 December 2007 – net commissions consist primarily of commissions and fees
on accounts, fees for issuances of letters of credit and letters of guarantee origination and commitment fees on loans and transaction-
processing, development of retail services and electronic banking products and other non-interest generated revenues. In addition the
Group continued to develop its fee-based banking services, particularly electronic banking products and services.

The Group’s net other operating income is principally comprised of the commissions and fees generated from its plastic card businesses,
including the sponsoring and processing of debit and charge cards such as Visa, MasterCard and Amex, the processing of transactions
made through its network of point-of-sale (“POS”) terminals installed at different locations throughout the country and the cross-selling
of related financial services, including bancassurance products through the Group’s insurance subsidiary Credit Libanais d’Assurances
(CLA). Net profits deriving from insurance, real estate and collection services increased year-on-year by 5.80%, 83.41% and 59.34%
respectively during the year 2008.

Net loss from operations on trading and transactions securities amounted to LBP 2.24 billion in 2008, compared to net gain of LBP 2.28
billion in the preceding year. This is mainly attributed to the deterioration in value of some financial papers when marked-to-market as
a result of the international financial crisis and its negatif implications on the markets.




                                                                                                                                              109
The Group’s net profit on foreign exchange operations amounted to LBP 4.67 billion at 31 December 2008, an increase by 35.38%
from LBP 3.45 billion at 31 December 2007.

The Group’s non-interest income decreased by -2.35% to LBP 33.42 billion at 31 December 2008, down from LBP 34.23 billion at the
end of the preceding year. It contributed to 18.82% of the Group’s net financial income at 31 December 2008, compared to 24.13% at
31 December 2007.

Net Financial Income
The following table sets out the Group’s net financial income for each of the years ended 31 December 2007 and 2008, respectively:
                                                                                                                              million LBP

 As at 31 December                                           2007                        2008                Percentage change
 Net interest income                                        115,463                    145,234                      25.78%
 Allowance for loan losses                                  (9,811)                    (12,721)                     29.66%
 Provision written-back on loans                             1,971                      11,579                     100.00%
 Non-interest income                                        34,229                      33,422                      -2.35%
 Total Net Financial Income                                 141,852                    177,514                      25.14%


The Group increased the amount allocated for loan losses by 29.66% during 2008. Allowances for loan losses amounted to LBP 12.7
billion for the year ended 31 December 2008, compared to LBP 9.8 billion for the preceding year.

Provisions written-back on loans increased to reach an amount of LBP 11.58 billion for the year ended 31 December 2008, compared
to LBP 1.97 billion for the year ended 31 December 2007, which reflects the conservative policy followed by the Group in provisioning
non-performing and doubtful loans.

As a result of the combined effects of the foregoing, the Group’s net financial income for the year ended 31 December 2008 amounted
to LBP 177.51 billion, compared to LBP 141.85 billion for the year ended 31 December 2007, reflecting a year-on-year increase of
25.14%.

Staff Expenses and Related Charges
The following table sets out the principal components of the Group’s staff expenses and related charges for each of the years ended
31 December 2007 and 2008, respectively:
                                                                                                                              million LBP

 As at 31 December                                         2007                         2008                 Percentage charge
 Salaries and wages                                       37,538                        39,830                       6.11%
 Board of Directors’ fees                                   992                          890                        -10.28%
 Social Security contributions                             5,375                        6,117                       13.80%
 Provision for end of service indemnities                   962                         3,237                        100%
 Other allowances and benefits                             7,788                        10,218                      31.20%
 Total Staff Expenses and Related Charges                 52,655                        60,292                      14.50%


Total staff expenses and related charges amounted to LBP 60.29 billion for the year ended 31 December 2008, compared to LBP
52.66 billion for the year ended 31 December 2007, reflecting a year-on-year increase of 14.50%. This increase was largely attributable
to the official increase in the high cost of living promulgated by the government with an effect starting 1st May 2008, and its direct




   Annual Report 2008                                                                                             Credit Libanais Group
                                                                                                               Group Financial Results




implications on the related personnel charges, end-of-service indemnities and social security contributions. Other staff allowances and
benefits were also affected by this official increase (schooling, transportation, etc.). The increase is staff expenses and related charges
is partially due to the new recruitments made by the Group in order to expand current and new business activities, and to the opening
of new branches.

General Operating Expenses
The following table sets out the principal components of the Group’s general operating expenses for the years ended 31 December
2007 and 2008, respectively:
                                                                                                                               million LBP

   As at 31 December                                           2007                          2008                 Percentage charge
   Taxes                                                      3,439                          7,542                       100.00%
   Premiums for the guarantee of deposits                     2,566                          2,450                       -4.52%
   Rental charges and related expenses                        2,854                          3,092                        8.34%
   Lawyers, audit and consultancy fees                        2,180                          2,699                       23.81%
   Data processing services                                   1,316                          1,858                       41.19%
   Mail and telecommunication (PTT, Swift)                    2,321                          2,365                        1.90%
   Maintenance and repairs                                     2,110                         2,841                       34.64%
   Electricity, water and heating                             2,246                          2,878                       28.14%
   Travel and entertainment                                   1,226                          1,424                       16.15%
   Transportation charges                                     1,009                          1,251                       23.98%
   Insurance premiums                                         1,868                          1,765                       -5.51%
   Advertising and public relations expenses                  3,095                          4,099                       32.44%
   Computer maintenance and charges                           1,121                          1,237                       10.35%
   Office stationery and printing                             1,054                          1,278                       21.25%
   Board of directors attendance allowances                   1,220                          1,388                       13.77%
   Training, documentation and services fees                   410                            452                        10.24%
   Other expenses                                              431                            503                        16.71%
   Total General Operating Expenses                           30,466                        39,122                       28.41%


General operating expenses increased by 28.41% to LBP 39.12 billion for the year ended 31 December 2008, compared to LBP 30.47
billion for the year ended 31 December 2007. The increase in general operating expenses is mainly attributed to the operational costs
incurred for opening new branches and expanding into new lines of business.

Despite the increase in staff and operating expenses, the Group’s overall cost-to-income ratio decreased to 55% as at 31 December
2008, compared to 62% for the year ended 31 December 2007.




                                                                                                                                              111
Exceptional Items
The following table sets out the Group’s exceptional income and expenses for the years ended 31 December 2007 and 2008,
respectively:
                                                                                                                             million LBP

 As at 31 December                                              2007                   2008                Percentage change
 Exceptional income                                              951                  18,162                      +100.00%
 Exceptional expenses                                           (151)                  (291)                      +92.72%
 Net Exceptional Income                                          800                  17,870                      +100.00%


Exceptional items are the result of activities and operations incurred by the Group outside the normal course of banking business.
Exceptional income, which amounted to LBP 18.16 billion for the year ended 31 December 2008, compared to LBP 951 million for the
year ended 31 December 2007, mainly derived from distribution amounting to LBP 14 billion received during 2008 by the Group from
Visa International and Mastercard in the form of cash and bonus shares made to card business acquires.

Profit before Tax
The following table sets out the Group’s pre-tax profit for the years ended 31 December 2007 and 2008, respectively:
                                                                                                                             million LBP

 As at 31 December                                              2007                   2008                Percentage change
 Profit before income tax                                       55,026                91,273                       65.88%
 Income tax                                                     (8,978)               (13,519)                     50.58%
 Net Profit for the Year                                        46,048                77,754                       68.86%


The Group’s pre-tax profits for the year 2008 amounted to LBP 91.27 billion (or the equivalent of USD 60.55 million), compared to LBP
55,03 (or the equivalent of USD 36.51 million) for the year 2007, a year-on-year increase by 65.88%.

Return on shareholders’ equity (before tax) stood at 19.34% at year-end 2008, compared to 11.93% at year-end 2007. Return on
average assets recorded 1.47% compared to 1.04% at the end of the preceding year.

Profit Appropriation
The Group’s consolidated profits for the year ended 31 December 2008 are generated from the following entities:
                                                                                                                             million LBP

 As at 31 December 2008                                   Profits Before Tax        Income Tax                  Net Profits
 Profit from Credit Libanais sal                                80,054                (10,901)                     69,153
 Profit from Credit Libanais Investment Bank sal                12,384                (2,303)                      10,081
 Profit from Credit International (Senegal)                       40                    ---                          40
 Profit from Credilease sal                                      186                    ---                         186
 Loss from Lebanese Islamic Bank sal                            (818)                   ---                        (818)
 Reversal of provision on Lebanese Islamic Bank                 1,606                   ---                        1,606
 Eliminations of the inter-group dividend distributions         (8,216)                 ---                        (8,216)
 Profits deriving from the Group’s banking activities           85,236                (13,204)                     72,032
 Group’s share in profits of subsidiaries
                                                                6,037                  (315)                       5,722
 and affiliated companies
 Net Profit for the Year                                        91,273                (13,519)                     77,754




   Annual Report 2008                                                                                           Credit Libanais Group
                                                                                                                 Group Financial Results




The General Assembly of Shareholders of Credit Libanais sal, convened to meet on 5 May 2009 approved the consolidated financial
statements of Credit Libanais Group as at 31 December 2008, showing net profits (after tax) amounting to LBP 77.75 billion, and
resolved the appropriation of the profits for the year 2008 deriving from Credit Libanais sal and amounting to LBP 69.15 billion before
addingup the retained earnings as at 31 December 2008 amounting to LBP 11.17 billlion, as follows:
   i. To transfer an amount of LBP 6.92 billion representing 10% of these profits to a legal reserve account as per the requirements of
   article No. 132 of the Code of Money and Credit.
   ii. To allocate an amount of LBP 3.27 billion to a special reserve for unspecified banking risks, computed on the basis of 2% of the
   total risk weighted assets and off balance sheet commitments as at the end of each financial year, as per BDL circular No. 1439
   iii. To allocate an amount of LBP 738.7 million to a special reserve account representing provisions written-back on NPLs rescheduled
   according to the framework defined by the Central Bank as per circular No. 41 dated 17 November 2003.
   iv. To allocate an amount of LBP 573 million to a special reserve for real estate properties (under liquidation) held in recovery of
   debts.
   v. To transfer an amount of LBP 5.65 billion representing dividends pertaining to preferred shares Series “A” issued by Credit
   Libanais sal, at a yearly yield of 7.5% withholding tax thereon amounting to LBP 282.66 million according to the Board of directors
   meeting dated on 16 June 2004.
   vi. To transfer an amount of LBP 10.77 to the “Sinking Fund Account” which represented 14.285% of the total amount of the Series
   A preferred shares.
   vii. To transfer the remaining profits, after the allocations and distributions listed above, to the retained earnings which will aggregate
   an amount of LBP 52.13 billion and to distribute out of these retained earnings an amount of LBP 35.10 billion to common shareholders
   of Credit Libanais sal on the basis of LBP 1,500 per common share.

In closing, the Board of Directors of Credit Libanais sal would like to express its gratitude for the continuous enthusiasm, confidence
and support of our Shareholders and customers, and for the efforts and devotion of the Group’s senior management and employees.




                                                                                                                  Yours Sincerely,
                                                                                                                 Dr. Joseph Torbey
                                                                                                           Chairman and General Manager




                                                                                                                                                 113
Annual Report 2008   Credit Libanais Group
                                                                                                                 Group Financial Results




Independent Auditors’ Report
to the Shareholders of Credit Libanais sal

We have reviewed the accompanying consolidated financial statements sheet of Credit Libanais sal and its consolidated subsidiaries,
which comprise the consolidated balance sheet as at 31 December 2008, the consolidated income statement, consolidated cash flow
statement and statement of changes in consolidated equity for the years then ended, and a summary of significant accounting policies
and other explanatory notes.

Board of Directors’ Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether
due to fraud or error; selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in
the circumstances.

Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Credit Libanais
sal as of 31 December 2008 and of its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with International Financial Reporting Standards.




Beirut, Lebanon                                                                                                 Gerard Zovighian
27 March 2009                                                                                             BDO Fiduciaire du Moyen-Orient




                                                                                                                                                115
Consolidated Balance Sheet
For the year ended 31 December 2008

                                                                                                                                                     million LBP

Assets                                                                                          Notes         2008          2008         2007          2007
                                                                                                              Group         Bank         Group         Bank
Cash, Compulsory Reserves and Central Banks                                                        3         773,523       692, 172      729,050      652,505
Banks and financial institutions                                                                   4         632,548       580, 239      930,748      898,241
Head office, branches, parent company, foreign sister, financial institutions & subsidiaries                    ---         22,910          ---        47,912
Trading assets                                                                                     5           2,708        1,732         3,419         2,195
Loans and advances to customers                                                                    6        1,477,089     1,265,973     1,128,637     939,039
Loans and advances to related parties                                                              7          21,760        29,212       21,911        27,485
Customers’ liability under acceptances                                                             8          36,168        36,168       27,331        27,331
Available-for-sale investment securities                                                           9         320,153       291,398       57,649        36,665
Loans and receivables investments securities                                                       10        589,577       588,495       543,043      507,493
Held-to-maturity investment securities                                                             11       2,615,162     2,145,667     2,016,006    1,514,178
Investments in associates                                                                          12          7,592        53,739        6,117        43,026
Property and equipment                                                                             13         88,065        45,553       86,462        42,903
Intangible assets                                                                                  14          2,433         610          3,262         1,488
Unquoted assets - Ready for sale                                                                   15         47,837        39,588       48,255        40,605
Other assets                                                                                       16         45,806        27,818       36,744        23,365
Revaluation of other fixed assets                                                                  17         54,366        54,366       54,366        54,366
Total Assets                                                                                                6,714,787     5,875,640     5,693,000    4,858,797



Off-Balance Sheet


Engagements by signature received                                                                  46           775          910           678           678
Other commitments received                                                                         47       2,682,019     2,161,412     2,082,182    1,624,191
Murabaha agreements with correspondents                                                            48         29,070          ---         3,015          ---
Total Contra Accounts                                                                                       2,711,864     2,162,322     2,085,875    1,624,869

                                                                                               The attached notes are an integral part of these financial statements




  Annual Report 2008                                                                                                                      Credit Libanais Group
                                                                                                                                     Group Financial Results




                                                                                                                                                     million LBP

Liabilities                                                                                     Notes         2008          2008         2007           2007
                                                                                                              Group         Bank         Group          Bank
Banks and financial institutions                                                                   18         95,568        83,257       59,198         38,861
Head office, branches, parent company, foreign sister, financial institutions & subsidiaries                    ---        316,644          ---        158,833
Customers’ accounts                                                                                19       5,669,165     4,712,194     4,691,212     3,885,350
Related parties’ accounts                                                                          20        150,656       120,321       128,324        92,595
Certificates of Deposits                                                                           21           ---           ---        92,409         92,409
Customers’ acceptance liability                                                                    8          36,168        36,168       27,331         27,331
Current tax liability                                                                              22         11,269        8,143         9,011          4,715
Other liabilities                                                                                  23         87,059        38,299       60,519         30,766
Provisions for risks and charges                                                                   24         20,762        18,683       18,025         16,354
Revaluation of other fixed assets                                                                  17         54,366        54,366       54,366         54,366
Total Liabilities                                                                                           6,125,013     5,388,075     5,140,395     4,401,580



Equity

Common shares                                                                                      25        234,000       234,000       234,000       234,000
Preferred shares                                                                                   25         16,000        16,000       16,000         16,000
Premium on insuance of preferred shares                                                            25         59,375        59,375       59,375         59,375
Reserves related to capital                                                                        26         64,056        44,480       54,067         35,963
Retained earnings                                                                                             13,677        11,177        3,717          1,195
Revaluation surplus (Tier two)                                                                                15,656        15,656       15,656         15,656
Reserve for revaluation of available-for-sale portfolio                                            27        (12,553)      (10,439)      (1,874)        (1,874)
Other reserves                                                                                     28        121,809        48,163       125,616        39,233
Net profit for the year                                                                                       77,754        69,153       46,048         57,669
     - Attributable to equity holder of the Bank                                                              75,948        69,153       44,417         57,669
     - Attributable to minority interest                                                                       1,806          ---         1,631           ---
Total Equity                                                                                                 589,774       487,565       552,605       457,217
Total Liabilities and Equity                                                                                6,714,787     5,875,640     5,693,000     4,858,797



Off-Balance Sheet


Financing commitments given to:                                                                    43        393,548       393,376       311,633       309,327
     - Financial intermediaries                                                                                2,927        2,927          282            282
     - Customers                                                                                             390,621       390,449       311,351       309,045
Commitments and contingencies given                                                                44         50,967        62,862       41,858         53,752
Deposits held under Murabaha agreements                                                            45         29,070          ---         3,015           ---
                                                                                                             473,585       456,238       356,506       363,079

                                                                                               The attached notes are an integral part of these financial statements




                                                                                                                                                                       117
Consolidated Statement of Income
For the year ended 31 December 2008

                                                                                                                  million LBP

                                                             Notes         2008          2008         2007          2007
                                                                           Group         Bank         Group         Bank
Interest Income                                                 29        432,270       366,326       387,672      314,696
Interest Expense                                                30        (286,067)    (244,637)     (271,187)    (215,980)
Net Interest Income                                                       146,203       121,689       116,485       98,716
Fee and commission income                                       31         56,618        41,600       49,249        34,127
Fee and commission expense                                      32        (29,754)      (21,444)     (23,462)      (14,659)
Net fee and commission income                                              26,864        20,156       25,787        19,468
Net gain on trading portfolio                                   33          4,693        4,822         3,822         4,679
Net gain on financial investment                                34         16,298        23,595        3,406        26,417
Other operating income                                          35          4,726        4,358          951          1,654
Total Financial Revenues                                                  198,784       174,620       150,451      150,934
Net losses on loans and advances                                36         (1,143)       (566)        (7,840)       (8,313)
Allowance for impairment of investment securities                          (2,025)      (2,035)          ---         (271)
Net financial revenues                                                    195,616       172,019       142,611      142,350
Staff costs                                                     37        (60,294)      (52,773)     (52,655)      (45,674)
Depreciation of property and equipment                          13         (5,214)      (4,227)       (4,865)       (4,112)
Amortization of intangible assets                               14          (881)        (879)         (546)         (535)
Other expenses                                                  38        (39,410)      (34,086)     (30,617)      (27,984)
General operating expenses                                                (105,799)     (91,965)     (88,683)      (78,305)
Net Operating Income                                                       89,817        80,054       53,928        64,045
Share in results of related companies under equity method                   1,456          ---         1,097          ---
Pofit before income tax                                                    91,273        80,054       55,025        64,045
Income tax expense                                              40        (13,519)      (10,901)      (8,977)       (6,376)
Net profit for the period                                       39         77,754        69,153       46,048        57,669
Attributable to:
Equity holders of the Bank                                                 75,948        69,153       44,417        57,669
Minority interest                                                           1,806          ---         1,631          ---
                                                                           77,754        69,153       46,048        57,669

                                                            The attached notes are an integral part of these financial statements




  Annual Report 2008                                                                                   Credit Libanais Group
                                                                                                                       Group Financial Results




Consolidated Statement of Cash Flows
For the year ended 31 December 2008

                                                                                                                                        million LBP

                                                                                  Notes         2008           2008          2007          2007
                                                                                                Group          Bank          Group         Bank
 Cash flows from operating activities
 Net Income                                                                                     77,754        69,153         46,048        57,669
 Adjustments to reconcile net profit to cash provided by operating activities:
       - Allowances for impairment of loans of advances                              36          8,389         8,376          9,168        9,093
       - Depreciation and amortization                                             13-14         6,095         5,105          5,411        4,647
       - Increase in provision for risks and charges                                             2,737         2,328          1,656        1,426
       - Decrease/(increase) in trading assets                                                    711           463          (1,327)        (972)
       - (Increase)/decrease in available-for-sale investment securities                       (262,504)     (254,733)        8,954        9,127
       - (Increase) in loans and advances to customers                                         (356,841)     (335,310)      (178,239)    (185,910)
       - Decrease/(increase) in loans and advances to related parties                             151         (1,728)         (200)        (4,157)
       - (Increase) in customers’ liability under acceptances                                   (8,837)       (8,837)        (4,658)       (4,658)
       - (Increase) in other assets                                                             (9,062)       (4,453)        (5,156)       (4,597)
       - Increase in banks and financial institutions (LT)                                      14,242        14,242          4,787        4,787
       - Increase in customers’ accounts                                                        977,953       826,844        465,238      589,486
       - Increase/(decrease) in related parties’ accounts                                       22,332        27,727         (3,073)      (23,371)
       - Increase in customers’ acceptance liability                                             8,837         8,837          4,658        4,658
       - Increase in current tax liability                                                       2,258         3,428          2,613         960
       - Increase in other liabilities                                                          26,540         7,533         15,567        8,270
 Net cash from operating activities                                                             510,755       368,975        371,447      466,458
 Cash flows from investing activities:
       - (Increase) in tangible and intangible assets                                           (6,869)       (6,876)        (18,184)     (10,750)
       - Decrease/(Increase) in unquoted assets - Ready for sale                                  418          1,017         (5,910)       1,267
       - (Increase) in investment in associates                                                 (1,475)       (10,713)        (915)        (2,728)
       - (Increase) in held-to-maturity investment securities                                  (599,156)     (631,489)       (5,745)      (54,105)
       - (Increase)/Decrease in loans & receivables investment securities                      (46,534)       (81,002)       31,834        49,358
       - (Increase) in deposits at banks & financial institutions                              (24,120)       (18,090)      (251,753)    (200,498)
 Net cash (used in) investing activities                                                       (677,736)     (747,153)      (250,673)    (217,456)
 Cash flows from financing activities:
       - (Decrease) in Certificates of Deposit                                                 (92,409)       (92,409)         ---           ---
       - Distribution to ordinary shareholders                                                 (24,304)       (24,304)       (20,794)     (20,794)
       - Distribution to preferred shareholders                                                 (5,936)       (5,936)        (5,764)       (5,764)
       - Tax on Inter-group distributions                                                       (2,109)          ---         (3,008)         ---
       - (Decrease) in unrealized profits or losses                                            (10,679)       (8,566)        (1,881)       (1,881)
       - Increase in Reserves                                                                    2,443           ---           ---           ---
       - Prior years adjustments                                                                   ---           ---         (1,204)         ---
 Net cash used in financing activities                                                         (132,994)     (131,215)       (32,651)     (28,439)
 Net (decrease)/ increase in cash and cash equivalents                                         (299,975)     (509,393)       88,123       220,563
 Cash and cash equivalents - Beginning of year                                       41        1,259,384     1,117,034      1,171,261     896,471
 Cash and cash equivalents - End of year                                             41         959,409       607,641       1,259,384    1,117,034

                                                                                 The attached notes are an integral part of these financial statements




                                                                                                                                                         119
Consolidated Statement of Changes in Equity
For the year ended 31 December 2008



                                                                      Share               Reserve                   Reserve for real
                                                                                                                    estate properties
                                                                      Capital                                       (under liquidation)
                                                                                Group           Minority             held-in-recovery
                                                                                                                         of debts
                                                                                Share           Interest

 At 31 December 2006                                                  250,000   150,573             6,594                5,486


 Allocation of 2006 net profit                                          ---     16,187               357                 4,739


 Dividend paid to preferred shareholders                                ---       ---                 ---                   ---


 Dividend paid to ordinary shareholders                                 ---       ---                 ---                   ---


 Reversal of reserve for real estate properties (under liquidation)     ---       ---                 ---               (3,049)


 Unrealized losses on available-for-sale portfolio                      ---       ---                 ---                   ---


 Prior year adjustments                                                 ---     (1,204)               ---                   ---


 Tax on Inter-group distributions                                       ---                           ---                   ---


 Net Profit for the year 2007                                           ---       ---                 ---                   ---


 At 31 December 2007                                                  250,000   165,556             6,951                7,176


 Allocation of 2007 net profit                                          ---      3,357               728                   832


 Dividend paid to preferred shareholders                                ---       ---                 ---                   ---


 Dividend paid to ordinary shareholders                                 ---       ---                 ---                   ---


 Reversal of reserve for real estate properties (under liquidation)     ---       ---                 ---               (1,178)


 Unrealized losses on available-for-sale portfolio                      ---       ---                 ---                   ---


 Tax on Inter-group distributions                                       ---       ---                 ---                   ---


 Minority interest reserve in Credit International                      ---       ---               2,443                   ---


 Net Profit for the year 2008                                           ---       ---                 ---                   ---


 At 31 December 2008                                                  250,000   168,913             10,122               6,830




  Annual Report 2008                                                                                        Credit Libanais Group
                                                                                                  Group Financial Results




                                                                                                                     million LBP

   Profits carried        Unrealized profits       Profit for the year            Premium          Revaluation          Total
      forward                 (losses)                                               on              surplus           Equity
                                                                                  preferred         (tier two)
Group        Minority   Group         Minority   Group          Minority
                                                                                   shares
Share        Interest   Share         Interest   Share          Interest

 6,907         (192)       7             ---     43,270           1,532             59,375             15,656          539,208


23,565          (46)      ---            ---     (43,270)        (1,532)               ---                ---             ---


(5,764)         ---       ---            ---       ---              ---                ---                ---          (5,764)


(20,794)        ---       ---            ---       ---              ---                ---                ---         (20,794)


 3,049          ---       ---            ---       ---              ---                ---                ---             ---


  ---           ---     (1,881)          ---       ---              ---                ---                ---          (1,881)


  ---           ---       ---            ---       ---              ---                ---                ---          (1,204)


(3,008)         ---       ---            ---       ---              ---                ---                ---          (3,008)


  ---           ---       ---            ---     44,417           1,631                ---                ---          46,048


 3,955         (238)    (1,874)          ---     44,417           1,631             59,375             15,656          552,605


41,103          28        ---            ---     (44,417)        (1,631)               ---                ---             ---


(5,936)         ---       ---            ---       ---              ---                ---                ---          (5,936)


(24,304)        ---       ---            ---       ---              ---                ---                ---         (24,304)


 1,178          ---       ---            ---       ---              ---                ---                ---             ---


  ---           ---     (10,676)         (3)       ---              ---                ---                ---         (10,679)


(2,109)         ---       ---            ---       ---              ---                ---                ---          (2,109)


  ---           ---       ---            ---       ---              ---                ---                ---           2,443


  ---           ---       ---            ---     75,948           1,806                ---                ---          77,754


13,887         (210)    (12,550)         (3)     75,948           1,806             59,375             15,656          589,774


                                                             The attached notes are an integral part of these financial statements




                                                                                                                                     121
Notes to the Consolidated Financial Statements
As at 31 December 2008

1- The Bank                                                             periods commencing on or after 1 January 2009, with earlier
Credit Libanais sal (“the Bank”) is a Lebanese joint stock company      adoption being permitted)
registered under Nº 10742 at the register of Commerce, and
                                                                        . Amendment to IFRS 2 Share-based Payment – Vesting
under Nº 53 on the banks’ list at the Central Bank of Lebanon.          Conditions and Cancellations (Accounting periods beginning on
                                                                        or after 1 January 2009).
The Bank, together with its wholly-owned medium and long
term Bank, Credit Libanais Investment Bank        sal   incorporated
                                                                        . IFRS 3 (Revised) Business Combinations. Amendments to
                                                                        accounting for business combinations (Annual reporting periods
on 27 February 1996, provides a full range of commercial and
                                                                        commencing on or after 1 July 2009).
investment banking activities through 60 branches in Lebanon,
                                                                        . Amendments to IFRS 7 Improving Disclosures about Financial
one international banking unit in Limassol – Cyprus, one branch
                                                                        Instruments. Changes the disclosure requirements in respect of
in Bahrain and a representative office in Montreal – Canada. The
                                                                        the fair value of financial instruments and liquidity risk (Annual
Bank also provides Islamic products and services that are Shariaa
                                                                        reporting periods commencing on or after 1 July 2009).
compliant through its majority owned subsidiary Lebanese Islamic        .  IFRS 8 Operating segments. New standard on segment
Bank sal. The Bank’s major shareholders are Capital Investment          reporting, replaces IAS 14 (Annual reporting periods commencing
Holdings-Bahrain and Capital Investment Holdings – Lebanon              on or after 1 January 2009).
sal   (78.99% and 11.21% of ordinary shares respectively).              .  IAS 1 Presentation of Financial Statements (revised).
                                                                        Significant changes to the presentation of primary statements
2- Adoption of new and revised standards
                                                                        which are prepared in accordance with IFRS. (Accounting periods
During the current year the International Accounting Standard           commencing on or after 1 January 2009 with early adoption being
Board (IASB) has amended IAS 39 “Financial Instruments”:                permitted). The key changes include:
Recognition and Measurement to enable in certain circumstances,          - The requirement to aggregate information in the financial
financial assets to be reclassified out of the “held-for-trading” and      statements on the basis of shared characteristics;
“available-for-sale” categories. The effect of the amendment is          - Changes in the titles of some of the primary financial statements
that certain assets are now permitted to be transferred to either          (for example ‘Balance Sheet’ becomes ‘statement of Financial
                                                                           Position’). However, there is no mandatory requirement to use
the loans and receivables or held-to-maturity categories, resulting
                                                                           the new titles in the preparation of the financial statements;
in them being carried at amortised cost rather than at fair value.       - Introducing the possibility of a single Statement of
The Bank has adopted the above amendments and has                          Comprehensive Income (combining the Income Statement
reclassified, where applicable, financial assets previously                and (what was previously) the Statement of Recognized
registered at fair value to the amortised cost value. (notes 5, 9          Income and Expense);
                                                                         - Preparers of financial statements will have the option of
and 10)
                                                                           continuing to present income and expense and components
At the date of authorisation of these financial statements, the            of other comprehensive income in two separate statements,
following Standards and Interpretations were in issue but not yet          for example, a separate Income Statement followed by a
                                                                           Statement of Comprehensive Income (the latter previously
effective:
. International Financial Reporting Standard 1 First-time                  called a Statement of Recognized Income and Expense);
                                                                         - Only the total of comprehensive income is to be shown in the
adoption of International Financial Reporting Standards’ (IFRS             Statement of Changes in Equity.
1) and International Accounting Standard 27 Consolidated and                . IAS 27 (Revised) Consolidated and Separate Financial
Separate Financial Statements (IAS 27). Measurement of the                  Statements. Consequential amendments from changes to
cost of investments in subsidiaries; jointly controlled entities and        Business Combinations (Annual reporting periods commencing
associates when adopting IFRS for the first time. (Accounting               on or after 1 July 2009).




      Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                              Group Financial Results




. Amendments to IAS 32 Financial Instruments: Presentation            The consolidated financial statements include the accounts of
                                                                      Credit Libanais sal and its banking and non-banking subsidiaries
and IAS 1 Presentation of Financial Statements. Puttable
                                                                      and affiliates as detailed below. The financial statements of
financial instruments and obligations arising on liquidation.
                                                                      subsidiaries are prepared for the same reporting year as the
Certain financial instruments will be classified as equity whereas,
                                                                      Bank, using consistent accounting policies. Adjustments are
prior to these amendments, they would have been classified as
                                                                      made to bring into line any dissimilar accounting policies that
financial liabilities. (Annual reporting periods beginning on or
                                                                      may exist.
after 1 January 2009).
. IAS 39 Financial Instruments: Recognition and Measurement.          ii) Companies in which the Bank holds a controlling voting interest
                                                                      or exclusive control over its management are fully consolidated.
Clarifies two hedge accounting issues: inflation in a hedge
                                                                      Intercompany balances, as well as income and expense on
accounting item and a one-sided risk in a hedge item.
.  IFRIC 15 Agreements for the Construction of Real Estate
                                                                      material intercompany transactions between fully consolidated
                                                                      companies, are eliminated on consolidation.
(Periods beginning on or after 1 January 2009).
. IFRIC 17 Distributions of Non-cash Assets to Owners (Periods        iii) Companies controlled jointly as well as companies in which
                                                                      the Bank exercises significant influence, but not exclusive control,
beginning on or after 1 July 2009).
                                                                      are accounted for under the equity method.
The directors anticipate that the adoption of all the above
                                                                      The equity method applies to financial and non-financial
Standards and Interpretations will have no material impact
                                                                      companies under joint control with other partners as well as to
on the financial statements of the Group in the period of initial
                                                                      associated companies in which the Bank exercises a significant
application.
                                                                      control over management policy (usually shareholdings between
3- Significant Accounting Policies                                    20% and 50%). All other minority interests are disclosed under
a) Statement of compliance                                            “investment in associates”.

The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRSs).

b) Accounting convention
The consolidated financial statements are prepared under
the historical cost convention, except for (a) the revaluation
of properties in Lebanon acquired prior to 1 January 1994
in compliance with Law No 282 dated 31 December 1993, (b)
the measurement at fair value of ready-for-sale and trading
investment securities.

c) Principles and basis of consolidation
i) The consolidated financial statements have been prepared in
accordance with IAS 27 “Consolidated and separate financial
statements” and the Central Bank Circular No 1524 dated 24
April 1997 and its amendments which requires the consolidation
of investments in banking and non banking subsidiaries and
affiliates, as from 31 December 1998.




                                                                                                                                             123
The list of companies included in the consolidated financial statements and the percentage held by the Bank are set out in the table
below:

   Company                               Nature of Business                                         Method of                          % of
                                                                                                    Consolidation                     Control
                                         Extending medium to long-term loans and
   Credit Libanais Investment Bank sal                                                              Full consolidation                  99.84
                                         investment banking
   Lebanese Islamic Bank sal             Islamic banking                                            Full consolidation                  99.82
   Credit International sal              Banking (not operating yet)                                Full consolidation                  84.97
   Cedar’s Real Estate sal               Real estate development                                    Full consolidation                  99.92
   Soft Management sal                   IT Solutions                                               Full consolidation                  46.99
   Hermes Tourism & Travel sal           Tourism and ticketing                                      Full consolidation                  99.99
   Liberty Restaurant sarl               Restaurant - under liquidation                             Full consolidation                  99.20
   Card Promotion Company sal            Credit card operations - under liquidation                 Full consolidation                  99.21
   Card Promotion sal Offshore           Credit card operations - under liquidation                 Full consolidation                  99.27
   Card Promotion Company sal Holding    Credit card operations - under liquidation                 Full consolidation                  99.22
   Crédit Libanais d’Assurances          Issuing all kinds of insurance and reinsurance policies;
                                                                                                    Full consolidation                  66.97
   et de Réassurances sal                including those related to loans granted by the Bank
   Business Development Center sarl      Publicity and advertising                                  Full consolidation                  98.60
   Capital Real Estate sal               Real estate development                                    Full consolidation                  98.00
                                         Real estate development (Owning the Liberty Tower
   Liberty Tower sal                                                                                Full consolidation                  99.89
                                         building)
                                         Handling the leasing services as part of the Bank’s
   Credilease sal                                                                                   Full consolidation                  99.24
                                         operations
   Collect sal                           Providing collection services of receivables               Full consolidation                  44.93
   Agence Générale de Courtage           Insurance brokerage                                        Equity Method                       25.86
   International Payment Network sal     ATM interbank payment network                              Equity Method                       23.40
   Credit Card Management sal            Handling credit cards issuing and acquiring operations     Equity Method                       28.96
   Hermes Rent-a-Car sal                 Car Rental                                                 Equity Method                       27.48
   Net Commerce sal                      E-commerce and payment gateway                             Equity Method                       19.10
   Liberty Executive Center sal          Providing business center services                         Equity Method                       6.27


d) Foreign Currencies
The consolidated financial statements are presented in Lebanese Pound which is the Bank’s reporting currency. However, the primary
currency of the economic environment in which the Bank operates (functional currency) is the US Dollar.
In preparing the financial statements of the individual entities, transactions in currencies other than the Bank’s reporting currency
(foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet 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 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 exchange differences on monetary items receivable from or payable
to a foreign operation for which settlement is neither planned nor likely to occur, which form part of the net investment in a foreign




    Annual Report 2008                                                                                                   Credit Libanais Group
                                                                                                                    Group Financial Results




operation, and which are recognized in the foreign currency                Offsetting:
translation reserve and recognized in profit or loss on disposal of        Financial assets and liabilities are set-off and the net amount
the net investment.                                                        is presented in the balance sheet when, and only when, the
                                                                           Group has a legal right to set-off the amounts or intends either to
For the purpose of presenting consolidated financial statements,
                                                                           settle on a net basis or to realize the asset and settle the liability
the assets and liabilities of the Group’s foreign operations are
                                                                           simultaneously.
expressed in Lebanese Pound using exchange rates prevailing
at the balance sheet date. Income and expense items are                    Fair Value Measurement
translated at the average exchange rates for the period.                   The determination of fair values of financial instruments traded
Exchange differences arising, if any, are classified as equity and         in active markets is based on quoted market prices. For
recognized in the Group’s foreign currency translation reserve.            financial instruments where there is no quoted price, fair value is
Such exchange differences are recognized in profit or loss in the          determined by using valuation techniques. Valuation techniques
period in which the foreign operation is disposed of.                      include net present value technique, the discounted cash flow
                                                                           method, comparison to similar instruments for which market
Comparative closing exchange rates of major currencies are
                                                                           observable prices exist.
detailed as follows:
                                                                           Impairment of Financial Assets
                               2008                    2007                Financial assets, other than those at fair value through profit or
 US Dollar                         1,507.50                 1,507.50       loss, are assessed for indicators of impairment at each balance
 Euro                              2,136.88                 2,212.56       sheet date. Financial assets are impaired where there is objective
 Sterling Pound                    2,186.33                 3,011.83       evidence that, as a result of one or more events that occurred
 Swiss Franc                       1,428.10                 1,330.77       after the initial recognition of the asset, the estimated future cash
 Japanese Yen                          16.70                   13.31       flows of the investment have been impacted.
 Bahrain Dinar                     3,999.63                 4,014.65
                                                                           Impairment losses on assets carried at amortized cost are
                                                                           measured as the difference between the carrying amount of the
e) Financial assets and Liabilities
                                                                           financial assets and the present value of estimated future cash
Recognition and Derecognition                                              flows discounted at the original effective interest rate. Losses are
The Group initially recognizes loans and advances, deposits, debt          recognized in profit or loss and reduce the carrying amount of the
securities issued and subordinated liabilities on the date that they       asset to its estimated recoverable amount. If, in a subsequent
are originated. All other financial assets and liabilities are initially   period, the amount of the impairment loss decreases, the
recognized on the trade date at which the Group becomes a party            previously recognized impairment loss is reversed through profit
to the contractual provisions of the instrument.                           or loss to the extent that the carrying amount of the investment
                                                                           at the date the impairment is reversed does not exceed what the
The Group derecognizes a financial asset when the contractual
                                                                           amortized cost would have been had the impairment not been
rights to the cash flows from the asset expire, or it transfers the        recognized.
rights to receive the contractual cash flows on the financial asset
                                                                           In respect of available-for-sale investment securities, the previously
in a transaction in which all the risks and rewards of ownership of
                                                                           accumulated losses recorded under equity are recognized in profit
the financial asset are transferred.
                                                                           or loss in case of impairment losses substantiated by a prolonged
The Group derecognizes a financial liability when its contractual          decline in fair value of the investment securities. Any increase in
obligations are discharged, cancelled or expire.                           fair value subsequent to an impairment loss is not recognized in




                                                                                                                                                    125
profit or loss for available-for-sale equity securities. Any increase   Provisions for doubtful and bad debts are set up to cover any
in fair value subsequent to an impairment loss is recognized in         possible losses in principal and interest in the existing portfolio of
profit or loss for available-for-sale debt securities.                  loans and advances to customers and contingent accounts.

The Bank classified its portfolio of investment securities (which       The level of provision to be constituted is based on the difference
includes Lebanese and non-Lebanese Treasury Bills, bonds and            between the book value and the present value of the expected
other fixed-income securities, stocks and other variable-income         future cash flows after taking into consideration the realizable
securities) according to the following categories:                      value of the guarantees provided.
.  Held-for-trading: these securities are bought for resale in          This provision charge is accounted in the statement of income.
the short term. They are stated in the balance sheet at their fair      No general provisions are requested on the loan portfolio apart
value which is close to their market value. Differences arising         from the “Reserve for general banking risks”.
between the fair value of these securities and their original cost      Provisions on doubtful accounts are written back to income only
are recorded in the statement of income.
.  Available-for-sale: these investments are bought with the
                                                                        when the debt is restructured or repayment effectively resumed.
                                                                        Provision charges and provisions written back are recorded under
intention not to be sold in the short term, nor to be held-to-
                                                                        “Net losses on loans and advances” in the statement of income.
maturity. After initial recognition, investments which are classified
                                                                        Doubtful and bad loans and advances are written-off from the
as “available-for-sale” are re-measured at fair value. Unrealized
gains and losses on revaluation are reported as a separate              balance sheet and are recorded as memorandum accounts when
component of equity until the investment is sold. In case of            all possible means of collection recourses have been exhausted,
impairment, the cumulative gain or loss previously reported under       and the possibility if any future recovery is considered to be
equity is transferred to the statement of income for the period.        remote.
.  Held-to-maturity: these securities are bought with the Bank’s
                                                                        g) Unrealized interest on sub-standard, doubtful and bad debts
ability and intention to hold until maturity. They are stated in the
                                                                        Interest on non performing loans and advances are only
balance sheet at their amortized cost, after taking into account any
discount or premium on acquisition, less provision for impairment       recognized in the income statement upon realisation.
value. Differences between amortized cost and redemption price          Interest receivable from sub-standard, doubtful and bad loans
are prorated over the period of the securities.                         is reserved and deducted directly from the loan accounts at the
.  Loans and receivables: these are securities which are bought         year-end.
directly from the issuer with the Bank’s ability and intention to       Interests are transferred to the «unrealized interest» account for
hold for more than one year. They are stated in the balance             every loan considered by the management as doubtful in the
sheet at their amortized cost, less provision for impairment value.     short run and transferred to the «non ordinary loans» account in
Differences between amortized cost and redemption price are             accordance with the Central Bank circular N° 58.
prorated over the period of the securities.
                                                                        h) Investment in associates
f) Loans and advances to customers and related provision
                                                                        An associate is an entity over which the Group has significant
Loans and advances to customers are stated at principal together
                                                                        influence and that is neither a subsidiary nor an interest in a joint
with interest earned at the balance sheet date, and after deduction
                                                                        venture. Significant influence is the power to participate in the
of unrealized interest and provisions on sub-standard doubtful
                                                                        financial and operating policy decisions of the investee but is not
and bad debts. These provisions are reviewed periodically by the
                                                                        control or joint control over those policies.
management of the Bank, using criteria that are consistent with
                                                                        Investments in associates over which the Group has significant
those of the preceding year.
                                                                        influence are accounted for at cost and reflected on the basis
Specific provision for credit losses is determined by assessing         of the equity method of accounting in the consolidated financial
each case individually.                                                 statements.




    Annual Report 2008                                                                                                 Credit Libanais Group
                                                                                                             Group Financial Results




Dividend income is recognized when the right to receive payment      Depreciation and amortization
is established. Dividend received and gains or losses arising on     Depreciation and amortization are provided for on a straight-line
disposal of these securities are recorded in the statement of        basis over the estimated useful lives of all tangible and intangible
income under “Net gain on financial investment”.                     assets, except freehold land that is deemed to have an indefinite
                                                                     life, at the following annual rates:
i) Property and equipment
Tangible and intangible assets are stated at historical cost less
                                                                                                                    Depreciation rate
accumulated depreciation, except for certain land and buildings
                                                                        Research and development expenses                          33%
owned by the Bank which have been revalued. The net positive
                                                                        Key money                                                  10%
surplus resulting from the revaluation of assets owned by the           License and franchise                                      20%
Bank is recorded under shareholders’ equity. No interest is             Freehold land                                                   Nil
charged to the cost of non-financial fixed assets.                      Freehold buildings                                        2.5%
                                                                        Installation and improvement                               25%
Maintenance, repairs and minor alterations are charged to
                                                                        Furniture and office equipment                       9% to 15%
operating expenses as incurred.
                                                                        Computer equipment                                         20%
The carrying amount of the Bank’s fixed assets are revised at the       Power generators                                           15%
Balance Sheet date to determine whether there is any evidence of        Motor vehicles                                             13%
impairment in order to estimate the expected recoverable amount.
If the carrying amount exceeds the estimated recoverable amount,     Impairment of tangible and intangible assets
the impairment loss is then recorded in the income statement.        At each balance sheet date, the Group reviews the carrying
                                                                     amounts of its tangible and intangible assets to determine
Revaluation                                                          whether there is any indication that those assets have suffered
Using the services of an independent appraiser and in accordance     an impairment loss. If any such indication exists, the recoverable
with applicable Lebanese tax laws, the Bank proceeded in 1994        amount of the asset is estimated in order to determine the extent
to the revaluation of its premises acquired prior to the year 1993   of the impairment loss (if any).
and still carried in the balance sheet at the date of revaluation.
                                                                     Recoverable amount is the higher of fair value less costs to sell
The revaluation surplus resulting from land and building, after      and value in use. In assessing value in use, the estimated future
deduction of the related tax liability computed on the basis of      cash flows are discounted to their present value using a pre-tax
1.5% under prevailing laws, is reflected in the balance sheet        discount rate that reflects current market assessments of the time
under “Revaluation surplus (Tier two)”.                              value of money and the risks specific to the asset for which the
The Central Bank of Lebanon and the Ministry of Finance approved     estimates of future cash flows have not been adjusted.
the revalued amounts for real estate as of 31 December 1993.         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.

                                                                     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




                                                                                                                                              127
increased carrying amount does not exceed the carrying amount          risk weighted assets and off balance sheet items based on rates
that would have been determined had no impairment loss been            specified by the Central Bank of Lebanon for any unspecified
recognized for the asset (cash-generating unit) in prior years. A      risks. The consolidated ratio should not be less than 1.25% of
reversal of an impairment loss is recognized immediately in profit     these risks at the end of the tenth financial year and 2% at the
or loss, unless the relevant asset is carried at a revalued amount,    end of the twentieth financial year.
in which case the reversal of the impairment loss is treated as a      This reserve is not available for distribution, and is constituted
revaluation increase.                                                  in Lebanese Pounds and foreign currencies in proportion to the
j) Assets acquired in satisfaction of loans (unquoted assets ready     composition of the total risk weighted assets and off balance
for sale)                                                              sheet items.
Real estate property acquired through the enforcement of security      n) Related party transactions
over loans and advances to customers is measured at cost less          Disclosures on related party transactions are made by the Board
any accumulated impairment losses. The acquisition of such             of Directors to the shareholders in a separate specific report as
assets is regulated by the local banking authorities which require     required by articles 158 and 159 of the “Code of Commerce” and
the liquidation of these assets within 2 years from acquisition. In    article 152 of the “Code of Money and Credit”. These related party
case of default of liquidation the Group’s lead regulator requires     transactions are confirmed by the auditors in a separate report
an appropriation from the yearly net income to a special reserve       to the shareholders at the annual ordinary General Assembly
that is reflected under equity. This reserve cannot be distributed     Meeting.
and cannot be considered as an equity component while
calculating the ratios set according to applicable laws, regulations   Loans and deposits to related parties are disclosed separately in
and decisions.                                                         the balance sheet.

k) Staff termination indemnity                                         o) Revenue and expense recognition
The provision for staff termination indemnities is based on the        Interest income and expense are recognized on an accrual
liability that would arise if the employment of all the staff were     basis, taking into account the principal outstanding and the rate
terminated at the balance sheet date. This provision is calculated     applicable, except for non-performing loans and advances for
                                                                       which interest income is only recognized upon realization.
in accordance with the directives of the Lebanese Social
Security Fund and Labor laws based on the number of years of
                                                                       .   Interest income and expense presented in the income
                                                                       statement include:
service multiplied by the monthly average of the last 12 months
                                                                          - Interest on financial assets and liabilities at amortized cost.
remunerations and less contributions paid to the Lebanese Social          - Interest on available-for-sale investment securities.
National Fund.                                                         . Net trading income presented in the income statement includes:
l) Liabilities under financial instruments                                - Interest income and expense on the trading portfolio.
                                                                          - Dividend income on the trading equities.
Debts represented by securities (Euro-Certificates of Deposit) are        - Realized and unrealized gains and losses on the trading
stated in the balance sheet at their nominal value plus accrued              portfolio.
interest. Interest paid on these debt securities is recorded in        .  Fees and commission income are recognized as the related
the statement of income under “Interest paid on Certificates of        services are performed.
Deposit”.                                                              .  Dividend income is recognized when the right to receive
                                                                       payment is established.
m) Reserves for general banking risks
In compliance with Central Bank regulations and effective year         p) Income and deferred tax
1996, Lebanese banks should appropriate from net profit for the        Taxation is provided for in accordance with the fiscal regulations
year a minimum of 0.2% and a maximum of 0.3% from the total            of the respective countries in which the Bank and its branches




    Annual Report 2008                                                                                               Credit Libanais Group
                                                                                                               Group Financial Results




and subsidiaries operate.                                              x) Use of estimates
                                                                       The preparation of the financial statements requires management
Provision for income taxes related to the period under review is
                                                                       to make estimates and assumptions that affect the reported
shown separately in the statement of income.
                                                                       amount of financial assets and liabilities and disclosure of
Tax due on future dividend distributions to be received from the       contingent liabilities.
Group’s controlled subsidiaries, is not shown as deferred tax          These estimates and assumptions also affect the revenues
liability but will be accounted for as and when such eventual          and expenses and the resulting provisions as well as fair value
distribution take place.                                               changes reported in equity. In particular, considerable judgment
Change in the fair value of financial instruments designed as          by management is required in the estimation of the amount
available-for-sale and registered in equity are not subject to         and timing of future cash flows when determining the level of
income tax.                                                            provisions required for non-performing credit facilities as well as
q) Legal reserve                                                       for impairment provisions for unquoted investments.
According to local laws, the Bank must withhold 10% of its annual      Such estimates are necessarily based on assumptions about
net profits (after tax) as a legal reserve before any dividend         several factors involving varying degrees of judgment and
distribution. This reserve is not available for distribution.          uncertainty and actual results may differ resulting in future
                                                                       changes in such provisions.
r) Cash and cash equivalents
Cash and cash equivalents included in the statement of cash            - Critical accounting judgments in applying the Group’s accounting
flows consist of net cash and due from banks and financial             policies
institutions maturing within one year from the date of the financial   Classification of financial assets:
statements.                                                            The Group’s accounting policies provide scope for investment
s) Books and accounts                                                  securities to be designated on inception into different categories
The Bank keeps proper books and accounts according to                  in certain circumstances based on specific conditions. In
prevailing regulations.                                                classifying investment securities as held-to-maturity, the Group
                                                                       has determined that it has both the positive intent and ability to
t) Due from banks and other financial institutions
                                                                       hold these assets until their maturity as required by in accounting
These are stated at cost less any amounts written off and
                                                                       policy under note 3e. If the Group fails to keep these investments
provision for impairment where necessary.
                                                                       until maturity other than for the specific circumstances, it will
u) Deposits                                                            require reclassifying the entire category as available-for-sale that
All money market and customer deposits are carried at cost             will be measured at fair value with the corresponding cumulative
including interest, less amounts repaid.                               negative change in fair value booked in equity.
v) Fiduciary assets                                                    - Key sources of estimation uncertainty
Assets held in trust or in a fiduciary capacity are not treated        Allowances for credit losses:
as assets of the Bank and are accordingly recorded under off-          Specific impairment for credit losses is determined by assessing
balance sheet items.                                                   each case individually. This method applies to classified loans and
w) Provisions for risks and charges                                    advances and the factors taken into consideration when estimating
Provisions are recognized when the Bank has a present obligation       the allowance for credit losses include the counterparty’s credit
(legal or constructive) arising from a past event and the costs        limit, the counterparty’s ability to generate cash flows sufficient
to settle the obligation are both probable and able to be reliably     to settle his advances and the value of collateral and potential
measured.                                                              repossession.




                                                                                                                                              129
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 3e. For financial instruments that
trade 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.

Impairment of available-for-sale equity investments:
The Group determines that available-for-sale equity investments
are impaired when there has been a significant or prolonged
decline in the fair value below its cost. This determination requires
judgment. In making this judgment the Group evaluates, among
other factors, the history of the Lebanese government default
with respect to government bonds and the normal volatility in
share price.




    Annual Report 2008                                                  Credit Libanais Group
                                                                                                                    Group Financial Results



Assets
3 - Cash , Compulsory Reserves and Central Banks                                                                                            million LBP

   As at 31 December                                          2008                           2008             2007                          2007
                                                              Group                          Bank             Group                         Bank
   Cash on hand                                                          41,457                 40,903                   30,686                 30,475
   Central Bank of Lebanon                                          723,273                    642,836              648,210                    572,326
       - Demand deposits                                            245,877                    237,348                   78,557                 80,346
       - Time deposits                                              477,396                    405,488              569,653                    491,980
   Other Central Banks                                                    5,365                     5,365                45,183                 45,183
       - Demand deposits                                                  5,365                     5,365                 2,973                    2,973
       - Time Deposits                                                       ---                       ---               42,210                 42,210
   Accrued interest on time deposits                                      3,428                     3,068                 4,971                    4,521
   Total                                                            773,523                    692,172              729,050                    652,505


a- Deposits at the Central Bank of Lebanon represent partly the cash compulsory reserve computed on the following basis:
-Deposits in Lebanese Pounds: 25% of current accounts and 15% of term deposits (of which 10% are non-interest earning deposits
and amounting to LBP 207,512 at 31 December 2008, LBP 69,274 at 31 December 2007).
-Deposits in foreign currencies: 15% on all categories of customer deposits in foreign currencies.

b- Cash and Central Bank are broken down by currency as follows:
                                                                                                                                            million LBP

   As at 31 December 2008                                                   Group                                            Bank
                                                           LBP              Foreign            Total         LBP            Foreign           Total
                                                                           Currency                                        Currency
   Cash on hand                                              26,379                15,078       41,457        26,122              14,781        40,903
   Central Bank of Lebanon                                  217,043           506,230          723,273       213,448          429,388          642,836
       - Demand deposits                                    211,043                34,834      245,877       207,448              29,900       237,348
       - Time deposits                                        6,000           471,396          477,396         6,000          399,488          405,488
   Other Central Banks                                             ---              5,365           5,365          ---             5,365           5,365
       - Demand deposits                                           ---              5,365           5,365          ---             5,365           5,365
       - Time deposits                                             ---                 ---             ---         ---                ---             ---
   Accrued interest on time deposits                               60               3,368           3,428           5              3,063           3,068
   Total                                                    243,482           530,041          773,523       239,575          452,597          692,172


                                                                                                                                            million LBP

   As at 31 December 2007                                                   Group                                            Bank
                                                           LBP              Foreign            Total         LBP            Foreign           Total
                                                                           Currency                                        Currency
   Cash on hand                                              19,322                11,364       30,686        19,201              11,274        30,475
   Central Bank of Lebanon                                  163,635           484,575          648,210       163,167          409,159          572,326
       - Demand deposits                                     69,635                 8,922       78,557        69,167              11,179        80,346
       - Time deposits                                       94,000           475,653          569,653        94,000          397,980          491,980
   Other Central Banks                                             ---             45,183       45,183             ---            45,183        45,183
       - Demand deposits                                           ---              2,973           2,973          ---             2,973           2,973
       - Time deposits                                             ---             42,210       42,210             ---            42,210        42,210
   Accrued interest on time deposits                               53               4,918           4,971          53              4,468           4,521
   Total                                                    183,010           546,040          729,050       182,421          470,084          652,505




                                                                                                                                                            131
Time deposits at Central Bank of Lebanon are broken down by maturity as follows:

 As at 31 December 2008                                                 Group
                                             LBP                              Foreign Currency
        Maturity           Amount Million          Average Interest   Amount Million    Average Interest       Total Million
                               LBP                     rate %             LBP                rate %                LBP
          2009                         6,000             3.69                       94,521    0.32                      100,521
          2010                              ---                                    171,855    3.02                      171,855
          2011                              ---                                     15,076    4.01                       15,076
          2012                              ---                                    170,347    3.44                      170,347
          2013                              ---                                     19,597    4.44                       19,597
          Total                        6,000                                       471,396                              477,396



 As at 31 December 2008                                                  Bank
                                             LBP                              Foreign Currency
        Maturity           Amount Million          Average Interest   Amount Million    Average Interest       Total Million
                               LBP                     rate %             LBP                rate %                LBP
          2009                         6,000             3.69                       85,928    0.54                       91,928
          2010                              ---                                    141,705    3.47                      141,705
          2011                              ---                                     13,567    3.69                       13,567
          2012                              ---                                    143,213    3.05                      143,213
          2013                              ---                                     15,075    4.44                       15,075
          Total                        6,000                                       399,488                              405,488


Time deposits at the Central Bank of Lebanon are broken down by maturity as follows:

 As at 31 December 2007                                                 Group
                                             LBP                              Foreign Currency
        Maturity           Amount Million          Average Interest   Amount Million    Average Interest       Total Million
                               LBP                     rate %             LBP                rate %                LBP
          2008                        94,000             3.67                      122,898    4.90                      216,898
          2009                              ---           ---                       10,552    6.11                       10,552
          2010                              ---           ---                      171,855    5.78                      171,855
          2012                              ---           ---                      170,348    5.94                      170,348
          Total                       94,000                                       475,653                              569,653



 As at 31 December 2007                                                  Bank
                                             LBP                              Foreign Currency
        Maturity           Amount Million          Average Interest   Amount Million    Average Interest       Total Million
                               LBP                     rate %             LBP                rate %                LBP
          2008                        94,000             3.67                      102,510    4.96                      196,510
          2009                              ---           ---                       10,552    6.11                       10,552
          2010                              ---           ---                      141,705    5.82                      141,705
          2012                              ---           ---                      143,213    5.91                      143,213
          Total                       94,000                                       397,980                              491,980




   Annual Report 2008                                                                                      Credit Libanais Group
                                                                                                                            Group Financial Results



Time deposits at Other Central Bank are broken down by maturity as follows:                                                                million LBP

  As at 31 December                              2008                      2008                            2007                       2007
                                                 Group                     Bank                            Group                      Group
                                                         Foreign Currency                                          Foreign Currency
                                          Amount       Average     Amount         Average           Amount       Average     Amount         Average
                                                       Interest                   Interest                       Interest                   Interest
  Maturity                               Million LBP    Rate %    Million LBP      Rate %          Million LBP    Rate %    Million LBP      Rate %
  2008                                           ---      ---             ---        ---               42,210      5.23           42,210      5.23
  Total                                          ---                      ---                          42,210                     42,210



Cash and Central Bank are broken down by geographical location as follows:
                                                                                                                                           million LBP

  As at 31 December                              2008                      2008                            2007                        2007
                                                 Group                     Bank                            Group                       Bank
  Lebanon                                                767,450                   686,099                         683,389                    606,844
  Middle East                                              3,164                       3,164                           662                       662
  Europe                                                   2,909                       2,909                         44,999                    44,999
  Total                                                  773,523                   692,172                         729,050                    652,505


Accrued interest are broken down by currency as follows:
                                                                                                                                           million LBP

  As at 31 December                              2008                      2008                            2007                        2007
                                                 Group                     Bank                            Group                       Bank
  Lebanese Pound                                              60                             5                          56                        53
  US Dollar                                                3,368                       3,063                          4,915                     4,468
  Total                                                    3,428                       3,068                          4,971                     4,521



4 - Banks and financial institutions
                                                                                                                                           million LBP

  As at 31 December                                2008                         2008                         2007                      2007
                                                   Group                        Bank                         Group                     Bank
  Demand deposits (a)                                      112,345                     110,437                       119,132                  117,649
  Time deposits (b)                                        519,217                     469,535                       809,372                  778,724
      - Maturing in less than one year                     514,271                     464,589                       804,361                  773,713
      - Pledge account                                       4,946                       4,946                          5,011                   5,011
  Doubtful commercial bank account                                ---                        ---                            ---                    ---
      - Gross doubtful commercial
                                                              129                         129                               ---
        bank account                                                                                                                               ---
      - Impairment losses                                    (129)                       (129)                              ---                    ---
  Accured interest receivable                                 986                         267                          2,244                    1,868
  Total                                                    632,548                     580,239                       930,748                  898,241




                                                                                                                                                         133
a) Demand deposits are broken down by resident and non resident banks as follows:
                                                                                                                                              million LBP

 As at 31 December 2008                                   Group                                                         Bank
                                    LBP                Foreign                Total                   LBP           Foreign                Total
                                                      Currency                                                     Currency
 Resident banks                            9,032                52,206             61,238               9,031             51,786                   60,817
 Non-resident banks                           ---               51,107             51,107                   ---           49,620                   49,620
 Total                                     9,032            103,313                112,345              9,031            101,406                110,437


                                                                                                                                              million LBP

 As at 31 December 2007                                   Group                                                         Bank
                                    LBP                Foreign                Total                   LBP           Foreign                Total
                                                      Currency                                                     Currency
 Resident banks                            8,967                34,528             43,495               8,967             33,505                   42,472
 Non-resident banks                           ---               75,637             75,637                   ---           75,177                   75,177
 Total                                     8,967            110,165                119,132              8,967            108,682                117,649


b) Time deposits are broken down by resident and non resident banks and by maturity as follows:
                                                                                                                                              million LBP

 As at 31 December 2008                                             Group                                                  Bank
                                Maturity            LBP             Foreign             Total               LBP           Foreign             Total
                                                                   Currency                                              Currency
 Resident banks                    2009               5,450                1,034             6,484                ---               ---                ---
 Non-resident banks                2009                   ---            512,733         512,733                  ---          469,535          469,535
 Total                                                5,450              513,767         519,217                  ---          469,535          469,535


                                                                                                                                              million LBP

 As at 31 December 2007                                             Group                                                  Bank
                                Maturity            LBP             Foreign             Total               LBP           Foreign             Total
                                                                   Currency                                              Currency
 Resident banks                    2008               5,800                5,603             11,403               ---            2,463              2,463
 Non-resident banks                2008                   ---            797,969         797,969                  ---          776,261          776,261
 Total                                                5,800              803,572         809,372                  ---          778,724          778,724




   Annual Report 2008                                                                                                              Credit Libanais Group
                                                                                                              Group Financial Results



Time deposits are broken down by currency as follows:
                                                                                                                             million LBP

  As at 31 December 2008                                  Group                                             Bank
                                            CV/LBP                  Average %                 CV/LBP                    Average %
  Lebanese Pound                                       5,450                     7.58                       ---                        ---
  US Dollar                                          429,512                     0.91                  401,569                       0.58
  EURO                                                34,082                     2.56                   34,082                       2.56
  Canadian Dollar                                     18,161                     1.28                   18,161                       1.28
  British Pound                                       12,025                     1.37                   12,025                       1.37
  New Zealand Dollar                                    479                      5.00                     479                        5.00
  New Turkish Lira                                     1,967                    18.70                    1,967                      18.70
  Australian Dollar                                    1,252                     4.00                    1,252                       4.00
  CFA Franc BCEAO                                     16,289                     5.00                       ---                        ---
  Total                                              519,217                                           469,535


                                                                                                                             million LBP

  As at 31 December 2007                                  Group                                             Bank
                                            CV/LBP                  Average %                 CV/LBP                    Average %
  Lebanese Pound                                       5,800                     7.44                       ---                        ---
  US Dollar                                          749,546                     4.92                  724,698                       4.88
  EURO                                                26,577                     4.09                   26,577                       4.09
  Canadian Dollar                                     13,638                     4.64                   13,638                       4.64
  Bristish Pound                                      10,842                     6.05                   10,842                       6.05
  UAE Dirham                                           2,463                     2.08                    2,463                       2.08
  New Zealand Dollar                                    506                      8.40                     506                        8.40
  Total                                              809,372                                           778,724


Time deposits include an amount of LBP 4,931 as at 31 December 2008 (LBP 5,011 as at 31 December 2007) pledged in favor of
non-resident banks against the issuance of VISA Card.

Deposits with banks and financial institutions are distributed by geographical location according to the table below:
                                                                                                                             million LBP

  As at 31 December                          2008                      2008                     2007                      2007
                                             Group                     Bank                     Group                     Bank
  Lebanon                                             73,877                    60,816                   54,198                   44,936
  Other (low risk countries)                         558,671                  519,423                   876,550                  853,305
  Total                                              632,548                  580,239                   930,748                  898,241




                                                                                                                                             135
5- Trading assets
                                                                                                                                                                  million LBP

 As at 31 December                                                                     2008                    2008                  2007                      2007
                                                                                       Group                   Bank                  Group                     Bank
                                                                             Foreign Currency Foreign Currency Foreign Currency Foreign Currency
 Lebanese Treasury Bills (a)                                                                     ---                     ---                   260                       260
 Certificates of Deposits issued by Central Bank of Lebanon (b)                                  ---                     ---                   239                       239
 Equity securities - Quoted (c)                                                              2,708                    1,732                  2,913                     1,690
 Accrued interest receivable                                                                     ---                     ---                      7                        6
 Total                                                                                       2,708                    1,732                  3,419                     2,195


a) Lebanese Treasury Bills classified as For Trading (at Fair Value through Profit & Loss):

Value at maturity, cost, fair value and average interest rate for Lebanese Treasury Bills classified for trading are broken down by
maturity as follows:
                                                                                                                                                                  million LBP

 As at 31 December 2007                                             Group                                                                Bank
                                                Cost                 Profit                Fair Value               Cost                Profit               Fair Value
                                          as at 31/12/2007       till 31/12/2007         as at 31/12/2007      as at 31/12/2007      till 31/12/2007       as at 31/12/2007
 Lebanese Treasury Bills in USD                         257                        3                    260                    257                     3                 260
 Total                                                  257                        3                    260                    257                     3                 260


                                                                                                                                                           Foreign Currency

 As at 31 December 2007                                             Group                                                                Bank
                                             Value at Maturity               Average Interest Rate               Value at Maturity            Average Interest Rate
                                               Million LBP                            %                            Million LBP                         %
 Lebanese Treasury Bills in USD:
 Maturity beyond 5 years                                           244                                 10.11                          244                              10.11
 Total                                                             244                                                                244


Movement in Lebanese Treasury Bills held-for-trading in foreign currency is detailed as follows:

 As at 31 December                                                                     2008                    2008                  2007                      2007
                                                                                       Group                   Bank                  Group                     Bank
                                                                             Foreign Currency Foreign Currency Foreign Currency Foreign Currency
 Balance beginning of year                                                                      260                    260                       ---                      ---
 Acquisition                                                                                30,707                  30,707                   6,840                     6,840
 Disposal                                                                                 (26,953)                (26,953)                  (6,529)                  (6,529)
 Variation in Fair Value through Profit and Loss                                                 73                     73                     (51)                     (51)
 Deferred losses resulting from the reclassification of Lebanese
                                                                                               (177)                  (177)                      ---                      ---
 Treasury Bills from “trading” to “held-to-maturity”
 Lebanese Treasury Bills reclassified from “trading” to “held-to-maturity”                 (3,910)                 (3,910)                       ---                      ---
 Balance End of Year                                                                             ---                     ---                   260                       260




   Annual Report 2008                                                                                                                                  Credit Libanais Group
                                                                                                                                      Group Financial Results



During the current year, and in accordance with the amendments to IAS 39, the Bank has reclassified Lebanese Treasury Bills from
held-for-trading to held-to-maturity. The fair value of these Treasury Bills at the reclassification date of 31 October 2008 was LBP 3,910
and is still the same as at 31 December 2008.

b) Certificates of Deposit classified as for Trading (at Fair Value through Profit & Loss):
Value at maturity, cost, fair value and average interest rate for Certificates of Deposit classified for trading are broken down as
follows:
                                                                                                                                                             million LBP

   As at 31 December 2007                                          Group                                                             Bank
                                                 Cost              Profit                Fair Value             Cost                Profit                 Fair Value
                                            as at 31/12/2007   till 31/12/2007         as at 31/12/2007    as at 31/12/2007      till 31/12/2007         as at 31/12/2007
   Central Bank of Lebanon:
   Certificates of Deposit (USD)                         238                     1                   239                   238                     1                 239
   Total                                                 238                     1                   239                   238                     1                 239


                                                                                                                                                       Foreign Currency

   As at 31 December 2007                                          Group                                                             Bank
                                              Value at Maturity          Average Interest Rate               Value at Maturity            Average Interest Rate
                                                Million LBP                       %                            Million LBP                         %
   Central Bank of Lebanon
      - Certificates of Deposit (USD)
   Maturity between 5 and 10 years (2015)                        226                                  10                          226                                 10
   Total                                                         226                                                              226



Movement in Certificates of Deposit issued by Central Bank of Lebanon is detailed as follows:

   As at 31 December                                                                 2008                  2008                  2007                       2007
                                                                                     Group                 Bank                  Group                      Bank
                                                                         Foreign Currency Foreign Currency Foreign Currency Foreign Currency
   Balance beginning of year                                                                  239                  239                       ---                      ---
   Additions                                                                               3,389                  3,389                  5,248                     5,248
   Sales                                                                                       ---                   ---                (5,014)                  (5,014)
   Positive change in fair value (through profit and loss)                                     33                   33                        5                         5
   Deferred losses resulting from the reclassification of Certificates
                                                                                             (258)                (258)                      ---                      ---
   of Deposit from “trading” to “loan and receivables”
   Certificates of Deposit reclassified from “trading” to
                                                                                         (3,403)               (3,403)                       ---                      ---
   “loans and receivables”
   Balance End of Year                                                                         ---                   ---                   239                       239


During the current year, and in accordance with the amendments to IAS 39, the bank has reclassified Certificates of Deposits from
held-for-trading to loans and receivables. The fair value of these Certificates of Deposit at the reclassification date of 31 October 2008
was LBP 3,403. Should the Bank have not reclassified these Certificates of Deposits it would have generated profits for LBP 86 million
as at 31 December 2008 due to the increase of their market value.




                                                                                                                                                                            137
Accrued interest receivable is distributed as follows:
                                                                                                                                                    million LBP

 As at 31 December                                                                                             2007                           2007
                                                                                                               Group                          Bank
 Lebanese Treasury Bills                                                                                                       3                               2
 Certificates of Deposit issued by Central Bank of Lebanon                                                                     4                               4
 Total                                                                                                                         7                               6


c) Equity securities - Quoted
                                                                                                                                                    million LBP

                                               Cost                       Profit             Net Value           Market Value                 Net Value
                                                                      up to 31/12/2008     as at 31/12/2008      as at 31/12/2008          as at 31/12/2008
                                              Group                       Group                Group                  Group                      Bank
 Ste Rasamny Younes sal                               1,167                        (429)                 738                       738                     738
 Banque du Liban et d’Outre Mer sal                   1,029                         923                1,952                   1,952                       976
 Ste Ciment Blanc sal                                    19                          (1)                  18                        18                      18
 Total                                                2,215                         493                2,708                   2,708                     1,732


                                                                                                                                                    million LBP

                                               Cost                       Profit             Net Value           Market Value                 Net Value
                                                                      up to 31/12/2007     as at 31/12/2007      as at 31/12/2007          as at 31/12/2007
                                              Group                       Group                Group                  Group                      Bank
 Ste Rasamny Younes sal                               1,167                        (715)                 452                       452                     452
 Banque du Liban et d’Outre Mer sal                   1,029                        1,418               2,447                   2,447                     1,224
 Ste Ciment Blanc sal                                    18                          (4)                  14                        14                      14
 Total                                                2,214                         699                2,913                   2,913                     1,690


Movement in Equity securities - Quoted is detailed as follows:
                                                                                                                                                    million LBP

 As at 31 December                             2008                                2008                       2007                           2007
                                               Group                               Bank                       Group                          Bank
 Balance beginning of year                                   2,913                         1,690                       2,092                          1,223
 Disposal                                                       ---                           ---                      (119)                           (118)
 Variation in fair value through
                                                             (205)                            42                        940                             585
 profit and loss
 Balance End of Year                                         2,708                         1,732                       2,913                          1,690




    Annual Report 2008                                                                                                                   Credit Libanais Group
                                                                                                                 Group Financial Results



6 - Loans and advances to customers
                                                                                                                               million LBP

  As at 31 December                        2008                        2008                         2007                     2007
                                           Group                       Bank                         Group                    Bank
  Ordinary loans                                1,357,935                   1,176,687                       984,227                 806,767
  Loans under watch                                 71,559                     52,476                        80,496                  80,369
  Substandard loans                                 36,830                     27,500                        45,140                  35,724
  Less: unrealized interest                        (11,643)                    (9,938)                      (10,866)                 (9,241)
  Doubtful loans                                   126,811                    120,184                       125,857                 117,435
  Less: impairment allowances                      (62,751)                   (61,014)                      (56,955)                (54,655)
  Less: unrealized interest                        (41,918)                   (39,975)                      (39,758)                (37,421)
  Bad loans                                         15,650                     13,842                        15,015                  13,652
  Less: impairment allowances                       (6,617)                    (5,499)                       (6,807)                 (6,084)
  Less: unrealized interest                         (8,767)                    (8,290)                       (7,712)                 (7,507)
  Total                                         1,477,089                   1,265,973                   1,128,637                   939,039


Loans and advances to customers denominated in foreign currencies represent 70.18% of total loan portfolio as at 31 December 2008
(67.22% as at 31 December 2007), and 31.50% of total customer deposits in foreign currencies as at 31 December 2008 (24.62% as
at 31 December 2007).

The loan to deposit ratio of the Group atood at 26.05% at 31 December 2008, compared to 24.06% at 31 December 2007.

Loans and advances to customers are broken down as follows:
                                                                                                                               million LBP

  As at 31 December 2008                                                                      Group
                                                               Gross            Unrealized             Impairment            Carrying
                                                              amount             interest               allowance            amount
  Regular Retail Customers:
        - Cash collateral                                          58,941                     ---                      ---           58,941
        - Mortgage loans                                          579,435                     ---                      ---          579,435
        - Personal loans                                          191,983                     ---                      ---          191,983
        - Credit cards                                             41,123                     ---                      ---           41,123
        - Overdrafts                                               41,883                     ---                      ---           41,883
        - Other                                                     5,392                     ---                      ---            5,392
  Classified Retail Customers:
  Rescheduled                                                      14,575                     ---                      ---           14,575
  Substandard                                                      25,499                 (8,845)                      ---           16,654
  Doubtful                                                         48,421                (20,099)               (24,624)              3,698
  Bad                                                               6,490                 (3,890)                (2,558)                 42
  Regular Corporate Customers:
        - Corporate                                               437,501                     ---                      ---          437,501
  Classified Corporate Customers:
  Rescheduled                                                      56,694                     ---                      ---           56,694
  Substandard                                                      11,331                 (2,798)                      ---            8,533
  Doubtful                                                         78,390                (21,819)               (38,127)             18,444
  Bad                                                               9,160                 (4,877)                (4,059)                224
  Accrued interest receivable                                       1,967                     ---                      ---            1,967
  Total                                                         1,608,785                (62,328)               (69,368)         1,477,089




                                                                                                                                               139
Loans and advances to customers are broken down as follows:
                                                                                                                     million LBP

 As at 31 December 2008                                                     Bank
                                    Gross Amount         Unrealized Interest     Impairment Allowance    Carrying Amount
 Regular Retail Customers:
       - Cash Collateral                       54,796                      ---                     ---                  54,796
       - Mortgage loans                       437,637                      ---                     ---                 437,637
       - Personal loans                       185,455                      ---                     ---                 185,455
       - Credit cards                          40,945                      ---                     ---                  40,945
       - Overdrafts                            41,459                      ---                     ---                  41,459
       - Others                                 5,392                      ---                     ---                    5,392
 Classified Retail Customers:
 Rescheduled                                    11,327                     ---                     ---                  11,327
 Substandard                                   20,759                  (8,246)                     ---                  12,513
 Doubtful                                      47,842                 (20,055)                (24,141)                    3,646
 Bad                                            6,490                  (3,890)                 (2,558)                       42
 Regular Corporate Customers:
       - Corporate                            409,660                      ---                     ---                 409,660
 Classified Corporate Customers:
 Rescheduled                                   41,149                      ---                     ---                  41,149
 Substandard                                    6,741                  (1,692)                     ---                    5,049
 Doubtful                                      72,342                 (19,920)                (36,873)                  15,549
 Bad                                            7,352                  (4,400)                 (2,941)                       11
 Accrued interest receivable                    1,343                      ---                     ---                    1,343
 Total                                       1,390,689                (58,203)                (66,513)               1,265,973


                                                                                                                     million LBP

 As at 31 December 2007                                                    Group
                                    Gross Amount         Unrealized Interest     Impairment Allowance    Carrying Amount
 Regular Retail Customers:
       - Cash Collateral                      151,169                      ---                     ---                 151,169
       - Mortgage loans                       464,672                      ---                     ---                 464,672
       - Personal loans                        21,177                      ---                     ---                  21,177
       - Credit cards                          18,652                      ---                     ---                  18,652
 Classified Retail Customers:
 Rescheduled                                   13,307                      ---                     ---                  13,307
 Substandard                                   28,152                  (8,139)                     ---                  20,013
 Doubtful                                      51,459                 (19,409)                (21,729)                  10,321
 Bad                                            6,858                  (3,663)                 (3,144)                       51
 Regular Corporate Customers:
       - Corporate                            327,349                      ---                     ---                 327,349
 Classified Corporate Customers:
 Rescheduled                                   67,189                      ---                     ---                  67,189
 Substandard                                   16,988                  (2,727)                     ---                  14,261
 Doubtful                                      74,398                 (20,349)                (35,226)                  28,823
 Bad                                            8,157                  (4,049)                 (3,663)                      445
 Accrued interest receivable                    1,208                      ---                     ---                    1,208
 Total                                       1,250,735                (58,336)                (63,762)               1,128,637




   Annual Report 2008                                                                                     Credit Libanais Group
                                                                                                                       Group Financial Results



                                                                                                                                      million LBP

   As at 31 December 2007                                                                  Bank
                                           Gross Amount                Unrealized Interest      Impairment Allowance          Carrying Amount
  Regular Retail Customers:
          - Cash Collateral                              494,607                          ---                        ---                 494,607
          - Mortgage loans                                21,305                          ---                        ---                  21,305
  Classified Retail Customers:
  Rescheduled                                             13,307                          ---                        ---                  13,307
  Substandard                                             22,133                     (7,285)                         ---                  14,848
  Doubtful                                                44,585                    (17,512)                    (21,200)                   5,873
  Bad                                                      6,859                     (3,663)                     (3,145)                        51
  Regular Corporate Customers:
          - Corporate                                    289,918                          ---                        ---                 289,918
  Classified Corporate Customers:
  Rescheduled                                             67,063                          ---                        ---                  67,063
  Substandard                                             13,591                     (1,956)                         ---                  11,635
  Doubtful                                                72,850                    (19,909)                    (33,455)                  19,486
  Bad                                                      6,793                     (3,844)                     (2,939)                        10
  Accrued interest receivable                                936                          ---                        ---                    936
  Total                                                 1,053,947                   (54,169)                    (60,739)                 939,039


Movement of substandard loans and advances to customers with related unrealized interest:
                                                                                                                                      million LBP

  As at 31 December 2008                                    Group                                                   Bank
                                          Gross           Unrealized          Net book            Gross           Unrealized         Net book
                                                           Interest            value                               Interest           value
  Balance January 1                          45,140             (10,866)            34,274            35,724               (9,241)        26,483
  Withdrawals on loans                        2,913                     ---          2,913             1,840                   ---         1,840
  Settlements                                (8,885)                    ---         (8,885)           (7,177)                  ---       (7,177)
  Additions to unrealized interest            3,477                 (3,477)              ---           2,868               (2,868)              ---
  Write-back of unrealized interest               ---                2,699           2,699                ---               2,170          2,170
  Write-off                                   (656)                     ---          (656)             (596)                   ---         (596)
  Transfer to/from doubtful & bad loans      (5,157)                    ---         (5,157)           (5,157)                  ---       (5,157)
  Effect of exchange rates changes                (2)                    1               (1)              (2)                   1               (1)
  Balance End of Year                        36,830             (11,643)            25,187            27,500               (9,938)        17,562




                                                                                                                                                      141
                                                                                                                                              million LBP

 As at 31 December 2007                                     Group                                                    Bank
                                         Gross            Unrealized         Net book               Gross          Unrealized             Net book
                                                           Interest           value                                 Interest               value
 Balance January 1                          42,208                 (9,667)         32,541               35,120               (8,428)             26,692
 Withdrawals on loans                        9,278                     ---          9,278                6,700                    --               6,700
 Settlements                               (10,104)                    ---       (10,104)               (9,278)                  ---             (9,278)
 Additions to unrealized interest            5,516                 (5,516)                ---            4,940               (4,940)                  ---
 Write-back of unrealized interest               ---                4,315           4,315                   ---               4,125                4,125
 Transfer to/from doubtful & bad loans      (1,764)                    ---         (1,764)              (1,764)                  ---             (1,764)
 Effect of exchange rates changes                 6                     2                  8                 6                    2                    8
 Balance End of Year                        45,140                (10,866)         34,274               35,724               (9,241)             26,483



Movement of doubtful and bad with related unrealized interest and allowance for impairment:
                                                                                                                                              million LBP

 As at 31 December 2008                                                                    Group
                                             Gross                  Unrealized Interest         Allowance for Impairment          Net Book Value
 Balance January 1                                     140,872                   (47,470)                         (63,762)                       29,640
 Withdrawals on loans                                    3,174                       (24)                         (10,779)                       (7,629)
 Settlements                                           (5,741)                        11                               90                        (5,640)
 Write-off                                                  ---                       ---                           4,188                          4,188
 Additions to unrealized interest                        7,044                    (7,044)                              ---                            ---
 Write-back of unrealized interest                        398                      3,800                               29                          4,227
 Write-off                                             (2,767)                        ---                              ---                       (2,767)
 Transfer to/from Doubtful loans                         (350)                        ---                              ---                         (350)
 Transfer from collective provisions                        ---                       ---                             828                            828
 Effect of exchange rates changes                        (169)                        42                               38                           (89)
 Balance End of Year                                   142,461                   (50,685)                         (69,368)                       22,408


                                                                                                                                              million LBP

 As at 31 December 2008                                                                     Bank
                                             Gross                  Unrealized Interest         Allowance for Impairment          Net Book Value
 Balance January 1                                     131,087                   (44,928)                         (60,739)                       25,420
 Withdrawals on loans                                    3,477                        ---                         (10,728)                       (7,251)
 Settlements                                           (4,613)                        ---                              ---                       (4,613)
 Write-off                                                  ---                       ---                           4,188                          4,188
 Additions to unrealized interest                        6,638                    (6,638)                              ---                            ---
 Write-back of unrealized interest                          ---                    3,259                               ---                         3,259
 Write-off                                             (2,044)                        ---                              ---                       (2,044)
 Transfer to/from Doubtful loans                         (350)                        ---                              ---                         (350)
 Transfer from collective provisions                        ---                       ---                             728                            728
 Effect of exchange rates changes                        (169)                        42                               38                           (89)
 Balance End of Year                                   134,026                   (48,265)                         (66,513)                       19,248




    Annual Report 2008                                                                                                             Credit Libanais Group
                                                                                                                              Group Financial Results



                                                                                                                                               million LBP

   As at 31 December 2007                                                                        Group
                                                   Gross                  Unrealized Interest         Allowance for Impairment       Net Book Value
   Balance January 1                                   153,967                         (49,022)                         (60,526)                   44,419
   Withdrawals on loans                                    4,620                               ---                       (9,093)                  (4,473)
   Settlements                                         (27,088)                                ---                           ---                 (27,088)
   Write-off                                                     ---                           ---                        3,962                     3,962
   Additions to unrealized interest                        7,843                        (7,843)                             299                      299
   Write-back of unrealized interest
   to income statement                                      (28)                          9,436                           1,678                    11,086
   Write-off                                               (415)                               ---                           ---                    (415)
   Transfer between to/from
   substandard loans                                       1,567                               ---                           ---                    1,567
   Effect of exchange rates changes                         406                               (41)                           ---                     283
   Balance End of Year                                 140,872                         (47,470)                         (63,762)                   29,640


                                                                                                                                               million LBP

   As at 31 December 2007                                                                            Bank
                                                   Gross                  Unrealized Interest         Allowance for Impairment       Net Book Value
  Balance January 1                                    130,002                         (40,827)                         (55,526)                   33,649
  Withdrawals on loans                                     4,574                               ---                       (9,093)                  (4,519)
  Settlements                                          (12,351)                                ---                           ---                 (12,351)
  Write-off                                                      ---                           ---                        3,962                     3,962
  Additions to unrealized interest                         7,304                        (7,304)                              ---                       ---
  Write-back of unrealized interest                              ---                      3,244                              ---                    3,244
  Write-off                                                (415)                               ---                           ---                    (415)
  Transfer to/from substandard loans                       1,567                               ---                           ---                    1,567
  Effect of exchange rates changes                          406                               (41)                          (82)                     283
  Balance End of Year                                  131,087                         (44,928)                         (60,739)                   25,420


Details of the entity’s exposure to credit risk with respect to loans and advances to customers
                                                                                                                                                million LBP

  As at 31 December 2008                                                                        Group
                                          Gross     Allowance   Net                                    Value of collateral held
                                       loans net of     for   Exposure Pledged                 Property Equities      Debt      Other             Total
                                        unrealized Impairment
                                         interest                       funds                                      securities
  Regular Accounts                     1,357,935           ---         1,357,935   163,104     1,094,789       6,827        5,192     63,944 1,333,856
  Loans under watch                       71,559           ---           71,559      3,631           25,483       ---          ---     5,670       34,784
  Impaired:
    Substandard                           25,187           ---           25,187         ---          18,995       ---          ---      548        19,543
    Doubtful & Bad                        91,776     (69,368)            22,408         ---          25,538       ---          ---     5,167       30,705
  Total                                1,546,457     (69,368)          1,477,089   166,735     1,164,805       6,827        5,192     75,329 1,418,888




                                                                                                                                                              143
                                                                                                                     million LBP

As at 31 December 2008                                                  Bank
                            Gross     Allowance   Net                          Value of collateral held
                         loans net of     for   Exposure Pledged       Property Equities      Debt      Other        Total
                          unrealized Impairment
                           interest                       funds                            securities
Regular accounts         1,176,687        ---   1,176,687   151,050     838,269      1,263     5,192    48,278     1,044,052
Loans under watch           52,476        ---     52,476      3,631       8,907         ---       ---     3,218        15,756
Impaired:
  Substandard               17,562        ---     17,562         ---     17,313         ---       ---       548        17,861
  Doubtful & bad            85,761   (66,513)     19,248         ---     11,928         ---       ---     3,939        15,867
Total                    1,332,486   (66,513)   1,265,973   154,681     876,417      1,263     5,192    55,983     1,093,536


                                                                                                                     million LBP

As at 31 December 2007                                                  Group
                            Gross     Allowance   Net                          Value of collateral held
                         loans net of     for   Exposure Pledged       Property Equities      Debt      Other        Total
                          unrealized Impairment
                           interest                       funds                            securities
Regular accounts           984,227        ---    984,227    155,211     752,931         ---    7,239    39,452       954,833
Loans under watch           80,496        ---     80,496      3,296      73,915         ---       ---       829        78,670
Impaired:
  Substandard               34,274        ---     34,274        178      27,163         ---       ---       953        28,294
  Doubtful & bad            93,402   (63,762)     29,640         ---     50,586         ---       ---     1,739        52,325
Total                    1,192,399   (63,762)   1,128,637   159,315     904,595         ---    7,239    42,973     1,114,122


                                                                                                                     million LBP

As at 31 December 2007                                                  Bank
                            Gross     Allowance   Net                          Value of collateral held
                         loans net of     for   Exposure Pledged       Property Equities      Debt      Other        Total
                          unrealized Impairment
                           interest                       funds                            securities
Regular Accounts           806,767        ---   806,767     147,326     520,991        ---     7,239    35,417       710,973
Loans under watch           80,369        ---    80,369       3,926      55,454        ---        ---       829       60,209
Impaired:
  Substandard               26,483        ---    26,483        178       24,333        ---        ---       953       25,464
  Doubtful & bad            86,159   (60,739)    25,420          ---     36,831        ---        ---       368       37,199
Total                      999,778   (60,739)   939,039     151,430     637,609        ---     7,239    37,567       833,845




   Annual Report 2008                                                                                   Credit Libanais Group
                                                                                                                   Group Financial Results



Remaining period to maturity of loans and advances to customers
                                                                                                                                 million LBP

  As at 31 December 2008                              Group                                                     Bank
                                           LBP                     C/V of FCY                        LBP                   C/V of FCY
  Up to one year                                 215,744                      822,930                      215,616                    657,320
  1 year to 3 years                              210,183                      170,176                      210,053                    132,018
  3 years to 5 years                              14,218                       32,973                       14,206                     26,322
  5 years to 10 years                               231                        10,620                         231                      10,193
  More than 10 years                                 14                            ---                         14                          ---
                                                 440,390                     1,036,699                     440,120                    825,853
                                                     1,477,089                                                1,265,973


                                                                                                                                 million LBP

  As at 31 December 2007                              Group                                                     Bank
                                           LBP                     C/V of FCY                        LBP                   C/V of FCY
  Up to one year                                 188,396                      630,912                      187,951                    507,881
  1 year to 3 years                              174,218                       89,489                      174,088                     56,610
  3 years to 5 years                               7,316                        7,542                        7,316                       558
  5 years to 10 years                                70                        30,686                          70                       4,557
  More than 10 years                                  8                            ---                          8                          ---
                                                 370,008                      758,629                      369,433                    569,606
                                                     1,128,637                                                 939,039


Allocation by geographical location
                                                                                                                                 million LBP

  As at 31 December                                        2008                     2008                   2007                2007
                                                           Group                    Bank                   Group               Bank
  Lebanon                                                        1,457,552               1,247,060           1,117,782                928,457
  Middle East & Africa                                             11,300                  11,300                  4,278                4,278
  Europe                                                            5,616                   5,616                  3,781                3,780
  North America                                                        76                      76                    758                 758
  Other                                                               578                     578                    830                 830
  Total                                                          1,475,122               1,264,630           1,127,429                938,103


Accrued interest receivable by currency:
                                                                                                                                 million LBP

  As at 31 December                                        2008                     2008                   2007                2007
                                                           Group                    Bank                   Group               Bank
  US Dollar                                                         1,966                   1,342                  1,137                 865
  Euro                                                                  1                       1                     71                  71
  Total                                                             1,967                   1,343                  1,208                 936




                                                                                                                                                 145
7- Loans and advances to related parties                                                                                                 million LBP

 As at 31 December                            2008                          2008                        2007                     2007
                                              Group                         Bank                        Group                    Bank
 Regular Retail
 Loans according to article 152 CMC                   21,586                        19,537                       21,695                  19,596
 Regular Corporate Customers:
 Loans linked to participations
                                                         174                             9,675                     216                    6,533
 according to article 158 CC
 Doubtful Corporate Customers
 Loans linked to participations
                                                             ---                            ---                      ---                  2,318
 according to article 158 CC
 Impairment allowances                                       ---                            ---                      ---                   (754)
 Unrealized interest                                         ---                            ---                      ---                   (208)
 Total                                                21,760                        29,212                       21,911                  27,485


Details of the entity’s exposure to credit risk with respect to loans and advances to related parties:
                                                                                                                                          million LBP

 As at 31 December 2008                                                                     Group
                                         Gross     Allowance   Net                              Fair Value of collateral held
                                      loans net of     for   Exposure Pledged             Property Equities       Debt       Other        Total
                                       unrealized Impairment
                                        interest                       funds                                   securities
 Regular accounts                        21,760        ---         21,760     2,073           10,865       ---       3,084         ---      16,022
 Total                                   21,760        ---         21,760     2,073           10,865       ---       3,084         ---      16,022


                                                                                                                                          million LBP

 As at 31 December 2008                                                                     Bank
                                         Gross     Allowance   Net                              Fair Value of collateral held
                                      loans net of     for   Exposure Pledged             Property Equities       Debt       Other        Total
                                       unrealized Impairment
                                        interest                       funds                                   securities
 Regular accounts                        29,212        ---         29,212          ---            ---      ---       3,084         ---       3,084
 Total                                   29,212        ---         29,212          ---            ---      ---       3,084         ---       3,084


                                                                                                                                          million LBP

 As at 31 December 2007                                                                     Group
                                         Gross     Allowance   Net                              Fair Value of collateral held
                                      loans net of     for   Exposure Pledged             Property Equities       Debt       Other        Total
                                       unrealized Impairment
                                        interest                       funds                                   securities
 Regular accounts                        21,911        ---         21,911     1,885           10,865       ---       3,084         ---      15,834
 Total                                   21,911        ---         21,911     1,885           10,865       ---       3,084         ---      15,834




    Annual Report 2008                                                                                                       Credit Libanais Group
                                                                                                                              Group Financial Results



                                                                                                                                                 million LBP

  As at 31 December 2007                                                                       Bank
                                      Gross     Allowance   Net                                    Fair Value of collateral held
                                   loans net of     for   Exposure Pledged                   Property Equities       Debt       Other              Total
                                    unrealized Impairment
                                     interest                       funds                                         securities
  Regular accounts                     26,129           ---         26,129            ---            ---        ---       3,084           ---        3,084
  Doubtful accounts                     2,110         (754)          1,356            ---            ---        ---             ---       ---              ---
  Total                                28,239         (754)         27,485            ---            ---        ---       3,084           ---        3,084


Remaining period to maturity of loans and advances to related parties:
                                                                                                                                                million LBP

  As at 31 December 2008                                      Group                                                       Bank
                                                LBP                          C/V of FCY                        LBP                    C/V of FCY
  Up to one year                                              77                            19,633                        77                        29,135
  5 years to 10 years                                         ---                            2,050                        ---                           ---
                                                              77                            21,683                        77                        29,135
                                                              21,760                                                      29,212


                                                                                                                                                million LBP

  As at 31 December 2007                                      Group                                                       Bank
                                                LBP                          C/V of FCY                        LBP                    C/V of FCY
  Up to one year                                              81                            19,732                        81                        27,404
  5 years to 10 years                                         ---                            2,098                        ---                           ---
                                                              81                            21,830                        81                        27,404
                                                              21,911                                                      27,485


Allocation by geographical location:
                                                                                                                                                million LBP

  As at 31 December                                                  2008                       2008                  2007                2007
                                                                     Group                      Bank                  Group               Bank
  Lebanon                                                                     3,609                   11,061                  3,760                  9,334
  Middle East & Africa                                                       18,151                   18,151              18,151                    18,151
  Total                                                                      21,760                   29,212              21,911                    27,485



8 - Customers’ liability under acceptances                                                                                                      million LBP

  As at 31 December                                                  2008                       2008                  2007                2007
                                                                     Group                      Bank                  Group               Bank
  Debtors by acceptances                                                     36,168                   36,168              27,331                    27,331


These result mainly from documentary credits that the Bank has committed to settle on behlaf of its clients, against endorsement of
bills by those clients.

The potential liability under acceptances is reported as a liability in the balance sheet. The recourse against the customer in the case
of a call on these commitments is reported as an offsetting asset for the same amount.




                                                                                                                                                                 147
9- Available-for-sale investment securities                                                                             million LBP

 As at 31 December 2008                                                                 Group
                                                                  LBP              Foreign Currency             Total
 Lebanese Treasury Bills                                                255,000                 11,996                  266,996
 Corporate bonds                                                             ---                18,233                   18,233
 Quoted equity securities and preferred shares                               ---                24,340                   24,340
 Unquoted equity securities                                               4,592                  1,831                    6,423
 Accrued interest receivable                                              4,431                  1,299                    5,730
 Interest received in advance on Treasury Bills
                                                                        (1,569)                       ---               (1,569)
 issued by the Central Bank of Lebanon
 Total                                                                  262,454                 57,699                  320,153


                                                                                                                        million LBP

 As at 31 December 2008                                                                 Bank
                                                                  LBP              Foreign Currency             Total
 Lebanese Treasury Bills                                                255,000                  3,042                  258,042
 Corporate bonds                                                             ---                18,233                   18,233
 Quoted equity securities and preferred shares                               ---                10,570                   10,570
 Unquoted equity securities                                                383                   1,002                    1,385
 Accrued interest receivable                                              4,431                   306                     4,737
 Interest received in advance on Treasury Bills
                                                                        (1,569)                       ---               (1,569)
 issued by the Central Bank of Lebanon
 Total                                                                  258,245                 33,153                  291,398


                                                                                                                        million LBP

 As at 31 December 2007                                                                 Group
                                                                  LBP              Foreign Currency             Total
 Certificates of Deposits issued by the Central Bank of Lebanon              ---                 4,072                    4,072
 Lebanese Treasury Bills                                                     ---                 8,652                    8,652
 Corporate bonds                                                             ---                19,742                   19,742
 Quoted equity securities and preferred shares                               ---                18,057                   18,057
 Unquoted equity securities                                               4,592                  1,002                    5,594
 Accrued interest receivable                                                 ---                 1,532                    1,532
 Total                                                                    4,592                 53,057                   57,649


                                                                                                                        million LBP

 As at 31 December 2007                                                                 Bank
                                                                  LBP              Foreign Currency             Total
 Certificates of Deposits issued by the Central Bank of Lebanon              ---                 4,072                    4,072
 Lebanese Treasury Bills                                                     ---                 8,652                    8,652
 Corporate bonds                                                             ---                19,742                   19,742
 Quoted equity securities and preferred shares                               ---                 2,448                    2,448
 Unquoted equity securities                                                383                   1,002                    1,385
 Accrued interest receivable                                                 ---                  366                      366
 Total                                                                     383                  36,282                   36,665




    Annual Report 2008                                                                                      Credit Libanais Group
                                                                                                                                        Group Financial Results



Cerificates of Deposits classified as available-for-sale:
                                                                                                                                                            million LBP

   As at 31 December 2007                                                Group                                                       Bank
                                                    Cost             Unrealized           Fair Value              Cost          Unrealized                Fair Value
                                                                       Loss                                                       Loss
   Central Bank of Lebanon:
   Certificates of Deposits (USD)                        4,194                (122)                4,072              4,194                (122)                  4,072
   Total                                                 4,194                (122)                4,072              4,194                (122)                  4,072


Value at maturity, cost, fair value and average interest rate for Certificates of Deposits classified available-for-sale as at 31 December
2007 are detailed as follows:
                                                                                                                                                            million LBP

   As at 31 December 2007                                                Group                                                       Bank
                                               Value at          Cost        Fair Value      Interest       Value at          Cost       Fair Value          Interest
                                               Maturity                                       Rate %        Maturity                                         Rate %
   Certificates of Deposits (USD)
   Maturity between 5 & 10 years                    3,859            4,194        4,072              10           3,859         4,194             4,072             10
   Total                                            3,859            4,194        4,072                           3,859         4,194             4,072


The movement of Certificates of Deposits issued by the Central Bank of Lebanon is as follows:
                                                                                                                                                            million LBP

   As at 31 December                                                             2008                      2008                 2007                       2007
                                                                                 Group                     Bank                 Group                     Bank
                                                                              Certificates of Deposits (USD)                  Certificates of Deposits (USD)
   Balance January 1                                                                      4,072                   4,072                    801                     801
   Additions                                                                              1,937                   1,937                  6,356                    6,356
   Sales                                                                                     ---                     ---                (2,963)                 (2,963)
   Variation in fair value through shareholder’s equity                                    122                     122                   (122)                    (122)
   Deferred losses resulting from the reclassification of Certificates
                                                                                          (505)                   (505)                     ---                        ---
   of Deposit from “available-for-sale” to “loans and receivables”
   Certificates of Deposit reclassified from “available-
                                                                                      (5,626)                 (5,626)                       ---                        ---
   for-sale” to “loans and receivables”
   Balance December 31                                                                       ---                     ---                 4,072                    4,072


During the current year, and in accordance with the amendments to IAS 39, the Bank has reclassified Certificates of Deposits from
available-for-sale to loans and receivables. The fair value of these Certificates of Deposits at the reclassification date of 31 October
2008 was LBP 5,626. Should the Bank have not reclassified these Certificates of Deposits it would have generated unrealized profits
for LBP 142 million as at 31 December 2008 due to the increase of their market value.




                                                                                                                                                                             149
Lebanese Treasury Bills classified as available-for-sale (at fair value through equity):
                                                                                                                                                  million LBP

 As at 31 December 2008                                         Group                                                      Bank
                                          Cost             Unrealized           Fair Value          Cost               Unrealized              Fair Value
                                                            (losses)                                                    (losses)
 Lebanese Treasury Bills in FCY                12,046                   (50)          11,996                3,042                  ---               3,042
 Lebanese Treasury Bills in LBP               255,000                    ---        255,000           255,000                      ---             255,000
 Total                                        267,046                   (50)        266,996           258,042                      ---             258,042


                                                                                                                                                  million LBP

 As at 31 December 2007                                         Group                                                      Bank
                                          Cost             Unrealized           Fair Value          Cost               Unrealized              Fair Value
                                                            (losses)                                                    (losses)
 Lebanese Treasury Bills in FCY                 8,929               (277)              8,652                8,929               (277)                8,652
 Total                                          8,929               (277)              8,652                8,929               (277)                8,652


Value at maturity, cost, fair value and average interest rate for Lebanese Treasury Bills classified as available-for-sale are broken down
by maturity as follows:
                                                                                                                                                  million LBP

 As at 31 December 2008                                   Group                                                          Bank
                                   Value at        Cost             Fair         Average       Value at         Cost             Fair            Average
                                   Maturity                        Value        Interest %     Maturity                         Value           Interest %
 Lebanese Treasury Bills in FCY
 Maturity less than 1 year             2,981            3,042           3,042        10.25         2,981              3,042         3,042            10.25
 Maturity between 1 & 5 years          9,045            9,004           8,954         9.12            ---                ---             ---            ---
 Lebanese Treasury Bills in LBP
 Maturity less than 1 year            50,000        50,000           50,000           7.10        50,000             50,000        50,000              7.10
 Maturity between 1 & 5 years        205,000       205,000          205,000           9.08       205,000            205,000       205,000              9.08
 Total                               267,026       267,046          266,996                      257,981            258,042       258,042


                                                                                                                                                  million LBP

 As at 31 December 2007                                   Group                                                          Bank
                                   Value at        Cost             Fair         Average       Value at         Cost             Fair            Average
                                   Maturity                        Value        Interest %     Maturity                         Value           Interest %
 Lebanese Treasury Bills in FCY
 Maturity between 1 & 5 years          2,000            1,997           1,944         7.83         2,000              1,997         1,944              7.83
 Maturity between 5 & 10 years         5,600            5,462           5,306         7.81         5,600              5,462         5,306              7.81
 Maturity beyond 10 years              1,508            1,470           1,402         8.25         1,508              1,470         1,402              8.25
 Total                                 9,108            8,929           8,652                      9,108              8,929         8,652




    Annual Report 2008                                                                                                             Credit Libanais Group
                                                                                                             Group Financial Results



The movement of Lebanese Treasury Bills is as follows:
                                                                                                                            million LBP

   As at 31 December                                                  2008              2008             2007              2007
                                                                      Group             Bank             Group             Bank
                                                                       Treasury Bills in FCY              Treasury Bills in FCY
   Balance January 1                                                          8,652             8,652            1,289             1,289
   Additions                                                             207,355               80,363        16,082               16,082
   Sales                                                                (186,748)          (68,760)          (8,482)              (8,482)
   Variation in fair value through shareholder’s equity                        322                372            (237)             (237)
   Deferred losses resulting from the reclassification of Lebanese
                                                                          (1,061)              (1,061)              ---               ---
   Treasury Bills from “available-for-sale” to “held-to-maturity”
   Lebanese Treasury Bills reclassified from
                                                                         (16,524)          (16,524)                 ---               ---
   “available-for-sale” to “held-to-maturity”
   Balance December 31                                                    11,996                3,042            8,652             8,652


During the current year, and in accordance with the amendments to IAS 39, the Bank has reclassified foreign currencies Lebanese
Treasury Bills from available-for-sale to held-to-maturity. The fair value of these Lebanese Treasury Bills at the reclassification date
of 31 October 2008 was LBP 16,524. Should the Bank have not reclassified these Lebanese Treasury Bills it would have generated
unrealized profits for LBP 273 million as at 31 December 2008 due to the increase of their market value.
                                                                                                                            million LBP

   As at 31 December                                                  2008              2008             2007              2007
                                                                      Group             Bank             Group             Bank
                                                                      Lebanese Treasury Bills            Lebanese Treasury Bills
   Balance January 1                                                             ---               ---              ---               ---
   Additions                                                             255,000           255,000                  ---               ---
   Balance December 31                                                   255,000           255,000                  ---               ---


The movement of Corporate Bonds is as follows:
                                                                                                                            million LBP

   As at 31 December                                                  2008              2008             2007              2007
                                                                      Group             Bank             Group             Bank
                                                                         Corporate Bonds                    Corporate Bonds
   Balance January 1                                                      19,742               19,742            6,895             6,895
   Additions                                                              26,834               26,834        14,642               14,642
   Sales                                                                 (11,336)          (11,336)                 ---               ---
   Variation in fair value through shareholder’s equity                   (8,354)              (8,354)       (1,795)              (1,795)
   Impairment loss on Corporate Bonds available-for-sale                  (1,835)              (1,835)              ---               ---
   Deferred losses resulting from the reclassification of Corporate
                                                                          (1,344)              (1,344)              ---               ---
   Bonds from “available-for-sale” to “held-to-maturity”
   Corporate Bonds reclassified from “available-for-
                                                                          (5,474)              (5,474)              ---               ---
   sale” to “held-to-maturity”
   Balance December 31                                                    18,233               18,233        19,742               19,742


During the current year, and in accordance with the amendments to IAS 39, the Bank has reclassified Corporate Bonds from available-
for-sale to held-to-maturity. The fair value of these Corporate Bonds at the reclassification date of 31 October 2008 was LBP 5,474.
Should the Bank have not reclassified these Corporate Bonds it would have generated unrealized losses for LBP 422 million and
unrealized profits for LBP 406 million as at 31 December 2008 due to the increase/(decrease) of their market value. (Net unrealized
losses LBP 16 million)



                                                                                                                                            151
The movement of quoted equity securities and preferred shares is as follows
                                                                                                                                                     million LBP

 As at 31 December                                                     2008                       2008              2007                           2007
                                                                       Group                      Bank              Group                          Bank
                                                                                  Quoted                                           Quoted
 Balance January 1                                                            18,057                     2,448                  15,968                      360
 Additions                                                                    20,246                 11,674                      2,926                     2,925
 Sales                                                                       (11,522)                (3,174)                     (987)                     (987)
 Variation in fair value through shareholder’s equity                         (2,441)                    (378)                    150                       150
 Balance December 31                                                          24,340                 10,570                     18,057                     2,448



Corporate Bonds - available-for-sale are detailed as follows:
                                                                                                                                                     million LBP

 As at 31 December                                                          2008                                                              2007
                                           Cost         Unrealized Impairment Market                 Net           Net               Net              Net
                                                         Losses      Losses      Value              Value         Value             Value            Value
                                          Group          Group       Group         Group            Group         Bank              Group            Bank
 Bonds - available-for-sale
 Maturity 2009
 Emirates Bank                                    ---          ---        ---               ---             ---           ---              745              745
 Maturity 2046
 General Electric                             2,220          (637)        ---            1,583           1,583      1,583                 2,126            2,126
 Maturity 2048
 Lloyds                                       2,097          (762)        ---            1,335           1,335      1,335                    ---              ---
 JP Morgan                                    1,921          (106)        ---            1,815           1,815      1,815                    ---              ---
 Maturity 2049
 RBS Capital Trust                            1,491          (963)        ---             528              528       528                  1,387            1,387
 Credit Agricole Preferred                      767          (386)        ---             381              381       381                   723              723
 NBP Capital Trust                              771          (470)        ---             301              301       301                   708              708
 Caisse Epargne                                 755          (340)        ---             415              415       415                   686              686
 HSHN                                           786          (545)        ---             241              241       241                   701              701
 HBOS                                         1,529          (866)        ---             663              663       663                  1,349            1,349
 Subordinated Bonds - Available-
 for-sale
 Maturity 2017
 Mashrek                                          ---          ---        ---               ---             ---           ---             1,425            1,425
 Maturity 2049
 Allianz                                      3,015          (762)        ---            2,253           2,253      2,253                    ---              ---
 AXA                                          1,518          (433)        ---            1,085           1,085      1,085                 1,455            1,455
 Credit Suisse                                1,504          (298)        ---            1,206           1,206      1,206                    ---              ---
 Prudential PLC                               1,499          (821)        ---             678              678       678                  1,312            1,312
 BNPP Paribas                                 1,514          (323)        ---            1,191           1,191      1,191                 1,402            1,402
 Sewidsh Export Credit                          709          (257)        ---             452              452       452                   663              663
 Wash Mutual                                  1,536            ---    (1,536)               ---             ---           ---             1,010            1,010
 Credit Agricole                              4,070          (977)        ---            3,093           3,093      3,093                 4,050            4,050
 Kaupthing Bank                                 300            ---      (300)               ---             ---           ---                ---              ---
 Natixis                                      2,111        (1,098)        ---            1,013           1,013      1,013                    ---              ---
 Total                                      30,113        (10,044)    (1,836)           18,233       18,233        18,233                19,742           19,742




    Annual Report 2008                                                                                                                   Credit Libanais Group
                                                                                                                   Group Financial Results



Quoted equity securities available-for-sale are detailed as follows:
                                                                                                                                     million LBP

  As at 31 December                                                             2008                                            2007
                                                    Cost         Unrealized    Market       Net           Net           Net             Net
                                                                    Profit
                                                                  (Losses)     Value       Value         Value         Value           Value
                                                    Group          Group       Group       Group         Bank          Group           Bank
  Equity securities and preferred shares
  available-for-sale - Quoted
  Solidère sal GDR                                    1,494           (400)       1,094      1,094         1,094          1,717           1,717
  Solidère sal (Shares B)                             1,135           (540)        595        595           595             496            496
  Solidère sal (Shares A)                             1,591           (805)        786        786           786                ---             ---
  Byblos Bank (c)                                          33          (16)         17         17               17           23               23
  Byblos Bank (p)                                          ---           ---         ---           ---           ---         40               40
  Banque Audi sal GDR                                  502            (236)        266        266           266             172            172
  Banque du Liban et d’Outre Mer sal                  2,739             38        2,777      2,777               ---      2,739                ---
  Bank of Beirut sal                                  3,015             15        3,030      3,030               ---      9,855                ---
  BBAC sal                                            3,015              ---      3,015      3,015               ---      3,015                ---
  Fransabank sal                                      3,015              ---      3,015      3,015               ---           ---             ---
  Foris Hybris                                        4,050         (2,117)       1,933      1,933               ---           ---             ---
  Mastercard                                           144             526         670        670           670                ---             ---
  VISA International                                  5,824           1,318       7,142      7,142         7,142               ---             ---
  Total                                              26,557         (2,217)      24,340     24,340        10,570         18,057           2,448


                                                                                                                                     million LBP

  As at 31 December                                                             2008                                            2007
                                                    Cost         Unrealized    Market       Net           Net           Net             Net
                                                                  (Losses)     Value       Value         Value         Value           Value
                                                    Group          Group       Group       Group         Bank          Group           Bank
  Equity securities available-for-sale - Unquoted
  Arab Financial Services Co. (Bahrain)                256               ---       256        256           256             256            256
  Arab Trade Financing Program                         745               ---       745        745           745             745            745
  Ste. Des Grands Hôtels du Liban sal                 1,270              ---      1,270      1,270               ---      1,270                ---
  Idarat Investment Holding sal                        766            (650)        116         116               ---        116                ---
  Ste. Al-Aamal sal                                        75            ---        75         75                ---         75                ---
  Ste. Des Contructions Immobilières sal               112             (82)         30         30                ---         30                ---
  Banque de l’habitat sal                             1,303              ---      1,303      1,303               ---      1,303                ---
  Sté Financière du Liban sal                          157               ---       157        157                ---        157                ---
  Kafalat sal                                          200               ---       200        200                ---        200                ---
  Capital Finance Company sal                          426               ---       426        426                ---        426                ---
  Ste Berytek scal                                         75            ---        75         75                ---         75                ---
  Terrascapa Club sal                                  543               ---       543        543                ---        543                ---
  Ste Oum El Rabb sarl                                 213               ---       213        213           213             213            213
  Ste Foncière Dreijat sarl                            168               ---       168        168           168             168            168
  Berytek Fund sal                                     754               ---       754        754                ---           ---             ---
  Building Bloc Equity Fund                                76            ---        76         76                ---           ---             ---
  Older investments                                        16            ---        16         16                 3          17                 3
  Total                                               7,155           (732)       6,423      6,423         1,385          5,594           1,385




                                                                                                                                                     153
Accrued interest receivable on available-for-sale investement is broken down as follows:
                                                                                                                                  million LBP

 As at 31 December                                             2008                   2008            2007                    2007
                                                               Group                  Bank            Group                   Bank
 Lebanese Treasury Bills                                                 4,753               4,503             120                       120
 Certificates of Deposits issued by Central Bank of Lebanon                 ---                 ---             70                        70
 Corporate Bonds                                                          234                  234             176                       176
 Quoted equity securities and preferred shares                            743                   ---           1,166                       ---
 Total                                                                   5,730               4,737            1,532                      366



Allocation by geographical location of available-for-sale investments:
                                                                                                                                  million LBP

 As at 31 December                                             2008                   2008            2007                    2007
                                                               Group                  Bank            Group                   Bank
 Lebanon                                                           290,823               264,116            34,680                   15,745
 Middle East and Africa                                                  1,002               1,002            3,196                   3,196
 Europe                                                               23,121              21,073            13,790                   11,741
 North America                                                           5,207               5,207            5,983                   5,983
 Total                                                             320,153               291,398            57,649                   36,665



10- Loans and receivables investment securities                                                                                   million LBP

 As at 31 December 2008                                                     Group                                 Bank
                                                                LBP                  C/V FCY          LBP                    C/V FCY
 Certificates of Deposits issued by Central Bank of Lebanon           55,613             524,061            55,613                  524,061
 Subordinated loans                                                         ---              1,082               ---                      ---
 Accrued interest receivable                                             1,593               7,228            1,593                   7,228
                                                                      57,206             532,371            57,206                  531,289
                                                                           589,577                              588,495


                                                                                                                                  million LBP

 As at 31 December 2007                                                     Group                                 Bank
                                                                LBP                  C/V FCY          LBP                    C/V FCY
 Certificates of Deposit issued by Central Bank of Lebanon            55,344             479,383            24,796                  476,364
 Subordinated loans                                                         ---              1,082               ---                      ---
 Accrued interest receivable                                             1,541               5,693             694                    5,639
                                                                      56,885             486,158            25,490                  482,003
                                                                           543,043                              507,493




    Annual Report 2008                                                                                                 Credit Libanais Group
                                                                                                              Group Financial Results



Certificates of Deposits classified as “Loans & receivables” (at amortized cost):
                                                                                                                              million LBP

  As at 31 December 2008                                                   Group                                    Bank
                                                            Amortized Cost          Fair Value        Amortized Cost       Fair Value
  Certificates of Deposits (USD)                                      524,061             529,649             524,061            529,649
  Certificates of Deposits (LBP)                                       55,613              55,613              55,613               55,613
  Total                                                               579,674             585,262             579,674            585,262


                                                                                                                              million LBP

  As at 31 December 2007                                                   Group                                    Bank
                                                            Amortized Cost          Fair Value        Amortized Cost       Fair Value
  Certificates of Deposits (USD)                                      479,383             493,875             476,364            490,695
  Certificates of Deposits (LBP)                                       55,344              55,344              24,796               24,796
  Total                                                               534,727             549,219             501,160            515,491



Value at maturity, amortized cost and average interest rate for Certificates of Deposits classified as “Loans & receivables” are broken
down by maturity as follows:
                                                                                                                              million LBP

  As at 31 December 2008                                 Group                                               Bank
                                        Value at       Amortized        Average          Value at          Amortized        Average
                                        Maturity         Cost          Interest %        Maturity            Cost          Interest %
  Certificates of Deposits (USD)            526,515         524,061                              526,515       524,061
  Maturity between 1 year and 5 years       317,621         317,621        8.78                  317,621       317,621        8.78
  Maturity between 5 and 10 years           208,894         206,440         10                   208,894       206,440         10
  Certificates of Deposits (LBP)             56,000          55,613                               56,000        55,613
  Maturity between 1 year and 5 years        56,000          55,613        11.3                   56,000        55,613        11.3
  Total                                     582,515         579,674                              582,515       579,674


                                                                                                                              million LBP

  As at 31 December 2007                                 Group                                               Bank
                                        Value at       Amortized        Average          Value at          Amortized        Average
                                        Maturity         Cost          Interest %        Maturity            Cost          Interest %
  Certificates of Deposits (USD)            482,724         479,383                              479,708       476,364
  Maturity between 1 year and 5 years       279,934         279,934        8.75                  279,934       279,934        8.75
  Maturity between 5 and 10 years           202,790         199,449         10                   199,774       196,430         10
  Certificates of Deposits (LBP)             56,000          55,344                               25,000        24,796
  Maturity between 1 year and 5 years        56,000          55,344        11.3                   25,000        24,796        11.3
  Total                                     538,724         534,727                              504,708       501,160




                                                                                                                                             155
Certificates of Deposits in USD issued by the Central Bank of Lebanon classified as “Loans and receivables” are broken down as
follows:
                                                                                                                        million LBP

 As at 31 December 2008                       Group                                             Bank
                          Maturity Date   Amortized Cost Average Interest % Maturity Date   Amortized Cost Average Interest %
                              2009                 46,060       7.5             2009                46,060             7.5
                              2012                233,874        9              2012               233,874              9
                              2013                 37,687        9              2013                37,687              9
                              2015                206,440        10             2015               206,440              10
                                                  524,061                                          524,061


                                                                                                                        million LBP

 As at 31 December 2007                       Group                                             Bank
                          Maturity Date   Amortized Cost Average Interest % Maturity Date   Amortized Cost Average Interest %
                              2009                 46,060       7.5             2009                46,060             7.5
                              2012                233,874        9              2012               233,874              9
                              2015                199,449        10             2015               196,430              10
                                                  479,383                                          476,364



Certificates of Deposits in LBP issued by the Central Bank of Lebanon classified as “Loans and receivables” are broken down as
follows:
                                                                                                                        million LBP

 As at 31 December 2008                       Group                                             Bank
                          Maturity Date   Amortized Cost Average Interest % Maturity Date   Amortized Cost Average Interest %
                              2010                 55,613       11.3            2010                55,613             11.3
                                                   55,613                                           55,613


                                                                                                                        million LBP

 As at 31 December 2007                       Group                                             Bank
                          Maturity Date   Amortized Cost Average Interest % Maturity Date   Amortized Cost Average Interest %
                              2010                 55,344       11.3            2010                24,796             11.3
                                                   55,344                                           24,796




    Annual Report 2008                                                                                       Credit Libanais Group
                                                                                                                                  Group Financial Results



Movement in Certificates of Deposits in USD issued by the Central Bank of Lebanon is detailed as follows:
                                                                                                                                                    million LBP

  As at 31 December                                                         2008                        2008                  2007                  2007
                                                                            Group                       Bank                  Group                 Bank
  Balance beginning of year                                                        479,383                476,364                474,190               471,171
  Acquisition                                                                       37,688                 37,688                233,873               233,873
  Disposal                                                                          (3,019)                       ---                   ---                   ---
  SWAP’s                                                                                ---                       ---           (228,894)            (228,894)
  Certificates of Deposits reclassified from “available-for-
                                                                                     5,683                     5,683                    ---                   ---
  sale” to “loans and receivables”
  Certificates of Deposits reclassified from “trading” to “loans
                                                                                     3,437                     3,437                    ---                   ---
  and receivables”
  Variation in amortized preniums                                                      889                      889                   214                    214
  Balance End of Year                                                              524,061                524,061                479,383               476,364



Movement in Certificates of Deposits in LBP issued by the Central Bank is detailed as follows:
                                                                                                                                                    million LBP

  As at 31 December                                                         2008                        2008                  2007                  2007
                                                                            Group                       Bank                  Group                 Bank
  Balance beginning of year                                                         55,344                 24,796                 92,541                85,680
  Acquisition                                                                       31,000                 31,000                 45,000                      ---
  Disposal                                                                         (30,548)                       ---            (51,000)             (45,000)
  SWAP’s                                                                                ---                       ---            (32,000)             (17,000)
  Variation in amortized preniums                                                    (183)                     (183)                  803                  1,116
  Balance End of Year                                                               55,613                 55,613                 55,344                24,796



11- Held-to-maturity investment securities                                                                                                          million LBP

  As at 31 December 2008                                            Group                                                        Bank
                                                LBP                C/V of FCY            Total                  LBP            C/V of FCY            Total
                                                 1,766,591             786,705            2,553,296             1,384,597             748,024        2,132,621
  Treasury Bills                                 1,724,543             773,238            2,497,781             1,350,399             735,063        2,085,462
  Accrued interest receivable                       43,258              13,467                56,725                35,408             12,961           48,369
  Interest received in advance                      (1,210)                  ---              (1,210)              (1,210)                    ---       (1,210)
                                                         ---            32,758                32,758                    ---                   ---             ---
  Certificates of Deposits issued by banks               ---            32,392                32,392                    ---                   ---             ---
  Accrued interest receivable                            ---                366                  366                    ---                   ---             ---
                                                         ---            29,108                29,108                    ---            13,046           13,046
  Corporate Bonds                                        ---            28,896                28,896                    ---            12,852           12,852
  Accrued interest receivable                            ---                212                  212                    ---               194                194
  Total                                          1,766,591             848,571            2,615,162             1,384,597             761,070        2,145,667




                                                                                                                                                                    157
                                                                                                                                                   million LBP

As at 31 December 2007                                       Group                                                         Bank
                                            LBP            C/V of FCY             Total              LBP                 C/V of FCY             Total
                                            1,241,395             716,902         1,958,297               825,708               682,400            1,508,108
Treasury Bills                              1,213,654             704,465         1,918,119               807,607               670,575            1,478,182
Accrued interest receivable                   27,741               12,437            40,178                18,101                 11,825              29,926
                                                  ---              32,765            32,765                     ---                  ---                  ---
Certificates of Deposits issued by banks          ---              32,393            32,393                     ---                  ---                  ---
Accrued interest receivable                       ---                372                  372                   ---                  ---                  ---
                                                  ---              24,967            24,967                     ---               6,093                6,093
Corporate Bonds                                   ---              24,861            24,861                     ---               6,020                6,020
Accrued interest receivable                       ---                106                  106                   ---                  73                  73
Interest received in advance on T-Bills           ---                (23)                 (23)                  ---                 (23)                (23)
Total                                       1,241,395             774,611         2,016,006               825,708               688,470            1,514,178



Lebanese Treasury Bills held-to-maturity (at amortized cost) are broken down as follows:
                                                                                                                                                   million LBP

 As at 31 December 2008                                                                    Group
                                           Amortized        Interest Received Accrued Interest                          Fair                  Total
                                             Cost              in Advance       Receivable                             Value
 Lebanese Treasury Bills (LBP)              1,724,543                 (1,210)                    43,258               1,724,543                    1,766,591
 Lebanese Treasury Bills (USD & EURO)        773,238                        ---                  13,467                 740,443                     786,705
 Total                                      2,497,781                 (1,210)                    56,725               2,464,986                    2,553,296


                                                                                                                                                   million LBP

 As at 31 December 2008                                                                     Bank
                                           Amortized        Interest Received Accrued Interest                          Fair                  Total
                                             Cost              in Advance       Receivable                             Value
 Lebanese Treasury Bills (LBP)              1,350,399                 (1,210)                    35,408               1,350,399                    1,384,597
 Lebanese Treasury Bills (USD & EURO)        735,063                        ---                  12,961                 703,321                     748,024
 Total                                      2,085,462                 (1,210)                    48,369               2,053,720                    2,132,621


                                                                                                                                                   million LBP

 As at 31 December 2007                                                                    Group
                                            Amortized                Accrued Interest                     Fair Value                       Total
                                              Cost                     Receivable
 Lebanese Treasury Bills (LBP)                      1,213,654                        27,764                       1,213,654                        1,241,418
 Lebanese Treasury Bills (USD & EURO)                   702,958                      12,375                           681,618                       715,333
 Foreign Treasury Bills                                   1,507                            16                           1,491                         1,523
 Total                                              1,918,119                        40,155                       1,896,763                        1,958,274




    Annual Report 2008                                                                                                                Credit Libanais Group
                                                                                                                       Group Financial Results



                                                                                                                                        million LBP

  As at 31 December 2007                                                                    Bank
                                            Amortized                  Accrued Interest              Fair Value                     Total
                                              Cost                       Receivable
  Lebanese Treasury Bills (LBP)                         807,607                         18,101                  807,607                      825,708
  Lebanese Treasury Bills (USD & EURO)                  669,068                         11,809                  648,520                      680,877
  Foreign Treasury Bills                                  1,507                            16                     1,491                         1,523
  Total                                                1,478,182                        29,926                 1,457,618                    1,508,108


Value at maturity, amortized cost and average interest rate for Treasury Bills classified as held-to-maturity are broken down by maturity
as follows:                                                                                                                  million LBP

  As at 31 December 2008                                     Group                                                   Bank
                                         Value at          Amortized         Interest Rate       Value at         Amortized         Interest Rate
                                         Maturity            Cost                  %             Maturity           Cost                  %
  Lebanese Treasury Bills (LBP)            1,725,547          1,724,543                            1,350,924         1,350,399
  Maturity less than 1 year                 237,543                237,446       9.55                237,543           237,446          9.55
  Maturity between 1 and 5 years           1,488,004          1,487,097          9.00              1,113,381          1,112,953         9.32
  Lebanese Treasury Bills (USD)             727,019                732,992                           689,261           694,817
  Maturity less than 1 year                  91,958                 91,191       8.05                 91,958               91,191       8.05
  Maturity between 1 and 5 years            415,691                417,338       7.85                383,280           384,510          7.85
  Maturity between 5 and 10 years           104,497                109,675       10.11                99,905           105,084          10.11
  Maturity beyond 10 years                  114,873                114,788       8.25                114,118           114,032          8.25
  Lebanese Treasury Bills (EURO)             40,246                 40,246                            40,246               40,246
  Maturity between 1 and 5 years             40,246                 40,246       5.88                 40,246               40,246       5.88
  Total                                    2,492,812          2,497,781                            2,080,431         2,085,462


                                                                                                                                        million LBP

  As at 31 December 2007                                     Group                                                   Bank
                                         Value at          Amortized         Interest Rate       Value at         Amortized         Interest Rate
                                         Maturity            Cost                  %             Maturity           Cost                  %
  Lebanese Treasury Bills (LBP)            1,215,608          1,213,654                              808,491           807,607
  Maturity between 1 year and 5 years      1,215,608          1,213,654          9.49                808,491           807,607          9.49
  Lebanese Treasury Bills (USD)             654,959                661,287                           621,024           627,397
  Maturity between 1 and 5 years            447,356                447,960       7.82                417,890           418,036          7.82
  Maturity between 5 and 10 years            94,296                100,739       10.16                90,527               96,773       10.16
  Maturity beyond 10 years                  113,307                112,588       8.25                112,607           112,588          8.25
  Lebanese Treasury Bills (EURO)             41,671                 41,671                            41,671               41,671
  Maturity between 1 and 5 years             41,671                 41,671       5.88                 41,671               41,671       5.87
  Foriegn Treasury Bills (USD)                1,507                  1,507                             1,507                1,507
  Maturity between 1 and 5 years              1,507                  1,507       2.25                  1,507                1,507       2.25
  Total                                    1,913,745          1,918,119                            1,472,693          1,478,182




                                                                                                                                                        159
Movement of Lebanese Treasury Bills held-to-maturity denominated in Lebanese pound:
                                                                                                                                                              million LBP

 As at 31 December                                                                         2008                                         2007
                                                                                   Lebanese Treasury Bills                      Lebanese Treasury Bills
                                                                                   Group            Bank                        Group             Bank
 Balance January 1                                                                      1,213,654             807,607              1,173,691                    742,328
 Additions                                                                               966,900              837,400                289,396                    283,307
 SWAP’s                                                                                       ---                  ---                15,095                          ---
 Redemption                                                                             (456,962)            (294,967)              (265,923)                 (218,523)
 Variation in amortized preniums                                                             951                  359                  1,395                         495
 Balance December 31                                                                    1,724,543            1,350,399             1,213,654                    807,607



Movement of Lebanese Treasury Bills held-to-maturity denominated in foreign currency:
                                                                                                                                                              million LBP

 As at 31 December                                                                         2008                                         2007
                                                                                   Lebanese Treasury Bills                      Lebanese Treasury Bills
                                                                                   Group            Bank                        Group             Bank
 Balance January 1                                                                       702,958              669,068                722,002                    687,850
 Additions                                                                                69,395               60,300                 15,075                     15,075
 Redemption                                                                               (4,666)                  ---               (37,235)                  (37,235)
 SWAP’s                                                                                  (13,568)             (13,568)                      ---                       ---
 Effect of exchange rates changes                                                         (1,425)              (1,425)                 4,327                      4,327
 Variation in amortized premiums                                                            (961)                (817)                (1,211)                      (949)
 Treasury Bills reclassified from “available-for-sale” to “held-to-maturity”              17,555               17,555                       ---                       ---
 Treasury Bills reclassified from “trading” to “held-to-maturity”                          3,950                3,950                       ---                       ---
 Balance December 31                                                                     773,238              735,063                702,958                    669,068



Movement of foreign Treasury Bills held to maturity:
                                                                                                                                                              million LBP

 As at 31 December                                                                          2008                                         2007
                                                                                    Foreign Treasury Bills                       Foreign Treasury Bills
                                                                                   Group             Bank                        Group             Bank
 Balance January 1                                                                         1,507                1,507                  1,507                      1,507
 Redemption                                                                               (1,507)              (1,507)                      ---                       ---
 Balance December 31                                                                          ---                  ---                 1,507                      1,507



Certificates of Deposits issued by banks and Corporate Bonds classified as held-to-maturity (at amortized cost):
                                                                                                                                                              million LBP

 As at 31 December 2008                                                   Group                                                      Bank
                                                 Amortized         Accrued Interest            Fair          Amortized         Accrued Interest             Fair
                                                   Cost              Receivable               Value            Cost              Receivable                Value
 Certificates of Deposits issued by banks                32,392                   366               28,453               ---                 ---                      ---
 Corporate Bonds                                         28,896                   212               25,347          12,852                  194                  10,805
 Total                                                   61,288                   578               53,800          12,852                  194                  10,805




    Annual Report 2008                                                                                                                             Credit Libanais Group
                                                                                                                            Group Financial Results



                                                                                                                                                million LBP

   As at 31 December 2007                                         Group                                                    Bank
                                              Amortized     Accrued Interest        Fair          Amortized         Accrued Interest             Fair
                                                Cost          Receivable           Value            Cost              Receivable                Value
   Certificates of Deposits issued by banks        32,393                 372         28,615                 ---                  ---                     ---
   Corporate Bonds                                 24,861                 106         24,609              6,020                   73               10,804
   Total                                           57,254                 478         53,224              6,020                   73               10,804



Certificates of Deposit are detailed as follows:
                                                                                                                                                million LBP

   As at 31 December                                                                       2008                                                   2007
                                                          Interest     Cost        Deferred Accrued                Market          Net             Net
                                                           Rate %                  Premium     Interest            Value          Value           Value
                                                          Group       Group         Group         Group            Group          Group          Group
   Certificates of Deposits - Held-to-maturity
   Maturity 2010
   Audi Investment Bank sal                                  10.75         3,090             4         49             3,183             3,143        3,145
   Bank Med sal                                              7.63          5,789           (20)       189             5,716             5,958        5,954
   Maturity 2012
   Bank Med sal                                              7.63         20,475            37         73            19,554        20,585           20,593
   Maturity 2015
   Central Bank of Lebanon                                   10.00         3,015             2         55             3,080             3,072        3,073
   Total                                                                  32,369            23        366            31,533        32,758           32,765



Movement of Certificates of Deposits issued by banks classified as held-to-maturity:
                                                                                                                                                million LBP

   As at 31 December                                                                                               Certificates of Deposits
                                                                                                           2008                            2007
                                                                                                           Group                           Group
   Balance January 1                                                                                                   32,393                       59,534
   Redemption                                                                                                               ---                   (27,134)
   Variation in amortized premiums                                                                                          (1)                         (7)
   Balance December 31                                                                                                 32,392                       32,393




                                                                                                                                                                161
                                                                                                                                                   million LBP

 As at 31 December                                                        2008                                                              2007
                                         Interest   Cost          Deferred     Market             Net           Net                Net              Net
                                                                 Premium &
                                          Rate %                   Other       Value             Value         Value              Value            Value
                                         Group      Group          Group       Group             Group         Bank              Group             Bank
 Corporate Bonds - Held-to-maturity
 Maturity 2008
 Prime ABCP Cond                          7.88        1,507              ---             950       1,507               ---               761               ---
 Maturity 2009
 General Electric Cap Corporation         3.75         750                3              749         753          753                    753             753
 Household Finance Corporation            4.13        1,504               3             1,483      1,507         1,507                  1,506         1,506
 Emirates Bank                            4.07         746                6              716         752          752                      ---             ---
 Maturity 2010
 Morgan Stanley                           4.00        3,004               8             2,858      3,012         3,012                  3,010         3,010
 Soudan Soukouk Al Salam                  9.00         969               ---             974         969               ---              1,504              ---
 Ste Dar International Soukouk Limited     ---             ---           ---               ---           ---           ---              3,015              ---
 Maturity 2012
 Byblos Bank sal                          9.00       13,568              ---           13,568     13,568               ---             13,561              ---
 Maturity 2013
 VIP                                      8.38         296               ---             195         296          296                      ---             ---
 Merrill Lynch                            6.15         731                1              720         732          732                      ---             ---
 Sberbank                                 6.47        2,252              ---            1,707      2,252         2,252                     ---             ---
 Maturity 2014
 General Motors Accept. Corporation       6.75         749                1              256         750          750                    751             751
 Maturity 2015
 Morgan Stanley                           6.00        1,467               1             1,291      1,468         1,468                     ---             ---
 Maturity 2017
 Mashrek Bank                             4.17        1,327               3              829       1,330         1,330                     ---             ---
 Total                                               28,870             26             26,296     28,896        12,852                 24,861         6,020



Movement of Corporate Bonds held-to-maturity denominated in foreign currency:                                                                      million LBP

 As at 31 December                                                           2008                                       2007
                                                                        Corporate Bonds                            Corporate Bonds
                                                                     Group           Bank                        Group           Bank
 Balance January 1                                                         24,861                  6,020                     21,845                   7,523
 Addition                                                                      1,507
 Sales                                                                     (3,015)                    ---                     5,273                        ---
 Redemption                                                                (1,289)                    ---                     (754)                        ---
 Corporate bonds reclassified from “available-
                                                                               7,085               7,085                         ---                       ---
 for-sale” to “held-to-maturity
 Variation in amortized premiums                                               (253)               (253)                 (1,503)                     (1,503)
 Balance December 31                                                       28,896                 12,852                     24,861                   6,020




    Annual Report 2008                                                                                                                 Credit Libanais Group
                                                                                                                               Group Financial Results



12- Investments in associates                                                                                                                        million LBP

  As at 31 December                                                          2008                         2008            2007                       2007
                                                                             Group                        Bank            Group                      Bank
  Investment in associates                                                                ---                53,739                  ---                 43,026
  Investment in associates carried under the equity method                             7,592                       ---             6,117                        ---
  Total                                                                                7,592                 53,739                6,117                 43,026



Investments in associates carried under the equity method are detailed as follows as:
                                                                                                                                                     million LBP

                 Name                                             2008                                                        2007
                                          Country of           Interest                  Total              Country of     Interest                  Total
                                        Incorporation           Held %                                    Incorporation     Held %
  Agence Générale de Courtage
                                           Lebanon                25.86                          3,717       Lebanon        25.86                            2,535
  d’Assurance sal
  Credit Card Management sal               Lebanon                28.96                          2,319       Lebanon        28.96                            2,193
  International Payment Network sal        Lebanon                23.40                          1,248       Lebanon        23.40                            1,092
  Net Commerce sal                         Lebanon                19.10                            193       Lebanon        19.10                             181
  Hermes Rent a Car sal                    Lebanon                27.48                            105       Lebanon        29.48                             106
  Liberty Executive Center sal             Lebanon                    6.27                          10       Lebanon         6.27                              10
  Total                                                                                          7,592                                                       6,117


13- Property and equipment                                                                                                                           million LBP

                                                     Freehold Installation Furniture  Motor     Power    Advances                                      Total
                                                      Land &      & Im-    & Office  Vehicles Generators on Capital
                                                                                                            Ex-
                                                     Buildings provement Equipment                       penditures
  Gross amount
  Balance January 1, 2007                                71,253              25,218             29,686           1,125     925              2,598       130,805
  Additions/Transfers                                        9,526            1,819              3,859            154      251              3,801        19,410
  Disposals/Transfers                                           ---              (3)             (860)            (46)       ---           (2,632)       (3,541)
  Balance December 31, 2007                              80,779              27,034             32,685           1,233    1,176             3,767       146,674
  Additions/Transfers                                        1,929            2,412              5,078             56       73              1,985        11,533
  Disposals/Transfers                                    (2,130)             (1,036)            (6,440)           (86)       ---           (2,241)      (11,933)
  Balance December 31, 2008                              80,578              28,410             31,323           1,203    1,249             3,511       146,274
  Accumulated depreciation
  Balance January 1, 2007                                    9,852           22,909             22,049            624      750                 ---       56,184
  Depreciation                                               1,166            1,378              2,168             91       62                 ---           4,865
  Disposals/Transfers                                           ---              (3)             (815)            (19)       ---               ---           (837)
  Balance December 31, 2007                              11,018              24,284             23,402            696      812                 ---       60,212
  Depreciation                                               1,275            1,286              2,466            100       87                 ---           5,214
  Disposals/Transfers                                           ---          (1,006)            (6,176)           (35)       ---               ---       (7,217)
  Balance December 31, 2008                              12,293              24,564             19,692            761      899                 ---       58,209
  Carrying amount
  December 31, 2008                                      68,285               3,846             11,631            442      350              3,511        88,065
  December 31, 2007                                      69,761               2,750              9,283            537      364              3,767        86,462




                                                                                                                                                                      163
14- Intangible assets                                                                                                                     million LBP

                                                            Key Money             Licenses &     Preliminary Research &                   Total
                                                                                  Franchise       Expenses Development
 Cost
 Balance January 1, 2007                                              1,470           6,083               45             9,700               17,298
 Additions/Transfers                                                    75              339               ---            1,055                1,469
 Disposals/Transfers                                                     ---         (3,967)             (45)                 ---            (4,012)
 Balance December 31,2007                                             1,545           2,455               ---           10,755               14,755
 Additions/Transfers                                                     ---             ---              ---             221                     221
 Disposals/Transfers                                                     ---             ---              ---            (169)                 (169)
 Balance December 31, 2008                                            1,545           2,455               ---           10,807               14,807
 Amortization
 Balance January 1, 2007                                              1,457           5,270               45             8,197               14,969
 Amortization                                                           17              382               ---             147                     546
 Disposals/Transfers                                                     ---         (3,977)             (45)                 ---            (4,022)
 Balance December 31, 2007                                            1,474           1,675               ---            8,344               11,493
 Amortization                                                             7             350               ---             524                     881
 Disposals/Transfers                                                     ---             ---              ---                 ---                  ---
 Balance December 31, 2008                                            1,481           2,025               ---            8,868               12,374
 Carrying amount
 December 31, 2008                                                      64              430               ---            1,939                2,433
 December 31, 2007                                                      71              780               ---            2,411                3,262


15- Unquoted assets - Ready for sale
This caption includes the assets acquired in satisfaction of loans.
The movement of unquoted assets is detailed as follows:                                                                                   million LBP

 As at 31 December                                              2008                    2008                    2007                  2007
                                                                Group                   Bank                    Group                 Bank
 Balance January 1                                                      48,255                 40,605               42,345                   41,872
 Additions due to settlement of loans                                    4,683                  4,011               10,104                    2,863
 Disposal/Transfer to property & equipment                              (5,101)                (5,028)              (4,194)                  (4,130)
 Balance December 31                                                    47,837                 39,588               48,255                   40,605




    Annual Report 2008                                                                                                         Credit Libanais Group
                                                                                                               Group Financial Results



16- Other assets                                                                                                               million LBP

   As at 31 December                                                      2008            2008            2007                2007
                                                                          Group           Bank            Group               Bank
   Stamps                                                                          459            456              539                470
   Financial assets (Share capital blocked with the Ministry of Finance           1,515            15             6,015                15
   Prepayments                                                                    7,179          6,806            6,620              6,088
   Sundry accounts receivable                                                 17,317             9,183         12,873                8,684
   Branches in Lebanon                                                            5,752          5,752            1,679              1,679
   Foreign currency exchange difference (see below)                               5,348          5,268            5,348              5,268
   Accrued income                                                                  391            338              259                810
   Miscellaneous assets                                                           7,845             ---           3,411               351
   Total                                                                      45,806         27,818            36,744              23,365



The “foreign currency exchange difference” results from the conversation, at the official exchange rate as at year-end, of the US Dollar
fixed-position taken within the limit set up by the Central Bank in respect of the increase in the Bank’s shareholders’ equity. This fixed-
position amounted to USD 113.335 million at 31 December 2008 (USD 116.379 million at 31 December 2007).

The negative exchange difference of LBP 5,348 at 31 December 2008 (LBP 5,348 as at 31 December 2007) was fully provided for as
shown under note 24.

17- Revaluation of other fixed assets                                                                                          million LBP

   As at 31 December                                                      2008            2008            2007                2007
                                                                          Group           Bank            Group               Bank
   Goodwill                                                                   34,220         34,220            34,220              34,220
   Key money on leased properties                                             10,736         10,736            10,736              10,736
   Fixed assets                                                                   9,410          9,410            9,410              9,410
   Assets acquired in satisfaction of loan                                        1,771          4,972            1,771              4,972
   Freehold land and buildings occupied by the Bank                           15,656         15,656            15,656              15,656
                                                                              71,793         74,994            71,793              74,994
   Less:
   Revaluation of assets acquired in satisfaction of loans
                                                                              (1,771)        (4,972)           (1,771)             (4,972)
   registered under “Unquoted assets - Ready for sale”
   Revaluation of freehold land and buildings occupied                       (15,656)       (15,656)          (15,656)            (15,656)
   by the Bank accepted in equity
   Total                                                                      54,366         54,366            54,366              54,366



The revaluation surplus amounting to LBP 71,793 was agreed upon by the Tax Authorities. Subsequently in 1995, only the revaluation
surplus relating to Freehold land and buildings occupied by the Bank (and amounting to LBP 15,656), was approved by the Central
Bank and added back to the relevant fixed assets and depreciated at the rate of 2%.




                                                                                                                                              165
Liabilities
18- Banks and financial institutions                                                                                   million LBP

 As at 31 December 2008                                  Group                                    Bank
                                         LBP             Foreign       Total         LBP          Foreign             Total
                                                        Currency                                 Currency
 Current deposits of banks (a)                 4,424        29,375        33,799        4,424        29,375               33,799
 Time deposits (b)                             8,253        12,060        20,313        8,253               ---             8,253
 Financial institutions (c)                       ---       40,633        40,633           ---       40,633               40,633
 Accrued interest payable (d)                    11              812           823         11            561                  572
 Total                                      12,688          82,880        95,568       12,688        70,569               83,257


                                                                                                                       million LBP

 As at 31 December 2007                                  Group                                    Bank
                                         LBP             Foreign       Total         LBP          Foreign             Total
                                                        Currency                                 Currency
 Current deposits of banks (a)                 2,856        11,512        14,368        2,849        10,529               13,378
 Time deposits (b)                             4,614        23,478        28,092           ---        8,872                 8,872
 Financial institutions (c)                       ---       16,332        16,332           ---       16,332               16,332
 Accrued interest payable (d)                     ---            406           406         ---           279                  279
 Total                                         7,470        51,728        59,198        2,849        36,012               38,861



a- Current deposits of banks are detailed as follows:
                                                                                                                       million LBP

 As at 31 December 2008                                  Group                                    Bank
                                         LBP             Foreign       Total         LBP          Foreign             Total
                                                        Currency                                 Currency
 Resident banks                                4,424        17,382        21,806        4,424        17,382               21,806
 Non-resident banks                               ---       11,993        11,993           ---       11,993               11,993
 Total                                         4,424        29,375        33,799        4,424        29,375               33,799


                                                                                                                       million LBP

 As at 31 December 2007                                  Group                                    Bank
                                         LBP             Foreign       Total         LBP          Foreign             Total
                                                        Currency                                 Currency
 Resident banks                                2,856        10,742        13,598        2,849         9,759               12,608
 Non-resident banks                               ---            770           770         ---           770                  770
 Total                                         2,856        11,512        14,368        2,849        10,529               13,378




    Annual Report 2008                                                                                      Credit Libanais Group
                                                                                                                                        Group Financial Results



b- Time deposits are detailed as follows:
                                                                                                                                                            million LBP

   As at 31 December 2008                                           Group                                                           Bank
                                                 LBP                Foreign              Total                LBP                   Foreign                  Total
                                                                   Currency                                                        Currency
   Resident banks                                      8,253              4,522              12,775                  8,253                       ---                 8,253
   Non-resident banks                                     ---             7,538               7,538                        ---                   ---                    ---
   Total                                               8,253             12,060              20,313                  8,253                       ---                 8,253


                                                                                                                                                            million LBP

   As at 31 December 2007                                           Group                                                           Bank
                                                 LBP                Foreign              Total                LBP                   Foreign                  Total
                                                                   Currency                                                        Currency
   Resident banks                                      4,614             15,940              20,554                        ---              8,872                    8,872
   Non-resident banks                                     ---             7,538               7,538                        ---                   ---                    ---
   Total                                               4,614             23,478              28,092                        ---              8,872                    8,872



Maturities of time deposits are as follows:                                                                                                                 million LBP

  As at 31
  December 2008                             Group                                                                 Bank
                             In LBP               In Foreign Currencies                            In LBP              In Foreign Currencies
    Maturities         Amount    Interest Rate    Amount      Interest Rate                  Amount    Interest Rate   Amount      Interest Rate
                                       %                            %                                        %                           %
       2009                 8,253         8.02                  12,060       4.46                  8,253             8.02                          ---         ---
                            8,253                               12,060                             8,253                                           ---

                                                                                                                                                            million LBP

  As at 31                                       Group                                                                           Bank
  December 2007
                             In LBP                      In Foreign Currencies                     In LBP                               In Foreign Currencies
    Maturities         Amount    Interest Rate           Amount      Interest Rate           Amount    Interest Rate                    Amount      Interest Rate
                                       %                                   %                                 %                                            %
       2008                 4,614         9.17                  23,478       5.92                     ---            ---                     8,872            6.53
                            4,614                               23,478                                ---                                    8,872


c- Financial institutions are detailed as follows:
                                                                                                                                                            million LBP

   As at 31 December                                                        2008                    2008                         2007                       2007
                                                                            Group                   Bank                         Group                      Bank
                                                                         C/V of F/CY             C/V of F/CY                C/V of F/CY                  C/V of F/CY
   Non-resident financial institutions:
   International Finance Corporation                                                17,336                  17,336                       5,276                       5,276
   Arab Trading Financing Program Abu-Dhabi                                         12,760                  12,760                       3,715                       3,715
   Banque Europeenne d’Investissement Luxembourg                                    10,537                  10,537                       7,341                       7,341
   Total                                                                            40,633                  40,633                      16,332                  16,332




                                                                                                                                                                              167
Maturities of loans from financial institutions:
                                                                                                                                                million LBP

 As at 31 December                                                       2008                 2008                  2007                     2007
                                                                         Group                Bank                  Group                    Bank
 2008                                                                                ---                ---                 4,793                   4,793
 2009                                                                          14,852               14,852                  1,670                   1,670
 2010                                                                            4,837               4,837                  2,266                   2,266
 2011                                                                            3,600               3,600                  2,338                   2,338
 2012                                                                            5,194               5,194                  2,415                   2,415
 2013                                                                            5,118               5,118                  2,323                   2,323
 2014                                                                            2,915               2,915                    527                      527
 2015                                                                            1,949               1,949                     ---                      ---
 2016                                                                               455               455                      ---                      ---
 2017                                                                               470               470                      ---                      ---
 2018                                                                               485               485                      ---                      ---
 2019                                                                               501               501                      ---                      ---
 2020                                                                               257               257                      ---                      ---
 Total                                                                         40,633               40,633               16,332                    16,332



Loans from financial institutions brokendown by currency:

                                              31/12/2008                                                         31/12/2007
                              Group                            Bank                            Group                                  Bank
                  Foreign             Average        Foreign           Average         Foreign          Average          Foreign             Average
                 Currency          Interest Rate     Currency       Interest Rate      Currency      Interest Rate      Currency          Interest Rate
                Million LBP              %          Million LBP           %           Million LBP          %           Million LBP              %
 USD                      35,969       4.52                35,969       4.52               10,664         6.33                 10,664           6.33
 EURO                      4,664       5,67                 4,664       5,67                5,668         5.67                  5,668           5.67
 Total                    40,633                           40,633                          16,332                              16,332



Accrued interest payable is detailed as follows:                                                                                                million LBP

 As at 31 December                                                       2008                 2008                  2007                     2007
                                                                         Group                Bank                  Group                    Bank
 Time deposit                                                                       261                 11                    187                       60
 Financial institutions                                                             562               561                     219                      219
 Total                                                                              823               572                     406                      279



Allocation by geographical location of deposits from banks and financial institutions:                                                          million LBP

 As at 31 December                                                       2008                 2008                  2007                     2007
                                                                         Group                Bank                  Group                    Bank
 Lebanon                                                                       37,770               30,070               47,928                    21,540
 Middle East and Africa                                                        18,048               13,437                  3,823                   3,823
 Europe                                                                        10,878               10,878                  7,447                   7,447
 North America                                                                 28,872               28,872                  6,051                   6,051
 Total                                                                         95,568               83,257               59,198                    38,861




    Annual Report 2008                                                                                                               Credit Libanais Group
                                                                                                              Group Financial Results



19- Customers’ accounts                                                                                                     million LBP

  As at 31 December 2008                                       Group                                          Bank
                                                          LBP Base Accounts                             LBP Base Accounts
                                              Interest       Non Interest     Total         Interest       Non Interest      Total
                                              Bearing          Bearing                      Bearing          Bearing
  Deposits from customers (private sector):
      - Long term saving accounts               1,760,842               ---   1,760,842       1,419,717               ---     1,419,717
      - Short term saving accounts                29,934                ---      29,934         29,934                ---       29,934
      - Long term deposits                       232,571                ---     232,571        183,819                ---      183,819
      - Short term deposits                      151,754                ---     151,754        150,187                ---      150,187
  Accrued interest payable                               ---       10,940        10,940                ---        6,406          6,406
  Deposits from customers (public sector):
      - Long term deposits                       110,757                ---     110,757          5,281                ---        5,281
      - Short term deposits                       66,643                ---      66,643         66,643                ---       66,643
  Other                                                  ---       10,634        10,634                ---       10,634         10,634
  Accrued interest payable                               ---        4,333         4,333                ---            15              15
  Total                                         2,352,501          25,907     2,378,408       1,855,581          17,055       1,872,636


                                                                                                                            million LBP

  As at 31 December 2008                                       Group                                          Bank
                                                       F/CY Base Accounts                            F/CY Base Accounts
                                              Interest     Non Interest       Total         Interest     Non Interest        Total
                                              Bearing        Bearing                        Bearing        Bearing
  Deposits from customers (private sector):
      - Long term saving accounts               1,837,364               ---   1,837,364       1,434,671               ---     1,434,671
      - Short term saving accounts               106,941                ---     106,941        106,941                ---      106,941
      - Long term deposits                       912,083                ---     912,083        874,722                ---      874,722
      - Short term deposits                      396,861                ---     396,861        391,153                ---      391,153
  Accrued interest payable                               ---       15,133        15,133                ---        9,951          9,951
  Deposits from customers (public sector):
      - Long term deposits                        15,077                ---      15,077         15,077                ---       15,077
      - Short term deposits                        3,370                ---       3,370          3,370                ---        3,370
  Other                                                  ---        3,649         3,649                ---        3,394          3,394
  Accrued interest payable                               ---           279            279              ---           279             279
  Total                                         3,271,696          19,061     3,290,757       2,825,934          13,624       2,839,558
  Total deposits from customers                                               5,669,165                                       4,712,194




                                                                                                                                           169
                                                                                                                                          million LBP

 As at 31 December 2007                                           Group                                               Bank
                                                          LBP Base Accounts                                    LBP Base Accounts
                                              Interest       Non Interest           Total          Interest       Non Interest           Total
                                              Bearing          Bearing                             Bearing          Bearing
 Deposits from customers (private sector):
     - Long term saving accounts                1,184,463                  ---      1,184,463         946,141                  ---          946,141
     - Short term saving accounts                  21,456                  ---         21,456          21,456                  ---           21,456
     - Long term deposits                         121,976                  ---        121,976          94,301                  ---           94,301
     - Short term deposits                        117,115              1,748          118,863         117,108                  ---          117,108
 Accrued interest payable                                ---           7,464            7,464                 ---          3,930              3,930
 Deposits from customers (public sector):
     - Long term deposits                          77,112                  ---         77,112           1,584                  ---            1,584
     - Short term deposits                         71,827                  ---         71,827          71,827                  ---           71,827
 Other                                                   ---           3,682            3,682                 ---          3,682              3,682
 Accrued interest payable                                ---           2,734            2,734                 ---              ---                ---
 Total                                          1,593,949             15,628        1,609,577        1,252,417             7,612          1,260,029


                                                                                                                                          million LBP

 As at 31 December 2007                                           Group                                               Bank
                                                          F/CY Base Accounts                                   F/CY Base Accounts
                                              Interest        Non Interest          Total          Interest        Non Interest          Total
                                              Bearing           Bearing                            Bearing           Bearing
 Deposits from customers (private sector):
     - Long term saving accounts                1,955,633                  ---      1,955,633        1,540,290                 ---        1,540,290
     - Short term saving accounts                  88,501                  ---         88,501          88,501                  ---           88,501
     - Long term deposits                         726,592                  ---        726,592         695,462                  ---          695,462
     - Short term deposits                        286,855              1,783          288,638         285,887                  ---          285,887
 Accrued interest payable                                64           15,102           15,166                 ---          8,361              8,361
 Deposits from customers (public sector):
     - Short term deposits                          3,227                  ---          3,227           3,227                  ---            3,227
 Other                                                   ---           3,878            3,878                 ---          3,593              3,593
 Total                                          3,060,872             20,763        3,081,635        2,613,367            11,954          2,625,321
 Total Deposits from customers                                                      4,691,212                                             3,885,350



Average balance of deposits during the last 3 years is broken down as follows:

 As at 31 December 2008                         LBP Base Accounts                   F/CY Base Accounts
                                              Average             Average         Average          Average           Average           Average
                                             Balance of        Percentage of     Balance of     Percentage of        Cost of           Interest
                                              Deposits         Total Deposits     Deposits      Total Deposits        Funds              Cost
                                               Group              Group            Group           Group              Group             Group
                                             Million LBP            %            Million LBP         %              Million LBP           %
 2008                                             485,826          49.01              495,705       50.99                 64,768          6.68
 2007                                             398,014          43.30              510,668       56.70                 63,427          7.04
 2006                                             519,593          55.65              414,486       44.35                 64,999          6,96




    Annual Report 2008                                                                                                         Credit Libanais Group
                                                                                                                       Group Financial Results




  As at 31 December 2008                       LBP Base Accounts                 F/CY Base Accounts
                                             Average          Average          Average             Average           Average           Average
                                            Balance of     Percentage of      Balance of        Percentage of        Cost of           Interest
                                             Deposits      Total Deposits      Deposits         Total Deposits        Funds              Cost
                                               Bank            Bank              Bank               Bank               Bank             Bank
                                            Million LBP         %             Million LBP            %              Million LBP          %
  2008                                         1,550,195       35.40             2,828,741          64.60                216,420         4.94
  2007                                         1,215,798       33.30             2,435,248          66.70                201,352         5.52
  2006                                         1,156,012       34.90             2,156,342          65.10                174,969         5.28



Group customers’ creditor accounts in Lebanese Pounds as at 31 December 2008 by brackets of deposits and maturity are broken
down as follows:                                                                                                 million LBP

                                            Less than 1        1 to 3            3 to 6           6 Months           1 to 5             Total
                                              Month           Months            Months            to 1 Year          Years
                                                                                          Group
  Less than 5 million                              5,023                13                47                  11                  2         5,096
  From LBP 5 million to 10 million                  157                 18            102                     13                10              300
  From LBP 10 million to 50 million                 863                177            481                     95                47          1,663
  From LBP 50 million to 250 million               1,906           1,215              777                   436                307          4,641
  From LBP 250 million to 750 million              4,098           2,633             1,779                  290                547          9,347
  From LBP 750 million to 1,500 million            5,509           5,072             3,184              5,099                    ---       18,864
  From LBP 1,500 million to 4,000 million         19,062                ---         12,649              8,166                 1,715        41,592
  From LBP 4,000 million to 6,500 million         17,443           8,816                  ---           5,982                    ---       32,241
  Above LBP 6,500 million                      1,179,476         812,731           161,992             55,192             40,000         2,249,391
  Total                                        1,233,537         830,675           181,011             75,284             42,628         2,363,135



Group customers’ creditor accounts in foreign currencies as at 31 December 2008 by brackets of deposits and maturity are broken
down as follows:                                                                                                    million LBP

                                            Less than 1        1 to 3            3 to 6           6 Months           1 to 5             Total
                                              Month           Months            Months            to 1 Year          Years
                                                                                          Group
  Less than 5 million                              3,832                42                48                   4                  4         3,930
  From LBP 5 million to 10 million                  679                142            196                     54                17          1,088
  From LBP 10 million to 50 million                3,919           1,385             1,295                  592                 30          7,221
  From LBP 50 million to 250 million              13,983           2,108             2,767              1,742                  778         21,378
  From LBP 250 million to 750 million             22,428           9,000             8,905              1,703                 2,537        44,573
  From LBP 750 million to 1,500 million           21,029           9,814             4,781              1,125                    ---       36,749
  From LBP 1,500 million to 4,000 million         44,808           9,258            11,148             13,475                 9451         88,140
  From LBP 4,000 million to 6,500 million         64,968          20,728             5,402                    ---                ---       91,098
  Above LBP 6,500 million                      1,562,655         913,826           253,518             83,129            168,040         2,981,168
  Total                                        1,738,301         966,303           288,060            101,824            180,857         3,275,345
  Total Group customers’ creditor accounts                                                                                               5,638,480




                                                                                                                                                      171
Bank cutomers’ creditor accounts in Lebanese Pounds as at 31 December 2008 by brackets of deposits and maturity are broken down
as follows:
                                                                                                                                    million LBP

                                           Less than 1     1 to 3          3 to 6          6 Months          1 to 5                Total
                                             Month        Months          Months           to 1 Year         Years
                                                                                    Bank
 Less than 5 million                              4,758              3               6                  6                 2             4,775
 From LBP 5 million to 10 million                   10              ---              5                 ---               ---                15
 From LBP 10 million to 50 million                 270              ---             10                 32               47                 359
 From LBP 50 million to 250 million               1,425         328                 66             120                  89              2,028
 From LBP 250 million to 750 million              3,135        1,778            455                    ---             546              5,914
 From LBP 750 million to 1,500 million            2,805        1,385                ---          2,800                   ---            6,990
 From LBP 1,500 million to 4,000 million         14,803             ---       7,456              3,725                1,716            27,700
 From LBP 4,000 million to 6,500 million         17,443        4,723                ---          5,982                   ---           28,148
 Above LBP 6,500 million                      1,065,685      689,563         35,038                    ---               ---        1,790,286
 Total                                        1,110,334      697,780         43,036             12,665                2,400         1,866,215



Bank cutomers’ creditor accounts in foreign currencies as at 31 December 2008 by brackets of deposits and maturity are broken down
as follows:
                                                                                                                                    million LBP

                                           Less than 1     1 to 3          3 to 6          6 Months          1 to 5                Total
                                             Month        Months          Months           to 1 Year         Years
                                                                                    Bank
 Less than 5 million                              3,490             21               6                  2                 4             3,523
 From LBP 5 million to 10 million                  349               8               5                 ---                7                369
 From LBP 10 million to 50 million                2,106         106             126                116                   ---            2,454
 From LBP 50 million to 250 million               9,602         955             612                707                 311             12,187
 From LBP 250 million to 750 million             17,167        4,861          3,023              1,703                1,945            28,699
 From LBP 750 million to 1,500 million           17,292        7,177          2,248              1,125                   ---           27,842
 From LBP 1,500 million to 4,000 million         42,329        5,787          4,740              3,570            7,,373               63,799
 From LBP 4,000 million to 6,500 million         54,512       15,100                ---                ---               ---           69,612
 Above LBP 6,500 million                      1,496,857      780,079        118,990             56,878           168,039            2,620,843
 Total                                        1,643,704      814,094        129,750             64,101           177,679            2,829,328
 Total Bank customers’ creditor accounts                                                                                            4,695,543




    Annual Report 2008                                                                                                   Credit Libanais Group
                                                                                                             Group Financial Results



Group customers’ creditor accounts in Lebanese Pounds as at 31 December 2007 by brackets of deposits and maturity are broken
down as follows:                                                                                                 million LBP

                                            Less than 1     1 to 3          3 to 6        6 Months         1 to 5            Total
                                              Month        Months          Months         to 1 Year        Years
                                                                                     Group
  Less than 5 million                              1,178             ---              7               8                 2        1,195
  From LBP 5 million to 10 million                   45              17              23               5               24             114
  From LBP 10 million to 50 million                 414          149             176              135                 47             921
  From LBP 50 million to 250 million               2,100         856             751              210                305         4,222
  From LBP 250 million to 750 million              6,503        2,125          1,371              259                569        10,827
  From LBP 750 million to 1,500 million            5,119        3,343          3,117            6,200                  ---      17,779
  From LBP 1,500 million to 4,000 million          9,572        6,128          5,157           10,335               3,072       34,264
  From LBP 4,000 million to 6,500 million         25,187       13,779         10,532            6,202               5,448       61,148
  Above LBP 6,500 million                        746,341      519,347        140,874           62,347                  ---   1,468,909
  Total                                          769,459      545,744        162,008           85,701               9,467    1,599,379



Group customers’ creditor accounts in foreign currencies as at 31 Decmber 2007 by brackets of deposits and maturity are broken down
as follows:                                                                                                              million LBP

                                            Less than 1     1 to 3          3 to 6        6 Months         1 to 5            Total
                                              Month        Months          Months         to 1 Year        Years
                                                                                     Group
  Less than 5 million                               448              38               8                2              15             511
  From LBP 5 million to 10 million                  302              33              49               31                7            422
  From LBP 10 million to 50 million                1,682         697             732              502                101         3,714
  From LBP 50 million to 250 million               5,510        3,576          1,309            1,553                495        12,443
  From LBP 250 million to 750 million              7,955       10,419          2,735            2,692               3,530       27,331
  From LBP 750 million to 1,500 million            9,540       12,234         12,758            4,028               1,774       40,334
  From LBP 1,500 million to 4,000 million         31,264       35,730          7,291           14,586               9,459       98,330
  From LBP 4,000 million to 6,500 million         57,938       15,837          5,975           18,467                  ---      98,217
  Above LBP 6,500 million                      1,256,801    1,165,291        248,975           84,814           29,286       2,785,167
  Total                                        1,371,440    1,243,855        279,832          126,675           44,667       3,066,469
  Total Group customers’ creditor accounts                                                                                   4,665,848




                                                                                                                                           173
Bank cutomers’ creditor accounts in Lebanese Pounds as at 31 December 2007 by brackets of deposits and maturity are broken down
as follows:
                                                                                                                                             million LBP

                                           Less than 1     1 to 3              3 to 6          6 Months             1 to 5                  Total
                                             Month        Months              Months           to 1 Year            Years
                                                                                        Bank
 Less than 5 million                              1,097             ---                  3                   8                     2              1,110
 From LBP 5 million to 10 million                    9              ---                  5                  ---                    6                 20
 From LBP 10 million to 50 million                 209              ---                 37                 61                     47                354
 From LBP 50 million to 250 million               1,740          469                  268                 147                     64             2,688
 From LBP 250 million to 750 million              3,818          841                  482                   ---               569                5,710
 From LBP 750 million to 1,500 million            3,351             ---              1,128               3,060                    ---            7,539
 From LBP 1,500 million to 4,000 million          7,439        4,550                 2,657               1,752                    ---           16,398
 From LBP 4,000 million to 6,500 million         20,893       13,779                    ---              6,202                    ---           40,874
 Above LBP 6,500 million                        720,736      434,966                25,704                  ---                   ---        1,181,406
 Total                                          759,292      454,605                30,284           11,230                   688            1,256,099



Bank cutomers’ creditor accounts in foreign currencies as at 31 December 2007 by brackets of deposits and maturity are broken down
as follows:
                                                                                                                                             million LBP

                                           Less than 1     1 to 3              3 to 6          6 Months             1 to 5                  Total
                                             Month        Months              Months           to 1 Year            Years
                                                                                        Bank
 Less than 5 million                               244              38                   7                   2                    15                306
 From LBP 5 million to 10 million                  157               8                  ---                 ---                   ---               165
 From LBP 10 million to 50 million                 822           369                  160                 242                     ---            1,593
 From LBP 50 million to 250 million               3,721        2,410                  526                 487                 193                7,337
 From LBP 250 million to 750 million              4,709        9,006                 1,205                504                3,132              18,556
 From LBP 750 million to 1,500 million            8,400        9,802                 3,503               3,154                    ---           24,859
 From LBP 1,500 million to 4,000 million         31,264       28,012                 7,291               2,355               6,988              75,910
 From LBP 4,000 million to 6,500 million         48,430        4,658                    ---          18,467                       ---           71,555
 Above LBP 6,500 million                      1,225,213    1,061,323               114,868           15,275                       ---        2,416,679
 Total                                        1,322,960     1,115,626              127,560           40,486               10,328             2,616,960
 Total Bank customers’ creditor accounts                                                                                                     3,873,059



Accrued interest payable on customers’ accounts split by currency:                                                                           million LBP

 As at 31 December                                              2008                      2008                    2007                    2007
                                                                Group                     Bank                    Group                   Bank
 Lebanese Pound                                                           15,273                 6,421                10,198                     3,930
 US Dollar                                                                14,854                 9,672                14,598                     7,793
 EURO                                                                       452                   452                     418                       418
 British Pound                                                               25                    25                        89                      89
 Other                                                                       81                    81                        61                      61
 Total                                                                    30,685               16,651                 25,364                    12,291




    Annual Report 2008                                                                                                            Credit Libanais Group
                                                                                                                     Group Financial Results



Allocation of customers’ accounts by geographical location:
                                                                                                                                       million LBP

  As at 31 December                                           2008                      2008                     2007                  2007
                                                              Group                     Bank                     Group                 Bank
  Lebanon                                                          5,215,279                4,304,427              4,246,036            3,479,267
  Middle East and Africa                                                293,267              269,948                281,210              262,047
  Europe                                                                110,240              106,233                110,796              107,881
  North America                                                          14,991               11,493                     9,625                5,744
  Other                                                                   4,703                3,442                 18,181                18,120
  Total                                                            5,638,480                4,695,543              4,665,848            3,873,059


20- Related parties’ accounts                                                                                                          million LBP

  As at 31 December 2008                                 Group                                                       Bank
                                                 LBP Base Accounts                                      LBP Base Accounts
                                        Interest    Non Interest              Total            Interest    Non Interest                Total
                                        Bearing       Bearing                                  Bearing       Bearing
  Deposits from related parties:
      - Long term saving accounts            62,236               ---              62,236           11,827                       ---       11,827
      - Long term deposits                   12,194               ---              12,194           38,768                       ---      38,768
      - Short term deposits                   3,543               ---               3,543               3,861                    ---          3,861
  Accrued interest payable                       ---             649                  649                  ---               129               129
  Total                                      77,973              649               78,622           54,456                   129          54,585



                                                                                                                                       million LBP

  As at 31 December 2008                                 Group                                                       Bank
                                                 F/CY Base Accounts                                     F/CY Base Accounts
                                        Interest     Non Interest             Total            Interest     Non Interest               Total
                                        Bearing        Bearing                                 Bearing        Bearing
  Deposits from related parties:
      - Long term saving accounts            12,635               ---              12,635               3,654                    ---          3,654
      - Short term saving accounts               23               ---                  23                 23                     ---            23
      - Long term deposits                   52,858               ---              52,858           49,927                       ---      49,927
      - Short term deposits                   6,100               ---               6,100           12,019                       ---      12,019
  Accrued interest payable                       ---             418                  418                  ---               113               113
  Total                                      71,616              418               72,034           65,623                   113          65,736
  Total deposits from related parties                                             150,656                                                120,321




                                                                                                                                                      175
                                                                                                                                     million LBP

 As at 31 December 2007                                       Group                                              Bank
                                                        LBP Base Accounts                                  LBP Base Accounts
                                            Interest       Non Interest      Total             Interest       Non Interest          Total
                                            Bearing          Bearing                           Bearing          Bearing
 Deposits from related parties:
     - Long term saving accounts                 11,790                ---      11,790              2,260                 ---            2,260
     - Long term deposits                        10,350                ---      10,350              5,395                 ---            5,395
     - Short term deposits                        2,192                ---       2,192              4,107                 ---            4,107
 Accrued interest payable                              ---            188            188                  ---             13                 13
 Total                                           24,332               188       24,520             11,762                 13            11,775


                                                                                                                                     million LBP

 As at 31 December 2007                                       Group                                              Bank
                                                        F/CY Base Accounts                                 F/CY Base Accounts
                                            Interest        Non Interest     Total             Interest        Non Interest         Total
                                            Bearing           Bearing                          Bearing           Bearing
 Deposits from related parties:
     - Long term saving accounts                 10,725                ---      10,725              9,443                 ---            9,443
     - Short term saving accounts                       4              ---              4                  4              ---                 4
     - Long term deposits                        88,766                ---      88,766             63,848                 ---           63,848
     - Short term deposits                        3,488                ---       3,488              7,355                 ---            7,355
 Accrued interest payable                              ---            821            821                  ---            170                170
 Total                                          102,983               821      103,804             80,650                170            80,820
 Total Deposits from related parties                                           128,324                                                  92,595



Group related parties’ creditor accounts in Lebanese Pounds as at 31 Decmber 2008 by brackets of deposits and maturity are broken
down as follows:
                                                                                                                                     million LBP

                                           Less than 1        1 to 3          3 to 6         6 Months           1 to 5              Total
                                             Month           Months          Months          to 1 Year          Years
                                                                                       Group
 From LBP 10 million to 50 million                     60              ---             ---                ---             ---                60
 From LBP 250 million to 750 million               988                438              ---                ---            627             2,053
 From LBP 1,500 million to 4,000 million          4,340           1,561                ---                ---             ---            5,901
 From LBP 4,000 million to 6,500 million          4,907                ---             ---                ---             ---            4,907
 Above LBP 6,500 million                         58,796           3,673          2,583                    ---             ---           65,052
 Total                                           69,091           5,672          2,583                    ---            627            77,973




    Annual Report 2008                                                                                                    Credit Libanais Group
                                                                                                                  Group Financial Results



Group related parties’ creditor accounts in foreign currencies as at 31 December 2008 by brackets of deposits and maturity are broken
down as follows:                                                                                                          million LBP

                                            Less than 1       1 to 3          3 to 6          6 Months          1 to 5           Total
                                              Month          Months          Months           to 1 Year         Years
                                                                                       Group
  Less than 5 million                                   5               3              ---                ---             ---               8
  From LBP 10 million to 50 million                   48               ---             ---                ---             ---             48
  From LBP 50 million to 250 million                 423           444                 69                 ---             ---            936
  From LBP 250 million to 750 million                  ---         465                 ---                ---             ---            465
  From LBP 750 million to 1,500 million                ---             ---             ---                ---            899             899
  From LBP 1,500 million to 4,000 million           8,084         3,624                ---                ---             ---       11,708
  Above LBP 6,500 million                          48,972         5,891          2,689                    ---             ---       57,552
  Total                                            57,532        10,427          2,758                    ---            899        71,616
  Total Group related parties’ creditor accounts                                                                                   149,589



Bank related parties’ creditor accounts in Lebanese Pounds as at 31 December 2008 by brackets of deposits and maturity are broken
down as follows:                                                                                                      million LBP

                                            Less than 1       1 to 3          3 to 6          6 Months          1 to 5           Total
                                              Month          Months          Months           to 1 Year         Years
                                                                                       Bank
  From LBP 10 million to 50 million                   60               ---             ---                ---             ---            60
  From LBP 250 million to 750 million               1,332          438                 ---                ---            627         2,397
  From LBP 1,500 million to 4,000 million           4,340              ---             ---                ---             ---        4,340
  Above LBP 6,500 million                          27,884        19,775                ---                ---             ---       47,659
  Total                                            33,616        20,213                ---                ---            627        54,456



Bank related parties’ creditor accounts in foreign currencies as at 31 December 2008 by brackets of deposits and maturity are broken
down as follows:                                                                                                         million LBP

                                            Less than 1       1 to 3          3 to 6          6 Months          1 to 5           Total
                                              Month          Months          Months           to 1 Year         Years
                                                                                       Bank
  Less than 5 million                                   4               2              ---                ---             ---               6
  From LBP 10 million to 50 million                   49               ---             ---                ---             ---             49
  From LBP 50 million to 250 million                 365           444                 ---                ---             ---            809
  From LBP 250 million to 750 million                  ---         465                 ---                ---             ---            465
  From LBP 1,500 million to 4,000 million          11,696         3,624                ---                ---             ---       15,320
  Above LBP 6,500 million                          48,974              ---             ---                ---             ---       48,974
  Total                                            61,088         4,535                ---                ---             ---       65,623
  Total Bank related parties’ creditor accounts                                                                                    120,079




                                                                                                                                                177
Group related parties’ creditor accounts in Lebanese Pounds as at 31 December 2007 by brackets of deposits and maturity are broken
down as follows:
                                                                                                                                      million LBP

                                           Less than 1       1 to 3          3 to 6          6 Months          1 to 5                Total
                                             Month          Months          Months           to 1 Year         Years
                                                                                      Group
 From LBP 10 million to 50 million                   70               ---             ---                ---               ---                70
 From LBP 250 million to 750 million                573          1,100                ---                ---             583              2,256
 From LBP 750 million to 1,500 million                ---        2,351                ---                ---             899              3,250
 From LBP 1,500 million to 4,000 million           3,967         4,455          1,760                    ---               ---           10,182
 Above LBP 6,500 million                              ---             ---       8,574                    ---               ---            8,574
 Total                                             4,610         7,906         10,334                    ---            1,482            24,332



Group related parties’ creditor accounts in foreign currencies as at 31 December 2007 by brackets of deposits and maturity are broken
down as follows:
                                                                                                                                      million LBP

                                           Less than 1       1 to 3          3 to 6          6 Months          1 to 5                Total
                                             Month          Months          Months           to 1 Year         Years
                                                                                      Group
 Less than 5 million                                  ---             12              ---                ---               ---                12
 From LBP 10 million to 50 million                   23               38              ---                ---               ---                61
 From LBP 50 million to 250 million                 362           159                 ---                ---               ---               521
 From LBP 750 million to 1,500 million                ---        1,252          1,212                    ---               ---            2,464
 From LBP 1,500 million to 4,000 million           3,178         7,785                ---                ---               ---           10,963
 From LBP 4,000 million to 6,500 million           5,768         4,617                ---                ---               ---           10,385
 Above LBP 6,500 million                          53,795         6,764          1,130             16,888                   ---           78,577
 Total                                            63,126        20,627          2,342             16,888                   ---          102,983
 Total Group related parties’ creditor accounts                                                                                         127,315



Bank related parties’ creditor accounts in Lebanese Pounds as at 31 December 2007 by brackets of deposits and maturity are broken
down as follows:
                                                                                                                                      million LBP

                                           Less than 1       1 to 3          3 to 6          6 Months          1 to 5                Total
                                             Month          Months          Months           to 1 Year         Years
                                                                                      Bank
 From LBP 10 million to 50 million                   70               ---             ---                ---               ---                70
 From LBP 250 million to 750 million                573          1,100                ---                ---             583              2,256
 From LBP 750 million to 1,500 million                ---         912                 ---                ---               ---               912
 From LBP 1,500 million to 4,000 million           2,210         6,314                ---                ---               ---            8,524
 Total                                             2,853         8,326                ---                ---             583             11,762




    Annual Report 2008                                                                                                     Credit Libanais Group
                                                                                                                         Group Financial Results



Bank related parties’ creditor accounts in foreign currencies as at 31 December 2007 by brackets of deposits and maturity are broken
down as follows:                                                                                                         million LBP

                                             Less than 1      1 to 3               3 to 6          6 Months            1 to 5              Total
                                               Month         Months               Months           to 1 Year           Years
                                                                                            Bank
  Less than 5 million                                  ---             12                   ---                ---                   ---            12
  From LBP 10 million to 50 million                   23               38                   ---                ---                   ---            61
  From LBP 50 million to 250 million                  82           159                      ---                ---                   ---           241
  From LBP 750 million to 1,500 million                ---        1,253                     ---                ---                   ---          1,253
  From LBP 1,500 million to 4,000 million           3,178         7,785                     ---                ---                   ---      10,963
  From LBP 4,000 million to 6,500 million           5,768         4,618                     ---                ---                   ---      10,386
  Above LBP 6,500 million                          57,734              ---                  ---                ---                   ---      57,734
  Total                                            66,758        13,865                     ---                ---                   ---      80,650
  Total Group related parties’ creditor accounts                                                                                              92,412



Accrued interest payable to related parties by currency:
                                                                                                                                           million LBP

  As at 31 December                                                2008                       2008                   2007                  2007
                                                                   Group                      Bank                   Group                 Bank
  Lebanese Pound                                                                649                   129                     188                   13
  US Dollar                                                                     417                   112                     820                  169
  EURO                                                                             1                     1                      1                    1
  Total                                                                        1,067                  242                    1,009                 183



Allocation by geographical location of related parties’ creditor accounts:
                                                                                                                                           million LBP

  As at 31 December                                                2008                       2008                   2007                  2007
                                                                   Group                      Bank                   Group                 Bank
  Lebanon                                                                    142,256              112,746              127,293                92,390
  Middle East and Africa                                                       7,333                 7,333                     22                   22
  Total                                                                      149,589              120,079              127,315                92,412


21- Certificates of Deposits                                                                                                               million LBP

  As at 31 December                                                2008                       2008                   2007                  2007
                                                                   Group                      Bank                   Group                 Bank
  Certificates of Deposits (Fixed rate notes USD
                                                                                  ---                   ---              90,450                90,450
  60,000,000 maturing 8 September 2008)
  Accrued interest on Certificates of Deposits                                    ---                   ---                  1,959                1,959
  Total                                                                           ---                   ---              92,409                92,409




                                                                                                                                                          179
22- Current tax liabilities                                                                                               million LBP

 As at 31 December                                             2008            2008            2007                    2007
                                                               Group           Bank            Group                   Bank
 Income tax                                                            2,684          2,400            1,872                  1,563
 Taxes on interest paid                                                3,982          3,314            2,936                  2,064
 Taxes on salaries                                                      992            759             1,079                     900
 Other taxes                                                           3,611          1,670            3,124                     188
 Total                                                             11,269             8,143            9,011                  4,715


23- Other liabilities                                                                                                     million LBP

 As at 31 December                                             2008            2008            2007                    2007
                                                               Group           Bank            Group                   Bank
 Margins held against documentary credits                              6,073          6,073            6,790                  6,779
 Other creditors                                                   50,935         20,847           31,533                    12,127
 Technical reserve for insurance companies                         20,488                ---       11,043                         ---
 Accrued expenses                                                      6,029          4,721            5,456                  4,168
 Interbranch reconciling items                                          886            865             2,390                  2,089
 Unearned revenue                                                       851            795             1,507                     607
 Shareholders’ account (accrued dividend)                                26             26               29                       24
 Revaluation of assets acquired in satisfaction of loans               1,771          4,972            1,771                  4,972
 Total                                                             87,059         38,299           60,519                    30,766


24- Provisions for risks and charges                                                                                      million LBP

 As at 31 December                                             2008            2008            2007                    2007
                                                               Group           Bank            Group                   Bank
 Provision for staff end of service indemnity (a)                  11,775         10,220               9,559                  8,261
 Provision for contingencies (b)                                       3,508          3,115            2,987                  2,745
 Provision for loss on foreign currency position                       5,348          5,268            5,348                  5,268
 Other                                                                  131             80              131                       80
 Total                                                             20,762         18,683           18,025                    16,354



a- Movement of provision for staff end-of-service indemnity:
                                                                                                                          million LBP

 As at 31 December                                             2008            2008            2007                    2007
                                                               Group           Bank            Group                   Bank
 Balance January 1                                                     9,559          8,261            8,820                  7,755
 Additions                                                             3,237          2,911             962                      708
 Settlements/Transfers                                             (1,021)            (952)            (223)                   (202)
 Balance December 31                                               11,775         10,220               9,559                  8,261




    Annual Report 2008                                                                                         Credit Libanais Group
                                                                                                               Group Financial Results



b- Movement of provision for contingencies:
                                                                                                                               million LBP

   As at 31 December                                                  2008             2008               2007                2007
                                                                      Group            Bank               Group               Bank
   Balance January 1                                                          2,987           2,745             2,077              1,835
   Additions                                                                   611             459                974                974
   Settlements                                                                 (90)            (89)               (64)               (64)
   Balance December 31                                                        3,508           3,115             2,987              2,745



25- Share capital                                                                                                              million LBP

   As at 31 December                                                  2008             2008               2007                2007
                                                                      Group            Bank               Group               Bank
   Common shares (23,400,000 shares of LBP 10,000 each, fully paid)      234,000          234,000             234,000             234,000
   Preferred shares (1,600,000 preferred shares at LBP 10,000 each)       16,000            16,000             16,000              16,000
   Total share capital                                                   250,000          250,000             250,000             250,000



In August 2004, Credit Libanais issued 1,600,000 cumulative preferred shares “Series A” for an aggregate amount of USD 50 million
with a seven-year term expiring on 10 August 2011. The issue was affected at a nominal value of LBP 10,000 for each preferred share,
while the aggregate share premium amounted to of LBP 59.37 billion. Preferred shares constitute part of the Group’s Tier II capital, and
earn an annual fixed divident to be paid to holders, out of the distributable consolidated profits of the Group, in an amount equivalent to
7.5 % of te total amount of the preferred shares issued. The Bank has the right, in its sole discretion, to redeem the Series A preferred
shares, in whole but not in part, on the fifth anniversary of the issue date, at the issue price plus accrued and unpaid dividends and an
early redemption premium equivalent to 50% of the value of the annual fixed dividends that would have been payable until the expiry
of the term of the Series A preferred shares.

As part of its risk management policy, the Bank has established a special purpose investment account (the “Sinking Fund Account”),
which is funded on an annual basis in each of the first seven years following the issue date of the Series A preferred shares (assuming
no early redemption) with proceeds generated from the annual consolidated profits in amounts equal to one-seventh or 14.285% of the
total amount of the Series A preferred shares.

26- Reserves related to capital                                                                                                million LBP

   As at 31 December                                                  2008             2008               2007                2007
                                                                      Group            Bank               Group               Bank
   Legal reserve                                                          39,775            23,973             32,964              18,206
   Reserve for general banking risks                                      24,281            20,507             21,103              17,757
   Total                                                                  64,056            44,480             54,067              35,963




                                                                                                                                              181
27- Reserve for revaluation of available-for-sale portfolio                                                                      million LBP

 As at 31 December                                               2008             2008               2007                     2007
                                                                 Group            Bank               Group                    Bank
 Unrealized (losses)/profits on available-for-sale securities:
         - Lebanese Treasury Bills                                        (50)             ---               (277)                    (277)
         - Certificates of Deposits                                         ---            ---               (123)                    (123)
         - Equity securities                                         (2,218)             (154)                216                       216
         - Corporate Bonds                                          (10,044)          (10,044)            (1,690)                   (1,690)
         - Lebanese Treasury Bills “available-for-sale”
                                                                           40              40                   ---                      ---
          transferred to “held-to-maturity”
         - Certificates of Deposits “available-for-sale”
                                                                          (75)            (75)                  ---                      ---
          transferred to “loans and receivables”
         - Equity securities “available-for-sale”
                                                                         (206)           (206)                  ---                      ---
          transferred to “held-to-maturity”
 Total                                                              (12,553)          (10,439)            (1,874)                   (1,874)
 Group’s share                                                      (12,550)          (10,439)            (1,874)                   (1,874)
 Minority share                                                            (3)             ---                  ---                      ---
 Total                                                              (12,553)          (10,439)            (1,874)                   (1,874)



The movement of the reserve for revaluation of available-for-sale portfolio during 2008 and 2007 is as follows:
                                                                                                                                 million LBP

 As at 31 December                                               2008             2008               2007                     2007
                                                                 Group            Bank               Group                    Bank
 Balance - January 1                                                 (1,874)           (1,874)                    7                       7
 Unrealized (losses) profits during 2008 on:
         - Lebanese Treasury Bills                                        227             227                (238)                    (238)
         - Certificates of Deposits issued by the Central
                                                                          123             123                (100)                    (100)
          Bank of Lebanon
         - Equity securities available-for-sale                      (2,434)             (370)                252                       252
         - Corporate Bonds available-for-sale                        (8,354)           (8,354)            (1,795)                   (1,795)
         - Lebanese Treasury Bills “available-for-sale”
                                                                           40              40                   ---                      ---
          transferred to “held-to-maturity”
         - Certificates of Deposits “available-for-sale”
                                                                          (75)            (75)                  ---                      ---
          transferred to “loans and receivables”
         - Equity securities “available-for-sale” transferred
                                                                         (206)           (206)                  ---                      ---
          to “held-to-maturity”
 Balance December 31                                                (12,553)          (10,439)            (1,874)                   (1,874)



28- Other reserves                                                                                                               million LBP

 As at 31 December                                               2008             2008               2007                     2007
                                                                 Group            Bank               Group                    Bank
 Reserve for assets acquired in satisfaction of loans                    6,830         12,830                7,176                  13,703
 Other reserves                                                     114,979            35,333            118,440                    25,530
 Total                                                              121,809            48,163            125,616                    39,233




    Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                 Group Financial Results




Consolidated Statement of Income
29- Interest income                                                                                            million LBP

  As at 31 December                                          2008             2008            2007             2007
                                                             Group            Bank            Group            Bank
  Lebanese Treasury Bills:                                      210,329         165,512          169,513          126,661
          - Available-for-sale                                       6,558           3,551             809             809
          - Held-for-trading                                           77              77               68              68
          - Held-to-maturity                                    203,694         161,884          168,636          125,784
  Deposits with the head office, branches, parent company,
                                                                        ---          9,095               ---          2,772
  foreign sister, financial institutions & subsidiaries
  Deposits with banks and financial institutions                 22,527          20,067           38,508           36,165
  Deposits and similar accounts with Bank of Lebanon             20,998          17,909           30,086           25,404
  Held-to-maturity investment securities                             5,231            325             6,019            266
  Loans and receivables investment securities                    54,564          51,360           51,801           45,843
  Trading investment securities                                          8               8                8                8
  Available-for-sale investment securities                           2,676           2,676            1,392           1,392
  Loans and advances to customers’                              106,411          92,885           83,404           71,313
  Loans and advances to related parties                              3,487           2,355            3,781           2,181
  Leasing activities                                                  376               ---            273               ---
  Other interest received and similar income                         5,663           4,134            2,887           2,691
  Total                                                         432,270         366,326          387,672          314,696



30- Interest expenses                                                                                          million LBP

  As at 31 December                                          2008             2008            2007             2007
                                                             Group            Bank            Group            Bank
  Deposits from banks and financial institutions                     3,107           2,898            2,126           1,721
  Deposits from customers and other creditor accounts           257,678         206,725          239,924          190,824
  Certificates of Deposits                                           4,293           4,293            6,128           6,218
  Deposits from related parties                                  20,904              9,695        22,743           10,528
  Deposits with the head office, branches, parent company,
                                                                        ---      21,026                  ---          6,689
  foreign sister, financial institutions & subsidiaries
  Other interest paid and similar income                               85               ---            176               ---
  Total                                                         286,067         244,637          271,187          215,980




                                                                                                                               183
31- Fee and commission income                                                                                                             million LBP

 As at 31 December                                                           2008             2008            2007                     2007
                                                                             Group            Bank            Group                    Bank
 Commission on letters of guarantee                                                  3,252           3,208            2,388                   2,334
 Commission on transactions with customers                                       16,154          15,714           13,604                     13,337
 Commission on credit cards and ATM                                              13,648          13,648           11,141                     11,141
 Commission on various banking transactions                                      23,564              9,030        22,116                      7,315
 Total                                                                           56,618          41,600           49,249                     34,127



32- Fee and commission expense                                                                                                            million LBP

 As at 31 December                                                           2008             2008            2007                     2007
                                                                             Group            Bank            Group                    Bank
 Commission on credit card and ATM                                               14,452          14,452           11,098                     11,098
 Commission on transactions with banks and financial institutions                    9,743           1,593        10,431                      1,749
 Commission on various banking transactions                                          5,559           5,399            1,933                   1,812
 Total                                                                           29,754          21,444           23,462                     14,659


33- Net gain on trading portfolio                                                                                                         million LBP

 As at 31 December                                                           2008             2008            2007                     2007
                                                                             Group            Bank            Group                    Bank
 Net (Loss)/Profit on trading portfolio                                              (320)               2             645                       166
 Dividends received on trading portfolio                                              108              61               97                        50
 Positive change in fair value of trading financial instruments                       547             547              756                       756
 Negative change in fair value of trading financial instruments                      (504)           (504)            (171)                    (171)
 Loss on foreign currency position                                               (1,115)             (900)            (462)                    (454)
 Gain on foreign currency position                                                   5,977           5,616            2,957                   4,332
 Total                                                                               4,693           4,822            3,822                   4,679



34- Net gain on financial investment                                                                                                      million LBP

 As at 31 December                                                           2008             2008            2007                     2007
                                                                             Group            Bank            Group                    Bank
 Net (Loss)/Profit on disposal of available-for-sale financial instruments            404             404              (43)                     (43)
 Dividends received on investments in subsidiaries                                      ---          9,594               ---                 26,371
 Dividend received on unquoted securities                                             132              60              138                        66
 Dividend received on quoted securities                                          13,537          13,537                 23                        23
 Net gain on sales of preferred shares                                                184               ---              ---                      ---
 Interest received on bonds - held-to-maturity                                        646               ---            524                        ---
 Dividend/interest received on preferred shares and
                                                                                     1,395              ---           1,370                       ---
 financial instruments available-for-sale
 Profit on disposal of investments in subsidiaries                                      ---             ---           1,394                       ---
 Total                                                                           16,298          23,595               3,406                  26,417




    Annual Report 2008                                                                                                         Credit Libanais Group
                                                                                                      Group Financial Results



35- Other operating income                                                                                          million LBP

  As at 31 December                                                2008             2008           2007             2007
                                                                   Group            Bank           Group            Bank
  Rental income                                                             975             790             760             760
  Income received on sales of real estate properties held-
                                                                           2,005           1,980             17              17
  in-recovery of debts
  Income received on sales of fixed assets                                  548             545             136             123
  Management fees income                                                      ---           829               ---           754
  Other operating income                                                   1,198            214              38               ---
  Total                                                                    4,726           4,358            951            1,654



36- Net losses on loans and advances                                                                                million LBP

  As at 31 December                                                2008             2008           2007             2007
                                                                   Group            Bank           Group            Bank
  Losses on loans & advances                                           (4,332)         (3,549)             (643)           (415)
  Allowances for impairement of loans & advances                       (8,389)         (8,375)         (9,168)          (9,093)
  Write-back of allowances for impairement of loans and advances       11,578          11,358              1,971           1,195
  Total                                                                (1,143)             (566)       (7,840)          (8,313)



37- Staff costs
                                                                                                                    million LBP

  As at 31 December                                                2008             2008           2007             2007
                                                                   Group            Bank           Group            Bank
  Salaries and wages                                                   39,831          34,536          37,538           32,660
  Board of Directors’ fees                                                  890             456             992             365
  Social Security contributions                                            6,079           5,343           5,375           4,692
  Provision for end of service indemnities                                 3,237           2,911            962             708
  Other allowances and benefits                                        10,257              9,527           7,788           7,249
  Total                                                                60,294          52,773          52,655           45,674




                                                                                                                                    185
38- Other expenses                                                                                                                 million LBP

 As at 31 December                                              2008                2008                2007                    2007
                                                                Group               Bank                Group                   Bank
 Taxes and similar disbursements                                        7,542               5,388               3,439                  2,478
 Premium for the guarantee of deposits                                  2,450               1,936               2,566                  2,129
 Rental charges and related expenses                                    3,092               3,430               2,854                  3,309
 Lawyers, audit and consulting fees                                     2,699               1,745               2,180                  1,320
 Data processing services                                               2,478               2,478               1,316                  1,872
 Mail and telecommunications (PTT, SWIFT)                               2,365               2,087               2,321                  2,101
 Maintenance and repairs                                                2,840               2,252               2,110                  1,933
 Electricity, water and heating                                         2,878               2,756               2,246                  2,174
 Travel and entertainment                                               1,424               1,202               1,226                  1,312
 Transportation charges                                                 1,251               1,029               1,009                     850
 Insurance premiums                                                     1,144               2,159               1,868                  2,251
 Advertising and public relation expenses                               4,099               3,838               3,095                  2,941
 Computer maintenance & charges                                         1,237               1,150               1,121                  1,065
 Office stationery and printings                                        1,278               1,002               1,054                     821
 Board of Directors attendance allowances                               1,388                712                1,220                     540
 Training, documentation and services fees                               452                 361                 410                      361
 Other expenses                                                          793                 561                 582                      527
 Total                                                               39,410                34,086           30,617                    27,984



39- Net profit for the year
Consolidated net profits for the year were originated from the following group entities:
                                                                                                                                   million LBP

 As at 31 December                                                                                      2008                   2007
                                                                                                        Group                  Group
 Credit Libanais sal                                                                                        69,153                    57,669
 Credit Libanais Investment Bank sal                                                                        10,081                    10,706
 Lebanese Islamic Bank sal                                                                                      (818)                   (275)
 Credit International sa                                                                                          40                       ---
 Credilease                                                                                                      186                     239
 Other subsidiaries and affiliates                                                                              5,722                  5,560
 Elimination of provision on Lebanese Islamic Bank                                                              1,606                      ---
 Elimination of interbank dividend distribution                                                             (8,216)                 (27,851)
 Total                                                                                                      77,754                    46,048



40- Income tax
Income tax charge is levied on profits emanating from the following entities and detailed as follows:
                                                                                                                                   million LBP

 As at 31 December                                                                                      2008                   2007
                                                                                                        Group                  Group
 Credit Libanais sal                                                                                        10,901                     6,376
 Credit Libanais Investment Bank sal                                                                            2,303                  2,403
 Other subsidiaries and affiliates                                                                               315                     198
 Total                                                                                                      13,519                     8,977




    Annual Report 2008                                                                                                  Credit Libanais Group
                                                                                                            Group Financial Results



41- Cash and cash equivalents
                                                                                                                          million LBP

  As at 31 December                                                     2008             2008           2007              2007
                                                                        Group            Bank           Group             Bank
  Cash, Compulsary Reserves and Central Banks                              773,523         692,172         729,050           652,505
  Banks and financial institutions                                         623,548         580,239         930,748           898,242
  Head office, branches, parent company, foreign sister,
                                                                                   ---      22,910                 ---        47,912
  financial institutions & subsdiaries
  Cash and due from banks                                                 1,406,071       1,295,321       1,659,798         1,598,659
  Less:
  Assets - maturity over one year
  Cash, Compulsory Reserves and Central Banks                             (376,875)       (313,560)       (352,755)         (295,470)
  Liabilities due within one year
  Banks & Financial institutions (Demand Deposit)                          (33,799)        (33,799)        (14,368)          (13,378)
  Banks & Financial institutions (Time Deposits)                           (21,136)         (8,264)        (28,498)           (9,150)
  Banks & Financial institutions                                           (14,852)        (15,413)         (4,793)           (4,793)
  Head office, branches, parent company, foreign
                                                                                   ---    (316,644)                ---      (158,834)
  sister, financial institutions & subsidiaries
                                                                          (446,662)       (687,680)       (400,414)         (481,625)
  Cash and cash equivalents                                                959,409         607,641        1,259,384         1,117,034



42- Earning per share
                                                                                                                          million LBP

  As at 31 December                                                     2008             2008           2007              2007
                                                                        Group            Bank           Group             Bank
  Net profits for the year (in Million LBP)                                 77,754          69,153          46,048            57,669
  Less: Proposed dividends to preferred shareholders (in Million LBP)       (5,936)         (5,936)         (5,936)           (5,936)
  Net profit related to ordinary shareholders (in Million LBP)              71,818          63,217          40,112            51,733
  Number of ordinary shares (in thousand shares)                            23,400          23,400          23,400            23,400
  Earning per common share (in LBP)                                             3,069           2,702           1,714            2,211



Contra accounts
43- Financing commitments given
                                                                                                                          million LBP

  As at 31 December                                                     2008             2008           2007              2007
                                                                        Group            Bank           Group             Bank
  Financial intermediaries                                                      2,927           2,927            282              282
  Commitments related to letters of credit (export)                             2,927           2,927            282              282
  Customers                                                                390,621         390,449         311,351           309,045
  Commitments related to letters of credit (import)                         85,948          85,776          65,006            62,700
  Credit limits - unutilized balances                                      304,673         304,673         246,345           246,345
  Total                                                                    393,548         393,376         311,633           309,327




                                                                                                                                         187
44- Commitments and contingencies given                                                                                        million LBP

 As at 31 December                                            2008                2008              2007                    2007
                                                              Group               Bank              Group                   Bank
 Commitments related to guarantees and endorsements                 50,967             62,862            41,858                   53,752


The obligations of guarantees on behalf of customers represent performance guarantees and other letters of guarantee by which the
Bank creates an irrevocable obligation to pay a specific amount to the beneficiary in the event of customer default. Consequently, the
amount which is expected to be paid is considerably lower than the total amount of these guarantees.

Engagements by guarantees and endorsements, and for the opening of documentary credits, are stated without deduction of the
respective margins which are included in the balance sheet under “Other liabilities”.

45- Deposits held under Murabaha Agreements                                                                                    million LBP

 As at 31 December                                            2008                2008              2007                    2007
                                                              Group               Bank              Group                   Bank
 Restricted deposits invested in Murabaha                           29,070                  ---             3,015                      ---



Through its majority owned sudsidiary, Lebanese Islamic Bank sal, the Group holds deposits invested on behalf of its customers in
Murabaha agreements. These deposits which are Shariaa - compliant are governed by Law No 575 dated 11 April 2004 regulating
Islamic banking activities in Lebanon.

46- Engagements by signature received                                                                                          million LBP

 As at 31 December                                            2008                2008              2007                    2007
                                                              Group               Bank              Group                   Bank
 Financial intermediairies                                            775                 910                678                     678



47- Other commitments received                                                                                                 million LBP

 As at 31 December                                            2008                2008              2007                    2007
                                                              Group               Bank              Group                   Bank
 Personal guarantees received                                     864,327            770,921            664,775                  579,054
 Mortgages and real securities received                          1,384,627          1,088,067          1,076,633                 815,377
 Mobilization bills received as guarantee                         422,058            293,869            328,095                  220,079
 Bills received as guarantee                                        11,007               8,555           12,697                    9,681
 Total                                                           2,682,019          2,161,412          2,082,182               1,624,191



48- Murabaha Agreements with correspondents                                                                                    million LBP

 As at 31 December                                            2008                2008              2007                    2007
                                                              Group               Bank              Group                   Bank
 Murabaha Agreements                                                29,070                  ---             3,015                      ---




    Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                                Group Financial Results



49- Transactions with related parties
                                                                                                                                million LBP

   As at 31 December                                               2008                2008               2007                 2007
                                                                   Group               Bank               Group                Bank
   Shareholders, directors and other key management
   personnel and close family members:
   Direct Facilities & Credit Balances:
           - Unsecured loans and advances                               21,586              19,537              21,695              19,596
           - Deposits                                                  134,968              68,447             114,542              56,577
   Indirect facilities:
           - Letters of credit                                              125                125                 101                 101
   Associated companies:
   Direct Facilities & Credit Balances:
           - Unsecured loans and advances                                   174               9,675                216                7,889
           - Deposits                                                   14,621              51,632              12,773              35,835
   Indirect facilities:
   - Letters of guarantees                                                 3,455              3,455               3,154               3,154
   Accrued interest payable
           - Deposits                                                      1,067               242                1,009                183
   Income statement
           - Interest income from loans and advances                       3,487              2,355               3,781               2,181
           - Interest expenses on deposits                              20,904                9,695             22,743              10,528



50- Solvency ratio (BIS capital adequacy ratio)
At 31 December 2008, the solvency ratio of the Bank (excluding net profits of the year) stood at 27.52% (compared to 31.63% at 31
December 2007), thus exceeding the minimum statutory level of 12%.
This ratio is calculated in accordance with the requirements of the Lebanese monetary authorities, and is in line with international
standards as set out in the Basle recommendations.

51- Commitments and contingencies
a) Due to the nature of its business, the Bank is a defendant in various that the legal proceedings. Management, after discussing with
its counselors all such cases and proceedings against the Bank, considers that the aggregate liability or loss, if any, resulting from an
adverse determination would not have a material effect on the consolidated financial position of the Bank.

b) The Bank’s books in Lebanon have not been reviewed by the tax authorities for the years 2006 and 2007. The ultimate outcome of
any such review can not be determined at this stage.

c) The Bank’s books in Lebanon have not been reviewed by the National Social Security Fund (NSSF) for the years 2006 and 2007
and 2008.

52- Risk management
In the ordinary course of business, the Bank is exposed to a variety of risks, the most important of which are liquidity risk, interest rate
risk, currency risk, credit risk and market risk. These risks are identified, measured and monitored through various control mechanisms
in order to price facilities and products on a risk adjusted basis and to prevent undue risk concentrations.
The independent risk control process does not include business risks such as changes in the environment, technology and industry.
They are monitored through the Group’s strategic planning process.
The Group’s risk management is the ultimate responsibility of the Board of Directors, who has also established independent bodies




                                                                                                                                               189
for managing and monitoring risks, namely the Risk Management Division and the Internal Audit.

Board of directors
Within the risk management framework, the Board of Directors:
- Defines the strategic objectives within the Group’s risk appetite and tolerance level;
- Approves the Risk Management Policy (RMP);
- Takes corrective action to develop the risk management process

Risk Management division
The main roles and responsibilities of the Risk Management Division are to:
- Assist the Executive Senior Management in managing the Group’s risks (i.e. identify, measure and analyse risks);
- Ensure that the capital adequacy ratio is adequate to cover credit, market and operational risks as defined by the Group’s regulator;
- Participate in the establishment of the risk management policy;
- Coordinate with the different specialized committees established by the Board of Directors.

53- Credit risk
Credit risk is the risk of a person or an organization defaulting in the repayment of their obligations to the Group in respect of the
terms and conditions of the credit facilities granted to them by the Group. The management minimizes this risk by spreading its loan
portfolio over all economic sectors and by adopting appropriate procedures and controls to evaluate the quality of the credit facilities
granted and the creditworthiness of the borrowers. The credit risk of connected accounts is monitored on a united basis. In addition,
the effective credit appraisal procedure for examining applications for credit facilities followed by the Group, adopts as the main criteria
the repayment capability and obtaining sufficient collateral. The continuous monitoring of credit accounts and the timely preventive
action further minimize to a large extent the exposure to credit risk.

Note 6 of this report show the distribution of loan portfolio by nature of facility, by economic sector and by type of collateral as at 31
December 2008 and 31 December 2007

54- Market risk
Market risk is defined as the potential loss in both on and off balance sheet positions resulting from movements in market risk factors
such as foreign exchange rates, interest rates, and equity prices.

The overall authority for market risk is vested in ALCO (Assets - Liability Committee) except for foreign exchange risk net open position
ceiling subject to applicable laws and regulations stipulated by BDL circular No 32.
ALCO responsibility regarding market risk is to measure, report and monitor all potential and actual market risks to which the Group is
exposed. The purpose is to introduce transparency around the treasury, investment portfolio, and asset and liability risk profile through
consistent and comprehensive risk measurements, aggregation, management and analyses. Policies are set and limits monitored in
order to ensure the avoidance of large, unexpected losses and the consequent impact of the Group’s safety and soundness.

55- Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under normal and stress
circumstances. To limit this risk, management has arranged diversified funding sources in addition to its core deposit base, manages
assets with liquidity in mind, and monitors future cash flows and liquidity on daily basis. This incorporates an assessment of expected
cash flows and the availability of high grade collateral which could be used to secure additional funding if required.
The Group maintains a portfolio of high marketable and diverse assets that can be easily liquidated in the event of an unforeseen
interpretation of cash flow. In addition, the Group maintains statutory deposits with the Central Banks.

The liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress factors relating to both




    Annual Report 2008                                                                                                Credit Libanais Group
                                                                                                             Group Financial Results



the market in general and specifically to the Group. The Group maintains a solid ratio of high liquid net assets in foreign currencies to
deposits and commitments in foreign currencies taking markets conditions into consideration.

The table below summarizes maturity profile of the Group assets and liabilities.

The Group’s consolidated assets and liabilities at 31 December 2008 are brokendown by maturity according to the following table:
                                                                                                                             million LBP

                 Amounts                     No maturity     Less than       3 to 6         6 to 12         Over 1            Total
                                              relating to    3 Months       Months          Months           Year
  Assets
  Cash, compulsory reserves and
                                                   45,383        340,710              ---       10,554         376,876          773,523
  Central banks
  Banks and financial institutions                    986        592,195              ---        7,637           31,730         632,548
  Trading assets                                    2,708             ---             ---             ---            ---          2,708
  Loans and advances to customers                   1,967        425,634       208,159         403,273         438,056        1,477,089
  Loans and advances to related parties                ---            ---             ---             ---        21,760          21,760
  Customers’ liability under acceptances           36,168             ---             ---             ---            ---         36,168
  Available-for-sale investment securities         21,154          3,041        50,000                ---      245,958          320,153
  Loans and receivables investment
                                                    9,903             ---             ---       46,060         533,614          589,577
  securities
  Held-to-maturity investment securities           56,093        129,473       225,588         151,918        2,052,090       2,615,162
  Investments in associates                         7,592             ---             ---             ---            ---          7,592
  Property and equipment                           88,065             ---             ---             ---            ---         88,065
  Intangible assets                                 2,433             ---             ---             ---            ---          2,433
  Unquoted assets - Ready for sale                 47,837             ---             ---             ---            ---         47,837
  Other assets                                     45,806             ---             ---             ---            ---         45,806
  Revaluation of other fixed assets                54,366             ---             ---             ---            ---         54,366
  Total assets                                    420,461      1,491,053       483,747         619,442        3,700,084       6,714,787
  Liabilities
  Banks and financial institutions                    823         59,553         7,485           2,785           24,922          95,568
  Customers’ accounts                              36,873      4,631,829       568,919         174,791         256,753        5,669,165
  Related parties’ accounts                         1,067        127,343        20,720                ---         1,526         150,656
  Certificates of Deposits                             ---            ---             ---             ---            ---              ---
  Customers’ acceptance liability                  36,168             ---             ---             ---            ---         36,168
  Current Tax liability                             2,264          4,833         4,172                ---            ---         11,269
  Other liabilities                                48,738         36,320         2,001                ---            ---         87,059
  Provisions for risks and charges                 20,762             ---             ---             ---            ---         20,762
  Revaluation of other fixed assets                54,366             ---             ---             ---            ---         54,366
  Total liabilities                               201,061      4,859,878       603,297         177,576         283,201        6,125,013
  Maturity gap                                    219,400     (3,368,825)     (119,550)        441,866        3,416,883         589,774




                                                                                                                                            191
The Group’s consolidated assets and liabilities at 31 December 2007 are broken down by maturity according to the following table:
                                                                                                                                   million LBP

                Amounts                     No maturity     Less than        3 to 6          6 to 12          Over 1              Total
                                             relating to    3 Months        Months           Months            Year
 Assets
 Cash, compulsory reserves and
                                                  36,433        303,288          19,597                ---        369,732            729,050
 Central banks
 Banks and financial institutions                  2,875        917,862               ---          5,000            5,011            930,748
 Trading assets                                    2,949             ---              ---              ---             470             3,419
 Loans and advances to customers                  53,698        313,408         184,378          269,051          308,102          1,128,637
 Loans and advances to related parties                ---            ---              ---              ---         21,911             21,911
 Customers’ liability under acceptances           27,331             ---              ---              ---              ---           27,331
 Available-for-sale investment securities          9,575          2,280               ---              ---         45,794             57,649
 Loans and receivables investment
                                                   8,262             ---              ---              ---        534,781            543,043
 securities
 Held-to-maturity investment securities           40,582         72,676         190,001          214,859        1,497,888          2,016,006
 Investments in associates                          6,117            ---              ---              ---              ---             6,117
 Property and equipment                           86,462             ---              ---              ---              ---           86,462
 Intangible assets                                 3,262             ---              ---              ---              ---            3,262
 Unquoted assets - Ready for sale                 48,255             ---              ---              ---              ---           48,255
 Other assets                                     36,744             ---              ---              ---              ---           36,744
 Revaluation of other fixed assets                54,366             ---              ---              ---              ---           54,366
 Total assets                                    416,911      1,609,514         393,976          488,910        2,783,689          5,693,000
 Liabilities
 Banks and financial institutions                    279         33,957           4,986            8,435           11,541             59,198
 Customers’ accounts                              28,813      3,954,018         441,837          212,377           54,167          4,691,212
 Related parties’ accounts                         1,009         55,894          53,950           16,888               583           128,324
 Certificates of Deposits                          1,959             ---              ---         90,450                ---           92,409
 Customers’ acceptance liability                  27,331             ---              ---              ---              ---           27,331
 Current Tax liability                                ---         7,084           1,927                ---              ---             9,011
 Other liabilities                                57,957          2,562               ---              ---              ---           60,519
 Provisions for risks and charges                 18,025             ---              ---              ---              ---           18,025
 Revaluation of other fixed assets                54,366             ---              ---              ---              ---           54,366
 Total liabilities                               189,739      4,053,515         502,700          328,150           66,291          5,140,395
 Maturity gap                                    227,172     (2,444,001)      (108,724)          160,760        2,717,398            552,605


56- Interest rate risk
Interest rate risk stems from the sensitivity of earnings to future movements and interest rates applied on assets and liabilities. The
Group’s management closely monitors interest rate fluctuations on a continuous basis and ensures that assets and liabilities are
matched and re-priced on a timely manner. 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 are re-priced in a given period. The most important source of interest rate risk is deriving from the
lending, funding and investing activities, where fluctuations in interest rates are reflected in interest margins and earnings.




    Annual Report 2008                                                                                                  Credit Libanais Group
                                                                                                               Group Financial Results



The Group’s sensitivity to interest rate risk as at 31 December 2008 was as follows:
                                                                                                                             million LBP

                 Amounts                     Less Than       3 to 6         6 to 12         Over 1          Non Interest      Total
                                             3 Months       Months          Months           Year          Earning Items
  Assets
  Cash, compulsory reserves and
                                                  89,968              ---       10,554        376,876            296,125        773,523
  Central banks
  Banks and financial institutions               480,086              ---        7,637         31,730            113,095        632,548
  Trading assets                                      ---             ---             ---            ---           2,708          2,708
  Loans and advances to customers                377,987       208,159         403,273        438,056             49,614       1,477,089
  Loans and advances to related parties               ---             ---             ---      21,760                 ---        21,760
  Customers’ liability under acceptances              ---             ---             ---            ---          36,168         36,168
  Available-for-sale investment securities         3,041        50,000                ---     245,958             21,154        320,153
  Loans and receivables investment
                                                      ---             ---       46,060        533,614              9,903        589,577
  securities
  Held-to-maturity investment securities         129,473       225,588         151,918       2,052,090            56,093       2,615,162
  Investments in associates                           ---             ---             ---            ---           7,592          7,592
  Property and equipment                              ---             ---             ---            ---          88,065         88,065
  Intangible assets                                   ---             ---             ---            ---           2,433          2,433
  Unquoted assets - Ready for sale                    ---             ---             ---            ---          47,837         47,837
  Other assets                                        ---             ---             ---            ---          45,806         45,806
  Revaluation of other fixed assets                   ---             ---             ---            ---          54,366         54,366
  Total assets                                 1,080,555       483,747         619,442       3,700,084           830,959       6,714,787
  Liabilities & shareholders’ equity
  Banks and financial institutions                25,756         7,485           2,785         24,922             34,620         95,568
  Customers’ accounts                          4,631,829       568,919         174,791        256,753             36,873       5,669,165
  Related parties’ accounts                      127,343        20,720                ---       1,526              1,067        150,656
  Customers’ acceptance liability                     ---             ---             ---            ---          36,168         36,168
  Current Tax liability                            4,833         4,172                ---            ---           2,264         11,269
  Other liabilities                               36,320         2,001                ---            ---          48,738         87,059
  Provisions for risks and charges                    ---             ---             ---            ---          20,762         20,762
  Revaluation of other fixed assets                   ---             ---             ---            ---          54,366         54,366
  Shareholders’ equity                                ---             ---             ---            ---         589,774        589,774
  Total liabilities & shareholders’ equity     4,826,081       603,297         177,576        283,201            824,632       6,714,787
  Interest rate sensitivity gap               (3,745,526)     (119,550)        441,866       3,416,883             6,327              ---
  Cumulative IR sensitivity gap               (3,745,526)   (3,865,076)     (3,423,210)        (6,327)                ---             ---




                                                                                                                                            193
The Group’s sensitivity to interest rate risk as at 31 December 2007 was as follows:
                                                                                                                                   million LBP

                Amounts                     Less Than        3 to 6         6 to 12         Over 1           Non Interest         Total
                                            3 Months        Months          Months           Year           Earning Items
 Assets
 Cash, Compulsory reserves and
                                                219,123         19,597                ---     369,732             120,598            729,050
 Central banks
 Banks and financial institutions               799,236               ---        5,000           5,011            121,501            930,748
 Trading assets                                      ---              ---             ---            470            2,949              3,419
 Loans and advances to customers                302,075        184,378         269,051        308,102              65,031          1,128,637
 Loans and advances to related parties               ---              ---             ---      21,911                  ---            21,911
 Customers’ liability under acceptances                 0             ---             ---             ---          27,331             27,331
 Available-for-sale investment securities         2,280               ---             ---      45,794               9,575             57,649
 Loans and receivables investment
                                                        0             ---             ---     534,781               8,262            543,043
 securities
 Held-to-maturity investment securities          72,676        190,001         214,859       1,497,888             40,582          2,016,006
 Investments in associates                           ---              ---             ---             ---           6,117               6,117
 Property and equipment                              ---              ---             ---             ---          86,462             86,462
 Intangible assets                                   ---              ---             ---             ---           3,262              3,262
 Unquoted assets - Ready for sale                    ---              ---             ---             ---          48,255             48,255
 Other assets                                        ---              ---             ---             ---          36,744             36,744
 Revaluation of other fixed assets                   ---              ---             ---             ---          54,366             54,366
 Total assets                                 1,395,390        393,976         488,910       2,783,689            631,035          5,693,000
 Liabilities & shareholders’
 Banks and financial institutions                14,690          4,986           8,435         11,541              19,546             59,198
 Customers’ accounts                          3,954,018        441,837         212,377         54,167              28,813          4,691,212
 Related parties’ accounts                       55,894         53,950          16,888               583            1,009            128,324
 Certificates of Deposits                            ---              ---       90,450                ---           1,959             92,409
 Customers’ acceptance liability                     ---              ---             ---             ---          27,331             27,331
 Current Tax liability                               ---              ---             ---             ---           9,011               9,011
 Other liabilities                                   ---              ---             ---             ---          60,519             60,519
 Provisions for risks and charges                    ---              ---             ---             ---          18,025             18,025
 Reevaluation of other fixed assets                  ---              ---             ---             ---          54,366             54,366
 Shareholders’ equity                                ---              ---             ---             ---         552,605            552,605
 Total liabilities & shareholders’ equity     4,024,602        500,773         328,150         66,291             773,184          5,693,000
 Interest rate sensitivity gap               (2,629,212)      (106,797)        160,760       2,717,398           (142,149)                 ---
 Cumulative IR sensitivity gap               (2,629,212)    (2,736,009)     (2,575,249)       142,149                  ---                 ---




    Annual Report 2008                                                                                                  Credit Libanais Group
                                                                                                                 Group Financial Results



57- Currency risk
Foreign exchange (or currency) risk is the risk that the value of a portfolio will fall as a result of changes in foreign exchange rates. The
major sources of this type of market risk are imperfect correlations in the movements of currency prices and fluctuations in the interest
rates. Therefore, exchange rates and relevant interest rates are acknowledged as distinct risk factors.
The Central Bank of Lebanon allows the Bank to maintain a currency exchange position, receivable or payable, that does not exceed
at any time 1% of total net equity on the condition that the global currency exchange position does not exceed 40% of total net equity.
This is subject to the Bank’s commitment to abide in a timely and consistent manner by the required solvency rate.
The Board has set limits on positions by currency. These positions are monitored constantly to ensure they are maintained within
established limits.

The table below shows the break down of assets and liabilities by currency as at 31 December 2008 and 31 December 2007.


   As at 31 December                                                  2008                              2007
                                                                      Group                             Group
         Amounts in millions of monetary units           Lebanese Pound Foreign Currencies Lebanese Pound Foreign Currencies
                                                              LBP            C/V USD            LBP            C/V USD
   Assets
   Cash, Compulsory Reserves and Central Banks                      243,482               351.60              183,010                362.22
   Banks and financial institutions                                  14,604               409.91                15,084               607.41
   Trading assets                                                        ---                 1.80                   ---                2.27
   Loans and advances to customers                                  440,337               687.73              370,009                503.24
   Loans and advances to related parties                                 ---                14.43                   ---               14.53
   Customers’ liability under acceptances                                ---                23.99                   ---               18.13
   Available-for-sale investment securities                         262,454                 38.27                4,592                35.20
   Loans and receivables investment securities                       57,206               353.15                56,885               322.49
   Held-to-maturity investment securities                         1,766,591               562.90             1,241,395               513.84
   Investments in associates                                          7,592                    ---               6,117                   ---
   Property and equipment                                            46,329                 27.69               71,541                 9.90
   Intangible assets                                                  2,433                    ---               3,262                   ---
   Unquoted assets - Ready for sale                                  11,055                 24.40                6,583                27.64
   Other assets                                                      20,342                 16.89               18,758                11.93
   Revaluation of other fixed assets                                 54,366                    ---              54,366                   ---
   Total assets                                                   2,926,791                 2,513            2,031,602                2,429
   Liabilities & shareholders’ equity
   Banks and financial institutions                                  12,688                 54.98                7,470                34.31
   Customers’ accounts                                            2,378,408              2,182.92            1,609,577             2,044.20
   Related parties’ accounts                                         78,622                 47.78               24,520                68.86
   Certificates of Deposits                                              ---                   ---                  ---               61.30
   Customers’ acceptance liability                                       ---                23.99                   ---               18.13
   Current Tax liability                                             11,269                    ---               9,011                   ---
   Other liabilities                                                 34,320                 34.98               19,272                27.36
   Provisions for risks and charges                                  18,572                  1.45               17,235                 0.52
   Revaluation of other fixed assets                                 54,366                    ---              54,366                   ---
   Shareholders’ equity                                             529,194                 40.19             482,804                 46.30
   Total liabilities & shareholders’ equity                        3,117,439                2,386            2,224,255                2,301
   Foreign currency position                                                              126.47                                     127.80




                                                                                                                                                195
58- Equity price risk
Equity price risk is the risk that the value of a portfolio will fall as a result of change in stock prices. Risk factors underlying this type of
market risk are a whole range of various equity (and index) prices corresponding to different markets (and currencies/maturities), in
which the Group holds equity-related positions.

The Group sets tight limits on equity exposures and the types of equity instruments that traders are allowed to take positions in.
Nevertheless, depending on the complexity of financial instruments, equity risk is measured in first cash terms, such as the market
value of a stock/index position, and also in price sensitivities, such as sensitivity of the value of a portfolio to changes in the underlying
asset price. These measures are applied to an individual position and/or a portfolio of equity products.

59- Operational risk
Operational risk is the risk of direct or indirect loss due to an event or action causing failure of technology, process infrastructure,
personnel, and other risks having an operational risk impact. The Group seeks to minimize actual or potential losses from operational
risks failure through a framework of policies and procedures that identify, assess, control, manage, and report those risks. Controls
include effective segregation of duties, access, authorization and reconciliation procedures, staff education and assessment
processes.

60- Fair value of financial assets and liabilities
The fair value of financial assets and liabilities as at 31 December 2008 was as follows:
                                                                                                                                     million LBP

 As at 31 December 2008                           Trading       Available-   Held-to-  Loans &     Other at            Total       Total Fair
                                                  Assets         For-Sale    Maturity Receivables Amortized           Carrying       Value
                                                                                                    Cost               Value
 Financial assets
 Cash, Compulsory deposits and
                                                          ---          ---           ---          ---     773,523       773,523        775,291
 deposits with Central Banks
 Deposits with banks and financial institutions           ---          ---           ---          ---     632,548       632,548        632,548
 Trading assets                                        2,708           ---           ---          ---           ---       2,708          2,708
 Loans and advances to customers                          ---          ---           ---          ---    1,477,089    1,477,089      1,479,412
 Loans and advances to related parties                    ---          ---           ---          ---       21,760       21,760         21,862
 Available-for-sale investment securities                 ---     320,153            ---          ---           ---     320,153        320,153
 Held-to-maturity investment securities                   ---          ---    2,615,162           ---           ---   2,615,162      2,601,175
 Loans and receivables investment securities              ---          ---           ---     589,577            ---     589,577        595,165
 Total                                                 2,708      320,153     2,615,162      589,577     2,904,920    6,432,520      6,428,314
 Financial liabilities
 Deposits and borrowings from banks                       ---          ---           ---          ---       95,568       95,568         95,832
 Customer’s accounts at amortized cost                    ---          ---           ---          ---    5,669,165    5,669,165      5,670,246
 Related parties’ accounts at amortized cost              ---          ---           ---          ---     150,656       150,656        150,659
 Liability under acceptances                              ---          ---           ---          ---       36,168       36,168         36,168
 Total                                                    ---          ---           ---          ---    5,951,557    5,951,557      5,952,905




    Annual Report 2008                                                                                                    Credit Libanais Group
                                                                                                               Group Financial Results



The fair value of financial assets and liabilities as at 31 December 2007 was as follows:
                                                                                                                               million LBP

  As at 31 December 2007                           Trading     Available-   Held-to-  Loans &     Other at          Total      Total Fair
                                                   Assets       For-Sale    Maturity Receivables Amortized         Carrying      Value
                                                                                                   Cost             Value
  Financial Assets
  Cash, Compulsory deposits and
                                                         ---          ---         ---            ---    729,050      729,050     730,488
  deposits with Central Banks
  Deposits with banks and financial institutions         ---          ---         ---            ---    930,748      930,748     928,786
  Trading assets                                      3,419           ---         ---            ---         ---       3,419        3,419
  Loans and advances to customers                        ---          ---         ---            ---   1,128,637   1,128,637    1,130,059
  Loans and advances to related parties                  ---          ---         ---            ---     21,911       21,911       22,013
  Available-for-sale investment securities               ---      57,649                         ---         ---      57,649       57,649
  Held-to-maturity investment securities                 ---          ---   2,016,006            ---         ---   2,016,006    2,012,098
  Loans and receivables investment securities            ---          ---         ---       543,043          ---     543,043     557,535
  Total                                               3,419       57,649    2,016,006       543,043    2,810,346   5,430,463    5,442,047
  Financial liabilities
  Deposits and borrowings from banks                     ---          ---         ---            ---     59,198       59,198       56,670
  Customers’ accounts at amortized cost                  ---          ---         ---            ---   4,691,212   4,691,212    4,691,472
  Related parties’ accounts at amortized cost            ---          ---         ---            ---    128,324      128,324     128,326
  Liability under acceptances                                                                            27,331       27,331       27,331
  Certificates of Deposits                               ---          ---         ---            ---     92,409       92,409       92,409
  Total                                                  ---          ---         ---            ---   4,998,474   4,998,474    4,996,208




                                                                                                                                             197
                                               Financial Results
Credit Libanais Investment Bank (CLIB)

Board of Directors                       201
Management’s Discussion and Analysis     202
Auditors’ Report                         205
Balance Sheet                            206
Statement of Income                      208
Statement of Cash Flows                  209
Statement of Changes in Equity           210
Annual Report 2008   Credit Libanais Group
                                                                                                Group Financial Results


Credit Libanais Investment Bank (clib)

                                         Board of Directors




                                         Dr. Joseph Torbey   Chairman &
                                                             General Manager




                                                              Members




                                                                               H.E. Dr. Samir        H.E. Mr. Jacques
                                                                               Makdessi              Joukhadarian




                                           Dr. Mohamad                         Dr. Chafic             Mr. Joe Issa
                                           Rahal                               Moharram               El Khoury




                                                                                                                          201
Management Discussion and Analysis of Results
Basis of Presentation
The following discussion and analysis have been prepared based on the audited consolidated financial statements of Credit Libanais
Investment Bank (“CLIB”) as at and for the years ended 31 December 2007 and 2008 and on selected financial information.


Analysis of Financial Position
1) Balance Sheet
a) Total Assets
In the year 2008, CLIB’s total assets rose by 10.5% (LBP 109.8 billion) to LBP 1,152.37 billion from LBP 1,042.60 billion in 2007.
This is mainly attributed to some 97.5% (LBP 150.7 billion) expansion in CLIB’s bank accounts with head office, branches and parent
company, which advanced to LBP 296.73 billion in 2008 up from LBP 152.88 billion in 2007. Concurrently, net loans and advances rose
by 6.9% to LBP 205.69 billion in 2008 up from LBP 192.42 billion in 2007.

CLIB’s balance sheet structure unveils a 29.7% contraction in net doubtful loans to around LBP 2.5 billion, down from LBP 3.5 billion
in 2007.

The composition of CLIB’s balance sheet reveals a steady structure in comparison with the year 2007, with Lebanese Treasury
Bills’ investments constituting a sizeable 35.18% share of the company’s total assets in 2008, followed by accounts with head office,
branches and parent company at a rate of 26.49%.
The following table sketches the changes in major asset categories year-on-year:
                                                                                                                              million LBP

 As at End of                                                                   2007                2008                % Change
 Cash and Banks                                                                      79,355             80,982               2.1
 Lebanese T-bills & Other Government Securities                                     439,208            405,351              -7.7
 Bonds and Other Fixed Income Securities                                             44,024             43,257              -1.7
 Head office, branches, parent company                                              154,608            305,280              97.5
      - Current accounts                                                            152,879            296,732              94.1
      - Time deposits                                                                  1,729               8,548           394.4
 Net loans and advances to customers                                                192,420            205,689               6.9
      - Commercial loans                                                            177,299            192,648               8.7
      - Loans and Advances to Related Parties                                          11,577           10,550              -8.9
      - Net Doubtful Loans                                                             3,544               2,491           -29.7
 Tangible Fixed Assets                                                               20,058             20,272               1.1
 Total Assets                                                                      1,042,602          1,152,365             10.5




   Annual Report 2008                                                                                              Credit Libanais Group
                                                                                                             Group Financial Results



b) Liabilities & Shareholder’s Equity
On the liabilities’ front, CLIB’s customer deposits ended the year 2008 higher by 16.6% at LBP 1,032.72 billion up from LBP 877.64
billion in 2007. The main driver behind said expansion was the 34.09% (LBP 55.98 billion) increase in time deposits to LBP 220.19
billion up from LBP 164.21 billion in 2007.

The rise in time deposits was coupled with a 12.5% increase in saving accounts which firmed at LBP 787.55 billion. The aggregate
variation in customer deposits was, however, diluted by a 72.1% contraction in the accounts of the head office, branches and parent
company, which regressed to LBP 12.53 billion.
On the equity side, shareholder’s equity retreated to LBP 109.91 billion in 2008, 0.9% lower for the year, owing to a 4.9% drop in
reserves and premiums to LBP 16.06 billion.

The following table sketches the development of some major liability and equity accounts during the period 2007-2008:
                                                                                                                           million LBP

   As at End of                                                                    2007               2008              % Change
   Banks & Financial Institutions (Time Deposits)                                          4,614                 0        -100.0
   Head office, branches, parent company deposits                                         44,905             12,534        -72.1
   Customer deposits                                                                  877,641           1,023,724          16.6
   Share capital                                                                          80,000             80,000         0.0
   Reserves for General Banking Risks                                                      3,347              3,774        12.8
   Reserves & preniums (and equity differences)                                           16,891             16,056        -4.9
   Total Equity                                                                        110,944            109,911          -0.9
   Total Liabilities & Shareholder’s Equity                                          1,042,602          1,152,365          10.5



The following tables portray the evolution of CLIB’s sources and uses of funds during the period 2007-2008:
                                                                                                                           million LBP

   As at End of                  Sources of Funds                                  2007               2008              % Change
   Banks & Financial Institutions (Time Deposits)                                          4,614                 0          0.0
   Head office, branches, parent company                                                  44,905             12,534         1.2
   Customer deposits                                                                  877,641           1,023,724          98.8
   Total                                                                              927,160           1,036,258          100.0



It is obvious from the above table that customer deposits remain CLIB’s main source of financing with a contribution of 98.8% to total
funding sources in 2008.
                                                                                                                           million LBP

   As at End of                    Uses of Funds                                   2007               2008            % of Total Uses
   Banks & Financial Institutions (Current Accounts)                                        761                777          0.1
   Head office, branches, parent company                                              154,608             305,280          57.2
      - Current Accounts                                                              152,879             296,732          55.6
      - Time Deposits                                                                      1,729              8,548         1.6
   Net Loans                                                                          192,420             205,689          38.5
      - Commercial Loans                                                              177,299             192,648          36.1
      - Loans and Advances To Related Parties                                             11,577             10,550         2.0
      - Net Doubtful Loans                                                                 3,544              2,491         0.5
   Total Fixed Assets                                                                     21,805             22,049         4.1
   Total                                                                              369,594             533,795          100.0




                                                                                                                                         203
On the funds’ utilization front, the above analysis reveals that the expansion in CLIB’s total uses of funds owes particularly to the increase
in net commercial loans and to the company’s current accounts with head office, branches and parent company. It is worth highlighting
that CLIB’s current accounts with head office, branches and parent company constituted the bulk of CLIB’s funds deployment at a ratio
of 58.1% in 2008 up from 42.93% in 2007. Nevertheless, CLIB’s lending portfolio’s share of total funds utilization eased to 38.5% in
2008 in comparison with 52.1% in 2007.

2) Income Statement
Credit Libanais Investment Bank posted net after tax profits of LBP 10.08 billion in 2008, slightly below the LBP 10.71 billion level
registered in 2007. This is partly attributed to a 65.3% regression in net commission income coupled with a 25.4% contraction in
profits on financial operations to LBP 0.26 billion and LBP 3.50 billion respectively. Net interest income, on the other hand, rose by a
staggering 36.6% to LBP 17.78 billion, up from LBP 13.02 billion in 2007. Consequently, net financial income ended the year 16.7%
higher at LBP 21.54 billion in 2008 up from LBP 18.46 billion in 2007.

Concurrently, CLIB’s general operating expenses rose from LBP 5.66 billion in 2007 to LBP 6.95 billion in 2008, counterbalancing the
growth in net financial income. Another item that reduced the profits of CLIB was the provision charge constituted during 2008 for the
impairment of the financial investment in the affiliated bank “Lebanese Islamic Bank sal” for LBP 1.6 billion.
The following table highlights the yearly change in major financial accounts in CLIB’s consolidated income statement:
                                                                                                                                    million LBP

  As at End of                                                                        2007                2008                % Change
  Interest Received                                                                        77,313              82,320              6.5
  Interest Paid                                                                            64,296              64,544              0.4
  Net Interest Income                                                                      13,017              17,776             36.6
  Net Comissions Received                                                                     751                 260            -65.3
  Profit on Financial Operations                                                             4,689               3,499           -25.4
  Provisions & Write-offs of Doubtful Loans                                                   311              (2,201)           -807.6
  Net Financial Income                                                                     18,457              21,536             16.7
  General Operating Expenses                                                                 5,659               6,951            22.8
  Net Operating Income (Before Tax)                                                        13,109              12,384             -5.5
  Net Income                                                                               10,706              10,081             -5.8


CLIB’s profits are stated on an individual basis and do not include the share of CLIB in the companies in which it holds direct interest.
After consolidating the share of CLIB in the profits of affiliated companies, net profits for the year 2008 would aggregate LBP 11.95
billion compared to 12.78 billion a year before.

Pre-tax return on average equity and on average assets reached 13.39% and 1.30% respectively in 2008, compared to 13.35% and
1.40% respectively in 2007.




                                                                                                                  Joseph Torbey
                                                                                                            Chairman & General Manager




    Annual Report 2008                                                                                                   Credit Libanais Group
                                                                                                                Group Financial Results




Independent Auditors’ Report


To the Shareholders,
We have reviewed the accompanying financial statements of Credit Libanais Investment Bank sal, which comprise the balance sheet
as at 31 December 2008, the income statement, cash flow statement and statement of changes in equity for the years then ended, and
a summary of significant accounting policies and other explanatory notes.

Board of Directors’ Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with International
Financial Reporting Standards. This responsibility includes: designing, implemeting and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit, We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable asssurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
manegement, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements give a true and fair view of the financial position of Credit Libanais Investment Bank sal as of 31
December 2008 and of its financial performance and its cash flow for the years then ended in accordance with International Financial
Reporting Standards.




Beirut, Lebanon                                                                                              Gerard Zovighian
March 27, 2009                                                                                          BDO Fiduciaire du Moyen-Orient




                                                                                                                                               205
Balance Sheet
                                                                                                                         million LBP

As at 31 December                                                                              2008                   2007
Cash, Compulsory Reserves and Central Banks                                                        80,205                   78,594
Banks and financial institutions                                                                       777                      761
Head office, branches, parent company, foreign sister, financial institutions & subsidiaries      305,280                  154,608
Trading assets                                                                                         976                    1,224
Loans and advances to customers                                                                   195,139                  180,843
Loans and advances to related parties                                                              10,550                    11,577
Available for sale investment securities                                                           28,744                   20,973
Loans and receivables investment securities                                                           1,082                 32,477
Held-to-maturity investment securities                                                            448,608                  483,231
Investments in associates                                                                          56,228                   54,228
Property and equipment                                                                                2,196                   2,515
Intangible assets                                                                                     1,777                   1,747
Unquoted assets - Ready for sale                                                                   18,077                   17,544
Other assets                                                                                          2,726                   2,280
Total Assets                                                                                    1,152,365                1,042,602




Off Balance Sheet
Engagements by signature received                                                                  12,362                   12,497
Other commitments received                                                                        501,304                  445,306
                                                                                                  513,666                  457,803




  Annual Report 2008                                                                                          Credit Libanais Group
                                                                                                     Group Financial Results




                                                                                                                   million LBP

Liabilities                                                                                   2008                 2007
Banks & financial institutions                                                                          ---               4,614
Head office, branches, parent company, foreign sister financial institutions & subsidiaries       12,534               44,905
Customers’ accounts                                                                              934,908              795,739
Related parties’ accounts                                                                         88,815               81,902
Current Tax liability                                                                                  861                1,033
Other liabilities                                                                                    4,724                2,890
Provisions for risks and charges                                                                       611                 575
Total Liabilities                                                                              1,042,453              931,658




Equity
Common shares                                                                                     80,000               80,000
Reserve related to capital                                                                        19,297               17,800
Reserve for revaluation of financial instruments                                                  (2,113)                    ---
Other reserves                                                                                       2,647                2,438
Net profit for the year                                                                           10,081               10,706
Total equity                                                                                     109,912              110,944
Total Liabilities and Equity                                                                   1,152,365             1,042,602




Off Balance Sheet
Financing commitments given to cutomers                                                                603                 603
                                                                                                       603                 603




                                                                                                                                   207
Statement of Income
                                                                             million LBP

As at 31 December                                  2008                   2007
Interest income                                       82,320                    77,313
Interest expense                                     (64,544)                  (64,296)
Net interest income                                   17,776                    13,017
Fee and commission income                                 1,907                  1,306
Fee and commission expense                            (1,647)                     (555)
Net fee and commission income                              260                      751
Net gain on trading portfolio                               60                      522
Net gain on financial investment                          3,205                  4,153
Other operating income                                     234                       14
Net financial revenues                                21,535                    18,457
Net losses on loans and advances                          (594)                     311
Allownce for impairment of investment securities      (1,606)                        ---
Net financial revenues                                19,335                    18,768
Staff costs                                           (2,209)                   (2,581)
Depreciation and amortization                             (381)                   (235)
Other expenses                                        (4,361)                   (2,843)
General operating expenses                            (6,951)                   (5,659)
Operating Income                                      12,384                    13,109
Profit before income tax                              12,384                    13,109
Income tax expense                                    (2,303)                   (2,403)
Net Profit for the Period                             10,081                    10,706




   Annual Report 2008                                             Credit Libanais Group
                                                                                                                Group Financial Results




Statement of Cash Flows
                                                                                                                              million LBP

 As at 31 December                                                                                            2008            2007
 Cash flows from operating activities:
 Net income                                                                                                      10,081           10,706
 Adjustments to reconcile net profit to cash provided by operating activities:
 Allowances for impairement of loans & advances                                                                         ---            57
 Depreciation and amortization                                                                                        381             235
 Variation in provision for risks and charges                                                                          36              92
 Variation in trading assets and available for sale (Treasury Bills)                                             (9,204)                ---
 Variation in loans and advances to customers                                                                   (14,296)          11,229
 Variation in loans and advances to related parties                                                                  1,027            162
 Variation in other assets                                                                                           (447)           (173)
 Variation in customers’ accounts                                                                               139,169          (71,807)
 Variation in related parties’ accounts                                                                              6,914       (24,615)
 Variation in current tax liability                                                                                  (172)             47
 Variation in other liabilities                                                                                      1,833           1,259
 Net cash from (used in) operating activities                                                                   135,322          (72,808)
 Cash flows from investing activities:
 Variation in trading assets and available for sale investment securities                                            1,681           (550)
 Variation in tangible and intangible assets                                                                          (91)        (1,363)
 Variation in unquoted assets - Ready for sale                                                                       (553)        (7,177)
 Variation in investment in associates                                                                           (2,000)             1,743
 Variation in loans & receivables investment securities                                                          31,395          (24,345)
 Variation in held-to-maturity investment securities                                                             34,623           52,780
 Variation in deposits at banks & financial institutions (LT)                                                    (6,030)         (51,255)
 Net cash from (used in) investing activities                                                                    59,045          (30,167)
 Cash flows from financing activities:
 Variation in head office, branches, parent company, foreign sister, financial institutions & subsidiairies      (5,489)                ---
 Distribution to ordinary shareholders                                                                           (9,000)         (27,000)
 Variation in unrealized profits or losses                                                                       (2,113)                ---
 Net cash (used in) financing activities                                                                        (16,602)         (27,000)
 Net variation in cash and cash equivalents                                                                     177,765         (129,975)
 Cash and cash equivalents - Beginning of year                                                                  127,158          257,133
 Cash and cash equivalents - End of year                                                                        304,923          127,158




                                                                                                                                              209
Statement of Changes in Equity
                                                                                                                                    million LBP

As at 31 December                         Share        Legal   Reserves    Other       Reserve for Unrealized        Profit for      Total
                                                                                       Real Estate
                                          Capital     Reserve for General Reserves     Properties   Losses           the Year       Equity
                                                                Banking                      (under
                                                                                       liquidation) held
                                                                                         in recovery of
                                                                 Risks                        debts

At 31 December 2006                         80,000      13,341     2,887     19,733                89          ---       11,188       127,838
Allocation of 2006 net profit                   ---      1,111       460      9,534                77          ---     (11,188)             ---
Divident paid to shareholders                   ---         ---       ---   (27,000)                ---        ---           ---      (27,000)
Net profit for the year 2007                    ---         ---       ---        ---                ---        ---      10,706         10,706
At 31 December 2007                         80,000      14,452     3,347      2,273               166          ---      10,706        110,944
Allocation of 2007 net profit                   ---      1,071       427      8,677               531          ---     (10,706)             ---
Reversal of reserve for real estate
                                                ---         ---       ---         4                (4)         ---           ---            ---
properties (under liquidation)
Divident paid to shareholders                   ---         ---       ---    (9,000)                ---        ---           ---       (9,000)
Unrealized losses on available for sale         ---         ---       ---        ---                ---    (2,113)           ---       (2,113)
Net profit for the year 2008                    ---         ---       ---        ---                ---        ---      10,081         10,081
At 31 December 2008                         80,000      15,523     3,774      1,954               693      (2,113)      10,081        109,912




   Annual Report 2008                                                                                                    Credit Libanais Group
Group Financial Results




                          211
                                                      Financial Results
Credit Libanais d’Assurance et de Reassurance (CLA)

Board of Directors                             215
Management’s Discussion and Analysis           216
Auditors Report                                219
Balance Sheet                                  220
Statement of Income                            221
Statement of Cash Flows                        222
Statement of Changes in Shareholders’ Equity   223
Annual Report 2008   Credit Libanais Group
                                                                                                                                   Group Financial Results


Credit Libanais d’Assurances et de Reassurances (CLA)

                                                        Board of Directors
                                                                                                   Members




                                                        Mr. Jacques          Chairman &                               Dr. Joseph           Mr. Khaldoun
                                                        Sehnaoui             General Manager                          Torbey               Barakat




                                                          H.E. Mr. Jacques                     Mr. Najib Takieddine
                                                          Joukhadarian




                                                                                                Dr. Mohamad
                                                                                                Rahal




                                                                                                                                                             215
Management Discussion and Analysis of Results
1- Presentation and Activities of the Company
Credit Libanais d’Assurances et de Reassurances SAL is a Lebanese joint stock company established and registered at the Commercial
register of Beirut on March 17, 1987. The capital of the company (LBP 4.370.000.000) is fully paid and divided into 230.000 shares of
LBP 19.000 each.

The company is engaged in all kinds of insurance and reinsurance operations, in Lebanon and overseas, according to the current
regulation and, in particular to the regulation relevant to the insurance sector. The company’s major shareholders are Credit Libanais
Bank sal (66,97%) and Agence Generale de Courtage d’Assurances sal (33%).


2- Basis of Preparation
a -Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards(IFRS) and in accordance
with the Ministry of Economy and Trade circulars and the Lebanese chart of accounts for insurance companies.

b – Accounting conventions
The financial statements have been prepared under the historical cost convention, on a basis consistent in all material respects with
previous years.

c - Functional and presentation currency
Financial statements are presented in Lebanese Pounds which is the company’s reporting currency. However, the currency of the
economic environment in which the company operates (functional currency) is the U.S Dollars.


3- A Year in Review
Credit Libanais d’Assurances et de Reassurances (“CLA”) has demonstrated once more a considerable business performance through
an outstanding increase in written permiums during the year 2008, exceeding the industry average for the same year.

Despite the economic difficulties prevailing in the industry, CLA has once again achieved a 45.46% increase in the premiums. The main
drivers behind the increase in the premiums was mainly attributed to client retention strategy adopted by the company since many
years, as well as to the long-term single premium insurance policies linked to long-term loans granted by banks and less affected by
the crisis.

The increase in total assets is another sign of the company’s strength during 2008. The company’s total assets increased by 38.14% in
2008 to reach LBP 101.52 billion as at 31/12.2008 compared to LBP 73.49 billion as at year-end 2007. This was driven by an increase
in technical reserves on single premiuim policies.

Cash flow statement for the company at year-end 2008 showed a considerable increase at all levels. Net cash provided from operating
activities increased by 87.22% from LBP 10.33 billion to LBP 19.35 billion in 2008.

Total business volume generated from single premium policies for the year 2008 represented 47.59% of total gross written premiums
and therefore amounting to LBP 11.08 billion in 2008. The gross written premiums amounted to LBP 23.27 billion including single
premium policies which are mostly from the life and motor insurance lines. Gross written premiums for the life insurance business




   Annual Report 2008                                                                                            Credit Libanais Group
                                                                                                           Group Financial Results




amounted to LBP 9.43 billion in 2008.

Net profits recorded in 2008 amounted to LBP 5.27 billion as compared to LBP 4.72 billion in 2007, with a percentage increase of
11.68% mainly attributed to the increase of operating and financial income.


Performance by Class of Business
Motor
The motor line of business achieved a substantial increase in premiums from LBP 2.49 billion in 2007 to LBP 4.84 billion for the year
under review without taking into account single premiums policies. Single premiums policies issued for car loans granted by banks
amounted to LBP 5.97 billion in 2008 and represent 55.24% of the premiums generated by this line of business.

The loss ratio for the motor class of business for the year 2008 based on accounting year production is 77.17% as compared to
102.55% in 2007.

Marine
The marine business showed a slight increase in premiums generated in 2008 from LBP 159 million in 2007 to LBP 186 million in
2008.

Fire
In 2008, CLA achieved a considerable growth in the premiums generated under the fire business class. The premiums income for
the year 2008 totaled LBP 804 million, well above the LBP 650 million achieved in the year 2007 with a percentage increase of
23.57% excluding single premiums policies. The single premium fire policies issued during the year 2008 amounted to LBP 1.23 billion
representing 60.37% of the total fire business generated during the year 2008 directly related to housing loans granted by banks to
their clients.

Life
The life insurance business once again showed a considerable development with respect to premium generated for the year under
review.

In 2008, the generated income under the life business totaled LBP 5.55 billion as compared to LBP 4.28 billion in 2007, a percentage
increase of 29.71% excluding single premium policies. Single premium policies contributed mainly to the increase in the premiums
recorded for the year 2008 representing 41.17% of this line total business generated for the year under review. These single premiums
policies were issued in relation to housing loans and car loans granted to clients by banks over medium and long term duration.

The loss ratio recorded for the year 2008 is 12.78% with a net decrease over the loss ratio of 42.41% recorded in the previous year.

Casualty
Casualty business premium income generated for the year 2008 amounted to LBP 824 million, as compared to LBP 813 million in
2007, an annual increase of 13.53%

The branches falling under the casualty class are mainly Hospitalization, Workmen’s compensation, personal accident, theft on
property, etc. The loss ratio calculated on this line of business showed a slight increase from 37.27% in 2007 to 40.64% in 2008.




                                                                                                                                        217
Technical Reserves
At the end of year 2008, an increase in the unexpired risks reserves has been recorded to become LBP 44.17 billion in 2008 as
compared to LBP 28.15 billion in 2007. This increase in mainly due to the fact that technical reserves were accounted for on single
premium policies.

An increase in outstanding claims reserves led to a decrease in the loss ratio for all lines to reach 41.04% in 2008 as compared to
56.94% in 2007.

Outstanding claims reserves increase from LBP 1.15 billions in 2007 to LBP 1.41 billion in 2008 excluding IBNR due to the increase in
claims volume recorded under the motor line business.

As a result, CLA recorded as technical reserves LBP 45.96 billion in its books in 2008 as compared to LBP 29.48 billion in 2007 with
an increase of 55.89% mainly due to the increase in gross written premiums recorded during the year.




   Annual Report 2008                                                                                           Credit Libanais Group
                                                                                                               Group Financial Results




Independent Auditors Report


To the Shareholders,
We have audited the accompanying financial statements of Credit Libanais d’Assurances et de Reassurances sal, which comprise
the balance sheet as at 31 December 2008 and the income statement, cash flow statement and statement of changes in shareholders’
equity for the year then ended, and a summary of significant accounting policies and other explanatory notes.


Managements’ responsibility for the financial statements
The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International
Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error;
selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.


Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the financial statements are free from material misstatement.


An audit involves performing procedure to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the
financial statements whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements, in order to design audit procedures that are appropriate
for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies and reasonableness of accounting estimates by Management as
well as evaluating the overall presentation of the financial statements.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the company as of 31 December
2008 and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting
Standards.




Beirut, Lebanon                                                                                             Gérard Zovighian
20 February 2009                                                                                      BDO Fiduciaire du Moyen-Orient




                                                                                                                                             219
Balance Sheet                                                                    million LBP

As at 31 December                                     2008                    2007
Assets
Net fixed assets                                         618,904                   280,436
     - Property and equipment                            586,734                   258,041
     - Intangible assets                                     32,170                  22,395
Financial assets                                       16,839,559               10,979,138
     - Held to maturity investments                    16,828,253               10,967,832
     - Unquoted investments                                  11,306                  11,306
Reinsurance share in technical reserves for            25,471,988               18,439,141
     - Unexpired risks                                 24,705,898               17,876,647
     - Outstanding claims                                530,574                   490,416
     - Claims incurred but not reported                  235,516                     72,078
Time deposits                                          43,475,342               36,402,989
Current assets                                         15,111,334                7,383,730
     - Preniums receivable - Net                         925,316                   461,327
     - Reinsurance balances receivable                  1,711,969                1,352,649
     - Other debtors                                         12,581                  38,733
     - Prepaid commissions                              6,403,899                3,467,547
     - Cash in hand and at banks                        6,057,569                2,063,473
Total                                                 101,517,127               73,485,433




Liabilities & shareholders’ equity
Shareholders’ equity                                   25,913,035               23,258,074
     - Capital                                          4,370,000                4,370,000
     - Legal reserve                                    1,457,000                1,457,000
     - Other reserves                                  14,818,012               12,713,692
     - Profit for the year                              5,268,023                4,717,383
Liabilities
Provisions for end of service indemnity                  467,962                   414,090
Reinsurance deposits                                    1,701,842                1,086,105
Technical reserves for                                 45,960,174               29,481,961
     - Unexpired risks                                 44,172,257               28,149,112
     - Outstanding claims                               1,408,346                1,144,814
     - Reserve for claims incurred but not reported      327,496                   149,214
     - Reserve for loss adjustment expenses                  52,075                  38,821
Banks overdraft                                                940                      882
Current liabilities                                    27,473,174               19,244,321
     - Reinsurance balances payable                    23,214,325               16,470,766
     - Premiums payable                                  212,312                   119,641
     - Social Security contributions                         30,183                  23,400
     - Taxes payable                                    1,877,887                  909,231
     - Unearned commissions                             1,969,348                1,602,376
     - Accrued charges and other creditors               169,119                   118,906
Total                                                 101,517,127               73,485,433




   Annual Report 2008                                                 Credit Libanais Group
                                                                                              Group Financial Results




Statement of Income                                                                                         million LBP

 As at 31 December                                                    2008                                 2007
                                                Gross Operations Ceded Operations Net Operations      Net Operations
 Premiums and related accounts
 Premiums and accessories                             28,677,509      (10,623,607)      18,053,902            7,902,901
 Changes in unexpired risks reserve                  (16,023,145)       6,829,251       (9,193,894)           (717,512)
 Total                                                12,654,364       (3,794,357)       8,860,008            7,185,389
 Claims and related accounts
 Claims paid                                          (3,765,910)         849,149       (2,916,761)         (2,102,067)
 Changes in outstanding claims reserve                  (455,068)         203,596        (251,472)            (235,864)
 Total                                                (4,220,979)       1,052,745       (3,168,234)         (2,337,932)
 Technical Margin                                      8,433,386       (2,741,612)       5,691,774            4,847,457


                                                                                                            million LBP

 As at 31 December                                                                     2008                2007
 Technical margin                                                                        5,691,774            4,847,457
 Other operating income                                                                    722,473             779,556
     - Commissions received on ceded premiums                                              457,202             265,277
     - Profit sharing commission                                                           265,271             514,280
 Other operating charges                                                                (1,887,835)         (1,438,827)
     - Rebates & commissions                                                            (1,887,835)         (1,438,827)
 General and administrative expenses                                                    (2,614,632)         (2,169,891)
     - General expenses                                                                 (2,424,192)         (2,000,556)
     - Depreciation charge                                                                (84,638)             (58,637)
     - Provisions for end of service                                                     (105,801)            (110,697)
 Net operating income                                                                   1,911,7891            2,018,296
 Net financial income                                                                    3,640,243            2,845,308
     - Financial income                                                                  3,876,153            3,066,446
     - Financial charges                                                                 (235,911)            (221,137)
 Technical and financial income                                                          5,552,024            4,863,605
 Other non operating charges/income                                                           (686)               22,304
 Provisions written back                                                                      1,495                8,846
 Profit Before Taxation                                                                  5,552,832            4,894,755
 Income Tax Expense                                                                      (284,809)            (177,372)
 Net Profit for the Year                                                                 5,268,023            4,717,383




                                                                                                                           221
Statements of Cash Flows
                                                                                         million LBP

As at 31 December                                             2008                    2007
Operating activities
Profit for the year                                            5,268,023                 4,717,383
Adjusted by:
     - Depreciation charges                                          84,638                  58,637
     - Variation in provision for end of service                     53,872                110,697
     - Variation in accrued charges and other creditors              50,213                   7,584
     - Variation in other debtors                                    26,152                (34,914)
     - Variation in reinsurance share in technical reserves   (7,032,847)              (4,967,776)
     - Variation in technical reserves                        16,478,213                 5,921,152
     - Variation in unearned commissions                         366,972                   498,850
     - Variation in prepaid commissions                       (2,936,352)                (780,533)
     - Variation in premiums and reinsurance payables          6,836,230                 4,842,350
     - Variation in social security and taxes payable            975,439                   145,655
     - Variation in reinsurance receivables                     (359,319)                (398,181)
     - Variation in net premiums receivable                      463,989                   211,557
     - Net book value of assets disposed off                           916                    1,968
Net cash provided by operating activities                     19,348,161                10,334,428
Financing activities
     - Variation in reinsurance deposits                         615,737                   165,406
     - Divident distributed                                    2,613,062               (3,590,450)
Net cash used in financing activities                         (1,997,326)              (3,425,044)
Investing activities
     - Acquisition of fixed assets                              (424,022)                  (94,068)
     - Variation in time deposits (more than 3 months)         6,291,913               (1,147,399)
    - Variation in held to maturity investments               (5,860,421)                  125,559
Net cash used in investing activities                                 7,470            (1,115,908)
Net variation in cash and cash equivalents                    17,358,305                 5,793,476
     - Cash & cash equivalents at the beginning of the year   18,479,872                12,686,396
     - Cash & cash equivalents at the end of the year         35,838,177                18,479,872




   Annual Report 2008                                                         Credit Libanais Group
                                                                                              Group Financial Results




Statement of Changes in Shareholders’ Equity
                                                                                                            million LBP

                                     Capital          Legal           Other              Profit         Shareholders’
                                                     Reserve         Reserves         For The Year         Equity
 Balance as of 1 January 2007           4,370,000       1,457,000       11,596,187         4,707,955         22,131,142
 Transfer profit for the year 2006             ---             ---       1,117,505        (1,117,505)                ---
 Dividend distributed                          ---             ---              ---       (3,590,450)        (3,590,450)
 Profit for the year 2007                      ---             ---              ---        4,717,383          4,717,383
 Balance as of 31 December 2007         4,370,000       1,457,000      12,713,692          4,717,383         23,258,074
 Transfer profit for the year 2007             ---             ---      2,104,320         (2,104,320)                ---
 Divident distributed                          ---             ---              ---       (2,613,062)        (2,613,062)
 Profit for the year 2008                      ---             ---              ---        5,268,023          5,268,023
 Balance as of 31 December 2008         4,370,000       1,457,000      14,818,012          5,268,023         25,913,035




                                                                                                                           223
                     List of Correspondent Banks




                                                              Help line for transfers

                                                         Central Processing Department
                                                   Phone : 961 1 258 106/9 Ext. 100/111
                                                                  Fax : 961 1 257 635/6




Annual Report 2008                                          Credit Libanais Group
                                                                    List of Correspondent Banks




Country               Bank’s name
Algeria               Compagnie Algérienne de Banque - “CA BANK” - Algiers
                      Arab Banking Corporation - Algiers
Australia             Westpac Banking Corporation - Sydney
Austria               Unicredit CAIB AG - Vienna
                      Raifeissen Zentralbank Osterreich AG (RZB-Austria) - Vienna
Bahrain               National Bank of Bahrain - Manama
                      Arab Banking Corporation BSC - Manama
                      The Arab Investment Company SAA - Manama
Belgium               KBC Bank NV - Brussels
                      Fortis Bank SA/NV - Brussels
Bulgary               Bulbank LTD - Sofia
Canada                National Bank of Canada - Montreal
                      Bank of Montreal - Montreal
                      Royal Bank of Canada - Montreal
Czech Republic        Ceskoslovenska Obchodni Banka - Prague
China and Hong Kong   Bank of China - Beijing
                      JP Morgan Chase Bank NA - Shanghai
                      The Bank of New York - Shanghai
                      Commerzbank AG - Shanghai
                      HSBC Bank LTD - Hong Kong
                      JP Morgan Chase Bank NA - Hong Kong
                      The Bank of New York - Hong Kong
                      UBAF (Hong Kong) LTD - Hong Kong
Cyprus                Bank of Cyprus Public Company Limited - Nicosia
                      Marfin Popular Bank Co. Ltd. - Nicosia
Denmark               Danske Bank A/S - Copenhagen
                      Nordea Bank Danmark A/S - Copenhagen
Egypt                 National Bank of Egypt - Cairo
                      Arab International Bank - Cairo
Finland               Nordea Bank Finland PLC - Helsinki
France                BNP Paribas - Paris
                      Natixis - Paris
                      UBAF - Union de Banques Arabes et Françaises - Paris
Germany               Deutsche Bank AG - Frankfurt
                      Commerzbank AG - Frankfurt
                      Dresdner Bank AG - Frankfurt
                      Bayerische Landesbank - Munich
                      West LB - Düsseldorf
Ghana                 Ghana Commercial Bank Ltd - Acra

Greece                National Bank of Greece - Athens
                      Bank of Cyprus Public Company Limited - Athens

Hungary               National Bank of Hungary - Budapest
Holland               Fortis Bank (Netherland) NV - Amesterdam




                                                                                                  225
   Country           Bank’s name
   India             State Bank of India - Mumbai

   Indonesia         PT Bank Mandiri (Persero) - Jakarta

   Italy             Intesa Sanpaolo SPA - Milano
                     Unicredit SPA - Milano
                     Banca Nazionale Del Lavoro SPA - Rome
                     San Paolo Imi SPA - Torino
                     Banca Popolare Dell Emilia Romagna - Modena
                     Banca Agricola Mantovana - Mantova

   Japan             The Bank of Tokyo-Mitsubishi UFJ, LTD - Tokyo
                     The Bank of New York - Tokyo
                     UBAF - Union de Banques Arabes et Françaises - Tokyo

   Jordan            Arab Bank PLC - Amman
                     Jordan Ahli Bank - Amman
                     Housing Bank for Trade & Finance - Amman

   Korea             Korea exchange Bank - Seoul
                     UBAF - Union de Banques Arabes et Françaises - Seoul
                     JP Morgan Chase Bank N.A. - Seoul
                     The Bank of New York Mellon - Seoul
                     Standard Chartered Bank - Seoul
                     Wachovia Bank - Seoul

   Kuwait            The National Bank of Kuwait SAK - Kuwait
                     The Gulf Bank K.S.C. - Kuwait

   Luxembourg        Kredietbank SA Luxembourgeoise
                     Banque de l’Europe Méridionale - Luxembourg

   Lybia             Wahda Bank - Tripoli
                     Umma Bank - Tripoli
                     Gumhouria Bank - Tripoli

   Malta             Fimbank (First Int’l Merchant Bank) - Sliema

   Morocco           Banque Marocaine du Commerce Extérieur - Casablanca
                     Banque Marocaine pour le Commerce et l’Industrie - Casablanca

   Norway            DNB NOR Bank ASA - Oslo

   Oman              Banque Banorabe SA - Muscat

   Poland            Bank Handlowy W Warszawie SA - Varsovia

   Portugal          Millenium BCP - Lisbon
                     Deutsche Bank (Portugal) S.A. - Lisbon

   Qatar             Qatar National Bank - Doha
                     Mashreqbank - Doha

   Romania           Banca Comerciala Romana - Bucharest
                     BLOM Bank Egypt SAE Romanian Branch - Bucharest

   Russia            VNESHECONOMBANK
                     (The Bank for Development & Foreign Economic Affairs) - Moscow

   Saudi Arabia      Al Rajhi Bank - Riyadh
                     The National Commercial Bank - Jeddah
                     Saudi Hollandi Bank - Riyadh




Annual Report 2008                                                       Credit Libanais Group
                                                                       List of Correspondent Banks




Country                Bank’s name
Senegal                BICI - Banque Internationale pour le Commerce & l’Industrie du Senegal - Dakar

Singapore              JP Morgan Chase Bank N.A. - Singapore
                       The Bank of New York Mellon - Singapore
                       UBAF - Union de Banques Arabes et Françaises - Singapore

Spain                  Banco de Sabadell - Madrid
                       Banco Santander S.A. - Madrid
                       Banco Bilbao Vizcaya Argentaria SA (BBVA) - Madrid
                       Banco Popular Espanol - Madrid

Sri Lanka              Bank of Ceylon - Colombo
                       Commercial Bank of Ceylon PLC - Colombo

Sudan                  Farmers Commercial Bank - Khartoum
                       Omdurman National Bank - Khartoum

Sweden                 Skandinaviska Enskilda Banken - Stockholm
                       Nordea Bank AB (Publ) - Stockholm

Switzerland            Credit Suisse - Zurich
                       Habib Bank AG Zurich - Zurich

Syria                  Commercial Bank of Syria / Damascus - Via Lebanon:
                       Syrian Lebanese Commercial Bank / Beirut

Taiwan                 JP Morgan Chase Bank N.A. - Taipei
                       The Bank of New York Mellon - Taipei
                       Standard Chartered Bank - Taipei

Thailand               Bangkok Bank Public Company Limited - Bangkok

Tunisia                Tunis International Bank - Tunis
                       Union Bancaire pour le Commerce et l’Industrie - Tunis
                       Société Tunisienne de Banque S.A. - Tunis

Turkey                 Yapi Ve Kredi Bankasi AS - Istanbul
                       Turkiye Is Bankasi AS - Istanbul
                       Koçbank AS - Istanbul
                       Finansbank AS - Istanboul
                       Oyak Bank AS - Istanbul
                       Sekerbank TAS - Istanbul

United Arab Emirates   Mashreqbank PSC - Dubai
                       National Bank of Abu Dhabi - Abu Dhabi
                       Standard Chartered Bank - Dubai
                       Emirates Bank International PJSC - Dubai
                       Habib Bank AG Zurich - Dubai

United Kingdom         HSBC Bank PLC - London
                       Standard Chartered Bank PLC - London
                       Bank of Beirut (UK) LTD - London

USA                    JP Morgan Chase Bank N.A. - New York
                       The Bank of New York Mellon - New York
                       Standard Chartered Bank - New York
                       Wachovia Bank - Philadelphia

Vietnam                Bank for Foreign Trade of Vietnam - Hanoi

Yemen                  Yemen Bank for Reconstruction and Development - Sana’a




                                                                                                        227
                        Head Office and Branch Netwok
                                                        Credit Libanais sal
                                                                                                                               Head Office
                                                                Sofil Center - Charles Malek Avenue - Ashrafieh 1100 2811 - Beirut, Lebanon
                                                                                                                                    P.O.Box: 16-6729
                                                                                                      Fax: +961 1 325 713 - Phone: +961 1 200 028/9
                                                                                                                                   +961 1 201 292
                                                                                                                     Website: www.creditlibanais.com
                                                                                        E-mail: info@creditlibanais.com - feedback@creditlibanais.com




                                                        Credit Libanais Investment Bank (clib) sal
                                                                                                                               Head Office
                                                                 Asseily Bldg. - Riad El Solh Square - Beirut Central District (BCD), Lebanon
                                                                                                                                    P.O.Box: 11-1458
                                                                                                   Fax: +961 1 983 155 - Phone: +961 1 983 150/1/2/3
                                                                                                                     Website: www.creditlibanais.com
                                                                                  E-mail: investment@creditlibanais.com - feedback@creditlibanais.com


                                                                          Haret Sakher - Jounieh Highway - Credit Libanais Bldg., 2nd Floor
                                                                                           Fax: +961 9 635 621 - Phone: +961 9 635 576/97 - 635 632




Call Center
+961 1 900 111
                                                        Credit Libanais d’Assurances
                                                        et de Reassurances (cla) sal
                                                                                                                               Head Office
                                                                                                           Credit Libanais sal Bldg. - Dora, Jisr
                                                                                                                   P.O.Box: 166729 - Beirut - Lebanon
                                                                                                       Fax: +961 1 257 629 - Phone: +961 1 257 628
                                                                                                                                    +961 1 257 629
                                                                                                                                    +961 1 257 630
                                                                                                                     Website: www.creditlibanais.com
                                                                                       E-mail: cla@creditlibanais.com.lb - feedback@creditlibanais.com




   Annual Report 2008                                                                                                    Credit Libanais Group
                                                                                                                     Head Office and Branch Network


                                                                                                                                             Beirut
Sofil (Main Branch) Ashrafieh, Charles Malek Ave., Sofil Center                        Mazraa Corniche El-Mazraa, Salam Blvd., Choueiry Bldg.
                    Fax: (01) 215 044 - Phone: (01) 200 028/9 - 201 292                                 Fax: (01) 300 937 - Phone: (01) 313 590 - 317435
                                 Branch Manager: Ms. Georgette Abdo                                                  Branch Manager: Mr. Bassam Matta


                  Ashrafieh Zahret Al Ihsan St.,Sausalito Bldg.                                                 Raouche Hajj Toufic Nassar Bldg.
                      Fax: (01) 204 643 - Phone: (01) 216 540 - 204 641                                 Fax: (01) 807 475 - Phone: (01) 807 454 - 807 492
                                    Branch Manager: Ms. Lina Dabaghi                                                 Branch Manager: Mr. Joseph Nakhle


                            Badaro Badaro St., Khatoun Center                                                         Rmeil Nahr St., Zoghbi Bldg.
                              Fax: (01)382 145 - Phone: (01) 387 878/9                                  Fax: (01) 445 275 - Phone: (01) 445 684 - 443806
                                  Branch Manager: Ms. Randa Hauche                                                     Branch Manager: Ms. Katia Ayoub


       Gefinor Clemenceau St., Gefinor Center 1st floor, Bloc C           Riad El Solh Beirut Central District, Riad El Solh Square, Asseily Bldg.
                             Fax: (01) 740 168 - Phone: (01) 739 830/1                                        Fax: (01) 983 141 - Phone: (01) 983 141/2/3
                                   Branch Manager: Mr. Ahmad Kechli                                                    Branch Manager: Mr. Robert Matta


                  Geitawi Facing Geitawi Hospital Bejjani Bldg.              Sassine Sassine Square, Independance Ave., Credit Libanais Bldg.
                             Fax: (01) 582 087 - Phone: (01) 580 715/6                                  Fax: (01) 203 007 - Phone: (01) 332 889 - 218 608
                                  Branch Manager: Mr. Costi Saroufim