At the MENA banking level deposit growth over the first five months of the year maintained last year's corresponding period level of circa $67.8 billion, loan growth reported a net improvement from $30.7 billion to $43.3 billion between the two periods.
In Turkey, the other market of presence of Bank Audi, increased exports and sustained public spending helped Turkey to edge past growth expectations for the first quarter of the year, as the economy expanded by 4.3 per cent compared with the same period of 2013, leading some outside forecasters to revise upward their estimates for 2014 as a whole. This was realized on the back of improved banking activity year-to-date, with deposit growth reporting $18.3 billion over the first five months of 2014, against $7.5 billion during the 2013 corresponding period.
Within this context, consolidated net profits of Bank Audi reached in the first half of 2014 $190 million after provisions and taxes, slightly exceeding the earnings of the corresponding period of 2013, bearing witness to a sustained dynamic growth at the level of all entities alike within the context of Odeabank reporting in the second quarter its first net profits, representing a rising trend that Management is looking to turn into an exponential increase. In parallel, consolidated assets sustained its last year's growth trend, posting an increase by $3.1 billion sourced principally from Turkey, Lebanon and Egypt. This growth was met by a further reinforcement of the Bank's asset quality after the allocation in the first half of 2014 of $34.9 million of net loan loss provision charges, most of which in collective provisions, in abidance with precautionary management policies.
• The Bank's consolidated assets rose from $36.3 billion at end-December 2013 to $39.3 billion at end-June 2014, and reaching $49.5 billion when accounting for fiduciary deposits, security accounts and assets under management. The consolidated asset growth stems in particular from Lebanon, Egypt and Turkey, where Odeabank reported at end-June 2014 assets of $9.6 billion, within a limited assets growth at the level of all other entities. This achievement translates in an increase of the contribution of entities abroad to consolidated assets from 42.6 per cent at end-December 2013 to 45.4 per cent at end-June 2014, of which 31 per cent is booked in investment grade countries. This performance is in line with Management's objective to reach a more balanced distribution of assets and profits over the different entities in Lebanon and abroad reinforcing the overall asset quality.
• Assets growth was primarily driven by consolidated customers' deposits reaching $34 billion at end-June 2014, and increasing by $2.9 billion, equivalent to a growth by 9.2 per cent over the first six months of 2014, mainly driven by the Turkish subsidiary and by Bank Audi Lebanon, Bank Audi Egypt and the Jordan network.
• Consolidated shareholders' equity reached $2.7 billion at end-June 2014 while the gross regulatory capital amounted to $3.2 billion, translating into a Basel III capital adequacy ratio of close to 12.3 per cent at end-June 2014, as compared to an 11.5 per cent regulatory minimum requirement including the capital conservation buffer.
• In parallel, the growth of the loan portfolio sustained the same pace, reporting an increase by nine per cent in the first six months of 2014, as consolidated net loans reached $16 billion at end-June 2014. This loan growth was met with a reinforcement of the loan quality through the allocation by the Bank of $34.9 million of additional loan loss provision charges in the first half of 2014, most of which in collective provisions. At end-June 2014, collective provisions amounted to $170 million, equivalent to 1.1 per cent of net consolidated loans while specific loan loss reserves on doubtful accounts reached $171 million, translating in coverage of doubtful loans of 106 per cent. Meanwhile, the ratio of gross doubtful loans over gross loans improved from 2.79 per cent at end-December 2013 to 2.53 per cent at end-June 2014, a low level when compared to the averages in Lebanon (3.3 per cent), the MENA region (4.5 per cent) and the World (6.6 per cent).
• Consolidated primary liquidity placed with Central Banks and foreign banks was further reinforced, reaching $14.1 billion, representing 41.6 per cent of customers' deposits.
• The evolution of the balance sheet in the first half of 2014 turned net earnings of $189.8 million. This performance stems from a sustainment of profitability levels in all entities within the context of Odeabank reporting, in the second quarter, its first net profits after provisions and taxes, representing a rising trend that Management is looking to turn into an exponential increase over the coming period.
• Based on such results, the Bank's profitability ratios were reinforced with the return on average assets achieving one per cent and the return on average common equity 15.9 per cent. In parallel, the Bank's earnings per common share amounted to $1 on an annualised basis, while the common book value per share stood at $6.25. Subsequently, and based on a common share price of $6.36 at the closing of 21/07/2014, the Bank's common shares were trading at 6.4x the HI-14 common earnings and 1.02x June-14 book value, reflecting a very low multiple relative to regional peer banks multiples that reported 11.9x common earnings and 1.7x book value according to the Deutsche Bank'sMENA report published on 2/7/2014.