Operating costs have compounded the problems of Byblos Bank, which announced a 4.6 per cent drop in net profits to $44.4 million in 2001. Byblos took over the medium-sized Wedge Banklast year to increase its local market share. The acquisition helped to boost assets by 16.2 per cent to $4,680 million, but also led to an 8.8 per cent increase in operating costs. ‘The main pressure on profitability in 2001 came from the fast drop in US interest rates and the ample foreign currency liquidity accumulated by the bank,’ Byblos says.

The downturn has also had an impact on Banque Audi, which posted a modest 0.6 per cent rise in profits to $34.5 million. The construction of new headquarters, and the bank’s acquisition of Lebanon Investand Banque Audi-Suisse, caused a 17.6 per cent rise in operating costs. This contributed to a fall in return on assets to 0.8 per cent in 2001, compared with 1 per cent the previous year. However, the expansion programme helped to boost total assets by 20 per cent to $4,600 million.