A combination of conservative lending policies, strong regulation from the central bank, and an accelerated flow of deposits from the Lebanese diaspora has meant that Byblos Bank has come through the global financial crisis relatively unscathed.

It posted a 19.3 per cent increase in net income in 2009, with loan growth of 14.6 per cent and deposit growth of 23 per cent. In the first nine months of 2010, net profits rose 25.7 per cent year-on-year to $120.6m, while total assets increased 11 per cent to $15.1bn and customer deposits were up 12.7 per cent $11.6bn. It also enjoyed a $250m capital increase in 2010, of which $100m was taken up by the International Finance Corporation and $30m by Proparco, an affiliate of the French government.

The greatest threat to the continued strong performance of Byblos Bank is political instability. Beirut is still awaiting the results of an investigation into the murder of former prime minister Rafiq Hariri, which could undermine peace. Beyond Lebanon’s borders, the possibility of a new conflict between Hezbollah and Israel could prompt a withdrawal of deposits by the Lebanese diaspora.

The bank’s international expansion reduces exposure to sovereign risk, but leaves itself exposed to major risks. In Iraq, Al-Qaeda attacks and bank runs have frequently destabilised the sector; the Congo is plagued with conflict; and Sudan’s referendum is expected to create instability. Security issues in such markets makes recruiting skilled staff a huge challenge, but the bank’s early entry will give it at an advantage over rivals should conditions become more favourable.