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Management Discussion And Analysis

1.0. Introduction

Bank Audi sal, previously named Bank Audi sal - Audi Saradar Group (“Bank Audi”) is a full fledged bank with operations in Lebanon, Europe, the Middle East and North Africa region and Turkey. Founded in 1830 in Lebanon and incorporated in its present form in 1962 as a private joint stock company with limited liability (“société anonyme libanaise”), Bank Audi offers universal banking products and services covering Corporate, Commercial, Individual and Private Banking services to a diversified client base mainly in the MENA region and Turkey. It ranks first among Lebanese banks as per major banking aggregates and stands among the top Arab banking groups. In addition to its historic presence in Lebanon, Switzerland and France, it is present in Jordan, Egypt, Syria, Sudan, Saudi Arabia, Qatar, Abu Dhabi (through a representative office), Monaco and Turkey, and is expected to launch its operation in Iraq in 2014.

The dicussion and analysis that follows covers the consolidated performance of Bank Audi in 2013, based on the audited consolidated financial statements of the Bank as at and for the fiscal years ended December 31, 2012 and December 31, 2013. Terms such as “Bank Audi”, “the Bank” or “the Group” refer to Bank Audi sal and its consolidated subsidiaries, principally Audi Private Bank sal (previously named Audi Saradar Private Bank sal), Audi Investment Bank sal (previously named Audi Saradar Investment Bank sal), Banque Audi (Suisse) sa, Bank Audi France sa (previously named Bank Audi Saradar France sa), Audi Capital Gestion, Bank Audi sal - Jordan Branches, Bank Audi Syria sa, Bank Audi sae (Egypt), National Bank of Sudan, Audi Capital (KSA), Bank Audi LLC (Qatar), Arabeya Online Brokerage (AoLb) and Odeabank A.Ş. (Turkey). All references to Lebanon are to all Lebanese entities excluding Audi Private Bank sal.

All figures are presented in US Dollars (“USD”), unless specifically otherwise stated, since the Bank transacts and funds the large majority of its business in US Dollar and functional currencies linked to the US Dollar. US Dollar amounts are translated from Lebanese Pounds (LBP) at the closing rate of exchange published by the Central Bank of Lebanon, (1,507.5 as of each of December 31, 2013 and December 31, 2012). References to foreign currency translation differences or changes reflect the impact of the movement of functional currencies in countries of presence against the US Dollar.

All references to the Lebanese banking sector are to the 53 commercial banks operating in Lebanon as published by the Central Bank of Lebanon (“BDL”). All references to the Bank’s peer group in Lebanon are to the Alpha Bank Group consisting of 14 banks with total deposits in excess of USD 2.0 billion each, as determined by Bankdata Financial Services WLL (publishers of Bilanbanques). All references to the Bank’s peer group in the MENA region are to the top regional Arab banking groups as compiled by the Bank’s Research Department.

Lebanon’s economic and banking data are derived from the International Monetary Fund, the Central Bank of Lebanon, various Lebanese governmental entities and the Bank’s internal sources. The region’s economic and banking data are derived from the International Monetary Fund, the Economist Intelligence Unit, Bloomberg, the region’s central banks and the Bank’s internal sources.

This discussion and analysis starts with an overview of the Bank’s strategy, followed by a review of the operating environment and a comparative analysis of the Group’s financial conditions and results of operations for the periods ended December 31, 2013 and December 31, 2012. An overview of risk management comes next, followed by an extensive coverage of share information and dividend policy, investor relations, resources deployed and Corporate and Social Responsibility.