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Management Discussion And Analysis

2.0. Strategy

Bank Audi is one of the largest banking institutions in the Levant, whose main purpose is to achieve quality growth by connecting customers to opportunities and allowing delivering long-term sustainable value to all stakeholders. Catering to more than 1,200,000 customers served by more than 5,800 employees, the Bank’s organisation is based on 3 principal development pillars markets – Lebanon, Egypt, Turkey – focusing on Corporate and Commercial Banking, Retail and Individual Banking, and Treasury and Capital Markets activities, along a fourth development pillar defined as the Private Banking business line, working hand in hand through a distinctive network of 12 banks and 3 financial institutions located in 13 countries across the MENA region and Turkey over and above a historical presence in Europe.

Late 2012, after the outbreak of the “Arab Spring” and the ensuing challenging environment in key markets of presence, the Group strategy was re-adjusted to focus on transforming the Group to become a large “Levant Bank” channelling the development over the coming five years around the following drivers:
  • Consolidating and strengthening its leadership in Lebanon (the home market) with a particular focus on pursuing asset utilisation optimisation while reinforcing operational efficiency to enhance a greater generation of productivity gains;
  • Strengthening the market background and positioning in Egypt, which despite the persisting uncertainties, remains a core growth market by virtue of scale and abundant resources triggering self-sustained economic and financial growth prospects;
  • Securing over the medium term an established positioning in the Turkish market, which still enjoys a large size and high levels of growth in spite of short-term volatility, building a franchise ranking second to Lebanon in term of size and earnings;
  • Leveraging cooperation and synergies across the Private Bankingentities in Europe, the Levant and the GCC, while transforming the Wealth Management operating model, enlarging its geographical footprint and reinforcing the range of products and services to shore up Private Banking development.

2013 marked the beginning of the implementation phase of the transformation strategy, centering on sustained quality growth supported by an effective capital placement and pursuing greater operational efficiency. Consolidated assets reached, at end-December 2013, USD 36.2 billion, registering an annual increase by USD 4.9 billion (15.6%), sourced principally from Odeabank, the fully-owned subsidiary in Turkey, which succeeded in 14 months to rank 14th among the 33 operating commercial banks in Turkey with an assets’ market share of close to 1%. The performance of Bank Audi during the year fairly reflects the strategic orientations set by Management, underscoring the Group’s leaner organisation and capacity to seize opportunities for the development of activities and expansion in new better rated countries ensuring added value to all stakeholders within its customers’ and shareholders’ base at large.

Going forward, the key strategic priorities continue to revolve around enhancing the efficiency of its Lebanese entities while developing its subsidiaries abroad in a way to ensure a significant contribution of foreign entities abroad in the growth of consolidated assets and net earnings starting 2015. Successful execution of this strategy lies on the importance of the diversified business model, increasingly distinctive regional footprint and the Group’s capacity on the continuing growth in the cross-border flows between the Near East, the Middle East, North Africa and Turkey, and the significant wealth creation particularly in the MENA region, Latin America and Sub-Saharan Africa.

Within that scope, Bank Audi was granted a license by the Central Bank of Iraq to open 7 branches and launch banking operations in Baghdad and each of Irbil, Basra, Najaf, Suleymanieh, Salaheddine and Mosul. A team from the Group is currently laying the organisational and operational grounds of this network in the aim of launching operations in Iraq during the course of 2014.