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AnnualReport2008

a yearin review

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FINANCIAL HIGHLIGHTS OF 2008

GROUP CHAIRMAN’S STATEMENT

SGBL GROUP PROFILE

THE COMPANY

Company Profile

Landmarks

Group Structure

Share capital

CORPORATE GOVERNANCE

Board of Directors

Board Committees

Executive Board / Management Team

OUR BUSINESS LINES

Retail Banking

Private Banking and Investment Services

Corporate and Investment Banking

SGBL’s Subsidiaries

a | Société Générale de Banque - Jordanie (SGBJ)

b | Sogecap Liban Sal

c | Sogelease Liban Sal

d | Fidus Sal

e | Centre de Traitement Monétique (CTM)

CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors’ Report

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

SGBL NETWORK

CORRESPONDENT BANKS

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TABLE OFCONTENTS

SGBLNetwork

HGroup

Chairman’sStatement

TheCo

CorporateGovernance

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Con

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OUR COMMITMENTAs bankers, we at SGBL, endeavor to provide cutting edge universal bankingservices to best serve our individual and corporate clients, day after day

OUR MISSIONTo grow alongside our clients and shareholders, against all odds

OUR VALUESProfessionalism, Team spirit, Innovation

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SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 2008 3

Loans and Advances

USD 967M

(+19% vs. Dec.31, 2007)

Net Banking Income

USD 126M

(+26% vs. Dec.31, 2007)

Customer Deposits

USD 2589M

(+16% vs. Dec.31, 2007)

Group Net Income

USD 44M

(+216% vs. Dec.31, 2007)

Equity

USD 312M

(+90% vs. Dec.31, 2007)

Equity

USD 312M

(+90% vs. Dec.31, 2007)

Average ROE

after tax

20.15%

20

Our strengths lie in our know-how, in the commitmentof our teams, and in the trust that we have earnedalong the years from our clients and partners.“ “

SGBLNetwork

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Dear shareholders, clients and colleagues,

SGBL delivered a very satisfactory performance in 2008, despite a highly challenging business

environment, at the domestic and at the international level. The Bank recorded net profits after

tax of USD 44 million, in the backdrop of an unstable domestic environment, and despite a

global financial crisis that started revealing in the third quarter.

As you read this report, we are moving out of the global recession and away from the financial

turmoil that has shaken practically all of the world’s economies. Looking back, it now seems

clear that Lebanon ranks among those countries that have shown considerable resilience to the

latest crisis. Its banking sector, in particular, has registered a very good performance in 2008,

supported by a prudent regulatory framework, by pertinent Central bank decisions which

mitigated the contagion risk, and by hefty capital inflows.

Banking activity was in line with the growth momentum of the economy. Despite intense political

tensions during the first semester, which had slowed down activity across sectors amid a wait-

and-see mood, the second half of the year witnessed a real economic drive. The Doha Accords

paved the way for the election of General Michel Sleiman at the head of the State and for the

constitution of a national unity cabinet that contributed to leveling out political tensions and

restoring confidence.

The result was a spur in economic activity, especially for tourism activity and real estate, both

key sectors of the Lebanese economy, as they traditionally draw in capital and drive growth. The

de-dollarization trend was sustained, and the balance of payments registered a historical

surplus of USD 3.5 billion. In parallel, foreign reserves of the Central bank registered new highs,

thus reinforcing the stability of the local currency. At the public sector level, sustained growth

led to a decrease of the Debt / GDP ratio which was in the vicinity of 160% at year end.

In this framework, our overall approach at SGBL was to ride the wave of the economic boom in

Lebanon while carefully monitoring exposure to financial instruments, in line with the Group’s

conservative approach to risk.

In 2008, SGBL Group has demonstrated its ability to deliver a robust performance in a highly

challenging environment. It registered a remarkable increase in Net Profits and a good Return

on Equity ratio.

In Retail, Private and Corporate Banking, customer retention and satisfaction remained at the

heart of our strategy, and our efforts proved effective. The domestic economic momentum and

the escalation of risks in the aftermath of the first episodes of the financial crisis both translated

into higher deposits (+14.6%) and a renewed interest for consumption and investment, hence

driving loans (+19%). Our achievements underscore our ability to monitor the change in customer

needs across businesses and regularly upgrade our wide range of products and services to best

serve those needs.

SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 2008 5

SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 20086

SGBL’s financial strengthening was also set as a strategic priority for this year, in the framework

of the Bank’s development plan. We have successfully raised USD 90 million in Preferred Shares

that will leverage the strengths of our core businesses and support the Bank’s future ventures

on new markets.

Once again, the Bank has demonstrated its ability to attract not only clients but also investors

who believe in the Group’s growth potential, in the quality of its vision, and in the capacity of its

management to deliver.

Today, as we start seeing the end of the tunnel and recovery seems set on track at the

international level, we are all the more determined to pursue the implementation of our

ambitious strategic development plan.

Our development strategy is two-fold, focusing on both internal organic growth, as well as

external growth on markets where we are either already present or on new markets. Our

approach is to keep providing all the necessary support that is conducive to continuous and

sustained organic growth, while keeping an eye out for the right opportunities for external

expansion. Overall, our efforts will focus on driving revenues across business lines, while

monitoring performance, managing risks, and promoting synergies within the Group.

SGBL Group is today positioned for future growth. The Bank is set to create a regional business

platform geared towards consolidation, growth and performance. As this report goes to press,

SGBL is closing the acquisition of a majority stake in Société Générale Cyprus. This operation

marks SGBL’s entrance into the European market and is the first step towards a more

developed regional presence.

To reach our ambitious goals, we will continue building on our strengths and relying on our

corporate values. Our strengths lie in our know-how, in the commitment of our teams, and in the

trust that we have earned along the years from our clients and partners. These assets derive

from our team’s deeply anchored sense of professionalism and commitment to quality.

As global recovery confirms, we are confident that SGBL Group is well positioned to take

advantage of worthy growth opportunities. Our performance over the first months of 2009

predict good perspectives, and we are looking forward to sharing even greater achievements at

year end with our shareholders, clients, employees and partners.

Antoun N. Sehnaoui

7SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 2008

Once again, the Bank has demonstrated

its ability to attract not only clients but

also investors who believe in the Group’s

growth potential, in the quality of its

v i s i o n , and in the capacity of its

management to deliver.

“

8 SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 2008

GBLork

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ActivitiesSGBL is the parent company of SGBL

Group, which encompasses subsidiaries

whose businesses include a broad range

of financial and non financial services,

among which: leasing, brokerage and

trading, wealth management, insurance,

retail, corporate and investment banking,

as well as credit card processing.


SGBL Network

42 branches in Lebanon

16 branches in Jordan

7 in Cyprus (sister company)

78 ATM’s

RegionalNetwork

With its core business anchored in L e b a n o n ,

SGBL Group also operat e s in Jordan and

Syria. Some of the company’s subsidiaries

are therefore subject to supervision and

e x a m i n ation by the authorities in their

respective countries and/or lines of business.

AffiliatedCompanies

SOGELEASE LIBANPioneer and leader in the leasing market in

L e b a n o n , Sogelease Liban offers professionals,

craftsmen and enterprises of all sizes

solutions for financing their equipment.

SOGECAP LIBANLife insurance company that ranks among

the top 10 life insurance companies in

Lebanon. Sogecap Liban offers a complete

range of life insurance products based on

contingency and capitalization.

FIDUSLeading brokerage firm that provides portfolio

m a n ag e m e n t , b r o k e r age and advisory

services on local and international markets.

E x clusive distributor of SG Asset Manag e m e n t

products for the Levant, the company offers a

comprehensive and diversified range of

customized financial products and services-

tailored to a particularly sophisticated and

demanding high net worth clientele, within a

highly competitive environment.

CENTRE DE TRAITEMENT MONÉTIQUE(CTM)Specialized in credit card management, CTM

is an electronic card processing company

that is a joint venture between SGBL and

Banque Libano-Française.

SGBL Group

Today, SGBL Group enjoys a prime position in

the financial markets of the Middle East, and

is set to grow beyond these frontiers.

Besides, the Group’s affiliation to Société

Générale Group further broadens its outreach

beyond its primary markets.

InternationalNetwork

SGBL is part of the international network of

SOCIETE GENERALE, one of the leading

financial services groups in the euro zone,

which operates in 82 countries worldwide.

SGBL s.a.l

Société Générale de Banque au Liban sal

(SGBL) is a joint stock company incorpo-

r ated in 1953, with a term of 99 years.

It is registered with the Commercial

R e g i s t ry of Beirut under No. 3696 and

registered under No.19 on the list of

banks licensed by Banque du Liban, t h e

Central bank of Lebanon.

Ranking

SGBL ranks among the Alpha Group banks,

L e b a n o n ’s 11 largest banks in terms of

customer deposits (over USD 2 billion).

Staff

1157*

As at December 31, 2 0 0 8 , in Lebanon, J o r d a n ,

and Syria.

Head OfficeSGBL’s head office is located on Riad

El–Solh Street, Beirut (Lebanon). T h e

B a n k ’s headquarters are, h ow e v e r,

located on Saloumeh Square, Sin El Fil

(Lebanon).


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Landmarks

1953

The Bank is incorporated as Banque

Belgo-Libanaise sal, a partnership

between Michel Sehnaoui & Sons,

Banque Belge pour l’Etranger and

C o m p agnie Belge de Banque et de

Gestion.

2002

SG Cyprus, the Bank’s sister company,

starts its onshore activities.

2003

SGBL becomes the majority shareholder

of MEIB; the subsidiary’s name becomes

Société Générale de Banque – Jordanie

(SGBJ).

2007

The Bank’s Board of Directors appoints

Mr.Antoun Sehnaoui as the new Chairman

and General Manager of SGBL, following a

redistribution of shares among the

Sehnaoui family members.

1969

Société Générale France acquires a 25%

stake in Banque Belgo-Libanaise,

establishing Société Générale Libano-

Européenne de Banque sal (SGLEB).

1991

Société Générale France purchases the

shares of Société Générale de Banque-

Bruxelles in Lebanon and Cyprus.

Société Générale’s stake in SGLEB rises

to 50%.

1992SGLEB acquires Globe Bank sal.

1996

Sogelease Liban sal (financial institution

specialized in financial leasing) is

incorporated as a subsidiary of SGLEB.

1997

SGLEB acquires Banque J. G e agea sal.

2009

As this report goes to press, SGBL awaits

the approval by Cypriot and L e b a n e s e

regulatory authorities, for the acquisition of

a majority stake in its sister company,

Société Générale Cyprus.

1999

The Bank acquires a majority stake in

Fidus sal, a leading financial institution in

Lebanon.

2000SGLEB is the first banking institution in

Lebanon to enter the Jordanian market by

acquiring a 37.3% stake in the Middle

East Investment Bank (MEIB) and taking

control of its management.

SGLEB acquires Inaash Bank sal.

Sogecap sal (a subsidiary specialized in

life insurance activities) is incorporated.

2001Société Générale Libano Européenne d e

Banque sal becomes Société Générale de

Banque au Liban sal (SGBL).

The Bank starts an offshore branch in the

free zone in Syria.

Centre de Traitement Monétique (CTM), a

card processing company, is established by

the Bank (50%) and Banque Libano-

Française (50%).


GROUP STRUCTURE


SHARE CAPITAL

CAPITAL STRUCTURE

SGBL’s total issued share capital as at December 31, 2008 was LBP 12,531,600,000

divided into 50,000 common shares and 9000 preferred shares, with a nominal value of LBP

212,400 per share.

In September 2008, the Bank raised its capital by issuing non cumulative perpetual

redeemable Preferred Shares. The issue was set at USD 90 million. The proceeds of the

issue were to be dedicated to support the Bank’s domestic and regional expansion policy.

SHAREHOLDING

HOLDERS OF COMMON SHARES %

Nabil SEHNAOUI 57.120

Antoun SEHNAOUI 0.010

Yasmina Nabil SEHNAOUI KAMEL 0.010

Pierre Frédéric KAMEL 0.010

Khalil André KAMEL 0.010

Najib EL SAAD 0.036

Kafinvest Holding Lebanon SAL 23.774

Holding APY Sehnaoui SAL 0.020

Société Générale France 18.980

Didier ALIX 0.010

Jean Louis MATTEI 0.010

Total 100.000


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SGBL’s Corporate Governance Charter sets the guidelines for efficient corporate governance

that safeguards the interests of the Bank’s stakeholders and complies with internationally

accepted standards, as well as with the rules and regulations that are in force in the countries

where the Group is present.

Corporate governance policies and procedures are thoroughly documented as per SG Group

standards and in line with the recommendations of the local regulatory bodies and with the

guidelines given by the Bank’s Board.

Sound corporate governance is achieved through:

- The Board of Directors

- Board Committees

- Internal specialized committees that support the Executive Board in its mission.

BOARD OF DIRECTORS

The management of the Bank is vested in the Board of Directors. The members of the Board of

D i rectors are elected by the General Assembly of Shareholders for a period of three years, re n e w a b l e

at the end of their term.

The Board appoints one of its members as Chairman. The Chairman of the Board of Directors, in

his capacity as General Manager, has extensive powers to execute the resolutions adopted by

the General Assembly, undertake operations necessary for the daily functioning of the Bank and

generally represent the Bank in its commercial activities.

As at Dec. 31, 2008, the Bank’s Board of Directors consists of the following members:

CHAIRMAN Antoun SEHNAOUI

MEMBERS Nabil SEHNAOUI

Khalil André KAMEL

Pierre Frédéric KAMEL

KAFINVEST HOLDING LEBANON SAL

HOLDING A.P.Y. SEHNAOUI SAL

SOCIETE GENERALE (France) represented by Jean-Louis MATTEI

Jean-Louis MATTEI

BOARD COMMITTEES

The Bank has established 4 committees derived from the Board of Directors and that report to the

B o a rd, the duties and responsibilities of which pertain to audit, risk, governance and

c o m p e n s a t i o n .

The audit committee is a pillar of the bank’s internal control systems as it monitors, on a

regular basis, its performance and activities, and implements the rules and regulations of the Central

Bank of Lebanon, namely principal circular no. 77 pertaining to internal control in banks.

The mission of the risk committee is to analyze periodically the Bank’s risk exposure, especially as

re g a rds credit and market risks.

The compensation committee makes recommendations to the Board re g a rding the

remuneration policy within the Group, benefit packages, profit-sharing mechanisms,

compensation packages for managers, processes and issues pertaining to the replacement of

administrators, etc.


The mission of the corporate governance committee consists of supervising, assessing and

upgrading corporate governance mechanisms to ensure that they operate effectively.

EXECUTIVE BOARD / MANAGEMENT TEAM

The composition of the Executive Board of the Bank is the following (as of September 2009):

Antoun SEHNAOUI Chairman & CEO Gérard GARZUEL Chief Operating Officer Tarek CHEHAB Deputy General Manager

Head of the Commercial DepartmentRetail, Corporate and Private Banking

Georges SAGHBINI Deputy General ManagerGroup CFO, Head of Business Development,Strategy, and Corporate Secretariat

Khalil LETAYF Deputy General Manager Head of Resources and Services Division

Sleiman MAARAOUI Head of the General Inspection & Audit Division

The Executive Board is supported in its mission by several specialized operational committees

with a wide array of responsibilities: credit risk, asset and liability management, anti money

laundering, IT security, procurement, etc.


Antoun SehnaouiChairman & CEO

Born in 1972. Holds a BA in BusinessAdministration - major in InternationalFinance and Banking from the University ofSouthern California (USA).

Chairman and General Manger of both SGBLand Fidus. Member of the Board of Directorsof the Association of Banks in Lebanon.

Tarek ChehabDeputy General Manager Head of the Commercial Department - Retail,Corporate and Private Banking.Chairman of Sogelease Liban

Born in 1966. Holds a Master degree inManagement - major in Finance. Heldseveral executive positions in France andLebanon as Group financial controller atTractel Group and Senior consultant atUnited Group Consultants in France andas General manager of Fidus. JoinedSGBL Group in 1999.

Khalil LetayfDeputy General Manager Head of the Resources and Services DivisionChairman of CTM

Born in 1963. Holds a degree in Engineeringfrom Ecole Centrale de Paris. Held differentpositions in the banking industry in Franceand Lebanon. Joined SGBL Group in 2008.

Sleiman MaaraouiHead of the General Inspection & Audit Division

Born in 1968. Holds a Master degree inEconomics – major in Finance from theUniversity of Amiens (France). Held severalexecutive positions in the banking sector inFrance. Joined SGBL Group in 2001.

Georges SaghbiniDeputy General ManagerGroup CFO, Head of Business Development,Strategy, and Corporate Secretariat; Chairmanof Sogecap Liban

Born in 1971. Holds a Master degree inEconomics and a Post graduate studiesdiploma in Money, Banking & Financefrom the Sorbonne University (Paris). Heldseveral executive positions in theLebanese banking sector and at SGBL.Joined SGBL Group in 1996.

Gérard GarzuelChief Operating Officer

Born in 1949. Holds a degree from theInstitut Technique de Banque àl’International in Paris. Held severalexecutive positions in SG France namelyin the Retail Banking activity across theSociété Générale network, as well vari-ous positions in SG Group’s affiliatesabroad. Joined SGBL Group in 2002.

EXECUTIVE BOARD - MANAGEMENT TEAM



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SGBL’s activities are organized around three core businesses, in the framework of a universal

banking model. Universal banking services address three main categories of customers and

encompass a wide range of diversified, standard, as well as tailor-made services that are

conceived to answer the broadest range of our customers’ needs.

RETAIL BANKING

Retail Banking is at the heart of our business and a driving force for SGBL’s growth. Backed by

Société Générale’s broad international experience, SGBL’s retail banking offers a wide range of

innovative products and services that cater for the broad and evolving needs of individual and

professional clients.

The Group’s regional retail network operates through 42 branches and 63 ATM’s in Lebanon, as

well as 16 branches and 15 ATM’s in Jordan (SGBJ). More recently (2009), Société Générale

Cyprus joined SGBL Group with 7 branches (pending official approvals).

Developing the domestic branch network is a strategic priority that was set on the Bank’s

agenda in 2008 and will remain so for the coming three years. Our latest branch was opened in

Beirut’s “Mathaf” area in April of 2009.

Quality of service is also a constant concern for us. That is why our efforts are driven by our

motivation to satisfy the clients’ needs and to accompany these needs by constantly adapting

our product range to best respond to demand.

SGBL’s product mix covers deposits, an array of loans, insurance, and investment products, as

well as a wide range of payment and credit cards, all conceived to answer the changing needs

of a broadening customer base, in a rapidly growing and highly competitive market.

Retail Banking contributed to 42% of the Group’s Net Banking Income in 2008.

The average number of products per customer has been increasing steadily in recent years. This

growth has been mainly driven by our loyalty programs and our astute targeting of new high

potential market segments (microfinance, youth, small businesses, consumer finance, etc.). As

at December 31, 2008, SGBL’s retail customers were equipped with 2.7 products on average.

Car and housing loans have registered an excellent performance in 2008: the Bank has doubled

the size of its car loan portfolio while housing loans registered a 34% increase.

SGBL also supports professionals in starting and developing their businesses: the Bank’s

portfolio of loans to SME’s and to professionals (retail) has registered a 20% rise this year, yet

with no compromise at the level of risks.

SGBL also addresses the very small business segment. The Bank’s commitment to sustainable

development materialized in 2003 with the introduction of lending to micro and very small

businesses. SGBL was the first bank in Lebanon to embark on a partnership with the Economic

and Social Fund for Development (ESFD), a national scale project funded by the European

Union, which aims to create jobs through improved access to loans for small and micro

companies. The ESFD-microcredit portfolio at SGBL registered a 51% increase in 2008, under-

lining the Bank’s active approach to unbanked market segments.

Bancassurance is a byproduct of Retail Banking that has also been witnessing significant

growth since the beginning of this decade. In 2008, the number of insurance products sold at

SGBL counters registered a 9% increase, following a 13% increase one year earlier.

SGBL is constantly seeking to expand and strengthen its presence in the markets where it is

present, while keeping an eye out for new growth opportunities. To achieve this objective, the

Bank is always leveraging its strengths: it relies on the dynamic sales approach and the

professionalism of its customer service teams, as well as on the closeness to customers, which

is ensured through all its branches and supported by highly efficient multi-channel platforms

covering a wide range of communication means (internet via eSGBL, mobile phone messaging,

and call center services).

PRIVATE BANKING AND INVESTMENT SERVICES

Thanks to the expertise of specialized teams in wealth management and asset allocation, and

with the support of the global financial platform supplied by SG Group, SGBL Group offers

full-fledged services to high net worth individuals and institutional investors.

• Our Private Banking teams are dedicated to optimizing their clients’ portfolios and ensuring

high value-added advice and solutions on a broad spectrum of markets: structured products,

derivatives, forex, fixed income securities, commodities, equities…

• Fidus sal, SGBL’s subsidiary that specializes in market-based financial services in the local and

i n t e rn a t i o n a l markets, is leader in advisory and brokerage services in Lebanon, and is the

exclusive distributor of SG Asset Management products for the Levant area.

The Bank has launched, since 2002, over eleven structured products and equity and credit

linked notes, for a total subscription of USD 400 Million. All of these products were issued by

Société Générale and other top rated and specialized investment banks.

S G B L’s development strategy in Private Banking and Wealth Management is based on supplying

c o m p re h e n s i v e advisory services within the framework of a global client approach. To this eff e c t ,

SGBL relies on the expertise and sound knowledge of its retail banking network customer

advisors to extend the scope of its Private Banking activities.

This approach is further supported by the close collaboration and the high level of synergies

between our Private Banking teams, Fidus and Société Générale Group, all of which are fully

dedicated to offering investment strategies, hedging solutions, and other products and services

tailored to the client’s needs and preferences.

Despite the market turmoil in 2008, Private Banking and Wealth Management services at SGBL

will continue to supply comprehensive investment services to drive revenues from customized

as well as tailor-made client solutions. Besides, the Group’s regional expansion strategy should

support the development of its Private Banking activities.


Quality Customer Service at SGBLQuality is high on SGBL’s list of strategic objectives.

Thanks to the continuous development of targeted and customized products, to adecentralization strategy boosting the importance of the branch network, and topersonalized communication methods, the Bank has succeeded in implementing “re l a t i o n a l ”marketing based on permanent communication between the Bank and its customers. Inorder to improve customer service in its 42 branches, the Bank dedicated suggestion boxesin each branch. Dedicated teams ensure close follow-up for the comments and complaintsreceived and make sure customer feedback is built back into the bank’s services.

At the organizational level, the Bank is installing a new digital queuing system that will ensurethat customers enjoy full confidentiality while carrying their banking operations at the Bank’scounters. The queuing system also optimizes space usage in the branches, improves thequality and the efficiency of the service, and reduces queuing time.

In August 2008, the Bank’s credit card department was certified ISO 9001-2000. The Bankalso conducts regular surveys to measure customer satisfaction.

CORPORATE AND INVESTMENT BANKING

At SGBL, we pride ourselves in being true partners of our corporate clients and we feel their

business achievements are ours as well.

SGBL’s relationship with its corporate clients goes beyond mere banking services. The Bank

builds on true partnerships with its clients, and often acts as advisor.

T h rough a wide range of products and services, our Corporate and Investment Banking services

are focused on supplying solutions that privilege a client-based approach to best support our

customers in their professional ventures. Corporate solutions aim to accompany companies in

their development and expansion phases. They range from classical overdraft facilities, medium

to long term loans to finance development projects, and trade finance, to more tailor-made

specific solutions such as project finance, loan syndications, and structured finance tapping

capital markets.

Corporate Banking at SGBL is backed by the skills and the expertise of the Bank’s qualified

teams who are fully dedicated to engineering optimal solutions for their customers.

For their business development at the regional or even at the international level, the Bank assists

its customers by mobilizing its regional network (namely in Jordan, in Cyprus and in Syria, and

often in collaboration with Société Générale’s global network) to help them identify business

opportunities and optimize efficiency. Société Générale’s international network is also a major

asset for SGBL Group with regard to cross-border and international trade and investment

operations.

Financing the Business Cycle. In addition to day-to-day banking services, SGBL offers a wide

range of short term loans, bank guarantees, and other credit facilities enabling companies to

finance their daily operations and to efficiently manage their businesses.

Financing International Operations. In order to finance the production cycle and the market-

ing process, the Bank offers its customers payment, collection, and guarantee instruments that

enable them to carry out import and export operations under the best conditions. Trade finance

operations include documentary credits, documentary remittances, stand-by letters of credit,

pre-financing and post-financing of exports, and back-to-back documentary credits. In addition

to the regular exchange operations, SGBL also offers its clients a range of hedging solutions

against exchange risks (forward exchange transactions, options, etc.).

Financing Investments. The Bank offers advanced financial engineering services adapted to

each company’s environment, by proposing, on a standalone basis or through banking

syndicates, various investment financing solutions with the best possible terms. Solutions range

from securing finance for the acquisition of equipment to the setup or development of projects

in various business sectors. Often, Corporate Banking services involve collaboration with the

Group’s subsidiaries, and in particular Sogelease Liban, which is a leader in leasing services in

Lebanon.

Investment Banking. Investment and consulting services are intended for both the private and

public sectors. Thanks to the wealth of its teams’ experience, and to the backing of Société

Générale’s know-how, SGBL was entrusted in the past with a variety of missions including

consulting missions for the Lebanese government, mergers and acquisitions in the private

sector, as well as capital raising and placement operations. However, such operations remain

scarce in the countries where SGBL Group is present. Still, our strategy is forward looking and

our ambition is to be always ready to grab the opportunity when the time comes.

In 2008, Corporate banking activities contributed to 29% of the Group’s Net Banking Income.


SGBL’S SUBSIDIARIES

a | SOCIÉTÉ GÉNÉRALE DE BANQUE - JORDANIE (SGBJ)

• Chairman: SGBL represented by Mr. Hassan Hamdi Mango

• General Manager: Ali Kooli

As at 31 December 2008, SGBL owned 50.6% of SGBJ’s shares. The remaining portion is

owned by Jordanian and Arab shareholders as SGBJ is listed on the Amman Stock Exchange.

Similarly to its parent companies Société Générale and SGBL, SGBJ is a universal bank that

f o c u s e s on the mainstream business lines of the Jordanian market.

• Retail Banking: SGBJ operates 16 branches and the network is set to gro w. Since 2003, the Bank

markets a wide range of classic Société Générale retail products which are adapted to the needs

of the Jordanian market

• Corporate and Investment Banking: initially SGBJ’s growth driver, Corporate and Investment

Banking at SGBJ is based on a privileged partnership with first class customers.

• Private Banking at SGBJ mainly relies on marketing investment products structured by SG

Group, in addition to wealth management services.

• Credit Card services: SGBJ is an agent for MasterCard. It also operates 15 ATM’s across the

Kingdom.

• Brokerage activities, with a representative office at the Amman Stock Market.

As part of the worldwide SG network, SGBJ distinguishes itself in Jordan by its correspondent

banking activity. Moreover, its capital markets division offers several instruments enabling

customers to hedge against exchange risks.

The bank has witnessed remarkable growth and significant improvement in terms of market share ,

p ro f i t a b i l i t y and financial structure since the year 2000, when it was bought by SGBL.

b | SOGECAP LIBAN SAL

• Chairman: Georges Saghbini

• General Manager: Jean-François Jaboulay

Sogecap Liban is the Group’s life insurance company. It is owned by the Bank (75% as at

Dec.31, 2008) and by Sogecap France (25%). Sogecap Liban ranks 7th in terms of total premi-

ums among life insurance companies in Lebanon. With USD 14.6 million of premium income,

Sogecap’s number of contracts under management rose by 13% in 2008.

This achievement is mainly due to the efficiency of the Bank’s distribution network, through

which Sogecap Liban markets a complete range of high-return life insurance products, in line

with customers’ needs.

Sogecap Liban proposed a first series of term life insurance products (personal protection) in 2000.

The company offers today a complete range of life insurance products including term life

insurance and capitalization / savings products with various insurance options (death insurance,

accidental death insurance, and disability).

The medium-term objectives pursued by the company focus on regional development

supported by the Group’s expansion, and on the development of its range of products.


c | SOGELEASE LIBAN SAL

• Chairman: Tarek Chehab

• General Manager: Roger Saghbini

Established in 1996, Sogelease Liban celebrated its 13th year of active presence on the

Lebanese market and reinforced its leading position in its sector of activities.

Leader in leasing solutions in the regional market, Sogelease Liban offers professionals,

craftsmen, and enterprises of all sizes, solutions for financing their equipment and guarantees

that are mainly related to the equipment financed. Equipment lease solutions are designed to

suit corporate, small and medium-sized companies and even retail banking customers. The latter

have access to Equip’lease, a simplified leasing product sold through SGBL’s retail network, and

intended for small companies and professional customers seeking to purchase equipment

worth up to USD 75,000.

d | FIDUS SAL

• Chairman: Antoun Sehnaoui

• Deputy General Manager: Jean Hanna

Fidus is the Group’s financial institution that specializes in financial market operations, with

expertise enabling it to reach local and international customers. Fidus is one of the leading

financial brokerage firms in the Lebanese market, offering diversified investment solutions

geared towards private and institutional clients.

The company offers a comprehensive and diversified range of customized financial products

and services tailored to a particularly sophisticated and demanding high net worth clientele,

within a highly competitive environment.

Its activities encompass wealth management and advisory services, as well as securities

brokerage, including brokerage of derivatives, commodities and exchange operations.

The team enjoys recognized skills in the field of structuring and marketing financial products

(guaranteed or non guaranteed capital) related to all types of instruments: equity, indices,

interest rates, foreign exchange, funds, etc. These products are generally developed by Fidus

with the support of Société Générale Group and other international banks.

In the framework of its agreement with SGAM (Société Générale Asset Management), Fidus is

the exclusive distributor of SGAM products in the Middle East. SGAM ranks among the twenty

top asset managers in the world. This agreement enabled Fidus to strengthen its leading

position in the Lebanese market but also to significantly widen its product offering in order to

consolidate its position in the field of mutual funds, hedge funds as well as SGAM products.

e | CENTRE DE TRAITEMENT MONÉTIQUE (CTM)

• Chairman: Khalil Letayf

• General Manager: Mohammad Itani

Centre de Traitement Monétique (CTM) is an electronic card processing company that is a joint

venture between SGBL and Banque Libano-Française sal.



SGBLNetwork

FinancialHighlights

of 2008

GroupChairman’s

Statement

SGBLFinancialHighlights

BusOurConsolidated

FinancialStatements



INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERSOF SOCIETE GENERALE DE BANQUE AU LIBAN SAL



CONSOLIDATED INCOME STATEMENTYear ended 31 December 2008

2008Notes

2007[In LL million]

Interest and similar income 4 271,449 247,026

Interest and similar expense 5 (144,561) (149,170)

NET INTEREST INCOME 126,888 97,856

Fees and commissions income 64,183 52,083

Fees and commissions expense (18,916) (13,537)

NET FEES AND COMMISSIONS INCOME 6 45,267 38,546

Profit from foreign exchange transactions 5,826 4,178

Net gain on financial investments 2,526 3,839

Other operating income 7 11,772 4,446

Unrealized (loss) gain on financial assets designated

at fair value through profit or loss (2,249) 1,663

TOTAL OPERATING INCOME 190,030 150,528

Net recoveries (credit losses) 8 2,360 (17,051)

Impairment losses on financial instruments (1,282) (35)

NET OPERATING INCOME 191,108 133,442

Personnel expenses 9 (61,724) (51,923)

Depreciation and impairment of tangible fixed assets (4,543) (6,477)

Amortization of intangible fixed assets (343) (475)

Other operating expenses 10 (47,562) (47,187)

TOTAL OPERATING EXPENSES (114,172) (106,062)

OPERATING PROFIT 76,936 27,380

Net profit from sale of non-current assets held for sale 24 2,937 950

Net profit from sale or disposal of other assets 51 1

PROFIT BEFORE TAX 79,924 28,331

Income tax expense 31 (14,219) (7,568)

NET PROFIT 65,705 20,763

Attributable to:

Equity holders of the parent 58,127 16,486

Minority interest 7,578 4,277

65,705 20,763

The attached notes 1 to 52 form part of these consolidated financial statements.


CONSOLIDATED BALANCE SHEETYear ended 31 December 2008

2008Notes

2007[In LL million]

ASSETSCash and balances with the Central Banks 11 640,776 553,895Deposits with banks and financial institutions 12 180,363 256,074Amounts due from Head Office, branches and affiliates 13 458,971 796,516

Financial assets held for trading 929 320Financial assets designated at fair value through profit or loss 14 4,401 18,774Loans and advances to customers, net 15 1,401,753 1,196,898Loans and advances to related parties, net 16 55,941 27,506Debtors by acceptances 17 74,642 83,333Available-for-sale financial instruments 18 390,347 473,880

Financial assets classified as loans and receivables 19 1,178,352 224,023Held to maturity financial instruments 20 383,824 397,827Investments in non-consolidated subsidiaries 21 1,608 1,608Tangible fixed assets 22 53,200 54,538Intangible fixed assets 23 2,106 1,574Non-current assets held for sale 24 143,567 145,895

Deferred tax assets 31 2,208 2,433Other assets 25 72,960 94,962Goodwill 26 2,706 1,102Total assets 5,048,654 4,331,158

LIABILITIES AND EQUITY

LIABILITIES

Due to Central Banks 27 305,101 296,261Due to banks and financial institutions 28 127,684 135,689Amounts due to Head Office, branches and affiliates 29 322 37,212Customers' deposits 30 3,903,315 3,373,472Related parties’ deposits 11,568 14,244Engagements by acceptances 17 74,642 83,333

Current tax liabilities 31 9,779 6,235Deferred tax liabilities 31 1,060 17Other liabilities 32 119,213 118,127Provision for risks and charges 33 12,443 9,756Employees’ end of service benefits 34 12,744 9,758Total liabilities 4,577,871 4,084,104

EQUITY

Share capital – common shares 35a 10,620 10,620

Share capital – preferred shares 35b 1,912 -Share premium – preferred shares 35b 133,121 -Cash contribution by shareholders 35c 106,746 106,746Reserves related to share capital 36 75,016 67,944Retained earnings 10,624 6,471Revaluation reserve of tangible fixed assets 38 3,934 3,934

Available-for-sale reserve 39 7,232 (1,265)Foreign currency reserve (28) 97Reserve for non-current assets held for sale 37 5,261 -Profit for the year 58,127 16,486

412,565 211,033Minority interest 58,218 36,021

Total equity 470,783 247,054

Total liabilities and equity 5,048,654 4,331,158

The financial statements were authorized for issue in accordance with a resolution of the Board of Directors on 14 April 2009.



CONSOLIDATED BALANCE SHEETYear ended 31 December 2008

2008Notes

2007[In LL million]

Off balance sheet

Financing commitments

- Commitments issued to customers 47 872 3,257

- Commitments issued to financial institutions 47 119,272 136,438

- Undrawn commitments to lend 47 286,158 253,918

Bank guarantees

- Guarantees issued to financial institutions 47 21,566 22,740

- Guarantees issued to customers 47 135,426 141,981

- Guarantees received from financial institutions 14,777 18,219

Foreign currency contracts

- Foreign currencies to receive 43 36,906 28,923

- Foreign currencies to deliver 37,389 29,475

Commitments on term financial instruments 43 17,254 19,862

Fiduciary deposits 45 156,066 193,033

Financial assets under management – non discretionary 46 1,694,423 1,225,598

Doubtful loans fully provided for 44 125,540 133,073



CONSOLIDATED CASH FLOW STATEMENT Year ended 31 December 2008

2008Notes

2007[In LL million]

OPERATING ACTIVITIES

Profit before income tax 79,924 28,331Adjustments for:

Depreciation and amortization 22 & 23 5,058 5,429Impairment of tangible fixed assets 22 - 2,137Impairment on available-for-sale financial instruments 963 -Amortization of the deferred costs resulting from the acquisitionof Inaash Bank SAL 25 27,430 24,474Provisions for doubtful loans 8 11,696 29,555Loans written off 8 1,480 3,766Provision for other doubtful debts 8 3,313 790Recoveries of impairment losses 8 (18,849) (17,060)Provision for employees’ end of service benefits 34 4,527 1,132Gain on sale of tangible fixed assets (40) (1)Gain on sales of non-current assets held for sale 24 (2,937) (950)Write-back of provisions on non-current assets held for sale (303) (1,438)Loss on disposal of intangible fixed assets 379 166Net provision for risks and charges 2,687 7,304Unrealized loss (gain) on financial assets carried at fair value through profit or loss 2,240 (1,663)

117,568 81,972Working capital changes:

Cash and balances with the Central Banks (1,022) (254,748)Deposits with banks and financial institutions 126 34,347Amounts due from Head Office, branches and affiliates 85,252 (234,545)Due to Central Banks 8,840 694Due to banks and financial institutions 16,577 (1,144)Due to Head office, branches and affiliates (1,526) 1,526Loans and advances to customers (212,546) 35,227Loans and advances to related parties (28,435) (6,139)Other assets (5,428) 9,979Customers’ deposits 529,843 (216,197)Related parties’ deposits (2,676) 7,328Other liabilities 1,086 32,107

Cash from (used in) operations 507,659 (509,593)Employees’ end of service benefits paid 34 (1,541) (1,023)Taxation paid (9,407) (7,369)Net cash from (used in) operating activities 496,711 (517,985)

INVESTING ACTIVITIES

Purchase of financial assets held for trading (609) (18)Proceeds upon maturity (purchase) of held to maturity financial instruments 14,003 (34,942)Proceeds from sales of financial assets carried at fair value through profit or loss 12,133 110(Purchase) proceeds of financial assets classified as loans and receivables (703,662) 28,237Purchase of available-for-sale financial instruments (132,273) (93,365)Purchase of tangible fixed assets 22 (3,914) (4,876)Purchase of intangible fixed assets 23 (1,818) (716)Proceeds from sale of tangible fixed assets 1,133 250Acquisition of additional shares in subsidiaries (4,909) -Proceeds from sales of non-current assets held for sale 14,467 5,600Proceeds from sales of non-consolidated subsidiary - 61Net cash used in investing activities (805,449) (99,659)

FINANCING ACTIVITIES

Issuance of preferred shares 35b 1,912 -Share premium – preferred shares 35b 133,121 -Transaction costs related to an increase of a subsidiary’s capital - (233)Increase of minority interest share due to increase of subsidiary’s capital 18,160 -Net cash from (used in) financing activities 153,193 (233)Effect of exchange rate changes 985 (1,481)

DECREASE IN CASH AND CASH EQUIVALENTS (154,560) (619,358)

Cash and cash equivalents at 1 January 41 795,256 1,414,614

CASH AND CASH EQUIVALENTS AT 31 DECEMBER 41 640,696 795,256



CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2008

[In LL million]

Balance at 31 December 2006 10,620 - - 106,746 61,

Transfer to retained earnings - - - -

Sale of tangible fixed assets (note 38) - - - -

Transfer to reserves related to share capital (note 36) - - - - 6,Transaction costs related to an increase

of a subsidiary’s capital (note 40) - - - -

Translation difference - - - -

Net movement in cumulative changes

in fair value (note 39) - - - -Profit for the year 2007 - - - -

Total income and expense for the year - - - -

Balance at 31 December 2007 10,620 - - 106,746 67,

Transfer to retained earnings - - - -

Transfer to reserve for non-current assets held for sale - - - -Transfer due to sale of non-current assets

held for sale (note 37) - - - -

Transfer to reserves related to share capital (note 36) - - - - 7,Issuance of preferred shares (note 35) - 1,912 133,121 -

Net increase in minority interests’ share due to

increase in share capital of SGBJ (note 3) - - - -Acquisition of minority interests in Sogecap SAL (note 3) - - - -

Translation difference - - - -

Net movement in cumulative changes

in fair value (note 39) - - - -

Profit for the year 2008 - - - -Total income and expense for the year - - - -

Balance at 31 December 2008 10,620 1,912 133,121 106,746 75

Share

capital –

common

shares

Attributable to equity h

Share

capital –

preferred

shares

Share

premium

–

preferred

shares

Cash

contri-

bution by

s h a re -

h o l d e r s



46 61,698 1,922 4,554 (2,257) 38 - 10,292 193,613 31,836 225,449

- - 10,292 - - - - (10,292) - - -

- - 620 (620) - - - - - - -

- 6,246 (6,246) - - - - - - - -

- - (117) - - - - - (117) (116) (233)

- - - - - 59 - - 59 57 116

- - - - 992 - - - 992 (33) 959- - - - - - - 16,486 16,486 4,277 20,763

- - - - 992 - - 16,486 17,478 4,244 21,722

46 67,944 6,471 3,934 (1,265) 97 - 16,486 211,033 36,021 247,054

- - 16,486 - - - - (16,486) - - -

- - (5,513) - - - 5,513 - - - -

- - 252 - - - (252) - - - -

- 7,072 (7,072) - - - - - - - -- - - - - - - - 135,033 - 135,033

- - - - - - - - - 17,637 17,637- - - - - - - - - (2,782) (2,782)

- - - - - (125) - - (125) (50) (175)

- - - - 8,497 - - - 8,497 (186) 8,311

- - - - - - - 58,127 58,127 7,578 65,705- - - - 8,497 - - 58,127 66,624 7,392 74,016

46 75,016 10,624 3,934 7,232 (28) 5,261 58,127 412,565 58,218 470,783

y holders of the parent

Reserves

related to

share

capital

Retained

earnings

Revaluation

reserve

of

tangible

fixed

assets

Available-

for-

sale

reserve

Foreign

currency

reserve

Reserve

for

non-

current

assets

held for

sale

Profit

for the

year

Total

Minority

interest

Total

equity



1. ACTIVITIES

Société Générale de Banque au Liban SAL (the Bank) is a shareholding company registered in Beirut, Lebanon.It was registered in 1953 under no. 3696 at the Commercial Registry of Beirut and no. 19 on the list of bankspublished by the Bank of Lebanon. The headquarters of the Bank are located at Saloumeh Square, Sin El Fil,Lebanon.

The Bank is 19% owned by Société Générale SA (France), which is referred to in these financial statements asthe “Head Office”.

The Bank, together with its subsidiaries (the Group), Société Générale de Banque - Jordanie, Sogelease LibanSAL, Sogecap SAL and Fidus SAL are involved in insurance, banking and financial services activities(commercial, investment and private). The Bank is regulated by the Laws in Lebanon mainly the Code ofCommerce, the Money and Credit Act and the circulars issued by the Bank of Lebanon and the BankingControl Commission.

The Bank provides a full range of banking activities through its headquarters and its branches in Lebanon.

2. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the financial statements are set out below:

Basis of preparation

The consolidated financial statements are prepared under the historical cost convention as modified for therestatement of buildings purchased prior to 1 January 1994 for the changes in the general purchasing powerof the Lebanese Lira and the measurement at fair value of derivative financial instruments, available for sale,held for trading and fair value through profit or loss (related to unit-linked contracts) investments.

The consolidated financial statements are presented in Lebanese Lira, which is the functional currency of theBank, and all values are rounded to the nearest million (LL million) except when otherwise indicated. All othercurrencies are denominated in units.

Statement of compliance

The consolidated financial statements have been prepared in accordance with the International FinancialReporting Standards (IFRS) and the applicable requirements of the Code of Commerce, the Money and CreditAct, and the circulars issued by the Bank of Lebanon and the Banking Control Commission.

Basis of consolidation

The consolidated financial statements comprise the financial statements of Société Générale de Banque auLiban SAL and its controlled subsidiaries drawn up to 31 December each year. The financial statements of thesubsidiaries are prepared for the same reporting year as the Bank, using consistent accounting policies.

All intra-group balances, transactions, income and expenses are eliminated in full.

Subsidiaries are fully consolidated from the date on which control is transferred to the Bank. Control isachieved where the Bank has the power to govern the financial and operating policies of an entity so as toobtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year areincluded in the consolidated income statement from the date of acquisition or up to the date of disposal.

Minority interests represent the portion of profit or loss and net assets not owned, directly or indirectly, by theBank and are presented separately in the consolidated income statement and within equity in the consolidatedbalance sheet, separately from parent shareholders’ equity. Any losses applicable to the minority interest areallocated against the interests of the parent. Acquisitions of minority interests are accounted for using theparent entity extension method, whereby, the difference between the consideration and the fair value of theshare of the net assets acquired is recognized as goodwill. If the cost of acquisition below the fair values ofthe identifiable net assets acquired (i.e. a discount on acquisition) the difference is recognized directly in theincome statement in the year of acquisition.

32

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSYear ended 31 December 2008


Name

Société Générale de Banque - Jordanie Jordan Banking 50.62% 50.07%

Fidus SAL* Lebanon Brokerage services 49.00% 49.00%

Sogelease SAL Lebanon Leasing 99.75% 99.75%

Sogecap SAL Lebanon Insurance 75.00% 50.03%

Country of

incorporation

Activities

The consolidated financial statements represent the financial statements of the Bank and the followingsubsidiaries:

2008 2007

* Effective 1 January 2004, the Group obtained control, by virtue of agreement with other investors, overFidus SAL, and consequently, the financial statements of Fidus SAL have been consolidated with those ofthe Group.

Changes in accounting policies

The accounting policies are consistent with those used in the previous year except as follows:

In October 2008, the IASB issued amendments to IAS 39, “Financial Instruments: Recognition andMeasurement”, and IFRS 7, “Financial Instruments: Disclosures”, titled “Reclassification of FinancialAssets”. The amendments to IAS 39 permit (1) certain reclassifications of non-derivative financial assets(other than those designated under the fair value option) out of the fair value through profit or loss categoryand (2) also allow the reclassification of financial assets from the available for sale category to the loans andreceivables category in particular circumstances. The amendments to IFRS 7 introduce additionaldisclosure requirements if an entity has reclassified financial assets in accordance with the amendments toIAS 39. The impact of reclassification permitted by the amendments is disclosed in note 18 to the financialstatements.

Future changes in accounting policies

Below is the list of standards, interpretations and amendments to existing standards issued but not yeteffective for the year ended 31 December 2008:

Applicable to the December 2009 year-end:IFRS 1 First-time Adoption of International Financial Reporting Standards – cost of an investmentin a subsidiary, jointly controlled entity or associate (Amendments)IFRS 2 Share-based payments – vesting conditions and cancellations (Amendments)IFRS 8 Operating SegmentsIAS 1 Presentation of Financial Statements (Revised)IAS 23 Borrowing Costs (Revised)IAS 27 Consolidated and Separate Financial Statements – cost of an investment in a subsidiary,jointly controlled entity or associate (Amendments)IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements –puttable financial instruments and obligations arising on liquidation (Amendments)IFRIC 13 Customer Loyalty ProgrammesIFRIC 16 Hedges of a Net Investment in a Foreign Operation

Effective subsequent to December 2009 year-end:IFRS 3 Business Combinations (Revised)IAS 27 Consolidated and Separate Financial Statements (Amendments)IAS 39 Financial Instruments: Recognition and Measurement – eligible hedged items (Amendments)

Management does not expect these interpretations and policies to have a significant impact on the Group’sfinancial statements when implemented in future years.


Business combinations and goodwill

Business combinations are accounted for using the purchase method of accounting. This involvesrecognizing identifiable assets (including previously unrecognized intangible assets) and liabilities (includingcontingent liabilities but excluding future restructuring) of the acquired business at fair value. Any excess ofthe cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. Ifthe cost of acquisition is less than the fair values of the identifiable net assets acquired, the discount onacquisition is recognized directly in the income statement in the year of acquisition.

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of thebusiness combination over the Group’s interest in the net fair value of the identifiable assets, liabilities andcontingent liabilities acquired.

Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwillis reviewed for impairment annually or more frequently if events or changes in circumstances indicate that thecarrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a businesscombination is, from the acquisition date, allocated to each of the Bank’s cash-generating units, or groups ofcash-generating units, that are expected to benefit from the synergies of the combination, irrespective ofwhether other assets or liabilities of the acquiree are assigned to those units or groups of units. Each unit orgroup of units to which the goodwill is allocated:• represents the lowest level within the Group at which the goodwill is monitored for internal managementpurposes; and• is not larger than a segment in accordance with IFRS 8 Operating Segments.

When subsidiaries are sold, the difference between the selling price and the net assets plus cumulativetranslation differences and goodwill is recognized in the income statement.

Non-trading investments

These are classified as follows:• Held-to-maturity• Available-for-sale• Loans and receivables

All non-trading investments are initially recognized at cost, being the fair value of the consideration givenincluding directly attributable transaction costs.

Premiums and discounts on non-trading investments are amortized using the effective interest method andtaken to interest income.

i) Held-to-maturityHeld-to-maturity financial instruments are those which carry fixed or determinate payments and have fixedmaturities and which the Bank has the intention and ability to hold to maturity. After initial measurement,held-to-maturity financial investments are subsequently measured at amortized cost using the effectiveinterest method, less allowance for impairment. Amortized cost is calculated by taking into account anydiscount or premium on acquisition and fees that are an integral part of the effective interest rate. Theamortization is included in “interest and similar income” in the income statement. The losses arising fromimpairment of such investments are recognized in the income statement under “impairment losses onfinancial investments”.

ii) Available-for-saleAvailable-for-sale financial investments are those investments which are designed as such or do notqualify to be classified as designated at fair value through profit or loss, held-to-maturity or loans andreceivables.

After initial measurement, available-for-sale financial investments are subsequently measured at fair value.Unrealized gains and losses are recognized directly in equity in the “available-for-sale reserve”. When thesecurity is disposed of the cumulative gain or loss previously recognized in equity is recognized in theincome statement. Interest earned whilst holding available-for-sale financial investments is reported asinterest income using the effective interest method. Dividends earned whilst holding available for salefinancial investments are recognized in the income statement as “net gain on financial investments” whenthe right of the payment has been established. The losses arising from impairment of such investments arerecognized in the income statement as “impairment losses on financial investments” and removed from the“available-for-sale reserve”.

34


iii) Loans and receivablesDebt instruments which do not meet the definition of held to maturity and which have fixed ordeterminable payments but are not quoted in an active market are treated effectively as loans andreceivables carried at amortized cost (adjusted for effective hedges) less provision for impairment invalue.

Trading investments

Financial assets held for trading are recorded in the balance sheet at fair value. Changes in fair value(realized and unrealized) are recognized in the income statement.

Deposits with banks and financial institutions and amounts due from head office, branches and affiliates

Deposits with banks and financial institutions and amounts due from head office, branches and affiliates arestated at fair value of the consideration given less any amounts written off and provision for impairment.

Loans and advances to customers

Loans and advances are stated at fair value of the consideration given adjusted for effective hedges andstated net of allowance for impairment losses and any amounts written off.

Renegotiated loans

Where possible, the Group seeks to restructure loans rather than take possession of collateral. This mayinvolve extending the payment arrangements and the agreement of new loan conditions. Once the termshave been renegotiated, the loan is no longer considered past due. Management continually reviewsrenegotiated loans to ensure that all criteria are met and that future payments are likely to occur. The loanscontinue to be subject to an individual or collective impairment assessment, recalculated using the loan’soriginal effective interest rate.

Investments in subsidiaries and associates

Investments in subsidiaries and associates are carried at cost less impairment. Subsidiaries areenterprises which the Group controls, normally where it holds more than 50% of the voting power.Associates are enterprises in which the Group exercises significant influence, but not control, normallywhere it holds 20% to 50% of the voting power.

The Group’s investments in associates are accounted for using the equity method of accounting. Anassociate is an entity in which the Group has significant influence and which is neither a subsidiary nor ajoint venture.

Under the equity method, the investment in the associate is carried in the balance sheet at cost pluspost-acquisition changes in the Group’s share of net assets of the associate. Losses in excess of the costof the investment in an associate are recognized when the Group has incurred obligations on its behalf.Goodwill relating to an associate is included in the carrying amount of the investment and is not amortized.The income statement reflects the Group’s share of the results of operations of the associate. Where therehas been a change recognized directly in the equity of the associate, the Group recognizes its share of anychanges and discloses this, when applicable, in the statement of changes in equity. Unrealized profits andlosses resulting from transactions between the Group and the associate are eliminated to the extent of theinterest in the associate.

The reporting dates of the associate and the Group are identical and the associate’s accounting policiesconform to those used by the Group for like transactions and events in similar circumstances.

Fair values

For investments and derivatives quoted in an active market, fair value is determined by reference toquoted market prices. Bid prices are used for assets and offer prices are used for liabilities.

For financial instruments where there is no active market, fair value is normally based on one of the following:

• recent transactions• brokers’ quotes• the expected cash flows discounted at current rates applicable for items with similar terms and risk

characteristics• option pricing models.

The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits,is the amount payable on demand.


Tangible fixed assets

Tangible fixed assets are initially recorded at cost less accumulated depreciation and any impairment in value.Buildings acquired prior to 1 January 1994 were restated for the changes in the general purchasing power ofLebanese Lira after the approval of the Bank of Lebanon. Net surplus arising on restatement is credited to“Revaluation reserve of tangible fixed assets”. Changes in the expected useful life are accounted for bychanging the depreciation period or method, as appropriate, and treated as changes in accounting estimates.

Depreciation is calculated using the straight line method on all tangible fixed assets. The rates of depreciationare based upon the following estimated useful lives:

• Buildings 40 to 50 years• Furniture and fixtures 5 to 12.5 years• Installations 5 to 16.67 years• Vehicles 6.67 to 10 years

The carrying values of tangible fixed assets are reviewed for impairment when events or changes incircumstances indicate the carrying value may not be recoverable. If any such indication exists and where thecarrying values exceed the estimated recoverable amount, the assets are written down to their recoverableamount, being the higher of their value less costs to sell and their value in use.

Expenditure incurred to replace a component of an item of tangible fixed assets that is accounted forseparately is capitalized and the carrying amount of the component that is replaced is written off. Othersubsequent expenditure is capitalized only when it increases future economic benefits of the related item oftangible fixed assets. All other expenditure is recognized in the income statement as the expense is incurred.

Intangible fixed assets

Intangible assets are measured on initial recognition at cost. Following initial recognition, intangible assets arecarried at cost less any accumulated amortization and any accumulated impairment losses.

The useful lives of the intangible assets are assessed to be either finite or indefinite. Intangible assets with finitelives are amortized over the useful economic life and tested for impairment whenever there is an indication thatthe intangible asset may be impaired. Intangible assets with indefinite useful lives are not amortized buttested for impairment annually, and whenever there is an indication that the intangible asset may be impaired.

If the carrying value of the intangible asset is more than the recoverable amount, the intangible asset isconsidered impaired and is written down to its recoverable amount. The excess of carrying value overrecoverable amount is recognized in the income statement.

Amortization is calculated using the straight line method to write down the cost of intangible assets to theirresidual values over 5 years.

Non-current assets held for sale

The Group occasionally acquires real estate in settlement of certain loans and advances. Such real estate isstated at the lower of the net realizable value of the related loans and advances and the current fair value ofsuch assets based on the instructions of the regulators. Gains or losses on disposal, and revaluation losses,are recognized in the income statement for the year.

Deferred costs

Deferred costs are the difference between the cost of the acquisition and the Bank’s interest in the net assetsof Inaash Bank SAL. Deferred costs are amortized over the period of the soft loan granted by the Bank ofLebanon following the acquisition. Amortization expense is reported as a contra revenue account on interestrevenue on Treasury bills as the soft loan received from the Bank of Lebanon is invested in Lebanese Treasurybills.

Deferred costs are stated at cost less accumulated amortization and accumulated impairment losses.

Customers’ deposits

All customer deposits are carried at the amortized cost, less amounts repaid and adjustments for effectivehedges.

36


Financial guarantees

In the ordinary course of business, the Group gives financial guarantees, consisting of letters of credit,guarantees and acceptances. Financial guarantees are initially recognized in the financial statements at fairvalue, being the premium received, in other liabilities. Subsequent to initial recognition, the Group’s liabilityunder each guarantee is measured at the higher of the amortized premium and the best estimate ofexpenditure required to settle any financial obligation arising as a result of the guarantee.

Any increase in the liability relating to financial guarantees is taken to the income statement in “creditlosses”.

Taxation

(i) Current taxCurrent tax assets and liabilities for the current and prior years are measured at the amount expected tobe recovered from or paid to the taxation authorities. The tax rates and tax law used to compute theamount are those that are enacted or substantively enacted by the balance sheet date.

The Group’s profits from operation in Lebanon are subject to a tax rate of 15% after deducting the 5%tax on interest received according to Law no. 497/2003 dated 30 January 2003.

(ii) Deferred taxDeferred income tax is provided using the liability method on temporary differences at the balance sheetdate. Deferred income tax assets and liabilities are measured at the tax rate that is expected to apply inthe year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that havebeen enacted or substantively enacted at the balance sheet date.

Current tax and deferred tax relating to items recognized directly in equity are also recognized in equityand not in the income statement.

The carrying amount of deferred tax assets is reviewed at each balance sheet and reduced to the extentthat it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferredtax assets to be utilized. Unrecognized deferred tax assets are reassessed at each balance sheet dateand are recognized to the extent that it has become probable that taxable profit will allow the deferred taxasset to be recovered.

Provision for risks and charges

Provisions are recognized when the Group has a present obligation (legal or constructive) arising from a pastevent and the costs to settle the obligation are both probable and can be reliably measured.

Employees’ end of service benefits

The Group provides end of service benefits to its employees. The entitlement to these benefits is basedupon the employees’ final salary, length of services and other local regulations where the Group operates.The expected costs of these benefits are accrued over the period of employment.

With respect to employees based in Lebanon, the Group makes contribution to the National Social SecurityFund calculated as a percentage of the employees’ salaries. The Group’s obligations are limited to thesecontributions, which are expensed when due.

Derivatives

Derivatives are stated at fair value. The fair value of a derivative is the equivalent of the unrealized gain orloss from marking to market the derivative using the prevailing market rates or internal pricing models.

For the purposes of hedge accounting, hedges are classified into two categories:

(a) fair value hedges which hedge the exposure to changes in the fair value of a recognized asset orliability; and(b) cash flow hedges which hedge exposure to variability in cash flows that is either attributable to aparticular risk associated with a recognized asset or liability or a forecasted transaction.

In relation to fair value hedges which meet the conditions for hedge accounting, any gain or loss fromremeasuring the hedging instrument is recognized immediately in the income statement. The hedged itemsare adjusted for fair value changes relating to the risk being hedged and the difference is recognized in theincome statement.


In relation to cash flow hedges which meet the conditions for hedge accounting, the portion of the gain or losson the hedging instrument that is determined to be an effective hedge is recognized initially in equity and anyineffective portion is recognized in the income statement. The gains or losses on cash flow hedges recognizedinitially in equity are transferred to the income statement in the period in which the hedged transaction impactsthe income statement. Where the hedged transaction results in the recognition of an asset or liability theassociated gains or losses that had initially been recognized in equity are included in the initial measurementof the cost of the related asset or liability.

For those derivatives which do not qualify for hedge accounting, any gains or losses arising from changes inthe fair value of the hedging instrument are taken directly to the income statement for the period.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, nolonger qualifies for hedge accounting or is revoked by the Group. For fair value hedges of financial instrumentswith fixed maturities any adjustment arising from hedge accounting is amortized over the remaining term tomaturity. For effective cash flow hedges, any cumulative gain or loss on the hedging instrument recognized inequity remains in equity until the hedged transaction occurs. If the hedged transaction is no longer expectedto occur, the net cumulative gain or loss recognized in equity is transferred to the income statement.

Fiduciary assets

Fiduciary assets are not treated as assets of the Group and are not reflected on the balance sheet.

Off balance sheet items

Off balance sheet balances include commitments which may take place in the Group’s normal operations suchas financial commitments, letters of guarantee, and letters of credit.

Offsetting

Financial assets and financial liabilities are only offset and the net amount reported in the balance sheet whenthere is a legally enforceable right to set off the recognized amounts and the Group intends to either settle ona net basis, or to realize the asset and settle the liability simultaneously.

Derecognition of financial assets and financial liabilities

Financial assetsA financial asset (or where applicable, a part of a financial asset or part of a group of similar financial assets)is derecognized where:

• The rights to receive cash flows from the asset have expired, or • The Group has transferred its rights to receive cash flows from the asset, or has assumed an obligation to

pay the received cash flow in full without material delay to a third party under a ‘pass through’ arrangement, and

• Either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferredcontrol of the asset.

When the Group has transferred its rights to receive cash flows from an asset and has neither transferred norretained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset isderecognized to the extent of the Group’s continuing involvement in the asset. Continuing involvement thattakes the form of a guarantee over the transferred asset is measured at the lower of the original carryingamount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expired.Where an existing financial liability is replaced by another from the same lender on substantially different terms,or the terms of an existing liability are substantially modified, such an exchange or modification is treated asa derecognition of the original liability and the recognition of a new liability and the difference in the respectivecarrying amount is recognized in profit or loss.

Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group andthe revenue can be reliably measured. The following specific recognition criteria must also be met beforerevenue is recognized:

(i) Interest and similar incomeFor all financial assets measured at amortized cost and interest bearing financial instruments classified asavailable for sale financial investments, interest income is recorded at the effective interest rate, which is therate that exactly discounts estimated future cash receipts through the expected life of the financial

38


instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset. Thecalculation takes into account all contractual terms of the financial instrument and includes any fees orincremental costs that are directly attributable to the instrument and are an integral part of the effectiveinterest rate, but not credit losses.

(ii) Fee and commission incomeThe Group earns fee and commission income from a diverse range of services it provides to its customers.Fee income can be divided into the following two categories:

Fee income earned from services that are provided over a certain period of timeFees earned for the provision of services over a period of time are accrued over that period. Loancommitment fees for loans that are likely to be drawn down and other credit related fees are deferred(together with any incremental costs) and recognized as an adjustment to the effective interest rate on theloan.

Fee income from providing transaction servicesFees or components of fees that are linked to a certain performance are recognized after fulfilling thecorresponding criteria.

(iii) Dividend incomeRevenue is recognized when the right to receive the payment is established.

(iii) Net trading incomeResults arising from trading activities include all gains and losses from changes in fair value and relatedinterest income from financial assets held for trading.

Foreign currencies

The consolidated financial statements are presented in Lebanese Lira which is the Bank’s functionalcurrency. Each entity in the Group determines its own functional currency and items included in thefinancial statements of each entity are measured using that functional currency.

Transactions and balancesTransactions in foreign currencies are initially recorded in the functional currency at the rate of exchangeruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated into Lebanese Lira orother functional currencies at rates of exchange prevailing at the balance sheet date. Any gains or lossesare taken to the consolidated income statement.

Translation gains or losses on non-monetary items carried at fair value are included in equity as part of thefair value adjustment on securities available-for-sale, unless part of an effective hedging strategy.

Translation of financial statements of foreign entities The assets and liabilities of foreign branches and subsidiaries are not deemed an integral part of the headoffice’s operations and are translated at rates of exchange ruling at the balance sheet date. Income andexpense items are translated at average exchange rates for the period. Any exchange differences are takendirectly to a foreign currency translation adjustment reserve.

Cash and cash equivalents

Cash and cash equivalents as referred to in the statement of cash flow comprise cash and balances withthe Central Banks, deposits with banks and financial institutions, amounts due from head office, branchesand affiliates, due to banks and other financial institutions and amounts due to head office, branches andaffiliates with an original maturity of three months or less.

Repurchase and resale agreements

Assets sold with a simultaneous commitment to repurchase at a specified future date at an agreed price(repos) are not derecognized in the balance sheet. Amounts received under these agreements are treatedas interest bearing liabilities and the difference between the sales and repurchase price treated as interestexpense using the effective yield method.

Assets purchased with a corresponding commitment to resell at a specified future date (reverse repos) arenot recognized in the balance sheet. Amounts paid under these agreements are treated as assets and thedifference between the purchase and resale price treated as interest income using the effective yieldmethod.


Impairment of financial assets

An assessment is made at each balance sheet date to determine whether there is objective evidence that aspecific financial asset may be impaired. If such evidence exists, any impairment loss is recognized in theincome statement.

Impairment is determined as follows:

(a) For assets carried at amortized cost, impairment is based on estimated cash flows which arediscounted at the original effective interest rate.

(b) For assets carried at fair value, impairment is the difference between cost and fair value.(c) For assets carried at cost, impairment is present value of future cash flows discounted at the current

market rate of return for a similar financial asset.

For available-for-sale equity investments reversal of impairment losses are recorded as increases in available-for-sale reserve under equity.

Trade and settlement date accounting

Purchases and sales of financial assets are recognized on the trade date, i.e. the date that the Group commitsto purchase or sell the asset.

Operating leases

Lease where the lessor retains substantially all the risks and benefits of ownership of the assets are classifiedas operating leases. Operating lease payments are recognized as expenses in the income statement on astraight-line basis over the lease term.

Accounting policies of subsidiary insurance company

The financial statements of the subsidiary insurance company have been prepared in accordance withInternational Financial Reporting Standards and the requirements of the local regulations related to insuranceand reinsurance companies in Lebanon. The key accounting policies are as follows:

Premiums earned on insurance contractsPremiums are recognized as revenues over the premium paying period of the related policies.

Insurance contracts liabilitiesMathematical reservesThe mathematical reserves are determined by actuarial valuation of future policy benefits. Actuarialassumptions include a margin for adverse deviation and generally take account of the type of policy, year ofissue and policy duration. Mortality and withdrawal rate assumptions are based on experience. Adjustmentsto the reserves are made in the income statement.

Liability adequacy testAt each balance sheet date the company assesses whether its recognized insurance liabilities are adequateusing current estimates of future cash flows under its insurance contracts. If that assessment shows that thecarrying amount of its insurance liabilities is inadequate in the light of estimated future cash flows, the entiredeficiency is immediately recognized in income and an unexpired risk provision created.

Commission earned and paidCommissions earned and paid are recognized at the time policies are written.

2a. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

Judgments

In the process of applying the Group’s accounting policies, management has made the following judgments,apart from those involving estimations, which have the most significant effect in the amounts recognized in thefinancial statements:

Classification of investmentsManagement decides on acquisition of an investment whether it should be classified as held-to-maturity, heldfor trading, carried at fair value through profit and loss account, or available-for-sale.

For those deemed to be held to maturity management ensures that the requirements of IAS 39 are met and inparticular the Group has the intention and ability to hold these to maturity.

40


The Group classifies investments as trading if they are acquired primarily for the purpose of making a shortterm profit by the dealers.

Classification of investments as fair value through profit and loss account depends on how managementmonitors the performance of these investments. When they are not classified as held for trading but havereadily available reliable fair values and the changes in fair values are reported as part of profit or loss in themanagement accounts, they are classified as fair value through profit or loss.

All other investments are classified as available-for-sale.

Impairment of investmentsThe Group treats available-for-sale equity investments as impaired when there has been a significant orprolonged decline in the fair value below its cost or where other objective evidence of impairment exists.The determination of what is “significant” or “prolonged” requires considerable judgment. In addition, theGroup evaluates other factors, including normal volatility in share price for quoted equities and the futurecash flows and the discount factors for unquoted equities.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balancesheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assetsand liabilities within the next financial year are discussed below:

Impairment losses on loans and advances and investment in debt instrumentsThe Group reviews its problematic loans and advances and investment in debt instruments on a regularbasis to assess whether a provision for impairment should be recorded in the income statement. Inparticular, considerable judgment by management is required in the estimation of the amount and timing offuture cash flows when determining the level of provisions required. Such estimates are necessarily basedon assumptions about several factors involving varying degrees of judgment and uncertainty, and actualresults may differ resulting in future changes to such provisions.

Valuation of unquoted equity investmentsValuation of unquoted equity investments is normally based on one of the following:

• Recent arm’s length market transactions;• Current fair value of another instrument that is substantially the same; • The expected cash flows discounted at current rates applicable for items with similar terms and risk

characteristics; or• Other valuation models.

The determination of the cash flows and discount factors for unquoted investments re q u i res significant estimation.

3. BUSINESS COMBINATIONS

During January 2008, Société Générale de Banque - Jordanie (SGBJ) increased its capital whereby eachshareholder had a pre-emptive right to subscribe to one share for every two shares he or she previouslyowned at an issue price of JD 1.27 per share allocated between JD 1 par value per share and JD 0.27 pershare issue premium. The gross amount of the capital increase amounted to LL 36,530 million detailed asfollows:

On 29 February 2008, the Bank subscribed to its share of the capital increase in the amount of US$12,133,182 or LL 18,291 million to retain its percentage of ownership at 50.07%.

Minority shareholders owning 0.55% of the total shares did not subscribe to their share of the capitalincrease, accordingly the unsubscribed shares were placed at the quoted market price of JD 3.66.

On 30 April 2008, the Bank purchased all the unsubscribed shares i.e. 222,374 shares (representing 1.65%of the total capital increase of SGBJ or 0.55% of the overall capital) for a purchase price of US$ 1,024,278.

[In LL million]

Gross amount of capital increase of SGBJ 36,530

Minority share from capital increase (6,733,199 share) (18,239)

Group’s share from capital increase (6,752,078 share) 18,291


30 April 2008[In LL million]

Fair value of net assets of SGBJ 95,198

Group’s share (0.55%) 523

Goodwill from the arising increase in share price 1,021

Cost of purchase 1,544

On 12 November 2008, the Board of Directors approved the acquisition of additional shares in SogecapSAL previously owned by related parties totaling 8,620 shares for a price of US$ 2,232,149 or LL 3,365million. Accordingly the Bank’s share in Sogecap increased by 25%.

12 November 2008[In LL million]

Fair value of net assets of Sogecap 11,129

Group’s share (24.97%) 2,782

Goodwill arising from purchase of additional shares 583

Cost of purchase 3,365

4. INTEREST AND SIMILAR INCOME

2008 2007[In LL million]

Available-for-sale financial instruments 44,275 29,292

Financial assets classified as loans and receivables 4,020 -

Held to maturity financial instruments 7,071 7,848

Deposits with banks and financial institutions 76,102 58,086

Deposits with head office, branches and affiliates 21,864 45,430

Loans and advances to customers 115,776 104,932

Loans and advances to related parties 2,341 1,438

Total 271,449 247,026

5. INTEREST AND SIMILAR EXPENSE


Deposits from banks and financial institutions 7,636 7,298

Deposits from head office, branches and affiliates 75 1,102

Deposits from customers and other credit balances 134,630 137,624

Deposits from related parties 2,220 3,146

Total 144,561 149,170


6. NET FEES AND COMMISSIONS INCOME


Credit related fees and commissions 44,527 32,469

Portfolio and other management fees 13,806 13,832

Other commissions received 5,850 5,782

64,183 52,083

Commissions paid (18,916) (13,537)

Total 45,267 38,546

7. OTHER OPERATING INCOME


Income from services rendered 720 946

Other operating income 10,648 5,149

Net provisions written back against risks and charges 404 14

Total 11,772 6,109

T

8. NET RECOVERIES (CREDIT LOSSES)


Provision for doubtful loans (note 15) 11,696 29,555

Provision for other doubtful debit balances (other assets) 3,313 790

Loans written off 1,480 3,766

16,489 34,111

Less: Recoveries (note 15) (18,849) (17,060)

Total (2,360) 17,051

The net recoveries (credit losses) are classified as follows:


Corporate loans (4,619) 14,622

Retail loans 2,259 2,429

Total (2,360) 17,051


9. PERSONNEL EXPENSES


Salaries and wages 38,180 33,675

National Social Security Fund contributions 5,686 5,176

Provisions for employees’ end of service benefits (note 34) 4,527 1,132

Other allowances 13,331 11,940

Total 61,724 51,923

11. CASH AND BALANCES WITH THE CENTRAL BANKS


Cash 46,100 44,130

Central Banks:

Current accounts 159,138 80,207

Time deposits 431,950 424,412

Accrued interest receivable 3,588 5,146

Total 640,776 553,895

10. OTHER OPERATING EXPENSES


Telecommunication and postage 5,454 4,780

Rent 4,485 4,165

Professional services 7,211 5,696

Maintenance and repairs 3,382 3,078

Taxes and fees 3,317 2,934

Net provisions for risks and charges 387 10,865

Premiums for guarantee of deposits 1,761 1,606

Electricity, water and fuel 2,239 1,914

Publicity and advertising 3,921 2,446

Printings and stationery 1,734 1,655

Traveling expenses and entertainment 4,879 2,110

Legal expenses 2,012 1,119

Insurance premiums 1,011 1,008

Transportation and vehicles maintenance 736 644

Donations 133 104

Other operating charges 4,900 3,063

Total 47,562 47,187


12. DEPOSITS WITH BANKS AND FINANCIAL INSTITUTIONS


Current accounts 56,617 36,044


Checks for collection 41,949 39,818

Discounted bills 890 7,520

Pledged account 905 -

179,987 255,552

Accrued interest receivable 376 522

Total 180,363 256,074

13. AMOUNTS DUE FROM HEAD OFFICE, BRANCHES AND AFFILIATES


Sight deposits 109,662 65,530


Discounted bills 282 128

Debit accounts against credit accounts, net - 219

456,404 791,828

Accrued interest receivable 2,567 4,688

Total 458,971 796,516

Cash and balances with the Central Banks include non-interest bearing balances held by the Group at theBank of Lebanon in coverage of the obligatory reserve requirements for all banks operating in Lebanon ondeposits in Lebanese Lira as required by the Lebanese banking rules and regulations. This compulsoryreserve is calculated on the basis of 25% of sight commitments and 15% of term commitments.

In addition to the above, all banks operating in Lebanon are required to deposit with the Bank of Lebanoninterest-bearing placements at the rate of 15% of total deposits in foreign currencies regardless of nature.

SGBJ is also subject to compulsory reserve requirements with varying percentages, according to thebanking rules and regulations of the Kingdom of Jordan.

Most current accounts represent balances deposited at correspondent banks for operating activities and do

not generate interest revenues.

Time deposits include an amount of LL 64,106 million (equivalent to Euro 30 million) as of 31 December 2008(2007: US$ 46 million) pledged in favour of Société Générale SA Paris in guarantee of documentary letters ofcredits and guarantees issued in favor of the Group’s clients with any of the entities under Société GénéraleGroup.


14. FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS


Listed funds

- Sogerprime 2008 - 14,934

- SGAM bonds 594 406

- SGAM equities 3,807 3,434

Total 4,401 18,774


Beginning balance at 1 January 18,774 17,221

Add: Purchases 4,821 2,828

Unrealized (loss) gain (2,240) 1,663

Realized (loss) gain (9) 61

Less: Sales (16,945) (2,999)

Ending balance at 31 December 4,401 18,774


Individuals 429,996 344,277

Trade wholesale 258,744 231,232

Manufacturing 283,267 261,102

Trade retail 286,355 258,977

Services 154,705 121,508

Construction 173,208 159,991

Financial institutions 95,286 56,610

Agriculture 25,254 19,104

Other 189,491 209,478

Total 1,896,306 1,662,279

Breakdown by economic sector of gross loans is as follows:

These instruments are held to cover unit-linked liabilities associated with certain contracts, for which theinvestment risk lies predominantly with the contract holder.

Investments in “Sogerprime 2008” fund, represent an investment in a portfolio of 18 international stocks. Thefund matured on 30 June 2008 being 5 years from the issue date on 30 June 2003.

The movement in investments held to cover unit-linked liabilities at 31 December was as follows:

15. LOANS AND ADVANCES TO CUSTOMERS, NET


Corporate loans 1,192,927 1,162,589

Retail loans 703,379 499,690

1,896,306 1,662,279

Less: Allowance for impairment losses (494,553) (465,381)

Total 1,401,753 1,196,898


2008[In LL million]

Corporate Retail Total

Balance at 1 January 395,484 69,897 465,381

Charge for the year (note 8) 8,103 3,593 11,696

Unrealized interest for the year 48,682 10,737 59,419

452,269 84,227 536,496

Less: Recoveries (note 8) (12,992) (5,857) (18,849)

Less: Provisions written off (21,888) (2,633) (24,521)

(34,880) (8,490) (43,370)

Transfers to off-balance sheet (note 44) (2,706) (433) (3,139)

Transfers from off-balance sheet (note 44) 5,334 - 5,334

420,017 75,304 495,321

Difference of exchange (658) (110) (768)

Balance at 31 December 419,359 75,194 494,553

Gross amount of loans, individually determined to beimpaired, before deducting the individually assessed

impairment allowance 429,413 90,724 520,137

2007[In LL million]


Balance at 1 January 377,708 65,827 443,535

Charge for the year (note 8) 24,479 5,076 29,555

Unrealized interest for the year 48,687 9,354 58,041

450,874 80,257 531,131

Less: Recoveries (note 8) (9,380) (7,680) (17,060)

Less: Provisions written off (43,241) (3,156) (46,397)

(52,621) (10,836) (63,457)

Transfers to off-balance sheet (note 44) (4,961) (14) (4,975)

Transfers from off-balance sheet (note 44) 1,176 - 1,176

394,468 69,407 463,875

Difference of exchange 1,016 490 1,506

Balance at 31 December 395,484 69,897 465,381

Gross amount of loans, individually determined to beimpaired, before deducting the individually assessedimpairment allowance 422,285 73,988 496,273

Total 1,896,306 1,662,279

A reconciliation of the allowance for impairment losses by class, is as follows:

All allowances for impairment are individual. The Group has no collective impairment.

According to the Bank of Lebanon regulations and Banking Control Commission Circular no. 240 dated 2January 2004, bad debts and related allowance for credit losses meeting the criteria set out in the circular

have been transferred to the off-balance sheet accounts.

Collateral repossessed

During the year, the Bank took possession of various real estates with carrying value of LL 9,283 million whichthe Bank is in the process of selling (note 24).


16. LOANS AND ADVANCES TO RELATED PARTIES, NET


Corporate loans 13,980 9,745


56,187 27,527

Less: Allowance for impairment losses (246) (21)

Total 55,941 27,506

18. AVAILABLE-FOR-SALE FINANCIAL INSTRUMENTS


❏ Quoted:

Lebanese Treasury bills – Eurobonds 5,845 214,726

Shares 13,564 12,486

Corporate Bonds 10,223 10,332

Funds 9 13

29,641 237,557

❏ Unquoted:

Lebanese Treasury bills – denominated in LL 358,722 235,083

Shares 2,430 1,686

361,152 236,769

❏ Impairment allowance (446) (446)

360,706 236,323

Total 390,347 473,880

2008[In LL million]


Balance at 1 January 21 - 21

Unrealized interest for the year 225 - 225

Balance at 31 December 246 - 246

2007[In LL million]


Balance at 1 January - - -

Unrealized interest for the year 21 - 21

Balance at 31 December 21 - 21

Total 1,896,306 1,662,279

A reconciliation of the allowance for impairment losses for loans and advances to related parties, by class, isas follows:

17. DEBTORS BY ACCEPTANCES

Acceptances resulted from letters of credit opened for the customers’ accounts for which settlement isdelayed and is guaranteed by the Group.


1 July 2008 31 December 2008[In LL million]

Carrying value Fair value Carrying value Fair value

Available-for-sale financial assetsreclassified to loans and receivables 250,667 250,667 248,468 241,262

Total 1,896,306 1,662,279

During the year ended 31 December 2008, the Group recorded an impairment loss on its investments inquoted shares for LL 963 million (2007: nil).

All unquoted available-for-sale shares are recorded at cost due to the unpredictable nature of future cashflows and lack of suitable other markets for reaching a reliable fair value.

Following the amendment to IAS 39 and IFRS 7, “Reclassification of Financial Assets”, the Bank reclassifiedall its available-for-sale portfolio of Eurobonds to loans and receivables. The Bank identified assets, eligibleunder the amendments, for which at 1 July 2008, it had a clear change of intent to hold for the foreseeablefuture rather than to exit or trade in the short term. Under IAS 39 as amended, the reclassifications were madewith effect from 1 July 2008 at fair value at that date. The disclosures below detail the impact of the

reclassification on the Bank.

The following table shows the carrying values and fair values of the reclassified assets:

As of the reclassification date, effective interest rates on reclassified available for sale Eurobonds ranged from5.8% to 9.1% with expected recoverable cash flows of LL 319,057 million.

Had the reclassification not been made, the Bank’s shareholders’ equity would have included additionalunrealized losses on the reclassified available-for-sale Eurobonds of LL 7,206 million as of 31 December 2008.

19. FINANCIAL ASSETS CLASSIFIED AS LOANS AND RECEIVABLES


❏ Quoted:

Treasury bills – Eurobonds 281,520 -

❏ Unquoted:

Certificates of deposit – Bank of Lebanon 890,302 213,370

Certificates of deposit – Bank of Jordan 6,530 10,653

896,832 224,023

Total 1,178,352 224,023


20. HELD TO MATURITY FINANCIAL INSTRUMENTS


❏ Quoted:

Lebanese Treasury bills – Eurobonds 27,846 53,577

Corporate bonds 1,560 1,422

29,406 54,999

❏ Unquoted:

Lebanese Treasury bills – denominated in LL 309,798 321,521

Other governmental bonds 42,387 21,307

Corporate bonds 2,233 -

354,418 342,828

Total 383,824 397,827

21. INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES

Ownership % 2008 2007[In LL million]

2 0 0 8 2007 Activity

Investments in non-consolidated subsidiaries

Société Générale Libanaise Foncière SARL 9 8 . 6 6 98.66 Real Estate 1 4 1 4

Société Générale de Services d’Investissements S A R L 9 8 . 5 0 9 8 . 5 0 Services & 1 6 3 1 6 3s t u d i e s

SGBL Courtage Assurance SARL 1 0 0 . 0 0 1 0 0 . 0 0 B ro k e r a g e 5 5

C e n t re de Traitement Monétique SAL 5 0 . 0 0 5 0 . 0 0 Financial 1 , 5 0 0 1 , 5 0 0s e r v i c e s

799 Bassatine Tarablos SAL 6 0 . 0 0 6 0 . 0 0 Investments & 2 2 2 2m a n a g e m e n t

Al Nisr Al Arabi Lil Istismarat 5 0 . 0 0 5 0 . 0 0 Real estate 2 2

1 , 7 0 6 1 , 7 0 6

Less: Provision for impairment

Société Générale de Services d’Investissements SARL ( 9 8 ) ( 9 8 )

To t a l 1 , 6 0 8 1 , 6 0 8

Held to maturity Lebanese Treasury bills include a gross amount of LL 342,920 million net of interest received

in advance of LL 35,500 million as of 31 December 2008 (2007: LL 334,905 million net of interest received inadvance of LL 15,415 million) pledged in favor of Bank of Lebanon against a soft loan (note 27).

The carrying values of the investments in subsidiaries which were not consolidated because they areimmaterial to the consolidated financial statements as at 31 December 2008, are detailed as follows:

Investments in non-consolidated subsidiaries represent the following:

21. INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES

Ownership % 2008 2007

The carrying values of the investments in subsidiaries which were not consolidated because they areimmaterial to the consolidated financial statements as at 31 December 2008, are detailed as follows:


22. TANGIBLE FIXED ASSETS

[In LL million]Advances on Land Furniture

purchase of and and

fixed assets buildings fixtures Installations Vehicles Total

Cost:

At 1 January 2008 2,715 54,799 43,335 28,644 1,022 130,515

Additions 1,398 375 1,038 1,071 32 3,914

Disposals - (1,315) (713) (173) (192) (2,393)

Transfers from advances on

purchase of fixed assets (1,214) - 723 491 - -

Write-off - - (3) - - (3)

Other adjustments (1) - (11) (7) - (19)

At 31 December 2008 2,898 53,859 44,369 30,026 862 132,014

Depreciation:

At 1 January 2008 - 10,024 36,172 26,093 771 73,060

Provided during the year - 405 2,556 1,112 79 4,152

Relating to disposals - (302) (689) (173) (136) (1,300)

Relating to write-off - - (3) - - (3)

Other adjustments - - (7) (5) - (12)

At 31 December 2008 - 10,127 38,029 27,027 714 75,897

Impairment:

At 1 January and 31 December 2008 1,560 1,357 - - - 2,917

Net carrying amount:

At 31 December 2008 1,338 42,375 6,340 2,999 148 53,200


Société Générale Libanaise Foncière SARL 19 23

Société Générale de Services d’Investissements SARL 369 318

SGBL Courtage Assurance SARL 523 347

Centre de Traitement Monétique SAL 2,755 2,852

799 Bassatine Tarablos SAL - 7

Total 3,666 3,547

Shareholders’ equity


[In LL million]Advances on Land Furniture

purchase of and and

fixed assets buildings fixtures Installations Vehicles Total

Cost:

At 1 January 2007 2,264 53,914 41,109 27,946 1,022 126,255

Additions 1,254 1,357 1,629 636 - 4,876

Disposals - (472) (84) (74) - (630)

Transfers from advances on

purchase of fixed assets (801) - 671 130 - -

Transfers to intangible assets (note 23) (3) - - - - (3)

Other adjustments 1 - 10 6 - 17

At 31 December 2007 2,715 54,799 43,335 28,644 1,022 130,515

Depreciation:

At 1 January 2007 - 8,883 33,688 25,179 658 68,408

Provided during the year - 1,380 2,546 984 113 5,023

Relating to disposals - (239) (68) (74) - (381)

Other adjustments - - 6 4 - 10

At 31 December 2007 - 10,024 36,172 26,093 771 73,060

Impairment:

At 1 January 2007 780 - - - - 780

Provided during the year 780 1,357 - - - 2,137

At 31 December 2007 1,560 1,357 - - - 2,917


At 31 December 2007 1,155 43,418 7,163 2,551 251 54,538

On 13 August 2004, one of the shareholders sold the Bank plot no 768, Dekwaneh, for US$ 11,500,000 or LL17,336 million; however, the Bank of Lebanon approved this transaction for a purchase price of US$10,600,000 instead of US$ 11,500,000 as per the original contract. During 2007, the Bank recognized thedifference between the original contract and the amount approved by the Bank of Lebanon for US$ 900,000

or LL 1,357 million as additions to buildings and recognized an impairment loss on buildings for the sameamount.

According to the provisions of law no. 282 dated 31 December 1993 and the Bank of Lebanon circulars, theBank restated the cost of buildings acquired prior to 1 January 1994 for the changes in the generalpurchasing power of the Lebanese Lira. The restatement amounted to LL 3,934 million as of 31 December

2008 (2007: same) and was added to tangible assets with a corresponding entry to revaluation reserveincluded in shareholders’ equity (note 38).


23. INTANGIBLE FIXED ASSETS

[In LL million]Advances on Key Licenses

intangible assets money and software Total

Cost:

At 1 January 2008 149 1,860 5,086 7,095

Additions 393 106 1,319 1,818

Write-off - (124) (267) (391)

Transfers (245) - 245 -

At 31 December 2008 297 1,842 6,383 8,522Amortization:

At 1 January 2008 - 1,842 3,679 5,521

Provided during the year - - 906 906

Write-off - - (11) (11)At 31 December 2008 - 1,842 4,574 6,416

Net book value:

At 31 December 2008 297 - 1,809 2,106

[In LL million]

Advances on Key Licenses

intangible assets money and software Total

Cost:

At 1 January 2007 128 1,868 4,546 6,542

Additions 84 - 632 716

Disposals - (8) (158) (166)

Transfers (63) - 63 -

Transfers from tangible fixed assets (note 22) - - 3 3

At 31 December 2007 149 1,860 5,086 7,095

Amortization:

At 1 January 2007 - 1,840 3,275 5,115

Provided during the year - 2 404 406

At 31 December 2007 - 1,842 3,679 5,521

Net book value:

At 31 December 2007 149 18 1,407 1,574


24. NON-CURRENT ASSETS HELD FOR SALE


Cost:

At 1 January 168,730 162,715

Additions 9,283 10,466

Disposals (11,526) (4,656)

Other adjustments (825) 205

165,662 168,730

Impairment:

At 1 January 22,835 24,179

Provided during the year - -

Write-back during the year (303) (1,438)

Other adjustments (437) 94

At 31 December 22,095 22,835


At 31 December 143,567 145,895

25. OTHER ASSETS


Net deferred costs resulting from the acquisition ofInaash Bank SAL 51,780 79,210

Prepaid expenses 2,951 4,033

Stamps 509 526

Printed materials and stationery 346 399

Credit cards inventory 170 130

Precious metals 5 5

Other debtors 17,896 10,694

73,657 94,997

Less: Provision for impairment losses on financial instruments 319 35

Provision for credit losses 378 -

Total 72,960 94,962

As at 31 December 2008, the fair value of the fixed assets acquired in settlement of debts as estimated bythe Group amounted to LL 177,193 million (2007: LL 168,429 million).

During the year, the Bank disposed of non-current assets with carrying value of LL 10,347 million andrecognized a gain of LL 2,937 million (2007: LL 950 million).


26. GOODWILL


Cost:

At 1 January 1,102 1,102

Additions 1,604 -

At 31 December 2,706 1,102


Société Générale de Banque – Jordanie 1,635 614

Fidus SAL 488 488

Sogecap Liban SAL 583 -

Total 2,706 1,102

[In LL million]

Initial deferred Additional

costs from the deferred costs

acquisition subsequent to

the acquisition Total

Gross deferred costs:

At 1 January 2008 and 31 December 2008 180,120 10,553 190,673

Amortization:

At 1 January 2008 105,857 5,606 111,463

Amortization for the year 26,111 1,319 27,430

At 31 December 2008 131,968 6,925 138,893

Net deferred costs:

At 31 December 2008 48,152 3,628 51,780

At 31 December 2007 74,263 4,947 79,210

The net deferred costs resulting from the Inaash Bank SAL acquisition consist of the following:

The initial costs resulting from the acquisition of Inaash Bank SAL amounted to LL 180,120 million. Thecosts are deferred and amortized over the period of future economic benefits from the soft loan(LL 250,000 million) and related facilities received from the Bank of Lebanon. The Bank used the pro c e e d sof the soft loan to subscribe to two-year Treasury bills which were pledged in favor of the Bank of Lebanonas a guarantee for the settlement of the soft loan.

On 10 January 2003, the Central Council of the Bank of Lebanon approved granting the Bank an additionalsoft loan amounting to LL 45,567 million to cover the additional costs of LL 10,553 million (US$ 7 million)i n c u r red following Inaash Bank SAL’s acquisition by the Bank. The loan bears interest determined byre f e rence to interest rates on Lebanese Treasury bills or any other guideline set by the Bank of Lebanon lessthe margin needed to cover the costs. This rate is revised on a regular basis. The proceeds from the loanw e re invested in financial instruments issued by the Bank of Lebanon which are pledged in favor of the Bankof Lebanon as a guarantee for the settlement of the soft loan. The additional costs are deferred andamortized over the period of the future economic benefits from the soft loan.

Goodwill acquired through business combinations with indefinite lives have been allocated to three

individual cash-generating units, which are subsidiaries of the Bank:• Société Générale de Banque – Jordanie• Fidus SAL• Sogecap Liban SAL

The carrying amount of goodwill to each of the subsidiaries is as follows :

Term soft loans include:

- 10-year term loan amounting to LL 250,000 million granted in 2000 from the Bank of Lebanon as a resultof the acquisition of Inaash Bank SAL with an effective interest rate of two-year Treasury bills less 8.22%(note 25);

- 8-year term loan amounting to LL 45,567 million granted in 2003 from the Bank of Lebanon subsequentto the acquisition of Inaash Bank SAL with an interest rate determined by the Bank of Lebanon every 2years. The effective interest rate for 2008 was 6.77% (2007: 4.97%) (note 25).

- 5-year term loan amounting to LL 8,431 million granted in 2008 from the Bank of Lebanon to cover 60%of the replacement costs of the Bank’s damaged buildings and installations and to cover 60% of the Bank’scredit losses relating to debtors directly affected by July 2006’s war. The effective interest rate for 2008 was5.07%.


27. DUE TO CENTRAL BANKS


Term soft loans 303,998 295,567

Accrued interest 1,103 694

Total 305,101 296,261

28. DUE TO BANKS AND FINANCIAL INSTITUTIONS


Sight deposits 20,798 4,965


Creditor accounts against debtor accounts, net 6,734 3,837

Pledged accounts 1,542 -

127,477 135,491

Accrued interest 207 198

Total 127,684 135,689

29. AMOUNTS DUE TO HEAD OFFICE, BRANCHES AND AFFILIATES


Sight deposits 13 24,844

Time deposits - 11,708

Creditor accounts against debtor accounts, net 305 -

318 36,552

Accrued interest 4 660

Total 322 37,212


Included in customers’ deposits as at 31 December 2008 are coded accounts amounting to LL 8,675 million(2007: LL 128,825 million). These accounts are opened in accordance with article 3 of the Banking SecrecyLaw dated 3 September 1956.

30. CUSTOMERS’ DEPOSITS


Current tax

Current income tax 13,994 7,090

Deferred tax

Relating to origination and reversal of temporary differences 225 478

Total 14,219 7,568

2008[In LL million]


Sight deposits 244,914 413,195 658,109

Net creditor accounts against debtor accountsand blocked margins 71,762 65,182 136,944

316,676 478,377 795,053

Time deposits 264,101 1,104,357 1,368,458

Savings accounts 47,221 1,683,117 1,730,338

627,998 3,265,851 3,893,849

Accrued interest 2,882 6,584 9,466

Total 630,880 3,272,435 3,903,315

31. INCOME TAX

The components of income tax expense for the years ended 31 December 2008 and 2007 are:

2007[In LL million]


Sight deposits 280,973 284,666 565,639

Net creditor accounts against debtor accountsand blocked margins 36,512 58,696 95,208

317,485 343,362 660,847

Time deposits 240,026 907,675 1,147,701

Savings accounts 72,864 1,483,742 1,556,606

630,375 2,734,779 3,365,154

Accrued interest 1,148 7,170 8,318

Total 631,523 2,741,949 3,373,472


Reconciliation of the total tax charge

The reconciliation between the tax expense and the accounting profit for the years ended 31 December 2008and 2007 is as follows:

During 2007, the Bank’s books and records were reviewed by the Department of Income Tax for the years2003, 2004 and 2005. This review resulted in additional taxes and penalties amounting to LL 887 million.


Accounting profit before tax 79,924 28,331

Less: Revenues previously subject to tax (10,916) (10,570)

Add: Non-deductible expenses 11,499 18,426

Taxable profit 80,507 36,187

Effective income tax rate 17.66% 20.91%

Income tax expense reported in the income statement 14,219 7,568

Current tax liabilities

Deferred tax

The following table shows deferred tax recorded on the balance sheet and changes recorded in the income

tax expense:


Income tax due 14,219 7,568

Less: tax withheld on interest (4,215) (855)

Less: Deferred tax amortized to the income statement (225) (478)

Total 9,779 6,235


Deferred Deferred Income Deferred Deferred Incometax tax tax tax

assets liabilities statement assets liabilities statementRevaluation of financialinvestments – available-for-sale - 1,060 - - - -

Non-current assets held for sale 2,208 - (225) 2,433 - (478)

Others - - - - 17 -

Total 2,208 1,060 (225) 2,433 17 (478)


32. OTHER LIABILITIES


Margins on letters of credit 7,243 8,739

Amounts collected from clients for placement in funds - 19,416

Due to the National Social Security Fund 599 643

Balances payable as a result of Inaash Bank SAL acquisition 201 201

Accrued expenses 10,984 7,638

Interest and commissions received in advance 5,211 3,412

Customers’ transactions between head office and branches 20,076 3,050

Revaluation variance on foreign exchange

forward contracts related to the Bank’s customers 483 552

Other creditors 22,490 16,145

Accrued interest 1,913 33

Insurance contracts liabilities 5,148 4,303

Investment contracts liabilities (i) 44,865 53,995

Total 119,213 118,127

2008[In LL million]Deposit Unit-linked Provision for

component liabilities participation Total

At 1 January 31,390 22,454 151 53,995

Investment component of premiums received 7,766 5,014 - 12,780

Surrenders paid and cancellations (4,982) (16,379) - (21,361)

Transfers of provision for participation 106 - (106) -

34,280 11,089 45 45,414

Change in investment contract liabilities:

Accrued interest, net 1,359 62 - 1,421

Unrealized loss - (2,240) - (2,240)

Provision for participation - - 270 270

1,359 (2,178) 270 (549)

At 31 December 35,639 8,911 315 44,865

(i) Investment contract liabilities – insurance business

The change in investment contract liabilities may be analyzed as follows:


2007[In LL million]

Deposit Unit-linked Provision for

component liabilities participation Total

At 1 January 27,980 19,509 132 47,621

Investment component of premiums received 7,036 3,156 - 10,192

Surrenders paid and cancellations (4,767) (2,035) - (6,802)

Transfers of provision for participation 132 - (132) -

30,381 20,630 - 51,011

Change in investment contract liabilities:

Accrued interest, net 1,009 161 - 1,170

Unrealized gain - 1,663 - 1,663

Provision for participation - - 151 151

1,009 1,824 151 2,984

At 31 December 31,390 22,454 151 53,995

The investment contract liabilities have been determined and certified on 9 January 2009 by an independentsworn actuary.

The movement in provisions for miscellaneous risks is as follows:

Movements in the provision for end of service benefits recognized in the balance sheet are as follows:

33. PROVISION FOR RISKS AND CHARGES


Provision for miscellaneous risks 10,067 9,280

Provisions for contingencies and charges 2,114 439

Other provisions 262 37

Total 12,443 9,756

34. EMPLOYEES’ END OF SERVICE BENEFITS


Balance at 1 January 9,758 9,649

Provided during the year (note 8) 4,527 1,132

Paid during the year (1,541) (1,023)

Balance at 31 December 12,744 9,758



Provided during the year 5,204 7,406

Written-back during the year (4,389) (403)

Difference of exchange (28) 12



35. SHARE CAPITAL

36. RESERVES RELATED TO SHARE CAPITAL

a- Common shares

The authorized, issued and fully paid share capital as of 31 December 2008 comprised 50,000 shares ofnominal value LL 212,400 each (2007: same).

b- Preferred shares

On 22 July 2008, the Bank issued 9,000 preferred shares (Type 2008) for a nominal amount of LL 212,400each (a total of LL 1,912 million) plus a share premium denominated in US Dollars of US$ 9,859. Accordingly,s h a re premium of LL 133,121 re p resents a premium of US$ 88,731,675 (or LL 133,763 million) less issuancecosts of LL 642 million.

- The payment of dividends for preferred shareholders is dependent on :

( 1 ) The availability of non-consolidated net income for a specific year after appropriation of legal and otherregulatory reserves;(2) The continuous compliance with the laws and regulations imposed by the Bank of Lebanon and theBanking Control Commission; and(3) The approval by the Ordinary General Assembly of shareholders to distribute those dividends.

c- Cash contribution by shareholders

Cash contribution to capital of US$ 70,810,000 was paid by the shareholders in prior years. Thesecontributions were granted by the shareholders of the Bank in order to support and develop the activitiesof the Bank, in accordance with the following conditions:

- Every shareholder is committed to retain the contributions during the lifetime of the Bank;- The shareholders commit to cover any loss using their contributions according to the provisions ofarticle 4 (A-B) of circular N° 1114 of the Bank of Lebanon and article 134 of the Money and Credit Act;- The shareholders have the right to use or not to use these contributions in case of a capital increase;and- Interest rate applied on these contributions is determined based on the latest 3-year Eurobond issue

less 0.5% and payment is subject to the approval of the Banking Control Commission and theshareholders’ General Assembly meeting. The Bank did not pay any interest on the cash contributionduring the year 2008 (2007: same).

Both the Central Council of Bank of Lebanon and the Ordinary General Assembly of the Bank approvedthese contributions.

[In LL million]

Legal General Reserve for

reserve reserve general banking Total

risks

At 31 December 2006 23,985 10,360 27,353 61,698

Transfer to reserves 1,066 1,853 3,327 6,246

At 31 December 2007 25,051 12,213 30,680 67,944

Transfer to reserves 2,068 1,709 3,295 7,072

At 31 December 2008 27,119 13,922 33,975 75,016


Reserve for general banking risks

In compliance with main circular No. 50 issued by the Bank of Lebanon, the Bank should appropriate fromits net profit for the year, a minimum amount of 2 per thousand and a maximum of 3 per thousand from thetotal risk weighted assets and off balance sheet items based on the rates specified by the Bank of Lebanonas a reserve for general banking risks. The accumulated balance of this reserve should not be less than 2%

of the total risk weighted assets and off balance sheet items at the end of the financial year 2017.

In addition, SGBJ is also required to appropriate a reserve for general banking risks in accordance with theinstructions of the Central Bank of Jordan.

Legal reserve

As required by Local regulations where the Group operates, a percentage of the net profit should betransferred to legal reserve. This reserve is non available for dividend distribution.

General reserve

General reserves relate to the Gro u p ’s operations in Lebanon and Jordan. These reserves were appro p r i a t e daccording to resolutions by the General Ordinary Assembly of shareholders of respective entities. These

reserves are distributable.

The Bank of Lebanon and the tax authorities approved on 29 March 1995 and on 18 April 1995, respectively,the revaluation of some of the buildings owned by the Bank and used for operating purposes in accordancewith law no. 282 dated 30 December 1993.

During 2007, the Bank sold two plots which were previously revalued during 1995. The revaluation surplus of

LL 620 million relating to these assets was transferred directly from “revaluation reserve” to retained earnings.

37. RESERVE FOR NON-CURRENT ASSETS HELD FOR SALE

In compliance with pronouncement 10/2008 of the Banking Control Commission issued on 2 April 2008,when properties acquired in settlement of debts are not sold within the timeframe required by localregulators, the Bank should appropriate an amount equal to 5% or 20% of the carrying value of such

properties. The annual appropriation, which is from the net profit of the respective year after appropriationsto legal reserve and reserve for general banking risks, is reported under “reserve for non-current assetsheld for sale”.

The Bank shall make a transfer from this reserve into retained earnings in the following circumstances:a) The reserve appropriated in prior years related to a property disposed of; or

b) The reserve appropriated in prior years (equal or up to) an impairment loss recognized in the incomestatement against the acquired property.

During 2008, the Bank disposed of non-current assets held for sale for a total value of LL 10,347 millionand accordingly transferred an amount of LL 252 million from the reserve for non-current assets held forsale to retained earnings.

38. REVALUATION RESERVE FOR TANGIBLE FIXED ASSETS


Revaluation amount 5,499 5,499

Book value (945) (945)

Sale of real estate (620) (620)

Revaluation variance 3,934 3,934


(a) For the year ended 31 December 2008, the quoted share price of Société Générale SA – Paris witnesseda significant decline in value. As a result, the Bank recognized impairment losses against these shares forLL 963 million.

Transaction costs represent legal and other fees recognized by the Bank under equity relating to the capital

increase of Société Générale de Banque - Jordanie which took place in 2007.

39. AVAILABLE-FOR-SALE RESERVE


At 1 January ( 1 , 2 6 5 ) ( 2 , 2 5 7 )

Net realized losses on available-for-sale financial instruments

reclassified to the income statement ( 5 4 ) ( 2 3 0 )

Impairment losses transferred to the income statement (note a) 9 6 3 -

Net unrealized gains on available-for-sale financial instruments 8 , 6 4 8 1 , 2 2 2

D e f e r red tax liability ( 1 , 0 6 0 ) -

Net movement 8 , 4 9 7 9 9 2

At 31 December 7 , 2 3 2 ( 1 , 2 6 5 )

40. TRANSACTION COSTS RELATED TO AN INCREASE OF A SUBSIDIARY’S CAPITAL

41. CASH AND CASH EQUIVALENTS


Cash and balances with the Central Banks 640,776 553,895

Treasury Bills 1,048,008 846,213

Deposits with banks and other financial institutions 180,363 256,074

Amounts due from Head Office, branches and affiliates 458,971 796,516

Due to Central Banks (305,101) (296,261)

Due to banks and other financial institutions (127,684) (135,689)

Amounts due to Head Office, branches and affiliates (322) (37,212)

1,895,011 1,983,536

Less: balances with maturities exceeding 3 months

Cash and balances with the Central Banks 456,883 455,861

Deposits with banks and other financial institutions 1,689 1,815

Amounts due from Head Office, branches and affiliates 152,466 237,718

Treasury Bills 1,003,389 829,107

Due to Central Banks (305,101) (296,261)

Due to banks and other financial institutions (55,011) (38,434)

Amounts due to Head Office, branches and affiliates - (1,526)

1,254,315 1,188,280

Cash and cash equivalents at 31 December 640,696 795,256


The Group enters into transactions with major shareholders, directors, senior management and their relatedconcerns in the ordinary course of business at commercial interest and commission rates. Except for a few

loans to related parties (note 16), all the loans and advances to related parties are performing advances andare free of any allowance for credit losses.

The following transactions have been entered into with related parties during 2008:

The following transactions have been entered into with related parties during 2007:

Compensation of the key management personnel is as follows:

42. RELATED PARTY TRANSACTIONS

2008[In LL million]

Major Other related Total

shareholders parties

Loans and advances (customers, Head Office,

branches and affiliates) 402,948 89,193 492,141

Customers’ deposits (customers, Head Office,


Letters of guarantee 2,065 1,111 3,176

Interest received / loans 22,656 1,314 23,970

Interest paid / deposits 1,509 2,065 3,574

Commissions received 846 - 846

Technical assistance fees paid 4,282 - 4,282

Technical assistance received - 671 671

Rent paid 2,618 - 2,618

Commission paid 435 - 435

2007[In LL million]

Major Other related Total

shareholders parties

Loans and advances (customers, Head Office,


Customers’ deposits (customers, Head Office,


Letters of guarantee - 726 726

Interest received / loans 44,341 1,824 46,165

Interest paid / deposits 1,868 3,105 4,973

Commissions received 929 20 949

Technical assistance fees paid 1,749 - 1,749

Technical assistance received - 897 897

Rent paid 2,466 - 2,466

Purchase of property 1,357 - 1,357


Board remunerations and attendance fees paid 1,722 1,606


The following schedule shows the positive and the negative fair values of the derivatives and their notionalamounts according to maturity. The notional amount is the amount of a derivative’s underlying asset,

reference rate or index and represents the basis for measuring the change in the derivative’s value. Thenotional amounts show the volume of operations at year end and do not reflect either market or credit risk.

Year ended 31 December 2008

Swaps are contractual agreements between two parties to exchange interest or foreign currency differentialsbased on a specific notional amount. For interest rate swaps, counterparties generally exchange fixed andfloating interest rate payments based on a notional value in a single currency.

The Bank has entered into the above interest rate swaps to hedge certain loans denominated in US dollarsand in Euros. These hedges are effective cash flow hedges.

Derivatives held or issued for hedging purposes

As part of its asset and liability management, the Group uses derivatives for hedging purposes in order toreduce its exposure to currency risk.

The Group uses forward foreign exchange contracts to hedge against specifically identified currency risks.

Year ended 31 December 2007

43. DERIVATIVES

[In LL million] Notional amount by maturityTotal Less

notional than 3 3 to 12 1 to 5

Assets Liabilities amount months months years

Interest rate swaps (cash flow hedges) - (837) 17,254 1,560 3,910 11,784

Forward contracts on foreign currencies

for hedging purposes - (483) 36,906 36,906 - -

Total - (1,320) 54,160 38,466 3,910 11,784

[In LL million] Notional amount by maturityTotal Less

notional than 3 3 to 12 1 to 5

Assets Liabilities amount months months years

Interest rate swaps (cash flow hedges) - (626) 19,862 1,263 5,298 13,301Forward contracts on foreign currencies

for hedging purposes - (552) 28,923 28,923 - -

Total - (1,178) 48,785 30,186 5,298 13,301

As per Banking Control Commission Circular no. 240, banks are required to transfer to the off-balance sheetdoubtful loans fully provided for and which meet some additional criteria outlined in the circular.

44. DOUBTFUL LOANS FULLY PROVIDED FOR


Corporate loans 122,765 130,733


Total 125,540 133,073


The movement in allowance for impairment losses for doubtful loans fully provided for was as follows:



Impairment loss during the year 4,683 4,446

Transfer from the balance sheet (note 15) 3,139 4,975

Transfer to the balance sheet (note 15) (5,334) (1,176)

Less: write-offs (9,935) (10,929)

Difference of exchange (86) 276



Deposits with banks 130,990 160,261

Loans and advances 13,568 13,568

Equity instruments 1,908 9,681

Certificates of deposit 9,600 9,523

Total 156,066 193,033

A summary of the Bank’s fiduciary accounts according to law no. 520 dated 6 June 1996 relating to the

development of financial markets and fiduciary contracts is as follows:

45. FIDUCIARY DEPOSITS


Treasury bills and Eurobonds 354,345 289,854

Bonds and other debt instruments 46,939 37,905

Equity instruments 3,957 6,627

Certificates of deposit 563,387 103,350

Funds 554,492 588,195

Options - 125

Stocks 171,303 199,542

Total 1,694,423 1,225,598

46. FINANCIAL ASSETS UNDER MANAGEMENT – NON DISCRETIONARY



Contingent liabilities

Commitments issued to customers 872 3,257

Commitments issued to financial institutions 119,272 136,438

Guarantees issued to customers 135,426 141,981

Guarantees issued to financial institutions 21,566 22,740

Debtors by acceptances 74,642 83,333

351,778 387,749

Commitments

Undrawn commitments to lend 286,158 253,918

Fiduciary deposits 156,066 193,033

Financial assets under management – non discretionary 1,694,423 1,225,598

Total 2,136,647 1,672,549

To meet the financial needs of customers, the Group enters into various irrevocable commitments andcontingent liabilities. Even though these obligations may not be recognized on the balance sheet, they do

contain credit risk and are therefore part of the overall risk of the Group.

The total outstanding commitments and contingent liabilities are as follows:

47. COMMITMENTS AND CONTINGENT LIABILITIES

Contingent liabilities

Letters of credit, guarantees (including standby letters of credit) and acceptances commit the Group to make

payments on behalf of customers in the event of a specific act, generally related to the import or export ofgoods. Guarantees and standby letters of credit carry the same credit risk as loans.

Undrawn commitments to lend

Commitments to extend credit represent contractual commitments to make loans and revolving credits.Commitments generally have fixed expiry dates, or other termination clauses. Since commitments may expire

without being drawn upon, the total contract amounts do not necessary represent future cash requirements.

However, the potential credit loss is less than the total unused commitments since most commitments toextend credit are contingent upon customers maintaining specific standards. The Group monitors the term tomaturity of credit commitments because longer-term commitments generally have a greater degree of creditrisk than shorter-term commitments.

Capital commitments

At 31 December 2008, the Bank had capital commitments in respect of premises and equipment purchasesamounting to LL 1,363 million (2007: LL 1,133 million).

Operating lease commitments

Future minimum rentals payable under non-cancelable operating leases mainly in connection with thepremises of the Group’s branches are as follows as of 31 December:


Within one year 3,673 3,533

After one year but not more than five years 16,799 8,342

More than five years - 797

Total 20,472 12,672


Legal claims

Due to the nature of its business, the Group is a defendant in various legal proceedings. Management, afterdiscussing with its counselors all such cases and proceedings against the Group, considers that theaggregate liability or loss, if any, resulting from an adverse determination would not have a material effect onthe financial position of the Group.

Other commitments

The Bank’s books and records have not been reviewed by the Department of Income Tax since 2006(inclusive). The ultimate outcome of any review that might take place cannot be presently determined.

The Bank’s contributions to the National Social Security Fund (NSSF) have not been reviewed since May

2004. The ultimate outcome of any review that may take place cannot be presently determined.

The Bank’s books and records have not yet been reviewed by the department of Value Added Tax sinceinception. The ultimate outcome of any tax review that might take place cannot be presently determined.

Sogecap Liban SAL contributions to the National Social Security Fund (NSSF) have not been reviewed by the

NSSF since 2000. The ultimate outcome of any review that may take place cannot presently be determined.

Sogecap Liban SAL books and records have not been reviewed by the Department of Income Tax since 2006(inclusive). The ultimate outcome of any review that may take place cannot presently be determined.

Fidus SAL books and records have not been reviewed by the Department of Income Tax for 2007 and 2008.

The ultimate outcome of any review that may take place cannot presently be determined.

Fidus SAL contributions to the National Social Security Fund (NSSF) have not been reviewed by the NSSFsince 2002. The ultimate outcome of any review that may take place cannot presently be determined.


Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financialinstruments that are carried in the financial statements. The table does not include the fair values of non-

financial assets and non-financial liabilities.

Set out below is a comparison by class of the carrying amounts and fair values of the Group’s financialinstruments that are carried in the financial statements. The table does not include the fair values of non-

financial assets and non-financial liabilities.

The following describes the methodologies and assumption used to determine fair values for those financialinstruments which are not already recorded at fair value in the financial statements.

Assets for which fair value approximates carrying value

For financial assets and financial liabilities that are liquid or having a short term maturity (less than three months)it is assumed that the carrying amounts approximate to their fair value. This assumption is also applied todemand deposits, savings accounts without a specific maturity and variable rate financial instruments.

Fixed rate financial instruments

The fair value of fixed rate financial assets and liabilities carried at amortized cost are estimated by

comparing market interest rates when they were first recognized with current market rates offered for similarfinancial instruments. The Group does not have fixed interest bearing deposits greater than one year. Forquoted debt issued, the fair values are calculated based on quoted market prices. For those notes issuedwhere quoted market prices are not available, a discounted cash flow model is used based on a currentinterest rate yield curve appropriate for the remaining term to maturity.


Carrying Fair Unrealized Carrying Fair Unrealizedvalue value gain (loss) value value gain (loss)

Financial assets

Cash and balances with the

Central Banks 6 4 0 , 7 7 6 6 4 0 , 7 7 6 - 5 5 3 , 8 9 5 5 5 3 , 8 9 5 -Deposits with banks andfinancial institutions 1 8 0 , 3 6 3 1 8 0 , 3 6 3 - 2 5 6 , 0 7 4 2 5 6 , 0 7 4 -Amounts due from Head off i c e ,branches and aff i l i a t e s 4 5 8 , 9 7 1 4 5 8 , 9 7 1 - 7 9 6 , 5 1 6 7 9 6 , 5 1 6 -Financial assets held for trading 9 2 9 9 2 9 - 3 2 0 3 2 0 -

Financial assets designated at fairvalue through profit or loss 4 , 4 0 1 4 , 4 0 1 - 1 8 , 7 7 4 1 8 , 7 7 4 -Loans and advances tocustomers, net 1 , 4 0 1 , 7 5 3 1 , 4 0 2 , 5 9 0 8 3 7 1 , 1 9 6 , 8 9 8 1 , 1 9 7 , 5 2 4 6 2 6Loans and advances to re l a t e dparties, net 5 5 , 9 4 1 5 5 , 9 4 1 - 2 7 , 5 0 6 2 7 , 5 0 6 -

Av a i l a b l e - f o r-sale financial instruments 3 9 0 , 3 4 7 3 9 0 , 3 4 7 - 4 7 3 , 8 8 0 4 7 3 , 8 8 0 -Financial assets classified as loansand re c e i v a b l e s 1 , 1 7 8 , 3 5 2 1 , 1 7 5 , 3 4 3 ( 3 , 0 0 9 ) 2 2 4 , 0 2 3 225,318 1,295Held to maturity financial instruments 383,824 350,163 (33,661) 397,827 383,687 (14,140)Other debtors 17,199 17,199 - 10,659 10,659 -

4,712,856 4,677,023 (35,833) 3,956,372 3,944,153 (12,219)

Financial liabilities

Due to Central Banks 305,101 305,101 - 296,261 296,261 -Due to banks and financial institutions 127,684 127,684 - 135,689 135,689 -Amounts due to Head office,branches and affiliates 322 322 - 37,212 37,212 -Customers’ deposits 3,903,315 3,903,315 - 3,373,472 3,373,472 -

Related parties’ deposits 11,568 11,568 - 14,244 14,244 -Interest rate swap - 837 (837) - 626 (626)Forward contracts on foreigncurrencies for hedging purposes 483 483 - 552 552 -Total 4,348,473 4,349,310 (837) 3,857,430 3,858,056 (626)

48. FAIR VALUE OF FINANCIAL INSTRUMENTS


Financial instruments recorded at fair value

The following table shows an analysis of financial instruments recorded at fair value, between those whosefair value is based on quoted market prices and those involving valuation techniques where all model inputsare observable in the market.

2008[In LL million]

Quoted Valuation Reported

market techniques- at Total

price market observable cost

inputs

Financial assets held for trading 926 - 3 929

Financial assets designated at fair

value through profit or loss 4,401 - - 4,401

Available-for-sale financial instruments 29,641 358,722 1,984 390,347


for hedging purposes - (483) - (483)

Total 34,968 358,239 1,987 395,194

2007[In LL million]

Quoted Valuation Reported

market techniques- at Total

price market observable cost

inputs

Financial assets held for trading 294 23 3 320

Financial assets designated at fair

value through profit or loss 18,774 - - 18,774



for hedging purposes - (552) - (552)

Total 256,625 234,554 1,243 492,422

The Group devotes significant resources to the ongoing adaptation of its risk management framework, inorder to keep pace with the increasing diversification of its activities. The risk management is implemented incompliance with the two following fundamental principles:

• risk assessment departments are completely independent from the operating divisions• a consistent approach to risk assessment and monitoring is applied at the Group level

a | Risk management structure

The Board of Directors is ultimately responsible for identifying and controlling risks; however, there areseparate independent bodies responsible for managing and monitoring risks.

Board of Directors

The Board of Directors is responsible for the overall risk management approach and for approving the riskstrategies and principles.

Risk Management

The Risk Management Unit is responsible for implementing and maintaining risk related procedures toensure an independent control process.

Bank Treasury

Bank Treasury is responsible for managing the Group’s assets and liabilities and the overall financialstructure. It is also primarily responsible for the funding and liquidity risks of the Group.

49. RISK MANAGEMENT


Internal Audit

Risk management processes throughout the Group are audited annually by the internal audit function thatexamines both the adequacy of the procedures and the Group’s compliance with the procedures. InternalAudit discusses the results of all assessments with management, and reports its findings andrecommendations to the Board of Directors.

b | Risk measurement and reporting systems

In 2003, the Group launched a major project to quantify its credit risks using a RAROC (Risk-Adjusted Returnon Capital) approach. One of the main objectives is to establish, using quantitative methods, the level of lossexpected on credit transactions over the course of the business cycle.

Taking advantage of the experience gained on this project, the Group has also begun work to upgrade its riskmanagement procedures in line with Basel II standards.

Monitoring and controlling risks is primarily performed based on limits established by the Group. Theselimits reflect the business strategy and market environment of the Group as well as the level of risk that theGroup is willing to accept, with additional emphasis on selected industries. In addition, the Group monitors

and measures the overall risk bearing capacity in relation to the aggregate risk exposure across all risk typesand activities.

c | Risk mitigation

As part of its overall risk management, the Group uses derivatives and other instruments to manageexposures resulting from changes in interest rates, foreign currencies, credit risks, and exposures arising from

forecast transactions.

The Group actively uses collateral to reduce its credit risks.

d | Excessive concentration

In line with the Group’s conservative lending policy, the Group seeks to diversify its lending activities to avoid

undue concentrations of credit risks with individuals and groups of customers in specific geographicallocations or business sectors. Collateral is also taken where appropriate. The Group also attempts to controlcredit risk by regular monitoring of its credit exposures and continuous assessment of the creditworthiness ofcounter-parties by the credit risk committee.

49.1 CREDIT RISK

In line with the Group’s conservative lending policy, the Group seeks to diversify its lending activities to avoidundue concentrations of credit risks with individuals and groups of customers in specific geographicallocations or business sectors. Collateral is also taken where appropriate.

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the

other party to incur a financial loss. The Group attempts to control credit risk by monitoring credit exposures,limiting transactions with specific counterparties, and continuously assessing the creditworthiness ofcounterparties. The Group seeks to manage its credit risk exposure through diversification of lendingactivities to avoid undue concentrations of risks with individuals or groups of customers in specific locationsor businesses. It also obtains security when appropriate.

The Group uses an internal classification system based on risk ratings for its corporate and retail customers. Therisk rating system, which is managed by an independent unit, provides a rating based on client and transactionlevel. The classification system includes eight grades, of which five grades relate to the performing portfolio(regular credit facilities: risk rating “1”, “2”, “3”, “4” and “5” and special mention – watch list: risk rating “6a”and “6c”), one grade relates to substandard loans (risk rating “6b”) and two grades relate to non-performingloans (risk rating “7” and “8”).

Information on credit risk relating to commitments and contingencies is found below. The information on theGroup’s net maximum exposure by economic sector is given in note 15.


49.1.1 Maximum credit exposure

The Group’s financial assets before and after taking into account collateral held or other credit enhancementsis as follows:


Gross Net Gross Net

maximum maximum maximum maximum

exposure exposure exposure exposure

inputs

Cash and balances with the Central Banks 640,776 640,776 553,895 553,895

Deposits with banks and financial institutions 180,363 180,363 256,074 256,074

Amounts due from Head Office,

branches and affiliates 458,971 458,971 796,516 796,516

Financial assets held for trading 929 929 320 320

Financial assets designated at fair value

through profit or loss 4,401 4,401 18,774 18,774

Loans and advances to customers, net 1,401,753 1,000,407 1,196,898 975,133

Loans and advances to related parties, net 55,941 47,746 27,506 21,424


Financial assets classified as loans

and receivables 1,178,352 1,178,352 224,023 224,023

Held to maturity financial instruments 383,824 383,824 397,827 397,827

Other assets 17,199 17,199 10,659 10,659

4,712,856 4,303,315 3,956,372 3,728,525

Letters of credit 120,144 116,584 139,695 134,212

Letters of guarantee 156,992 110,602 164,721 100,219

Acceptances 74,642 70,901 83,333 78,734

Undrawn commitments to lend 286,158 286,158 253,918 253,918

Fiduciary assets 156,066 156,066 193,033 193,033

Financial assets under management

- non discretionary 1,694,423 1,694,423 1,225,598 1,225,598

Total 2,488,425 2,434,734 2,060,298 1,985,714


The maximum credit risk for the financial assets is based on their net carrying amounts as recorded in thebalance sheet.

49.1.2 Credit quality per class of financial assets

The credit quality of financial assets is managed by the Group using internal credit ratings. The table belowshows the credit quality by class of asset based on the Group’s credit rating system. The amount presentedis gross of impairment allowances:

2008[In LL million]High Standard Past due Individually Total

grade grade but not impaired

unpaired

Balances with the Central Banks 594,676 - - - 594,676Deposits with banks and financial institutions 79,872 100,491 - - 180,363Amounts due from Head Office,

branches and affiliates294,905 164,066 - - 458,971

Financial assets held for trading 929 - - - 929Financial assets designated at fair valuethrough profit or loss 4,401 - - - 4,401Loans and advances to customers, net

- Corporate 420,942 298,950 43,622 429,413 1,192,927- Retail 481,987 105,462 25,176 90,754 703,379

Loans and advances to related parties, net- Corporate 10,515 905 2,314 246 13,980- Retail 36,026 6,181 - - 42,207

Available-for-sale financial instruments 389,901 - - 446 390,347

Financial assets classified as loansand receivables 1,178,321 - - 31 1,178,352Held to maturity financial instruments 383,824 - - - 383,824Total 3,876,299 676,055 71,112 520,890 5,144,356

2007[In LL million]High Standard Past due Individually Total

grade grade but not impaired

unpaired

Balances with the Central Banks 509,765 - - - 509,765Deposits with banks and financial institutions 109,193 146,881 - - 256,074Amounts due from Head Office,branches and affiliates

685,559 110,957 - - 796,516

Financial assets held for trading - 320 - - 320Financial assets designated at fair valuethrough profit or loss 18,774 - - - 18,774Loans and advances to customers, net

- Corporate 400,870 244,682 94,752 422,285 1,162,589- Retail 328,726 76,607 20,369 73,988 499,690

Loans and advances to related parties, net- Corporate 5,580 905 3,239 21 9,745- Retail 13,073 4,709 - - 17,782

Available-for-sale financial instruments 473,187 - - 446 473,633Financial assets classified as loansand receivables 224,023 - - - 224,023

Held to maturity financial instruments 397,827 - - - 397,827Total 3,166,577 585,061 118,360 496,740 4,366,738


49.1.3 Aging of individually impaired loans

Aging analysis of individually impaired loans is as follows:

The fair value of collateral received against past due but not impaired loans amounted to LL 46,292 million asof 31 December 2008 (2007: LL 73,214 million).

The carrying value of renegotiated financial assets included in the consolidated balance sheet is as follows:

Impairment assessment

For accounting purposes, the Group uses an incurred loss model for the recognition of losses on impairedfinancial assets. This means that losses can only be recognized when objective evidence of a specific loss

event has been observed. This approach differs from the expected loss model used for regulatory capitalpurposes in accordance with Basel II.

The main considerations for the loan impairment assessment include whether any payments of principal orinterest are overdue by more than 90 days or whether there are any known difficulties in the cash flows ofcounterparties, credit rating downgrades, or infringement of the original terms of the contract. The Group

addresses impairment assessment by individually assessed allowances.

Individually assessed allowances

The Group determines the allowance appropriate for each individually significant loan or advance on anindividual basis. Items considered when determining allowance amounts include the sustainability of thecounterparty’s business plan, its ability to improve performance once a financial difficulty has arisen,

projected receipts and the expected payout should bankruptcy ensue, the availability of other financial

2008[In LL million]

individually impaired


From 1 to 90 days 625 76 701

From 91 to 180 days 3,407 11,075 14,482

From 181 to 270 days 6,172 2,382 8,554

From 271 to 365 days 230 408 638

More than 365 days 418,979 76,813 495,792

Total 429,413 90,754 520,167

2007[In LL million]

individually impaired


From 1 to 90 days 937 25 962

From 91 to 180 days 5,001 13,247 18,248

From 181 to 270 days 120 1,715 1,835

From 271 to 365 days 10,951 35,499 46,450

More than 365 days 405,276 23,502 428,778

Total 422,285 73,988 496,273


Loans and advances 41,201 58,263


support, the realizable value of collateral and the timing of the expected cash flows. Impairment allowancesare evaluated at each reporting date, unless unforeseen circumstances require more careful attention.

49.1.4 Risk concentration of the maximum exposure to credit risk

Concentrations arise when a number of counterparties are engaged in similar business activities, or activitiesin the same geographic region, or have similar economic features that would cause their ability to meetcontractual obligations to be similarly affected by changes in economic, political or other conditions.Concentrations indicate the relative sensitivity of the Group's performance to development affecting aparticular industry or geographical location.

The distribution of assets, liabilities and off-balance sheet items by geographic region as follows:


Assets Liabilities Off-balance Assets Liabilities Off-balanceand equity sheet and equity sheet

Geographical location:

Lebanon 3,846,639 4,192,133 2,424,996 2,874,779 3,528,624 1,981,941

Outside Lebanon 1,202,015 856,521 662,541 1,456,379 802,534 771,760

Total 5,048,654 5,048,654 3,087,537 4,331,158 4,331,158 2,753,701


Lebanon Outside Total Lebanon Outside TotalL e b a n o n L e b a n o n

Cash and balances with theCentral Banks 5 3 9 , 1 0 1 1 0 1 , 6 7 5 6 4 0 , 7 7 6 5 0 0 , 8 6 2 5 3 , 0 3 3 5 5 3 , 8 9 5

Deposits with banks and financiali n s t i t u t i o n s 5 2 , 6 9 1 1 2 7 , 6 7 2 1 8 0 , 3 6 3 5 7 , 3 7 7 1 9 8 , 6 9 7 2 5 6 , 0 7 4

Amounts due from Head off i c e ,branches and aff i l i a t e s 5 4 7 4 5 8 , 4 2 4 4 5 8 , 9 7 1 6 , 0 8 5 7 9 0 , 4 3 1 7 9 6 , 5 1 6

Financial assets held for trading 9 2 9 - 9 2 9 2 7 2 9 3 3 2 0

Financial assets designated at fair valuet h rough profit or loss 4 , 4 0 1 - 4 , 4 0 1 1 8 , 7 7 4 - 1 8 , 7 7 4

Loans and advances to customers, net 1 , 0 2 9 , 6 2 0 3 7 2 , 1 3 3 1 , 4 0 1 , 7 5 3 8 9 0 , 1 6 9 3 0 6 , 7 2 9 1 , 1 9 6 , 8 9 8

Loans and advances related parties, net 5 0 , 7 3 3 5 , 2 0 8 5 5 , 9 4 1 2 2 , 7 9 7 4 , 7 0 9 2 7 , 5 0 6

Av a i l a b l e - f o r-sale financial instruments 3 8 6 , 3 7 4 3 , 9 7 3 3 9 0 , 3 4 7 4 7 2 , 6 8 8 1 , 1 9 2 4 7 3 , 8 8 0

Financial assets classified as loansand re c e i v a b l e s 1 , 1 7 1 , 8 2 2 6 , 5 3 0 1 , 1 7 8 , 3 5 2 2 1 3 , 0 6 8 1 0 , 9 5 5 2 2 4 , 0 2 3

Held to maturity financial instruments 3 3 8 , 9 0 3 4 4 , 9 2 1 3 8 3 , 8 2 4 3 7 5 , 6 7 1 2 2 , 1 5 6 3 9 7 , 8 2 7

Other assets 1 4 , 7 2 9 2 , 4 7 0 1 7 , 1 9 9 8 , 6 4 8 2 , 0 1 1 1 0 , 6 5 9

3 , 5 8 9 , 8 5 0 1 , 1 2 3 , 0 0 6 4 , 7 1 2 , 8 5 6 2 , 5 6 6 , 1 6 6 1 , 3 9 0 , 2 0 6 3 , 9 5 6 , 3 7 2

Letters of credit 4 6 , 7 6 0 7 3 , 3 8 4 1 2 0 , 1 4 4 6 , 3 7 8 1 3 3 , 3 1 7 1 3 9 , 6 9 5

Letters of guarantee 9 7 , 8 9 6 5 9 , 0 9 6 1 5 6 , 9 9 2 1 0 5 , 6 9 4 5 9 , 0 2 7 1 6 4 , 7 2 1

Acceptances 4 3 , 0 2 6 3 1 , 6 1 6 7 4 , 6 4 2 4 6 , 3 9 2 3 6 , 9 4 1 8 3 , 3 3 3

Undrawn commitments to lend 2 7 8 , 3 4 2 7 , 8 1 6 2 8 6 , 1 5 8 2 4 2 , 4 3 3 1 1 , 4 8 5 2 5 3 , 9 1 8

Fiduciary assets 1 5 4 , 9 8 0 1 , 0 8 6 1 5 6 , 0 6 6 1 9 2 , 0 3 8 9 9 5 1 9 3 , 0 3 3

Financial assets on consignment 1 , 2 1 6 , 2 3 6 4 7 8 , 1 8 7 1 , 6 9 4 , 4 2 3 5 9 7 , 4 7 5 6 2 8 , 1 2 3 1 , 2 2 5 , 5 9 8

1 , 8 3 7 , 2 4 0 6 5 1 , 1 8 5 2 , 4 8 8 , 4 2 5 1 , 1 9 0 , 4 1 0 8 6 9 , 8 8 8 2 , 0 6 0 , 2 9 8

Total credit exposure 5 , 4 2 7 , 0 9 0 1 , 7 7 4 , 1 9 1 7 , 2 0 1 , 2 8 1 3 , 7 5 6 , 5 7 6 2 , 2 6 0 , 0 9 4 6 , 0 1 6 , 6 7 0


49.2 MARKET RISK

Market risk arises from fluctuations in interest rates, foreign exchange rates and equity prices. The Board hasset limits on the value of risk that may be accepted. This is monitored on a weekly basis by the Asset andLiability Committee.

49.2.1 Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will affect future profitability or thevalues of financial instruments. The Group is exposed to interest rate risk as a result of mismatches ofinterest rate repricing of assets and liabilities and financial instruments not recognized in the balance sheetwhich will mature or reprice in a particular period. The Group manages this risk by matching the repricing ofassets and liabilities through risk management strategies.

The effective interest rate (effective yield) of a monetary financial instrument is the rate that, when used in apresent value calculation, results in the carrying amount of the instrument. The rate is a historical rate for afixed rate instrument carried at amortized cost and a current market rate for a floating rate instrument or aninstrument carried at fair value.

The sensitivity of the consolidated income statement and consolidated shareholders’ equity is the effect of

the assumed changes in interest rates on the Group’s profits for one year based on the floating rate financialassets and financial liabilities held at 31 December.


Currency Increase Income Shareholders’ Increase Income Shareholders’/decrease in s t a t e m e n t equity /decrease in s t a t e m e n t e q u i t y

e ffective intere s t e ffective intere s tbasis points basis points

Lebanese Lira + 50 3 1 9 - + 50 2 2 3 -

US Dollars + 50 1 , 3 5 4 ( 2 , 8 9 5 ) + 50 1 , 0 3 3 ( 2 , 4 1 7 )

E u ro + 50 ( 1 0 9 ) - + 50 ( 1 0 3 ) -

The effective interest rates for each of the financial instruments (main currencies) as of 31 December 2008

are as follows:.

2008Euro Sterling Pound US Dollar LL

% % % %

ASSETS

Cash and balances with the Central Banks 5.39 2.79 6.66 8.93

Lebanese and other governmental bills bonds 7.48 - 8.02 7.82

Deposits with banks and financial institutions

- On demand 3.8 3.71 2.32 2.46

- Term 4.47 5.01 3.52 3.79

Loans and advances to customers, net 7.79 10.46 12.91 11.43

Loans to related parties, net 5.63 12 6.82 14.02

LIABILITIES

Due to Central Banks 4.98 - 4.58 1.12

Due to banks and financial institutions

- On demand 4.2 3.83 2.86 6.12

- Term 3.89 3.77 4.48 5.77

Customers deposits:

- On demand 0.33 0.56 0.8 0.98

- Demand savings accounts 1.09 1.09 0.24 0.94

- Time savings accounts 3.18 3.95 3.76 6.68

Related parties’ deposits

- Time savings accounts 4.43 - 3.53 8.10


The effective interest rates for each of the financial instruments (main currencies) as of 31 December 2007 areas follows:

The above percentages are stated after adjusting for interest rate swaps.

2007Euro Sterling Pound US Dollar LL

% % % %

ASSETS

Cash and balances with the Central Banks 5.41 3.32 6.57 9.25

Lebanese and other governmental bills bonds - - 7.82 4.02

Deposits with banks and financial institutions 3.92 5.6 5.63 4.49

- Sight 3.2 5.4 4 3.68

- Term 6.79 6.88 8.19 7.75

Loans and advances to customers, net

Loans and advances to related parties, net

LIABILITIES

Due to Central Banks - - 4.55 2.54

Due to banks and financial institutions

- Sight 3.8 5.85 6.41 4.37

- Term 5.14 5.78 6.1 4.69

Customers’ deposits

- On demand 0.84 1.27 0.77 1.12

- Demand savings accounts 1.09 1.18 0.21 1.08

- Time savings accounts 3.51 4.26 4.28 6.69

Related parties’ deposits

- Time savings account 1.52 0.38 3.91 8.09


2008[In LL million]

Non

interest

Up to 1 1 to 3 3 months 1 to 2 2 to 5 Over 5 bearing

m o n t h m o n t h s to 1 year y e a r s y e a r s y e a r s i t e m s To t a l

A S S E T S

Cash and balances with the Central Banks 1 8 5 , 3 9 6 1 5 0 , 7 5 0 1 8 0 , 9 0 0 - - - 1 2 3 , 7 3 0 6 4 0 , 7 7 6Deposits with banks and financial institutions 1 3 1 , 6 2 1 2 , 4 0 5 1 , 4 7 8 - - - 4 4 , 8 5 9 1 8 0 , 3 6 3Amounts due from Head Office, branchesand affiliates 1 9 5 , 8 1 9 1 2 6 , 6 7 6 1 3 3 , 6 2 9 - - - 2 , 8 4 7 4 5 8 , 9 7 1Financial assets held for trading - - 9 0 4 - - - 2 5 9 2 9Financial assets designated at fair valuet h rough profit or loss - - - - - - 4 , 4 0 1 4 , 4 0 1Loans and advances to customers, net 1 2 1 , 4 6 9 1 1 8 , 4 2 7 5 0 1 , 6 8 3 2 2 9 , 4 1 9 2 7 0 , 0 2 9 1 5 8 , 7 4 1 1 , 9 8 5 1 , 4 0 1 , 7 5 3Loans and advances to related parties, net 5 4 , 9 7 0 2 2 5 9 4 6 5 2 3 0 1 5 - 5 5 , 9 4 1Bank acceptances - - - - - - 7 4 , 6 4 2 7 4 , 6 4 2Av a i l a b l e - f o r-sale financial instruments 2 0 , 0 4 7 3 0 , 2 8 7 2 8 , 0 6 4 8 8 , 8 5 3 1 9 9 , 9 9 7 1 6 6 2 2 , 9 3 3 3 9 0 , 3 4 7Financial assets classified as loansand re c e i v a b l e s 6 , 5 3 0 - 9 8 , 8 5 3 9 1 , 3 6 0 9 2 6 , 7 1 7 2 1 , 4 9 4 3 3 , 3 9 8 1 , 1 7 8 , 3 5 2Held to maturity financial instruments - 4 , 2 5 2 4 , 2 5 2 2 5 3 , 7 2 4 1 1 3 , 0 5 9 5 , 9 4 3 2 , 5 9 4 3 8 3 , 8 2 4Investments in non-consolidated subsidiaries - - - - - 1 , 6 0 8 1 , 6 0 8Tangible fixed assets - - - - - - 5 3 , 2 0 0 5 3 , 2 0 0Intangible fixed assets - - - - - - 2 , 1 0 6 2 , 1 0 6N o n - c u r rent assets held for sale - - - - - - 1 4 3 , 5 6 7 1 4 3 , 5 6 7D e f e r red tax assets - - - - - - 2 , 2 0 8 2 , 2 0 8Other assets - - - - - - 7 2 , 9 6 0 7 2 , 9 6 0G o o d w i l l - - - - - - 2 , 7 0 6 2 , 7 0 6T O TAL ASSETS 7 1 5 , 8 5 2 4 3 2 , 7 9 9 9 5 0 , 0 2 2 6 6 3 , 8 2 1 1 , 5 1 0 , 0 3 2 1 8 6 , 3 5 9 5 8 9 , 7 6 9 5 , 0 4 8 , 6 5 4

L I A B I L I T I E S

Due to Central Banks - 8 , 4 3 0 4 5 , 5 6 7 - - - 2 5 1 , 1 0 4 3 0 5 , 1 0 1Due to banks and financial institutions 6 6 , 3 0 7 1 3 , 9 7 8 7 , 5 8 5 1 0 , 6 3 1 1 7 , 7 9 8 1 1 , 1 7 7 2 0 8 1 2 7 , 6 8 4Amounts due to Head Office, branchesand aff i l i a t e s 3 1 7 - - - - - 5 3 2 2Customers’ deposits 1 , 9 7 3 , 8 6 9 1 , 6 9 2 , 7 9 4 7 0 , 5 9 4 4 1 , 6 2 6 1 7 , 5 5 4 - 1 0 6 , 8 7 8 3 , 9 0 3 , 3 1 5Related parties’ deposits 6 , 9 2 8 - - - - - 4 , 6 4 0 1 1 , 5 6 8Engagements by acceptances - - - - - - 7 4 , 6 4 2 7 4 , 6 4 2C u r rent tax liabilities 5 , 2 5 0 - - - - - 4 , 5 2 9 9 , 7 7 9D e f e r red tax liabilities 1 , 0 6 0 - - - - - - 1 , 0 6 0Other liabilities 1 6 , 3 5 2 - - - - - 1 0 2 , 8 6 1 1 1 9 , 2 1 3P rovision for risks and charg e s - - - - - - 1 2 , 4 4 3 1 2 , 4 4 3Employees’ end of service benefits - - - - - - 1 2 , 7 4 4 1 2 , 7 4 4T O TAL LIABILITIES 2 , 0 7 0 , 0 8 3 1 , 7 1 5 , 2 0 2 1 2 3 , 7 4 6 5 2 , 2 5 7 3 5 , 3 5 2 1 1 , 1 7 7 5 7 0 , 0 5 4 4 , 5 7 7 , 8 7 1

Total interest rate sensitivity gap ( 1 , 3 5 4 , 2 3 1 ) ( 1 , 2 8 2 , 4 0 3 ) 8 2 6 , 2 7 6 6 1 1 , 5 6 4 1 , 4 7 4 , 6 8 0 1 7 5 , 1 8 2 1 9 , 7 1 5 4 7 0 , 7 8 3

Interest rate sensitivity gap

The Group’s interest rate sensitivity position based on contractual repricing arrangements or maturity at 31December 2008 has been shown in the table below. The expected repricing and maturity dates may differsignificantly from the contractual dates particularly with regard to the maturity of customer demand depositsamounting to LL 611,904 million (2007: LL 491,197 million).


2007[In LL million]

Non

interest

Up to 1 1 to 3 3 months 1 to 2 2 to 5 Over 5 bearing

m o n t h m o n t h s to 1 year y e a r s y e a r s y e a r s i t e m s To t a l

A S S E T S

Cash and balances with the Central Banks 1 2 4 , 1 8 2 6 7 , 8 3 8 2 4 8 , 7 3 8 - - - 1 1 3 , 1 3 7 5 5 3 , 8 9 5Deposits with banks and financial institutions 1 8 3 , 7 9 4 2 2 , 6 1 3 1 , 8 0 8 - - - 4 7 , 8 5 9 2 5 6 , 0 7 4Amounts due from Head Office, branchesand affiliates 5 5 6 , 9 6 7 2 3 4 , 7 0 6 - - - - 4 , 8 4 3 7 9 6 , 5 1 6Financial assets held for trading - - - - - - 3 2 0 3 2 0Financial assets designated at fair valuet h rough profit or loss - - - - - - 1 8 , 7 7 4 1 8 , 7 7 4Loans and advances to customers, net 7 5 , 8 5 9 9 6 , 1 5 9 5 5 3 , 4 0 6 1 0 7 , 5 0 7 2 2 5 , 2 8 1 1 3 5 , 9 5 7 2 , 7 2 9 1 , 1 9 6 , 8 9 8Loans and advances to related parties, net 2 6 , 6 0 1 - 9 0 5 - - - - 2 7 , 5 0 6Bank acceptances - - - - - - 8 3 , 3 3 3 8 3 , 3 3 3Av a i l a b l e - f o r-sale financial instruments 1 8 5 - 4 5 , 7 3 0 8 1 , 5 0 0 2 4 9 , 8 7 6 7 4 , 2 7 1 2 2 , 3 1 8 4 7 3 , 8 8 0Financial assets classified as loansand re c e i v a b l e s 1 0 6 , 3 5 0 - - 6 5 , 2 7 1 3 6 , 8 4 3 1 , 2 3 9 1 4 , 3 2 0 2 2 4 , 0 2 3Held to maturity financial instruments - 4 , 2 6 1 3 5 0 , 1 8 8 1 1 , 1 8 2 1 3 , 9 4 7 1 4 , 0 6 4 4 , 1 8 5 3 9 7 , 8 2 7Investments in non-consolidated subsidiaries - - - - - - 1 , 6 0 8 1 , 6 0 8Tangible fixed assets - - - - - - 5 4 , 5 3 8 5 4 , 5 3 8Intangible fixed assets - - - - - - 1 , 5 7 4 1 , 5 7 4N o n - c u r rent assets held for sale - - - - - - 1 4 5 , 8 9 5 1 4 5 , 8 9 5D e f e r red tax assets - - - - - - 2 , 4 3 3 2 , 4 3 3Other assets - - - - - - 9 4 , 9 6 2 9 4 , 9 6 2G o o d w i l l - - - - - - 1 , 1 0 2 1 , 1 0 2T O TAL ASSETS 1 , 0 7 3 , 9 3 8 4 2 5 , 5 7 7 1 , 2 0 0 , 7 7 5 2 6 5 , 4 6 0 5 2 5 , 9 4 7 2 2 5 , 5 3 1 6 1 3 , 9 3 0 4 , 3 3 1 , 1 5 8

L I A B I L I T I E S

Due to Central Banks - - 4 5 , 5 6 7 - - - 2 5 0 , 6 9 4 2 9 6 , 2 6 1Due to banks and financial institutions 1 1 1 , 5 3 2 7 , 6 9 0 - 5 , 7 0 8 1 0 , 4 5 0 1 1 3 1 9 6 1 3 5 , 6 8 9Amounts due to Head Office, branchesand aff i l i a t e s 3 7 , 2 0 5 - - - - - 7 3 7 , 2 1 2Customers’ deposits 2 , 1 2 4 , 2 5 8 1 , 0 6 3 , 9 2 2 8 0 , 0 0 7 5 , 5 8 0 5 , 2 8 4 - 9 4 , 4 2 1 3 , 3 7 3 , 4 7 2Related parties’ deposits 6 , 2 6 9 - - - - - 7 , 9 7 5 1 4 , 2 4 4Engagements by acceptances - - - - - - 8 3 , 3 3 3 8 3 , 3 3 3C u r rent tax liabilities 4 - - - - - 6 , 2 3 1 6 , 2 3 5D e f e r red tax liabilities - - - - - - 1 7 1 7Other liabilities 3 5 , 8 1 7 - - - - - 8 2 , 3 1 0 1 1 8 , 1 2 7P rovision for risks and charg e s - - - - - - 9 , 7 5 6 9 , 7 5 6Employees’ end of service benefits - - - - - - 9 , 7 5 8 9 , 7 5 8T O TAL LIABILITIES 2 , 3 1 5 , 0 8 5 1 , 0 7 1 , 6 1 2 1 2 5 , 5 7 4 1 1 , 2 8 8 1 5 , 7 3 4 1 1 3 5 4 4 , 6 9 8 4 , 0 8 4 , 1 0 4

Total interest rate sensitivity gap ( 1 , 2 4 1 , 1 4 7 ) ( 6 4 6 , 0 3 5 ) 1 , 0 7 5 , 2 0 1 2 5 4 , 1 7 2 5 1 0 , 2 1 3 2 2 5 , 4 1 8 6 9 , 2 3 2 2 4 7 , 0 5 4

The Group’s interest rate sensitivity position based on contractual repricing arrangements or maturity at31 December 2007 was as follows:


49.2.2 Currency risk

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign

exchange rates. The Group has set limits on positions by currency. Positions are monitored on a daily basisand hedging strategies are used to ensure positions are maintained within established limits.

The following table shows the effect of a reasonably probable change in currencies, with all other variablesheld constant, against the Lebanese Lira on the consolidated income statement and consolidated statementof changes in equity.

The negative amounts represent probable losses in the consolidated income statement while positiveamounts represent probable gains:


Currency Change in Effect on Effect on Change in Effect on Effect oncurrency rate the Income equity currency rate the Income equity

s t a t e m e n t s t a t e m e n t

US Dollars + 25 4 9 8 8 4 + 2 5 ( 6 8 ) 9 8

E u ro + 25 ( 2 0 ) - + 2 5 ( 6 2 ) -


The following consolidated balance sheets as at 31 December 2008 and 2007 are detailed in Lebanese Lira

(LL million) and foreign currencies, primarily US$, translated into LL million:


Lebanon Outside Total Lebanon Outside TotalL e b a n o n L e b a n o n

A S S E T S

Cash and balances with the Central Banks 1 3 9 , 2 1 8 5 0 1 , 5 5 8 6 4 0 , 7 7 6 8 6 , 0 7 3 4 6 7 , 8 2 2 5 5 3 , 8 9 5

Deposits with banks and financial institutions 1 2 , 8 0 8 1 6 7 , 5 5 5 1 8 0 , 3 6 3 1 3 , 4 3 3 2 4 2 , 6 4 1 2 5 6 , 0 7 4

Amounts due from Head Office, branches

and affiliates 1 2 3 4 5 8 , 8 4 8 4 5 8 , 9 7 1 5 , 6 4 7 7 9 0 , 8 6 9 7 9 6 , 5 1 6

Financial assets held for trading - 9 2 9 9 2 9 - 3 2 0 3 2 0

Financial assets designated at fair value

t h rough profit or loss - 4 , 4 0 1 4 , 4 0 1 - 1 8 , 7 7 4 1 8 , 7 7 4

Loans and advances to customers, net 1 9 9 , 6 4 2 1 , 2 0 2 , 1 1 1 1 , 4 0 1 , 7 5 3 1 6 1 , 4 2 5 1 , 0 3 5 , 4 7 3 1 , 1 9 6 , 8 9 8

Loans and advances to related parties, net 2 5 0 5 5 , 6 9 1 5 5 , 9 4 1 2 , 0 6 5 2 5 , 4 4 1 2 7 , 5 0 6

Bank acceptance - 7 4 , 6 4 2 7 4 , 6 4 2 - 8 3 , 3 3 3 8 3 , 3 3 3

Av a i l a b l e - f o r-sale financial instruments 3 5 9 , 1 9 3 3 1 , 1 5 4 3 9 0 , 3 4 7 2 3 5 , 5 5 4 2 3 8 , 3 2 6 4 7 3 , 8 8 0

Financial assets classified as loans

and re c e i v a b l e s 3 1 6 , 0 5 7 8 6 2 , 2 9 5 1 , 1 7 8 , 3 5 2 1 0 8 , 1 4 9 1 1 5 , 8 7 4 2 2 4 , 0 2 3

Held to maturity financial instruments 3 0 9 , 7 9 8 7 4 , 0 2 6 3 8 3 , 8 2 4 3 4 6 , 9 9 3 5 0 , 8 3 4 3 9 7 , 8 2 7

Investments in non-consolidated

s u b s i d i a r i e s 1 , 6 0 6 2 1 , 6 0 8 1 , 6 0 6 2 1 , 6 0 8

Tangible fixed assets 4 9 , 0 6 0 4 , 1 4 0 5 3 , 2 0 0 5 0 , 4 7 3 4 , 0 6 5 5 4 , 5 3 8

Intangible fixed assets 1 , 2 8 5 8 2 1 2 , 1 0 6 1 , 1 0 1 4 7 3 1 , 5 7 4

N o n - c u r rent assets held for sale ( 9 7 2 ) 1 4 4 , 5 3 9 1 4 3 , 5 6 7 ( 7 0 2 ) 1 4 6 , 5 9 7 1 4 5 , 8 9 5

D e f e r red tax assets 1 5 0 2 , 0 5 8 2 , 2 0 8 2 0 6 2 , 2 2 7 2 , 4 3 3

Other assets 6 0 , 5 1 9 1 2 , 4 4 1 7 2 , 9 6 0 8 3 , 5 5 5 1 1 , 4 0 7 9 4 , 9 6 2

G o o d w i l l 2 , 7 0 6 - 2 , 7 0 6 1 , 1 0 2 - 1 , 1 0 2

T O TAL ASSETS 1 , 4 5 1 , 4 4 3 3 , 5 9 7 , 2 1 1 5 , 0 4 8 , 6 5 4 1 , 0 9 6 , 6 8 0 3 , 2 3 4 , 4 7 8 4 , 3 3 1 , 1 5 8

LIABILITIES

Due to Central Banks 3 0 5 , 1 0 1 - 3 0 5 , 1 0 1 2 9 6 , 2 6 1 - 2 9 6 , 2 6 1

Due to banks and financial institutions 1 0 , 3 8 2 1 1 7 , 3 0 2 1 2 7 , 6 8 4 4 , 4 7 8 1 3 1 , 2 1 1 1 3 5 , 6 8 9

Amounts due to Head Office, branches

and aff i l i a t e s 4 7 2 7 5 3 2 2 5 , 6 5 5 3 1 , 5 5 7 3 7 , 2 1 2

Customers’ deposits 9 5 8 , 3 3 4 2 , 9 4 4 , 9 8 1 3 , 9 0 3 , 3 1 5 6 8 2 , 3 2 1 2 , 6 9 1 , 1 5 1 3 , 3 7 3 , 4 7 2

Related parties’ deposits 3 , 6 9 4 7 , 8 7 4 1 1 , 5 6 8 3 , 4 0 2 1 0 , 8 4 2 1 4 , 2 4 4

Bank acceptances - 7 4 , 6 4 2 7 4 , 6 4 2 - 8 3 , 3 3 3 8 3 , 3 3 3

C u r rent tax liabilities 5 , 6 3 6 4 , 1 4 3 9 , 7 7 9 4 6 , 2 3 1 6 , 2 3 5

D e f e r red tax liabilities 9 9 6 6 4 1 , 0 6 0 - 1 7 1 7

Other liabilities 1 2 , 5 8 5 1 0 6 , 6 2 8 1 1 9 , 2 1 3 1 1 , 7 9 3 1 0 6 , 3 3 4 1 1 8 , 1 2 7

P rovision for risks and charg e s 1 0 , 4 3 6 2 , 0 0 7 1 2 , 4 4 3 8 , 7 7 4 9 8 2 9 , 7 5 6

Employees’ end of service benefits 5 , 9 3 0 6 , 8 1 4 1 2 , 7 4 4 2 , 9 5 5 6 , 8 0 3 9 , 7 5 8

T O TAL LIABILITIES 1 , 3 1 3 , 1 4 1 3 , 2 6 4 , 7 3 0 4 , 5 7 7 , 8 7 1 1 , 0 1 5 , 6 4 3 3 , 0 6 8 , 4 6 1 4 , 0 8 4 , 1 0 4

NET EXPOSURE 1 3 8 , 3 0 2 3 3 2 , 4 8 1 4 7 0 , 7 8 3 8 1 , 0 0 3 1 6 6 , 0 1 7 2 4 7 , 0 5 4


49.3 LIQUIDITY RISK

Liquidity risk is the risk that the Group will be unable to meet its liabilities when they fall due. To limit this risk,

management has arranged diversified funding sources, manages assets with liquidity in mind, and monitorsliquidity on a daily basis. In addition, the Group maintains a statutory deposit with the Bank of Lebanon (referto note 11 for details).

The percentage of liquid assets from customer deposits as of 31 December is as follows:

The table below summarizes the maturity profile of the Group's assets and liabilities based on contractualrepayment arrangements and does not take account of the effective maturities as indicated by the Group'sdeposit retention history.

The maturity profile of the assets and liabilities at 31 December 2008 and 2007 were as follows:

2008 2007[In %]

Liquidity percentage 42.27 51.79

2008[In LL million]

Up to 1 1 to 3 3 months 1 to 2 2 to 5 Over 5

m o n t h m o n t h s to 1 year y e a r s y e a r s y e a r s To t a l

A S S E T S

Cash and balances with the Central Banks 2 6 3 , 9 0 2 - 1 8 0 , 9 0 0 - 1 9 5 , 9 7 4 - 6 4 0 , 7 7 6Deposits with banks and financial institutions 1 7 6 , 4 8 1 2 , 4 0 4 1 , 4 7 8 - - - 1 8 0 , 3 6 3Amounts due from Head Office, branches and a ffiliates 1 9 8 , 6 6 6 1 2 6 , 6 7 6 1 3 3 , 6 2 9 - - - 4 5 8 , 9 7 1Financial assets held for trading - - - 2 4 - 9 0 5 9 2 9Financial assets designated at fair value t h rough profit or loss - - 4 , 4 0 1 - - - 4 , 4 0 1Loans and advances to customers, net 7 8 , 8 3 8 1 6 3 , 0 1 8 5 0 1 , 6 8 1 2 2 9 , 4 4 6 2 7 4 , 7 9 3 1 5 3 , 9 7 7 1 , 4 0 1 , 7 5 3Loans and advances to related parties, net 5 3 , 7 8 6 1 , 1 8 4 2 5 9 4 6 5 2 3 1 1 6 5 5 , 9 4 1Bank acceptances 3 3 , 0 7 3 2 4 , 6 3 4 1 6 , 9 3 5 - - - 7 4 , 6 4 2Av a i l a b l e - f o r-sale financial instruments 2 7 , 5 9 1 3 0 , 2 8 7 2 8 , 0 7 3 8 8 , 8 5 3 1 9 9 , 9 9 8 1 5 , 5 4 5 3 9 0 , 3 4 7Financial assets classified as loansand re c e i v a b l e s 3 9 , 9 2 7 - 9 8 , 8 5 3 9 1 , 3 6 0 9 2 6 , 7 1 7 2 1 , 4 9 5 1 , 1 7 8 , 3 5 2Held to maturity financial instruments 2 , 5 9 3 4 , 2 5 2 4 , 5 5 4 2 8 3 , 9 0 2 8 8 , 2 1 5 3 0 8 3 8 3 , 8 2 4Investments in non-consolidated subsidiaries - - - - - 1 , 6 0 8 1 , 6 0 8Tangible fixed assets 2 1 8 4 3 5 1 , 8 5 5 2 , 0 3 3 5 , 3 8 1 4 3 , 2 7 8 5 3 , 2 0 0Intangible fixed assets 3 2 6 5 5 2 3 2 2 7 6 3 9 7 8 2 0 2 , 1 0 6N o n - c u r rent assets held for sale 1 4 2 , 5 8 2 - - - - 9 8 5 1 4 3 , 5 6 7D e f e r red tax assets 1 5 0 - - - - 2 , 0 5 8 2 , 2 0 8Other assets 2 0 , 7 3 8 4 , 0 7 3 6 , 1 0 9 1 2 , 2 1 8 2 6 , 3 6 4 3 , 4 5 8 7 2 , 9 6 0G o o d w i l l - - - - - 2 , 7 0 6 2 , 7 0 6T O TAL ASSETS 1 , 0 3 8 , 8 7 1 3 5 7 , 0 1 8 9 7 8 , 9 5 9 7 0 8 , 5 7 7 1 , 7 1 8 , 0 7 0 2 4 7 , 1 5 9 5 , 0 4 8 , 6 5 4

LIABILITIES

Due to Central Banks 1 , 1 0 3 - - 2 5 0 , 0 0 0 5 3 , 9 9 8 - 3 0 5 , 1 0 1Due to banks and financial institutions 9 5 , 2 0 8 6 , 5 3 7 3 , 3 3 3 - 1 7 , 7 9 8 4 , 8 0 8 1 2 7 , 6 8 4Amounts due to Head Office, branchesand aff i l i a t e s 3 2 2 - - - - - 3 2 2Customers’ deposits 1 , 9 9 0 , 1 8 2 1 , 7 2 4 , 4 8 3 7 0 , 5 9 4 4 1 , 6 2 6 9 , 0 1 9 6 7 , 4 1 1 3 , 9 0 3 , 3 1 5Related parties’ deposits 1 1 , 5 6 8 - - - - - 1 1 , 5 6 8Bank acceptances 2 0 , 5 3 1 3 6 , 9 7 8 1 7 , 1 3 3 - - - 7 4 , 6 4 2C u r rent tax liabilities 5 , 4 6 5 3 8 7 - - - 3 , 9 2 7 9 , 7 7 9D e f e r red tax liabilities 1 , 0 6 0 - - - - - 1 , 0 6 0Other liabilities 6 3 , 3 8 4 2 , 5 4 7 - - - 5 3 , 2 8 2 1 1 9 , 2 1 3P rovision for risks and charg e s - 1 , 4 0 9 8 1 0 - - 1 0 , 2 2 4 1 2 , 4 4 3Employees’ end of service benefits - 1 , 5 8 2 8 6 - - 1 1 , 0 7 6 1 2 , 7 4 4T O TAL LIABILITIES 2 , 1 8 8 , 8 2 3 1 , 7 7 3 , 9 2 3 9 1 , 9 5 6 2 9 1 , 6 2 6 8 0 , 8 1 5 1 5 0 , 7 2 8 4 , 5 7 7 , 8 7 1

Net liquidity gap ( 1 , 1 4 9 , 9 5 2 ) ( 1 , 4 1 6 , 9 0 5 ) 8 8 7 , 0 0 3 4 1 6 , 9 5 1 1 , 6 3 7 , 2 5 5 9 6 , 4 3 1 4 7 0 , 7 8 3


Analysis of financial liabilities by remaining contractual maturities

The table below summarizes the Group’s financial liabilities at 31 December 2008 and 2007 based oncontractual undiscounted repayment obligations. As the special commission payments up to contractualmaturity are included in the table, totals do not match with the balance sheet. The contractual maturities ofliabilities have been determined on the basis of the remaining period at the balance sheet date to thecontractual maturity date and do not take into account the effective expected maturities as shown in

maturity analysis of assets and liabilities. Repayments which are subject to notice are treated as if notice werebeing given immediately. However, the Group expects that many customers will not request repayment on theearliest date the Group could be required to pay and the table does not reflect the expected cash flowsindicated by the Group’s deposit retention history.

2007[In LL million]



A S S E T S

Cash and balances with the Central Banks 1 9 2 , 0 9 5 - - 1 8 0 , 9 0 0 1 8 0 , 9 0 0 - 5 5 3 , 8 9 5Deposits with banks and financial institutions 2 3 1 , 6 5 3 2 2 , 6 1 3 1 , 8 0 8 - - - 2 5 6 , 0 7 4Amounts due from Head Office, branches and affiliates 5 6 1 , 8 1 0 2 3 4 , 7 0 6 - - - - 7 9 6 , 5 1 6Financial assets held for trading - - - 3 2 0 - - 3 2 0Financial assets designated at fair valuet h rough profit or loss - - 1 8 , 7 7 4 - - - 1 8 , 7 7 4Loans and advances to customers, net 4 7 , 1 5 5 1 3 3 , 2 0 1 5 1 4 , 2 9 4 1 2 0 , 3 8 9 2 4 3 , 7 1 6 1 3 8 , 1 4 3 1 , 1 9 6 , 8 9 8Loans and advances to related parties, net 2 6 , 6 0 1 - - - 9 0 5 - 2 7 , 5 0 6Bank acceptances 3 6 , 0 8 2 2 4 , 5 8 2 2 2 , 6 6 9 - - - 8 3 , 3 3 3Av a i l a b l e - f o r-sale financial instruments 9 , 2 7 3 - 3 8 , 5 7 6 8 8 , 9 6 2 2 5 0 , 0 5 2 8 7 , 0 1 7 4 7 3 , 8 8 0Financial assets classified as loansand re c e i v a b l e s 2 4 , 6 7 0 - 1 7 , 0 0 0 6 5 , 2 7 1 1 1 5 , 8 4 3 1 , 2 3 9 2 2 4 , 0 2 3Held to maturity financial instruments 3 , 4 9 3 4 , 2 6 1 3 5 0 , 8 7 9 1 1 , 1 8 2 1 3 , 9 4 8 1 4 , 0 6 4 3 9 7 , 8 2 7Investments in non-consolidated subsidiaries - - - - - 1 , 6 0 8 1 , 6 0 8Tangible fixed assets 6 3 9 5 4 2 2 , 3 6 2 2 , 8 7 9 6 , 7 9 3 4 1 , 3 2 3 5 4 , 5 3 8Intangible fixed assets 1 3 4 6 0 2 4 1 2 5 1 3 8 9 4 9 9 1 , 5 7 4N o n - c u r rent assets held for sale 1 4 4 , 0 3 0 - - - - 1 , 8 6 5 1 4 5 , 8 9 5D e f e r red tax assets 2 0 6 - - - - 2 , 2 2 7 2 , 4 3 3Other assets 1 5 , 3 2 0 3 , 8 1 8 1 7 , 1 8 1 3 1 , 9 7 3 2 4 , 6 3 7 2 , 0 3 3 9 4 , 9 6 2G o o d w i l l - - - - - 1 , 1 0 2 1 , 1 0 2T O TAL ASSETS 1 , 2 9 3 , 1 6 1 4 2 3 , 7 8 3 9 8 3 , 7 8 4 5 0 2 , 1 2 7 8 3 7 , 1 8 3 2 9 1 , 1 2 0 4 , 3 3 1 , 1 5 8

LIABILITIES

Due to Central Banks 6 9 4 - - - 2 9 5 , 5 6 7 - 2 9 6 , 2 6 1Due to banks and financial institutions 1 1 6 , 5 3 1 2 6 8 8 , 3 2 7 - 1 0 , 4 5 0 1 1 3 1 3 5 , 6 8 9Amounts due to Head Office, branchesand aff i l i a t e s 3 2 , 6 7 4 4 , 5 3 8 - - - - 3 7 , 2 1 2Customers’ deposits 2 , 2 1 8 , 6 7 9 1 , 0 6 3 , 9 2 2 8 0 , 0 0 7 5 , 5 8 0 5 , 2 8 4 - 3 , 3 7 3 , 4 7 2Related parties’ deposits 1 4 , 2 4 4 - - - - - 1 4 , 2 4 4Bank acceptances 2 2 , 5 5 0 2 4 , 5 8 2 2 2 , 6 6 9 - - 1 3 , 5 3 2 8 3 , 3 3 3C u r rent tax liabilities 3 , 5 7 6 - - - - 2 , 6 5 9 6 , 2 3 5D e f e r red tax liabilities - - - - - 1 7 1 7Other liabilities 4 9 , 9 8 3 - 1 8 , 0 8 5 - - 5 0 , 0 5 9 1 1 8 , 1 2 7P rovision for risks and charg e s - - - - - 9 , 7 5 6 9 , 7 5 6Employees’ end of service benefits - - 7 5 9 0 1 - 8 , 7 8 2 9 , 7 5 8T O TAL LIABILITIES 2 , 4 5 8 , 9 3 1 1 , 0 9 3 , 3 1 0 1 2 9 , 1 6 3 6 , 4 8 1 3 1 1 , 3 0 1 8 4 , 9 1 8 4 , 0 8 4 , 1 0 4

Net liquidity gap ( 1 , 1 6 5 , 7 7 0 ) ( 6 6 9 , 5 2 7 ) 8 5 4 , 6 2 1 4 9 5 , 6 4 6 5 2 5 , 8 8 2 2 0 6 , 2 0 2 2 4 7 , 0 5 4


2008[In LL million]



Due to Central Banks 1 , 1 0 3 - - 2 5 0 , 7 8 9 6 3 , 5 6 7 - 3 1 5 , 4 5 9Due to banks and financial institutions 9 5 , 4 3 3 6 , 5 5 6 3 , 3 3 3 - 1 7 , 7 9 8 4 , 8 0 8 1 2 7 , 9 2 8Amounts due to Head Office, branchesand aff i l i a t e s 3 3 0 - - - - - 3 3 0Customers’ deposits 2 , 4 4 6 , 6 5 5 1 , 3 0 6 , 9 3 8 1 4 0 , 2 5 6 9 , 7 3 2 1 6 , 3 4 4 - 3 , 9 1 9 , 9 2 5Related parties’ deposits 1 1 , 5 6 8 - - - - - 1 1 , 5 6 8To t a l 2 , 5 5 5 , 0 8 9 1 , 3 1 3 , 4 9 4 1 4 3 , 5 8 9 2 6 0 , 5 2 1 9 7 , 7 0 9 4 , 8 0 8 4 , 3 7 5 , 2 1 0

2007[In LL million]



Due to Central Banks 6 9 4 - - - 3 0 4 , 5 1 7 - 3 0 5 , 2 1 1Due to banks and financial institutions 9 7 , 7 4 8 5 , 6 6 0 1 2 , 8 8 0 8 , 9 8 4 1 0 , 4 1 7 1 1 3 1 3 5 , 8 0 2Amounts due to Head Office, branchesand aff i l i a t e s 3 7 , 2 4 5 - - - - - 3 7 , 2 4 5Customers’ deposits 2 , 0 3 5 , 6 2 4 1 , 2 2 0 , 9 4 4 1 1 5 , 2 6 9 5 , 9 1 4 6 , 0 6 5 - 3 , 3 8 3 , 8 1 6Related parties’ deposits 1 3 , 0 6 5 - - - - - 1 3 , 0 6 5To t a l 2 , 1 8 4 , 3 7 6 1 , 2 2 6 , 6 0 4 1 2 8 , 1 4 9 1 4 , 8 9 8 3 2 0 , 9 9 9 1 1 3 3 , 8 7 5 , 1 3 9

49.4 OPERATIONAL RISK

Operational risk is the risk of loss arising from systems failure, human error, fraud or external events. Whencontrols fail to perform, operational risks can cause damage to reputation, have legal or regulatoryimplications, or lead to financial loss. The Group cannot expect to eliminate all operational risks, but through

a control framework and by monitoring and responding to potential risks, the Group is able to manage therisks. Controls include effective segregation of duties, access, authorization and reconciliation procedures,staff education and assessment processes, including the use of internal audit.

Prepayment risk is the risk that the Group will incur a financial loss because its customers and counterpartiesrepay or request repayment earlier than expected. The fixed rate asset of the Group is not significant

compared to the total assets. Moreover, other market conditions causing prepayment are not significant in themarkets in which the Group operates. Therefore the Group considers the effect of prepayment on net interestincome is not material after taking into account the effect of any prepayment penalties.

50. PREPAYMENT RISK

The Group maintains an actively managed capital base to cover risks inherent to the business. The adequa-cy of the Group’s capital is monitored using, among other measures, the rules and ratios established by the

Bank of Lebanon and the Banking Control commission.

The Group should maintain a required capital adequacy ratio (greater or equal to 12%) based on the total tierone capital over the total risk weighted assets and off-balance sheet items.

51. CAPITAL MANAGEMENT


The Group manages its capital structure and makes adjustments to it in the light of changes in economicconditions and the risk characteristics of its activities. No changes were made in the objectives, policies andprocesses for the years ended 31 December 2008 and 2007.

Capital consists of the following as of 31 December 2008 and 2007:

On 28 March 2008, the Bank of Lebanon issued intermediary circular No. 158 which requires banks topresent their financial statements in accordance with a new format. Accordingly, comparative figures werepresented to comply with the current year’s presentation.

52. COMPARATIVE AMOUNTS


Tier 1 capital 498,829 266,697

Tier 2 capital 9,886 6,346

Total 508,715 273,043


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THE GROUP’S CONTACT INFORMATION

ELECTRONIC BANKINGwww.esgbl.com : for clients to check their accounts on the Netwww.sgbl.com.lb : our trilingual Web Site

SOGETEL Call Center : 03-47 77 77

GENERAL MANAGEMENTSin el Fil - Saloumeh roundaboutP.O.Box: 11– 2955Tel: +961 1 499813 - +961 1 483001 - Fax : +961 1 502820Telex: 44453-44368 LE - Swift: SGLILBBXe-mail : [email protected]

HEADQUARTERSRiad el Solh • Riad el Solh streetTél: +961 1 980783/4 – Fax: +961 1 980785

THE NATIONAL NETWORK

GREATER BEIRUT

BAABDA - Next to Sérail Tel : 05 468770 Fax : 05 468065

BADARO - Badaro street Tel : 01 386295/7 Fax : 01 386296

BARBIR - Barbir street Tel : 01 659693 Fax : 01 647305

BLISS - Main road - Selman Bldg Tel : 01 370006 Fax : 01 370071

BURJ EL BRAJNEH - Ain Sekké street Tel : 01 451137/8 Fax : 01 451139

BOURJ HAMMOUD - Municipality square Tel : 01 258883/4 Fax : 01 267116

CHIAH - Mecharafieh Tel : 01 277311/2 Fax : 01 545993

FURN EL CHEBBACK - Gharios center Tel : 01 289143 Fax : 01 293631

GHOBEIRY - Main street Tel : 01 856116/7 Fax : 01 841431

HAMRA - Banque du Liban street Tel : 01 350020/1 Fax : 01 751764

HORCH TABET - Horch Tabet Tel : 01 512550/3 Fax : 01 512552

JDEIDEH - Monte Libano Bldg Tel : 01 893555 Fax : 01 884237

JEITAWI - Greek Orthodox Hospital street Tel : 01 448170/1 Fax : 01 562402

KHALDE - Beginning Khaldeh highway Tel : 05 800184 Fax : 05 803151

MAR ELIAS - Moussaytbeh - Mar Elias street Tel : 01 312223/4 Fax : 01 309231

MATHAF - Facing ISF Tel : 01 422558/9 Fax : 01 422558

MAZRAA - El Mama street - Saeb Salam Corniche Tel : 01 818155/6 Fax : 01 314794

RIAD EL SOLH - Riad el Solh street Tel : 01 980783/4 Fax : 01 984008

SADAT - Hamra - Lagos center Tel : 01 743075/7 Fax : 01 743076

SAINT NICOLAS - St Nicolas street - Ashrafieh Tel : 01 200528/9 Fax : 01 335232

SASSINE - Sassine square - Ashrafieh Tel : 01 200525 Fax : 01 200526

SIN EL FIL - Saloumeh roundabout Tel : 01 499813 Fax : 01 502820

VERDUN - Verdun street Tel : 01 860704/5 Fax : 01 860706

MOUNT LEBANON

AJALTOUN - Main road Tel : 09 230683/4 Fax : 09 231065

ANTELIAS - Armenian Patriarcat street Tel : 04 410480/1 Fax : 04 402137

BIKFAYA - Bikfaya square Tel : 04 986271/2 Fax : 04 981392

BROUMANA - Main road Tel : 04 961538 Fax : 04 961539

DHOUR EL CHOUEIR - Dhour El Choueir square Tel : 04 390352 Fax : 04 390574

JBEIL - Main road Tel : 09 541170 Fax : 09 540877

JOUNIEH - Banque du Liban street Tel : 09 936801 Fax : 09 831714

KASLIK - Sarba highway Tel : 09 640716 Fax : 09 831715

MANSOURIEH - Mansourieh square Tel : 04 401076 Fax : 04 401872

SOUTH

NABATIEH - Main road Tel : 07 764204/5 Fax : 07 768288

SAIDA - Jezzine street Tel : 07 725549 Fax : 07 753945

SOUR - Sour Al Ramel Tel : 07 741702 Fax : 07 740614

NORTH

ABDEH - Main road Tel : 06 471041/2/3 Fax : 06 471044

AMIOUN - Main road Tel : 06 950962 Fax : 06 952762

KFARAAKA - Koura - Main road Tel : 06 953535 Fax : 06 952901

MINA - Al Mina street Tel : 06 442549 Fax : 06 442594

TRIPOLI - Fouad Chehab street Tel : 06 441043 Fax : 06 430321

BEKAA

CHTAURA - Main road Tel : 08 542898 Fax : 08 543034

ZAHLEH - Main road Tel : 08 810502/3 Fax : 08 801753

THE REGIONAL NETWORK

SYRIA

DAMASCUS - Aljamarek Free zone

Tel : +963 11 2122012 Fax : +963 11 2133808

JORDAN

AMMAN - SGBJ - Société Générale de Banque – Jordanie

Tel : +962 6 5600300 Fax : +962 6 5624275

Headquarters : Shmeisani - P.O.Box 560 Amman - 11118 www.sgbj.com.jo

CYPRUS

NICOSIA - Société Générale Cyprus (SGC) (Sister bank)

Tel : +357 22 399777 Fax : +357 22 399700

Headquarters : 20 Agias Paraskevis, 2002 Strovolos, Nicosie - P.O.Box. 25400 www.sgcyprus.com


AFFILIATED COMPANIES

SOGELEASE LIBAN

Montelibano bldg, Jdeideh, Beirut, Lebanon

Tel : +961 1 892 660 Fax: +961 1 892 614

SOGECAP LIBAN

Sogecap bldg, 41 street, Dekwaneh, Beirut, Lebanon

Tel : +961 1 511 696/7 Fax: +961 1 511 694/5 www.sogecapliban.com

FIDUS S.A.L.

Sehnaoui bldg, Riad el Solh, Beirut, Lebanon

Tell : +961 1 990 600 Fax : +961 1 990 610

www.fidus.com.lb

CENTRE DE TRAITEMENT MONETIQUE (CTM)

Ashrafieh, Beirut, Lebanon

Tel : +961 1 577 612/3/4 Fax : +961 1 577 611


SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 2008SOCIÉTÉ GÉNÉRALE DE BANQUE AU LIBAN | ANNUAL REPORT 200890

CorrespondentBanks


COUNTRY BANK

Australia, Sydney Commonwealth Bank of Australia

Canada, Toronto Canadian Imperial Bank of Commerce

Denmark, Copenhagen Danske Bank A/S

France, Paris, La Défense Société Générale

Great Britain, London National Westminster Bank Plc

HSBC Bank Plc

Japan, Tokyo Mizuho Corporate Bank Ltd

Jordan, Amman Société Générale de Banque - Jordanie

Kuwait, Kuwait City National Bank of Kuwait SAK

New Zealand, Wellington ANZ National Bank Limited

Norway, Oslo DnB NOR Bank ASA

Saudi Arabia, Riyadh Riyad Bank

Sweden, Stockholm Skandinaviska Enskilda Banken AB (PUBL)

United Arab Emirates, Abu Dhabi United Arab Bank

Switzerland, Zurich Crédit Suisse

United States, New York Société Générale, The Bank of New York Mellon



Documents

A nnua l R ep ort 200 8 - SGBL Report List... · A nnua l R ep ort 200 8 a year ... N etw or k H G ro up C ha irm a nÕs S tatem en t The Co ... 6 SOCIÉTÉ GÉNÉRALE DE BANQUE AU