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BANK AUDI SYRIA saAnnuAl report 2009
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TABLE OF CONTENTS
Financial Performance Summary 3
The Board of Directors’ Report to the General Assembly of
Shareholders in 2009 5
Corporate Governance Guidelines 6
Main Founders (establishment phase) 15
Organizational Chart of Bank Audi Syria sa 16
Related and Sister Companies 18
Syrian Economy’s Performance 19
Syrian Banking Sector’s Performance 21
Banking, Regulatory & Legal Environment 24
Major Structural Developments of Bank Audi Syria in 2009 26
Financial Performance of Bank Audi Syria in 2009 27
Auditor’s Report 40
Consolidated Financial Statements 42
Addresses and Branches 104
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Profit for the year
SYP billions SYP billions
SYP billionsSYP billions
Total assets
Customers deposits and Margin accounts
Loans & advances to customers (net)
CAGR (06-09) 61.9%
CAGR (06-09) 66.4%
BANK AUDI SYRIA’S FINANCIAL PERFORmANCE SUmmARY
2009200820072006
26.10
30.00
25.00
20.00
15.00
10.00
5.00
0
19.31
9.83
4.88
60.00
70.00
80.00
50.00
40.00
30.00
20.00
10.00
0.002009200820072006
75.55
58.60
36.38
17.79
60.00
70.00
80.00
50.00
40.00
30.00
20.00
10.00
0.002009200820072006
67.10
52.14
32.52
14.56
CAGR (06-09) 1013%
700.00
800.00
600.00
500.00
400.00
300.00
200.00
100.00
0.002009200820072006
624.54
365.60
258.80
0.45
CAGR (06-09) 74.8%
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SELECTED FinAnCiAL hiGhLiGhTS OF BAnk AuDi SyRiA
SyP ‘000’ Dec 2009 Dec 2008Liquid Assets 47,250,599
36,976,268
Loans & Advances to Customers (net) 26,100,199
19,305,772
Other Assets 829,793 880,586
Fixed Assets 1,366,501 1,436,641
Total Assets = Total Liabilities & Equity 75,547,092
58,599,268
Due to Banks 1,012,302 2,058,286
Due to Customers & Margin Accounts 67,102,176 52,142,234
Other Liabilities 1,302,995 1,332,021
Equity 6,129,618 3,066,728
Structural Ratios
Liquid assets to assets 62.5% 63.1%
Net liquid assets to deposits 68.9% 67.0%
Loans to deposits 38.9% 37.0%
Fixed assets to equity 22.3% 46.8%
Assets / Equity 1232.5% 1910.8%
Bank deposits to customers deposits 1.5% 3.9%
Customers’ deposits / assets 88.8% 89.0%
Profitability Ratios
Cost to net income 53.93% 55.16%
Return on average assets 0.93% 0.77%
Return on average equity 13.6% 12.4%
Shares Data
Total Shares 5,000,000 2,500,000
Average Shares for the Period 3,410,959 2,500,000
Basic & diluted earnings per share for equity holders of the
parent 183.1 146.24
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In the wake of turbulence in the global financial markets since
late 2008, and residual repercussions into 2009, Bank Audi Syria
managed to overcome the difficult global circumstances that led to
a local financial slowdown and maintained a healthy growth and
development pace, through astute management of the sources and
usage of funds. The different performance indicators growth rates
of the Bank in 2009 clearly showcase the efficiency and flexibility
adopted by the Bank in that period, to withstand the different
challenges.
In 2009, the Bank grew its total assets by 29%, or SYP 17
•billion, reaching SYP 75.5 billion at the end of the period. This
growth proved to be the highest among private traditional banks
according to initial figures for 2009;
Customers’ deposits and margin accounts volume •increased by SYP
15 billion, reaching an aggregate of SYP 67 billion at the end of
the period. This translates into net increase of 29% compared to
last year.
The Bank deployed approximately 45% of the increase •in deposits
in the form of direct credit facilities, thus reaching a total
portfolio size of SYP 26 billion at the end of 2009, reflecting a
growth rate of 33% compared to 2008.
The Bank’s net profit increased during this period by •71% over
the results of 2008, despite diminishing returns from the
international markets and reducing spreads in the local markets,
thus closing the 2009 financial year with a net SYP 624.5
Million.
These performance indicators confirm the Bank’s ability to
maintain high performance in different circumstances, by being
flexible and responsive in its policies and interaction with the
Syrian market dynamics. With regard to retail banking products and
services, the Bank sought to emphasise organic growth, rather than
horizontal growth, therefore increasing the depth and scope of its
product offerings. This strategy was geared to fulfill the needs
and aspirations of the different segments in the Syrian market.
Furthermore, the Bank sought to offer outstanding services in its
branch network across Syrian cities and governorates, and
leveraging this network to achieve an increase of 43% of its
customer base compared to 2008. In terms of corporate and
commercial lending, the Bank is well aware that a healthy banking
system is fostered on its ability to facilitate the transfer of
funds to the various productive sectors of the economy. In that
regards, during 2009, the Bank continued to target different
productive sectors with the aim of providing comprehensive banking
services. These services include syndicated loans, long-
term loans, and commercial facilities to support the trade
sector. In addition, the Bank offered loans to small and medium
enterprises (SME), such as a specialized loan for the professionals
in the health sector allowing them to upgrade their equipment and
premises. All of this lending activity was developed within a
balanced framework of maturities management, aiming to keep
liquidity related risks under a healthy and constructive
control.The bank was keen on listing its shares on the Damascus
Stock Exchange on the inauguration of the market, as another proof
of the bank’s role and support of all activities and steps taken
for the development of a modern and healthy financial sector in
Syria. Moreover, in cooperation with Audi Saradar Group, the Bank
launched the ‘Audi Index of the Stock Market’ and continued
publishing the ‘Syrian Economic Report’ as a firm belief in the
importance of bringing awareness onto the latest developments in
the Syrian economy.The Bank continued to assume its civic role,
which it considers to be a part of its fundamental values, through
continuously offering academic scholarships and actively
participating in different social activities. For the second year
in a row, Bank Audi Syria was granted the ‘Best Emerging Market
Bank in the Middle East’, by Global Finance for 2009. This prize
was in recognition of the Bank’s achievements in offering the best
financial services, its contribution to the economy as a whole, and
the value it is creating to institutions and individuals alike.The
Board of Directors confirms the accuracy of the financial
statements published in this report, certified by the appointed
Auditor. The Board also confirms its ongoing commitment to
implement and maintain effective financial control mechanisms to
guarantee the efficiency of the Bank performance.Finally, we would
like to thank the Bank’s employees who have shown, throughout
different periods that they are the pillars upon which successes
and achievements are built. Their exemplary attitude towards their
duties and responsibilities is the best example of a harmony
between their individual awareness and the Bank’s general interest.
For this reason, they deserve praise, appreciation, and
support.
Deputy-Chairman & General Manager Chairman Bassel hamwi
Georges Achi
ThE BOARD OF DIRECTORS’ REPORT TO ThE GENERAL ASSEmBLY OF
ShAREhOLDERS IN 2009
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1SuMMARy OF CORPORATE GOvERnAnCE GuiDELinE FOR BAnkS
The purpose of the Corporate Governance Guidelines in
traditional and Islamic banks operating in the Syrian Arab Republic
is to provide a framework for the governance of these banks to be
used by the Board of Directors in order to protect the interests of
the shareholders and others stakeholders. Accordingly, these
Guidelines define the rules for the composition of the Board of
Directors, the role of the Chairman of the Board, the different
activities of the Board and its committees, the proper environment
for monitoring and control, transparency and disclosure. Such a
framework guarantees the continuity, consistency and effectiveness
of the Board of Directors’ approach to managing the Bank’s
affairs.
2SuMMARy OF ThE STEPS FOR iSSuinG ThE CORPORATE GOvERnAnCE
GuiDELinES By SyRiAn AuThORiTiES On 8Th APRiL 2009 unDER DECiSiOn
nO. 489/Mn/B4
Public authorities in Syria have developed Corporate Governance
by modernising laws and regulations. The Central Bank - the Credit
and Monetary Council issued the Corporate Governance Guidelines on
8th April 2009 under the Decision No. 489 /MN/B4. This Decision set
the adoption of the aforementioned Governance Guidelines
by the traditional and Islamic banks operating in Syria. These
Guidelines apply to all banks operating in Syria and their
affiliated institutions, as well as any other financial companies
specified by the Monetary and Credit Council. The Chairman of the
Syrian Securities Exchange also issued the Code of Best Practices
on 29th June 2008. The Central Bank- the Credit and Monetary
Council set as deadline the beginning of 2010 for banks to be
compliant with the Guidelines regulations.
3STEPS By BAnk AuDi SyRiA TO APPLy DECiSiOn nO. 489
In order to comply with the Corporate Governance Guidelines
under Decision No. 489, the Board of Directors of Bank Audi Syria
ratified the Corporate Governance Guidelines at its meeting held on
25th November 2009 and the Board’s Risk Committee Charter and
Remuneration Committee Charter. The bank will comply with the
guideline’s rules in 2010, in relation to the election of
committees and other terms as well.
CORPORATE GOvERNANCE GUIDELINES
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4BAnk AuDi SyRiA’S BOARD OF DiRECTORS
Chairman Dr. Georges A.Achi
Deputy Chairman & General Manager Mr. Bassel S. Hamwi
Members of the Board Mr. Raymond W. Audi, representative of Bank
Audi sal, Audi–Saradar Group Mr. Samir N. Hanna, representative of
Bank Audi sal, Audi–Saradar Group Dr. Freddie C. Baz,
representative of Audi Saradar Investment Bank sal Mr. Elia S.
Samaha, representative of Lebanon Invest sal Mr. Adnan N. Takla Dr.
Ahmad M. Al Abboud Mrs. Rana T. Zein
Advisors to the Board Mrs. Nada N. Assaad Mrs. Yasmina R. Azhari
Mr. Abdulateef A. Al-Rajihi Mr. Mohamed Said Z. Zaim
Legal Advisor Sarkis Law firm
External Audit Ernst & Young
5MAnAGEMEnT
Top Management Mr. Bassel S. Hamwi* General Manager Mr. Antoine
G. El-Zyr* Deputy General Manager
Senior Management Mr. Mahmoud A. Kurdy* Assistant GM/Chief
Financial Officer Mr. Jamil R. Shocair* Assistant GM /Head of
Corporate Banking Division Mr. Fady A. Obeid* Assistant GM/Head of
Retail Division
Branch network Mr. Melhem J. Abou-Antoun Regional Manager (North
Area)
Main Departments Mr. Abdulrahman M. Abrash Deputy Chief
Financial Officer Mr. Jamil R. Samaha Head of Operations &
Correspondent Banking Department Mr. Gilbert G. Ghosn Head of
Treasury Department Mr. Mohamad A. Chamseddine Head of Human
Resources Department Mr. Mohannad S. Kandil Head of Information
Technology Department Mr. Elie N. Kanaan Head of Credit Risk
Management Department Mr. Kenan K. Aslan Chief Accountant Mr. Shadi
N. Khoury Head of Branch Network Management Department Mr. Hussein
A. Jaber Head of Sales & Business Development Department Mr.
Jean E. Homsy Head of Engineering Department Mr. Khaled H. Midani
Head of Administration Department
General Manager Office Mrs. Rawia V. Osta Head of Legal
Department Mr. Dany A. Chamoun Senior Internal Auditor Mr. Iyad S.
Saleh Head of Compliance Unit* Member of the executive
committee
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Has worked in the banking sector in Syria prior to the
nationalization and then moved afterwards to Lebanon and held the
General Manager position in various banks. He was elected as the
Chairman of the Board of Directors of Crédit Commercial du
Moyen-Orient sal (CCMO) from 1988 to 1997; at that time when CCMO
was merged with Bank Audi sal. He was also elected in 1989 as
Chairman of the Association of Banks in Lebanon and served two
mandates until 1993. He is currently the Secretary General of the
Association Board as well as the head of the Board legal committee.
He is also a member of the Board of Directors of the National
Institute for the Guarantee of Deposits and Kafalat. Georges Achi
is the author of several publications in finance and banking.
In 2004, he was appointed Advisor to the Chief Executive Officer
of Bank Audi SAL.He was also involved in structuring and setting up
the Damascus Securities Exchange in March 2009, and was elected as
Deputy Chairman of its Board of Directors. He is also a member of
the Syrian Business Council (SBC), the Banking Training Centre
(BTC) and the International Chamber of Commerce (ICC) in Syria.
Mr. Hamwi led the team which structured Bank Audi Syria and was
responsible for its initial public offering, the most successful
IPO in Syria to date. Mr. Hamwi served 14 years in the
International Finance Corporation (IFC), the private sector arm of
the World Bank Group, where he worked on financing several
industrial projects such as cement and hotels, and other sectors
such as technical consultation to countries in the financial and
banking sectors. Mr. Hamwi was responsible for IFC’s activities in
Islamic finance in the region and the financial sector in the Gulf
States.
Mr. Hamwi holds a Masters in International Finance and
Bachelor’s in Business Computer Information Systems and
Organizational Management from the University of North Texas. Mr.
Hamwi is a participant in Harvard’s Presidents Program at the
Harvard Business School, and is the author of several publications
in Finance & Banking.
6BiOGRAPhiES OF ThE MEMBERS OF ThE BOARD OF DiRECTORS
Dr. Georges A. Achi Mr. Bassel S. hamwi
Chairman of the Board of Directors of Bank Audi Syria sa•
Chairman of the Audit Committee•
Former Chairman of the Board of Directors in Bank Audi •SAL –
Audi-Saradar Group, from August 2008 till end of 2009
Holds a Doctoral Degree in Law from the University •of Paris and
a Doctoral degree in Economics from the University of Geneva.
Deputy-Chairman of the Board of Directors of Bank Audi •Syria
sa
General Manager of Bank Audi Syria sa•
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Raymond Audi was born in Saida in 1932, a Lebanese national. He
completed his secondary education at St. Joseph College Beirut.He
worked with his two brothers, Georges and Jean, in banking, and
founded Bank Audi sal in 1962. He became the General Manager of the
Bank and later a Chairman in 1998. Raymond Audi served as President
of the Association of Banks in Lebanon from November 1993 to
November 1994. He has been the Secretary General of the Association
Board since 2001.
He was born in Beirut in 1944, a Lebanese national. He started
his banking career in January 1963 and held various positions
across many departments of the Bank. In 1975, he moved to the
United Arab Emirates where he was appointed as a General Manager of
‘Investbank’, part of Bank Audi, for 8 years. He relocated to
Lebanon in 1982 and was appointed as a General Manager of Bank Audi
Lebanon in 1989.
In the early 1990s, Mr. Hanna worked on and implemented an
expansion and restructuring strategy of the Bank, transforming it
into a solid financial institution offering universal banking
products and services.He is currently the Chief Executive Officer
of the Group and he is heading the development of the group into
becoming a leading regional financial institution in the MENA
region.
Mr. Raymond W. Audi Mr. Samir n. hanna
Member of the Board of Directors of Bank Audi Syria sa, •and a
representative of Bank Audi sal.
Member of the Board of Directors of Bank Audi France•
Member of the Board of Directors of Bank Audi •Switzerland
Chairman of the Board of Director of the Libano-Arabe •– Société
d’Assurances et de Réassurances in Lebanon.
Member of the Board of Directors of Bank Audi Syria sa •and
Representative of Bank Audi sal.
Member of the Board of Directors and General Manager •of Bank
Audi sal – Audi Saradar Group
Chairman of the Executive Committee of Audi Saradar •Group
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Dr. Baz joined Bank Audi sal in 1991 as Advisor to the Chairman
and founded the Secretariat for Planning and Development. He
currently has overall authority over finance, accounting, MIS and
the budgeting function across the group, and is responsible for the
development of the Group strategy.
Dr. Baz is also the Managing Director of Bankdata Financial
Services WLL, which he founded in 1985, the publisher of
‘Bilanbanques’, the only reference in Lebanon providing an
extensive structural analysis of all banks located in Lebanon.
Dr. Baz holds a State Doctoral Degree in Economics from the
University of Paris I (Panthéon – Sorbonne).
He joined the Bank Audi in 2007, moving from Citibank/ Citigroup
where he had started his career in 1980 as a Management Associate
in the Corporate Bank in Beirut. Of his 27 years with Citigroup, he
spent 15 years in Athens, Dubai, Abu Dhabi and Cairo, with
short-term assignments in New York and London. He focused on
country management and business development as well as on Corporate
Banking, Corporate Finance, and Risk Management. His last
assignment with Citigroup was as Managing Director in charge of the
Citigroup franchise in Egypt and of Corporate Banking and Corporate
Finance for the Levant and North Africa region.
Elia Samaha is a member of the Middle East advisory Board of the
Suliman S. Olayan School of Business at the American University of
Beirut.
He holds a Bachelor’s Degree in Economics from the American
University of Beirut.
Dr. Freddie C. Baz Mr. Elia S. Samaha
Member of the Board of Directors of Bank Audi Syria sa, •a
representative of Bank Audi Saradar
Member of the Board of Directors of Bank Audi sal - Audi
•Saradar Group
General Manager and Group Chief Financial Officer and •Strategy
Director of the Group
Member of the Board of Directors of Bank Audi Syria sa,
•representative of Lebanon Invest sal
General Manager in Bank Audi sal – Audi Saradar Group•
Member of the Board Executive Committee of Bank Audi •sal -
Saradar Group
Manages the relations with Correspondent Banks and •Financial
Institutions.
Responsible for the Regional Expansion of Bank Audi sal •in
Syria and Jordan
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He was born in Homs in 1939, a Syrian national, and completed
his secondary education at School of Shweir in Lebanon in 1956. He
has been involved in trading since 1962 and he has performed many
projects in the contracting sector since 1970 to date. He is an
industrialist and owner of a ceramics factory since 1994.
He was born in Deir-Ezzor in 1935, a Syrian national. He is an
agricultural engineer and holds a Master’s in ‘Crops Protection’
from the USA. Mr. Abboud is the Chairman of the Board of Directors
of Abboud Group in Syria.
Mr. Adnan n. Takla Dr. Ahmad M. Al Abboud
Member of the Board of Directors of Bank Audi Syria sa• Member
of the Board of Directors of Bank Audi Syria sa•
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She was born in 1965 in Damascus, a Syrian national.She
completed her secondary education at the American School in Athens,
Greece in 1982. She holds a degree in Marketing Administration from
DEREE, the American College of Greece in Athens.Rana Zein is a
member of the Board of Directors of Naftomar Shipping and Trading
Co, and a member of the International Leaders in Cleveland Clinic
Foundation, also a sponsor of Cleveland Clinic Foundation
Healthlink in Athens, Greece. She is a member of the Muscular
Dystrophy Association in Athens, Greece.
She was born in 1981 in Damascus, a Syrian national. She holds a
Bachelor’s in Business Administration from the American University
of Beirut. She started her career as a Deputy CFO at Lead for
Trading and Contracting in June 2002, and became the CFO in June
2004.
Nada Assaad is the Chairwoman of the Board of Directors of Al
Jumail Group since 2006, and an Advisor to the Board of Directors
of the Syrian Arab Insurance.
She is an active member of various groups and organizations,
most importantly ‘Basma’ for supporting children with cancer, the
Syrian Business Council and the Syrian Young Entrepreneurs
Association (SYEA).
Mrs. Rana T. Zein Ms. nada n. Assaad
Member of the Board of Directors of Bank Audi Syria sa• Advisor
to the Board of Directors of Bank Audi Syria sa•
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A Syrian national, holds a Bachelor’s of Art in French
Literature from Tishreen University. She is a partner and
Administrative Manager at P&O Nedlloyd shipping agency. She is
also a representative of “NMCP” a Netherlands Management
Corporation Program, and an Honorary Consul of Netherlands in
Lattakia and Tartous. She is the Head of Lattakia Business Women
Committee.
Yasmina Azhari is a representative of the Dutch Private Co.,
“G&M Partners”, which offers services, training, and
development courses for international tourist establishments, and
is also a member of the Lattakia Chamber of Commerce and Industry.
She was named in ‘Forbes’ magazine as one of 50 Most Powerful Arab
businesswomen.She is the Chairman of the Board of Directors of
Mawred in Syria and head of Bashaer Al Nour NGO, a member of the
Arab Businesswomen Council, the Syrian Business Council, a member
of the Board of Directors of Tartous Port, and a member of the
project of United Nation Advisory Council of the Global Charter on
Syria.
He holds a Master’s of Business Administration (MBA) from the
American University of Beirut. He is currently the Chairman of the
Boards of Directors of Tradeco Global Engineering &
Construction S.A in Geneva, Switzerland, Swiss-Attixs Development
W.L.L Manama, Bahrain, and Abdulateef Al Rajihi Group, Khubar,
Saudi Arabia
Furthermore, he is the General Manager of al Khatt Printing in
Dammam, Saudi Arabia, and the Regional Manager of the al Rajihi
Bank of the Eastern Region in Saudi Arabia. He is currently a
member of Board of Directors of Islam Jordanian Bank for finance
and investment in Amman, Jordan, and the Rajihi Trading Group,
Riyadh, Saudi Arabia.
Ms. yasmina R. Azhari Mr. Abdulateef A. Al-Rajihi
Advisor to the Board of Directors of Bank Audi Syria sa• Advisor
to the Board of Directors of Bank Audi Syria sa•
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He was born in Aleppo in 1969, a Syrian national. He continued
his studies at Boarzell Tutorial College in Sussex, United Kingdom.
He holds a Bachelor’s of Business Administrations and Economy from
the American College of Switzerland in Luzern Switzerland
(1993-1998). He is currently working for Unexim Group on project
establishment and development. He is a founding member and the
Director of Riyadh Electric Wires and a member of Riyadh Electric
Wires in Saudi Arabia. He is a founding member of Electric
Appliances and Equipment Associates in Lebanon. He is a partner and
Deputy-Chairman of the Modern Company for Cables Industry in
Damour, Lebanon.Furthermore he is a founding member and
Deputy-Chairman of the Board of Directors of Unexim Group in
Beirut, Lebanon and Akar for tourism, the holding company for the
Blue Lagoon in Aleppo, Syria. Also, he is a founding member,
partner and Deputy-General Manager in the United Company for
Tourism and Travel in Aleppo, Syria.
7DuTiES AnD RESPOnSiBiLiTiES OF ThE BOARD OF DiRECTORS’
COMMiTTEES
RiSk COMMiTTEE
The Risk Committee recommends to the Board of Directors the risk
policy that is appropriate for the Bank’s ability and risk
appetite. It reviews the Top Management performance in credit risk
management, markets risk, liquidity risk, operational risk,
compliance, and other.
GOvERnAnCE AnD REMunERATiOn COMMiTTEE
The Corporate Governance Committee establishes the governance
framework and guideline, monitors its implementation and suggests
amendments when necessary. The committee also ensures the
transparency of the election, renewal, or replacement of members or
the Chairman of the Board of Directors and the Chief Executive
Officer. It evaluates the efficiency of the Board of Directors and
each Board member independently, as well as the performance of the
Executive Managers. The committee guarantees the transparency of
policies of remuneration, bonuses, and allowances for the members
of the Board and the Executive Managers.
AuDiT COMMiTTEE
This committee supervises the control function, compliance and
financial disclosure in general, and reviews in particular
financial reports, audit and control systems. Moreover, it reviews
the adequacy and results of internal and external audits and the
accounting issues that have a vital effect on the financial
statements.
Mr. Mohamed Said Z. Zaim
Advisor to the Board of Directors of Bank Audi Syria sa•
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Bank Audi sal – Audi Saradar group 41%Audi Saradar Investment
Bank sal 3%Lebanon Invest sal 3%Mr. Abdulateef A. Al-Rajihi 2%Mrs.
Huda A. Muhanna 5%Mrs. Hadia A. Debs 4%Mr. Bassel S. Hamwi 3%Mr.
Adnan N. Takla 2% Dr. Georges A. Achi 2% Dr. Ahmad M. Al Abboud
2%Mr. Mohamad Ayman M. Al Asfari 2%Mr. Hammad M. Al-Attasi 1%Mr.
Riad G. Zein 1%Mr. Imad G. Zein 1%Mrs. Nada N. Assaad 1%Mrs. Mayya
N. Assaad 1%Mr. Mohamad Saied Z. Al Zaim 1%
mAIN FOUNDERS - ESTABLIShmENT PhASE
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Branch network Management Department
Sales & Business
Development Department
Central Operations &
Correspondent Banking
Department
Credit Risk Management Department
information Technology Department
human Resources
Department
Consumer Lending
Department
FUNCTIONAL ORGANIzATIONAL ChART OF BANK AUDI SYRIA sa
General Management Office
- Audit Department- Legal Department- Compliance unit
Assistant General Manager - head of Retail
Retail Division
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Finance Department
Treasury Department
Engineering Department
Administration Department
SME Lending Department
Corporate Lending
Department
Board of Directors
General Manager
Deputy General Manager
Executive Committee
Assistant General Manager - head of Corporate Banking
Division
Department
Functional Organizational Chart of Bank Audi Syria sa
Assistant General Manager - Chief Financial
Officer
Finance & Administration Division
Corporate Banking Division
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AuDi CAPiTAL SyRiA ltd.
With an aim to fulfill an effective role in achieving ongoing
and promised changes in the Syrian Market, and emphasising the
concept of a Syrian bank that offers comprehensive services to
Syrian citizens and the economy, Bank Audi Syria established Audi
Capital Syria Limited with a capital of SYP 270 Million, owned at
99.999% by Bank Audi Syria.
This company offers the following range of services:
Consultations and analysis of published data 1. relating to the
stock market. It provides customers and others with advice, or
consultation, in return for fees or commissions.
Stock brokerage that includes:2. a- Buying and selling stocks on
behalf of others
in exchange for commissions.b- Trading stocks directly for Audi
Capital Syria
in the stock market.
Managing IPOs without underwriting. This includes 3. managing
and marketing stocks on behalf of the issuing company. In addition,
it involves preparing bulletins and carrying out all required
research and procedures for issuing and listing the stocks.
Investment management of stocks and funds. 4. This service
covers portfolio management for third parties (investment
management) in accordance with an agreement signed with the broker.
The agreement defines the investment policy as well as authorities
and duties of the investment manager. These activities also include
the management of joint investments funds.
As a subsidiary of Bank Audi Syria and Audi Saradar group, the
company gains from the wide technical and field expertise of these
financial companies. Moreover, the company stands to gain
experienced and technical expertise from the comprehensive support
of Bank Audi Private Bank, which is a related company to Audi
Saradar Group. Audi Capital will start its activities by mid
2009.
RELATED AND SISTER COmPANIES
SyRiAn ARAB inSuRAnCE sa
Syrian Arab Insurance is a sister company of Bank Audi Syria, a
part of Audi Saradar Group, and is 5% owned by the Bank. The
company was established in 2006 with a capital of SYP 1 billion,
representing 2 million shares. The company offers special programs
and various services that consist of a wide range of insurance
policies. These policies are designed to appeal to all segments of
Syrian society, citizens and companies. The most important of these
are automobile, property, travel, engineering, accident, health,
and life insurance.
The company is adopting a framework to ensure transparency and
fruitful partnerships with its clients, employees, and providers,
in order to achieve healthy and long-standing success.
The Arab Syria Insurance reported a profit of SYP 70.9 million,
a growth of 39% above 2008. It achieved, since inception, an annual
growth of SYP 60.5 million, thus increasing profit by 35.45% per
share. The total assets of the company reached SYP 2.1 billion as
at end 2009, and reported a total average growth of 23% since
inception.
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19
*200920082007200620051.0%
2.5352.437
2.025
1.7091.491
4.5%
5.1%
4.3%
5.2%
4.0%
Nominal Gross
Domestic Product (GDP)
Real GDP
growth rate
During 2009, the Syrian economy experienced a slowdown as it was
directly affected by the consequences of the global financial
crisis. However, it neither suffered a recession nor a deflation,
at the GDP level.
According to the International Monetary Fund, the global economy
has experienced a negative growth in real GDP (at the end of 2009)
averaging -1.3%, compared to 3.2% in 2008. The Middle East and MENA
regions, in
DEvELOPmENT OF SYRIAN ECONOmY IN 2009
general, experienced a growth decline to 2.4% and 2.5%,
respectively, versus 6.2% and 5.2% in the previous year. The Syrian
economy reported a real growth of 4.0% in 2009 versus 5.20% in
2008, and an average growth in nominal non-oil GDP of 7.7% in 2009
versus 30.5% in 2008. The real sector was noticeably affected by
the impact of the global crisis mainly in the export and total
consumption components.Syrian export of products dropped by -13.5%
compared to last year, following many years of consistent annual
positive growth averaging 13.0% between 2005 and 2008. This decline
was mainly due to a decline in oil exports which reported a
negative growth of -36.8% in 2009 compared to the annual total
recorded growth of 4.8% between 2005 and 2008. Non-oil exports
dropped by -5.2% in 2009. This was a consequence of the resilience
of such export products as agriculture, fabrics, and cotton, as the
demand for these products was less affected by the financial
crisis. The financial crisis had a negative impact on the
consumption growth of the private and public sectors. A negative
growth of -9.4% and -0.2%, respectively, reflected negatively on
the total level of consumption in 2009, representing a drop of
-8.2% compared to an average annual growth of 20.6% between 2005
and 2008.
As for domestic investments, a positive average growth of 15.0%
was maintained in 2009, whereas the public sector’s investments
witnessed a growth of 44.0%. As for private sector investment, the
pace of growth slowed down by 1.9% compared to the pre-crisis
period.
Moreover, it is worth mentioning the effect of remittances of
workers abroad and direct foreign investments, on the real sector
in Syria. Worker transfers were affected by the tough economic
circumstances amid the financial crisis, in particular within GCC
countries which host more than 1.5 million Syrian expatriates.
Workers either suffered a pay cut or lost their jobs, consequently
leading to a decline in their cash flow. As for direct foreign
investments, the lack of liquidity in the region following the fall
in oil prices, and the deterioration of the global and local
financial markets, resulted in a decline in growth (not deflation)
in 2009.
In conclusion, the effect of the global financial crisis on the
Syrian economy was inevitable. However, the reform process in the
Syrian economy is capable of revitalising the path towards
structural growth over the foreseeable future.
6.0%3,000
5.0%2,500
4.0%2,000
3.0%1,500
2.0%1,000
500
SYP billions
*expected
-
20
nOMinAL GROSS DOMESTiC PRODuCT (GDP)
(At current prices, SyP million) 2005 2006 2007 2008 *2009
CAGR2005-2008
CAGR 2005-2009
nominal Gross Domestic Product (GDP) 1,491,000 1,709,000
2,025,000 2,535,000 2,437,000 19.4% 13.1%
Growth rate 14.4% 17.1% 21.2% 34.2% -3.7%
ow Oil GDP 357,000 404,000 467,000 639,000 400,000 21.4%
2.9%
Growth rate 24.9% 15.6% 18.2% 46.7% -37.3%
ow non-oil GDP 1,134,000 1,305,000 1,558,000 1,896,000 2,037,000
18.7% 15.8%
Growth rate 11.5% 17.6% 22.1% 30.5% 7.7%
Real GDP growth rate 4.5% 5.1% 4.3% 5.2% 4.0% 4.9% -2.9%
+imports of goods and services 677,467 743,134 882,671 1,016,744
886,465 14.5% 7.0%
Growth rate 24.7% 12.1% 21.5% 23.5% -12.6%
o.w. Goods 537,229 607,945 725,110 826,968 706,962 15.5%
7.1%
Oil 128,925 147,127 211,977 262,989 150,862 26.8% 4.0%
Growth rate 113.9% 16.6% 47.4% 33.0% -42.5%
Non-oil 408,305 460,818 513,133 563,979 556,100 11.4% 8.0%
Growth rate 13.9% 15.3% 13.9% 17.9% -1.2%
Services (Payments) 140,237 135,190 157,561 189,776 179,502
10.6% 6.4%
Growth rate 12.8% -1.5% 19.2% 29.2% -5.2%
=Aggregate supply 2,168,508 2,451,548 2,909,237 3,553,372
3,325,716 17.9% 11.3%
Growth rate 17.4% 15.5% 21.4% 31.0% -6.2%
Domestic investment 322,056 391,361 455,625 509,535 584,880
16.5% 16.1%
Growth rate 3.8% 24.2% 19.1% 19.9% 15.0%
o.w. Private sector 183,393 232,424 279,450 352,365 358,239
24.3% 18.2%
Growth rate 11.7% 29.5% 23.0% 35.2% 1.9%
o.w. Public sector 138,663 158,937 176,175 157,170 226,641 4.3%
13.1%
Growth rate -5.0% 17.1% 13.4% -4.3% 44.5%
+Total consumption 1,225,602 1,391,126 1,678,725 2,147,145
1,966,659 20.6% 12.5%Growth rate 19.3% 16.0% 23.4% 37.2% -8.2%
o.w. Private Sector final consumption 1,034,754 1,192,882
1,415,475 1,868,295 1,688,841 21.8% 13.0%Growth rate 22.1% 17.8%
21.4% 41.5% -9.4%
o.w. Public Sector final consumption 190,848 198,244 263,250
278,850 277,818 13.5% 9.8%
Growth rate 6.1% 6.2% 35.8% 13.6% -0.2%
+Exports of goods and services 620,850 669,061 774,887 896,692
774,177 13.0% 5.7%
Growth rate 21.9% 10.1% 18.5% 24.1% -13.5%
Goods 471,020 521,577 584,208 708,777 589,568 14.6% 5.8%
o.w. Oil 223,441 207,223 217,214 257,221 162,142 4.8% -7.7%
Growth rate 25.8% -5.2% 7.2% 27.0% -36.8%
o.w. Non-oil 247,579 314,354 366,994 451,556 427,427 22.2%
14.6%
Growth rate 26.7% 29.8% 19.4% 31.9% -5.2%
Services (Receipts) 149,830 147,484 190,679 187,916 184,609 7.8%
5.4%
Growth rate 10.0% 0.6% 32.2% 5.7% -1.6%
=Aggregate demand 2,168,508 2,451,548 2,909,237 3,553,372
3,325,716 17.9% 11.3%Growth rate 17.4% 15.5% 21.4% 31.0% -6.2%
ThE COmPONENTS OF ThE SYRIAN GDP (GROSS DOmESTIC PRODUCT)
*expected
-
21
DEvELOPMEnT OF ThE SyRiAn BAnkinG SECTOR AnD BAnk AuDi SyRiA
PERFORMAnCE
DEvELOPMEnT OF ThE SyRiAn BAnkinG SECTOR
Syria witnessed a continuous expansion in banking activities in
2009. Banking groups reported a growth of 7.5%, as of September
2009, reaching SYP 129.8 billion (annual growth of 10%). The sector
volume reached SYP 1.862 billion as at end of September 2009.The
Syrian banking sector was immune to the losses that hit global and
regional financial sectors. This was due to the limited involvement
of the Syrian banking sector within global markets, and the
conservative control policy of the Central Bank of Syria, whereby
it prevents banks from investing in local and regional stock market
portfolios. The effects of this crisis on banking performances are
reflected in the relative performance of the Syrian banks,
particularly private banks, compared to the considerable drop in
realised gains of liquid investments in global financial
businesses. However, a fall in interest rates suppressed margins on
interest. Therefore, such gains from the lending growth could not
compensate, amid the slowdown of the Syrian market, into more
moderate economic growth, as previous levels. Private Banks’
lending increased by 13.8% in the first 9 months of 2009 (annual
growth of 22.7%) compared to 84.0% in 2008. The contribution of the
private banking sector to increased lending for the private sector
dropped from 66.9% in 2008, to 31% in the first 9 months of
2009.
Deposits of the private sector are the main driver of the growth
for the Bank’s activity. It exceeds three quarters of total assets
of the Banks. The total deposits of the private sector, as at
September 2009, reached SYP 899 billion. This gives an average
growth of 10.2% (annual growth of 13.5%), of which SYP 383 billion
are in private banks. Concurrently, these banks grew by 17.1 % in
the same period (annual growth of 22.8%) compared to 30% in 2008.
This growth allowed private banks to sustain a growing share of the
market, reaching 42.6%, as at the end of September 2009, compared
to 40.1% in 2008. Furthermore, the banking sector continued to
deploy the deposits of the private sector in the form of advances
offered to the private sector. The ratio of advances versus
deposits rose from 47% in 2008 to 50.9% in September 2009 in the
sector as a whole. This ratio rose from 54.3% to 60.5% between 2008
and September 2009 in public
banks, whilst the private banks maintained the ratio of 38% in
the two periods.
The Syrian banking sector hasn’t experienced noticeable changes
as a result of the global financial crisis. However, in a country
that seeks to play an expanding role in the regional financial
services sector, a group of challenges have emerged. These involve
sustaining the primary revenues amid the relative deterioration of
the business environment, and the improvement of the financial
performance indicators in general. Nevertheless, the expansion of
the Syrian banking market continued in spite of the global
financial crisis. That’s evidenced by the establishment of private
banks such as Fransabank and Bank of Jordan, in addition to Chark
Bank, Qatar National Bank, and the Islamic Al-Baraka Bank. Other
banks in the region, traditional and Islamic, are to obtain
licences to enter the Syrian market.
-
22
SyRiAn BAnkinG SECTOR – TOTAL ASSETS
SyP mill 2004 2005 2006 2007 2008 Sep-09
Banking Sector Total Assets 1,250,260 1,342,953 1,410,440
1,593,982 1,732,149 1,861,973
Growth 5.7% 7.4% 5.0% 13.0% 8.7% 7.5%
o.w. Public Banks 1,224,024 1,247,726 1,227,645 1,304,006
1,344,089 1,406,571
Growth 3.4% 1.9% -1.6% 6.2% 3.1% 4.6%
o.w. Private Banks 26,236 95,227 182,795 289,976 388,060
455,401
Growth 263.0% 92.0% 58.6% 33.8% 17.4%
Conventional Banks 26,236 95,227 182,795 271,064 341,909
389,659
Growth 263.0% 92.0% 48.3% 26.1% 14.0%
Islamic Banks 18,912 46,151 65,742
Growth 144.0% 42.5%
Private Banks M.Share 2.1% 7.1% 13.0% 18.2% 22.4% 24.5%
Private share of Change 39.2% 74.4% 129.8% 58.4% 70.99%
51.87%
TOTAL DEPOSiTS FROM SyRiAn PRivATE BAnkinG SECTOR
SyP mill 2004 2005 2006 2007 2008 Sep-09
Deposits from Private sector 438,459 477,794 585,854 715,778
816,493 899,375
Growth 11.4% 9.0% 22.6% 22.2% 14.1% 10.2%
by Public Banks 418,471 410,918 436,371 464,047 489,240
516,282
Growth 6.3% -1.8% 6.2% 6.3% 5.4% 5.5%
by private Banks 19,988 66,876 149,483 251,731 327,253
383,093
Growth 234.6% 123.5% 68.4% 30.0% 17.1%
Conventional Banks 19,988 66,876 149,483 233,923 289,048
333,805
Growth 234.6% 123.5% 56.5% 23.6% 15.5%
Islamic Banks 17,808 38,205 49,288
Growth 114.5% 29.0%
Private Banks M.Share 4.6% 14.0% 25.5% 35.2% 40.1% 42.6%
Private share of Change 44.5% 119.2% 76.4% 78.7% 74.99%
33.15%
TOTAL CREDiT TO SyRiAn PRivATE BAnkinG SECTOR
SyP mill 2004 2005 2006 2007 2008 Sep-09
Credit to Private sector 147,770 222,528 254,750 304,980 389,878
457,951
Growth 35.1% 50.6% 14.5% 19.7% 27.8% 17.5%
by Public Banks 143,362 205,474 219,335 237,397 265,519
312,457
Growth 31.0% 43.3% 6.7% 8.2% 11.8% 17.7%
by private Banks 4,408 17,054 35,415 67,583 124,359 145,495
Growth 286.9% 107.7% 90.8% 84.0% 17.0%
Conventional Banks 4,408 17,054 35,415 65,903 110,183
125,439
Growth 286.9% 107.7% 86.1% 67.2% 13.8%
Islamic Banks 1,680 14,176 20,055
Growth 743.8% 41.5%
Private Banks M.Share 3.0% 7.7% 13.9% 22.2% 31.9% 31.8%
Private share of Change 11.5% 16.9% 57.0% 64.0% 66.88%
31.05%
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23
SyP mill 2005 2006 2007 2008 Sep-09 Dec-09*
BASY Total Assets 17,788 36,383 58,599 59,121 71,589 75,547
BASY Share of Change (Private Conventional Banks)
14.6% 21.1% 31.4% 1.8% 27.2% 29.0%
BASY Share of Change (Private Banking Sector)
14.6% 17.3% 22.7% 1.2% 19.3% 19.7%**
Market share (Private Conventional Banks) 9.7% 13.4% 17.1% 16.0%
18.4% 19.6%
Market Share (Private Banking Sector) 9.7% 12.5% 15.1% 13.7%
15.7% 16.8%**
* based on the initial data for the private banks’ results of
the end of 2009 ** The ratio misses the numbers of the Al Cham
Islamic bank, it wasn’t available until the date of publishing.
SyP mill 2005 2006 2007 2008 Sep-09BASY Total Deposits 2,157
14,560 32,521 52,142 63,371
BASY Share of Change (Private Conventional Banks)
4.6% 15.0% 21.3% 35.6% 25.1%
BASY Share of Change (Private Banking Sector)
4.6% 15.0% 17.6% 26.0% 20.1%
Market share (Private Conventional Banks)
3.2% 9.7% 13.9% 18.0% 19.0%
Market Share (Private Banking Sector) 3.2% 9.7% 12.9% 15.9%
16.5%
SyP mill 2005 2006 2007 2008 Sep-09
BASY Total Lending 17 4,885 9,832 19,306 23,724
BASY Share of Change (Private Conventional Banks)
0.1% 26.5% 16.2% 21.4% 29.0%
BASY Share of Change (Private Banking Sector)
0.1% 26.5% 15.4% 16.7% 20.9%
Market share (Private Conventional Banks)
0.1% 13.8% 14.9% 17.5% 18.9%
Market Share (Private Banking Sector)
0.1% 13.8% 14.5% 15.5% 16.3%
BAnk AuDi’S PERFORMAnCE
Bank Audi Syria played an effective role in the growth of the
banking private sector in the first 9 months of 2009. This is
revealed through the Bank’s contribution of 27.2% of the total
assets of private and traditional banks, or 19.3%, when including
the growth of the assets of Islamic private banks.
Therefore, the Bank market share among traditional private banks
increased from 17.1% in 2008 to 18.4% by September 2009, and from
15.1% to 15.7% in the banking sector as a whole.
Initial disclosures of private and traditional banks show the
constant efficiency of Bank Audi Syria. It contributed to 29.0% of
the increase at the level of private and traditional banks in 2009.
This secured a market share of 19.6%.
At the level of deposits in the private sector, as at the first
9 months of 2009, Bank Audi’s contribution to the increase in
deposits was 25.1%, within traditional and private banks. This
ratio is 20.1% within the private banking sector as a whole. The
Bank increased its share from 18% to 19% between the end of 2008
and September 2009.
Bank Audi Syria contributed a third of the increase in the
credit portfolio of traditional and private banks. It increased its
market share from 17,5% to 18.9% between the end of 2008 and end of
September 2009. This contribution would have amounted to 20.9% if
private and Islamic bank lending was included, consequently, 16.3%
of the market share.
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24
inTRODuCTiOn
Operating banks in Syria are subject to the authority of the
Credit and Monetary Council. The CMC regulates the function and
effectiveness of banking and financial institutions to help develop
the monetary and financial market and ensure its stability
according to the needs of the national economy. Furthermore, it
maintains the purchasing power of the Syrian currency and exchange
rate stability. It operates within its authority and under the
government’s general economic guidelines, approved by Council of
Ministers. The Credit and Monetary Council consists of:The Governor
of the Central Bank of Syria, as Chairman;The Deputy Governor of
the Central Bank of Syria, as a Deputy;The Head of State Planning
Commission, the Assistant to the Minister of Trade and Commerce,
the Assistant to the Minister of Finance, the Assistant to the
Minister of Agriculture, and the Assistant to the Minister of
Industry all act as Members; and Three Experts.
ThE GLOBAL FinAnCiAL CRiSiS AnD COPinG MEChAniSMS
The global financial crisis impacted negatively the world
economy during 2008. Global markets are still suffering its
consequences, which are expected to last for an extended time, and
which may leave damaging results that influence all economic
sectors.
This crisis showcases the importance of the effective role the
government can play in controlling and balancing macroeconomic
conditions. The uncontrolled expansion of the activities of global
institutions, on balance sheet or off balance sheet, basis was the
main factor that destabilized the global financial system. Banking
and financial controls were not sufficient and comprehensive enough
for all aspects of the financial sector; additionally there were
weaknesses in regulatory frameworks for risk management and
liquidity. To rectify this, supervisory
BANKING, REGULATORY AND LEGAL ENvIRONmENT
institutions are currently working to tighten regulations and
improve efficiency.
Despite the events that shook global economic stability, the
effect of the crisis on the Syrian economy was very limited due to
many factors. Most importantly, effective banking supervision was
carried out by the Central Bank of Syria, who adopted a rigorus of
standards and controls. These were compatible with international
accounting standards and agreements, most importantly Basel II.
In addition, the role of the Government Commission for Banks at
the Central Bank of Syria was further developed. This Commission is
directly responsible for banks and their performance. The Central
Bank of Syria had been keen to enhance the standards of banking
supervision by training employees in the department, and improving
their skills at both office and field supervision levels.
The compliance of Syrian banks with regulations, instructions,
and supervisory controls, protected banks from facing difficulties
and turbulence. The most important areas targeted by these
regulations and controls are the exchange rate, the foreign
currency, Basel II standards for banking supervision, the maximum
limits for available facilities, and banking deployments and
investments abroad.
The Credit and Monetary Council, carries out, as a part of its
constant activity, the development of its existing resolutions, and
the enactment of new ones. For 2009, these can be summarised as
follow:
Resolutions to regulate facilities, banking deployments •and
investments.
These resolutions determined the maximum limits of facilities or
placement of funds, and the basis to be followed to ensure the
highest degree of guarantees. For example, a paragraph was added to
Resolution no. 395 pursuant to Resolution no. 483 that clarified
accepted guarantees to reduce the value of granted or used
facilities. In similar vein Resolution no. 501 replaced
pre-existing Resolutions no. 100-114-173-248-339 to achieve
compliance with the ‘risk concentration principles’ of the Basel
Committee for Banking Supervision. The concentration ratios in
banks balance sheets and mother company is 25% of equity and 75% of
accounts in and off balance sheet; this is done after weighing
according the bank’s classification and types of balance sheet
accounts. It also prevented dealing with fiduciary accounts, and
set a ceiling of investment
-
25
in government or regular securities, the same as those applied
to investing in shares and fixed assets.
Regulatory Resolutions for work performance in the •banking
sector
In this context, Resolution no. 534 provides for the formation
of an independent department, the ‘Department of Compliance’, which
reports directly to the Bank’s Board of Directors. This is done to
ensure its independence and its responsibility for maintaining
compliance with laws and regulations in force. In particular, laws
and resolutions related to money laundering and financing
terrorism, Resolution no 489 relating to the Corporate Governance
Guidelines for banks operating in Syria.
Regulatory Resolutions for activating the development
•process
These regulations encourage banks to fund development projects
by increasing the ratios that define the volume of granted
facilities to equity, such as Resolution no. 461 which raised
granted facilities from 25% to 35% of equity as defined by
Resolution 395. It allows the funding of tourism projects according
to a “Build, Operate, and Transfer (B.O.T)” principle up to 50% of
the project value as defined by Resolution no. 490, or by allowing
the decrease of the level of the Obligatory Reserve
Requirement.
This is defined in resolution no. 502 which reduces level of the
Obligatory Reserve Requirement whenever facilities are directed
towards the industrial sector. It is important to note that Bank
Audi Syria benefited from Resolution no. 461, and was granted the
approval to fund the two companies, Lafarge and Al Medsteel,
pursuant to CMC Resolution no. 587.
Regulatory resolutions that contribute to the banking
•stability
There are a number of resolutions that deal with this
aspect:Resolution no. 460 authorised the Central Bank of Syria to
provide liquidity to different banks under specific conditions and
interest rates. This is an important resolution aiming at
supporting banks suffering from liquidity squeeze. Resolution no.
462 allowed a bigger margin for interest rates pricing. Resolution
no. 500 stated that direct and indirect credit facilities were
prohibited to relatives of members of the Board of Directors as
well as to any related company of members of the Board of
Directors.
In order to comply with international standards for managing
liquidity, Resolution no. 588 was issued to set the volume of
liquidity available in the bank at 30% of all currencies, and 20%
of Syrian Pounds for every working day. It implemented an
additional method to measure liquidity based on ‘maturities
mismatch’ to compare future
cash inflows and outflows during certain periods to which ratios
must be complied to. In order to adhere to the policy of a tight
approval process and improving the quality of the securities and
guarantees, Resolution no. 597 was issued providing guidelines and
special treatment for the risk classification of debts and
accumulation of Loan Loss Provision.
Resolutions to combat money laundering and terrorism •
Resolution no. 590 was issued to allow the banks to offer Syrian
citizens foreign currency, thereby enabling them to fund
international credit or debit cards. This resolution superseded
Resolution no. 396 and its Executive Instructions no. 474; In
addition, resolution no. 607 was issued imposing the usage of
crossed checks.As the CMC fulfils its role in the organization,
coordination and regulation of the work of different financial
institutions, and the Central Bank of Syria fulfils its role in
handling the monetary policy and supervising its implementation,
the result benefits the banking sector as whole and is reflected in
better regulation and supervision, leading to the stability,
prosperity and growth of the sector.
-
26
Bank Audi witnessed three major structural developments in 2009:
its listing on the Damascus Securities Exchange; its increase in
capital from SYP 2.5 billion to SYP 5 billion; and the issuing of
the final licence for Audi Capital ltd.
LiSTinG BAnk AuDi’S ShARES On ThE DSE
The Bank has a role in supporting various developments that are
taking place in Syria in general, and in the financial sector, in
particular. The Bank was the first company to be listed on the
Damascus Securities Exchange at its inception on 10th March 2009.
The value of Bank Audi Syria’s shares was first established at SYP
1380, on the day of listing, to close at SYP 1914 at the end of
2009. This is a solid increase of 39%. Note that this takes into
account a reduction in the share price on the DSE on 26th
June 2009, due to an increase in capital by 100%.
inCREASE BAnk AuDi SyRiA’S CAPiTAL
To keep up with the growth of the Syrian economy whilst adhering
to the provisions of local regulations, international standards of
capital adequacy, and domestic factors relating to the expansion of
Bank Audi Syria and its desire to maximize gains for its
shareholders, the Board of Directors obtained the approval of the
shareholders on the 2nd October 2008, to increase the capital from
SYP 2.5 billion to SYP 5.0 billion.
The Bank increased its capital in 2009 over two phases. The
first phase was during the IPO from 24th June 2009 to 13th July
2009, during which the Bank’s shareholders exercised their right to
preferential subscription, within the limits of the number of
shares owned by each shareholder. The second stage, from the 14th
July 2009 to the 2nd August 2009, covered the surplus from the
first phase of the subscription. The Bank’s shareholders
demonstrated their confidence
mAjOR STRUCTURAL DEvELOPmENTS OF BANK AUDI SYRIA IN 2009
in the Bank’s performance and increased their investment in the
Bank by subscribing for 99.22 % of shares on offer in the first
phase. Therefore there was a surplus of 19.324 shares that remained
for subscription, reaching an oversubscription of 699.26% in the
second phase. The total coverage to shares offered reached 104.6%.
The capital increase was accomplished to be effective from 20th
August 2009.
AuDi CAPiTAL ltd.
Audi Capital was launched in 2009. It is a limited liability
company registered in the commercial register under no /15663/ on
the 27th January 2009. The company will provide financial brokerage
services on the Damascus Securities Exchange. The company was
granted the final licence by the Syrian Commission for Financial
Market & Securities (SCFMS) on March 17 2009, and is planned to
begin its activities by mid-2010.
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27
HeadquartersBranches
Evolution of the employees distribution in the headquarters and
the branches
2009
2008
239
279300
250
200
150
100
50
0
147
195
33%
55%
12%
Distribution of employees by educational level
post-graduate education (or higher education)
Lower to intermediate
education
Undergraduate Education
(or University Education)
1huMAn RESOuRCES DEvELOPMEnT
In accordance with Bank Audi Syria 2009 strategy, which consists
of developing the HR function, and given Management belief in the
positive impact such a development would have on employees’
performance, the process of generating policies and procedures was
accomplished to organize employees’ work at the bank. On another
role, the focus was on improving the level and skills of existing
staff rather than recruiting external candidates in order to
provide employees with development and advancement
opportunities.Along the above lines, the Bank strived to motivate
employees and develop their skills and expertise by offering them
training courses in different areas. The number of trainees reached
1,617 with an average of 30 training hours per employee. On the
other hand, new employees underwent different internal training
programs to meet future work responsibilities.
BANK AUDI SYRIA’S PERFORmANCE 2009
By the end of 2009, 67% of employees were holders of graduate or
post-graduate degrees and worked either in banking operations (in
branches and at the headquarters) or in other departments. The
remaining employees (13%) are educated up to an intermediate level
and occupy supporting positions at the Bank.
The Bank worked as well on increasing the percentage of Syrian
citizens in the banking sector by giving priority to the hiring of
local talent to occupy managerial positions in accordance with the
resolutions of the Ministry of Labor and Social Affairs.Bearing
this in mind, the Bank launched during 2009 a 3 to 6-month
“Accelerated Development Program” for managerial positions. The
objective of this program was to develop local staff technical and
supervisory skills in order for them to assume their fiduciary
responsibilities vis-à-vis our customers that we consider, at Bank
Audi Syria, as our top priority.As a result of Bank Audi’s belief
in developing human capital and investing in internal talents,
priority was given to promoting bank employees. Thus, the
percentage of internal promotions at Bank Audi Syria rose to 16% in
2009 as opposed to 9% in 2008.
88%
3%9%
Distribution of training courses according to their type
local training courses
overseas training courses
in-house training courses
20092008
Distribution of the human capital among employees and
trainees
386
113
474
27Employees
Trainees
500
400
300
200
100
0
-
28
The Bank’s management strategies are based on guidance,
development and the provision of opportunities to demonstrate
personal skills and creativity. Bank Audi Syria employees enjoy
many privileges and benefits, some of which are basic entitlements
and some of which are additional benefits granted by management to
ensure the total comfort of employees, such as the expansion of the
health insurance network and the possibility of covering female
employees’ families that are not insured elsewhere.It’s worth
mentioning that the number of employees, who were entitled to
educational grants for their children in 2009 reached 39 employees.
On the other hand, 62 of the employees’ children benefited from
this grant.Bank Audi Syria also grants personal loans to its
employees to meet their financial needs, according to certain
universal fixed terms and conditions approved by the Central Bank
of Syria. These loans totaled SYP one and a half million. In
addition, the Bank also grants its employees consumer loans, one of
the products offered to its clients, without exceeding the
employee’s legally permitted level of debt. Human resources
activities in 2009 were crucial, as the Bank’s carefully appointed
and trained staff are the main driver of our growth and the
representatives of our six core values and ambitious future
goals.
2COMMERCiAL AnD SynDiCATED LOAnS
2.1POLiCy OF COMMERCiAL LEnDinG OF BAnk AuDi SyRiA
A healthy banking system is the most important factor supporting
economic growth. It generates a supply of financial resources into
the economy, particularly via lending to productive sectors.Based
on the effective role of Bank Audi Syria in the banking sector, the
Bank adopted a credit policy that achieves a balance between the
need to support large investments that drive the economy in Syria,
and the need to maintain an acceptable level of risk. Accordingly,
Bank Audi Syria has adopted since its inception a credit policy to
provide most productive sectors with comprehensive banking
services. The services range from granting loans to small and
medium-sized institutions, to offering commercial facilities for
the activation of trade exchange, long-term loans to productive
sectors (in particular industry and tourism), or syndicated loans
for large projects. The Bank has always sought to provide loans and
advances to different sectors, and to sustain a balanced credit
portfolio between long term loans and short term facilities used to
finance the production cycle
and working capital. This is to maintain adequate liquidity in
order to reduce associated risks.
2.2LAFARGE SynDiCATED LOAn
Bank Audi sal - Audi Saradar Group arranged and acted as
book-runner of a syndicated loan for Lafarge to finance a cement
project in Syria with a production capacity of SYP 2.75 million
tons per annum. Bank Audi led the syndication of 15 banks in Syria,
Lebanon and Jordan, in addition to the European Investment Bank
(EIB), the Danish export credit agency Eksport Kredit Fonden (EKF)
and the Société de Promotion et de Participation pour la
Coopération Economique (PROPARCO). The total value of the loan was
USD 340 million, distributed into two parts. The first was in
Syrian pounds for a 5 years period and the second was in US Dollars
for a 7 years period. This loan was the largest syndicated loan in
Syrian history and the first of its kind in the region.Lafarge
cement factory is one of the largest development projects in Syria.
Moreover, it is the biggest foreign direct investment (FDI) that
has taken place in Syria in decades. The project is characterised
by the following:
The creation of many new job opportunities for people in •the
area of the factory in Aleppo region;
Consumption of local raw material and production of •cement
which is a strategic product in the development of the Syrian
economy. Furthermore, this project will generate a surplus in
foreign currency because it reduces the need imports ; and
Producing good quality cement will maximise the export •of
surplus of this product and other local products. This will result
in a flow of foreign currency.
Bank Audi sal plays an essential role in this syndication loan,
as summarised by the following:
The Lender: Bank Audi sal is the lender of the syndication
•loan.
The Issuing Bank: facilitates importing the machinery •and
equipment for this project.
Syrian Lenders’ Agent: represents the lenders in their •internal
relationship, the relationship with the borrower, and the
relationship with third parties, including the rest of the external
creditors and government organizations.
Syrian Security Agent: represents the lenders in their •internal
relationship, the relationship with the borrower, and the
relationship with third parties including the rest of the external
creditors and government bodies. Moreover, Bank Audi Syria sa will
act as a trustee of the guarantees and will hold the legal
documents relating to these guarantees.
2.3SMALL AnD MEDiuM LOAnS
Small and medium-sized enterprises play a vital role in economic
growth, creation of jobs and the activation of
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29
local and regional development. They help to secure social
harmony and to enhance women’s status and that of the younger
generation of entrepreneurs. The role of these loans in the
restructuring of the economy and fighting poverty and unemployment
has been recognized by Bank Audi Syria. Accordingly, the Bank
launched a special unit for financing small and medium-size
projects, becoming a leader in financing this important sector.
Despite the difficulties faced by small projects, often
characterised by limited or poor production capacity, or inadequate
invested capital, Bank Audi Syria, was in a short period of time
able to achieve a good increase in the percentage of loans offered
to these projects. It increased them as a percentage of the credit
portfolio and also maintained a high quality of loans. The Bank’s
initiative to finance small businesses has motivated other banks to
follow. This has reflected positively on the financing conditions,
therefore enabling small and medium businesses to obtain funding in
Syria
2.4nEW PRODuCTS FOR SMALL AnD MEDiuM-SiZED EnTREPRiSES in
2009
Bank Audi Syria launched a range of products addressed to small
to medium-sized businesses in 2009, following a study on the Syrian
market. The Bank launched a loan in June 2009 designed for the
medical sector to allow them to purchase equipment or to own their
practicing premises. Bank Audi Syria was the first private bank to
launch a medical loan.The Bank’s initiative to support the Syrian
medical sector encouraged other banks to launch similar loans,
which in turn would be reflected positively on the medical sector
in terms of both quality of service and quantity of the available
premises and equipment. The Bank also developed other banking
services for other economic sectors with a focus on improving the
mechanism for granting loans and services to customers.
3BAnk AuDi SyRiA’S STRATEGy in RETAiL BAnkinG SERviCES,
MARkETinG AnD SALES
3.1BAnk AuDi SyRiA STRATEGy in RETAiL BAnkinG SERviCES
Bank Audi Syria strived to maintain a high standard of service
to its customers by offering pioneering products
that meet the needs and aspirations of the Syrian society.
Indeed, the bank adopted a strategy aiming at working on customer
retention by enhancing current clients’ loyalty to the bank, in
addition, to its continuous efforts to attract new customers and
spread banking awareness among the Syrian society both on the
professional and private levels, such as car loans; where selling
opportunities were maximized by a dynamic direct sales force that
promoted the bank’s product in the most important car exhibitions,
such as the ’ SYRMOTOR SHOW’ in Damascus in addition to exhibitions
in the other Syrian cities like Aleppo, Lattakia and Homs. In these
occasions, the bank welcomed visitors in an elegant stand,
presented them with impressive car loan offers, granted approvals
& executed car loans in record time. Clients were also directed
to the bank’s representative offices in different car dealerships
spread across the country. As for the electronic banking products,
Bank Audi Syria has largely expanded its portfolio of payment cards
following the receipt of a formal licence from MasterCard
International enabling the Bank to be the first and only private
bank in Syria that holds an official license from MasterCard to
issue international and local cards. The bank was also able to
expand its point of sales network at retailers in the country and
launch two debit cards, Gold and Platinum, in addition to a unique
co-branded credit card - MTN MasterCard - in cooperation with MTN
(available for local &/or international use).The Gold and
Platinum debit cards are characterized by their smart design and
the higher withdrawal limits compared to Visa card. Accordingly,
the customer’s purchase power reaches SYP 220,000 for the Gold card
and SYP 300,000 for the Platinum one. Moreover, these cards have
enhanced security features as the client receives a confirmation
SMS on his/her mobile following each transaction made through the
card. The launching event of these cards took place in September
2009 at the Four Seasons Hotel in Damascus with top representatives
from MasterCard, Bank Audi Syria & Bank Audi SAL Audi Saradar
Group in charge of the electronic banking business.The MTN
MasterCard on the other hand was launched in November 2009. It is
the first co-branded credit card ever to be launched in Syria
between a bank and a leading international telecom company. This
card was able to combine special features and benefits from both
the banking and mobile telecom worlds to create a unique loyalty
program. Accordingly, the cardholder earns 5 free local call
minutes from mobile to mobile for every 2,000 SYP spent on a POS or
4,000 withdrawn on an ATM accepting MasterCard cards. Moreover the
cardholder benefits from a free MTN golden number, free
international access, free international roaming without guarantee
deposit requirement in addition to a VIP treatment at MTN CSP. The
credit limit of this card reaches 1.5 million SYP.This joint credit
card was also launched in a press conference at the Four Seasons
Hotel in Damascus in the presence of representatives from the top
management of MasterCard, Bank Audi Syria and MTN. Participants
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30
highlighted the significance of the electronic banking products
as fast and reliable payment solutions available now to Syrian
citizens. The launch of MTN MasterCard was accompanied by a
full-fledged advertising campaign going from newspapers, daily,
weekly and monthly magazines to websites, radio ads and billboards
in addition to the flyers available at Bank Audi Syria’s branches
and MTN Customer Service Points. The slogan was” Redeem free talk
using your card” In line with its urge to continuously improve
customer experience and make sure up to the standard customer care
is being granted to its clients, the marketing and research
department at the bank prepared & conducted surveys all
throughout 2009 to gather clients’ comments and suggestions and
follow-up on their needs. The bank also carried out market studies
on the developments in the Syrian banking environment customer’s
behaviours and needs. Accordingly, the bank was a pioneer in
launching products and services that correspond to the aspirations
of the society and positively reflect on the Syrian economy. The
marketing and Business Intelligence unit is also responsible for
product development and staff training prior to launch sought to
improve employees’ performance through ongoing training sessions
which focused on customer needs as well as developing the
employees’ customer services skills, selling skills and problem
solving skills. As for the newly launched products and services,
the retail marketing and sales division built-up a diversified
portfolio including retail loans and electronic payment cards. The
Bank will resume its strategy in 2010, which will focus on deposits
acquisition through the launch of products that preserve its
existing customer’s base and expand it steadily.
3.2RETAiL PRODuCTS AnD SERviCES
In July 2009, Bank Audi launched the ‘Maxi Housing Loan’ which
expands the house financing options available to clients by
allowing them to purchase a house under construction that requires
internal finishing. This product is characterized by its
flexibility as the Bank finances up 60% of the value of the
property in core & shell, and up to 100% of the finishing cost
at a competitive interest rate & a tenure reaching 15 years.
The additional finishing loan on top of the house loan is disbursed
to the client in three phases according to the work in progress
whereby the client fills out the estimated cost of each period
according to the bill of quantities document provided by the bank.
Hence, the Bank fulfils the needs of those customers who wish to
buy a house in the suburbs or newly developed areas for reasonable
prices compared to city centres. This unique housing loan program
was accompanied by a large advertising campaign under “Own your
house & finish it as you please ‘كيفك على واكسيه بيتك which
lasted for ’متلك a period of 4 weeks and included billboards,
newspapers, magazines, radio ads in addition to flyers which have
been distributed to real estate agents..
This product expands the housing loan portfolio currently
available in the bank serving and satisfying the needs of all
segments in the Syrian Society. The housing loan portfolio now
includes 3 different housing loan options The Traditional Loan
designed for individuals who have savings and are able to pay a
minimum of 35% of the property price. This loan offers a low
interest rate, over tenure of 15 years. The ‘FlexiPay’ Loan,
allowing customers to pay adown payment as low as 25% of the
property price. The period of this loan goes up to 20 years with a
competitive interest rate fixed for the first 4 years.The Bank’s
housing loan products have achieved a steady success in the market,
especially that they provide the comfort and security of life and
property insurance policies over the period of the loan.
Furthermore, Bank Audi Syria has constantly offered its customers
modern and environment-friendly products. Indeed, following the
remarkable success of LCD and Plasma loans in cooperation with Sony
and Samsung, the PC Loans in cooperation with Toshiba, and the
Solar heating systems with Prima group for renewable energy (Al
Tawfeer),the Bank was the first to launch a bundle of high tech
products such as the digital and video camera loans with Sony in
addition to interest free packages launched on special occasions.
It is worth mentioning that the Bank always partners with
prestigious and professional companies which offer products of high
quality and within required standards. Currently, Bank Audi Syria
is preparing to launch a set of innovative retail products which
will enhance the bank’s portfolio on both a local and regional
level.Finally, given the importance of diversifying bank accounts,
the bank is currently preparing to introduce new investment
programs designed to cater different segments of the Syrian
society. Such plans will enhance customer loyalty towards the Bank
and fulfill the needs of the expanding customer base.
4BAnk AuDi SyRiA’S CORPORATE SOCiAL RESPOnSiBiLiTy (CSR) AnD
PARTiCiPATiOn in COnFEREnCES AnD ExhiBiTiOnS
Bank Audi Syria resumed participating in CSR activities and
continued its scholarship program ‘ ننمي طموحات شبابنا’.The 7
outstanding students who were granted the
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31
Billions of SYP
2009200820072006
Total assets
75.5528.9% 80
70
60
50
40
30
20
10
0
61.1%
104.5%
58.60
36.38
17.79
scholarships will graduate in 2011 from Al Kalamoon private
university holding a BA in ‘Business Administration, Banking and
Finance’, As for sponsoring relevant conferences relating to the
financial sector and investments, Bank Audi Syria sponsored the
Public Private Partnership conference (PPP), organized by the
British-Syrian Society in October 2009 through hosting its opening
cocktail reception, which took place at the Sheraton Hotel in
Damascus, in the presence of the official sponsors and
participants. This conference focused on three key sectors:
infrastructure, transport, and the energy segments of electricity,
oil and gas. The conference hosted a group of prominent speakers
from banking and global financial firms as well as executive
officials of the Syrian Government, in addition to private banking
sector representatives who highlighted on how investment
opportunities can be realised through the private public
partnership. Spreading awareness and providing education related to
the development and changes in the Syrian economy, Bank Audi Syria
continued publishing the ‘Syria Economic Report’ which includes
periodic updated and accurate studies on the of the Syrian economy
in all sectors such as tourism, agriculture, industry, services,
foreign trade, insuranceو banking, capitals and property. The Bank
invited the local and foreign press who operate in Syria to a
dinner gathering at the Four Seasons Hotel, Damascus, in September
2009 to discuss this report and to put it in use as a statistical
and economic reference on the current Syrian economy. In an
unprecedented initiative, and on the occasion of the inauguration
of the Damascus Securities Exchange on March 10, 2009, during which
the first official stock exchange trading took place, Bank Audi
Syria declared its launching of the Audi Index:“Audi Index
(AIP)”“Audi Index – Market Capitalization (AIMC)”“Audi Index –
Trading Volume (AITV)”These indices were the first to monitor the
Damascus Securities Exchange activities and the launch of these
indices closely followed the evolution of the price of stocks
listed in the Syrian market and the market growth in general, in
addition to changes in the exchange size.Bank Audi Syria launched
these indices to be the first institution to keep its customers, as
well as all Syrian citizens and investors informed about the state
of the market following each session, through total transparency
and clarity, monitoring economic performance and available
investment opportunities
5DEvELOPMEnT OF FinAnCiAL ACTiviTy OF BAnk AuDi SyRiA
5.1ASSETS GROWTh
Bank Audi Syria grew its total assets by 28.9% in 2009,
equivalent to SYP 17 billion, reaching SYP 75.5 billion as at Dec
31, 2009. Such substantial growth in total assets reinforces the
bank’s position in size among private banks as it scored the
highest contribution to the size growth of the private and
conventional banking sector for the second year in a row
registering 18.90% share of the increase in total assets for
2009.
5.2uSE OF FunDS
The Interest earning assets has reached SYP 55.9 billion as at
Dec 31, 2009 growing by 23.8% compared to Dec 31, 2008. Such
revenue generating asset category has captured the biggest share of
the total bank assets being 74% versus 77% in 2008. Given the local
currency investment opportunity limitation to customer lending
environment, the bank could strive to keep the interest earning
assets as the biggest contributor to the increase in total assets
of 63.3% in 2009, versus 77.4% in 2008. Such growth in interest
earning assets represents an evident indicator of the Bank’s
efficient Assets & Liabilities management.Analyzing the
structure of Interest Earning Assets clearly
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32
2009 2008interest Earning Assets volume % of Total
Assetsvolume % of Total
AssetsPercentage
ChangeBalances with Banks 11,644,626,415 15.4% 17,593,831,533
30.0% -33.8%
Placements with Banks 13,588,351,737 18.0% 6,103,238,735 10.4%
122.6%
Loans and advances to customers (net) 26,100,199,495 34.5%
19,305,771,518 32.9% 35.2%
Investments - Loans and receivables 1,151,009,080 1.5%
1,960,049,457 3.3% -41.3%
Investments - Available for Sale 3,446,910,665 4.6% 232,653,482
0.4% 1381.6%
Total Interest Earning Assets 55,931,097,392 74.0%
45,195,544,725 77.1% 23.8%
Total Assets 75,547,091,806 100.0% 58,599,267,806 100.0%
28.9%
*After deduction of private equity of SYP 50 million in non
interest-generating assets
24.3%
46.7%
6.2%2.1%
20.8%
Structure of interest earning assets for 2009
13.5%
0.5%4.3%
38.9%
Structure of interest earning assets for 2008
Investments-Loans and receivables
Investments-Available for Sale
Balances with Banks
Placements with Banks
Loans and advances to
customers (net)
Investments-Loans and receivables
Investments-Available for Sale
Balances with Banks
Placements with Banks
Loans and advances to
customers (net)
42.7%
indicates the Bank’s continuous efforts to improve efficiency of
its Assets & Liabilities Management by reinforcing Interest
Earning Assets optimal structure towards captions yielding higher
returns. It’s noteworthy that the Bank could improve its Interest
Earning Assets structure under challenging operating conditions
depicting the Syrian Market characterized by the limited investment
opportunities.This trend is evident as the share of loan portfolio,
which constitutes the biggest share of Interest-Earning Assets,
grew from 42.7% in 2008 to 46.7% in 2009. Such growth came at the
expense of the drop in bank placements caption, which yield lower
return than the loan portfolio, from 52.4% in 2008 to 45.1% in
2009. Such development is justified by substantial growth in loan
portfolio being 35.2% during 2009 which represents 63.3% &
40.1% of the growth in Interest Earning Assets and Total Assets
respectively.Treasury management is also another supporting factor
to the optimization of Interest earning Assets structure, whereby
the Bank has targeted reducing current accounts balances with
correspondent banks to the minimum required
for liquidity and shifting the excess to deposit placements with
banks thus benefiting from the substantially higher rates of
returns. In parallel, the growth in both current accounts and
placements with banks combined of 6.50% over 2008 amounting to
SYP1.50 billion was exclusively reflected in growth in bank
placements caption. In effect, the bank placements has grown by
122.6% to reach SYP 13.6 billion thus representing 24.3% of total
Interest Earning Assets as at Dec 31, 2009. In contrast, the
current accounts with banks has declined by 33.8% in 2009 to reach
SYP 11.6 billion thus representing 20.8% of the total Interest
Earning Assets by end of 2009.Finally, the deployments of the
Bank’s investments reported an increase of SYP 2.4 billion in 2009
thus growing by 110% over 2008. Accordingly, the investment
portfolio, which includes financial assets in both accounting
classifications as loans and receivables and available for sale,
has reached SYP 4.6 billion at the end of the period. The
investments in financial assets available for sale has increased by
SYP 3.20 billion in 2009 due to purchasing a portfolio of medium
term bonds thus benefiting from improvements in global financial
markets. Upon the sale of EuroBonds in 2009 classified as loans and
receivables, this financial asset class has dropped by 41.3%
compared to 2008.
5.3ASSETS QuALiTy
5.3.1 Risk weighted assets and Capital Adequacy
The bank has maintained a 52% ratio of risk weighted assets to
total assets being a key indicator to the quality of assets. This
ratio is considerably good when benchmarked to the good
international norms of risk weight assets ratio between 50% and
60%.In reference to Basel II minimum requirements on capital
adequacy set at 8.00%, the Bank’s maintained over adequate capital
to cover its weighted assets whereby the bank has reported a Basel
II ratio for capital adequacy of 15.44% in 2009 rising from 9.58%
in 2008. This increase was mainly due to the doubling the Bank’s
capital, a process which was completed in August 2009 and came as
natural outcome of the Bank’s expansion plan & growth on one
hand, and in compliance to the 8.00% minimum capital adequacy
requirement in accordance with the CBS resolutions and Basel II
accord.
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33
5.3.2 Loan Portfolio
The noticeable growth of loan portfolio in 2009 was just as
significant as that achieved in the past years. The size of loan
portfolio has reached SYP 26.1 billion in net terms as at Dec 31,
2009 as compared to SYP 19.3 billion by end of 2008, thus growing
by 35%. Such performance has led Bank Audi Syria to capture 18.60%
of the total increase in the loan portfolio of the conventional
private banking sector in 2009, being the second largest share of
the increase. With such noticeable growth of its lending portfolio,
it’s noteworthy that the Bank did not compromise its loan book
quality by maintaining its deliberate selective credit policy.
5.3.2.1 Breakdown of Loan Portfolio by Economic Sector
Analyzing the loan portfolio breakdown by economic sector
indicates a growth of loans granted to both industrial sectors and
individuals thus increasing their share in total portfolio at the
expense of trade and real-estate sectors between 2008 and 2009.
This emphasises the Bank’s effective role
and contribution to supporting the national economy and
providing premium services that address people’s needs and thus
help improve their lifestyles through making available the relevant
credit facilities and services.It is important to mention that the
industrial sector share increased from 22% in 2008 to 31% in 2009.
This comes in line with government economic policy and the Central
Bank of Syria’s guidelines for stimulating the industrial sector
particularly depicted by the issuance of Credit and Monetary
Council Resolution no. 502 in 2009 which stipulates a reduction in
the mandatory reserve on deposits against lending granted to
industrial sector.
5.3.2.2 Distribution of Portfolio by Borrowers
The Bank maintained its role of supporting financing extended to
corporate clients reinforced by increasing its capital to become
the largest Bank with biggest capital in the traditional private
banking sector. Therefore, the Bank propensity for lending
increased and thus its capability to finance bigger projects has
increased, while respecting
the regulatory lending limits as stipulated by domestic laws and
Basel II accord as well.Furthermore, the Bank didn’t undermine the
role of small and medium-sized companies. The results showed that
the loan portfolio granted to these companies increased form SYP 98
millions in 2008 to SYP 441 millions in 2009; i.e. doubling its
share in total loan portfolio from 1.00% in 2008 to become 2.00% in
2009.As for individuals, the Bank continued to offer the same
special retail services and loans as it was renowned for in
previous years. Accordingly, individual retail loans grew from SYP
4.59 billion at the end of 2008 to SYP 6.8 billion at the end of
2009. As a result, the retail loan portfolio share in total loan
portfolio has risen from 24% in 2008 to 26% at the end of 2009.The
contribution that Bank Audi Syria made to support the lending needs
of individuals was demonstrated by the distribution of the
portfolio by the borrowers in terms of number of clients depicted
by the ratio of retail clients to retail borrowers being 99% by end
of 2009.
76%72%
26% 24%
1%2%
Structure of net loans and advances portfolio by custmer
category profile
2009
SMERetailCorporate
2008 0%
10%
20%
30%
40%
50%
60%
70%
80%
Billions of SYP
Structure of net loans and advances portfolio by customer
category (economic sector)
2009
2008
Financial1%
0%
Agricultural 1%0%
Industrial31%
23%
Trading30%
42%
Real Estate4%
5%
Individual-Retail 35%
29%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
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34
11%27%
5%
23%
0%
34%
Structure of due from banks based on credit risk rating
BBB- to +BBB
BB- to +BB
B- to +B
AAA- to +AAA
AA- to +AA
A- to +A
5.3.2.3 Distribution of Loan Portfolio by Tenor
The loan portfolio is systematically distributed among the
maturities brackets which maintains relatively narrow maturity
gaps, thus provides a sustainable and healthy liquidity
management.
5.3.3 Bank Placements
The Bank maintained its successful policy in concentrating the
deployments of deposits in foreign banks of high credit rating as
45% of the placements portfolio is deposited in banks rated between
AAA+ and AA- followed by 50% in banks rated between A+ and BBB-.As
for the geographical distribution, the Bank deployed 57% of its
total bank placements with Syrian banks or in other Middle Eastern
countries followed by 35% in European banks in 2009 compared to 59%
share in 2008. This reflected the Bank’s conservative
