When Blom Bank was awarded CPI Financial’s gong for the Best Bank in the Middle East earlier this year, the accolade was more significant than it might otherwise have been – it capped a real breakthrough. Not only was this the first time that a Lebanese bank had won the award, and one received after a tough year of global economic turmoil at that, it was also followed by a slew of others: Banker Middle East gave Blom Bank Best Mutual Fund in the Middle East award for this year, as well as that for Best Investment Advisory Service in the Middle East.
Indeed, the awards have come thick and fast, suggesting just how improved standards are paving the way for the Middle East’s successful institutions to play an increasingly important role in the global economy: World Finance, Global Finance and Emea Finance all gave Blom Bank their equivalents of a Best Bank in the Lebanon award, with Global Finance also recognising it for the best trade finance and best foreign exchange operations in the country. So much for room in the trophy cabinet – but Blom Bank also backed it with hard and fast figures: for the first half of this year it recorded the highest profits in Lebanon, up 5.8 percent on the same period last year, to $138.3m – a bravura performance for an organisation with assets also up 8.51 percent for those six months to $19.42bn and with total deposits up 10.47 percent to $16.69bn.
Small wonder then that Blom Bank is now widely recognised as the leading Lebanese Bank, with arguably the strongest household name recognition for a bank in the country and certainly with the greatest reach of any competitor organisation beyond it. As well as domestic subsidiaries including Blominvest, a private investment bank, and Arope, an insurance business, with 56 branches in Lebanon alone – with three more opening over 2009 – Blom Bank now has presence in some 11 other countries too, an on-going expansion programme that began in the mid-1970s. As well as a strong regional reach – it has operations in Syria, Jordan, UAE , Qatar and Egypt, where this year has seen considerable expansion, and where annual profits shot up an impressive 73.4 percent. Blom also has a private banking operation in Saudi Arabia, and banking businesses in Cyprus, Romania, Switzerland, France and UK.
A cultural success
Nor is its spread merely geographic. It is also cultural: a further subsidiary of Blom Bank – and a growing market internationally – is its Islamic bank, called Blom Development Bank, which was launched to the public in the spring of 2007 and carries out all of its banking operations in line with both Sharia law and within the regulations of the Lebanese Central Bank. It offers a deposit service and Islamic financing services taking into account the religious dilemma posed by the fact that Islamic law does not permit the making of money from money – including that made from interest – with wealth generated only through legitimate trade and investment in assets. Sensitive to the particular needs of many of its customers, Blom Bank has consequently offered financial services in the form of, for example, ‘Murabaha’ (by which a commodity is sold with the costs and profit known to the seller and buyer alike), ‘Ijara’ (through which a property is bought by the bank and then sold to the customer for the same price under a long-term ‘promise to purchase’ agreement), ‘Wakala’ (a fee paid for expertise), as well as ‘Tawaruk’ and ‘Istisna’a’.
By the end of 2009, Blom Development Bank will open a branch in Tripoli and one planned for Beirut too, with various locations currently under consideration. The three Sharia scholars on Blom Bank’s Islamic subsidiary’s board have been involved in making it especially competitive in this market through the identification of new types of financial arrangements that are compliant with Sharia law, several of which are in the pipeline for launch over the next few years and which should help Blom tap into local financing activities that have so far been the preserve of conventional banks.
Certainly, Blom Bank’s ambitions have been as much those of scope as geography and culture, setting out its mission as being the intention to operate in all banking and related finance fields. The bank has already had considerable success with its aforementioned insurance division – one which now covers car, health, fire and personal accident areas, as well as life insurance. This year saw the opening of three dedicated insurance branches in Lebanon – a timely follow-up to Arope Lebanon gaining three places to fourth in the total Lebanese Insurance Market Ranking last year – as well as one in Syria, and two insurance companies in Egypt, in relation to life and property insurance markets. Growth has also been seen in the bank’s savings products linked to life insurance, such as its retirement plan denominated in US dollars, and those geared towards covering the cost of children’s education.
As well as the insurance market, Blom Bank is also building its presence in commercial, corporate, retail, private and investment banking sectors. Private banking (through Blom Bank’s Blominvest arm and Blom Bank operations based in Geneva) has been especially successful, with investments and asset management sectors benefiting particularly from Blom Bank’s expertise in Lebanese investment instruments and brokering on the Beirut Stock Exchange (BSI), but also the work of its research department. This produces market-leading daily reports on the Lebanese economy, conducts equity research into Lebanese and regional companies and publishes the respected BLOM Stock Index, Lebanon’s first financial market index, covering all stocks quoted on the BSI. Blom Bank also produces its Blom MENA Banking Index, which tracks the performance of all of the listed banks across 11 Arab countries of the Gulf Co-operation Council, Middle East and North Africa.
Long and short term foresight
The creation of mixed-asset funds – such as the BLOM Cedars Balanced Fund and the Blom Petra Balanced Fund, both launched last year to target the Levant region – is an example of the kind of advances over recent years that might be said to have more than justified that slew of awards. Blom Bank has sought to establish an inclusive customer-friendly approach providing products for all: for those with smaller amounts they wish to use more profitably, Blom has also created a variety of mutual fund investment products; perhaps one of its most stand-out successes has been Tayseer, an investment product that has been reintroduced more than five times, and which on each occasion has provided good returns on everything from currencies to Eurobonds, gold to oil.
Blom Bank’s commercial banking activities are a further case in point of its desire to manage its clients’ money profitably but safely. If in past times it, along with other regional banks, has been considered as rather conservative in its lending policies (shaped also, of course, by central bank regulations), the current economic climate is now seeing these re-framed as ones of foresight rather than fearfulness. Nor has it especially suffered slower profit growth attributed by Lebanese banks to the lower interest rates applied to their high foreign currency liquidity: deposits at Lebanese banks grew by $8bn over the first half of this year, with expectations that Lebanese living abroad would make less income and transfer less money being over-turned and money continuing to flow.
Tight terms and required collateral have remained the bedrock of Blom Bank’s lending policy – with consideration given to the Lebanese Central Bank’s urging of Lebanese banks to lend more in Lebanese pounds instead of dollars to reflect a shift in bank deposits from foreign currencies to the local currency. Compared with its peers, Blom Bank’s profitability ratios are strong, something attributed to the greater cost efficiencies that have done so much to build its reputation – net interest income accounts for close to three quarters of the bank’s operating revenues and is mostly generated from holding inter-bank deposits and government securities (this, as with many Lebanese banks, being considered an excessive exposure to sovereigns).
But, crucially, this is not to say that Blom Bank – established in 1951, one of Lebanon’s oldest banks and still its largest lender by profit – has lacked imagination: its board would be the first to recognise that a conservative attitude alone may allow for growth but at a painfully slow rate. This year, for example, has seen Blom Bank look more to financing the likes of real estate developer Landmark’s benchmark residential and tourism project in Beirut’s Central District Area. Blom’s involvement in such deals – this one to the tune of $130m – is expected to be especially welcome due to its consistently high profile in the domestic market. Blom Bank is also active in sponsoring events which promote the image of Lebanon on the International scene such as Blom Beirut Marathon. In preparation for the opening, earlier this year the bank signed a deal which will see it remain the key sponsor until 2011.
Indeed, while Blom has adopted a policy of expansion that has taken as far west as Paris and London, its chief commitment might rightly be said to be local at heart: its regional expansion has been of especial benefit to the growing number of Lebanese and Arab expatriates throughout the Middle East.
Clearly the bank can make a strong claim to market leadership in Lebanon, with recent years seeing a number of innovations in other countries too, many of which have been quickly imitated by the competition. Blom was, for example, the first bank in Jordan to drop the requirement for a guarantor for car loans. In Egypt it was the first to introduce an international MasterCard co-branded with the local network 1-2-3 which, cleverly, works as a local card in Egypt and an international card abroad. And in Syria it was one of the first four private banks granted a licence.
Retail banking has also been a key area of development for the bank over recent years. Much like other banks, Blom Bank has pursued an inclusive policy aiming to develop products for all needs and incomes: its range of payment cards, for example, operates under both Visa and, as had been noted, MasterCard brands but includes options from Classic through to Black Platinum, as well as a similar spread of corporate cards – among many firsts, Blom Bank, in fact, launched the Middle East’s first Visa Platinum Corporate card, as well as its first Visa Platinum Business card. Ahead of many companies in the banking sector, it also offers prepaid cards and those dedicated for internet banking, and has got together with cellphone network provider Alfa to create another first for the Middle East, a co-branded credit card programme that gives its members free talk time under certain Alfa deals.
Certainly Blom Bank has been quick to not only identify specific customer groups and provide them with dedicated products – its recently-launched Watan card, for example, was created just for use by members of the Lebanese army and security forces – but to give an unusual degree of customer personalisation too: Blom Bank’s ‘personalise your card’ system allows cardholders to order their card, on-line or through branches, with their choice of image selected from Blom’s picture library. This again, was a first in the banking world across the Middle East.
A similar thinking lies behind its Golden Points Loyalty programme, which, with every $100 of purchases allows cardholder to win from a range of gifts, among them top-flight hotel stays, electronic goods, airline tickets as well as gifts from certain establishments accepting the cards. Certain cards also offer an innovative cash back programme that allows cardholders to redeem a percentage of their purchases, from three percent up to an impressive 25 percent. With the same kind of personalisation in mind, Blom Bank also offers a variety of specialist accounts, including traditional savings accounts, as well as those devised to help with the mundane – the settlement of utilities bills, for example – as well as the more magical – such as preparing for a wedding.
Technology applied by Blom is helping consumers and retailers alike throughout Lebanon too. For consumers, Blom Bank’s branches throughout the country each have an ATM, with five branches of a new format offering faster teller service having been opened over the last year. And for retailers, Blom’s Point of Sale machines now accept all forms of payment card, as well as the latest generation of chip cards, which have been introduced over recent years to minimise the risk of fraud. With this being a key priority throughout the retail banking sector, Blom Bank has also established a 24hr call centre to deal with any service issues as well as a network of dedicated account managers to handle particular POS problems. A similar service is also offered to customers, together with internet and telephone banking. Telephone banking of another order is in operation here too: customers can also receive SMS alerts whenever the balance of their account changes.
Technology is just the most obvious way in which Blom Bank is looking forward. The bank’s primary strategic objective remains to maintain its leading position in Lebanon, chiefly through the organic growth with which it has been characterised for the last half century, as well as maintaining its efforts to preserve its outperforming level of cost efficiency and consolidating its one-stop-shop, universal bank profile. The bank’s motto – ‘Peace of Mind’, which was driven home in yet another innovation, last year’s advertising campaign, the first of its kind on Lebanese national TV – is proving to be as much a promise as a marketing tag-line.
For further information email: blom@blom.com.lb;
www.blom.com.lb
