Top banks on scale

FFA fair value boosts Blom, Audi, Byblos shares by 42 , 19 , and 9 percent

Regional and local political events, as well as the economic slowdown domestically and in key markets, have moderated the operating performance of Lebanon’s top three banks, according to a report by FFA Private Bank.

FFA published in December its equity research on the performance of Bank Audi, Blom Bank, and Byblos Bank, during the first nine months of the year.

The report said that the share price performance of Bank Audi, Blom Bank, and Byblos Bank were negatively impacted by investor concerns on regional operations and local political uncertainty.
According to FFA, the decline in the three banks’ share price performance is exaggerated.

FFA gave the three following reasons for its judgment: i) relatively sound fundamentals particularly regarding asset quality, ii) proven management teams with experience of operating in difficult conditions, and ii) positive, albeit slower, growth in balance sheet and earnings.

It also noted that Syria and Egypt represent less than ten percent of earnings for Bank Audi and Blom Bank, while Byblos has operations only in Syria.

FFA expected earnings, and therefore dividends, to moderate next year. It said that the significant year-to-date declines in the share prices of the three banks will result in attractive dividend yields, which would be 6.8 percent for Audi, 6.1 percent for Blom, and 8.3 percent for Byblos.
FFA gave Bank Audi shares a ‘Marketweight’ evaluation, with a fair value of $7.5 per share (down from $9 in a previous estimation). Bank Audi’s share price closed at $5.85 on December 22.

It rated Blom Bank shares at ‘Overweight’ with a fair value of $11 per share (down from $12 in a previous estimation). Blom Bank’s share price was $7.7 at the last closing.

It gave Byblos Bank shares a ‘Marketweight’ evaluation with a fair value of $1.75 per share (down from $1.9 in a previous estimation). Byblos Bank’s share price was $1.6 at the last closing.