AUDI SARADAR PRIVATE BANK sal Head Office Beirut Clover Bldg., Charles Malek Avenue, Achrafieh P.O.Box 11-1121 & 11-3312 Riad El-Solh, Beirut, 1107 2070 & 1107 2130 LEBANON Achrafieh Branch Clover Bldg., Charles Malek Avenue, 5th Floor, Beirut LEBANON

BANK AUDI sal - AUDI SARADAR GROUP Beirut Bank Audi Plaza, Bab Idriss P.O.Box 11-2560 Riad El-Solh Beirut 1107 2808 LEBANON

AUDI SARADAR INVESTMENT BANK sal Beirut Bank Audi Plaza, Bab Idriss P.O.Box 16-5110 Beirut LEBANON

Tel: +961 1 205 400, 208 400 Fax: +961 1 205 480, 205 454 [email protected] http://www.audisaradarpb.com Tel: +961 1 205 400, 208 400 Fax: +961 1 200 265, 205 441 [email protected]

Tel: +961 1 994 000 Fax: +961 1 990 555 [email protected] http://www.banqueaudi.com

Tel: +961 1 994 000 Fax: +961 1 999 406, 200 950 [email protected]

AnnualReport

BANQUE AUDI (SUISSE) sa Head Office Geneva 18, Cours des Bastions P.O. Box 384 1211 Geneva 12 SWITZERLAND

Representative Office Beirut Bank Audi Plaza, Bab Idriss P.O.Box 11-2666 Riad El Solh Beirut 1107 2110 LEBANON

BANK AUDI SARADAR FRANCE sa

Paris 73, Champs-Elysées Avenue 75008 Paris FRANCE

AUDI CAPITAL (KSA) cjsc Riyadh Centria Bldg., 3rd Floor Prince Mohammad Bin Abdul Aziz Road (Tahlia) P.O. Box 250744, Riyadh 11391 KINGDOM OF SAUDI ARABIA BANK AUDI LLC Doha Qatar Financial Center Tower Office 1801, 18th Floor, Diplomatic Area P.O. Box 23270 Doha QATAR BANK AUDI sal - Representative Ofiice Abu Dhabi Arab Monetary Fund Bldg., Corniche Street P.O. Box 94409 UNITED ARAB EMIRATES

BANK AUDI sam - AUDI SARADAR GROUP

Monaco 24 Boulevard des Moulins MC 98000 MONACO

Tel: +41 22 704 11 11 Fax: +41 22 704 11 00 [email protected] http://www.bankaudi.ch

Tel: +961 1 977 544 Fax: +961 1 980 535

Tel: +33 1 53 83 50 00 Fax: +33 1 42 56 09 74 [email protected]

Tel: +966 1 2199300 Fax: +961 1 4627942 [email protected] http://www.audicapital.com

Tel: +974 4967365 Fax: +974 4967373 [email protected]

Tel: +971 2 6331180 Fax: +971 2 6336044 [email protected]

Tel: +377 97 701 701 Fax: +377 97 701 741 MC 98000 MONACO [email protected] http://www.bankaudi.mc

Audi Saradar Private Bank sal

2010

CHAIRMAN’S LETTER Despite a still very challenging environment, 2010 was a successful year for Audi Saradar Private Bank sal (ASPB) which achieved strong profitability with a net income of USD 27.84 million, representing increased earnings of 82.14% compared to 2009 and including dividends of USD 10.86 received from Solifac sal, ASPB’s subsidiary specialised in factoring.

BOARD OF DIRECTORS Chairman

Mr. Fady G. Amatoury (Since December 20, 2010) Mr. Mario J. Saradar (Until December 20, 2010)

Members

Mr. Marc J. Audi (Until February 11, 2011) Dr. Joe A. Debbané Mr. Istvan I. Nagy Bank Audi sal - Audi Saradar Group

MANAGEMENT Chairman & General Manager

Mr. Fady G. Amatoury (Since December 20, 2010) Mr. Mario J. Saradar (Until December 20, 2010)

General Manager

Mr. Toufic R. Aouad

Executive Managers

Ms. Leila S. Alameddine (Until May 31, 2011) Mrs. Martine S. Hochar Ms. Nada M. Safa (Since March 01, 2011)

Regional Managers

Mr. Maher A. Raham Mrs. Nada M. Rizk

Manager - Head of Operations & Organisation Manager - Head of Product Development Unit Manager - Head of Internal Control & Compliance Manager - Head of HR Private Banking Business Line Manager - Head of Credit Unit

Mrs. Aline S. Karam Mr. Charles R. Najjar (Until February 28, 2011) Mrs. Eugénie E. Rizkallah Mrs. Claudine E. Selouan Mrs. Marie G. Touma

AUDITORS Ernst & Young Semaan, Gholam & Co.

In terms of assets under management, ASPB witnessed an important growth in customers’ deposits and off-balance sheet assets which respectively increased by over USD 490 million and USD 187 million. At end-2010, ASPB managed USD 3,440 million in off-balance sheet assets and customers’ deposits, up by 24.47% compared to 2009. In addition, ASPB was awarded, for the fourth year in a row, the “Best Local Private Bank in Lebanon” award for 2010 by Euromoney Magazine, a growing international recognition of the Bank’s core values, constant efforts, and high customer service. Audi Saradar Group benefits from a leading position in Private Banking, catering to the needs of high net worth individuals through its entities providing Private Banking services, namely Banque Audi (Suisse) sa, Audi Saradar Private Bank sal, Bank Audi LLC (Qatar) and Audi Capital (KSA), accounting for over USD 8.2 billion of assets under management at end-2010, by far the largest portfolio managed by a Lebanese banking group. With a view to extending the Group’s Private Banking business, Bank Audi sal - Audi Saradar Group acquired Monaco’s Dresdner Bank SAM in September 2010. In parallel, Banque Audi (Suisse) sa opened a branch in Gibraltar in February 2010. Human resources in 2010 ensured full alignment with the expansion strategy of the Private Banking business line. Recruitment mainly consisted in the employment of a dedicated team of investment specialists and analysts who significantly expanded the Bank’s product offering to provide high net worth clients with a complete range of investment products and services. The Bank’s product offering now includes Investment Advisory Services on asset allocation, Stock Selection, Mutual Funds, Exchange Traded Funds, Bonds, Foreign Exchange, Vanilla and Exotic Options, as well as Structured Products and Tailor-made Investment Proposals. Daily market updates and weekly reports are also prepared to keep the Bank’s relationship managers and clients updated on market dynamics and investment opportunities. Amongst the range of products offered by ASPB’s subsidiaries are real estate investment products. Indeed, in 2010, ASPB successfully launched 2 projects in commercial and residential real estate by raising private equity funds amounting to USD 80 million. A major effort was also allocated in 2010 to Training and Development: Private Banking special training programs for young promising talents were launched and ongoing development programs are currently being implemented in order to continue building an elite Private Banking team with the necessary skills to serve clients at the highest level. At the IT level, ASPB witnessed the launch of the Basel II module which constitutes a crucial regulatory and risk management tool, and the development of the Capital Private Banking valuation reporting, an advanced Private Banking CRM and asset management platform. Furthermore, ASPB initiated a full upgrading project of its networking infrastructure. As we look back on 2010 and ahead to 2011, we remain confident in our ability to adapt to dynamic financial markets. Our products and services are designed to meet the needs of our clients, regardless of economic conditions. In closing, I would like to express my gratitude to all our colleagues for their loyalty and hard work, and to our clients for their valued trust, and I have no doubt that 2011 will be another year of continued growth and achievements.

Fady G. Amatoury Chairman & General Manager

Audi Saradar Private Bank

Annual Report 2010

2

BALANCE SHEET AS AT DECEMBER 31, 2010

2010 ASSETS (in LL Millions)

LL

C/V LL

TOTAL

LL

C/V LL

TOTAL

73,054

472,250

545,304

62,918

360,025

422,943

23

46,616

46,639

19

60,362

60,381

508,205

1,903,705

2,411,910

362,837

1,402,498

1,765,335

Derivative financial instruments

-

318

318

-

1,689

1,689

Financial assets held for trading (**)

-

160

160

-

152

152

Loans and advances to customers (*)

1,283

392,399

393,682

166

342,019

Loans and advances to related parties

63

154,870

154,933

25

139,327

Cash and balances with Central Banks Due from banks and financial institutions Due from Head Office, sister, related banks and financial institutions

C/V LL

TOTAL

LL

C/V LL

TOTAL

Due to banks and financial institutions

1,128

6,137

7,265

1,550

6,073

7,623

Due to Head Office, sister, related banks and financial institutions

4,099

631

4,730

2,481

24,053

26,534

-

715

715

-

1,851

1,851

458,352

2,922,593

3,380,945

393,209

2,258,729

2,651,938

Deposits from related parties

3,655

90,219

93,874

3,753

80,866

84,619

342,185

Current tax liabilities

5,098

-

5,098

2,996

-

2,996

139,352

Deferred tax liabilities

36,335

37,272

4,282

43,594

47,876

Financial assets classified as loans and receivables (**)

-

20,128

20,128

55,490

21,765

77,255

Financial instruments held to maturity (**)

-

13,686

13,686

-

13,673

13,673

Investments in associates

20,451

11,115

31,566

21,352

11,115

32,467

Property and equipment

18,371

-

18,371

19,108

-

19,108

Intangible fixed assets

780

-

780

1,130

-

1,130

Non current assets held for sale

196

8,752

8,948

(415)

12,456

12,041

2,348

252

2,600

2,064

436

2,500

625,711

3,060,586

3,686,297

528,976

2,409,111

2,938,087

Other assets TOTAL ASSETS

* **

LIABILITIES AND SHAREHOLDERS’ EQUITY (in LL Millions)

2009

LL

937

Available for sale financial instruments (**)

2010

2009

After deduction of provisions amounting to LBP (million) 47,062 from loans and advances to customers as per IAS 39, of which LBP (million) 580 representing provisions on collective assessment Includes an amount of LBP (million) 38,396 representing Lebanese Eurobonds

Derivative financial instruments Customers’ deposits

3

536

539

11

312

323

7,864

3,450

11,314

6,063

3,941

10,004

58

-

58

78

-

78

2,104

-

2,104

3,663

-

3,663

482,361

3,024,281

3,506,642

413,804

2,375,825

2,789,629

40,000

-

40,000

40,000

-

40,000

72,730

20,774

93,504

64,028

18,314

82,342

16

3,039

3,055

64

1,766

1,830

1,126

-

1,126

1,243

-

1,243

41,970

-

41,970

23,043

-

23,043

Shareholders’ Equity

155,842

23,813

179,655

128,378

20,080

148,458

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY

638,203

3,048,094

3,686,297

542,182

2,395,905

2,938,087

613

17,933

18,546

613

20,156

20,769

87

25,006

25,093

196

27,037

27,233

3,281

4,950

8,231

5,088

6,046

11,134

83,932

757,435

841,367

24,203

694,710

718,913

-

54,591

54,591

-

118,405

118,405

Foreign currencies to deliver

-

55,156

55,156

-

118,566

118,566

Engagements on term financial instruments

-

212

212

-

181

181

6,784

362,157

368,941

6,784

430,738

437,522

70,630

1,272,503

1,343,133

45,123

948,148

993,271

2,520

67,682

70,202

2,279

63,838

66,117

Other liabilities Provisions for risks and charges End of service benefits Total Liabilities Shareholders’ equity - Group share Capital - Common shares Capital reserves Reserves on reevaluations of financial instruments Other reserves Result of the year

OFF-BALANCE SHEET ITEMS (in LL Millions) Bank Guarantees Guarantees given to banks and financial institutions Guarantees received from banks and financial institutions Guarantees given to customers Guarantees received from customers Foreign Currency Forwards Foreign currencies to receive

Fiduciary assets Assets under management Bad debts fully provided for

Audi Saradar Private Bank

Annual Report 2010

4

INCOME STATEMENT AS AT DECEMBER 31, 2010

2010

2009

INCOME STATEMENT (in LL Millions)

FINANCIAL HIGHLIGHTS FOR THE YEAR 2010 146,626

115,835

(108,975)

(89,792)

37,651

26,043

Fees and commissions income

9,213

9,061

Fees and commissions expenses

(940)

(936)

Net fees and commissions income

8,273

8,125

Net trading income

1,217

1,665

16,689

6,309

Other operating income

3,278

2,707

Total operating income

67,108

44,849

Net provisions for credit losses

4,068

3,273

Provisions for doubtful loans

(196)

(1,280)

Recoveries of provisions for doubtful loans

4,264

4,553

Provision on impairment of financial instruments

(900)

(2,094)

Net operating income

70,276

46,028

Personnel expenses

(9,419)

(9,275)

Depreciation of property and equipment

(1,113)

(1,048)

(368)

(731)

Other operating expenses

(12,222)

(8,682)

Total operating expenses

(23,122)

(19,736)

47,154

26,292

3

(7)

Profit before tax

47,157

26,285

Income tax

(5,187)

(3,242)

Profit after tax from operating activities

41,970

23,043

Profit for the period

41,970

23,043

Net Profit - Group share

41,970

23,043

Basic earnings per share

1.049

0.576

Diluted earnings per share

1.049

0.576

Interest and similar income Interest and similar expenses Net interest income

Net gain or loss on financial investments

Amortization of intangible assets

Operating profit Net gain (loss) on sale or disposal of other assets

With indicators revealing two-digit activity growth rates, Audi Saradar Private Bank sal (ASPB) posted an outstanding performance in 2010. Total footings (on-balance sheet assets and off-balance sheet assets under management) grew by 23.56%, moving from LL 4,369 billion to LL 5,398 billion at end-2010. This growth was mainly driven by customers’ deposits which rose by 26.98% over the year, from LL 2,737 billion at end-December 2009 to LL 3,475 billion at end-December 2010, and by off-balance sheet AUMs which rose by 19.66% and registered a total of LL 1,712 billion in 2010. Loans and advances to customers posted a year-on-year growth of 13.93%, totaling LL 549 billion at end-December 2010, out of which 73% were granted against cash collaterals. In parallel with asset growth, profitability recorded new highs in 2010. ASPB’s net interest income went up from LL 26 billion to LL 38 billion, reflecting a remarkable increase of 44.57% within a context of better control over interest margins. Non-interest income also witnessed a significant increase of 56.64%, reaching LL 29 billion including dividends received from ASPB’s subsidiary, Solifac sal, which amounted to LL 18.2 billion in 2010 compared to LL 6.8 billion in 2009. Adding to the above net recoveries on credit losses and provision on impairment of financial instruments totaling LL 3.17 billion, the net operating income improved by 52.68% to reach LL 70 billion. On the other hand, total operating expenses increased by 17.16%, reaching LL 23 billion. In view of these positive results, ASPB succeeded in achieving an increase of 82.14% in its net earnings compared to 2009, recording LL 42 billion including net dividends received by Solifac sal. Nevertheless, profits for the year would have increased by a notable 51.42% as compared to 2009 if we exclude the net dividends of Solifac sal.

Audi Saradar Private Bank

Annual Report 2010

6

AUDI SARADAR PRIVATE BANK sal Head Office Beirut Clover Bldg., Charles Malek Avenue, Achrafieh P.O.Box 11-1121 & 11-3312 Riad El-Solh, Beirut, 1107 2070 & 1107 2130 LEBANON Achrafieh Branch Clover Bldg., Charles Malek Avenue, 5th Floor, Beirut LEBANON

BANK AUDI sal - AUDI SARADAR GROUP Beirut Bank Audi Plaza, Bab Idriss P.O.Box 11-2560 Riad El-Solh Beirut 1107 2808 LEBANON

AUDI SARADAR INVESTMENT BANK sal Beirut Bank Audi Plaza, Bab Idriss P.O.Box 16-5110 Beirut LEBANON

Tel: +961 1 205 400, 208 400 Fax: +961 1 205 480, 205 454 [email protected] http://www.audisaradarpb.com Tel: +961 1 205 400, 208 400 Fax: +961 1 200 265, 205 441 [email protected]

Tel: +961 1 994 000 Fax: +961 1 990 555 [email protected] http://www.banqueaudi.com

Tel: +961 1 994 000 Fax: +961 1 999 406, 200 950 [email protected]

AnnualReport

BANQUE AUDI (SUISSE) sa Head Office Geneva 18, Cours des Bastions P.O. Box 384 1211 Geneva 12 SWITZERLAND

Representative Office Beirut Bank Audi Plaza, Bab Idriss P.O.Box 11-2666 Riad El Solh Beirut 1107 2110 LEBANON

BANK AUDI SARADAR FRANCE sa

Paris 73, Champs-Elysées Avenue 75008 Paris FRANCE

AUDI CAPITAL (KSA) cjsc Riyadh Centria Bldg., 3rd Floor Prince Mohammad Bin Abdul Aziz Road (Tahlia) P.O. Box 250744, Riyadh 11391 KINGDOM OF SAUDI ARABIA BANK AUDI LLC Doha Qatar Financial Center Tower Office 1801, 18th Floor, Diplomatic Area P.O. Box 23270 Doha QATAR BANK AUDI sal - Representative Ofiice Abu Dhabi Arab Monetary Fund Bldg., Corniche Street P.O. Box 94409 UNITED ARAB EMIRATES

BANK AUDI sam - AUDI SARADAR GROUP

Monaco 24 Boulevard des Moulins MC 98000 MONACO

Tel: +41 22 704 11 11 Fax: +41 22 704 11 00 [email protected] http://www.bankaudi.ch

Tel: +961 1 977 544 Fax: +961 1 980 535

Tel: +33 1 53 83 50 00 Fax: +33 1 42 56 09 74 [email protected]

Tel: +966 1 2199300 Fax: +961 1 4627942 [email protected] http://www.audicapital.com

Tel: +974 4967365 Fax: +974 4967373 [email protected]

Tel: +971 2 6331180 Fax: +971 2 6336044 [email protected]

Tel: +377 97 701 701 Fax: +377 97 701 741 MC 98000 MONACO [email protected] http://www.bankaudi.mc

Audi Saradar Private Bank sal

2010