Libya’s largest bank, Libyan Arab Foreign Bank, has taken advantage of the country’s economic reform programme and is participating in expanded trade finance activities, the growing privatisation process and increasing foreign investment. The bank also believes the lifting of economic sanctions on Libya by the US will ensure more funds from international markets and strengthen investment possibilities.
Reflecting the bank’s new strategy of diversifying its channels of investment and desire to maintain a strong position in regional and international markets LAFB has significantly increased its balance sheet in 2004, growing by 18.1% to $11.2bn. In pre-tax profit terms the bank increased profits by a factor of six in 2004 to reach $51.5m compared with $8.4m in 2003.
This result in 2004 produced an ROE of 16%, which appears to be a good result. But it is important to note that official figures include a high degree of loan loss provisioning and the bank claims itself that its NPL ratio is 95%, a figure that needs to be understood in the context of the Libyan financial sector.
