BEIRUT: Bank of Beirut’s net profits in the first six months of 2011 rose slightly by 1 percent to $48.6 million compared to the same period of 2010, but the bank’s executives predict that the bank will become more profitable after the successful acquisition of Laiki Bank in Australia in March 2010.

The bank, which is one of the five Lebanese banks listed on the Beirut Stock Exchange, has seen its assets rise by 26 percent to $9 billion and customer deposits jump by 33.25 percent to more than $7 billion, loans up by 60 percent to $3.2 billion and equity soar to $826 million, following the acquisition of 85 percent stake of the Beirut- Hellenic for $420 million which includes investment in shares and rise in capital.

The bank is in the process of closing a proffered share issue of $135 million and this will bring the capital to more than $1 billion, further consolidating its position as the bank with the highest capitalization level among leading Lebanese banks.

Roger Dagher, the chief financial officer of Bank of Beirut, told The Daily Star that the huge investment made in the acquired bank will eventually pay off in the coming two years and this will translate into more profits in 2012 and 2013.

Dagher acknowledged that the economic slowdown and the political tension in some of the Arab states have naturally affected the volume of business in Lebanon.

“One percent rise in profit is a good result, especially if we take into consideration the difficult situation in Lebanon and the region,” Dagher said.

One of the reasons behind the slight increase in profits in the first six months of this year was the small interest margins in the Lebanese market, he said.

“The strategy of our bank was to increase liquidity. We decided to increase liquidity after we acquired the bank in Australia,” the banker explained. “The acquisition of the bank in Australia came at a cost and this means that liquidity came out of the bank to buy the majority stake in the Australian bank.”

Bank of Beirut acquired the shares of the Australian bank for $142 million, increased this capital by $80 million and provided a sub loan for the Beirut Hellenic bank of $100 million.

“We made a lot of investments in this bank but the results will become more visible in the coming few years,” Dagher said.

Bank of Beirut’s liquidity ratio, including the compulsory deposits in the Central Bank, is close to 46 percent of total deposits.

“The assets quality of our bank improved tremendously following the acquisition of Beirut-Hellenic bank in Australia,” Dagher said.

He stressed that Bank of Beirut has made investments in countries like the United Kingdom, Germany, Cyprus, Oman and Australia, which are branded AAA by international agencies and all these countries have no or very minor political risks.

“But we decided to do business in Australia where the long-term investment is much more promising than countries that have high political risks,” Dagher said.

Bank of Beirut intends to open seven more branches in 2011 and six to seven more in 2012.

“There are more than 450,000 Lebanese living in Australia and this by itself has huge potential for our bank,” Dagher said.

Bank Audi, which recorded an increase of profits of 10.8 percent to $179 million in the first six months, was the first listed bank to disclose results last week.

BLOM, Byblos Bank and BEMO have yet to reveal their results before the end of July.