Stock Analysis & Valuation BLOM Bank SAL (BLBD.L)

• Previous Close: £0.18
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	-100
Intrinsic value (DCF)	7.98	4460
Graham-Dodd Method	13.00	7329
Graham Formula	616.80	352357

Strategic Investment Analysis

Company Overview

BLOM Bank SAL (BLBD.L), listed on the London Stock Exchange, is a leading Lebanese financial institution with a strong presence in the Middle East. Operating in a challenging economic environment, BLOM Bank provides a comprehensive range of banking services, including retail, corporate, and investment banking. Despite Lebanon's economic instability, the bank has demonstrated resilience with substantial revenue and net income figures, reflecting its ability to navigate macroeconomic turbulence. BLOM Bank's financial strength is underscored by its significant operating cash flow and conservative debt levels. The bank plays a crucial role in Lebanon's financial sector, offering critical services to businesses and individuals amid ongoing economic reforms and regional uncertainties. Investors should note its exposure to Lebanon's volatile economy but also recognize its potential for recovery as regional stability improves.

Investment Summary

BLOM Bank SAL presents a high-risk, high-reward investment opportunity due to its strong financial metrics amid Lebanon's economic instability. The bank reported robust revenue (LBP 13.17 trillion) and net income (LBP 3.15 trillion) for FY 2023, alongside a healthy operating cash flow (LBP 10.72 trillion). However, its negative beta (-1.09) suggests an inverse correlation with broader market trends, making it a potential hedge in volatile markets. Key risks include Lebanon's economic crisis, currency devaluation, and political instability, which could impact asset quality and liquidity. The lack of dividend payouts may deter income-focused investors, but the bank's strong fundamentals could appeal to those betting on a long-term regional recovery.

Competitive Analysis

BLOM Bank SAL operates in a highly competitive and fragmented Lebanese banking sector, characterized by economic volatility and regulatory challenges. The bank's competitive advantage lies in its strong balance sheet, with low total debt (LBP 71.21 billion) relative to its cash reserves (LBP 12.51 billion), providing financial flexibility. Its substantial operating cash flow underscores efficient liquidity management, critical in Lebanon's cash-strapped economy. However, BLOM Bank faces stiff competition from both local and regional banks, with rivals leveraging stronger international networks or digital banking innovations. The bank's resilience in a crisis-prone market is a key differentiator, but its growth potential is constrained by Lebanon's macroeconomic instability. To maintain competitiveness, BLOM Bank must focus on digital transformation and regional diversification while managing exposure to domestic risks.

Major Competitors

• Audi Saradar Group (AUDI.BE): Audi Saradar is one of Lebanon's largest banks, with a strong retail and corporate banking presence. It has a more extensive branch network than BLOM Bank but faces similar macroeconomic risks. The bank's digital initiatives give it an edge in customer service, though its higher debt levels may limit financial flexibility compared to BLOM.
• Bank of Beirut (BYB.BE): Bank of Beirut is a key competitor with a focus on trade finance and SME banking. It has a smaller market share than BLOM Bank but benefits from niche expertise in cross-border transactions. Its weaker liquidity position compared to BLOM could be a disadvantage in Lebanon's uncertain economic climate.
• Fransabank (FRN.FR): Fransabank competes closely with BLOM in retail banking, offering innovative digital solutions. However, its higher exposure to non-performing loans in Lebanon's crisis may pose greater asset quality risks compared to BLOM's more conservative portfolio.