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French Version

Lebanese banks record hefty profits, asset growth

Successful measures counter impact of economy

Lebanese banks continued to record hefty profits and growth in assets and customer deposits despite the downbeat mood in the country as a result of the political deadlock.

Figures released by the Central Bank this week indicate that the consolidated balance sheet of commercial banks continued its progress over the first nine months of 2007.

Meanwhile aggregate activity, measured by the consolidated assets of banks operating in Lebanon, grew by 7.1 percent over the same period, the equivalent of LL8.2016 trillion, or $5.4405 billion to reach LL123.0416 trillion, or $81.6196 billion at end-September 2007. Such an asset expansion compares well to the 4.5 percent growth recorded during the corresponding period of 2006.

Observers said Lebanese banks have managed to weather the negative economic indicators through a series of measures such as reducing expenditures and diversifying their sources of income through their successful operations in many Middle East countries.

Central Bank Governor Riad Salameh had predicted earlier this year that the growth in assets will reach seven to 10 percent at the end of 2007.

"However, one should note that growth during the said period was hindered by the slowdown witnessed in July and August 2006 as a result of the Israeli war," the weekly news bulletin of Bank Audi said.

During the month of September 2007, the growth in consolidated assets leveled out to 0.2 percent after surging by 2.4 percent in the previous month, thus attaining the highest monthly growth rate throughout 2007.

On a yearly basis, total assets saw a major increase of 11 percent at end-September 2007, even though in September 2006, banking activity managed to resume its development, however consolidated assets did not go back to their pre-war level.

Audi said that asset growth was driven by the growth in customer deposits, which went up by 8.2 percent in the nine months extending between end-2006 and end-September 2007. In fact, the growth in customer deposits is considered noteworthy, especially since it exceeded the growth in assets.

This growth in deposits translates into an increase of LL5.9869 trillion, or $3.9714 billion over the first nine months of 2007 to reach LL99.0068 billion, or $65.6761 billion.

When compared to end-September 2006, deposits increased by 11.8 percent year-on-year.

The growth in deposits over the first nine months of 2007 was actually mostly due to resident deposits, which grew by 9.7 percent or LL7.4856 trillion, greatly offsetting the shy contraction of 0.2 percent or LL27.150 billion in nonresident deposits.

But the Central Bank noticed that the deposit growth in Lebanese pound was very shy.

"The analysis of deposit growth by currency suggests that deposits in Lebanese pounds grew by 7 percent or LL1.5258 trillion since the beginning of the year while foreign currency deposits grew by a higher 8.6 percent, or $3.9714 billion," Audi news bulletin said.

It added that deposits in dollars grew by 0.3 percent since end-December 2006, increasing to 76.5 percent at end-September 2007.

"The rise in dollarization reflects a loss in confidence in the Lebanese pound, and is in line with the fact that the growth in foreign-currency deposits was higher than that of LL denominated deposits," Audi said.

Beirut 09-11-2007
The Daily Star

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