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| Lebanon banks show growth
despite political instability Balance sheets increase by 3.75 percent BEIRUT - Lebanese banks, the pillars of the economy, are surprisingly still able to cushion the turbulence raging in the country as clearly illustrated by the good results in the first six months of 2007. According to the latest report by the Central Bank, total balance sheets of all banks operating in Lebanon up to June of this year reached $79.038 billion, an increase of 3.75 percent compared to the same period of 2006. In the month of May alone total assets rose by $873.7 million while in June the assets jumped by $1.144 billion. Banque Audi Saradar, one of the largest banks in the country, saw its assets rise by $800 million during the last six month. This rise was attributed to the bank's placement of $700 million of Solidere International's new capital which was oversubscribed in the markets. Audi and BLOM bank are fiercely competing to become the largest bank in Lebanon in terms of assets, deposits and size of profits. Both banks have expanded outside Lebanon to diversify their sources of revenue and increase their shares in the thriving regional market. Other leading banks such as Byblos and Fransabank made similar moves outside Lebanon. Lebanese banks are currently operating in Egypt, Syria, Jordan, Sudan, Algeria and Qata and have representative offices in other countries as well. Total customer deposits also maintained reasonable growth despite the security incidents and tense political situation, rising by 4.1 percent in the first six months of this year to reach $63.201 billion. The assets of Lebanese banks are three times more than the
country's GDP. Bank deposits fell slightly during the summer war of 2006 but nervous investors quickly replenished their hefty accounts in the local banks once the drums of war fell silent. "Close to $2 billion fled the country in 2006 but most of the cash came back as the government gave signals that reconstruction would resume in earnest," one financial analyst said. He added Lebanese banks are among the rare sectors which always manage to override the problems and "lands on its feet." The profits of the banking sector in the first six months increased by 4.74 percent to $397 million while private equities rose by 9.34 percent in the same reporting period. But contrary to the assets and deposits of the private sector, the deposits of the public sector in these banks fell by 44 percent. The Central Bank said public-sector deposits in the first six months of this year fell to $586 million from $1.050 billion. The drop in public-sector deposits is the biggest in 10 years. There was no official explanation behind the drop. The loans to the private sector up to June of this year rose 8.93 percent to $20.614 billion from $18.924 billion in the same period of last year. Loans to the public sector slightly increased by 0.64 percent in the first six months to $20.825 billion. All successive governments since 1994 borrowed heavily from the local banks to cover the cost of debt servicing, the largest spending item in the budget. The governments also borrow from local banks to finance investment projects. -Daily Star |
