BEIRUT, Lebanon - The banking sector continued to achieve steady growth in assets, deposits and profits in 2007, the Central Bank said in a report on Thursday. According to the report, the combined net income of the banking sector in the first 11 months of 2007 reached $748 million, an increase of 22 percent compared to the same period of 2006. Total profits in 2006 stood at $669 million.

Bankers said they expected the trend to continue.

It is worth mentioning that the 10 leading banks in the country control more than 75 percent of the market.

The growth in profits was attributed to several factors, including the expanding economies of many countries in the Middle East due to rising prices for crude oil.

Leading Lebanese banks like BLOM, Audi, Byblos and Fransabank are operating in more than 10 Arab countries in an attempt to diversify their sources of revenues and reduce the risk exposure to Lebanon's alarming public debt.

Total customer deposits in the first 11 months of 2007 jumped by 8.8 percent to $65.9 billion compared to $60.6 billion in 2006.

Bank assets increased by 7.07 percent to reach $80.114 billion. Bank assets in the first 11 months of 2006 were $74.271 billion.

Lebanese banks, seen as the backbone of the economy, saw more than $3 billion in customer deposits fleeing the country during the 2006 war with Israel. But once the conflict came to an end, most of the money was channeled back to the Lebanese banks.

Bankers in general agree that Lebanon reaped benefits from the oil boom in the region as most Lebanese working in the Gulf Arab countries opened additional accounts with banks back home.

The influx of thousands of engineers and professionals to the Gulf states over the last 12 months has helped banks increase their deposits.

One banker said that most of the Lebanese working in the Gulf region save enough money to buy a property or a house because "eventually they know that they will settle here."

According to the Central Bank, total remittances are more than $5.5 billion a year, or a whopping 20 percent of the country's GDP.

Makram Sader, the secretary general of the Association of Banks in Lebanon, told The Daily Star recently that 2007 was a very good year for the local banks.

He added that bank lending to the private sector increased by $3.5 billion, and nearly half of this amount went to Lebanese working in the Gulf region.

"There are many Lebanese investors borrowing from our banks to finance the projects they are implementing in the Gulf states such as the UAE and Qatar," Sader said.

Total credit to the government and public departments in the first 11 months of 2007 reached $21.3 billion, compared to $20.692 billion in 2006.

Lebanese banks are the biggest lenders to the government, although there are serious attempts to reduce the credit lines to the state in 2008 if the government failed to implement the economic reforms that were pledged during the Paris III donor conference.

Total private equities of the banks in Lebanon in 2007 reached $6.177 billion, an increase of $493 million compared to the same period of 2006.

Bankers say that the increase in the private capital is part of an overall strategy to expand both locally and regionally.

The Central Bank stressed that dollarization in bank deposits up to November 2007 reached 76.99 percent compared to 76.77 percent in the same period of 2006.

In addition, 84 percent of the banks' lending is in dollars, while the rest is in Lebanese pounds. - The Daily Star