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Bank Deposits: Decreased Growth

The total deposits in Lebanon’s commercial banks reached LBP 192,443 billion (USD 127.6 billion) by the end of 2012 compared to LBP 177,438 billion (USD 118 billion) in 2011 and LBP 163,717 billion (USD 109 billion) in 2010, i.e. up by LBP 15,005 billion (USD 10 billion) and LBP 13,721 billion (USD 9 billion) amounting to 8.5% and 8.4% respectively.

However, the growth registered in 2010 stood at 13.4%.

The decrease in deposits in 2011 and 2012 was first of its kind over a four-year span as shown in Table 1.

Evolution of bank deposits (2000-2012)

Table 1

End of the year

Total deposits (LBP billion)

Total deposits (USD billion)

Annual growth in deposits (%)

2000

56,729

37.6

10.9

2001

60,514

40.1

6.7

2002

64,274

42.6

6.2

2003

73,455

48.7

14.3

2004

82,690

54.8

12.5

2005

85,906

56.9

3.9

2006

91,494

60.7

6.5

2007

101,435

67.3

10.8

2008

117,252

77.8

15.6

2009

144,367

95.8

23.1

2010

163,717

109

13.4

2011

177,438

118

8.4

2012

192,443

127.7

8.5

Source: Monthly newsletter issued by the Association of Banks in Lebanon

Bank loans

The loans granted to the private sector reached around LBP 65,504 billion (USD 43.4 billion) by the end of 2012 compared to LBP 59.358 billion (USD 39.3 billion) in 2011 and LBP 52,656 billion (USD 34.9 billion) in 2010, i.e. up by LBP 6,146 billion and LBP 6.702 billion amounting to 10.3% and 12.7% respectively. However, the growth in loans registered in 2010 stood at 23.1%.

Table 2 shows the evolution of bank loans from 2006 until 2012 noting that the year 2012 recorded the lowest rate in loans.

Evolution of bank loans to the private sector (2006-2011)

Table 2

Year

Private sector loans (LBP billion)

Growth rate (%)

2006

25,652

-

2007

30,791

20

2008

37,748

22.6

2009

42,774

13.3

2010

52,656

23.1

2011

59,358

12.7

2012

65,504

10.3

Source: Monthly newsletter issued by the Association of Banks in Lebanon

Banks’ Share of Public Debt

Lebanon’s gross public debt ended the year 2012 at LBP 86,959 billion (USD 57.7 billion) compared to LBP 80.887 billion (USD 53.6 billion) in 2011 and LBP 79.298 billion (USD 52.6 billion) in 2010. As is commonly known, the largest chunk of Lebanon’s public debt is acquired through treasury bonds both in Lebanese pounds and foreign currencies. Treasury bonds totaled LBP 82.124 billion (USD 54.5 billion) in 2012, which constitutes 94.4% of the public debt.

The share of the banking sector in treasury bonds stood at LBP 46.883 billion by the end of 2012 compared to LBP 43.950 billion in 2011 which translates into 57% and 58% respectively of the total bonds. In 2010, the banks’ share was LBP 44.115 billion, i.e. 59.7% of the total bonds. Table 3 shows the evolution of treasury bonds and the share of commercial banks.

Evolution of treasury bonds and bank shares in these bonds (2000-2012)

Table 3

Year

Bonds

(LBP billion)

Bonds

(USD million)

Total

(LBP billion)

Share of banking sector in LBP treasury bonds

Share of banking sector in FC treasury bonds

Total share of banking sector in both LBP and FC treasury bonds

Banks’ share in bonds in LBP (%)

Banks’ share in bonds in FC (%)

Total % of bank shares in bonds

2000

25,731

5,218

33,597

17,589

3,769

23,270

68.3

72.2

69.2

2001

26,484

7,819

38,271

14,567

5,470

22,813

55

70

59.6

2002

24,548

12,779

43,812

16,700

6,838

27,008

68

53.5

61.6

2003

26,013

13,007

45,621

11,940

6,364

21,533

45.9

48.9

47.2

2004

25,766

15,709

49,448

12,111

8,791

25,363

47

55.9

51.3

2005

28,290

16,413

53,032

14,072

9,306

28,100

49.7

56.7

53

2006

29,158

17,540

55,600

16,429

10,673

32,518

56.3

60.8

58.4

2007

30,253

17,976

57,351

16,440

11,074

33,134

54.3

61.6

57.8

2008

37,644

17,789

64,461

23,781

10,354

39,389

63.1

58.2

61.1

2009

44,577

18,005

71,719

27,181

11,566

44,618

60.9

64.2

62.2

2010

47,237

17,737

73,975

26,489

11,692

44,192

56

65.9

59.7

2011

48,384

18,236

75,874

24,849

12,670

44,055

51.3

69.4

58

2012

49,334

21,751

82,124

27,107

13,081

46,930

55

60

57

Source: Monthly newsletter issued by the Association of Banks in Lebanon

Evolution of Banks’ Profits

The banking profits have been soaring over the past years reaching their highest in 2001 (58.7%) as shown in Table 4.

The 2011 profits decreased by 3.6% compared to 2010 and the average growth during the past four years stood at 17.6%.

Evolution of banks’ profits (2000-2012)

Table 4

Year

Banks’ profits (USD million)

% of change

2000

216

-

2001

343

58.7

2002

312

-9

2003

396

26.9

2004

461

16.4

2005

519

12.6

2006

668

28.7

2007

850

27.2

2008

1,067

25.5

2009

1,426

33.6

2010

1,642

15.1

2011

1,582

-3.6

2012

1,620

2.4

Source: Monthly newsletter issued by the Association of Banks in Lebanon

The growth rate registered in deposits in 2012 equaled 8.5% noting that the average rate registered in the past four years was 15.1%.

Profit rates decreased by 2.4%, noting that the average profit rate over the past four years was 17.6%.

There was also a 10.3% decline in bank loans while the average growth rate amounted to 18% over the past four years.

All these indicators make one wonder about the status of the Lebanese banking sector and whether it has really started to stumble or not, and if so, what repercussions does this have on the financial and economic conditions in the next few years? 



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