BEIRUT: Lebanese banks continued to see steady growth in customer deposits and assets for the seventh month this year. Bank Audi’s weekly monitor, which released new figures on the performance of Lebanese banks, noted that July 2009 was yet another month during which all banking activity indicators moved upward with assets progressing by a monthly LL2.660 trillion, or $1.764 billion and deposits increasing by a monthly LL2.877 billion.
“This monthly growth in deposits is deemed especially significant as it is the second-highest monthly deposit growth rate witnessed in over a year now, following that observed in April 2009,” Audi said.
It added that the growth in assets and in deposits are important indicators of the sturdiness of the Lebanese banking system. Nonetheless the most notable result in the banking sector in July was the revival of lending activity after months of a strict lending policy adopted by banks since the eruption of the global financial crisis in late 2008.
Total loans of commercial banks progressed by LL1.3813 trillion during the month of July alone, surpassing the growth in loans during each and every month since February 2008, bearing in mind that in 2008 prior to the outbreak of the crisis, Lebanese banks were following an aggressive lending strategy.
“This growth is especially significant as it occurs during a period of deleveraging across the globe and could be attributed to the relatively large flexibility at Lebanese banks characterized by high liquidity and significant operating surpluses,” Audi said.
It is worth noting that almost 79 percent of the total growth in loans during the seventh month of the year, the equivalent of LL1.086 trillion, is in the form of loans extended to non-residents.
“This indicates that Lebanese banks are continuing the path they were following prior to the global crisis, which was characterized by extending vigorous loans to regional corporates in order to make use of the banks’ abundant liquidity, bearing in mind that the local market remains relatively small considering the size of the country’s banking system and its ensuing liquidity,” Audi said.
The upsurge in all three banking-activity indicators during the month has kept aggregate activity flourishing in the first seven months of the year.
Between December 2008 and July 2009, total bank assets grew by $11.1 billion, the equivalent of 11.8 percent, higher than the growth of 9.6 percent reported over the corresponding period of 2008, and nearly three times the average growth recorded over the corresponding period of the previous six years of 4.6 percent.
Customer deposits remained one of the most important activity drivers in the first seven months of the year. The latter’s growth during that period outpaced the growth reported in the first seven months of 2008 and was more than three times the average growth reported over the previous six years.
Bank deposits rose by a healthy 12.7 percent this year’s first seven months, moving from LL117.253 trillion at end-December 2008 to LL132.188 trillion at end-July 2009.
“Within the context of significant conversions from FX holdings to LL holdings as a result of growing confidence in the national currency, the growth in deposits was accounted for to the extent of 58.5 percent by LL deposits, which actually grew by $ 5.795 billion, while FX deposits rose by $4.112 billion over this year’s first seven months,” Audi said. – The Daily Star
