BEIRUT: The growth in net profits of the 13 largest banks in Lebanon fell to 1.3 percent in the first half of 2013 from 7.7 percent in the same period of last year, a report said Tuesday.
“Alpha banks reported a stagnation in profitability. Net profits rose by a mere 1.3 percent in the first half of 2013 relative to the corresponding period of 2012,” Bankdata Financial Services said.
“The rise in net interest income by 2.2 percent comes within the context of the persistently low interest rate environment, while the 6.8 percent growth in net operating income is mainly driven by noninterest income, which saw its share from total income rising from 37.2 percent in the first half of 2012 to 40 percent in the same period this year.”
The president of the Association of Banks in Lebanon, Francois Bassil, told The Daily Star earlier that the profits of Lebanese banks in 2013 and 2014 were expected to fall considerably.
The report added that the growth in operating income was outpaced by that of operating expenses, which amounted to 8.6 percent over the first half despite banks efforts to contain them.
However, the consolidated balance sheet of the alpha group, banks with deposits of more than $2 billion, grew by 3.8 percent in first half of 2013.
Domestic assets rose by 4.8 percent during the first six months while the assets of their subsidiaries abroad declined by 0.7 percent.
Bankdata Financial Services said customer deposits remained the main driver of growth, rising by 4.4 percent, also driven by domestic activity which saw a significant growth in foreign currency deposits by 7.3 percent while Lebanese pound deposits grew by a mere 2.1 percent.
Bankdata Financial Services said that the alpha banks maintained their liquidity despite a relatively cloudy environment, with their primary liquidity representing 31.9 percent of their total assets.
“The first half year of 2013 reported a rise in the share of the central bank, with placements at the central bank growing from 20 percent in December 2012 to 21.2 percent in June 2013, while placements with banks dropped from 11.7 percent to 10.7 percent over the same period,” the report added.
It added that the first half of the year also witnessed a rise in sovereign exposure, with the Lebanese Eurobonds as a percentage of foreign currency deposits rising from 12.8 percent in December 2012 to 14.3 percent in June 2013, with their share to shareholders equity growing from 85.6 percent to 100.2 percent respectively.
The report noted that the sluggish operating environment did not seemingly impact banks assets quality.
Alpha banks saw the share of their doubtful loans as a percentage of total gross loans dropping from 6.24 percent in December 2012 to 5.68 percent in June 2013.