BEIRUT: BankMed maintained double-digit growth in deposits and total assets in 2013 despite an overall economic slowdown that saw net profit almost flatten due to the conservative management strategy of allocating an additional $35 million in general provisions.
Customer deposits increased by 12 percent to reach $10.3 billion at of the end of December 2013, and the customer loan portfolio expanded by 7 percent to $4.3 billion, while consolidated net profit grew year on year by 1 percent to $128.1 million.
In line with its conservative management strategy, BankMed decided to increase its general provisions by $35 million to $140 million rather than post higher profits, a BankMed statement said.
The loan loss provision coverage ratio stood at 203 percent.
“Despite tough economic conditions and a year that witnessed numerous challenges, the bank maintained healthy activities in 2013 that resulted in continued growth in deposits and assets,” the statement added.
By the end of December 2013, BankMed’s total assets posted a 10 percent growth to hit $13.8 billion.
The bank invested around $679 million of its balance sheet growth in 2013 in liquid assets including cash and deposits in the Central Bank and commercial financial establishments and $422 million in marketable securities such as treasury bills, while granting around $282 million in loans.
BankMed is committed to its long-time policy of maintaining high liquidity ratio, the statement said. BankMed’s foreign currency liquidity ratio stood at 40.6 percent compared to the Central Bank limit of 10 percent. The bank’s capital adequacy ratio reached 13.8 percent by the end of 2013 compared to the 10.5 percent required by the Central Bank.
International rating agency Moody’s recently reiterated its negative outlook for Lebanon’s sovereign rating and warned that banks’ profitability would remain under pressure owing to slow economic growth.
Moody’s said the outlook reflected banks’ increasing exposure to B1-rated Lebanese government securities, which leaves their modest capital buffers susceptible to sovereign event risk.
The majority of Lebanese banks are rolling over their maturing treasury bonds but have been cautious to buy new issues of government debt.
Pressure arising from banks’ operations in regional countries hit by turmoil was also among the issues highlighted in Moody’s report.
However, despite the political concerns in Turkey, the operations of BankMed’s Turkish subsidiary (T-Bank) were not affected, and its assets grew by 39 percent during 2013, according to the statement.
Turkey’s central bank hiked all its key interest rates last February in a bid to defend the country’s crumbling currency.
According to Moody’s, the sharp interest rate hike will squeeze the profitability of the banking sector through higher funding costs and hurt the quality of bank assets.
BankMed’s statement downplayed the impact of the rate hike in Turkey on its operations, saying the current circumstances were the result of a political spillover into the economy rather than vice versa.
BankMed, which was the first Lebanese bank to expand to Turkey in 2007, has more than 29 branches in the country.
BankMed posted an 8 percent growth in profits in 2012 as well as 16 percent growth in deposits and 15 percent growth in loans.