Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Lebanon bank deposits expected to recover from dip: senior banker

Economy Jul 22, 2019 06:21PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

By Tom Perry

BEIRUT (Reuters) - Deposits in Lebanese banks are expected to recover from a dip in the first five months of 2019 as customer optimism returns after approval of the state budget, the chairman of the Association of Banks in Lebanon said on Monday.

Salim Sfeir said deposits had fallen to $176 billion at the end of May from $179 billion at the end of December. "I expect a very positive recovery. Our market is very elastic," he told Reuters in an interview.

He also said banks would take steps to support the economy in the next four to seven months, including working to reduce interest rates and to extend more loans to some sectors.

"The banks are liquid enough, the banks are optimistic that they will be able to give the leverage needed to the economy to take off again," said Sfeir, who is also chief executive officer of Bank of Beirut.

One of the world's most heavily indebted states, Lebanon finally approved the 2019 budget on Friday, aiming to cut the deficit as part of efforts to put the public finances on a sustainable path.

The government embarked on long-delayed reforms as the economy stagnated and as deposit growth in the banking sector slowed: the sector has long played a critical role in financing the state and the wider needs of the economy.

"There was plenty of worry in the air," Sfeir said, linking these concerns to political friction over the budget. "The worry was manifested in depositors asking for more interest on their holdings, or some withdrawal of deposits," he said.

"But for the last 48 hours, I feel that the markets are more quiet, people are more quiet, transfers from Lebanese pounds to U.S. dollars are less than normal."

The budget aims to bring the deficit down to some 7.6% of GDP from more than 11% in 2018, though the International Monetary Fund has said this year's deficit is likely to be well above the targeted level.

"The deficit that was reached is acceptable by Lebanese standards, if not by international standards. But the effort is appreciable. So the more our depositors feel optimistic, the more we will be seeing a higher inflow of capital," Sfeir said.


With Lebanon's foreign currency reserves falling, Lebanese banks recently launched a new effort to draw in fresh dollars by offering interest rates of 14% on large sums locked up for three years. The dollars are deposited at the central bank.

"I was told that almost $800 million to $1 billion was injected in those products. The significance of that is positive, certainly. It is an additional $1 billion into the reserves, although expensive, but here they are," Sfeir said.

The average interest rate paid on deposits in Lebanon climbed to around 6.8% this year from 3.4% to 3.5% last year, he added, saying that while these rates were on the high side, they were in line with those offered in the regional market.

He said loans had also shrunk in the five months period to the end of May by almost 5%.

Ratings agencies S&P and Fitch are both expected in Lebanon soon. Sfeir said he hoped they would wait for the 2020 budget before taking any new action on Lebanon's sovereign ratings.

"We hope they will be understanding enough to be patient and to assess the situation ... based on the 2020 budget. The 2019 budget is a good step further, and we expect a substantial effort to reduce the deficit in the 2020 budget," he said.

Lebanon bank deposits expected to recover from dip: senior banker

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email