Arab Today, arab today lebanese banks cut government debt exposure
Last Updated : GMT 13:27:39
Arab Today, arab today
Arab Today, arab today

Lebanese banks cut government debt exposure

Arab Today, arab today

Arab Today, arab today Lebanese banks cut government debt exposure

Beirut - Arabstoday

Lebanon’s banks are attracting more deposits and reducing exposure to government debt, Central Bank Governor Riad Salameh said, which benchmark rating companies note are critical to the most-indebted Arab nation’s creditworthiness. Climbing at an annualized rate of about 8 percent, bank deposits have increased this year to $122 billion, Salameh said in an interview in Beirut. Credit to private businesses and consumers has exceeded $40 billion, while lending to the government stands at about $28 billion, extending a reversal that started in 2009 in how the country’s banks deploy funds. Banks have also cut their “exposure to Syrian businesses, either from here or from Syria, by 40 percent” in the past 15 months, he said, as an uprising in the neighboring country rages on. The performance may help allay the concerns of credit assessors who are watching out for signs that the crisis in Syria is spilling over into the Lebanese economy and banks. A prolonged decline in deposits held by non-residents would “negatively affect the sovereign’s funding profile, and therefore the rating,” Fitch Ratings, which ranks Lebanon five levels below investment grade at B, said in March. “The vulnerability coming from the sovereign risk has decreased in a sensible manner,” Salameh said Friday at his office. The reduction in the banks’ “exposure to the government created a gap that we filled as a central bank because our portfolio is around $17 billion in paper.” Lebanon’s three biggest banks – BLOM Bank SAL, Bank Audi SAL and Byblos Bank SAL – are among 14 lenders in Lebanon, Jordan, Ukraine and Pakistan that could have their credit worthiness lowered at Moody’s Investors Service for reasons including “balance-sheet exposure to domestic sovereign debt,” the rating company said April 5. Moody’s changed its outlook on Lebanese banks to negative from stable in December, citing risks to economic growth from “regional political uncertainty.” Lebanon’s economic growth accelerated to between 3 percent and 3.5 percent in the first quarter of this year as air traffic rose 10 percent and tourism in the capital, Beirut, recovered, Salameh said. Growth ground to a halt in the same period in 2011 as revolts spread across the Arab world, he said. Gross domestic product expansion slowed to 1.5 percent last year from 7 percent in 2010, International Monetary Fund estimates show. While growth may accelerate to 3 percent this year, it’s still “well below Lebanon’s potential,” IMF Deputy Managing Director Nemat Shafik said in a statement Thursday. “The implementation of strong domestic policies is essential to instill confidence. This requires above all maintaining fiscal discipline by targeting a primary surplus, which would keep the debt-to-GDP ratio on a downward path.” Lebanon’s debt stood at 134 percent of economic output at the end of October, and about 40 percent of it is denominated in foreign currency, according to the IMF. Lebanon has “liquid” foreign-currency assets of more than $32 billion and a stock of gold worth about $16 billion, Salameh said. The uprising in Syria against President Bashar Assad has hurt tourist arrivals by land and raised insurance costs for exporters, Salameh said. Syria is the only land route for exports. Lenders have taken more steps to insulate themselves from the Syrian crisis, Salameh said. “Banks have constituted general provisions already. That explains why you don’t see an important growth in the profits of banks.” BLOM Bank posted a 5.3 percent increase in profit for the quarter ended March 31 to $83.2 million. Its full-year net income may decline 8 percent to $296.4 million, according to the mean estimate of Bloomberg analysts. Lebanon’s credit risk fell 27 basis points, or 0.27 percentage point, this year to 445, according to data provider CMA. The extra yield investors demand to hold Lebanese debt instead of U.S. Treasuries is little changed at 383 basis points, JPMorgan Chase & Co. data shows. The yield on local-currency government debt has risen by 50 basis points since March, in line with an IMF recommendation that higher rates would help spur bank demand for the securities. The yield on one-year notes now stands at 5.35 percent, compared with almost 16 percent in Egypt. The government agreed to raise borrowing costs in Lebanese pounds “to allow the auctions to be served by the market and to decrease the intervention of the central bank in these auctions,” Salameh said. “The results were good because we are seeing increased bidding on the Lebanese treasury bill auctions.”

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today lebanese banks cut government debt exposure Arab Today, arab today lebanese banks cut government debt exposure

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today lebanese banks cut government debt exposure Arab Today, arab today lebanese banks cut government debt exposure

 



Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
Arab Today, arab today Zainab Fadel Oglu designs “Shakerin” mosque

GMT 12:13 2017 Thursday ,11 May

Zainab Fadel Oglu designs “Shakerin” mosque
Arab Today, arab today Seeks to move past rift with Israel

GMT 08:00 2017 Monday ,08 May

Seeks to move past rift with Israel
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday