Arab Today, arab today profits of lebanese banks to plunge 25 pct
Last Updated : GMT 12:19:39
Arab Today, arab today
Arab Today, arab today

Profits of Lebanese banks to plunge 25 pct

Arab Today, arab today

Arab Today, arab today Profits of Lebanese banks to plunge 25 pct

Beirut - Arabstoday

A leading Lebanese banker said Thursday he expected the profits of the banking sector to plunge as much as 25 percent at the end of the year in light of the severe economic slowdown, political stalemate and volatile situation in the Middle East. “I am afraid that the profits of the local banks will fall by 25 percent at the end of the year. The results of the first six months of this year were not too encouraging as well,” chairman of Byblos Bank Francois Bassil told The Daily Star. Most of the Lebanese banks have either reported a drop in profits or nearly flat results in the first six months of 2012 amid concern that the days of hefty profits are long gone. “Some banks are selling part of their Treasury bills holdings to investors in order to show that profits are still healthy or at least not to show losses. Profits are going down because there are no more investments in the country,” Bassil said. Lebanese banks are the biggest subscribers of T-bills and sovereign Eurobonds in the local market and these bonds have allowed the lenders to maintain healthy profits over the past 10 years thanks to the relatively high yields on them. Against this backdrop, most of the banks were forced to reduce spending, pursue a more conservative lending scheme and above all increase the provisions for nonperforming loans. To make matters even worse, all of the Lebanese banks operating in war-torn Syria have seen their deposits and assets fall sharply. But despite this bleak picture, local banks have massive liquidity that is crying for high-return investments. Bassil also strongly criticized the government’s plan to increase the salaries of the public sector through its approval of a new salary scale. “We as banks and private sector will not hesitate to call for a strike and even shut down our businesses temporarily to demonstrate our displeasure with the economic and financial performance of this Cabinet,” he warned. Bassil said the government should first cut waste and improve tax collection instead of raising substantially the salaries of public sector workers. “Let them [the Cabinet] first find out why 50 percent of commodities and goods at Beirut Port are passing through the customs department. This means that 50 percent of the taxes on goods are not being collected by the authorities,” the banker said. Bassil called on the government to overhaul the public sector, noting that most of the government departments are overstaffed. “The number of public school teachers is more than what the government needs. Many of these teachers are collecting their salaries without even reporting to work. This is simply not acceptable and the Cabinet must do something about it,” Bassil argued. He added that banks and many companies have increased the working hours in the offices to improve productivity while the government employees work few hours. Bassil reiterated his call to allow the Lebanese banks to take part in government infrastructure projects, adding that banks have excess cash which can be used for investments in Lebanon. He again slammed the government for not giving the banks a chance to ease the chronic electricity production in the country. “We can take the problems of electricity production off the government’s shoulders if they allow us. But so far we have not seen any indication that this Cabinet is serious in solving the long-running electricity crisis.”  

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