Profits of Lebanese banks in Syria shrinking further

Losses have been provisioned
for better performance

Net profits of Lebanese banks operating in Syria dropped by 77 percent in the first half of 2014, according to the Syrian Commission on Financial Markets and Securities (SCFMS). 


The total net profits of Bank Audi Syria, Bank of Syria & Overseas (affiliate of BLOM Bank), Byblos Bank Syria, Bank BEMO Saudi Fransi, Sharq Bank (affiliate of Banque Libano-Française), and Syria Gulf Bank (in which First National Bank has a minority share) dropped to $19.2 million in the first half of 2014 from $90.12 million in the first half of 2013. Fransabank Syria is excluded from the list of seven banks due to the absence of its financial data.
 
“These banks are better adapting to the conflict there and registering smaller losses compared to the last previous three years,” said Marwan Mikhael, Head of Research at Blominvest. “They already took the necessary provisions,” he said.


The drop in net profits is attributed to the continuous conflict in Syria, the SCFMS said. Bank Audi Syria had the lion’s share in terms of net profits with $9 million, followed by Bank BEMO Saudi Fransi ($8.7 million), Bank of Syria & Overseas ($3.5 million), Sharq Bank ($2.5 million), Byblos Bank Syria ($1 million), and Syria Gulf Bank with a loss of $5.7 million.


Upon conversion into the U.S. dollar at the prevailing end of year exchange rate, net profits of those banks dropped by $70.8 million year-on-year drop, down to $19.2 million from the $90.12 million mentioned above.


The total assets of the six local banks with presence in Syria had increased by 2.6 percent in the first half of 2014, reaching $2.5 billion. Bank BEMO Saudi Fransi had the highest share of assets (33 percent), followed by Bank of Syria & Overseas (26 percent), Bank Audi Syria (15 percent), Byblos Bank Syria (12 percent), Syria Gulf Bank (nine percent), and Sharq Bank (five percent).


“The increase in assets is the result of depreciation of the Syrian lira,” said Mikhael.  


Upon conversion into the US dollar at the prevailing end of year exchange rate, the consolidated balance sheet of the six banks had an annual increase by 2.7 percent.


In terms of capitalization, the equity of the six banks increased by more than eight percent in the first half of 2014 to $247.6 million.