BEIRUT: High performing Lebanese banks have challenged all odds this year and even came on top. From a severe global recession that hit Gulf oil countries real hard to a gradual fall in interest rates on Lebanese pound and all the way to the absence of a government that should run the daily affairs of the Lebanese. But despite all these negative factors, Lebanese banks in general and most notable the large banks have continued to record relatively high profits in the first nine months of this year.

Lebanese banks have drawn over $12 billion in customer deposits in the first eight months of 2009 and central bankcentral bank Governor Riad Salameh projected this trend to continue next year.

Bankers in general attribute the solid performance of their banks to two things: high confidence in the Lebanese banking system and the effective measures adopted by Salameh to safeguard these banks from any unforeseen pitfalls in the future.

However, the sectary general of the Association of Banks in Lebanon believes that the Lebanese banks may not be able to maintain the high profits ratios in the coming years.

“It is true that Lebanese banks made good profits but this profit growth was lower than 8-9 percent compared to 2008,” Makram Sader told The Daily Star on Monday.

He added that the fall in interest rates on the US dollar and other foreign currencies have fallen worldwide.

“The central bankcentral bank and even Lebanese commercial banks have part of their portfolios and investments abroad and naturally the return on these equities have dropped due to the decline in interest rates on US dollar,” Sader said.

He noticed that the interest rates on the US dollar in Lebanese banks did not fall in the same ratio as other banks around the world.

Sader argues it is difficult to project the performance of Lebanese banks in 2010 due to several factors.

“If we have sufficient liquidity in Lebanese banks then profits will stay high but if this cash falls then profits will obviously drop,” Sader said.

He stressed that before the global credit crunch, most banks in the US and Europe had high profits because liquidity was high. “But when cash started to drain out, many of these banks in the US and other countries have fallen and some of them have recorded losses,” Sader said.

He also warned that the fall in interest rates in the Lebanese pound and treasury bills in addition to the absence of a government will take its toll on both the economy and banks.

“It is wrong to assume, as some people think, that the economy and banks will continue to prosper without the need of a government. Investors will not be encouraged to make any commitment if there is no government in the country,” Sader said.

Other bankers say that they may find it difficult to invest this huge cash deposits with the private sector if the latter is not eager to borrow money amid this sharp political crisis.

They admitted that if remittances from Lebanese expatriates in oil rich Gulf States shrunk due to the severe economic conditions then cash inflow to the local banks will decline and with them the profits.

Sader said that the International Monetary Fund (IMF) is upbeat about the future of Lebanon and even expects the Lebanese working in the Gulf to send more money to their country next year.

“But personally I do not share the IMF’s optimism. I think that remittances will slightly decline next year,” he said.

It is worth mentioning that the financial statements of the top three Lebanese banks for the first nine months of 2009 released last week show that net profits of Lebanese banks grew by 12.2 percent over the first nine months of 2009 relative to last year’s corresponding, in a period where most regional and global banks are witnessing net contractions in earnings.

Bank Audi s.a.l – Audi Saradar Group ranked first in terms of all major criteria, i.e assets, deposits, loans, shareholders’ equity and net profits

Audi recorded a net profit of $212.75 million up to September of this year.

BLOM Bank came in second with $20.3 billion in total assets, and an increase of 13.2 percent from $17.9 billion at year-end 2008.

Byblos Bank came in the third place with total assets of $13.0 billion at end-September 2009, up by 16.1 percent from $11.2 billion at year-end 2008.