A tough road to cross

Expect more sparkling wine in plastic cups than champagne in crystal flutes at the year-end parties of Lebanese banks. What were once soaring profits have now taken a beating on a sluggish domestic economy, ongoing turmoil in neighboring Syria and increasing international scrutiny and regulations. Add to this the uncertainties of the global economy and the party planners might just opt for Almaza instead. After reporting double-digit profit growth from 2005 to 2010, profits declined by three percent in 2011 to end the year at $1.6 billion. 2012 has not been any better: Bank profits were $356 million in the first quarter, a four percent drop relative to the first period last year. “The level of profitability has been adversely affected by the operating environment; net interest margins [the difference between interest gained and paid out] are under pressure” says Marwan Barakat, chief economist at Bank Audi. It’s not all