Profitability

The hey days of the mid to late 1990s in terms of bank profitability are now over for most Lebanese banks. During that period, local banks were able to create significant interest rate margins between deposits and other funding on the liability side, and loans and government debt securities on the asset side. At that time, yields on government debt securities, whether Eurobonds or Treasury bills, were very high and well exceeded the 10% mark for both Lebanese pound and US dollar denominated fixed income securities, while deposits carried average interest rates (albeit, higher than current levels).Profitability at Lebanese banks has been on a declining trend for some time, as some banks have slowed down their growth, while others find it extremely difficult to lend to viable and creditworthy companies, individuals or projects, given the deteriorating general operating environment. But the main reason for a depleted profitability is the enforced