x Abu Dhabi, UAEMonday 24 July 2017

Bank's profit plunge gives insight on Syria's woes

The first Syrian lender to announce 2012 earnings has reported a 95 per cent plunge in profits, as months of violence takes its toll on the banking sector.

The first Syrian lender to announce 2012 earnings has reported a 95 per cent plunge in profits, as months of violence takes its toll on the banking sector.

Bank Audi Syria said it took out the biggest possible provision to cover bad loans.

The unit of Lebanon's largest lender made just 5.58 million Syrian pounds (Dh289,084) last year, compared with 114.3m pounds in 2011 and 737.5m pounds in 2010.

Syria's 14 private lenders, considered the crown jewels of the president Bashar Al Assad's economic modernisation plan, are struggling with a mismatch of assets and liabilities.

Banking transactions such as trade finance or corporate lending have taken a big hit, and deposits and withdrawals continue. Some banks have started to move deposits to the capital, temporarily closing branches amid crossfire in conflict areas such as Homs and Deir Al Zor.

"The bank has taken all the necessary measures to ensure business continuity and offer the best banking services possible by adapting with the current operational conditions," the chairman, George Al Ashi, said in a release to the Damascus bourse. "This is in addition to maintaining higher cash-flow rates than that decided by the authorities in a way that ensures and provides bank clients with liquidity at any given time and any given currency."

The foreign-backed lender found it necessary to establish a balance between the bank's income and its operational expenses, the statement said. The bank's management was able to reduce costs by 100m Syrian pounds last year, it added.

The IMF has not provided figures on the Syrian economy since the start of violence in March 2011. Nassib Ghobril, the chief economist of Byblos Bank, estimates Syria's GDP has halved since 2010's figure of US$58 billion (Dh213bn).

"The banks are being directly affected by turmoil and continue to be affected as long as the situation persists," Mr Ghobril said.

"All the banks in Syria are being very cautious.They are waiting to see what happens. They are not extending loans to new clients. There is no new business. It's a very difficult situation."

There are 20 stocks listed on the Damascus Securities Exchange, 12 of which are banks, with the rest from the insurance, services, industrial and agriculture sectors.

Trading on the DSE has almost halted in recent months as violence escalated in the capital and other cities across Syria. But exchange officials say they remain committed to offering investors a place to trade their holdings.

The DSE General Index has lost more than half of its value since the uprising began. It traded at 1,523.14 points on March 15, 2011, and has since fallen to 783.18 points.

 

halsayegh@thenational.ae