Local banks in Syria see drop in profits

Higher provisions for non-performing loans

The Syrian affiliates of Lebanese banks posted a 46 percent drop in profits in 2012. The aggregate net profits of Bank Audi Syria, Bank of Syria & Overseas (affiliate of BLOM Bank), Byblos Bank Syria, Bank BEMO Saudi Fransi, Fransabank Syria, Sharq Bank (affiliate of BLF), and Syria Gulf Bank (in which FNB has a minority share) dropped to $13.8 million.

The drop in profits can be mainly attributed to the banks’ allocation of higher provisions for non-performing loans and other credit losses. The seven banks had seen a three percent profits growth in 2011.

Bank BEMO Saudi Fransi, which has the widest presence base in Syria, also had the highest share of profits (54 percent), followed by Sharq Bank (34 percent), Fransabank Syria (five percent), and Bank of Syria & Overseas (four percent). Byblos Bank Syria, Syria Gulf Bank, and Bank Audi Syria each had profit shares of less than one percent.

Local banks with a presence in Syria have been taking a conservative approach since the outbreak of confrontations. “Since the outbreak Byblos Bank’s management decided to reduce the size of its Syrian exposure and thus limited its operations there,” said Alain Wanna, Byblos Bank’s Deputy General Manager.

The seven banks saw their assets fall by four percent year-on-year to $4 billion from a low base. Bank BEMO Saudi Fransi maintained the biggest share of assets at 27 percent. Bank of Syria & Overseas followed with 18 percent, while Bank Audi Syria’s assets made up 15.8 percent, and those of Byblos Bank Syria represented 14 percent. The total assets of local banks in Syria had decreased by 17.2 percent from end-2010. All seven banks had an equity growth of 3.6 percent to $470 million.