Bank deposit costs rising unjustifiably. Association of Banks says liquidity is sufficient - Lebanon

Bank deposit costs
rising unjustifiably
Association of Banks

says liquidity is sufficient

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The Association of Banks (ABL) has warned that the cost of deposits is rising at an unjustifiable rate, taking into consideration that there is sufficient liquidity available.

The ABL said in a statement that a very small number of banks are not abiding by a recommendation to keep interest rates stable. The ABL said these banks are putting the entire banking sector at risk and that they have been asked to commit to these requirements, if they do not, ABL will take appropriate measures.

The existing low interbank rates show that liquidity levels are adequate, the ABL said.

If the upward trend of deposit costs continues it will not only lead to a decline in the banks’ profits, but the banks may even record losses, according to the statement. This will also have a negative impact on financing the economy, ABL said.

The weighted average rate on deposits in lira increased to 8.6 percent last April from 6.64 percent a year ago driven by economic challenges and rumors about public finance and the national currency. The weighted average rate on deposits in foreign currencies rose to 5.68 percent in April from 4.1 percent a year earlier.
Reported by Shikrallah Nakhoul
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Date Posted: Jul 19, 2019