Plans to expand US sanctions on Hizbullah, which would have had a negative impact on the Lebanese banking sector, have been watered down, in a positive development for the sector. This will enable banks to continue to grow deposits and assets at a robust pace, driven by improving confidence in the economy and a loyal depositor base.

We believe

The Lebanese economy will see some improvements over the coming years, as falling political risk boosts business confidence and as external conditions brighten. That said, the pace of growth will remain modest, owing to structural weakness in the business environment, poor public finances prompting austerity measures, and the return of inflation.