The performance of the Lebanese banking sector remained clawed by the local and regional political havoc and the country’s slothful economic activity, with Alpha banks’ combined profits plunging by 13.76% on an annual basis to $1,697.92 million in the first nine months of 2018, down from $1,968.74 million during that same period last year, bearing in mind that the profit figure for the 2017 period incorporated some $95.29 million in gains from discontinued activities. It is worth noting that the Alpha group of banks comprises 15 banks each having customer deposits exceeding $2 billion. The group includes Bank Audi, BLOM Bank, BankMed, Banque Libano-Française, Byblos Bank, Credit Libanais, Bank of Beirut, Bank Beirut & the Arab Countries (BBAC), First National Bank, IBL Bank, Société Générale de Banque au Liban (SGBL), Fransabank, Lebanon and Gulf Bank, CreditBank, and Saradar Bank. In details, the Alpha group reported some 15.84% y-o-y expansion in net interest income to just over $3.39 billion, accompanied by a 1.63% increase in net commission & fee income to $667.56 million. On the other hand, other operating income dwindled by 63.51% on a yearly basis to $149.09 million, with net gains on financial instruments sinking by 67.18% to $245.21 million. Consequently, net operating income fell by 6.18% y-o-y to just below $4.21 billion by September 2018, slightly alleviated by a 3.90% drop in total operating expenses to $2,163.63 million. On the balance sheet front, the consolidated assets of Alpha banks (including their foreign affiliates) widened by 7.03% during the first nine months of the current year to nearly $249.18 billion (compared to a 9.67% growth for the resident banking sector, which excludes foreign affiliates), up from $232.81 billion as at year-end 2017, notwithstanding the 5.09% contraction in the portfolio of net loans & acceptances (compared to some 0.44% drop for the resident banking sector) to around $62.99 billion. The increase in assets was mainly buoyed by a 23.15% hike in cash and balances with Central Banks. On the other hand, customer deposits at Alpha banks rose by a shy 0.22% in the first nine months of 2018 (in comparison with some 3.03% year-to-date uptick in the resident banking sector) to $182.90 billion, from $182.50 billion at end of year 2017. More specifically, domestic deposits at the Alpha group of banks grew by 2.32% to about $160.44 billion, while foreign deposits plummeted by 12.41% to $22.59 billion. From a currency breakdown perspective, the domestic deposit dollarization rate rose from 67.46% in December 2017 to 67.72% in September 2018, accompanied by a contraction in the domestic loan dollarization rate from 70.15% to 69.31%. In this context, the Alpha group’s ratio of net loans to customer deposits fell to 34.44% by end of September 2018 (compared to a resident banking sector ratio of 33.35% when factoring out foreign subsidiaries), with shareholders’ equity shedding 1.33% to around $21.46 billion. From an asset quality standpoint, the ratio of gross doubtful loans to gross loans at Alpha banks increased from 5.88% at end of 2017 to 7.04% by end of September 2018. As far as profitability ratios are concerned, the Alpha group reported annualized returns on average assets (ROaA) and average equity (ROaE) of 0.94% and 10.48% respectively. In details, the expansion in the net interest margin from 1.95% to 2.03% was diluted by the decline in the net operating margin from 40.45% to 37.94%. Said decline in the net operating margin came mainly as a result of the increase in the cost to income ratio from 46.27% YTD September 2017 to 48.35% YTD September 2018, coupled with the expanding tax cost from 8.03% to 8.21% in the light of the corporate income tax hike. It is worth noting that the branch network of Alpha banks narrowed by 5 during the first nine months 2018 to 1,192 branches, with the number of employees also dropping by 461 to 30,431.