The latest statistics released by the Association of Banks (ABL) on cleared checks in the Lebanese financial system notably revealed a substantial increase in the month-on-month (MOM) and year-on-year (YOY) number of returned checks. At the same time the total value and number of checks continued its downtrend over the period.
The uptick highlighted in the returned checks can be largely attributed to the closure of banks from October 17th till Nov. 01st and the ensuing capital controls imposed, including ad hoc changes to clients’ overdrafts arrangements with their respective bank(s). These were prompted by the protests that erupted in the capital over the period.
In fact, on a MOM basis, 81,782 checks worth $319.73M were returned in November 2019, composing 6.17% and 10.16% of the total value and number of returned checks, respectively. In comparison, returned checks in October 2019 totaled 16,427 checks worth $88.9M, thereby composing 2.87% and 3.08% of the total value and number of returned checks, respectively.
Meanwhile, in the month of November alone, the total value of cleared checks decreased by 3.5% to $5.2B, owing it partly to a 15.34% yearly downtick recorded in the value of cleared checks denominated in foreign currency to $2.9B. Meanwhile, the value of checks denominated in LP rose by a yearly 13.84% to settle at $2.2B in November 2019.
By the same token and on a yearly basis, the total value of cleared checks fell by a yearly 16.8% by November 2019 to $50.7B, while the number of checks cleared by Banque du Liban declined by 16.2% to stand at 9.1M over the same period last year. In details, the value of cleared checks denominated in Lebanese Pound (LP) declined by an annual 1% to $19.7B by November 2019 whilst the number of checks slipped by a yearly 1.04% to 4.2M. In turn, the number and value of checks denominated in foreign currency (USD) witnessed sharper annual slumps of 26.08% and 24.51% to stand at 4.9M checks worth $30.9B. Accordingly, the dollarization rate in terms of volume and value fell from 60.66% and 67.26% to 53.53% and 61.04%, respectively, by November 2019.
As for the returned checks over the same period, they constituted 2.88% and 2.55% of the total value and number of checks to stand at 294,362 checks worth $1.45B, up from last year’s 254,257 checks worth $1.47B.
However, it is eminent to mention that the central bank issued on Nov. 12, 2019 a new Circular No 533 (decision No 13137) regarding returned checks which clarified that the 15-days grace period usually granted to issuers of returned checks, excludes the dates ranging between: October 15th 2019 and November 15th 2019.
Value of Cleared Checks by November (in $B)