Interpreting the checks dataset provided by the Association of Lebanese Banks’ (ABL) on a monthly basis reveals that the uptrend witnessed in the total value of checks early-on in 2020 began to be reversed.
In fact, after reaching highs of $6.7B and $5.8B in Jan. and Feb. 2020, the value of checks respectively declined by 30%YOY and 33.6%YOY in March and in April 2020, before slumping further by 38.1%YOY in May 2020 to close the month at $2.6B. Therefore, it may be safe to say that demand has somewhat softened on real estate (RE) when compared to the period of Q4 2019 when protests first erupted. As RE prices softened, the value of checks slipped as apparent in May’s data.
On a yearly basis, the total number of checks cleared within the Lebanese financial system slumped by an annual 41.5% to settle at 2.5M checks by May 2020 as per ABL. It followed that the value of total cleared checks slipped but less pronouncedly, by a yearly 7.8%, to $21.6B over the same period. In detail, the downticks in the value of total checks partly came as a result of the 11.3% year-on-year (YOY) decline in checks denominated Lebanese pounds (LBP) to $7.7B. Meanwhile, the value of cleared checks denominated in foreign currencies registered a softer retreat, slipping by an annual 5.7% YOY to stand at $13.8B in the first five months of 2020. In terms of volume, checks denominated in Lebanese Pounds and in foreign currencies both registered pronounced decreases of 31.6% and 49.1%YOY to stand at 1.3M and 1.2M by May 2020. Interestingly, the cumulative dataset also confirms that demand on RE has softened (as witnessed in lower-value of check payments made namely to contractors), knowing that many big depositors have already bought RE in the earlier months.
Accordingly, the dollarization of cleared checks in terms of value grew from 62.7% by May 2019 to 64.12% by May 2020. However, the dollarization rate of checks in terms of volume declined from last year’s 56.3% to 48.9% over the same period. In turn, the value and number of returned checks fell by 35.6%YOY and 21.3%YOY, to 71,530 checks worth $477M by May 2020.
Number & Value of Cleared Checks by May (in $B)