Months of violent conflict are weighing heavily on Syria's banking sector with many branches closing their doors and foreign lenders chalking up big losses.
As a result of the war some branches are unable to stay open every weekday. Others have closed entirely and managers have moved employees to branches operating in safer neighbourhoods.
"In Aleppo and Homs, some bank offices are shut most of the time," said Anas Jawish, the listings and operations manager at the Damascus Securities Exchange. "They only open when it's safe. People can't walk on the streets, fire is burning in some areas on continued fighting - business life has almost stopped completely."
The country's two foreign-backed lenders have reported their first ever losses since the uprising that began 16 months ago, a sign the country's banking system is beginning to falter.
Bank Audi Syria, the Lebanese lender's subsidiary, reported a loss of 686.50 million Syrian pounds (Dh36.5m) for the quarter ending September 30, compared with a profit of 64.4m pounds a year earlier. Non-performing loans almost doubled to 4.96 billion pounds, at 19.9 per cent of outstanding loans, compared with 2.93bn pounds a year ago.
In a statement to the Damascus bourse yesterday, the bank said it planned to "reduce operational expenses, both staff expenses and various other expenses, in line with the current operational circumstances."
Qatar National Bank Syria posted a third-quarter net loss of 315.4m pounds, from a profit of 155.6m pounds in the same period last year. Customer deposits fell to 156m pounds, from 253.3m pounds last year, as people traded the local currency for hard currencies such as dollars or for gold.
Syria's 14 private lenders, considered the crown jewels of the president Bashar Al Assad's economic modernisation plan, are struggling with a mismatch of assets and liabilities following a 25 per cent decline in the value for the country's currency since May last year.
Banking transactions such as trade finance or corporate lending have taken a big hit, and deposits and withdrawals continue.
Before the uprising that began in March last year, many Syrian banks were hoping to expand operations, said Nassib Ghobril, the chief economist at Byblos Bank in Lebanon.
"But since the turmoil, their focus has become risk management. Lenders are in wait-and-see mode, and paying attention to how they can minimise the damage and losses until the conflict ends."
Syria International Islamic Bank said last month it had been targeted in a robbery in Homs resulting in the loss of 75.2m pounds, while Banque Bemo Saudi Fransi said it had incurred losses from fraud and forgery totalling 25m pounds in a separate filing to the Damascus Securities Exchange.
Many lenders reported a windfall of profit in the third quarter of last year, despite international sanctions, because of their foreign currency holdings.
"The banks held dollar accounts, and when the pound fell, that's what made the net income, it was very obvious," said Mr Jawish. "But on operational income, only three out of 14 banks were at break-even."
The IMF has not provided figures on the Syrian economy since the start of violence.
The Damascus exchange index has lost 40 per cent of its value since the uprising. Trading has mostly halted over the past month, although the exchange remains open.
Most Syrian banks have decided to downsize by the end of this year, said Mr Jawish.
Layoffs have not yet begun, but employees who are resigning are not being replaced, he added. "The banks cannot continue like this. If they continue for another year, I wouldn't be surprised to see the start of consolidation, mergers," he added.
Mr Ghobril said it was unlikely that Lebanese banks would pull out of Syria, despite the worsening economic environment.
"Lebanese banks are used to operating in very difficult environments. They survived 15 years in the civil war in Lebanon, and they have developed the ability to be flexible and adapt to political and security shocks," he added.
