Banking Statistics and Financial Indicators: What the Data Shows

●      The statistical tables of the Palestine Monetary Authority (PMA), published on its website, (Table No. 10), indicate that the total deposits of customers in banks operating in Palestine, as of 31-12-2022, reached an amount of 16,468 million dollars (sixteen billion four hundred sixty-eight million dollars), a decrease from the total at the end of 2021 by approximately (fifty million dollars), i.e. a percentage decrease ( 3 per thousand.(. The total deposits in the West Bank amounted to 14,930 million dollars, while total deposits in the Gaza Strip amounted to 1,538 million dollars...

●      It is notable that these deposit figures for 2022 are almost identical to the figures for 2021, which indicates stagnation in 2022 and a tilt toward negativity in the positive growth of these deposits, despite increases in annual interest rates on the dollar and some other currencies, which raised deposit interest—an incentive for deposit growth and a relative disincentive to seek bank facilities that become more costly. In Palestine in 2022 this was the opposite, as bank facilities increased, as we will show later, and bank deposits declined relatively..... However, dollar-denominated deposits subject to payable interest dominated deposits in other currencies...as we will show below.

●      The total of these deposits (subject to interest - payable interest -) amounted to 8,699 million dollars, of which in the shekel (ILS) currency amounted to 2,817 million dollars, and in the dinar currency 2,161 million dollars, while in the dollar currency it amounted to 3,586 million dollars... Meanwhile the total of these deposits (not subject to interest – payable interest -) amounted to 7,769 million dollars.. of which in the shekel (ILS) currency amounted to 3,963 million dollars, while in the Jordanian dinar currency it amounted to 1,172 million dollars, and in the dollar currency amounted to 2,326 million dollars...

●      Total customer deposits as of 31-12-2022 in current accounts amounted to 6,242 million dollars, while bank deposits in savings accounts amounted to 5,714 million dollars, whereas customer deposits in time (term) accounts amounted to 4,512 million dollars. (Table No. 13 - Palestine Monetary Authority (PMA))

●      It is noticeable from the data in Table No. 13, which shows the distribution of customers' bank deposits by depositor and by the account types hosting these deposits, that savings deposit accounts increased in 2022, where the rate of increase compared to 2021 was less than 2%, while time (term) accounts decreased in 2022 compared to 2021 by (a decrease of 2%). As for current accounts, their decrease in 2022 compared to 2021 was (a decrease of 1%).

●      Total deposits of the private sector – resident and non-resident, at the end of 2022 amounted to 15,847 million dollars, a decrease from the end of 2021 (by 42 million dollars). (a percentage decrease of less than 1%) according to Table No. 15.

●      Table No. 17 of the Palestine Monetary Authority (PMA) statistics shows the distribution of customers' deposits by region (geographical distribution of deposits), the third quarter of 2022 (30-9-2022). The following lists the distribution of these deposits in the table below for your information, where it is noticeable that the Ramallah and Al-Bireh Governorate controlled the largest share of customer deposits in the West Bank despite its population not exceeding 12% of the West Bank population, showing a clear concentration of deposits in this governorate relative to other northern governorates. This is what we later observe significantly in the concentration of bank facilities in this governorate... which weakens levels of financial inclusion ( Financial Inclusion) in Palestine, which are originally among the lowest levels of financial inclusion in the world. The World Bank announced in its 2021 financial inclusion report that Palestine and the rest of the Arab countries (except the Gulf countries) ranked around 34% in 2021 regarding account ownership, which is one of the basic elements of financial inclusion... which in turn weakens the wheel of economic growth in the country. (Noting that the Palestine Monetary Authority (PMA) statistics in its annual report on financial inclusion in Palestine for 2021 show a financial inclusion rate of 46%)..

●      Table No. 18 of the Palestine Monetary Authority (PMA) statistics for 2022 showed that bank facilities for 2022, as of 31-12-2022, reached 11,045 million dollars (eleven billion forty-five million dollars)... achieving an increase over the end of 2021 by 298 million dollars. Bank facilities in the form of loans to the public sector amounted to 2,194 million dollars, declining from the end of 2021 by (241 million dollars) – a decrease – and overdraft bank facilities at the end of 2022 provided to the public sector decreased by (32 million dollars) - a decrease - compared to 2021... while bank loans to the private sector at the end of 2022 amounted to 7,822 million dollars, achieving an increase over the same period in 2021 by 483 million dollars. The increase in bank facilities to the private sector was not limited to loans only; bank facilities provided by banks at the end of 2022 in the form of overdrafts amounted to 52 million dollars – an increase – over their level at the end of 2021, and likewise private sector facilities provided in the form of leasing financing increased by 29 million dollars – an increase – therefore, private sector bank facilities in 2022 increased by 7% compared to their level at the end of 2021... We will attempt later to present a clearer picture through analysis of the economic sectors in the Palestinian economy that received increases in these bank facilities provided to the private sector for 2022..

●      Table No. 19 of the Palestine Monetary Authority (PMA) statistics for 2022 showed the distribution of total bank facilities granted to the private sector by economic activity sector in 2022, as follows:

-       Bank facilities provided to the resident private sector for 2022 in the West Bank amounted to 7,842 million dollars, an increase of about 542 million dollars, distributed as follows:

-       As for bank facilities provided to the resident private sector in 2022 for the Gaza Strip, they amounted to 977 million dollars, an increase over 2021 by 41 million dollars... and most of the increase in these bank facilities in the Gaza Strip was directed to resident companies (19 million dollars – increase –) and resident individuals by 21 million dollars – increase – while a decline was observed in Gaza Strip bank facilities provided in the form of credit cards by about one million dollars.. (a decrease)..

●      It is noticeable that the banking credit sector – for the private sector - individuals and companies - in the form of credit cards, showed a noticeable slowdown ..in the West Bank, and a decline in the Gaza Strip, and this is an indicator that the public does not pay clear attention to this type of electronic banking facility. Or that the conditions for granting it by banking institutions appear harsh...which excludes it from the financial market, or a low uptake rate, despite being an important tool in achieving financial inclusion in the country.....and this itself also weakens the levels of financial inclusion in Palestine, which are among the lowest in the world. As we stated earlier!..which places an additional burden on the monetary and financial authorities and institutions in Palestine, in facing the implementation of the objectives of the National Strategy in Palestine for 2018-2025, which was drawn up by the Palestine Monetary Authority (PMA), the Palestine Capital Market Authority, and other relevant parties including international ones, and one of its most important objectives is expanding levels of financial inclusion in Palestine, and enabling the majority of Palestinian social groups to access financial and banking services..and in particular electronic ones, if not their generalization. In order to be used by all segments of the Palestinian people, which in turn form the foundations of economic growth, and the prosperity of economic and social activities in all its sectors, to increase the gross domestic income..in Palestine.

●      We also observed that current account overdraft (jari madin al-jamid) in 2022, its figures increased compared to the same period in 2021.., which indicates an accumulation of defaults on current account overdrafts..which hinders the growth of banking facilities provided in the form of current account overdrafts..!.

●      We ask you to see below..the distribution of banking facilities in the third quarter of 2022 across the governorates of the West Bank ...

●      Table No. 21 of the Palestine Monetary Authority (PMA) statistics showed the distribution of total facilities granted by area for the third quarter of 2022..the governorates - as follows:

●      As for the distribution of total facilities granted for the third quarter of 2022..in the Gaza Strip, it was as follows:

●      It is clear that the siege of the Gaza Strip that has lasted for more than 17 years, and the effect of the bitter division between the West Bank and the Gaza Strip..casts its shadow over the financial data of the Gaza Strip, and economic activity therein..as the modest numbers whether in total deposits and banking facilities constitute only a 9% share of total deposits in Palestine in 2022..while in banking facilities, they were in the Gaza Strip at 11% of total banking facilities in Palestine for 2022, which hardly reach the data of a medium-sized governorate in the West Bank.....and this in reality is one of the deep wounds..which affects the growth of the Palestinian economy, and the expansion of credit and other financial services across all Palestinian areas, and involving them in advancing the Palestinian economy!..It is the policy of military occupation and economic impoverishment of the Palestinians.

●      And it is clear that Area C, classified by the Israeli military occupation authorities, is not controlled in the normal sovereign manner nor included under the legal and judicial jurisdictions of the Palestinian National Authority...and others. These lands constitute more than 60% of the Palestinian lands, after the Israeli occupation in 1967,....and therefore, banks operating in Palestine do not find an incentive under these conditions, and a protector of their financial rights....!

●      We also observe the concentration of banking facilities in the Gaza Strip in Gaza City as in the northern governorates – West Bank..

●     As for Table No. 23 of the Palestine Monetary Authority (PMA) statistics for the sectoral distribution of banking facilities for the third quarter of 2022...based on the nature of economic activity

●      From our analysis of these banking data, we observe indicators of the trajectory of banking facilities provided to the private sector by economic activity sector, as it is clear that the primary destination of banking facilities is directed to the construction and building sector at 19% of total facilities in 2022, noting that this activity achieved an increase of 9% compared to its counterpart in 2021, followed by the domestic and foreign trade sector at 16% of the total of these facilities in 2022, noting that it achieved an increase of 2% compared to 2021, then in third place comes consumer loans at 14% of total facilities in 2022, where it achieved an increase over its counterpart in 2021 by 6%.

●      As for the sectors that received a weak share of total banking facilities in 2022, the agriculture sector received 1% of the total of these banking facilities..noting that it achieved an increase of 2% over the banking facilities granted to it in 2021 in the same period..as the activity of the tourism, hotels and restaurants sector..its share of banking facilities in 2022 was less than 1%...of the total banking facilities granted to the private sector in 2022, in addition to that it recorded a decrease in the facilities granted to it compared to 2021..by (1% -decrease-).

●      It is noticeable that among the (ostracized) sectors from banking facilities granted to the private sector is the investment in shares sector..one of the sectors considered an effective tool to stimulate economic growth in the private sector and its companies..as the share of banking facilities granted to this sector in 2022 was less than 1%...noting that it also recorded a marked decline when comparing the facilities granted to it in 2022 with those in 2021, where the rate of decline was (32%).

●      As for the activity of the auto and vehicle financing sector which had a share of banking facilities granted to it in 2022 of 4%, of total banking facilities granted to the private sector in 2022..however it recorded a decline in its growth rate when comparing its facilities granted in 2022 to facilities granted to it in 2021, where there is (a decline of 4%).

●      It was noted that the activity of the land development sector, which received 4% of total banking facilities for the private sector in 2022, recorded a decrease in its growth, relative to 2021, by (1%)...

● From the analysis of the data on banking facilities granted to the public sector in the West Bank in the third quarter of 2022 (i.e., up to 30-9-2022) relative to total banking facilities in that period, its share reached 20%. Meanwhile the public sector recorded a decline in its growth compared to facilities in the third quarter of 2021 by (7%)...a decrease... and it is known that the public sector is attributed to the government sector...while the private sector’s share of total banking facilities granted in the third quarter of 2022 amounted to about 80%..its facilities also grew by an increase of 5%..comparing its facilities in the third quarter of 2022 with their counterparts in 2021...

● It is clear that the banking sector, which is one of the critical tributaries for developing the wheel of the national economy..still focuses on certain sectors in the national economy..namely the consumer sectors for individuals, the corporate sector, and some service sectors..while there are sectors considered vital for stimulating the growth of the national economy and increasing gross domestic product, such as the tourism and hotels sector and agriculture and industry productive. and trading in shares....which received a modest share of the banks’ investment portfolio..and we know that there are partly acceptable reasons for some of this in order to maintain the continuity of the existence and activity of banks since they are private companies..yet their social responsibility..in participating in the wheel of growth in the national economy, outweighs the meager amounts shown by the Association of Banks’ 2021 statistics, of the amounts that banks contribute in partnership with non-profit institutions...and which the banks do not participate effectively in expanding the scope and levels of financial inclusion in the country as hoped at the national level...We also noticed how modest the percentage of banking facilities granted in the form of bank cards is..and these banks must seek broader and more incentivizing means to restructure the spread of their banking services to be broader, review the bases and criteria for granting banking facilities, include microcredit more substantively, and be creative in establishing and expanding service channels under the names of financial technology..to stimulate and encourage the public to knock on their doors..in larger volume and quality. and safer and at lower cost....!