Customer Deposits in Palestine, 2020

-        Customer deposits at banks operating in Palestine on 31-12-2020 amounted to 15,137 million dollars (fifteen billion one hundred thirty-seven million dollars), of which customer deposits in the West Bank amounted to 13,708 million dollars (thirteen billion seven hundred eight million dollars), in addition to customer deposits in the Gaza Strip which amounted to 1,429 million dollars (one billion four hundred twenty-nine million dollars).

-        Based on these figures, it was observed that the total customer deposits on 31-12-2020 increased compared with total customer deposits on 31-12-2019 by 1,753 million dollars (one billion seven hundred fifty-three million dollars). (Table No. 10 from the statistics of the Palestine Monetary Authority (PMA)).

-        The composition of customer deposit accounts as of 31-12-2020 is distributed as follows: current accounts amount to 5,803 million dollars, while savings deposits amounted to 4,926 million dollars, and time (term) customer deposits amounted to 4,408 million dollars. (Table No. 13 from the statistics of the Palestine Monetary Authority (PMA))... It was also observed that demand (current) customer deposits declined at the end of March 2020 (the start of the Corona pandemic) compared with their level in February 2020 before the Corona pandemic, by more than 71 million dollars in April 2020; savings deposits also declined by 100 million dollars, and term customer deposits decreased by 42 million dollars for that comparative period (February and March 2020). This is an indicator of customers withdrawing part of their deposits to cover pandemic-related expenses, in addition to what was imposed by the cessation of work in most activities of the national economy in Palestine, and the effect of home quarantine on withdrawals and savings in banks instead of spending from their accounts as we observed....

-        Customer deposits in the West Bank as of 31-12-2020 held the largest total, amounting on that date to 13,708 million dollars, while customer deposits in the Gaza Strip amounted to 1,429 million dollars... Noting that the increase in customer deposits in the West Bank on 31-12-2020 compared with 31-12-2019 also constituted the largest share, accounting for more than 93% of the total increase during the year.

·       I refer to Table No. (21) from the statistics on the Palestine Monetary Authority (PMA) website for the third quarter of 2020, which concerns the distribution of total loans and customer deposits by region, and its comparison with data for the third quarter of 2019; we clarify the following:

-        The value of bank facilities (loans) granted by banks operating in Palestine up to the end of the third quarter of 2020 (30-9-2020) increased by 967 million dollars in the West Bank, compared to the bank facilities data as of the end of the third quarter of 2019 (30-9-2019).

-        We analyzed the trajectories of this increase in bank facilities as of the end of the third quarter of 2020, to determine the volume of bank facilities that the Palestinian governorates and cities in the West Bank received, and the following became apparent:

-        Ramallah and Al-Bireh Governorate received 1,047 million dollars (one billion forty-seven million dollars) of bank facilities by the end of the third quarter of 2020, which consumed the entire amount of the increase in bank facilities according to the statistics compared with bank facilities at the end of the third quarter of 2019.... (100%), while deposits of Ramallah and Al-Bireh Governorate at the end of the third quarter of 2020 (30-9-2020) amounted to 4,882 million dollars, an increase over its deposits in the third quarter of 2019 of 286 million dollars, so that its deposit increase represents 16% of the amount 1,753 million dollars, which is the total annual increase in customer deposits in 2020. (Taking into account the value of the governorate’s deposits in the fourth quarter of 2020..)

-        As for Hebron Governorate, its facilities decreased by 23 million dollars, with its facilities balance at the end of the third quarter of 2020 amounting to 551 million dollars, while its deposits at the end of the third quarter of 2020 amounted to 1,364 million dollars, an increase over the governorate’s deposits at the end of the third quarter of 2019 by 144 million dollars, i.e., an increase of about 8% of the total increase in customer deposits during 2020.

-        Salfit Governorate’s facilities also decreased by 45 million dollars, noting that the balance of customer deposits in this governorate at the end of the third quarter of 2020 was 171 million dollars, an increase of 21 million dollars over customer deposits at the end of the third quarter of 2019.

-        Bank facilities in Tubas Governorate also decreased by 6 million dollars, while the governorate’s deposits at the end of the third quarter of 2020 increased compared with the end of the third quarter of 2019 by 10 million dollars. Noting that the balance of these deposits in the third quarter of 2020 amounted to 108 million dollars.

-        Likewise in Qalqilya Governorate, its facilities decreased by 2 million dollars, while its deposits increased by 33 million dollars compared with their level at the end of the third quarter of 2019, with a balance at the end of the third quarter of 2020 of 263 million dollars.

-        In addition, Jenin Governorate’s facilities decreased by 17 million dollars, while its deposits at the end of the third quarter of 2020 increased by 88 million dollars compared with their level at the end of the third quarter of 2019, with a balance at the end of the third quarter of 2020 of 263 million dollars...

-        However, other governorates increased their facilities, such as Bethlehem Governorate, by 37 million dollars, while its deposits increased by 58 million dollars, with a balance of 1,068 million dollars at the end of the third quarter of 2020.

-        Also Tulkarm Governorate, which increased its facilities by 7 million dollars, while its deposits increased by 73 million dollars, with a balance of 662 million dollars at the end of the third quarter of 2020.

-        As for Nablus Governorate, its facilities increased by 37 million dollars, with the balance of its facilities at the end of the third quarter of 2020 amounting to 1,124 million dollars (one billion one hundred twenty-four million dollars)... Its deposits increased by 153 million dollars, with a balance of 1,838 million dollars at the end of the third quarter of 2020.

·       As a result of this analysis, it is clear that the beneficiary of the entire increase in bank facilities was Ramallah and Al-Bireh Governorate, which received 1,047 million US dollars, and there are several governorates, as noted, whose facilities declined markedly... In summary of all these data, Ramallah Governorate, which hosts the public sector (the government) and part of the private sector, benefited from the entirety of the bank facilities from the banks in 2020 which were consumer credit to the private sector whether consumer loan financing or vehicle financing.... which do not add an incentive to gross domestic product..! In addition to some facilities granted to a few other governorates in the West Bank, this indicates that bank facilities in 2020 did not achieve the objectives for which bank credit is granted, namely financing different economic sectors and their various activities, in order to develop the economy and increase gross domestic income.

·       I add here that such financial data, which show that most governorates lacked bank credit in their governorates and cities to develop their economies and advance local communities, noting that banks operating in Palestine hold in their vaults customer deposits from individuals, companies and institutions in these governorates, and it is evident that the value of bank facilities granted to them by banks operating in Palestine does not correspond to the deposits of each governorate.

-        It was observed that the interest rates on bank loans up to the third quarter of 2020 were higher in the second quarter of 2020 across all loans in the three main currencies, and remained so until the end of the third quarter of 2020. The average interest rate on loans in dinar in the second quarter of 2020 (from 1-4-2020 to 30-6-2020) was 6.95% per annum, while the interest on dollar loans for the same period averaged 5.71%, and the average interest rate on loans in shekel (ILS) for the same period was 7.08%. Noting that most bank facilities in 2020 were in shekel (ILS) followed by the dollar, while facilities in dinar declined compared with their level in the previous year.... Therefore, since the second quarter was the initial period of the Corona outbreak, analysis of these rates shows that banks did not reduce interest rates on their facilities, and there were no indicators that banks took into account their interest rate pricing on bank credit during that crisis.. the pandemic..! According to the data on loan interest rates in that critical period, they were in fact the highest during 2020 up to the end of the third quarter.

-        Certainly the year 2020 is an exceptional year... because of the pandemic that disrupted the country and its people; economic facilities were closed, and emergency laws and home quarantine were applied, both of which contributed significantly to the contraction of facilities, due to the lack of movement between the governorates.... in light of the concentration of official services, administrative services, and banking financing, in the hands of the Ramallah and al-Bireh Governorate.

-        As for the banking facilities provided to the Gaza Strip, these banking facilities decreased by an amount of 21 million dollars, compared with the balance of banking facilities at the end of the third quarter of 2019, where the balance of banking facilities for the Gaza Strip in the third quarter of 2020 amounted to 898 million dollars...

·       It is certain that these amounts are modest amounts relative to the size of the Gaza Strip, economically and demographically, and we hope that the division will end ..soon.. so that the economic data and, before that, the political situation will consequently change, to the benefit of the Palestinian people who have been languishing under the Israeli occupation for several black decades.!!

-       Dated 1-2-2021