Trends in Deposits and Bank Credit in the First Half of 2026

 

Preliminary statistical data issued by the Palestine Monetary Authority indicate the continued growth of Palestinian banking activity during the first half of 2026, despite the continuing economic and political challenges facing the Palestinian economy, notably the repercussions of the war on the Gaza Strip and the decline in economic activity in a number of productive sectors.

Total customer deposits at banks operating in Palestine rose to $23.179 billion at the end of the second quarter of 2026, compared with $21.862 billion at the end of 2025, an annual increase of $2.232 billion compared with the second quarter of 2025. Total credit facilities also rose to $13.296 billion, with the geographic concentration of banking activity continuing in the West Bank, especially in the Ramallah and Al-Bireh Governorate. Conversely, indicators emerged of a change in the structure of bank credit, manifested in increased financing directed to the public sector and a slowdown in the growth of financing directed to the private sector!

First: Development of customer deposits

1-      Overall deposit growth

Total customer deposits at banks operating in Palestine amounted to approximately $23.179 billion on 30/6/2026, compared with $21.862 billion at the end of 2025, an increase of $1.317 billion and a growth rate approaching 6%. Deposits also rose compared with the second quarter of 2025, when total deposits amounted to $20.947 billion, an increase of $2.232 billion, representing a growth rate of about 11%.

This increase reflects the continued ability of the Palestinian banking system to attract savings and liquidity despite exceptional economic conditions, and it also indicates an increased propensity to retain funds within the banking sector, whether for saving purposes or due to limited alternative investment opportunities.

2-      Geographic distribution of deposits between the West Bank and the Gaza Strip

Customer deposits in the West Bank at the end of the second quarter of 2026 amounted to approximately $17.551 billion, constituting 76% of total deposits in Palestine, while deposits in the Gaza Strip amounted to $5.628 billion, or 24% of the total.

In the year-on-year comparison, West Bank deposits increased by $1.113 billion, or 6.8%, while Gaza Strip deposits increased by $1.119 billion, with a high growth rate of about 25%.

These results indicate that the relative growth in Gaza Strip deposits was higher than in the West Bank despite the difficult humanitarian and economic conditions, which may reflect inflows of financial aid, an increased tendency to hold liquidity within the banking system, or changes in spending and consumption patterns.

Second: Geographic distribution of deposits within the West Bank

The data reveal a clear concentration of bank deposits in a limited number of governorates, with Ramallah and Al-Bireh Governorate ranking first with deposits amounting to $6.948 billion, representing 40% of total West Bank deposits. Nablus Governorate ranked second with $2.431 billion (14%), followed by Hebron Governorate with $1.957 billion (11%), then Jenin with $1.293 billion (7%), and Bethlehem with $1.280 billion.

These indicators reflect the continuation of economic and financial concentration in Ramallah and Al-Bireh Governorate, as the main administrative and financial center in Palestine, where government institutions, banks and large companies are concentrated.

The data also showed a decline in Tulkarm Governorate deposits by $57 million compared with the end of 2025, making it the only governorate that recorded a decrease in deposits during the period under study.

Third: Development of credit facilities

Total credit facilities provided in Palestine at the end of the second quarter of 2026 amounted to approximately $13.296 billion, compared with $12.680 billion in the second quarter of 2025, an increase of $616 million.

The West Bank accounted for 96% of total facilities with $12.738 billion, compared with only $555 million for the Gaza Strip, i.e., 4% of total facilities. Facilities granted to Gaza also declined by $402 million compared with the second quarter of 2025.

These data indicate a widening credit gap between the West Bank and the Gaza Strip, and an increased degree of banking caution toward financing in Gaza given the existing economic and security conditions.

Fourth: Geographic distribution of facilities in the West Bank

The data show a large concentration of bank facilities in Ramallah and Al-Bireh Governorate, which accounted for $8.359 billion, or 63% of total facilities in the West Bank. Nablus ranked second with 10%, then Hebron with 6%, Bethlehem with 4%, and Jenin with 3%.

This concentration indicates that economic and financing activity remains concentrated in a limited number of governorates, which calls for work to achieve a more balanced distribution of bank credit among the governorates.

Fifth: Sectoral distribution of credit facilities

Total credit facilities in the first quarter of 2026 amounted to about $12.695 billion, of which $3.442 billion were to the public sector, or 27%, and $9.252 billion to the private sector, or 73%. Facilities granted to the public sector increased by $731 million, while the increase in private sector financing did not exceed only $20 million!

These data indicate a relative shift in the structure of bank credit toward increased financing of the public sector at the expense of slower financing of the private sector!

At the level of economic sectors, some activities recorded a decline in facilities granted to them, most notably: business services: a decrease of $84 million; land development: a decrease of $62 million. Also real estate: a decrease of $39 million. In addition, vehicle financing: a decrease of $18 million, and investment in shares: a decrease of $13 million was also observed!

In contrast, facilities granted to consumer loans increased by $124 million, and to domestic and foreign trade by $49 million, noting that the increase was concentrated in domestic trade, while financing directed to foreign trade decreased by $46 million!

Thus the main conclusions point to the following:

1. Continued growth of customer deposits at rates exceeding the growth of credit facilities.
2. Continued financial and banking concentration in Ramallah and Al-Bireh Governorate.
3. An increase in the share of deposits in the Gaza Strip alongside the continued decline of credit facilities granted to it.
4. Increased reliance of the banking system on financing the public sector.
5. A slowdown in the growth of financing directed to productive and real estate sectors.
6. An increase in consumer financing compared with productive financing.
7. Continued geographic disparity in the distribution of bank credit.

• Overall, the report shows that the Palestinian banking sector maintained its resilience and its ability to attract deposits during the first half of 2026, yet the credit structure points to challenges related to geographic and sectoral concentration of financing, and to the need to direct more financial resources toward productive and developmental sectors. Among the indicators in these statistical reports is that the banking system remains strong, liquidity is high, credit deployment has become more conservative, the public sector has become the largest borrower, the private sector has begun to lose momentum, economic activity is increasingly concentrated in Ramallah, and Gaza has become more dependent on deposits than on credit.

• Recommendations that can be adopted to improve the indicators and results include: the necessity of enhancing financing directed to productive, industrial and agricultural sectors; encouraging a fairer geographic distribution of bank facilities; developing financing instruments specific to the Gaza Strip to support economic recovery; limiting excessive expansion in consumer financing in favor of developmental financing; and strengthening the role of the banking sector in supporting small and medium-sized enterprises!

ِ