Libya

Libya's banking system comprises 25 commercial banks, 24 of which report to the Central Bank of Libya's (CBL) statistics, operating 715 branches and agencies. At end-2025, total assets excluding contra accounts were LYD245.7bn, up 30.9% on the year. The sector is highly concentrated. The five largest banks, Jumhouria, National Commercial Bank, Wahda, Sahara and the Bank of Commerce and Development, held 66.5% of assets, and Jumhouria alone held 24.0%. This is down from a 79.7% share for the top five in 2021. The five largest lenders also account for about 90% of sector credit.

Intermediation is shallow. Loans were only 13.7% of total assets and 17.5% of deposits at end-2025, while liquid assets made up 77.1% of the balance sheet. Banks' deposits at the CBL, including required reserves, rose 49.9% to LYD171.1bn. Customer deposits grew 31.5% to LYD193.2bn, of which 82.6% were demand deposits. The increase was boosted by about LYD30.3bn of banknotes deposited after the CBL withdrew certain denominations in June 2025. Because interest is prohibited, Murabaha financing makes up just over half of the loan book.

Reported solvency is high, but asset quality is weak. The CBL puts the sector's capital adequacy ratio at 31.7% at end-2025, up from 24.3%, as banks raised paid-up capital under CBL requirements that have not yet been fully met. Non-performing loans were 19.3% of total loans, with provisions covering 74.2%. Aggregate profit rose 7.7% to LYD2.1bn, and non-interest expenses fell to 55.0% of income. Excess liquidity of about LYD89.8bn reflects limited lending opportunities, and credit growth was capped at 7% for 2025.

The operating environment is shaped by divided political institutions, oil-revenue dependence and foreign-exchange pressure. The official dinar rate was adjusted in 2025, from about LYD4.85 to LYD5.4 per US dollar, and stood at around LYD6.3–6.4 per dollar in the first quarter of 2026. A unified state budget, the first in more than 13 years, was adopted in April 2026. In August 2026 the House of Representatives' finance committee and the High Council of State rejected Governor Naji Issa's request to resign. Key risks remain fiscal slippage, a parallel foreign-exchange market, cash-liquidity shortages and compliance demands from correspondent banks.