Lebanese banks Bank Audi, BankMed and Blom Bank have had their outlook revised to stable from negative, by US ratings agency Standard & Poor’s (S&P).

S&P’s long-term ratings remain at B- for all three lenders and the short-term rating for Bank Audi and BankMed remains at C.

The improvement to the banks’ outlook follows the ratings provider’s upgrade of Lebanon’s country outlook from negative to stable earlier in April.

S&P says the country’s banking sector’s outlook has strengthened due to strong deposit inflows, which have remained stable despite the increasing level of instability caused by the spillover of the civil war in neighbouring Syria.

These deposit levels are expected to ensure the government can meet its financing need in the coming year.

However, the ratings agency warns that the Lebanese banks remain highly exposed to the domestic market, and have very large exposures to the sovereign. This is despite banks’ efforts to diversify their business through regional expansion.