According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 13.26% (LBP 43,324 billion) during the year 2020 to LBP 283,474 billion ($188.04 billion), down from LBP 326,797 billion ($216.78 billion) in December 2019. This drop is partly attributed to the sizeable contraction in loans to the private sector.

On the funding side of the balance sheet, customer deposits fell by 11.69% (LBP 28,848 billion) during the year 2020 to LBP 218,017 billion ($144.62 billion) bearing in mind that they fell by $3.61 billion in December and by $5.86 billion in November 2019 at the onset of October’s social uprising. This comes on the back of the bank run witnessed in the aftermath of the ongoing social tensions and fear of a haircut on deposits. More specifically, deposits of the resident private sector fell by 11.57% (LBP 22,046 billion) to LBP 168,519 billion ($111.79 billion), accompanied by a 15.71% (LBP 7,687 billion) decrease in the deposits of the non-resident private sector to LBP 41,233 billion ($27.35 billion). However, public sector deposits increased by 11.99% (LBP 885 billion) in 2020 to LBP 8,264 billion ($5.48 billion). From a currency denomination standpoint, deposits in Lebanese Pounds receded by 23.69% (LBP 15,353 billion) in the year 2020 to LBP 49,446 billion ($32.80 billion), with foreign currency deposits also dropping by 7.41% (LBP 13,495 billion) to LBP 168,570 billion ($111.82 billion). In this context, the deposit dollarization rate increased to 80.37% as at end of year 2020 in comparison with 76.02% in December 2019.

On the lending front, loans to the private sector (residents and non-residents) receded by 27.33% (LBP 20,504 billion) during the year 2020 to LBP 54,523 billion ($36.17 billion), down from LBP 75,027 billion ($49.77 billion) in December 2019. This drop in the loans portfolio partly owes to the early settlement of some loans either from fresh funds to benefit from the multiplier effect on fresh currency or from related customers’ deposits through a netting process in fear of a haircut on deposits or a formal devaluation of the currency. This resulted in a ratio of net loans to customer deposits of 25.01% at end of year 2020, compared to 30.39% at end of 2019. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 44.55% in December 2020, in comparison with 36.23% at year-end 2019. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 19.28% at end of December 2020 from 28.31% at end of December.

The consolidated capital accounts of commercial banks operating in Lebanon dropped by 3.83% in 2020 to around LBP 30,045 billion ($19.93 billion). It is worth highlighting, however, that said figure increased by 5.37% ($1.02 billion) month-on-month as banks are in the process of completing the 20% capital increase in compliance with BDL intermediate circular no.532.