According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon expanded by 0.05% (LBP 135 billion) during the first two months of the year 2021 to LBP 283,609 billion ($188.13 billion), up from LBP 283,474 billion ($188.04 billion) in December 2020. On an annual basis, however, the combined assets of the resident banking sector came in 10.56% lower than the LBP 317,083 billion ($210.34 billion) reading reported at end of February of last year.

On the funding side of the balance sheet, customer deposits fell by 0.13% (LBP 274 billion) during the first two months of 2021 to LBP 217,742 billion ($144.44 billion) bearing in mind that they dropped by $28.61 billion since the onset of October’s social uprising up until end of year 2020. 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 0.15% (LBP 260 billion) to LBP 168,260 billion ($111.62 billion), coupled with a 0.42% contraction in deposits of the non-resident private sector to LBP 41,059 billion ($27.24 billion). However, public sector deposits increased by 1.93% (LBP 160 billion) during the first two months of 2021 to LBP 8,424 billion ($5.59 billion). From a currency denomination standpoint, deposits in Lebanese Pounds increased by 1.51% (LBP 748 billion) by February 2021 to LBP 50,193 billion ($33.30 billion), while foreign currency deposits dropped by 0.61% (LBP 1,022 billion) to LBP 167,548 billion ($111.62 billion). In this context, the deposit dollarization rate dropped to 80.04% as at end of February in comparison with 80.37% in December 2020, yet remained higher than the 77.63% level registered in February 2020. On an annual basis, total customer deposits narrowed by 7.73% from LBP 235,992 billion ($156.55 billion) at end of February 2020.

On the lending front, loans to the private sector (residents and non-residents) receded by 1.87% (LBP 1,021 billion) during the first two months of 2021 to LBP 53,502 billion ($35.49 billion), down from LBP 54,523 billion ($36.17 billion) in December 2020. This drop in the loans portfolio partly owes to the early settlement of some loans from related customers’ deposits through a netting process in fear of a haircut on deposits or a formal devaluation of the currency. The loans portfolio also sank by 22.98% on an annual basis, resulting in a ratio of net loans to customer deposits of 24.57% at end of February 2021, compared to 25.01% at end of 2020 and 29.44% in February 2020. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 43.14% in February 2021, in comparison with 44.55% at year-end 2020 and 39.30% at end of February 2020. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 19.01% at end of February 2021 from 19.28% at end of December and 26.19% in February 2020.

The consolidated capital accounts of commercial banks operating in Lebanon dropped by $2.71 billion by end of  February 2021 to LBP 25,958 billion ($17.22 billion), mainly owing to the losses incurred by the sector during the year 2020.