According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 0.95% (LBP 2,684 billion) during the first quarter of the year 2021 to LBP 280,790 billion ($186.26 billion), down from LBP 283,474 billion ($188.04 billion) in December 2020. On an annual basis, moreover, the combined assets of the resident banking sector came in 10.69% lower than the LBP 314,389 billion ($208.55 billion) reading reported at end of March of last year.

On the funding side of the balance sheet, customer deposits fell by 1.33% (LBP 2,903 billion) during the first three months of 2021 to LBP 215,114 billion ($142.70 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 1.55% (LBP 2,607 billion) to LBP 165,912 billion ($110.06 billion), coupled with a 1.69% contraction in deposits of the non-resident private sector to LBP 40,537 billion ($26.89 billion). However, public sector deposits increased by 4.84% (LBP 400 billion) during the first three months of 2021 to LBP 8,664 billion ($5.75 billion). From a currency denomination standpoint, deposits in Lebanese Pounds increased by 0.03% (LBP 14 billion) by March 2021 to LBP 49,460 billion ($32.81 billion), while foreign currency deposits dropped by 1.73% (LBP 2,917 billion) to LBP 165,653 billion ($109.89 billion). In this context, the deposit dollarization rate stood at 80.24% as at end of March in comparison with 80.37% in December 2020 and 77.94% in March 2020. On an annual basis, total customer deposits narrowed by 7.51% from LBP 232,569 billion ($154.27 billion) at end of March 2020.

On the lending front, loans to the private sector (residents and non-residents) receded by 5.43% (LBP 2,962 billion) during the first three months of 2021 to LBP 51,561 billion ($34.20 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 24.02% on an annual basis, resulting in a ratio of net loans to customer deposits of 23.97% at end of March 2021, compared to 25.01% at end of 2020 and 29.18% in March 2020. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 42.48% in March 2021, in comparison with 44.55% at year-end 2020 and 40.25% at end of March 2020. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 18.44% at end of March 2021 from 19.28% at end of December and 25.60% in March 2020.

The consolidated capital accounts of commercial banks operating in Lebanon dropped by $2.98 billion in the first quarter of 2021 to LBP 25,559 billion ($16.95 billion), mainly owing to the losses incurred by the sector during the year 2020.