According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 2.49% (LBP 7,067 billion) during the first five months of the year 2021 to LBP 276,406 billion ($183.35 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 10.05% lower than the LBP 307,293 billion ($203.84 billion) reading reported at end of May of last year.

On the funding side of the balance sheet, customer deposits fell by 2.72% (LBP 5,923 billion) during the first five months of 2021 to LBP 212,093 billion ($140.69 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 3.03% (LBP 5,101 billion) to LBP 163,418 billion ($108.40 billion), coupled with a 2.38% contraction in deposits of the non-resident private sector to LBP 40,253 billion ($26.70 billion). However, public sector deposits increased by 1.91% (LBP 158 billion) during the first five months of 2021 to LBP 8,422 billion ($5.59 billion). From a currency denomination standpoint, deposits in Lebanese Pounds contracted by 2.64% (LBP 1,307 billion) by May 2021 to LBP 48,139 billion ($31.93 billion), while foreign currency deposits dropped by 2.74% (LBP 4,617 billion) to LBP 163,954 billion ($108.76 billion). In this context, the deposit dollarization rate stood at 80.50% as at end of May in comparison with 80.37% in December 2020 and 79.57% in May 2020. On an annual basis, total customer deposits narrowed by 6.92% from LBP 227,860 billion ($151.15 billion) at end of May 2020.

On the lending front, loans to the private sector (residents and non-residents) receded by 10.06% (LBP 5,486 billion) during the first five months of 2021 to LBP 49,037 billion ($32.53 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 not to mention some discounts offered by banks on early settlements of loans. The loans portfolio also sank by 24.19% on an annual basis, resulting in a ratio of net loans to customer deposits of 23.12% at end of May 2021, compared to 25.01% at end of 2020 and 28.39% in May 2020. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 41.80% in May 2021, in comparison with 44.55% at year-end 2020 and 43.59% at end of May 2020. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 17.63% at end of May 2021 from 19.28% at end of December and 23.85% in May 2020.

The consolidated capital accounts of commercial banks operating in Lebanon dropped by $2.96 billion in the first four months of 2021 to LBP 25,580 billion ($16.97 billion), mainly owing to the losses incurred by the sector during the year 2020.