According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 4.13% (LBP 11,702 billion) during the eight months of the year 2021 to LBP 271,722 billion ($180.28 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 7.88% lower than the LBP 295,032 billion ($195.71 billion) reading reported at end of August of last year.

On the funding side of the balance sheet, customer deposits fell by 4.34% (LBP 9,468 billion) during the first eight months of 2021 to LBP 208,548 billion ($138.34 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 4.33% (LBP 7,289 billion) to LBP 161,230 billion ($106.95 billion), coupled with a 4.61% contraction in deposits of the non-resident private sector to LBP 39,334 billion ($26.09 billion). In addition, public sector deposits fell by 3.39% (LBP 280 billion) during the first eight months of 2021 to LBP 7,984 billion ($5.30 billion). From a currency denomination standpoint, deposits in Lebanese Pounds contracted by 3.18% (LBP 1,573 billion) by August 2021 to LBP 47,872 billion ($31.76 billion), while foreign currency deposits dropped by 4.68% (LBP 7,895 billion) to LBP 160,676 billion ($106.58 billion). In this context, the deposit dollarization rate stood at 80.11% as at end of August in comparison with 80.37% in December 2020 and 80.18% in August 2020. It is worth noting that LBP deposits increased by around 1% (LBP 436.92 billion) on a monthly basis, which may be attributed to the effects of BDL circular 158 whereby part of the USD deposits are being converted to the local currency at a rate of LBP 12,000 per USD. On an annual basis, total customer deposits narrowed by 6.58% from LBP 223,245 billion ($148.09 billion) at end of August 2020.

On the lending front, loans to the private sector (residents and non-residents) receded by 14.66% (LBP 7,995 billion) during the first eight months of 2021 to LBP 46,528 billion ($30.86 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 22.13% on an annual basis, resulting in a ratio of net loans to customer deposits of 22.31% at end of August 2021, compared to 25.01% at end of 2020 and 26.76% in August 2020. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 40.69% in August 2021, in comparison with 44.55% at year-end 2020 and 45.07% at end of August 2020. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 16.83% at end of August 2021 from 19.28% at end of December and 21.43% in August 2020.

The consolidated capital accounts of commercial banks operating in Lebanon dropped by $3.06 billion in the first eight months of 2021 to LBP 25,431 billion ($16.87 billion), mainly owing to the losses incurred by the sector during the year 2020 and up until August 2021.