According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 6.97% (LBP 19,756 billion) during the year 2021 to LBP 263,717 billion ($174.94 billion), down from LBP 283,474 billion ($188.04 billion) in December 2020. 

On the funding side of the balance sheet, customer deposits fell by 7.02% (LBP 15,304 billion) during year 2021 to LBP 202,713 billion ($134.47 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 6.14% (LBP 10,341 billion) to LBP 158,517 billion ($104.93 billion), coupled with a 10.28% contraction in deposits of the non-resident private sector to LBP 36,996 billion ($24.54 billion). In addition, public sector deposits fell by 8.78% (LBP 725 billion) in 2021 to LBP 7,538 billion ($5.00 billion). From a currency denomination standpoint, deposits in Lebanese Pounds contracted by 3.51% (LBP 1,736 billion) by December to LBP 47,709 billion ($31.65 billion), while foreign currency deposits dropped by 8.05% (LBP 13,568 billion) to LBP 155,003 billion ($102.82 billion). In this context, the deposit dollarization rate stood at 79.42% as at end of December in comparison with 80.37% a year earlier. It is worth noting that on a monthly basis, LBP deposits rose by 2.65% while those denominated in FC dropped by 0.72%, as depositors opted to benefit from the increase in the “lollar” rate by BDL from LBP 3,900 per USD to LBP 8,000 per USD.

On the lending front, loans to the private sector (residents and non-residents) receded by 23.38% (LBP 12,747 billion) during the year 2021 to LBP 41,776 billion ($27.71 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 ratio of net loans to customer deposits dropped to 20.61% at end of year 2021, compared to 25.01% at end of 2020. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 38.30% as at end of year 2021, in comparison with 44.55% at year-end 2020. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 15.16% at end of December 2021 from 19.28% at end of December 2020.

The consolidated capital accounts of commercial banks operating in Lebanon dropped by $2.19 billion during the year 2021 to LBP 26,740 billion ($17.74 billion) owing to the losses incurred by the sector during the year 2020 and up until December 2021.