According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 2.23% (LBP 5,875 billion) during the first half of 2022 to LBP 257,671 billion ($170.93 billion), down from LBP 263,547 billion ($174.82 billion) in December 2021. On an annual basis, moreover, the combined assets of the resident banking sector came in 5.61% lower than the LBP 272,975 billion ($181.08 billion) reading reported at end of June 2021. On a monthly basis, total assets fell by 1.16% ($2.00 billion) on the back of some 25.30% ($0.97 billion) decrease in vault cash in LBP and a 3.20% contraction ($556.94 million) in the value of the resident securities’ portfolio held by banks.

On the funding side of the balance sheet, customer deposits fell by 2.89% (LBP 5,859 billion) during the first half of 2022 to LBP 196,854 billion ($130.58 billion) bearing in mind that they dropped by $38.76 billion since the onset of October’s social uprising up until end of year 2021. 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 1.52% (LBP 2,406 billion) to LBP 155,772 billion ($103.33 billion) and were accompanied by a 2.86% contraction in deposits of the non-resident private sector to LBP 35,939 billion ($23.84 billion). In addition, public sector deposits fell by 31.78% (LBP 2,396 billion) by end of June 2022 to LBP 5,143 billion ($3.41 billion). From a currency denomination standpoint, deposits in Lebanese Pounds increased by 0.79% (LBP 377.18 billion) in the first half of 2022 to LBP 48,087 billion ($31.90 billion), while foreign currency deposits dropped by 4.02% (LBP 6,236.20 billion) to LBP 148,767 billion ($98.68 billion). In this context, the deposit dollarization sustained its downturn to reach 77.60% as at end of June in comparison with 79.42% in December 2021 and 80.27% in June 2021. On an annual basis, total customer deposits narrowed by 6.44% (LBP 13,539 billion) from a reading of LBP 210,392 billion ($139.56 billion) at end of June 2021.

On the lending front, loans to the private sector (residents and non-residents) receded by 13.51% (LBP 5,647 billion) during the first half of 2022 to LBP 36,134 billion ($23.97 billion), down from LBP 41,781 billion ($27.72 billion) in December 2021. 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 24.78% on an annual basis, resulting in a ratio of net loans to customer deposits of 18.36% at end of June 2022, compared to 20.61% at end of 2021 and 22.83% in June 2021. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 34.55% in June 2022, in comparison with 38.31% at year-end 2021 and 41.63% at end of June 2021. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 13.12% at end of June 2022 from 15.16% at end of December and 17.28% in June 2021.

The consolidated capital accounts of commercial banks operating in Lebanon rose by $415.48 million (2.51%) in June of the current year LBP 25,552 billion ($16.95 billion), noting that they fell by $0.84 billion in the first half of 2022 as the year 2021 losses which were booked in January were cushioned by profits registered in February, March, April, May and June of the current year.