According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 2.04% (LBP 5,385 billion) during the first seven months of the year 2022 to LBP 258,162 billion ($171.25 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 5.20% lower than the LBP 272,321 billion ($180.64 billion) reading reported at end of July 2021. On a monthly basis, total assets expanded by 0.19% ($0.33 billion) on the back of some 0.99% ($1.12 billion) increase in deposits with BDL.

On the funding side of the balance sheet, customer deposits fell by 2.51% (LBP 5,078 billion) during the first seven months of 2022 to LBP 197,634 billion ($131.10 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 0.76% (LBP 1,202 billion) to LBP 156,976 billion ($104.13 billion) and were accompanied by a 3.49% (LBP 1,292 billion) contraction in deposits of the non-resident private sector to LBP 35,704 billion ($23.68 billion). In addition, public sector deposits fell by 34.28% (LBP 2,584 billion) by end of July 2022 to LBP 4,954 billion ($3.29 billion). From a currency denomination standpoint, deposits in Lebanese Pounds increased by 4.98% (LBP 2,374 billion) in the first seven months of 2022 to LBP 50,083 billion ($33.22 billion), while foreign currency deposits dropped by 4.81% (LBP 7,452 billion) to LBP 147,550 billion ($97.88 billion). In this context, the deposit dollarization sustained its downturn to reach 76.58% as at end of July in comparison with 79.42% in December 2021 and 80.40% in July 2021. On an annual basis, total customer deposits narrowed by 5.39% (LBP 11,263 billion) from a reading of LBP 208,897 billion ($138.57 billion) at end of July 2021.

On the lending front, loans to the private sector (residents and non-residents) receded by 16.04% (LBP 6,700 billion) during the first seven months of 2022 to LBP 35,081 billion ($23.27 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 25.92% on an annual basis, resulting in a ratio of net loans to customer deposits of 17.75% at end of July 2022, compared to 20.61% at end of 2021 and 22.67% in July 2021. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 32.78% in July 2022, in comparison with 38.31% at year-end 2021 and 41.75% at end of July 2021. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 12.65% at end of July 2022 from 15.16% at end of December and 17.07% in July 2021.

The consolidated capital accounts of commercial banks operating in Lebanon fell by $20.98 million (2.51%) in July of the current year to LBP 25,519 billion ($16.93 billion), noting that they fell by $0.86 billion in the first seven months 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 aggregating to around $1 billion.