According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 3.48% (LBP 9,159 billion) during the first eight months of the year 2022 to LBP 254,388 billion ($168.75 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 6.40% lower than the LBP 271,772 billion ($180.28 billion) reading reported at end of August 2021. On a monthly basis, total assets dropped by 1.46% ($2.50 billion) on the back of some 2.59% ($2.88 billion) contraction in deposits with BDL.

On the funding side of the balance sheet, customer deposits fell by 4.23% (LBP 8,580 billion) during the first eight months of 2022 to LBP 194,133 billion ($128.78 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 3.37% (LBP 5,324 billion) to LBP 152,854 billion ($101.40 billion) and were accompanied by a 3.74% (LBP 1,382 billion) contraction in deposits of the non-resident private sector to LBP 35,614 billion ($23.62 billion). In addition, public sector deposits fell by 24.85% (LBP 1,873 billion) by end of August 2022 to LBP 5,665 billion ($3.76 billion). From a currency denomination standpoint, deposits in Lebanese Pounds dropped by 2.19% (LBP 1,042 billion) in the first eight months of 2022 to LBP 46,666 billion ($30.96 billion), while foreign currency deposits dropped by 4.86% (LBP 7,536 billion) to LBP 147,466 billion ($97.82 billion). In this context, the deposit dollarization rate sustained its downturn to reach 78.24% as at end of August in comparison with 79.42% in December 2021 and 80.11% in August 2021. On an annual basis, total customer deposits narrowed by 6.91% (LBP 14,415 billion) from a reading of LBP 208,548 billion ($138.34 billion) at end of August 2021.

On the lending front, loans to the private sector (residents and non-residents) receded by 17.66% (LBP 7,377 billion) during the first eight months of 2022 to LBP 34,404 billion ($22.82 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 26.06% on an annual basis, resulting in a ratio of net loans to customer deposits of 17.72% at end of August 2022, compared to 20.61% at end of 2021 and 22.31% in August 2021. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 34.99% in August 2022, in comparison with 38.31% at year-end 2021 and 40.69% at end of August 2021. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 12.26% at end of August 2022 from 15.16% at end of December and 16.83% in August 2021.

The consolidated capital accounts of commercial banks operating in Lebanon fell by $46.12 million (0.27%) in August of the current year to LBP 25,450 billion ($16.88 billion), noting that they contracted by $0.90 billion in the first eight months of 2022 as the year 2021 losses of around $1.79 billion 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.