According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 4.47% (LBP 11,778 billion) during the first nine months of the year 2022 to LBP 251,768 billion ($167.01 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 7.05% lower than the LBP 270,871 billion ($179.68 billion) reading reported at end of September 2021. During the month of September alone, total assets fell by 1.03% ($1.74 billion) on the back of some 6.55% ($0.89 billion) contraction in debt securities held at amortized cost and a 7.63% ($0.77 billion) drop in placements in Lebanese treasury bills.

On the funding side of the balance sheet, customer deposits fell by 4.28% (LBP 8,673 billion) during the first nine months of 2022 to LBP 194,039 billion ($128.72 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 3.21% (LBP 5,079 billion) to LBP 153,099 billion ($101.56 billion) and were accompanied by a 4.65% (LBP 1,722 billion) contraction in deposits of the non-resident private sector to LBP 35,274 billion ($23.40 billion). In addition, public sector deposits fell by 24.84% (LBP 1,872 billion) up to September 2022 to LBP 5,666 billion ($3.76 billion). From a currency denomination standpoint, deposits in Lebanese Pounds rose by 0.07% (LBP 32.12 billion) YTD September 2022 to LBP 47,742 billion ($31.67 billion), while foreign currency deposits dropped by 5.62% (LBP 8,706 billion) to LBP 146,298 billion ($97.05 billion). In this context, the deposit dollarization rate sustained its downturn to reach 77.66% as at end of September in comparison with 79.42% in December 2021 and 80.05% in September 2021. On an annual basis, total customer deposits narrowed by 6.51% (LBP 13,504 billion) from a reading of LBP 207,543 billion ($137.67 billion) at end of September 2021.

On the lending front, loans to the private sector (residents and non-residents) receded by 19.60% (LBP 8,188 billion) during the first nine months of 2022 to LBP 33,593 billion ($22.28 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 25.72% on an annual basis, resulting in a ratio of net loans to customer deposits of 17.31% at end of September 2022, compared to 20.61% at end of 2021 and 21.79% in September 2021. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 33.24% in September 2022, in comparison with 38.31% at year-end 2021 and 39.64% at end of September 2021. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 12.12% at end of September 2022 from 15.16% at end of December and 16.47% in September 2021.

The consolidated capital accounts of commercial banks operating in Lebanon fell by $171.99 million (1.02%) in September of the current year to LBP 25,191 billion ($16.71 billion), noting that they contracted by $1.07 billion in the first nine 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.