According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 5.82% (LBP 15,351 billion) during the first ten months of the year 2022 to LBP 248,196 billion ($164.64 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 7.97% lower than the LBP 269,688 billion ($178.90 billion) reading reported at end of October 2021. During the month of October alone, total assets fell by 1.42% ($2.37 billion) on the back of some 5.88% ($0.75 billion) contraction in debt securities held at amortized cost and a 1.44% ($1.56 billion) drop in deposits with BDL.

On the funding side of the balance sheet, customer deposits fell by 3.90% (LBP 7,905 billion) during the first ten months of 2022 to LBP 194,807 billion ($129.23 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 3.73% (LBP 5,900 billion) to LBP 152,278 billion ($101.01 billion) and were accompanied by a 4.83% (LBP 1,786 billion) contraction in deposits of the non-resident private sector to LBP 35,210 billion ($23.36 billion). In addition, public sector deposits fell by 2.90% (LBP 219 billion) up to October 2022 to LBP 7,320 billion ($4.86 billion). From a currency denomination standpoint, deposits in Lebanese Pounds rose by 3.49% (LBP 1,664.5 billion) YTD October 2022 to LBP 49,374 billion ($32.75 billion), while foreign currency deposits dropped by 6.17% (LBP 9,569 billion) to LBP 145,433 billion ($96.47 billion). In this context, the deposit dollarization rate sustained its downturn to reach 77.57% as at end of October in comparison with 79.42% in December 2021 and 80.09% in October 2021. On an annual basis, total customer deposits narrowed by 5.68% (LBP 11,721 billion) from a reading of LBP 206,529 billion ($137.00 billion) at end of October 2021.

On the lending front, loans to the private sector (residents and non-residents) receded by 20.87% (LBP 8,721 billion) during the first ten months of 2022 to LBP 33,059 billion ($21.93 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 24.86% on an annual basis, resulting in a ratio of net loans to customer deposits of 16.97% at end of October 2022, compared to 20.61% at end of 2021 and 21.30% in October 2021. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 32.63% in October 2022, in comparison with 38.31% at year-end 2021 and 38.73% at end of October 2021. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 11.65% at end of October 2022 from 15.16% at end of December and 16.08% in October 2021.

The consolidated capital accounts of commercial banks operating in Lebanon rose by $62.78 million (0.38%) in November of the current year to LBP 25,286 billion ($16.77 billion), noting that they contracted by $1.01 billion in the first ten 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, June and October of the current year.