According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon contracted by 3.30% (LBP 8,694 billion) during the year 2022 to LBP 254,853 billion ($169.06 billion), down from LBP 263,547 billion ($174.82 billion) in December 2021. On a monthly basis, however, the combined assets of the resident banking sector came in LBP 6,043 billion higher mainly on the back of a LBP 4,407 billion increase in tangible assets (as some banks revalued their real estate portfolio to bolster their equity) and some LBP 2,161 billion rise in vault cash in LBP (on the back of Sayrafa transactions).

On the funding side of the balance sheet, customer deposits fell by 3.03% (LBP 6,139 billion) in 2022 to LBP 196,573 billion ($130.40 billion) bearing in mind that they dropped by $38.76 billion since the onset of November’s social uprising up until end of year 2021. It is worth noting that deposits rose by LBP 1,884 billion in December 2022 mainly buoyed by some LBP 2,945 billion increase in LBP deposits on the back of the Central Bank’s directives in late December to increase the Sayrafa ceiling for individual and institutional depositors. 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 2.48% (LBP 3,930 billion) to LBP 154,248 billion ($102.32 billion) and were accompanied by a 4.66% (LBP 1,725 billion) contraction in the deposits of the non-resident private sector to LBP 35,270 billion ($23.40 billion). In addition, public sector deposits fell by 6.42% (LBP 484 billion) in 2022 to LBP 7,055 billion ($4.68 billion). From a currency denomination standpoint, deposits in Lebanese Pounds rose by 9.89% (LBP 4,718.84 billion) in 2022 to LBP 52,428 billion ($34.78 billion), while foreign currency deposits dropped by 7.01% (LBP 10,857 billion) to LBP 144,145 billion ($95.62 billion). In this context, the deposit dollarization rate sustained its downturn to reach 76.06% as at end of December in comparison with 79.42% in December 2021.

On the lending front, loans to the private sector (residents and non-residents) receded by 27.65% (LBP 11,553 billion) during the year 2022 to LBP 30,228 billion ($20.05 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. It is worth highlighting that loans contracted by around LBP 1,870 billion in December alone. The ratio of loans to deposits pursued its downturn attaining 15.38% by end of year 2022 down from 20.61% a year earlier. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 28.43% in December 2022, in comparison with 38.31% at year-end 2021. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 10.63% at end of December 2022 from 15.16% at end of year 2021.

The consolidated capital accounts of commercial banks operating in Lebanon expanded by LBP 2,796 billion (11.29%) in December 2022 alone to reach LBP 27,568 billion ($18.29 billion) by end of year as the LBP 5,522 billion increase in supplementary capital (as a result of the aforementioned revaluation of fixed assets by some banks) outweighed the LBP 2,727 billion drop in core capital (owing to losses registered by some banks). Said revaluation totally offset the year 2021 losses that were booked in January 2022, as total equity rose by 2.83% in 2022 from $17.79 billion in 2021.