According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon rose by around six-folds (LBP 1,502.99 trillion) in the first seven months of 2023 to LBP 1,757.84 trillion, up from LBP 254.85 trillion in December 2022. This increase owes to the adoption of the new official exchange rate of LBP 15,000 per USD starting the month of February instead of LBP 1,507.5 previously. On an annual basis, moreover, the combined assets of the resident banking sector came in more than six-folds (LBP 1,499.68 trillion) higher than the LBP 258.16 trillion reading reported at end of July 2022.

 

On the funding side of the balance sheet, customer deposits increased by 644.40% (LBP 1,266.72 trillion) YTD July 2023 to LBP 1,463.29 trillion. More specifically, deposits of the resident private sector increased by 628.02% (LBP 968.71 trillion) to LBP 1,122.96 trillion with deposits of the non-resident private sector rising by 813.80% (LBP 287.03 trillion) to LBP 322.30 trillion. In addition, public sector deposits increased by 155.66% (LBP 10.98 trillion) to LBP 18.04 trillion. From a currency denomination standpoint, deposits in Lebanese Pounds increased by 39.45% (LBP 20.68 trillion) to LBP 73.11 trillion, while foreign currency deposits decreased by 3.05% ($2.92 billion) to $92.94 billion. In this context, the deposit dollarization rate stood at 96.46% as at end of July 2023 in comparison with 76.25% in December 2022 mainly owing to the change in the official exchange rate. On an annual basis, total customer deposits widened by 640.40% (LBP 1,265.66 trillion) from a reading of LBP 197.63 trillion at end of July 2022.

 

On the lending front, loans to the private sector (residents and non-residents) reached LBP 135.59 trillion in July 2023, registering an increase of LBP 105.37 trillion (384.57%) from December’s reading of LBP 30.23 trillion. More specifically, LBP denominated loans fell by 20.60% (LBP 3.07 trillion) YTD July 2023 to LBP 11.83 trillion and foreign currency loans receded by 18.83% ($1.91 billion) to $8.25 billion. The ratio of loans to deposits attained 9.27% by July 2023 compared to 15.38% at end of 2022 and 17.75% in July 2022. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 16.19% in July 2023, in comparison with 28.43% at year-end 2022 and 32.78% at end of July 2022. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 8.88% at end of July 2023 from 10.60% at end of December 2022 and 12.61% in July 2022.

 

The consolidated capital accounts of commercial banks operating in Lebanon, restated at the new official exchange rate, increased by 24.67% (LBP 25.24 trillion) during the month of July 2023 to LBP 127.57 trillion, noting that they rose by 362.73% (LBP 100.00 trillion) when compared to December’s reading of LBP 27.57 trillion. The notable monthly increases during the months of June and July (total of LBP 49 trillion) is in part attributed to banks reclassifying losses on the foreign currency position from retained losses under equity to other assets (which rose by ~LBP 37 trillion in July) coupled with gains emanating from the revaluation of their real estate portfolios.