According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon rose by around six-folds (LBP 1,451.01 trillion) in the first eight months of 2023 to LBP 1,705.86 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 1,451.47 trillion) higher than the LBP 254.39 trillion reading reported at end of August 2022.

On the funding side of the balance sheet, customer deposits increased by 638.39% (LBP 1,254.90 trillion) YTD August 2023 to LBP 1,451.47 trillion. More specifically, deposits of the resident private sector increased by 621.91% (LBP 959.28 trillion) to LBP 1,113.53 trillion with deposits of the non-resident private sector rising by 808.03% (LBP 285.00 trillion) to LBP 320.27 trillion. In addition, public sector deposits increased by 150.52% (LBP 10.62 trillion) to LBP 17.67 trillion. From a currency denomination standpoint, deposits in Lebanese Pounds increased by 31.08% (LBP 16.30 trillion) to LBP 68.72 trillion, while foreign currency deposits decreased by 3.57% ($3.42 billion) to $92.18 billion. In this context, the deposit dollarization rate stood at 96.71% as at end of August 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 647.67% (LBP 1,257.34 trillion) from a reading of LBP 194.13 trillion at end of August 2022.

On the lending front, loans to the private sector (residents and non-residents) reached LBP 133.82 trillion in August 2023, registering an increase of LBP 103.59 trillion (342.71%) from December’s reading of LBP 30.23 trillion. More specifically, LBP denominated loans fell by 13.57% (LBP 2.02 trillion) YTD August 2023 to LBP 12.88 trillion and foreign currency loans receded by 20.68% ($2.10 billion) to $8.06 billion. The ratio of loans to deposits attained 9.22% by August 2023 compared to 15.38% at end of 2022 and 17.72% in August 2022. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 18.75% in August 2023, in comparison with 28.43% at year-end 2022 and 34.99% at end of August 2022. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 8.72% at end of August 2023 from 10.60% at end of December 2022 and 12.22% in August 2022.

The consolidated capital accounts of commercial banks operating in Lebanon, restated at the new official exchange rate, contracted by 23.31% (LBP 29.74 trillion) during the month of August 2023 to LBP 97.83 trillion, noting that they rose by 254.85% (LBP 70.26 trillion) when compared to December’s reading of LBP 27.57 trillion. The notable monthly contraction during the month August is mainly attributed to the provisions of BDL circular 677 which suspended the implementation of some articles of circulars 675 & 676 that previously permitted banks to book FX losses under regularization accounts on the asset side of the balance sheet instead of reporting them under equity. Hence, banks that benefited from the provisions of the aforementioned circulars had to reverse these entries and book these FX positions as losses.