According to BDL statistics, the combined balance sheet of commercial banks operating in Lebanon rose by around six-folds (LBP 1,435.49 trillion) in the first nine months of 2023 to LBP 1,690.34 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 1,438.58 trillion) higher than the LBP 251.77 trillion reading reported at end of September 2022.

On the funding side of the balance sheet, customer deposits increased by 635.29% (LBP 1,248.81 trillion) YTD September 2023 to LBP 1,445.39 trillion. More specifically, deposits of the resident private sector increased by 619.22% (LBP 955.14 trillion) to LBP 1,109.39 trillion with deposits of the non-resident private sector rising by 801.90% (LBP 282.83 trillion) to LBP 318.10 trillion. In addition, public sector deposits increased by 153.64% (LBP 10.84 trillion) to LBP 17.89 trillion. From a currency denomination standpoint, deposits in Lebanese Pounds increased by 33.90% (LBP 17.77 trillion) to LBP 70.20 trillion, while foreign currency deposits decreased by 4.12% ($3.94 billion) to $91.68 billion. In this context, the deposit dollarization rate stood at 96.61% as at end of September 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 644.90% (LBP 1,251.35 trillion) from a reading of LBP 194.04 trillion at end of September 2022.

On the lending front, loans to the private sector (residents and non-residents) reached LBP 130.39 trillion in September 2023, registering an increase of LBP 100.16 trillion (331.35%) from December’s reading of LBP 30.23 trillion. More specifically, LBP denominated loans fell by 16.17% (LBP 2.41 trillion) YTD September 2023 to LBP 12.50 trillion and foreign currency loans receded by 22.67% ($2.30 billion) to $7.86 billion. The ratio of loans to deposits attained 9.02% by September 2023 compared to 15.38% at end of 2022 and 17.31% in September 2022. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits stood at 17.80% in September 2023, in comparison with 28.43% at year-end 2022 and 33.24% at end of September 2022. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits fell to 8.55% at end of September 2023 from 10.60% at end of December 2022 and 12.08% in September 2022.

The consolidated capital accounts of commercial banks operating in Lebanon, restated at the new official exchange rate, contracted by 27.72% (LBP 27.11 trillion) during the month of September 2023 to LBP 70.71 trillion (following an LBP 29.74 trillion drop in August) noting that they rose by 156.49% (LBP 43.14 trillion) when compared to December’s reading of LBP 27.57 trillion. The notable LBP 56.86 trillion combined contraction during the months of August and September 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 which translated into an increase in equity by an amount equivalent to LBP 49.14 trillion between the months of June and July 2023 had to reverse these entries and book these FX positions as losses.