According to Lebanon’s consolidated commercial banks’ balance sheet, total assets decreased by 11.67%, year-to-date (y-t-d), to stand at $192B in September 2020.The decrease started by then will likely continue for the upcoming months. Noting that several banks are shutting down more branches in different areas in Lebanon, and some of them are quitting the regional market.
The banking sector in Lebanon was known as a solid pillar in Lebanese economy and had a strong immunity to all Lebanese political conflicts. However, things changed after 17 October 2019, when Lebanese banks were unable to handle all their client’s requests, noting that any bank worldwide can go bankrupt if it receives such big withdrawal demands.
In details, Resident customers’ deposits (which grasp 58.75% of total liabilities) decreased since the start of the year by 9.51% to $113.14B in September 2020, with deposits in LBP and in foreign currencies declining by 26.58% and 3.01% to $25.31B and $87.82B, respectively.
As for the Non-resident customers’ deposits (14.25% of total liabilities), they retreated by 15.46% ($4.47B) and totaled $27.43B over the same period on the back of a drop in deposits in LBP and in foreign currencies by 29.52% and 13.95% to $2.21B and $25.22B, respectively. As such, the dollarization ratio for private sector deposits increased from 76.02% in December 2019 to 80.22% in September 2020.
On the assets side, Reserves (constituting 58.23% of total assets) recorded y-t-d downtick of 5.15% to settle at $112.13B in September 2020. Deposits with the central bank (BDL) (99.05% of total reserves) recorded a y-t-d downtick of 5.66% to reach $111.1B. It is worth mentioning that starting December 2019 (and according to the offsetting criteria in IAS 32 “Financial Instruments: Presentation”), banks have offset their loans taken from BDL in LBP with their corresponding placements at BDL in LBP carrying the same maturities, not to mention the sizeable drop in their loans to the private sector.
Meanwhile, Claims on resident customers (17.60% of total assets) retreated by 22.84%, to stand at $33.88B in September 2020. Moreover, Resident Securities portfolio (12.59% of total assets) declined by 19.31% during the year to stand at $24.25B. In details, the subscription to T-bills in LBP and to Eurobonds recorded a decline by 13.29% and 27.35% to $12.7B and $10B, respectively in September 2020. Moreover, we can note that claims on non-resident financial sector dropped by 20.01% since the start of the year to record $4.6B in September 2020.
Commercial Banks Assets and Residents Customer Deposits by September ($B)