Lebanese Commercial Banks’ Total Assets Up Year to Date by 0.95% to $186.26B by March 2021

With the financial crisis and political uncertainty, Lebanese commercial banks’ health is Jeopardized. Total assets of Lebanese commercial banks decreased by 0.95%, year-to-date (y-t-d), and stood at $186.26B in March 2021, according to Lebanon’s consolidated commercial banks’ balance sheet. However, Central Bank’s circular 154 which is related to the increase of banks’ external liquidity by 3%, in addition to circular 567 associated with the increase of commercial banks’ capital by 20%, equivalent to around $4 billion, is expected to be reflected in the Commercial Banks’ Balance sheet in the coming period.  In fact, it is not yet known how many banks will meet the Central Bank’s targets after the Lebanese Banking Control Commission assesses each separately.

In details, resident customers’ deposits (which grasp 58.25% of total liabilities) decreased since December 2020 by 1.58% to $108.49B in March 2021, with deposits in LBP down ticked by 0.98% to $24.819B while the deposits in foreign currencies declined by 1.75% to stand at $84.30B.

As for Non-resident customers’ deposits grasping 14.44% of total liabilities, recorded a drop of 1.69% and stood at $26.89B over the same period. In fact, the deposits in LBP retreated by 1.76% to reach $2.218B while deposits in foreign currencies declined by 1.68% and totaled $24.67B in March 2021. More importantly, the dollarization ratio for private sector deposits increased from 77.94% in March 2020 to 80.24% in March 2021. In addition, Non-resident financial sector Liabilities held 3.20% of total Liabilities and dwindled by 9.59% to reach $5.95B y-t-d.

On the assets side, Reserves, constituting 59.81% of total assets, recorded a y-t-d downtick of 0.13% to settle at $111.39B in March 2021. Deposits with the central bank (BDL), grasping 98.77% of total reserves, witnessed a slight y-t-d decrease of 0.37% to reach $110.02B.

Meanwhile, Claims on resident customers, constituting 16.23% of total assets, shrank by 4.86%, to stand at $30.22B in March 2021. The drop in the loans portfolio followed 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. Moreover, Resident Securities portfolio (11.72% of total assets) dropped by 2.81% during February to stand at $21.84B. Specifically, the subscriptions in T-bills in LBP added 1.39% to reach $11.61B in March 2021 while the subscriptions in Eurobonds recorded a decline of 10.11% and totaled $8.44B for the same period, as banks are selling their Eurobond holdings to share up their foreign currency liquidity. In addition, claims on non-resident financial sector rose by 3.67% to record $4.89B in March 2021.

In addition, Banque du Liban was supposedly scheduled to launch an electronic currency exchange platform “Sayrafa” by early May 2021. The platform is set to organize exchange rate transactions with the help of the commercial banks and licensed exchange dealers. It is most likely to be postponed for a later date in May or beyond.

Moreover, the Central Bank announced yesterday said it was looking into a system through which depositors could have access to their funds by granting depositors up to $25,000 of their money in installments. However, the mechanism would be granted for deposits in all currencies dating before October 2019 and as they stood at end of March 2021, but it is unknown yet whether it will be adopted, especially as a substitute for subsidies.

Commercial Banks Assets and Residents Customer Deposits by March ($B)

Lebanese Commercial Banks’ Total Assets Up Year to Date by 0.95% to $186.26B by March 2021

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