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The consolidated balance sheet of commercial banks operating in Lebanon showed that private sector deposits amounted to $90.8 billion at the end of June 2024, at the exchange rate of 89,500 LBP/USD. These figures reflect a complex dynamic, marked by a contraction in Lebanese pounds and increasing dollarization, a direct consequence of the persistent economic instability in the country.
Evolution of loans to the private sector
Loans granted to the private sector amounted to 610.2 trillion Lebanese poundsincluding 526.4 trillion LBP for residents and 83.8 trillion LBP for non-residents. In terms of variation:
- Loans in Lebanese pounds decreased by 18 % over one year, going from 1,211 trillion LBP in 2023 to 995.6 trillion LBP in June 2024.
- Foreign currency loans fell by 11,5 % over the first half of 2024, after a drop in 20 % in 2023.
The rate of dollarization of private loans increased, reaching 99,2 % at the end of June 2024, against 98,2 % at the end of January 2024. This reflects an almost complete shift towards hard currencies, highlighting the loss of confidence in the local currency.
Private sector deposits
Total private sector deposits reached 8,126 trillion Lebanese pounds ($90.8 billion). Deposits in Lebanese pounds represented 62.7 trillion pounds (20.5% increase compared to the end of 2023, but 7.2% decrease over one year). Foreign currency deposits decreased by 1,3 % in the first half of 2024, reflecting a trend towards stagnation.
Resident deposits accounted for 76,9 % of total deposits, while non-residents accounted for 23,1 %.
Interest rates and impact on loans
Average interest rates on loans in Lebanese pounds reached 4,89 % in June 2024, against 4,24 % the previous year. However, in US dollars, rates increased from 1.68% to 2.02%thus increasing the pressure on borrowers.
Bank assets
The total assets of banks reached 1,393.4 trillion Lebanese pounds (104.3 billion USD) at the end of June 2024, marking a significant increase since 2023. Deposits with the Banque du Liban amount to 7,308.6 trillion Lebanese poundshighlighting a continued reliance on liquidity available in the central system.
Evolution of private sector deposits since 2019
Since the start of the financial crisis in 2019, the Lebanese banking sector has suffered a significant decrease in private sector deposits. Several factors have contributed to this trend:
- 2019 : Private sector deposits were estimated at around 170 billion dollars. Confidence in the banking system was relatively stable.
- 2020 : Following the start of the economic crisis and the protests, deposits began to decline, reaching approximately 150 billion dollars. Banking restrictions have led to a loss of confidence among depositors.
- 2021 : The continued devaluation of the Lebanese pound and the lack of economic reforms have worsened the situation, reducing deposits to around 120 billion dollars.
- 2022 : Economic deterioration continued, with deposits falling to around 100 billion dollars.
- 2023 : Before the marked increase in dollarization, private sector deposits were close to 95 billion dollars.
- June 2024 : Deposits reached $90.8 billionconfirming the downward trend.
Illustration of the evolution of deposits (2019-2024)
| Year | Private sector deposits (in billions of dollars) |
|---|---|
| 2019 | 170 |
| 2020 | 150 |
| 2021 | 120 |
| 2022 | 100 |
| 2023 | 95 |
| 2024 | 90,8 |
Trend analysis
This decrease of almost 80 billion dollars over five years reflects the seriousness of the economic crisis in Lebanon. Key factors include:
- Loss of confidence : Restrictions on withdrawals and transfers abroad have prompted many depositors to withdraw their funds or convert them into foreign currencies.
- Increased dollarization : Faced with the devaluation of the Lebanese pound, deposits in dollars have become predominant, the rate of dollarization of deposits reaching 79,5 % in June 2024.
- Flight of capital : Political and economic uncertainty has led to an outflow of capital, reducing available liquidity in the banking system.
Evolution of loans to the private sector
Loans to the private sector have also decreased:
- Reduction of loans in Lebanese pounds : A drop in 18 % over one year, reflecting distrust of the local currency.
- Increase in the dollarization rate of loans : Moving on to 99,2 % in June 2024, indicating that almost all loans are now denominated in foreign currencies.
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