Will Israel's attacks shake al-Qard al-Hasan client confidence?

Conflicting narratives

The extent of the damage caused by Israel's recent air strikes on al-Qard al-Hasan's assets remains unclear. Israeli officials framed the attacks as a major blow to the institution's gold and cash reserves, highlighting that one of the targets in Beirut was an underground warehouse containing a substantial stockpile of these assets. This narrative fuelled widespread speculation on social media, with rumours circulating that the targeted reserves had been destroyed. Some media reports even indicated that traces of gold were found at the sites struck last week.

Contrarily, al-Qard al-Hasan has maintained that its assets are secure, supported by the preemptive measures it implemented to protect them. The association announced these precautions days before the attacks, as reported by the al-Modon website.

A source within the organisation claimed that all branches across Lebanon, particularly those in the south and the southern suburbs of Beirut, had been cleared of gold, cash, and sensitive files, which were moved to secure locations. Analysts have also noted that not all branches hold significant amounts of cash or gold, meaning the targeting of these sites does not necessarily translate to a major financial blow.

However, al-Qard al-Hasan has asserted that its assets are secure, a claim supported by pre-emptive measures announced by the association several days before the attacks. According to the al-Modon report, which cited a source within the organisation, all branches across Lebanon had been cleared of gold, cash, and files and relocated to secure locations. Analysts have also noted that not all al-Qard al-Hasan branches house cash or gold, indicating that targeting these branches does not necessarily cause significant financial damage to the organisation.

Reports published by platforms not affiliated with Hezbollah suggest that Israel's attacks did not incite widespread panic among the association's clients.

Although many branches have temporarily closed due to the escalating conflict, customers who spoke to the media, as well as those sharing their experiences on social media, reported being able to access their savings or retrieve their gold. In each case, clients were asked by branch staff for a brief waiting period while the requested assets were brought from external locations, and the assets were returned as promised.

Crucially, the association also informed depositors that it has temporarily frozen monthly loan repayments. This decision not only relieves clients from the burden of debt repayment during these difficult times—a gesture likely appreciated—but also mitigates the risks the association might face in processing payments. Besides, it reduces the immediate need to return collateralised gold to clients who borrowed against it.

The relatively small size of loans issued by al-Qard al-Hasan, when coupled with the myriad of other pressing concerns people are facing amid the ongoing devastating war, explain why the institution's assets are not a top priority for most depositors. Right now, people are more focused on finding shelter, securing essentials, or seeking refuge abroad.

Maintaining client trust crucial

Nonetheless, a time will come when al-Qard al-Hasan's clients will return in large numbers, seeking access to their deposits. The institution's performance during that crucial period will be a decisive factor in maintaining client trust. If al-Qard al-Hasan can meet its obligations to depositors and beneficiaries after this conflict—much as it did following the 2006 war—it could turn this challenging period into another success story, at least for the association.

However, failure to fulfil its commitments would have far-reaching consequences. It would not only drive clients away but also add to a growing list of disappointments linked to Hezbollah's decisions, which have inflicted suffering and devastation that will linger long after the sounds of bullets and explosions fade.