PwC Luxembourg publishes latest report on banking trends and figures

Press Release, 26 September 2018

Key takeaways:

  • Luxembourg is the most diversified banking place in Europe
  • Luxembourg among the best in class for solvency ratio and profitability
  • Asset Management and private banking are strong contributors to Luxembourg’s banking industry results
  • Banking staff in Europe is decreasing but is still stable and agile in Luxembourg
  • The digital transformation is on the way with a cost income ratio under control

PwC Luxembourg has just published the third edition of “Banking in Luxembourg - Trends & Figures 2018”.  This study provides an international overview of the Luxembourg banking sector and establishes a comparison between the trends by country segment and the market as a whole. In total, six countries are analysed.

Luxembourg banks are managing the balancing act between a sustainable banking income and the investment that needs to be injected into new technology as well as compliance with new regulations.

With 139 entities authorised at the end of 2017, the number of banks slightly dropped from 2016 (141). In total, 135 have a universal banking license while four have a mortgage-bond banking license.

The study also highlights that the balance sheet total decreased slightly by 2.3% to 752 billion euros. The overall decrease has been driven by a 13.5% decrease in bonds and other transferable securities due to maturities with limited new investments. Notable, is the increase of loans and advances to customers by 3.5% as well as the increase of amounts owed to customers, consisting of deposits of corporate and private clients as well as current accounts of investment funds.

According to this publication, the annual net profit has substantially dropped by 20.1%, which is largely due to an exceptional transaction resulting from the sale of a participation at one of the banks during 2016, resulting in a net gain of 741 million euros. Without this one-off effect, the annual net profit would have decreased by 5.3%. Moreover, the growth in current operating expenses by 3.2%, driven by an increase in administrative expenses mainly due to new investments in infrastructure and compliance with new accounting and regulatory standards, further reduced annual net profit.

As for net interest result, it has increased to 4,877 million euros. More than half of the banks have experienced positive growth in the volume of activities. Due to the negative interest regime, some banks have passed on negative interest charges to their institutional clients. Furthermore, net commission result has increased by 2.7% due to a favourable stock market climate.

As far as geographic representation is concerned, German banks still make up the largest group (23 banks), followed by the UK/US (16 banks) and the French groups (14 banks).

This year again, the Chinese banks have made a breakthrough by further expanding their presence in Luxembourg.

Since the financial crisis in 2008, the Luxembourg banking sector has been going through a tremendous transformation. This leads, as of today, to an even higher and more balanced banking income since ten years ago. In terms of solvency and profitability, the financial centre’s credit institutions are best-in-class in Europe,” says Björn Ebert, partner at PwC Luxembourg. “Our analysis shows that many credit institutions initiated projects enhancing customer experience by using the new possibilities that technology offers.

Our study shows that the workforce remains stable in Luxembourg compared to many other EU restrictions, where workforce decreases has been recognised. A highly skilled and experienced workforce are two strong arguments towards maintaining the country’s attractiveness and competitiveness,” adds Roxane Haas, partner and Banking Leader at PwC Luxembourg.

Finally, all the banks remained stable with respect to headcount, employing 26,149 people. The headcount in the Chinese segment grew considerably by 39%, due to new banks being established and the expansion of the European branch network.

Explore more data in Banking in Luxembourg: Trends & Figures 2018.

Notes to editors

About PwC

1. PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with 2,850 people employed from 77 different countries. PwC Luxembourg provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice. The firm provides advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. The firm helps its clients create the value they are looking for by contributing to the smooth operation of the capital markets and providing advice through an industry-focused approach.

2. At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com and www.pwc.lu.

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Youcef Damardji
Communications & Media Relations , PwC Luxembourg
Tel: +352 49 48 48 5821
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