PwC Luxembourg presents "Banking in Luxembourg - Trends & Figures 2017"

Luxembourg banking sector keeps on attracting international investors

PwC Luxembourg has just published the second edition of “Banking in Luxembourg – Trends & Figures 2017”. This study provides an international overview of the Luxembourg banking sector and establishes a comparison between the trends by segment and the market as a whole. In total, six countries are analysed.

Luxembourg banks see net profit jump and net interest income rise

With 141 entities authorised in 2016, the number of banks slightly fell from 2015 (141). In total, 137 have a universal banking licence while 4 have a mortgage-bond banking licence. PwC Luxembourg also highlights in its study that the balance sheet total increased to 770.1 billion euros.

The overall growth has been driven by a 15% increase in loans to customers, with loans to retail clients up by 5% and loans to business customers up by 18%. According to this publication, the annual net profit has increased by 18.4% which is largely due to a one-off effect resulting from the sale of a participation at one of the banks analysed, resulting in a net gain of 741 million euros. Without this one-off effect, the annual net profit would have increased by 0.2%.

As for net interest, it has increased to 4,734 million euros. More than half of the banks have experienced positive growth, despite the negative interest regime. Conversely, net commission income has decreased by 2.3% due to a less favourable stock market climate.

As far as geographic representation is concerned, German banks still make up the largest group (25 banks), followed by French (15) and UK/US (15). This year again, the Chinese banks have made a breakthrough, further expanding their presence in Luxembourg.

The Chinese banks have shown again an overall high growth and will soon count twelve institutions. They are primarily active in corporate banking. In addition, they are exercising and currently expanding a European hub function for their respective parent companies, says Jörg Ackermann, partner at PwC Luxembourg. The recent acquisition of a major bank in Luxembourg by a Chinese investment group confirms the trend observed over the last few years, with more and more non-EU players investing in the local market.

Our study shows how international and diverse the Luxembourg banking sector is. These two elements are strong arguments to maintain the country’s attractiveness and competitiveness. The reactive environment allows individual institutions’ business models to develop successfully,” adds Roxane Haas, Banking Leader at PwC Luxembourg.

Finally, all the banks slightly increased their headcount, employing 26,060 people. The headcount in the Chinese segment grew considerably by 18.6%, due to new banks being established and the expansion of the European branch network.

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