Luxembourg banks increase profit by 45%
The Grand Duchy’s banking sector last year recorded a total profit before provisions and tax of €8,942 million, which represents a 45.1% increase compared to the previous year.
Net results increased by 67%, or €6,603 million, the CSSF said in a statement published on Monday, while the interest margin rose by 50.9%. The increase “coincided with the rise of interest rates and 80% of banks benefited from it,” the CSSF wrote.
“2023 is an exceptional year due to very favourable interest margins and reversals of provisions, albeit of a transitory nature,” said Luxembourg’s financial sector watchdog.
Despite the positive results, net fee and commission income dropped by 3.2%, though this only affected about half of banks.
A majority of banks (81%) also reported a rise of 7.2% in general expenses. This is mainly due to the “very substantial” increase in payroll costs. The automatic wage indexation system in place in Luxembourg triggers a wage increase of 2.5% when the sustained inflation rate crosses the 2.5% mark. Staff wages were adjusted to inflation three times last year.
As inflation slows down, Statec in February estimated that the next wage indexation would take place in the fourth quarter of this year.
First, please LoginComment After ~