Banking industry segmentation
Our study is based on 79 banks located in Luxembourg, covering 70% of the total amount of assets on the market. We have divided them into four different segments based on their business type:
- Commercial banks, which focus on deposits, business loans, payments and basic investment products.
- Private banks, which manage the personal finance of high-net-worth individuals (HNWIs) by providing a wide range of financial services.
- Depositary banks, which focus on custody services for their own groups and institutional clients around the world.
- Universal banks, which provide a combination of the services offered by commercial, private and depositary banks.
Three banks that specialize in issuing covered bonds were not included in these four segments due to their specific business type. Branches have also been excluded from the analysis.
Breakdown by business type
Source: KPMG study
In this annual analysis of the Luxembourg banking market, we focus on the performance indicators that reflect the overall trends of each banking segment. We gathered the financial data of banks’ annual accounts as of December 2021, of which 70% used LuxGAAP methodology and the remaining 30% IFRS. As both methodologies result in different levels of granularity, we have standardized all indicators for both accounting schemes to provide accurate and consistent results.
Regulatory classification* of the 79 banks included in our analysis
- 4
- LU SI
- Banks/groups designated as significant institutions (SIs)
- 24
- Other SI
- Banks/groups designated as other significant institutions (SIs)
- 51
- LSI
- Less significant institutions
* ECB List of Supervised Entities
Key performance indicators
An overview of the key performance indicators of the bank types covered in this study.
| Universal banks | Depositary banks | Private banks | Commercial banks | |
|---|---|---|---|---|
| Cost/income ratio | 56.81% | 61.17% | 74.73% | 56.81% |
| -5.23% | 2.60% | -1.95% | 1.35% | |
| Return on equity | 5.05% | 9.51% | 5.86% | 7.04% |
| 1.43% | -0.19% | 1.87% | 0.97% | |
| Return on assets | 0.47% | 0.61% | 0.48% | 0.72% |
| 0.15% | -0.10% | 0.11% | 0.17% | |
| Interest margin | 0.84% | 0.27% | 0.38% | 1.25% |
| 0.03% | -0.16% | -0.08% | -0.32% | |
| Commission margin | 0.36% | 1.23% | 1.38% | 0.83% |
| -0.14% | -0.06% | 0.04% | 0.22% | |
| Net profit/FTEs | 117,577 | 167,554 | 87,294 | 273,086 |
| 45.19% | 1% | 48.90% | 57.43% | |
| Employee costs/FTEs | 114,644 | 128,041 | 160,275 | 154,037 |
| -3.27% | 15.60% | 6% | 8.94% |
KPMG study
Average number of employees per banking segment
KPMG study
Benchmark your bank
Click each button to view balance sheet and P&L components together with performance indicators by bank type.
Profit and loss overview
Total operating income (average in EUR million)
Total operating costs (average in EUR million)
Net profit (average in EUR million)
Apart from a universal bank’s one-time transaction skewing the 2016 results, the net profit trend has remained stable in recent years.
The total operating income and total operating costs significantly dropped in 2021, mainly due to one bank changing its status to a branch and, therefore, being excluded from the analysis. The remaining banks in this segment have steadily developed over the last few years, showing no major fluctuations.
The net profit drop in 2020 was mainly due to increased credit provisions as a direct effect of the COVID-19 crisis. In 2021, credit provisions returned to pre-pandemic levels.
Balance sheet overview
Balance sheet (in EUR billion)
Loan-to-deposit (customer) ratio
Profit and loss overview
Total operating income (average in EUR million)
Total operating costs (average in EUR million)
Net profit (average in EUR million)
While 90% of depositary banks grew their net commission income, this was offset by the fall in net interest income and the rise in costs. Net profit has remained stable in recent years, with no major changes.
Balance sheet overview
Balance sheet (in EUR billion)
Profit and loss overview
Total operating income (average in EUR million)
Total operating costs (average in EUR million)
Net profit (average in EUR million)
Two in three private banks saw their net interest income fall, whereas 85% experienced an increase in net commission income.
On average, net commission income accounts for two-thirds of private banks’ revenues. The nearly 46% spike in net profit is mainly due to one bank selling part of its activities to a third party.
Balance sheet overview
Balance sheet (in EUR billion)
Loan-to-deposit (customer) ratio
Profit and loss overview
Total operating income (average in EUR million)
Total operating costs (average in EUR million)
Net profit (average in EUR million)
In this segment, two banks account for two-thirds of revenues and costs and are the main drivers of the rise in income and expenses. The peak between 2016 and 2018 was due to one bank’s surge in interest income during that period.
The 51% growth in net profit can be partially attributed to the rise in the average total operating income, and partially to one bank experiencing a significant increase in profit deriving from other income in 2021.
Balance sheet overview
Balance sheet (in EUR billion)
Loan-to-deposit (customer) ratio
