Evolution of the Luxembourg banking industry

The breakdown of assets has remained quite stable over the last few years. Total assets increased slightly (by 0.6 percent) in 2023 compared to the previous year, with no significant changes in the structure of those assets.

Deposits from credit institutions and customers remain the two main sources of funding for the Luxembourg banking market. No significant change in the structure of liabilities was observed in 2023 compared to 2022.

In 2023, total banking income experienced a robust 24 percent increase over the previous year. This significant growth was primarily driven by an impressive 51 percent increase in net interest income, as well as by a 6 percent increase in other net revenues. This surge was only partially offset by a decrease in revenues from fees and commissions, which declined by 3 percent compared to 2022.

Total expenses continued their upward trend, increasing by 6 percent in 2023. Ongoing infrastructure investments, restructuring efforts and regulatory compliance initiatives, as well as wage indexation, remained the primary drivers of the sustained increase in the banks’ expenses, as evidenced by the 3 percent rise in other administrative expenses and the 11 percent increase in staff costs. These expenses reflect the banks’ commitment to enhancing operational efficiency, adapting to regulatory changes and investing in human capital. For a comprehensive analysis of the changes in total operating costs across different categories, please refer to the banking performance indicators section of this report.