PricewaterhouseCoopers (PwC) today published the 32nd edition of its assessment of the annual accounts of German banks in Luxembourg.
The report, entitled "Der Auswertung Jahresabschlüsse 2014 der deutschen Eurobanken in Luxembourg", compared the financial statements of Luxembourg subsidiaries of German banks and reports on developments in the German banking sector in Luxembourg. With 16 subsidiaries and 13 branches in 2014, German banks still represented the most significant group in the financial centre.
"The transformation of business models, which had already been observed in recent years, was heightened in 2014," reported Björn Ebert, Partner at PwC Luxembourg and head of the analysis of the annual accounts of German banks. "This continual adaptation of the sector brought about a diversification in services, especially in the area of investment funds. In 2014, the number of German banks increased from 37 to 29, which is due to the end of a long consolidation process in regional banks. Other banks reaffirmed their commitment in the financial industry by developing sustainable business models."
Jörg Ackermann, partner in charge of monitoring the German customers in the financial sector at PwC Luxembourg, discussed the main trends of 2014 for German banks, commenting:
"On one hand, the transformation of the business models brought about the transfer of some activities conducted by subsidiaries to existing or newly created branches, which are on the other hand subject to less important supervisory requirements, such as the level of own funds and declaration obligations. Moreover, this development was accompanied by the transfer of several functions within the group and the process of optimisation. Besides the transformation of business models, persistent low level interest rates has impacted on the margins (20%) of banks. Meanwhile, banks remain exposed to increasing pressure on costs, notably because of prudential requirements, such as CRD IV / CRR or MiFID II."
Although in its annual report the Commission's Financial Sector Supervisory noted a historical level of net commission income of €4.072m and an increase of 14.8% in the total income of the collective of banks, the net profit for the year in the German market segment dropped 33.2% to €360.1m. However, the surplus of provisions, excluding non-recurring effects, fell only slightly (-3.3%), and for some banks revenues from credit operations and activity in funds increased.
The anaylsis of the annual account of German banks in Luxembourg was complemented by a large number of statistics which showed a stable balance sheet with a slight decline of 2.1% of total assets to around €181 billion. The analysis of financial statements conducted by PwC demonstrated the differences between German institutes and the global market, and advances in results compared with the previous year. The analysis thus provided a detailed overview of the total balance sheet and the account of losses, the overall profits of subsidiaries, selected indicators and data relative to the balance sheet structure, as well as a ranking of german subsidiaries based on total assets, public equity, annual results and employees.
Photo by PwC (Björn Ebert, Partner at PwC Luxembourg and head of the analysis of the annual accounts of German banks)
