A recent assessment of the Commission de Surveillance du Secteur Financier (CSSF) concerning profit before provisions of the Luxembourg banking sector for the first nine months of 2015 has revealed a 3.8% decline compared to the same period in 2014, standing at €4,068 million.

Major contributors to this decrease were other net revenues, as well as overheads in high fluctuation in relation to their level posted in the third quarter 2014.

Whilst intermediation activity remained at the same level, the interest margin was down 1.4%, reflecting the challenges of banking operations in the current climate of low interest rates.

Compared to levels reported at the end of the third quarter of 2014, net commission income was up 5.5%, arriving at a favourable time for financial markets and an increase in business, particularly at depositary banks. These changes resulted in an increase in commission income.

Over the same period, the trend in other net revenues declined by 6.3%. Due to its composition, this post is traditionally more volatile, meaning that a limited number of banks in the market and results from non-recurring factors culminated in this observed decrease between late September 2014 and the same period in 2015.

Expenses increased by 4.5% year over year due to other general costs, whilst personnel expenses saw a 0.5% fall YOY. The increase in other overhead was particularly pronounced among custodian banks due to the favourable evolution of their activities. This is partly due to investments in IT systems.

 

Photo by CSSF