RTL Today - Statec: Luxembourg banks thrive despite drop in mortgages

New figures from Statec show that Luxembourg's banks are thriving despite a drop in mortgages.

The drop in mortgages in the Grand Duchy is indisputable. In December, the general manager of the BCEE bank, François Thoma, had reported a significant decline in the number of loans the bank was granting to help with buying houses, the figure reaching 45% in one year. Pauline Perray, member of the economic analysis division of Statec, said that all the banks surveyed in Luxembourg noted a drop in demand for property loans of about 40 percent in the last quarter of 2022. The cause is clear: the European Central Bank's successive interest rate hikes.

Financial institutions may have been expected to suffer from the fall in new mortgages, but figures from Statec show that banks are actually thriving.

Perray explained that the banks are in fact benefiting from the strong rise in interest rates after being penalised with low rates for several years.
The successive increases have stimulated profit margins by an incredible 37 percent in 2022, which should increase by a further 26 percent in 2023. Luxembourg's banking sector thus has nothing to complain about with regards to the ECB's rate hikes.

Nonetheless, it should be noted that the banks' net results will probably be affected by a strong increase in personnel costs linked to salary indexations.