Banque Internationale à Luxembourg (BIL), a Chinese-owned systemic bank in Luxembourg, on Monday posted a robust financial performance for the first half, revealing a net profit of 103 million euro, up from 68 million in the same period a year earlier. The bank attributed the surge to the current global financial environment characterized by central banks hiking interest rates to combat soaring inflation levels. Clients deposits have fallen 6.8% during the first half.
Marcel Leyers, CEO of BIL, lauded the company’s strong half-year performance. ““In the complex environment we are currently navigating, the mission of our teams is first and foremost to support our clients and to ensure them of our undivided support. The combination of this relentless work, our resources and our capabilities continued to drive growth in 2023,” he said in a statement.
The bank’s performance comes against the backdrop of one of the most turbulent global economic climates in recent years, dominated by higher interest rates and persistent inflation. BIL has said it maneuvered these challenges with prudence and agility, closely monitoring risks while maintaining a CET1 ratio of 13.63% and an LCR of 154.4%, indicators showcasing the bank’s robust financial fundamentals. The bank underlined that these metrics have been corroborated by the recent European Central Bank (ECB) stress tests.
“With robust levels of capital and liquidity, BIL is a reliable partner for all its clients,” BIL said in its earnings press release.
Client deposits down
Client deposits at BIL, 90% owned by Hong Kong-based Legend Holdings, dipped 6.8 percent to 19.6 billion euro as customers shifted their funds to higher-yield products and prepaid variable-rate loans. Despite a general slowdown in mortgage loan production in Luxembourg, influenced by ECB’s interest rate policies and disruptions in the real estate sector, client loans remained relatively stable, shrinking slightly to 16.4 billion euro from 16.5 billion at the end of last year.
“BIL focused on proactively helping clients navigate the current environment of rising interest rates,” it said. “Client deposits decreased… as they moved their deposits to more remunerative products and also proceeded to the early repayment of their variable rate loans.”
AUM up
Assets Under Management (AUM) have shown a modest but positive uptick, climbing to 44.1 billion euro from 43.5 billion at the end of 2022. This growth appears to be fueled by market conditions, according to the bank.
During the first half, BIL has also made strides in its sustainable development action plan, enhancing its ESG offerings and focusing on key commercial markets through its hubs in Luxembourg, Switzerland, and China. This is particularly noteworthy as the bank strengthens its services aimed at entrepreneurs and those with an entrepreneurial mindset.