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Luxembourg’s banks are not yet reaping the benefits of Brexit as Brexit-related additional costs are outstripping the rise in revenues. This has led to a year-on-year decline of 5.4% in banks’ profits in the third quarter of 2019, according to CSSF figures.
Revenues of Luxembourg’s banks rose by 5.7%, mainly thanks to an increase in commission income. However, only 45% of banks actually saw their commission income rise, regulator CSSF noted. ‘A select number of banks that have seen growth strongly related to Brexit, account for the majority of the rise in commission income’, CSSF said in a statement.
Because costs rose much more strongly than revenues, total profits of the Luxembourg banking sector decreased by some €217 million to €3.77 billion, a decline of 5.4% compared to the third quarter of 2018.
The rise of total bank costs was again in the double digits, as was the case in the first two quarters of this year. Personnel costs rose by 10,4%, while other costs went up by 13,2%. CSSF attributed the extent of the increase of general expenses to the ‘mobilisation of human and technical means’ necessary to manage the transferring of banking activities to Luxembourg because of Brexit.