“Our 2023 performance confirms the relevance of our strategic choices and of our comprehensive and loyal response to the needs of all our clients, be they individuals, entrepreneurs and businesses,” said Marcel Leyers, CEO of Banque Internationale à Luxembourg, announcing the bank’s 2023 financial year results. Archive photo: Simon Verjus / Maison Moderne

“Our 2023 performance confirms the relevance of our strategic choices and of our comprehensive and loyal response to the needs of all our clients, be they individuals, entrepreneurs and businesses,” said Marcel Leyers, CEO of Banque Internationale à Luxembourg, announcing the bank’s 2023 financial year results. Archive photo: Simon Verjus / Maison Moderne

Banque Internationale à Luxembourg reported a 32% increase in net income for 2023, reaching €202m on Wednesday, driven by robust revenue growth despite increased expenses and loss of customer deposits.

Banque Internationale à Luxembourg (Bil) on Wednesday 24 April a net income after tax of €202m for 2023, marking a 32% increase from 2022. Driven by solid revenue growth, partly offset by increased expenses and the cost of risk, net income surpassed 2022’s €153m by €49m.

The oldest-serving bank in the grand duchy noted that the non-recurring items before tax generated a negative impact of €9m in 2023 compared with a positive impact of €38m recorded in 2022. In 2023, non-recurring items recognised before tax are composed of the remeasurement at fair value of an investment property with a reduction of the fair value revaluation by €6m (compared with the fair value increase of €25m in 2022), capital gains realised on the bank’s investment portfolio of €4m (compared with €21m in 2022) and higher restructuring costs, offset by interest received on a legacy loan, positively impacting the cost of risk by €3m.

Core operating performance

In 2023, the core gross operating income (excluding non-recurring items) totalled €267m, representing a substantial increase of €124m or 86% compared to the €144m reported in 2022. This growth was primarily driven by a significant increase in core operating revenues, amounting to €164m. Commercial activities and financial markets contributed €113m to this increase, while group centre activities added €50m. However, this growth was offset by a rise in core operating expenses of €40m compared to the previous year.

Furthermore, the core operating net income before tax reached €239m in 2023, compared to €127m in 2022, marking an increase of €112m or 88%. This significant growth was driven by the increase in core gross operating income of €124m, despite a higher core cost of risk of €12m compared to 2022.

Assets

Assets under management reached €43.8bn, a slight increase from the €43.5bn reported at the end of 2022, up by 0.7%. This growth was driven by a positive market effect of €670 million. Additionally, the CET1 ratio stood at 14.41% after profit allocation, compared to 14.03% in 2022, indicating improved financial strength. Furthermore, the liquidity coverage ratio also saw improvement, rising to 174% from 153% in 2022.

Customer deposits and loans

Customer deposits, amounting to €18.455bn, decreased by 12% compared to €21.091bn at the end of 2022. This decline was primarily attributed to clients shifting their deposits to higher-return investments and opting for early repayment of their variable rate loans amid higher interest rates, stated Bil in the report.

Regarding customer loans, which stood at €16.329bn, stability was observed compared to the previous year’s €16.483bn. This consistency was driven by a significant slowdown in mortgage loans in Luxembourg and continued early mortgage loan repayments throughout the second half of 2023. The adverse effects of rapidly rising interest rates in 2022, coupled with a sharp reduction in construction activity and rising raw material costs, contributed to this scenario. Additionally, the bank faced significant volatility in terms of institutional client deposits from a limited number of institutional clients, primarily public sector entities, aligning with their liquidity needs.

Related articles