“PSFs have shown surprising resilience, as illustrated by the market rebound,” according to Deloitte’s Raphaël Charlier, partner and PSF leader, and Adil Sebbar, managing director audit. Charlier and Sebbar were in charge of Deloitte’s annual survey of professionals of the financial sector (better known by their French acronym PSF). “Our report, now in its thirteenth edition, confirms the stabilisation of the number of PSFs after a difficult covid period, demonstrating once again the continued resilience and recovery of the sector since the start of the pandemic.”
This resilience can be seen in the figures, which were released on Tuesday.
From December 2017 to December 2021, driven by the trend towards market consolidation through mergers and acquisitions, the number of PSFs had fallen sharply from 289 to 266. In the past year, the number of players, including branches, has remained relatively stable, going from 266 to 263 entities (-1.1%) over the period from 2021 to early 2022. From one year to the next, 14 companies disappeared and 12 were created. These variations are due to the creation of new companies, the transformation of existing entities into PSFs and changes in categories.
The PSF sector is made up of three families of players: investment companies, which provide investment services to third parties; specialised PSFs, active in the financial sector but not providing investment services, such as family offices, domiciliaries or registrars; and support PSFs, mainly companies offering services in the information and communication technology sector.
The main categories of PSFs in 2021 remained specialised PFS (100 active firms) and investment firms (96 active firms). They represented 38% and 36% of the companies in the sector respectively.
Growing net profits
The sector grew notably last year, the Deloitte study found. The total balance sheet of all PSFs amounted to €8.9bn on 31 December 2021 (+3%). On 30 June, the balance sheet contracted by 3.4% to €8.6bn. €260m of this fall was due to IBLux (formerly Interactive Brokers Luxembourg).
The growth was due to rising profit, which amounted--on the basis of provisional figures--to €294m against €234m in 2020. This increase was due to the good health of investment PSFs, whose profits reached €129m (+38%), and of support PSFs, with a performance of €70m (+61%). Net profits of specialised PSFs remained mostly stable at €94m in 2021 (-2%).
However, 2022 looks set to be a less buoyant year: for the first nine months of 2022, provisional net profit amounts to almost €174m, down 9% compared to the same period in 2021.
35% of financial employment
The number of PSF employees also rose. After a decline in headcount during 2020--during the covid crisis, the number of employees fell from 16,878 at the end of 2019 to 16,248 at the end of 2020--the trend has been reversed: the number of employees has exceeded the pre-pandemic level, with 17,320 staff as at 30 September (+6%). 53% of these jobs are filled by support FSPs.
By comparison, banks employed 25,992 people at the end of 2021 and management companies 6,895. Between 2009 and 2021, the number of employees in PSFs grew by 24%, while the number of employees in banks remained stable, falling from 26,420 to 25,965 over the period.
Deloitte said that today the PSF sector employed 35% of the overall financial sector workforce.
This article was published for the Paperjam+Delano Finance newsletter, the weekly source for financial news in Luxembourg. Subscribe using this link. Read the original French version of this article on the Paperjam site.