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Luxembourg's financial services regulator, the Commission de Surveillance du Secteur Financier (CSSF), has announced that the profit before tax and provisions of the Grand Duchy's banking sector amounted to €1.321 billion.

As at 31 March 2021, Luxembourg credit institutions recorded a profit before provisions of over €1.321 billion. Over one year, this represents a 13.7% increase in earnings before provisions.

In the first quarter of 2021, the interest margin fell by 18.6% compared to the same period in 2020. This decrease affected 75% of credit institutions and is mainly explained by a reduction in the margins at the level of interbank lending operations and loans to non-financial corporations, as well as the fall in the interest rate in dollars.

Net commission income, which is largely the result of the asset management business for private and institutional clients, including the provision of financial services to investment funds, grew by 5.8%. 62% of Luxembourg banks contributed to this increase. Commissions on custody of assets were also on the rise following the positive development of stock market prices and the valuation of financial assets.

The significant increase (up 284.4%) in other net income came from the sale of activities carried out by a local bank.

Overheads (up 4.6%) remained on the rise for more than half of the banks.

Overall, the aforementioned developments led to a 13.7% increase in profit before tax and provisions.