Credit: BIL
Banque Internationale à Luxembourg (BIL) has announced its half-year financial results for 2023, with a reported net income of €103 million.
Over the past twelve months, central banks around the world have been raising interest rates to curb the highest levels of inflation seen in decades, and tightening financial conditions. BIL reported that this new environment, not seen in years, brings new challenges which it is closely monitoring. According to BIL, as a systemic bank, it is following a prudent approach by identifying and managing risks. The bank’s financial fundamentals are reported to be “strong” as the recent ECB Stress Test exercise revealed: its CET1 ratio stands at 13.63% (liquid bank holdings) and it Liquidity Cover Ratio (LCR) at 154.4%.
Marcel Leyers, CEO of BIL, commented: “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.”
During the first half of the year, BIL reported having enhanced its offerings for entrepreneurs and individuals with an entrepreneurial mindset. The company directed its efforts towards providing support to clients in its primary commercial markets, operating from its hubs located in Luxembourg, Switzerland and China. Additionally, the Group reported advancements in its sustainable development action plan, fostering expertise and awareness regarding Environmental, Social and Governance (ESG) requirements, and expanding its portfolio of ESG investment and financing solutions.
In June 2023, BIL achieved a net income after tax of €103 million, showing significant growth compared to the €68 million recorded in June 2022. BIL attributed this increase to higher revenues generated from its commercial activities and effective cost management. Note that there was an uptick in the cost of risk, which was a result of prudent provisioning aligned with rising interest rates and inflation.
BIL emphasised its commitment to assisting clients in navigating the current environment characterised by increasing interest rates. Notably, client deposits experienced a 6.8% decrease, totalling €19.6 billion, as clients opted to allocate their funds to more lucrative investment products and proactively repaid their variable rate loans. Concurrently, client loans saw a slight reduction from €16.5 billion at the end of 2022 to €16.4 billion.
BIL attributed this decline to the ongoing general deceleration in mortgage loan production within Luxembourg, influenced by the rapid interest rate hikes mandated by the ECB. Additionally, delays in new construction projects, triggered by the prevailing downturn in the real estate sector, along with rising raw material costs and supply chain disruptions, have contributed to this trend. Clients are also employing their surplus liquidity to deleverage their investment portfolios, further impacting loan volumes.
Furthermore, assets under management (AUM) witnessed growth, reaching €44.1 billion compared to the €43.5 billion recorded at the end of 2022. According to BIL, this increase is attributed to positive market effects.
The full 2023 semi-annual report is available on bil.com.
