“The strength of the financial centre today depends as much on the soundness of the banks as on Luxembourg’s ability to remain a country where businesses and talented individuals want to settle and grow,” said the president of the Luxembourg Bankers’ Association (ABBL), 
Bank balance sheets grew by 2.29% year-on-year to reach €958.9bn, driven in particular by international operations. The sector’s workforce remains broadly stable at around 26,284 employees (+139), despite the ongoing restructuring and consolidation seen in recent years.
For the ABBL, however, this stability masks a profound transformation within the industry. “Today, organisations are increasingly turning to specialists,” emphasised Yves Stein, citing in particular the growing demand for expertise in artificial intelligence, cybersecurity and regulatory compliance.
Second-best year on record
Financially speaking, banks recorded their second-best year on record in 2025, following the record set in 2024, according to figures presented by the association. Net banking income remained stable at €18bn, whilst net profit fell by 5.4% to €6.846bn. This decline was mainly due to the narrowing of the interest margin, which was affected by the ECB’s cut in key interest rates and the rise in refinancing costs. Commission income, however, rose by 2.2%, helping to offset some of the impact.
“The sector remains profitable, but striking a balance between revenue and costs is becoming more challenging,” summarised Yves Stein. Costs are indeed continuing to rise rapidly. Overhead costs rose by 4.2% in 2025, driven by a combination of wage indexation, talent shortages, the strengthening of control functions, and investments in technology and cybersecurity.
The ABBL placed particular emphasis on the growing burden of European regulation. The association’s secretary-general, Sandrine Roux, pointed out that a study carried out by the organisation shows that 41% of banks’ investments are now linked to regulatory requirements. “There can be no competitive economy without competitive banks,” she said, calling for regulatory simplification based more on the proportionality of risks rather than on a one-size-fits-all approach applied to all institutions.
The ABBL intends to capitalise on the European debate reignited by the Letta and Draghi reports on European competitiveness to push forward several demands: reducing regulatory fragmentation between Member States, applying the principle of ‘same activity, same risk, same rules’ to fintech firms and non-European players, and simplifying reporting requirements.
Housing and economic wait-and-see attitudes
The picture regarding credit is mixed. Loans to households (€47.76bn) and mortgages (€9bn) have begun to pick up again following the slowdown caused by the sharp rise in interest rates between 2022 and 2023. By contrast, lending to businesses is declining in an environment characterised by a wait-and-see attitude and a lack of economic visibility.
“Banks today must strike the right balance: supporting the economy whilst ensuring prudent risk management, in the interests of both depositors and borrowers,” said the CEO of the ABBL, 
Housing remained one of the key topics of the conference. The ABBL believes that the recovery in the property market observed in 2025 remains fragile, particularly for projects currently under construction. Banks say they are continuing to finance the sector and are working with the authorities on a number of initiatives designed to restore buyer confidence and support supply.
Opening bank accounts for businesses also remains a sensitive issue. In light of the difficulties faced by some companies due to increasingly stringent anti-money laundering requirements, the ABBL states that it has set up working groups, drawn up practical guides and prepared a dedicated helpdesk. “We must continue to be able to welcome and support businesses engaged in legitimate activities, whilst maintaining the high standards of vigilance that underpin the reputation of the Luxembourg financial centre,” Yves Stein also emphasised regarding the difficulties faced by certain businesses in opening bank accounts.
Innovation and transformation at the start of a challenging year
Innovation and payments were another key focus of the discussions. The ABBL highlighted the rise of instant payments and the imminent launch of Wero, the future European payment solution. “Banks are actively innovating, ensuring that the solutions they roll out are both secure and sustainable,” said the ABBL board member, 
Against this backdrop of rapid transformation, the banking association also emphasises the need to strengthen the sector’s collective resilience, whether in terms of cybersecurity, skills development or the fight against online fraud.
The ABBL anticipates a more challenging year in 2026. The gradual decline in interest margins is expected to continue, whilst costs will keep rising. The sector will therefore need to find new drivers of performance through revenue diversification, operational efficiency and technological transformation. “Competitiveness attracts, appeal retains, and resilience ensures longevity,” concluded Yves Stein. “The challenge is no longer simply to adapt, but to do so collectively and over the long term.”
Appropriate governance
At the AGM, the CEO of Banque Internationale à Luxembourg, 
The other appointments are:
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- Carlos Fernandez-Rubies de Lillo, CEO of Creand Wealth and Securities (Private Wealth Bank), the new chairman of the Southern Europe regional group;
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- Martin Wallmann, country manager of JP Morgan – Luxembourg Branch, new chairman of the North America regional group;
- Wenqing Qi, CEO of Bank of China (Europe), has been appointed the new chairman of the Asian Markets Regional Group.
