Nevertheless, officials at a press conference of the Luxembourg Bankers Association (ABBL) noted that the profit ratio already experienced a negative trend before the pandemic. ABBL president Guy Hoffmann explained that the country's banking sector remains stable for now, but efforts have to be made so that it can stay competitive in the long run.
Hoffmann referred to the elevated costs due to stronger regulations, as well as the high salaries in public service. In Luxembourg, the tax rate for businesses is currently set around 25%, which is higher than in many foreign countries, but at the same time below of what it used to be. Yves Maas from Crédit Suisse acknowledged that the health crisis is not the right moment to ask for tax reductions, but that a solution still needs to be found to help banks invest anew.
When it comes to the repercussions from the pandemic, ABBL believes that the banking sector will soon register a delayed wave of bankruptcies.
