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Belgium’s banking sector: Facts & Figures

According to the European Commission, real GDP growth in Belgium is likely to increase from 1.2% in 2016 to 1.5% in 2017 and +1.7% in 2018. A policy improving competitiveness, such as reducing labour costs (including an important tax shift), supports exports and makes growth considerably more labour intensive (in 2016, employment rose by 1.3% and unemployment is expected to decrease from 7.8% in 2016 to 7.6% in 2017 and 7.4% in 2018). Investments by companies, federal and regional governments and households are strong. In a coordinated investment plan, the Belgian government is pooling investments worth €30 billion spread over a period till 2030 in the areas of energy, mobility, security, digitalisation and health.

The Belgian banking community features a large variety of players operating in different market segments.  BNP Paribas Fortis, KBC, Belfius and ING Belgium are the four leading banks (with a combined balance sheet on a non-consolidated basis of 58% of the total sector, at the end of 2016) offering an extensive range of services in the field of retail banking, private banking, public and corporate finance and payment services. A number of smaller institutions often operates within a more limited number of market segments.

A number of institutions has specialised in international niche activities, such as Euroclear (one of the world’s biggest players in the field of clearing and settlement services) or The Bank of New York Mellon (custody). At the end of 2016, there were 90 credit institutions in Belgium.

Of the 90 banks in Belgium, 83% are branches or subsidiaries of foreign institutions, and 17% has a Belgian majority shareholding. Meanwhile, 13 credit institutions under Belgian law (with Belgian or foreign majority stake) had 100 branches in 27 foreign countries.

At the end of 2016, there were 3,347 bank branches in Belgium. Independent bank agents managed an additional 2,835 branches which gives a total number of 6,182 branches. Of the 13,706 ATMs, 8,613 were cash dispensers. There were also 11.2 million subscriptions for internet banking and 3.3 million for mobile banking at the end of 2015.

Banks in Belgium employ some 54,000 people, with 124,300 in the wider financial sector. The sector invests in staff skills: almost 3% of total staff costs is spent on training annually.

At the end of 2016, the Belgian banks’ total assets (on a consolidated basis) amounted to €1,022 billion.  Loans granted to households/self-employed and liberal professions and interbank claims make up the biggest part of the Belgian banks’ assets (almost one fifth of the total assets), followed by investment in debt securities issued by banks, companies and public-sector entities (17%) and corporate lending to non-financial companies, taking up about 11% of the total assets.

The Belgian banking sector’s liabilities include client deposits (63%) (including debt evidenced by certificates), mainly regulated savings deposits (23%), sight deposits (22%) and term deposits (8%).

The Belgian banking sector is a key figure in economy financing, not least in financing the (non-financial) companies. According to the Bank Lending Survey, Belgium’s banks have not tightened credit criteria for corporates since the first quarter of 2013, easing criteria in half of the quarters. Credit demand from companies increased considerably during all quarters since the fourth quarter of 2014.

Outstanding credit to non-financial companies (NFCs) grew by 5% year-on-year towards the end of 2016. Long-term credits (duration longer than 5 years) rose by nearly 7%. Long-term credits represent over 60% of total credit to non-financial companies. Nearly three-quarters of outstanding NFC credit is extended to SMEs.

Company financing has become more diverse in recent years. Companies increasingly use asset-based financing, such as leasing, from bank subsidiaries or non-banks or raising funding in the financial markets (e.g. bond issues), where banks often provide assistance.

The savings and investments’ segments are experiencing a similar diversification in services. Belgian households held €1,323 billion in gross financial wealth at the end of 2016, over three times Belgian GDP, and financial wealth net of debts of over €1,000 billion. Belgian households, non-banking companies and governments together held over €500 billion in deposits in the Belgian banking sector at the end of the first quarter of 2017, Belgian households had over €186 billion in investment funds at the end of 2016, some of which are offered by banks’ asset management subsidiaries.

Cost efficiency of the Belgian banking sector has increased significantly, with a cost-to-income ratio (over the first nine months of 2016) of only 59.5% compared to 72.1% in 2013. Return on average equity was at 10% in 2016, the same level as in 2015. Non-performing exposures on the total loans and advances in domestic portfolio were at 2.8% (end 2015) and mortgage loans to households were at 1.8%. The Liquidity Coverage Ratio was strong at 135% (September 2016), as is the CET 1 ratio at 15.4%.