On Thursday 28 April, ING Senior Economist Philippe Ledent presented the results of the study for the Grand Duchy and its households.

Overview of financial wealth and its development

Household financial accounts have two components: on the asset side, we find all financial assets that households own in different forms (cash, equities, bonds, funds and other assets). These assets totalled nearly EUR 70 billion in 2015.

Household liabilities, however, which are essentially debt (mainly mortgage loans), must be deducted from these assets to obtain a household's net wealth. This amounted to around EUR 15 billion in 2002 and had reached EUR 40 billion in 2015, i.e. EUR 71,800 per inhabitant.

The financial crisis had a major impact on household financial wealth in many European countries. Household assets declined considerably, undermining their financial balance and, in many cases, entire economies.

In the case of Luxembourg, households' financial condition improved on the whole during the period from 2002-2015 and the financial crisis had only a minor impact on their financial balances.

Factors for international comparison

Luxembourg is characterised by financial wealth per inhabitant that is higher than the European average.

The relative stability of Luxembourg household assets stands out from the European average. Many reasons can explain this fact: first, the aforementioned factors have had an impact: population growth has been more dynamic than in other countries and income growth has also been stronger (and at a constant savings rate, the growth in household assets has been stronger as a result). Second, the composition of the wealth makes it more or less sensitive to market trends. Accordingly, the particular composition of Luxembourg household "portfolios" has played an important role.

Composition of household financial wealth

Household financial wealth in Luxembourg is mainly made up of cash (currency and deposits). A cash proportion in excess of 50% is atypical at the European level.

Overall, the wealth structure did not change substantially between 2002 and 2015. The percentage of bonds has decreased, which is also the case in other countries such as Belgium.

Changes since the crisis

If we look at the gross change in the different asset classes since the crisis, we note that Luxembourg households on the whole have lost interest in bonds. While remaining quite conservative, the change in the percentage of riskier assets, such as equities and funds, has been rather mixed. Ultimately, cash and other retirement-based savings products seem to be favoured products for households.

It is true that this portfolio structure enables Luxembourg households to be less exposed to the sometimes drastic fluctuations in financial markets. In a period of extremely low interest rates, however, this structure provides an extremely low return on savings.

"Household financial wealth in Luxembourg developed positively during the period from 2002 - 2015 and the financial crisis had only a minor impact. This is due, among other things, to a relatively conservative household portfolio structure, as the proportion of cash is particularly high compared to other European countries", Philippe Ledent explains.