An environment marked by uncertainty

In 2023, the economic environment was marked by a series of uncertainty factors: conflicts in various parts of the world, the trajectory of inflation and the global economic slowdown, to name but a few. These factors made 2023 a particularly difficult year, both for the financial sector and for private, professional, and institutional customers.

In Luxembourg, the economic slowdown and the sharp rise of interest rates were two unusual factors which impacted all sectors of the national economy and led to lower growth in the demand for credit.

Against this particular background, Banque Raiffeisen has remained faithful to its values as a cooperative bank close to its customers, to its strong commitment to responsible and sustainable finance, to its role in supporting the national economy and to its prudent financial management. As of 31 December 2023, the Bank can therefore report a solid operating result of EUR 25.5 million, an increase of EUR 1.8 million on the previous year. 

Banque Raiffeisen consolidates its support at municipal and para-public level

On the asset side of the balance sheet, customer loans showed a slight annual decline of EUR 39 million (-0.5%) to EUR 7,694 million.

In 2023, Banque Raiffeisen continued to support the national economy by assisting its private customers, the many local businesses and SMEs, as well as financing a number of large-scale municipal or parapublic projects; the latter segment growing strongly by 37.3%.

The inflationary environment and disruption to the national real estate market have had significant repercussions for private customers looking to embark on a property project. Some have adopted a wait-and-see attitude, while others have scaled back their plans. For the Bank, this has had an impact on the number of mortgage loan applications processed. The Bank’s core business, financing home ownership, experienced a historic fall of 2.4%, reflecting the sharp drop in demand for housing from individuals.

Increase in the savings of private customers

On the liabilities side of the Bank’s balance sheet, funds entrusted by non-bank customers amounted to EUR 9,597 million, an increase of EUR 170 million (+1.8%), by virtue of growth in household savings totalling EUR 209 million. Due to the unfavourable economic climate, deposits from professional customers fell by EUR 39 million (-1.1%).

Profit and loss account

In line with its strategy and principles, the Bank maintained a prudent risk management policy. Against the backdrop of uncertainty, this prudent approach, together with the resilience of its business model and rising interest rates, enabled Banque Raiffeisen to post a solid result.

In 2023, the Bank recorded a 56% increase in net interest income. This increase was mainly due to higher interest rates earned on the Bank’s liquid assets and the replacement of its equity capital.

Net commissions were 2.6% lower than in 2022, mainly as a result of lower commissions from financing activities, partially offset by higher commissions from our securities placement and payment activities.

In view of these factors, net banking income rose by 44.8% over the year.

Operating costs increased by 6.5%, mainly due to higher staff costs following a 3.5% increase in the workforce and successive index-linked pay rises during 2023. As of 31 December 2023, Banque Raiffeisen had 683 employees.

The cost of risk had a significant impact on Banque Raiffeisen’s financial results for 2023. A very prudent risk management approach regarding the Bank’s loan portfolio led to a significant net allocation to value adjustments on loans and advances of EUR 53.5 million, as well as an allocation of EUR 10 million to the fund for general banking risks. These amounts enable the Bank to cover all identified credit risks and to build up a reserve to cover any other contingencies, especially related to sectors exposed to the downturn in the economy.

Taking all these factors into account, and after deducting tax charges, the Bank posted a net profit of EUR 43.9 million, an increase of EUR 20.2 million on the previous year. The result for the year includes a large exceptional component linked to the restructuring of the Bank’s shareholdings, notably the sale of a subsidiary, leading to a non-recurring profit of EUR 18.4 million.

The operating result and exceptional income allowed the Bank to strengthen its equity capital. This ongoing strengthening of equity will enable the Bank to continue to expand its financing activities and develop its business model through fostering a long-term, close relationship with its members and customers.

A cooperative bank which belongs to its members

At the end of 2023, Banque Raiffeisen had 49,348 members, an increase of 7.6%. They received OPERA benefits of a total value of EUR 1,384,855, an increase of 9.2% on the previous year.

A “phygital” approach to meet customers’ needs and expectations

In 2023, Banque Raiffeisen maintained a high level of investment, both in staff training and in its “phygital” approach, which favours the development of both traditional and digital distribution and communication channels, as illustrated by the opening of a new branch in Differdange (March 2023), the refurbishing of the branch in Niederanven (June 2023) and the ongoing development of the online banking R-Net, the R-Vision digital advisor tool and the Online Branch.

Towards an ever more responsible and sustainable finance

Banque Raiffeisen, with its pioneering cooperative business model, is committed to meeting the current expectations of customers and investors seeking more responsible growth, as well as the expectations of future generations.

The Bank’s ambition is to be a driving force for change in the transition to a more sustainable economy, particularly through its ESG products and services. These include its range of Visa credit cards which, for every 200 transactions made, lead to the planting of a tree, its range of ESG-compliant investments and its financing of projects designed to support an environmentally friendly energy transition (photovoltaic installations, energy-efficient renovations, low-emission mobility, renewable energies).

Banque Raiffeisen promotes well-being, commitment and equity in the workplace

Banque Raiffeisen is not only a solid and reliable partner for all its customers, a supporter of the national economy and an important actor working towards more sustainable and responsible finance, but it is also an employer that promotes the professional development of its employees. The Bank therefore attaches great importance to the well-being and commitment of its staff members, and takes concrete action to promote diversity, inclusion, and equity within the company.

2023 was also the first year of the introduction of Quality Time, which is now used by the majority of staff members with no negative impact neither on the internal organization nor on the quality of the service provided to customers. Following the introduction of this measure, a considerable increase in the number of job applications was observed, which is particularly important in the context of a highly competitive job market.

Other initiatives were deployed to enhance Banque Raiffeisen’s employer branding, including the opening of several “satellite offices”, the adherence to the “Luxembourg Women in Finance” charter and the development of a “Diversity, Equity, Inclusion” policy.

NB: The figures as reported in this Press Release are still subject to approval by the Ordinary General Meeting