European central banks have raised their key rates several times in 2022. For example, ECB raised rates by 300 basis points during the year, something that had never happened before. Of course, higher rates caused people to be less willing to borrow money. However, there is a flip side to this.
Luxembourg banks are no exception to the general trend. Higher interest rates have indeed discouraged some customers. However, the number of applications that came in during the year was enough to increase the interest margin.
Thus, according to the Statec report, almost all the banks in the Grand Duchy noticed a drop in demand for financial services. However, interest margins still increased by 37%. In 2023 they are expected to grow by 26%, with the added value of banks raised by 16%.