FACTS & FIGURES

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1 FACTS & FIGURES

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3 Presentation of Febelfin 4 Belgian financial sector 6 Banking and finance in Belgium 8 Banking sector 10 Table of content International and European dimension Selected social-economic aspects Main developments and trends Results Lending to households 48 Leasing-financing 53 Undertakings for collective investment (UCIs) 55 Stockbroking firms 58 Financial markets: currencies, stocks, debt securities and derivatives 63 Global and European level Euronext Selected additional aspects of Belgium s money and capital markets Clearing and settlement

4 presentation of Febelfin is the federation of the Belgian financial sector. It tries to reconcile the interests of its members with those of the policy makers, supervisors, trade associations and pressure groups at the national and European level. 4

5 Takes positions on issues for and by its members: large banks, savings banks and universal banks, niche players, non-bank financial institutions and organisations, providers of financial infrastructure, etc. Represents members at national and European level, and conducts social negotiations. Presentation of Febelfin Provides services: informing, interpreting and giving advice, but also providing training via the Febelfin Academy. Communicates with members and the public at large and participates in debates involving professional, political, social and educational topics members 5 constituent associations 9members with a special status Non-banking financial institutions and organisations: Belgian Venturing Association, Belgian Association of Factoring Companies, Belsipa, Euroclear, Isabel, LCH. Clearnet, Euronext, SWIFT and Worldline. 5

6 Belgian financial sector BANK Savings + Investments Pensions billion on savings accounts billion in investment funds 2.1 billion savings in people's loans 5.7% sustainable investment funds 1.6 million people have joined a pension savings fund BANK 95% Credit granting to the Belgian economy Households billion Companies billion Public entities 73.5 billion % 59.6 billion through bond loans 15.1 billion through leasing % Bank financing is only part of the entire financing mix. Companies and private individuals can also turn to alternative forms of financing such as bond loans, leasing and crowdfunding billion through crowdfunding % 6

7 BANK 95% Payments 1.27 billion online sessions per year 12.1 million 1.7 internet banking subscriptions of savings is used for credit granting (internet and mobile) 5,896 offices billion card payments % BANK Belgian financial sector 5.9 million mobile banking subscriptions 1.27billion credit transfers 273,5 million cash withdrawals These services are provided by 90 banks in Belgium. Since 2008, the banking sector has undergone profound changes: Total assets Own funds (core capital + reserves) Leverage 26.6% 54.0% 54.2% Profitability is under pressure whereas banks (in Belgium) have to pay many kinds of taxes and levies to the Government, in 2017: 1.355billion (1) (1) Banks and stockbroking firms The most recent figures have been selected for publication. Source: BLA, ECB, BEAMA, NBB and Febelfin 7

8 banking and finance in Belgium The contribution of the financial sector to the Gross Domestic Product (GDP) of the Belgian economy is 5.6%. Chart 1: The financial sector s contribution to the economy (as a %, end of 2016) Gross added 5.6 value 8.1 Employment Employees wages Gross investments in fixed assets Financial sector (1) within the economy as a whole Financial sector (1) within the services sector as a whole (2) Financial sector (1) within the trade services (3) Source: Febelfin calculations on national accounts data (INA, detailed accounts and tables ). (1) The financial activities and insurance segment. (2) Services sector: trade services (see footnote 3), the public sector (civil service, defense, obligatory social allowances), education and other kinds of services (health care, social action, community, sociocultural and personal services, sports and recreation, association, private households with personnel taken as a whole). (3) Trade services: trade, hotels and restaurants, transport and communications, financial services, real estate, equipment leasing, IT, R & D and business services. 8

9 The monetary financial institutions (MFIs), mainly banks, account for over 48% of total gross value added by the Belgian financial sector. Chart 2: Breakdown of gross added value according to the financial subsectors (as a % of the total figure, period)» Insurance companies and pension funds (4) : 14.2 Banking and finance in Belgium» Financial auxiliary companies (3) 18.6» Monetary financial institutions (1) : 48.6» Other financial intermediaries except for insurance companies and pension funds (2) 18.5 Source: Febelfin calculations on national accounts data (INA, detailed accounts and tables ). (1) Credit institutions, electronic money institutions, money market funds and central bank. (2) Financial vehicle corporations executing securitisation transactions, stockbroking firms, financial lease companies, institutions providing consumer credit, trade credit, mortgage loans and other kinds of credit (leasing), venture and development capital companies, exports and imports financing companies, real estate companies (BEVAKS), PRIVAKS, non-monetary undertakings for common investment, units with legal personality (trusts, estates, third party accounts and brass plate companies), holdings with a control interest in a group of subsidiaries, SPEs attracting financial means for the benefit of their parent companies, lenders, institutions granting loans to students or foreign trade loans and government investment funds. (3) Stock Exchange management companies (Euronext among others), payment institutions, institutions in charge of securities issuing and financial markets infrastructure, central supervisors for financial intermediaries and markets, securities and mortgage credit brokers, insurance, investment and pension consultants, pension fund managers, investment companies, etc. (4) Insurance companies, re-insurance companies and social insurance pension funds. 9

10 banking sector international and European dimension The total assets of the Belgian banking sector have significantly decreased since the 2008 financial crisis, in absolute numbers as well as compared to the volume of the Belgian economy. This is much less true for countries like the Netherlands and France. Chart 3: International comparison of the relative importance of the banking sector in the economy (total assets, as a GDP percentage, end of 2016) Luxembourg Cyprus Malta France Netherlands Eurozone Belgium Finland Germany Spain Austria Ireland Portugal Italy Greece Latvia Estonia Slovenia Slovakia Lithuania ,500 Source: Febelfin calculations on ECB ,

11 In Belgium, there are 90 banks in total, of which 75 are branches or subsidiaries of foreign banks. Chart 4: Number of banks established in Belgium (number, end of September 2017)» Banks under foreign law: 56 90» Banks under Belgian law with Belgian majority: 15 Banking sector > International and European dimension» Banks under Belgian law with foreign majority: 19 Source: Febelfin calculations on Febelfin and NBB data. 11

12 In most cases, branches and subsidiaries of foreign banks established in our country originate from other EU Member States, with France, the Netherlands and Luxembourg at the helm. Chart 5: Foreign banks (1) established in Belgium (number, end of September 2017) Total Total EU countries France Netherlands Luxembourg United Kingdom Spain Germany Others Total non-eu countries United States India Japan Others Banking sector > International and European dimension Source: Febelfin calculations and presentation based on NBB data. (1) Subsidiaries and branches of foreign banks taken as a whole. 12

13 The Belgian banking population has a much more international character compared with our neighbouring countries: 83% of banks in Belgium are foreign banks compared to 53% in the Netherlands, 41% in France and only 8% in Germany. Chart 6: Internationalisation of the banking population European comparison (number of foreign banks (1) vs. total number of banks, as a %, end of 2016) Luxembourg Belgium United Kingdom Greece Netherlands Spain France EU 15 (2) Sweden Denmark Portugal Italy Ireland Finland Austria Germany Banking sector > International and European dimension Source: Febelfin as for Belgium and Febelfin calculations on ECB data as for the other countries. (1) Banks under foreign law ( branches ) as well as banks under the law of the Member State concerned but with a foreign majority ( subsidiaries ). (2) Data pertaining to the former 15 EU Member States. 13

14 Belgian banks have 100 offices abroad, three quarters of which are located within the EU. Chart 7: Geographical breakdown of Belgian banks offices (1) abroad (end of 2017) 100» EU (2) : 75» North-America: 8» Asia: 12 Banking sector > International and European dimension» Other European countries: 5 Source: Febelfin. (1) Branches, bank and financial subsidiaries, representative offices and qualified participating interests in banks and financial institutions. Belgian banks haven t got any offices in Latin America, Africa or Oceania. (2) EU with 28 Member States. 14

15 Almost 700 banks from other EU Member States have requested formal permission to directly provide services without being based in Belgium. 471 of those requests are also related to funds raising. Chart 8: Requests from banks in other EU Member States to provide services in Belgium under the system of free provision of services (number, end of December 2016) Total United Kingdom France Germany Luxembourg Netherlands Ireland of which Banking sector > International and European dimension Candidates for funds raising Source: Febelfin calculations and presentation based on NBB data. 15

16 Almost half of the balance sheet total in the Belgian banking sector has an international character, i.e. relates to transactions with a foreign counterparty or to foreign currency transactions. Chart 9: Share taken up by international transactions (1) in the activities of banks established in Belgium (as a %, end of December 2016) Balance sheet total (2) Customer deposits Customer credit Securities portfolio (3) Interbank transactions Banking sector > International and European dimension Source: Febelfin calculations on NBB data. (1) Transactions in EUR with foreign countries and foreign currency transactions. (2) Assets and liabilities average. (3) All securities and participations, except for Belgian public debt instruments. 16

17 In Belgium, foreign banks branches and subsidiaries account for almost two thirds of total assets held by the banking sector. This is much less true for Germany, France and the Netherlands. Chart 10: Share of foreign banks (1) in the total volume of credit institutions assets (share, as a % in total assets, end of 2016) Luxembourg Belgium United Kingdom(²) Germany Italy France Spain Netherlands Greece Banking sector > International and European dimension Source: Febelfin calculations on ECB data. (1) All of the subsidiaries and branches of foreign banks. (2) As for this country, calculations are based on the total assets of the monetary financial institutions (MFIs). 17

18 banking sector selected social-economic aspects Belgian customers (households, companies and public authorities) have almost 550 billion EUR in deposits with Belgian banks, mainly savings deposits and current accounts. Chart 11: Resident customers deposits (1) in Belgiumbased banks per category (amounts outstanding, as a % of the total, end of June 2017)» Term deposits: 8.0» Current accounts: billion EUR» Regulated savings deposits: 46.3» Other: 4.4» Bonds and savings certificates: 6.7» Deposit certificates: 2.2 Source: Febelfin calculations on NBB data. (1) Non-banking clients as a whole (including non-banking financial institutions). 18

19 Belgian households save about 11% of their income. This ratio is slightly under the euro area level. Chart 12: Household saving rate (1) European comparison (as a %, end of 2016) Sweden Germany France Austria Netherlands Slovenia Eurozone Belgium Denmark Italy Slovakia Spain Finland Portugal United Kingdom Banking sector > Selected social-economic aspects Source: Eurostat. (1) Gross saving rate of households, as a percentage of the disposable income. 19

20 Belgium holds a relatively strong position when it comes to deposits: deposits held with Belgian banks reach 121.9% as compared to GDP. The euro area average stands at only 106.3%. Chart 13: Total deposits held at monetary financial institutions (MFIs) as compared to the GDP, European comparison (as a %, end of 2016) (1) Luxembourg Cyprus Malta Netherlands Spain United Kingdom Belgium Portugal Eurozone Germany France Italy Austria Ireland Greece Sweden Estonia Finland Slovakia Slovenia Banking sector > Selected social-economic aspects Source: Febelfin calculations based on ECB data (as for deposits) and Eurostat (as for the GDP). (1) Deposits include the deposit volumes held by non-bank customers at the monetary financial institutions (MFIs, especially credit institutions), not including the ESCB (European System of Central Banks). The GDP figures pertain to estimates as published by Eurostat. Those calculations have an indicative value only. 20

21 Belgium has a relatively low loan-to-deposit ratio (71.4%), i.e. the banks total loans divided by their total deposits. Among other things, this underlines the strong liquidity position of Belgian banks. Chart 14: Total volume of credits as compared to the total volume of deposits held by the monetary financial institutions (MFIs) (as a %, end of 2017) (1) Luxembourg Malta Belgium Slovenia Ireland Germany Portugal Spain Eurozone United Kingdom Italy Slovakia Austria France Netherlands Cyprus Estonia Greece Finland Sweden Banking sector > Selected social-economic aspects Source: Febelfin calculations on ECB data. (1) Provisional data taken from the balance sheet reporting of the monetary financial institutions (MFIs, especially credit institutions), ESCB (European System of Central Banks) not included. This covers the credits granted to non-bank sectors as well as their deposits. As for credits, the securitised volumes have been left out. The data that have been calculated, have an indicative value only. 21

22 The outstanding credit granted by banks to Belgian households, companies and public authorities is close to 420 billion EUR. More than 82% of this credit volume is granted to the Belgian private sector. Chart 15: Credit granted by banks for the financing of the Belgian real economy (banks and other financial institutions not included) (credit outstanding, as a % of the total, end of December 2017) (1)» Credit to households: billion EUR» Credit to non-financial companies: 31.3 Banking sector > Selected social-economic aspects» Credit to the public authorities: 17.5 Source: Febelfin calculations on NBB data. (1) Loans taken out, on a territorial basis, including securitised credit volumes. Debt paper held by banks (treasury certificates and bonds issued by the public authorities) has been included into the loans granted to public authorities. 22

23 The banking sector consists of a network made up of 5,896 bank offices. Just over half of those offices are owned by the banks themselves, the other part belongs to independent agents. Chart 16: Bank offices network: branches and independent agents Branches (number, end of 2017) Independent agents (number, end of 2017) (a) 2,075 (b) 1,120 3,298 5,896 Banking sector > Selected social-economic aspects 0 2,000 4,000 6,000 8,000 Branches owned by banks: 3,195 (a) Branches owned by banks and run by captive staff (b) Branches owned by banks and run by independent agents Offices owned by independent agents: 2,701 Independent banking agents working at their own offices: 2,534 Independent banking agents working at branches owned by banks: 764 Source: Febelfin (member banks only). 23

24 Compared to other European countries, Belgian bank customers can count on an extensive network of ATMs: 1,216 per million inhabitants in Belgium, which is well above the euro area average of 923 ATMs. Chart 17: Number of ATMs (1) per million of inhabitants (end of 2016) Portugal Austria Belgium Croatia United Kingdom Spain Germany Luxembourg Eurozone total France EU Total Italy Slovenia Bulgaria Ireland Poland Cyprus Estonia Romania Latvia Slovakia Hungary Malta Greece Czech Republic Lithuania Denmark Netherlands Finland Sweden , , , , , , , ,100 1,300 1,500 1,700 Banking sector > Selected social-economic aspects Source: Febelfin (Belgium) and ECB (other countries). (1) According to the ECB s definition, it involves electromechanical devices enabling cash withdrawals and/or providing access to other services. 24

25 Belgians have access to over 4,400 self-banking units and almost 8,200 cash dispensers. Chart 18: Self-banking facilities and cash dispensers in Belgium Self-banking units (number, end of 2017) Generally accessible cash dispensers (number, end of 2017) 0 4,377 2,000 4,000 6,000 8,000 8,235 Units in branches owned by banks and run by captive branch staff 1,732 Units in branches owned by banks and run by independent agents 1,114 Units in offices owned by independent agents 1,375 Autonomous units (1) 156 Banking sector > Selected social-economic aspects Cash dispensers in self-banking units of bank branches and independent agents offices as well as in autonomous self-banking units 6,998 Cash dispensers off premise (2) 297 Other Cash dispensers (3) 940 Source: Febelfin (member banks only). (1) Self-banking units outside branches with staff. Except cash dispensers that are not part of self-banking units. (2) Cash dispensers not installed in a bank office or self-banking unit. (3) These are cash dispensers which do not belong to one of the aforementioned categories. 25

26 Financial institutions in Belgium directly employ 123,200 people. Chart 19: Employment Sector comparison (number of employees, in thousands, end of 2016) Trade services Secondary sector (except construction) Construction Primary sector Real estate, renting, corporate services Wholesale and retail Transport and storage Hotels and restaurants Financial institutions Chemical and pharmaceutical products, rubber, synthetic material Information and communication Food and luxury products ,000 1,500 2, ,154.8 Upper scale Lower scale Banking sector > Selected social-economic aspects Machines, equipment, means of transport, IT-products, electronic and optical devices 94.1 Metal and metal products Electricity, gas, water, steam, air conditioning, sewage and purification Furniture, other industry, repair and installation of machinery Wood, paper, publishing, printing Textile, clothing and leather ,000 Source: Febelfin calculations on data provided by the Institute for National Accounts (INA), national accounts, detailed accounts and charts for

27 Bank staff is highly educated: 8 out of 10 bank employees hold a higher education degree. Chart 20: Breakdown of bank employees according to degree (as a % of the total number, end of 2016)» Higher secondary education: 19.1» Higher non-university level: 45.8 Banking sector > Selected social-economic aspects» Other degrees: 0.6» University degree: 34.5 Source: Febelfin (member banks plus non-member banks which take part in the survey). 27

28 The composition of the group of newly-engaged employees also reflects the high level of education of our bank staff. Over half of newly-hired employees have acquired a university degree. Chart 21: Breakdown of newly-engaged bank employees according to degree (as a % of the total number, new employees engaged throughout 2016)» University degree: 51.4» Higher non-university level: 37.7 Banking sector > Selected social-economic aspects» Higher secondary education: 10.0» Other degrees: 0.9 Source: Febelfin (member banks plus non-member banks which take part in the survey). 28

29 Payment cards (debit or credit cards) are Belgium s most frequently-used payment method. In nearly half of the cases, Belgians choose this payment instrument. Credit transfers are often used as well. Chart 22: Estimated use of payment instruments (1) in Belgium (as a % of the total, end of 2016)» Debit, credit and private cards: 49.5» Direct debit: 12.9» Electronic money: 0.3» Cheques: 0.3» Others : 0.0 Banking sector > Selected social-economic aspects» Credit transfers: 37.0 Source: Febelfin calculations on ECB data. (1) All categories of users (private persons, companies). Some means (cash payments, commercial paper, ATM cash withdrawals) have been left out. 29

30 banking sector main developments and trends The assets of the 5 leading banks as a share of total assets of all banks provide an indication of the degree of market concentration. This percentage tends to be higher in smaller countries. In the Netherlands, the banking sector is significantly more concentrated than in Belgium. Chart 23: Share taken up by the 5 leading banks in the total assets of all banks (as a %, end of 2016) Greece Netherlands Portugal Denmark Finland Belgium Spain Sweden EU 15 (1) France Ireland Italy United Kingdom Austria Germany Luxembourg Source: Febelfin presentation on ECB data. (1) I.e. the former 15 EU Member States. Non-weighted arithmetical mean. 30

31 In Belgium, this indicator marched lower after the financial crisis, unlike in the Netherlands. Chart 23bis: Evolution share taken up by the 5 leading banks in the total assets of all banks (as a %) Austria Belgium Germany Denmark Spain Finland France United Kingdom Greece Ireland Italy Luxembourg Netherlands Portugal Sweden Source: Febelfin presentation based on ECB data. Banking sector > Main develpment and trends 31

32 The Herfindahl index is a more sophisticated way to measure market concentration: the Belgian banking sector performs averagely, but significantly less than other small economies (see also chart 23). Chart 24: Herfindahl index on the basis of total assets (1) (end of 2016) Greece Netherlands Finland Denmark Portugal Belgium EU 15 (2) Spain Sweden Ireland France Italy United Kingdom Austria Germany Luxembourg , ,224 1,181 1,790 2,097 2,332 Banking sector > Main develpment and trends 0 1,000 2,000 3,000 Source: Febelfin presentation based on ECB data. (1) Sum of the squares of the market shares of all individual credit institutuions as for total assets. (2) I.e. the former 15 EU Member States. Non-weighted arithmetical mean. 32

33 The evolution of the Herfindahl index reflects the decreased market concentration in the Belgian banking sector since the financial crisis (see also chart 23bis). Chart 24bis: Evolution Herfindahl index on the basis of total assets Austria Belgium Germany Denmark Spain Finland France United Kingdom Greece Ireland Italy Luxembourg Netherlands Portugal Sweden Source: Febelfin presentation based on ECB data. Banking sector > Main develpment and trends 33

34 Gross financial assets (including coins and notes) of Belgian households amount to almost 1,350 billion EUR, over four-fifths of which are held in Belgium. Chart 25: Gross financial assets of the Belgian households (1) (in billion EUR, end of December 2017) In Belgium Abroad «(2)» ,102.3 Deposits at financial institutions: Debt paper issued by financial institutions: 12.7 Insurance and pensions: Shares (and equivalent paper): Participations in CIS: Government paper and debt paper from non-financial companies: 4.0 Other: 22.7 Banking sector > Main develpment and trends Source: Febelfin calculations on NBB data. (1) Notes and coins included. (2) Total financial assets held by households with Belgian financial institutions, in the form of deposits held with and securities issued by these institutions. 34

35 Deposits still represent a significant share (roughly 30%) of the Belgian households gross financial assets. Chart 26: Share in the Belgian households gross financial assets as represented by deposits at national financial institutions (including debt paper), participations in CIS and insurance assets (as a % of the total financial assets (1), end of period) Banking sector > Main develpment and trends Deposits, fiduciary currency and debt paper national financial institutions (2) CIS (3) Insurance (4) Source: Febelfin calculations on NBB data. (1) Notes and coins included. (2) The whole of deposits at the national financial institutions on the one hand and of securities at the other hand, except for shares issued by these institutions and held by Belgian households. (3) Participations in CIS. (4) Provisions with a technical insurance character (mainly pension and life insurance provisions). 35

36 The financial liabilities of the Belgian non-financial companies reach nearly 2,000 billion EUR. The clear majority of those liabilities are shares, and loans from within existing group structures (i.e. intercompany loans). Chart 27: Financial liabilities of the Belgian nonfinancial companies (as a % of the total, end of December 2017)» Fixed interest securities: 3.4 1,909.9 billion EUR» Shares and other participations: 54.2 Banking sector > Main develpment and trends» Other loans (1) : 24.0» Loans granted by credit institutions: 8.6» Other commitments: 9.8 Source: Febelfin calculations on NBB data. (1) Mainly loans granted by other non-financial companies (including within existing group structures). 36

37 The Belgian households have 214 billion EUR in credit obligations in the banks. Chart 28: Total amount of outstanding credit (including securitisation) granted to Belgian households (1) by banks established in Belgium (amounts outstanding, in billion EUR, end of period) Source: Febelfin calculations on NBB data. (1) Total of bank loans granted to Belgian households (mortgage loans, consumer credit and other kinds of credit), including securitized credit volumes Banking sector > Main develpment and trends 37

38 After the financial crisis, Belgian households saved increasingly less. In 2016 they saved 11.2 % of their disposable income. For 2017, the NBB calculated a savings rate of 11.3 %. Chart 29: Belgian household savings rate (1) (as a %, end of year) Banking sector > Main develpment and trends Source: Eurostat. (1) Gross savings rate of households, as a percentage of the disposable income. 38

39 The total amount of outstanding mortgage debt in Belgium comes to a per-capita debt of almost 14,000 EUR; 8 % higher than the European average. Chart 30: European comparison of home loans granted by monetary financial institutions (MFIs): credit amount outstanding per capita (in EUR, end of 2017) (1) Luxembourg Sweden Netherlands United Kingdom Finland Ireland France Germany Belgium Cyprus Eurozone Austria Spain Malta Portugal Italy Greece Estonia Slovakia Slovenia 17, , , , , , , , , , , , , , , , , , , ,975.1 Banking sector > Main develpment and trends 0 10,000 20,000 30,000 40,000 50,000 Source: Febelfin calculations based on ECB data (as for home loans) and Eurostat data (as for population data). (1) Monetary financial institutions (especially credit institutions), ESCB (European System of Central Banks) not included. This is the credit volume as mentioned in the MFI balance sheets (i.e. not taking into account securitised credit volumes). The value of the data that have been calculated, is indicative only. 39

40 In Belgium, the amount of outstanding consumer credit per inhabitant stands at 792 EUR, which is low compared to other countries and the eurozone. Chart 31: European comparison of consumer credits granted by the monetary financial institutions (MFIs): credit amount outstanding per capita (in EUR, end of 2017) (1) Luxembourg Cyprus Ireland Finland France Germany United Kingdom Austria Sweden Greece Eurozone Spain Italy Portugal Slovenia Slovakia Netherlands Malta Belgium Estonia , , , , , , , , , , , , , , , , ,248.3 Banking sector > Main develpment and trends 0 1,000 2,000 3,000 4,000 Source: Febelfin calculations on the basis of ECB data (as for consumer credit) and Eurostat data (as for population data). (1) Monetary financial institutions (especially credit institutions), ESCB (European System of Central Banks) not included. This is the credit volume as mentioned in the MFI balance sheets (i.e. not taking into account securitised credit volumes). The value of the data that have been calculated, is indicative only. 40

41 About three quarters of all bank loans granted to Belgian non-financial companies go to SMEs and micro-entities. Chart 32: Lending from Belgium-based banks to Belgian non-financial companies, according to company size (as a % of the total of bank loans outstanding and granted; end of period) (1) Banking sector > Main develpment and trends Big companies SMEs Micro-entities (2) Source: Febelfin calculations on data provided by the Corporate credit observatory at the NBB. (1) Moment when these data were first provided. (2) Since 2016, the NBB discloses separate information for micro-entities. 41

42 While Belgium s public debt is increasing further in absolute amount, the total volume of loans granted by Belgian banks to the Belgian public authorities has been slowly crumbling since Chart 33: Share taken up by banks in the Belgian public debt financing (amounts outstanding, end of period, in billion EUR) Banking sector > Main develpment and trends Belgian public debt (1) Public debt funding by Belgian banks (2) Source: Febelfin calculations on NBB data. (1) Consolidated gross debt ( Maastricht definition). (2) Represented by debt instruments as well as direct lending. 42

43 Transactions on interest rates (often used as hedging instruments against interest rate risks) account for the vast majority of all forward transactions of the Belgian banking sector. The total number of forward transactions came down to a lower level after the financial crisis. Chart 34: Evolution and structure of forward transactions of the Belgian banking sector (amounts outstanding, end of period, in billion EUR) 10,000 9,000 8,000 Banking sector > Main develpment and trends 7,000 6,000 5,000 4,000 3,000 2,000 1,000» Total forward transactions 3, Structure On interest: 2, On foreign currencies: Other: Source: Febelfin calculations on NBB data. 43

44 The sales network of the Belgian banks plays an important role in the distribution of individual life insurances. Chart 35: Share taken up by bancassurance (1) in the distribution of insurance products on the Belgian market - share in various insurance segments (2) (as a %, end 2016) Civil liability Fire and other assimilated risks Motor vehicle Accident Health Total non-life Group insurance Individual life insurance Total life Total life and non-life Banking sector > Main develpment and trends Source: Febelfin presentation on Assuralia data. (1) Bancassurance means the contracts sold through a bank counter, either by an employee of the bank or by an independent bank agent, who sells only the insurance products of the company that issued the contract (or group of companies, having at least a participation link between the insurance company and the bank). (2) Non-exhaustive list. Based on premium incomes or production of new offers. 44

45 banking sector results With an average return on equity of 9% to 10% over the years , Belgian banks achieved solid profitability. The climate (including the persistently very low interest rates) will nevertheless present major challenges in the coming years. Chart 36: Evolution of the ROA and the ROE for all banks under Belgian law (as a %, end of period) (1) -40 ROA -1.3 ROE Source: Febelfin presentation on NBB data. (1) Data on a consolidated basis. As of 2006, data according to the IAS/ IFRS reporting rules (the dotted line between 2005 and 2006 shows this change of method). ROA: return on (average) assets; ROE: return on (average) equity. 45

46 Following the financial crisis, capital requirements for banks have been considerably tightened. The solvency ratios (risk asset ratios) of Belgian banks are high, indicating financial solidity. Chart 37: Evolution of the risk asset ratio for all banks under Belgian law (as a %, end of period) (1) Banking sector > Results Source: Febelfin presentation on NBB data. (1) Risk asset ratio (RAR): ratio between the banks regulatory own funds requirements and their weighted risk volume in accordance with the requirements, data on consolidated basis. 46

47 Given the high level of competition and the numerous challenges that come their way, all banks are responsible for safeguarding and continuously improving their cost-effeciency (cost/income ratio). Chart 38: Evolution of the banks cost/income ratio (as a %, end of period) (1) Banking sector > Results Source: Febelfin calculations on NBB data. (1) Banks under Belgian law taken as a whole, data on a consolidated basis

48 lending to households The financial liabilities of households in Belgium primarily concern housing financing. Chart 39: Financial liabilities of the Belgian households (amounts outstanding, end of period, in million EUR) 107, , , , , , , , , , , , , , , , , , , Mortgage loans: 226,132 Consumer credit: 19,276 Other loans + 1 year: 10,894 Loans max. 1 year: 7,961 Miscellaneous: 14,318 Source: Febelfin presentation on NBB data. Lending to households 48

49 In 2017, almost 75% of the total amount of mortgage loans granted was used to purchase an existing or newly built house (or apartment). About 10% served to refinance an existing mortgage. Chart 40: Mortgage loans according to purpose (credit granted in 2017, as a % of the total credit amount granted) Lending to households» Purchase: 58.0» New houses: ,569 million EUR» Renovation: 7.8» External refinancing: 10.1» Purchase + renovation: 5.1» Other real estate purpose: 3.3 Source: Febelfin calculations on NBB data. 49

50 Credit loans make up nearly three quarters of consumer credit to households. Chart 41: Consumer credit according to type of credit (1) (as a % of the total amount outstanding, end of June 2017) Lending to households» Credit loans: 74.9» Credit opening: ,233 million EUR» Credit sale: 3.2 Source: Febelfin calculations on ADSEI (Algemene Directie Statistiek en Economische Informatie) data. (1) Contracts subject to the Law of June 12, 1991 on consumer credit (consumer credit for private persons only); contracts signed with all credit providers. 50

51 The Belgian households financial debt ratio has gradually increased over the past few years, now almost reaching the level for the entire euro area. There are significant differences between the Member States of the Monetary Union. Chart 42: European comparison of households debt ratio (households financial debt as a % of the GDP, 2016) Denmark Netherlands United Kingdom Portugal Sweden Finland Spain France Greece Luxembourg Eurozone Belgium Ireland Italy Germany Austria Voorwoord Lending to households Source: Presentation Febelfin on data provided by Eurostat. 51

52 The Belgian households financial debt ratio has gradually increased over the past few years, now almost reaching the euro area average. There are significant differences between the Member States of the Monetary Union. Chart 43: Evolution of households debt ratio (households financial debt as a % of the GDP, ) Lending to households Austria Germany Italy Luxembourg (2) Ireland (1) France Greece Finland Spain Sweden Portugal United Kingdom Netherlands Denmark Belgium Source: Febelfin presentation based on Eurostat data. (1) As for Ireland, data available from 2001 onwards. (2) As for Luxembourg, data available from 1999 onwards. 52

53 leasing-financing In 2017, leasing production amounted to 5.8 billion euros. Leasing is more than just a financing instrument for cars; it also provides funding for many other purposes in the real economy (e.g. for investments in machinery, buildings, etc.). Chart 44: Components of leasing production (2017, as a % of the total figure) (1)» Computers and bureautics: 12.8» Industrial machines and equipment: 29.2 Source: BLA (Febelfin). (1) BLA members only. 5,800.1 million EUR» Cars for private use: 23.7» Real estate leasing: 13.4» Other categories: 2.9» Company cars:

54 In 2017, the outstanding amount for leasing was 15.1 billion EUR, significantly more than in previous years. Chart 45: Lease financing amount outstanding Evolution over time (1) (end of year, in million EUR) Leasing-financing , , , , , , , , , , , , , ,9 4,000 6,000 8,000 10,000 12,000 14,000 Source: BLA (Febelfin). (1) BLA members only. 54

55 undertakings for collective investment (UCIs) Over the last five years, net assets in public funds distributed in Belgium have grown by 75 billion EUR to reach 194 billion EUR. Chart 46: Net assets of Belgian public distribution UCIs under Belgian and foreign law (end of year 2017, in billion EUR) Source: BEAMA (Febelfin). 55

56 The European fund market is dominated by a few countries marketing their funds under national law to investors all over the world. Chart 47: European sector of UCIs under national law Total net assets (in billion EUR, end of 2017) Luxembourg Ireland Germany France United Kingdom Netherlands Switzerland Sweden Italy Denmark Spain Belgium (1) Austria Belgium (2) Finland Norway Poland Portugal , , , , , ,000 1,500 3,500 Undertaking for collective investment (UCIs) Source: Febelfin presentation based on EFAMA data. (1) Belgian UCI market, i.e. net assets of Belgian public distribution UCIs under Belgian and foreign law. (2) UCIs under Belgian law. 56

57 The European fund market is dominated by a few countries marketing their funds under national law to investors all over the world. Chart 48: Net assets of UCIs under national law in comparison with the GDP (as a %, end of 2016) Luxembourg Ireland Netherlands Denmark Switzerland France United Kingdom Sweden Germany Austria Finland Belgium (1) Norway Belgium (2) Spain Italy Poland Portugal ,829.2 Undertaking for collective investment (UCIs) ,800 Source: Febelfin calculations on EFAMA (CIS), BEAMA and Eurostat (BBP) data. (1) Belgian UCI market, i.e. net assets of Belgian public distribution UCIs under Belgian and foreign law. (2) UCIs under Belgian law only. 57

58 stockbroking firms At the end of September 2017, 19 stockbroking firms operated in Belgium. The value of the financial instruments that clients hold in stockbroking firms has risen to well over 100 billion EUR in recent years. Chart 49: Customer financial instruments deposited with stockbroking firms (in million EUR, end of period) (1) ,200 20,700 19,700 32,800 28,400 41,100 46,600 54,772 73,200 69,594 69,737 78,769 80,119 93, , , , , , , , ,830 Source: NBB. (1) This covers the whole of customer financial instruments deposited with settlement institutions within or outside the group, kept in safes by third party depositaries or by the institution itself. Customer debit balances and potential revaluation differences have also been included. 58

59 At the end of September 2017, stockbroking firms managed 4.2 billion EUR in assets. Chart 50: Assets managed by stockbroking firms (in million EUR, end of period) Stockbroking firms Source: NBB. 3,356 3, ,168 7, , , ,324 59

60 Over the last three years, the total income of stockbrocking firms reached relatively low levels. Chart 51: Total income of stockbroking firms (in million EUR, end of period) (1) Stockbroking firms Source: Febelfin calculations based on data provided by the NBB. (1) From 2000 up to and including 2010, total operating income. As of 2011, total net interest income (plus similar income), net fee earnings, financial transactions result plus other operating income

61 Just like banks, stockbroking firms have to keep a very close eye on their cost-efficiency. Chart 52: Cost/Income ratio of stockbroking firms (as a %) (1) Stockbroking firms Source: Febelfin calculations based on data provided by the NBB. (1) From 2000 up to and including 2010, ratio between operating costs and operating income. As of 2011, ratio between general administrative costs and other operating costs on the one hand and income as defined as for chart 51 on the other hand. 61

62 Stockbroking firms overall return on equity equalled slightly over 4% in Chart 53: Stockbroking firms return on equity (ROE, as a %) Stockbroking firms Source: Febelfin calculations based on data provided by the NBB. 62

63 financial markets: currencies, stocks, debt securities and derivatives global and European level 75% of the amount outstanding of international debt securities was issued by financial institutions. Banks account for 42% of this amount. Chart 54: International Debt Securities (1) (by issuer s residence and sector, amounts outstanding in billion USD, end of September 2017) Total Developed countries Offshore centres Developing countries Financial companies of which banks Non-financial companies General government 0 2,368 2,416 1,867 3,607 6,840 21,874 17,090 16,401 5,000 10,000 15,000 20,000 Source: Bank for International Settlements (BIS). (1) International Debt Securities (IDS) are debt securities issued in a market other than the local market of the country where the borrower resides. Issues conventionally known as Eurobonds and foreign bonds. 63

64 In terms of market capitalisation, the New York Stock Exchange (NYSE) remains the leading stock market in the world. Euronext and the London Stock Exchange (LSE) are closely tied in the ranking, whereas the Deutsche Börse is further behind. Chart 55: World Top 15 of the leading stock markets according to market capitalisation (in billion USD, end of 2017) NYSE NASDAQ - US Japan Exchange Group Inc. Shanghai Stock Exchange LSE Group Euronext Hong Kong Exchanges and Clearing Shenzhen Stock Exchange TMX Group National Stock Exchange of India Ltd. BSE India Limited Deutsche Börse AG Korea Exchange SIX Swiss Exchange Nasdaq Nordic Exchanges 2, , , , , , , , , , , , , , ,081.4 Financial markets > Global and European level 0 5,000 10,000 20,000 Source: Febelfin presentation based on World Federation of Exchanges data. 64

65 The Bombay Stock Exchange (BSE) is the world s largest exchange by the number of listed companies. According to this indicator, Euronext is ranked much lower. However, Nasdaq, LSE and NYSE have a higher number of listed foreign companies. Chart 56: Number of share market listed companies (end of 2017) BSE India Limited Japan Exchange Group Inc. TMX Group BME Spanish Exchanges Nasdaq - US LSE Group NYSE Australian Securities Exchange Korea Exchange Hong Kong Exchanges and Clearing Shenzhen Stock Exchange National Stock Exchange of India Ltd. Shanghai Stock Exchange Euronext (1) Nasdaq Nordic Exchanges Domestic companies Foreign companies 1,396 1,255 2,286 2,147 2,134 2,118 2,089 1,897 2,498 2,949 3,136 3,328 3,604 3,878 1,000 2,000 3,000 4,000 Financial markets > Global and European level Source: Febelfin presentation based on World Federation of Exchanges data. (1) Alternext included. 65

66 Globally considered, interest rate contracts (used for hedging against interest rate risks, inter alia) account for the largest share of the total volume in derivative financial instruments or «derivatives». Chart 57: Global derivatives markets (1) (notional amounts outstanding, in billion USD, end of 2017) Contracts Total Foreign currency contracts Interest contracts Share-linked contracts Commodities contracts Credit default swaps Other derivates Miscellaneous (indefinite) 6,836 1,401 9, ,330 76, , , , ,000 Financial markets > Global and European level Source: Febelfin presentation based on Bank for International Settlements (BIS) data. (1) Over-the-counter (OTC) derivatives. 66

67 financial markets: currencies, stocks, debt securities and derivatives Euronext At the end of 2017, 828 companies were listed on Euronext (Alternext not included). Chart 58: Number of Euronext quotations: companies and securities (end of 2017) Domestic 726 Foreign Companies with share listing 5,659 Bonds (1) 804 Trackers (1) 63,232 Structured products (1) Paris Amsterdam Brussels Lisbon London Listed securities 0 10,000 20,000 30,000 40,000 50,000 60,000 Source: Febelfin presentation based on NYSE Euronext data. (1) Data for Brussels: 1,559 (bonds); 17 (trackers); 2,721 (structured products). 67