Following the publication of our 2020 financial results in our document Portrait 2021, Pierre Ahlborn, Administrateur délégué, considers the challenges and major issues facing the Bank in the coming years.
In a year of turbulence across the globe, how did Banque de Luxembourg perform financially in 2020?
Fortunately, our Bank was able to manage the challenges of the health crisis, particularly through remote working, and deliver strong results. Despite the unique circumstances, activity was strong in all our client areas – from private banking to businesses and professional banking. These results demonstrate the confidence that our clients have in us and we ended the year with consolidated net profit of €65 million, a slight increase.
At the same time, we kept our overheads under control by reducing our operating costs. Overall, our risk position did not deteriorate significantly.
At 31 December 2020, our equity capital came to €1,007 billion. The ‘Common Equity Tier 1’ solvency ratio of 23.71%, above the requirements, is a further indication of the Bank’s solidity.
It's just over a year since the start of the Covid-19 pandemic. What lessons have you learned from this crisis and what challenges will Banque de Luxembourg have to face in the coming years?
Last year was reminiscent of the early years of our Bank, which was founded 100 years ago during the Spanish flu epidemic. The current pandemic has reminded us of the fragility of life and the need to be better prepared for the future. Is there any doubt that the biggest challenges facing our global community relate to social, climate and geostrategic issues, which of course include threats to biodiversity and public health? To respond to these challenges, it is vital that all stakeholders, including businesses, operate within a framework of corporate social and societal responsibility (CSR).
Our century-old Bank has weathered many crises, thanks to solutions that ensure its resilience. Today, mindful of our responsibilities to our own stakeholders – our clients and employees, our mutualist shareholder and the local community that provides the framework for our development – we have redefined our roadmap, ensuring that sustainability and responsibility are strategically embedded in all our business activities and sectors.
In real terms, how can a bank, contribute to CSR goals?
As a responsible Bank, our mission has always been to protect and enhance our clients’ tangible and intangible wealth. This is part of our DNA and is fundamental to our way of working.
Our wealth management approach has always been guided by cautious principles that prioritise high quality investments and expert risk control. We formalised our commitment by signing up to the United Nations Principles for Responsible Investment in 2017, and by overhauling our investment and advisory strategy to offer our clients responsible wealth management based on ESG* criteria.
In this connection, we are developing a range of sustainable and responsible investment solutions along the same lines as our socially responsible fund management mandate. These investment solutions are popular with our clients and their solid performance demonstrates the strength of our approach. We are focused on continuous improvement in this area.
The pandemic has been a remarkable accelerator of progress. Is the Bank part of this transition?
In the very short term, we will focus on analysing the consequences of the pandemic. Specifically, we will continue to support our business and entrepreneur clients and help them overcome the challenges resulting from this complex time. The pandemic has unexpectedly accelerated many trends that already existed. Our economies are probably at the start of a tremendous transformation and a surge in productivity, the key to all wealth creation. We are also finding that digitalisation is still in its infancy; over time, it will revolutionise every aspect of the way we live and operate.
This is an area in which we can help our clients to grow, through our investment loans business, for example. At our own level too, by recalibrating our investment programmes, we hope to improve both our level of service and our efficiency, while reducing energy consumption and use of consumables.
What are your priorities for the coming years?
In a rapidly changing world, our priorities are clear: we aim to be a beacon of excellence in SRI and CSR**. As a company, we want to ensure that all our activities serve our stakeholders and bring them real added value while offering solutions for the challenges we all face.
Our planet is an ecosystem; everything is interconnected and no single person, company or government can tackle the major issues confronting all of humanity. Only collective action, the combined total of all our individual efforts, will enable us to turn threats into opportunities. We all share the capacity and responsibility for change.
*ESG: Environmental, Social & Governance
**CSR: Corporate Social Responsibility
