Belgian banks continue to work efficiently, despite economic pressure due to Ukraine- Russia war

Belgium: Despite the war in war-torn Ukraine, rising economic pressures, and the difficult financial conditions for households and companies alike, the Belgian banks are performing well despite the economic crisis.

According to the sources, the major banks made over €3 billion in profits in the first half of this year, just €160,000 less than the same period last year. Major banks have been boosted by the European Central Bank’s (ECB) decision to raise interest rates in a bid to curb rampant inflation.

Moreover, high inflation is certainly bad news for banks. Many in Belgium are now undertaking massive cost-saving operations, making senior officials redundant and replacing them with cheaper hires and closing most of the bank branches.

The decision of the ECB means that borrowing will now be more expensive for consumers, reducing the supply of cheap credit and driving down inflation. Increased borrowing rates are ultimately a net positive for the banks, which can boost profits from interest, their primary source of revenue.

Increased rates will only compound the effect in the coming months as banks replace attractive borrowing rates with more expensive leading agreements. Belgian banks are generally postponing the switch to higher interest rates on savings, as these rates will apply to existing and new savings alike.

Along with this, major Belgian banks also make significant profits from managing investment funds as well as assets. Yet his source of revenue has been under pressure with market turbulence since the beginning of the full-scale military operation against torn Ukraine, leading to a fall in equity markets, ultimately reducing income from commissions and fees.

Despite that, Belgian banks have generally performed well in the first six months of 2022. Despite the invasion, banks continue to lend heavily as well as have managed to increase their revenues.

The largest bank in Belgium, BNP Paribas Fortis, increased its loan portfolio by 14,4 percent this year. It equally raised its residential loan portfolio by 18.1percent.

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