Return on equity (ROE) of the banking sector in Luxembourg 2015-2021

Banks in the Grand Duchy of Luxembourg were making less profit in 2021 than they did in 2015, according to the decreasing return on equity (ROE) ratio within this timeframe. In 2021, the ROE of Luxembourgish banks was 4.2 percent, which was higher than in the previous year but still lower than in the period between 2015 and 2019. The ROE or return on equity measures is one of several measures to look into bank profitability, in this case measuring income that returned as shareholder equity. Normally, ROEs of around 15 to 20 percent are considered good returns. That Luxembourgish banks do not reach these numbers is probably due to low-interest rates, as a consequence of the monetary policy of the European Central Bank (ECB). For several years, this body maintained artificially low-interest rates in an effort to increase inflation on the European continent.