These two large banks also contribute to the high market concentration of banks in Belgium. The four largest banks in the country, BNP Paribas Fortis, KBC, Belfius, and ING Belgium, are crucial players in all segments of the industry, including retail, corporate, and investment banking.
Diverse banking segments; same key players
Retail banking in Belgium combines elements of private banking and asset management, with banks offering different investment instruments and services for household deposits. The value of financial assets held by Belgian households exceeded 1.5 trillion euros at the end of 2023. The number of asset managers in Belgium is far lower compared to other countries in the region, and most private banking assets are held by the four largest banks.These banks also play a prominent role in corporate banking. The corporate banking market penetration rate of BNP Paribas Fortis, ING, and KBC was all above 70 percent in 2024, with BNP Paribas having a penetration rate of over 90 percent. In terms of market dynamics, despite the sharply increasing interest rates on loans to corporations in 2022 and 2023, the value of bank credit to corporations continued to rise, reaching 175 billion euros in 2023.
Potentially the fastest-growing segment of the Belgian banking industry is digital banking. The revenue of digital banks has increased steadily in recent years, exceeding 1.4 billion U.S. dollars in 2023. This upward trend is likely due to the gradually increasing online banking penetration in the country. ING is a leading player in this segment as well, having seen the highest number of banking app downloads between 2020 and 2023.
Banking system efficiency
Due to the economic downturn triggered by the COVID-19 pandemic, the Belgian banking industry saw a decline in profitability in 2020 and 2021, with notable drops in return on equity and the CET1 ratio. The industry stabilized swiftly, surpassing pre-pandemic stability levels by 2022. The alarming signals of a banking crisis in early 2023 left another mark on the industry's performance, but once again, the industry stabilized quickly. The value of bank assets remained above one trillion euros through 2023, and the cost-to-income ratio decreased notably towards the end of the year.Overall, the Belgian banking industry showcases a unique landscape shaped by foreign ownership, exemplified by the prominent role of BNP Paribas Fortis and ING Belgium in all banking segments. Despite challenges posed by economic downturns, the industry demonstrates resilience, maintaining stability and efficiency to navigate uncertainties and sustain growth.
