Key Highlights

Balance sheet

Balance sheets expanded in aggregate across the six largest banks in FY25, driven primarily by a strong recovery in mortgage lending following the reduction in registration duties in Flanders and Wallonia. On the liability side, the year was defined by a sector-wide rotation out of term deposits – accumulated in FY24 in response to the maturity of the Belgian State bond – back into savings and current accounts, as ECB rate cuts made short-term products progressively less attractive.

Costs

Cost growth remained contained around inflation, despite wage indexation, rising regulatory charges and higher ICT costs. This was achieved often through cuts in discretionary spend rather than structural efficiency gains. Bank levies are now the fastest-growing cost component, limiting further improvement in cost-to-income ratios.

Income

Combined income across the six largest banks reached EUR 31.8bn (+4.1% YoY), demonstrating resilience despite a declining rate cycle. Net interest income held up better than expected, supported by deposit migration into lower-cost products, continued lending repricing, and a recovery in mortgage volumes; while fee income became the primary growth engine, driven by investment activity and transactional volumes.

Asset quality

Asset quality remained robust overall, but early signs of stress emerged as default and bankruptcy rates in SME and corporate portfolios rose in 2025, concentrated in cyclical sectors. Meanwhile, retail and mortgage portfolios held up well, supported by a resilient housing market and stable household credit quality.

Capital and liquidity

Capital positions remained solid across the six largest banks, comfortably above regulatory requirements. However, the first year of CRR3 implementation highlights increasing dispersion in capital ratios, driven primarily by portfolio composition. Output floor effects remained limited in 2025 due to transitional measures and are expected to become a more meaningful driver through 2030. Liquidity remains strong and well above regulatory thresholds, supported by stable deposit bases.

Strategic workforce and AI

AI has moved into scaled operational use, particularly in financial crime and customer servicing, but workforce transformation is lagging behind technology deployment. Based on engagement with HR leadership across the sector, banks are only at an early stage of strategic workforce planning, with significant reskilling needs, role redesign, and uneven readiness across functions. Workforce adaptability is emerging as a key challenge on the translation of technology investment into sustainable performance.