This 2016 study is an update of the 2013 "The cumulative impact of regulation" report. As more regulations move to the implementation stage our objective is again to identify and update how the new regulatory framework and tax environment might affect the Belgian banking sector today and in the future.
For that purpose, KPMG developed a financial model that estimates the combined potential effects of the most important new regulations, the bank taxes and contributions and the low interest rate environment. Althrough relatively simple in its design, the model provides valuable insights into the likely impact of the selected regulations on capital, liquidity, and profitability. For this analysis, high-level data (balance sheet, income statement and Basel 3 ratios) have been collected from individual banks and then added together in order to produce an aggregated view. The sample of participating banks represents about 90% of the Belgian banking entities (excluding branches) in terms of the size of the balance sheet.
The Belgian banks have done well the lsat three years in terms of capital buffers, profitability, and liquidity. But by 2019 they will have to take corrective measures to maintain profitability and to maintain the solvency and liquidity at acceptable levels.
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