Financial industry: Weak economy: Volksbanks expect less profit

The German cooperative banks expect falling profits in view of the economic flakes and the customs dispute with the USA. The current year is characterized by geopolitical tensions, uncertainty by the customs conflict and a weak internal economy, said Tanja Müller-Ziegler, director of the Federal Association of German Volksbanken and Raiffeisenbanken (BVR), in Frankfurt. “Overall, we expect a result in a somewhat lower level in the current Gemengelage in 2025 than in the past financial year.”

Last year, the input tax result of the cooperative financial group broke into 10.8 billion euros – a quarter less than the record of 14.4 billion in 2023. At that time, the cooperative banks benefited from the increased interest rate level.

Nevertheless, the group achieved one of its best results in 2024, said BVR President Marija Kolak. The interest surplus has grown slightly, and the surplus with commissions, for example from the securities business, had increased significantly.

Regional Volksbanken feel the economic crisis

The 672 folk and Raiffeisen banks in Germany, Sparda banks and PSD banks belong to the cooperative financial group with the Central Institute DZ Bank. The group looks after more than 30 million customers.

The main reason for the decline in input tax last year was a strong increase in risk provision to 4.9 billion euros. The BVR justified the greater caution with the economic flaut and the strong increase in bankruptcies that regional Volksbanks felt in daily business. In 2025, a falling risk provision is expected, said BVR board member Daniel Quinten. “But it will be permanently higher in the financial group than in the years of the low interest rate phase.”

The economic environment also remains difficult. This year you are expecting a stagnating economy, said director Müller-Ziegler. The uncertainty about US customs policy remains extremely high, although you expect an agreement with the United States by the end of July.