Overall, the cooperative financial group did significantly better business in 2021 than a year earlier. However, according to the BVR industry association, this cannot be continued.
After a jump in profits in 2021, Germany’s cooperative banks are expecting worse results again this year.
“The outlook for the current financial year in the banking business is clouded by the abrupt rise in interest rates and the weakening economy,” said Andreas Martin, board member of the Association of German Volksbanken and Raiffeisenbanken (BVR), on Tuesday in Frankfurt.
“Overall, we expect the cooperative financial group to see a significant drop in earnings compared to the 2021 financial year.” One factor here: According to the association, the risk provision for possible loan defaults should rise again significantly to just over 900 million euros.
From 2020 to 2021, the cooperative financial group increased its pre-tax profit by almost 46 percent to a good 10.5 billion euros. This is due to growth in day-to-day business and “a significant reduction in the risk provision result”, explained the BVR. While risk provisions had been increased to a good EUR 2.3 billion in the previous year, this item now increased by EUR 337 million as a result of reversals.
After taxes, the group had a surplus of just over 7.5 billion euros in 2021 after a good 5.0 billion euros a year earlier. The financial group includes 770 (previous year: 814) Volksbanken and Raiffeisenbanken, the Sparda banks and the DZ-Bank Group.
Big concern inflation
The high inflation is currently one of the biggest concerns with regard to further economic development, said BVR President Marija Kolak. “It would be a fallacy to hope to be able to absorb the price increase through strong wage and salary increases. This would only increase the pressure on margins in many industries, leading to further price increases and thus entrenching inflation.”
Kolak sees the European Central Bank (ECB) as having to curb the rate of inflation: According to the BVR President, the central bank should not only raise interest rates by 0.25 percentage points as announced, but by 50 basis points at its next meeting on July 21 and thus “send a clear message to the markets that they are determined to counteract inflation”.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
