Overall, the cooperative financial group did much better in 2021 than the year before. However, according to the BVR trade association, this cannot be continued.
After a jump in profits in 2021, German cooperative banks again expect worse results this year.
“The outlook for the current financial year in the banking industry is overshadowed by the sudden rise in interest rates and the slowing economy,” said Andreas Martin, board member of the Association of German Banks Volksbanken and Raiffeisenbanken (BVR) in Frankfurt on Tuesday.
“Overall, we expect the earnings of the cooperative financial group to decline significantly compared to fiscal 2021.” One factor: according to the association, the provisions for the risk of possible defaults should rise significantly again to just over 900 million euros.
From 2020 to 2021, the cooperative financial group increased its pre-tax profit by almost 46%. to a good 10.5 billion euros. The BVR explained that this was due to an increase in current business and “a significant reduction in the risk provision result”. While the risk provisions had increased to a good EUR 2.3 billion in the previous year, this item has now increased by EUR 337 million as a result of the reversal.
After tax, the group had a surplus of just over 7.5 billion euros in 2021, after a good 5.0 billion a year earlier. The financial group comprises 770 (previous year: 814) Volksbanken and Raiffeisenbanken, Sparda banks and the DZ-Bank group.
High inflation is currently one of the biggest concerns for further economic development, said the president of BVR, Marija Kolak. “It would be a mistake to hope that the rise in prices will be compensated by sharp wage increases. This would only increase pressure on margins in many industries, would lead to further price increases, and thus strengthen inflation ”.
Kolak thinks the European Central Bank (ECB) must keep inflation rates tight: according to the BVR chairman, the central bank should not only raise interest rates by 0.25pps as announced, but by 50bp at its next meeting on 21st July and thereby “send a clear signal to the markets that they are determined to counteract inflation.” (dpa)