Improved operating results for Savings Banks

Savings banks held up successfully in last year’s demanding market environment. “Our business model has demonstrated its resilience in crisis. The operating results are gradually recovering,” observed Helmut Schleweis, President of the German Savings Bank Association (DSGV), at the Financial Press Conference of the Savings Banks Finance Group in Frankfurt/Main today.

Net interest income grew by 9.2 per cent in 2022 to 21.0 billion euros. That, said Schleweis, is a healthy shift in the direction of economic normality, where Savings Banks can apply their stability-oriented business model to good advantage. There is another bold plus sign in front of net commission income, up by 3.9 per cent.

This is due to robust growth in savings for home loans, new customer relations based on more current accounts and a clear expansion of the volumes for cashless payment transactions.

Savings Banks had demonstrated the entrepreneurial skill to overcome those difficult years when interest rates were negative. “Now we are gradually retuning to ‘normal’ life,” said Schleweis.

Valuation expenses had amounted to 7.8 billion euros, approximately 4 billion euros more than in the previous year. The principal reason for this had been a temporary need for to take higher impairments on fixed-interest securities, because when interest rates are hiked, securities with low rates of fixed interest will lose value for a while. “If these securities are kept until they finally mature, they will be fully reimbursed and will make up for the interim impairment. We expect this to be the norm in the case of savings banks,” said Schleweis. The operating performance of the savings banks had been so strong in 2022 that they would now only have to use a very small proportion of the provisions already accrued in order to finance this temporary adjustment.

Meanwhile, loan loss provisions had been 370 million euros lower than originally assumed. “The widely awaited recession did not materialise – and we no longer expect it to,” added Schleweis.

Savings Banks will pay 2.7 billion euros in tax for the past fiscal year. Earnings after tax were 1.5 billion euros. The cost-income ratio (CIR) before valuation improved by 3.6 percentage points to 62.6 per cent.