The corona pandemic has left deep marks on the balance sheets of the Volksbank and Raiffeisenbanken. The reason is a significantly higher provision for bad loans. It was increased by 1.5 billion euros to 2.3 billion euros compared to the previous year. This is one of the main reasons why the consolidated pre-tax profit fell to 7.2 billion euros, after around 10.2 billion euros in 2019. After taxes, the group achieved an annual profit of over 5.0 billion euros in 2020 (previous year: 7.0).
The financial group includes 814 (previous year: 841) Volksbanks and Raiffeisenbanks, the Union Investment fund company, R + V Versicherung, the Sparda banks, and the DZ Bank Group.
Worry about rising bankruptcies
Although the situation of the institutes will probably stabilize in the course of the economic recovery, said Andreas Martin, board member of the Federal Association of German Volksbanks and Raiffeisenbanks (BVR) in Frankfurt today. At the same time, however, due to the recession of 2020 and the obligation to file for insolvency, which is no longer suspended for companies, increasing insolvency figures can be expected, even if the resumption of the obligation to file for insolvency at the beginning of May has not yet led to a large increase in the number of insolvencies. Nevertheless, the cooperative banks do not want to give the all-clear yet.
With the buffer of 2.3 billion euros set up last year, the group is well prepared for this year. However, the Volks- und Raiffeisenbanken suffer, particularly from the European Central Bank’s zero interest rate policy. The fact that they still managed to generate an interest income of 18.4 billion euros is mainly due to the good real estate business. Thanks to the increased interest of investors in buying shares and fund shares, the cooperative banks were also able to increase their commission income.
Repayment of bank fees “manageable”
The Volks- und Raiffeisenbanken are burdened by the judgment of the Federal Court of Justice regarding the repayment of bank fees. While the private banks are talking about spending amounting to several hundred million euros, the cooperative banks are holding back with estimates. The demands are “easily manageable” for the financial institutions of the group, said board member Gerhard Hofmann. The respective cases are usually not about high amounts.
I don’t have to report any customers on my own, added BVR President Kolak. All existing customers had been informed, and one-on-one discussions followed. The Federal Court of Justice ruled in April that banks must obtain customer approval for changes to general terms and conditions. The clause according to which financial institutions can assume tacit approval if customers do not object to a change within two months, disadvantageous consumers inappropriately. Many bank customers can now claim back part of the fees that have been paid too much.
