Stuttgart The savings banks were hit hard by the price losses on the stock and bond markets last year. The 50 savings banks in Baden-Württemberg have to accept 960 million euros in value adjustments on securities, as their regional savings banks association announced on Thursday.
“This is the other side of the coin of the turnaround in interest rates and is mainly due to the rapid and sharp rise in interest rates,” said Peter Schneider, President of the Savings Banks in Baden-Württemberg. The European Central Bank (ECB) has raised interest rates several times since last July. This dramatic reversal in monetary policy caused significant losses in the market value of securities investments by savings banks, but also by Volksbanks. In concrete terms, the sharp rise in interest rates means that the market value of older bonds and loans falls because they bear lower interest rates.
Overall, however, the value adjustments have a strong impact on the annual result. Profits collapsed by almost half. The bottom line is that the savings banks in Baden-Württemberg earned 490 million euros, in 2021 it was almost 940 million euros.
Big banks on the rise
While small credit institutions such as savings banks and cooperative banks have been doing better than large banks for several years, the situation is now turning. In 2022, Deutsche Bank achieved its best result in 15 years. The net profit was a good five billion euros, as the largest German bank announced on Thursday morning.
Depending on how interest rates, bonds and shares move this year, the savings banks can quickly make up for some of the losses in value in their securities portfolios – but at least this will happen in the longer term. According to Schneider, the savings banks in Baden-Württemberg have “only paper with the highest credit rating” in their own investments, which they could easily hold until the average final maturity in two to four years. “We can stand it and expect write-ups in the next few years.”
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In the case of some small financial institutions, however, the value adjustments can also ensure that they slip into the red. The financial regulator Bafin recently warned that after the release of reserves and the use of further control options, individual banks would fall below their capital requirements at the end of 2022 due to the interest effects. The Sparkasse Zwickau has already reported a loss.
In the medium term, banks and savings banks will benefit from rising interest rates. They bring higher income from the lending business. Interest income from the savings banks in Baden-Württemberg rose again in 2022 for the first time in years.
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