"The Cooperative Financial Network is successful in the market, enjoys high customer approval, has a healthy balance sheet with strong capital adequacy, and has the resources to bear the risks arising from the low-interest-rate environment even over the longer term," explained Uwe Fröhlich, President of the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR) [National Association of German Cooperative Banks]. The Cooperative Financial Network, he continued, is helping to shape the future with large-scale projects in the areas of sales and digitalization. "We are accompanying our customers as they enter the world of digital banking while retaining personal contact and high-quality advice as core elements of our cooperative business model," added Fröhlich.
The strength of the customer business was reflected in the 2.8 percent rise in net fee and commission income to €6.0 billion. Net interest income, which was affected by the ongoing period of low interest rates, amounted to €18.8 billion, compared with €20.0 billion in 2015. Last year, the Cooperative Financial Network was able to use its own resources to achieve a further substantial increase in its equity to €98.6 billion.
Looking to the future structure of the eurozone and the debate about the future of economic and currency union, Fröhlich rejected eurobonds as a way of mutualizing debt. Fröhlich: "We cannot have a discussion about eurobonds while financial policy is still largely decided upon at national level. The eurozone needs better budgetary control, not collective borrowing." He believes that the idea of a eurozone finance minister is worth discussing, however. "A finance minister for the eurozone could be part of the European Stability Mechanism and would need to be able to exercise sufficient control rights over the national budgetary policies in the euro area, and have the right to intervene in them directly, on behalf of the community," said Fröhlich, adding that this would enable the eurozone to progressively reduce the high level of public debt.
Last year, the Cooperative Financial Network's consolidated net profit came to €5.9 billion (2015: €7.0 billion) after taxes. There was steady growth in the Cooperative Financial Network's consolidated total assets, which were up by 4.6 percent to more than €1.2 trillion. In absolute terms, the customer lending business was the biggest driver of the increase in the assets on the consolidated balance sheet. Demand for long-term consumer home finance remained high in 2016. Loans to customers rose by a total of 4.6 percent to €733.2 billion in the reporting year. The increase in lending to corporate customers (loans to non-financial companies and self-employed people) by the local cooperative banks was mainly attributable to lending to service providers. The Cooperative Financial Network's deposits from customers were up by 4.7 percent to €774.3 billion, ensuring that the funding structure remains robust. The institutions are continuing to seize opportunities for growth in 2017: As at March 31 of this year, the cooperative banks had increased their market share in the customer lending business to 16.1 percent, a rise of 0.3 percentage points compared with the end of the first quarter of 2016. For 2017 as a whole, the Cooperative Financial Network expects to generate a satisfactory profit before taxes that is slightly below the figure for 2016.
For further information, see: www.bvr.de/KJA
Background information about the Volksbanken Raiffeisenbanken Cooperative Financial Network:
The local cooperative banks, Sparda banks, PSD banks, the cooperative church banks, and the specialized institutions hold virtually all of the capital of the Cooperative Financial Network – including that of the central institution, DZ BANK AG. They have more than 30 million customers, 18.4 million of whom are members of the local cooperative banks and thus their shareholders. The ownership structure of the cooperative banking group is therefore very broad and the group is entirely in private hands.
The central institution and specialized service providers within the Cooperative Financial Network, which include Bausparkasse Schwäbisch Hall AG, DG HYP – Deutsche Genossenschafts-Hypothekenbank AG, Union Asset Management Holding AG, and R+V Versicherung AG as well as Münchener Hypothekenbank eG, WL BANK AG Westfälische Landschaft Bodenkreditbank, the VR Leasing Group, TeamBank AG Nürnberg, and DZ PRIVATBANK S.A., provide the local cooperative banks with financial products and services, from which each local bank compiles a package that is tailored to its positioning in the market and meets the needs of its customers. The BVR is the strategic competence center of the cooperative banking group. As an umbrella organization for the banking sector, it represents the interests of the cooperative banking group at both national and international levels.
The BVR also operates a dual system of bank protection. Its wholly owned subsidiary, BVR Institutssicherung GmbH, has been officially recognized as a deposit insurance scheme and, in addition to protecting banks, fulfills the statutory remit of ensuring depositors affected by a bank's insolvency are compensated in accordance with national deposit insurance legislation. The BVR protection scheme is an additional, voluntary system that also guarantees that deposits are safe by protecting the banks.