These strong results reflect the close, successful partnership within the cooperative financial network, although stable, predictable economic conditions will be essential for it to maintain this performance in the future. Consequently, the National Association of German Cooperative Banks (BVR) is taking a firm stand against the EU Commission's proposals concerning banking union which call for the creation of a single resolution mechanism or for a merger of the national resolution funds of individual countries. "We remain committed to fighting any communitization of bank risk at the expense of the German banks. This is something we owe to our customers and members," said Uwe Fröhlich, President of the BVR.
Last year, the Cooperative Financial Network 's consolidated total assets grew by 3 percent to €1,090 billion. This was due to the efforts of the group's 190,000 or so employees who work at its 1,101 primary banks, at DZ BANK and WGZ BANK, at its central product specialists, the three mortgage banks DG HYP, WL BANK and Münchener Hypothekenbank and Bausparkasse Schwäbisch Hall, R&V-Versicherung and Union Investment.
"In 2012, the Cooperative Financial Network again performed well in customer lending, which is its core business", explained Fröhlich. Lending to retail and corporate customers rose by 4.2 percent to €632 billion last year, with particularly strong expansion in the local cooperative banks' corporate lending business. Customer deposits also grew during the reporting period, rising by 2.8 percent to almost €665 billion.
At €19.6 billion, net interest income was just 1.1 percent ahead of the previous year, an impressive performance given the persistently fierce competition in the market and the flat yield curve. Overall, the higher volume achieved in the group's lending and deposit-taking businesses with retail and corporate customers more than offset the slight decline of 0.04 percentage points in the interest margin which fell to 1.83 percent.
Net allowances for loans and advances of €1.0 billion remained at a long-term low and reflected the robust financial health of the group's customers.
Despite ongoing uncertainty among investors following the sovereign debt crisis, net fee and commission income improved by an impressive 1.5 percent, rising to €4.9 billion. This modest increase was largely attributable to steady revenue from businesses such as payments processing and to growth in the distribution of guarantee products and in the brokerage of home savings contracts, loans and leases.
Gains on trading activities rose to €0.9 billion compared with €0.7 billion the previous year. Gains and losses on investments and other gains and losses on the valuation of financial instruments were influenced by the recovery in the financial markets. Although the group made net losses of around €3.2 billion on these items in 2011, a total improvement of €3.6 billion in both items – primarily on the back of reversals of impairment losses on bonds – resulted in a net gain of €0.4 billion in 2012.
The 2.8 percent increase in administrative expenses, bringing them to €16.3 billion, was not only the result of encouraging growth in major divisions of the Cooperative Financial Network ; it was also due to increased regulatory and legal requirements.
Net income from insurance business climbed by 32.6 to €0.8 billion in 2012.
Last year, income taxes amounted to €2.4 billion, virtually all of which related to current tax, i.e. tax paid. In 2011, €1.2 billion was reported under this item, which included deferred tax assets, while taxes paid amounted to €2.0 billion. As a result, there was a 20 percent increase in 2012, from €2.0 billion to €2.4 billion.
The biggest proportion (57.8 percent) of the group's consolidated total assets of €1,090 billion was attributable to the primary banks, 31.6 percent was attributable to the DZ BANK Group, 7.5 percent to the WGZ BANK Group and 3.1 percent to Münchener Hypothekenbank.