Frankfurt Despite the economic downturn, German banks Volks- und Raiffeisenbanken again extended more loans last year. The loan portfolio increased by seven percent year-on-year to 758 billion euros, their lobby association BVR said on Monday with reference to preliminary data. It would be the highest increase in the last ten years.
BVR head Marija Kolak was satisfied with the “rapid customer response”, however it is expected to be lower in 2023. We know that customers face major challenges. “Inflation, high energy prices and uncertainties about the future of the economy have already led to a decline in loan applications this year,” said Kolak. Material bottlenecks and labor shortages have also emerged in companies.
The private customer loan portfolio grew by a good six percent to 359 billion euros. The bulk of this, 320 million euros, is construction funding, which has also increased by six percent. This slowed growth from 2021, when home loan growth was around 8%.
Rising interest rates have made housing finance much more expensive, and property prices have hardly ever fallen. In light of this development, Kolak told Handelsblatt in November that cooperative banks were expecting less new business than before. In the first nine months of 2022, the loan portfolio grew by almost ten percent.
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“Until the European Central Bank flipped interest rates, it was only unattainable for low-income people. Buying real estate is now becoming difficult even for people with middle or even higher incomes if they don’t bring equity, for example through an inheritance,” said Kolak.
The president of the BVR stressed that it is not only the demand for funding that is declining. “Lenders are also having to turn down a growing proportion of mortgage applications because they realize that some stakeholders have calculated too closely in view of higher interest rates and the higher cost of living.”
The number of money houses has decreased
After several years of strong credit growth – in 2012 the loan portfolio was still 443 billion euros – there may even be a slump at first. In the medium term, however, the BVR expects the lending business to grow again, according to its own statements. The need for investment by private and corporate customers in areas such as energy renovation, CO2-free power generation and digitization is enormous.
People’s banks have about 30 million private and corporate customers. Last year there were 35 mergers, thus the number of financial institutions fell to almost 740. In addition to the Volksbank and the Raiffeisen banks, the Popular Banks also include the Sparda Banks, the PSD Banks and some specialized institutions. The main institution is DZ Bank, which in turn is the parent company of Bausparkasse Schwäbisch Hall, fund company Union Investment and R+V Versicherung.
As in previous years, the BVR even predicted 40 to 50 mergers. Mergers are an ongoing phenomenon. In 1970 there were still more than 7,000 cooperative banks, in 1991 there were 3,100 and in 2011 around 1,100.
More: More and more banks and savings banks are closing customer accounts.
