The merged institute earns a quarter more before taxes – confidence for the current year
for Mainz
Thanks to a sharp increase in interest income and declining risk provisions, Volksbank Darmstadt Mainz earned a quarter more in the past financial year than in the previous year. The institute, which emerged from Mainzer Volksbank and Volksbank Darmstadt-Südhessen in 2023, generated pre-tax earnings of 123 million euros last year, after 98 million euros in 2022.
In view of the merger to be managed, the year went better than expected, said board spokesman Uwe Abel and Matthias Martiné at the first joint annual press conference on Monday in Mainz. Since the banking systems were merged in November, the merger has been completed.
Customers shift funds
The Volksbank, now Germany’s third largest with a balance sheet total of 14.6 billion euros, increased its loan portfolio by 460 million or 4.3% to 11.2 billion euros. New business came to more than 2.1 billion euros. Deposits grew slightly to 11.3 billion euros, with many customers shifting funds as interest rates rose. Demand deposits lost, time deposits and securities investments became more attractive. Demand deposits shrank from EUR 9.2 billion to EUR 7.7 billion.
Volksbank Darmstadt MainzKey figures according to HGBin Mill. Euro20232022Net interest income245.7224.0Net commission income83.681.1Expenses176.3160.0Operating result before valuation149.4142.8Risk provisions-11.6-44.2Result before taxes122.997.8Loans11.20510.746Deposits11.29711.158Cost-income ratio (%)55.2 54.1Total assets ( billion)14,614.2Employees (number)1,5991,600
Although interest expenses have multiplied, said Martiné, all in all the rise in interest rates has given a strong boost: “Overall, we are benefiting from the change in interest rates and will continue to benefit in the coming years.” The prerequisite is that interest rates are largely at the current level or slightly lower.
Higher net commission income
Abel described net commission income as increasingly important, increasing by 3% to 83.6 million euros. The growth was driven by higher income in payment transactions and securities business. The network business with financial partners such as R+V Versicherung or Bausparkasse Schwäbisch Hall, however, declined somewhat, which was bearable given the year of the merger and the fact that the decline was more than made up for in payment transactions and securities business. “We are happy about the bank’s commission result in the first year,” said Abel.
In terms of costs, it went up by a tenth in 2023. The sharp increase can be explained by higher costs due to inflation, salary adjustments and one-off merger costs, it said. Martiné estimated the latter at around 3.2 million euros, roughly half of which was incurred for the technical merger, the other half for legal and other consulting costs.
7 million euros in attributions
Volksbank also benefited from write-ups on securities held in its own portfolio. In 2022, high write-downs were incurred on interest-bearing securities as a result of the rapid change in interest rates. For this reason, there was a loss of a good 48 million euros in 2022, but last year there was a plus of more than 7 million euros.
The reverse was the case with loan loss provisions. Releases of EUR 4 million in the previous year were offset by additions of almost EUR 19 million in 2023. The bottom line is that provisions for loans and personal investments amounted to just over 11 million euros, only a quarter of the previous year’s value. “We assume that we can achieve the good result from 2023 again this year,” said Martiné, even if interest rates are expected to fall slightly. Further growth can be expected in loans, deposits and the securities business.
2024-02-05 19:41:39
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