Consolidated Financial Statements 2020


In brief

The Volksbanken Raiffeisenbanken Cooperative Financial Network as a whole held up well in a year in which coronavirus made conditions difficult. It generated a solid €7.2 billion in consolidated profit before taxes in 2020. The equivalent figure for the prior year of €10.2 billion had been heavily boosted by valuation effects. In its operating business, the Cooperative Financial Network not only saw a rise in net fee and commission income and net interest income in 2020, but also a slight reduction in costs. In terms of negative effects resulting from the coronavirus pandemic, loss allowances for loans and advances were raised by €1.5 billion as a preemptive measure. Equity rose by 5 percent to €121.8 billion. Consolidated total assets grew by 6.6 percent to €1,476 billion.

The annual consolidated financial statements of the Cooperative Financial Network, prepared in accordance with International Financial Reporting Standards (IFRS), provide information on the 2020 financial year of the 814 local cooperative banks, Sparda banks, PSD banks, and other specialized institutions in the Cooperative Financial Network as well as the DZ BANK Group and Münchener Hypothekenbank. At €18.4 billion, the Cooperative Financial Network’s consolidated net interest income in 2020 was slightly above the prior-year level in absolute terms, primarily due to further growth in the Real Estate Finance operating segment. Net fee and commission income rose by 4.9 percent to €7.4 billion and was mainly generated by the primary banks. On the investments side, there was particularly encouraging growth in fund- and securities-based saving. Payments processing also made a key contribution once again.

Loss allowances of €2.3 billion were added in 2020. This increase on the figure of €0.8 billion for the prior year was due mainly to the anticipated economic impact of the pandemic. An adjustment of the probability of defaults based on modeling of the expected macroeconomic situation resulted in the bulk of the loss allowances, with a figure of €1.5 billion. The net realized recognition of loss allowances for the Cooperative Financial Network in 2020 of €0.8 billion was thus at the same level as in the prior year. This gives it a good buffer for 2021 based on the current assessment of the risk situation. Moreover, the number of defaults is now expected to be more moderate than had been anticipated at the turn of the year.

Thanks to rigorous cost management, total administrative expenses nudged down by 0.6 percent to €18.0 billion. At €10.1 billion, staff expenses were at almost exactly the same level as in the prior year. Current taxes of €2.6 billion were paid in 2020. The Cooperative Financial Network’s consolidated net profit after taxes amounted to just over €5.0 billion (2019: €7.0 billion).

The lending business of the Cooperative Financial Network grew by 5.4 percent to €890.6 billion as at December 31, 2020. This was again due mainly to robust customer demand, including in the form of COVID-19 support loan referrals. On the equity and liabilities side of the balance sheet, the deposit-taking business expanded by 6.5 percent to €937.9 billion as at December 31, 2020. This is a stronger increase than the rise of 4.5 percent achieved in 2019 and was attributable to customers being able to save more money last year because of the pandemic-related restrictions. At €1,476 billion, consolidated total assets as at December 31, 2020 were up by 6.6 percent compared with the end of the prior year.

Equity rose by 5 percent to €121.8 billion. Despite the pandemic, the regulatory Tier 1 capital ratio including the reserves in accordance with section 340f of the German Commercial Code (HGB) rose by 0.6 percentage points to 16.1 percent. The leverage ratio was also up by 0.6 percentage points, rising to 8.4 percent.