In brief
In 2021, the Volksbanken Raiffeisenbanken Cooperative Financial Network generated a consolidated profit before taxes of €10.5 billion despite an environment impacted by the coronavirus pandemic and expansionary monetary policy. This rise of nearly 46 percent compared with the prior-year figure of €7.2 billion was attributable to growth in the operating business and a marked reduction in the need to recognize loss allowances. The increased volume of customer business meant that consolidated total assets increased further by 6.1 percent to €1,566 billion.
The annual consolidated financial statements of the Cooperative Financial Network provide information on the 2021 financial year of the 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. For the purposes of the consolidated reporting, the cooperative banks’ financial statements, which are based on the German Commercial Code (HGB), are reconciled to International Financial Reporting Standards (IFRS).
Net interest income was once again influenced by the European Central Bank’s policy of low interest rates in 2021. This meant that margins remained tight, but the cooperative institutions were able to offset this through volume growth in the lending business. Consequently, the Cooperative Financial Network delivered a stable performance, with net interest income remaining virtually unchanged on the previous year at €18.2 billion. By contrast, net fee and commission income jumped by 16.6 percent to €8.7 billion in 2021, mainly thanks to the thriving securities business and payments processing.
The level of loss allowances in 2021 was better than expected, resulting in income from the reversal of loss allowances of around €0.3 billion. Following a net addition of €2.3 billion in the previous year, this item has thus normalized over the past two years.
Administrative expenses came to €18.6 billion and were thus slightly higher than in the previous year. Staff expenses again accounted for a large part of these expenses (€10.4 billion), while other administrative expenses accounted for €8.2 billion. The slight increase was mainly attributable to salary adjustments and continued investment in digitalization. The cost/income ratio of the Cooperative Financial Network decreased from 65.4 percent to 64.6 percent. The Cooperative Financial Network paid €3.1 billion in income taxes. After taxes, consolidated net profit amounted to just over €7.5 billion, compared with €5 billion in the previous year.
The Cooperative Financial Network’s loans and advances to retail and corporate customers went up significantly again, by 6 percent, to €944 billion. Deposits from customers increased by 5 percent to €985 billion.
The Cooperative Financial Network continued to strengthen its capital base in 2021. Equity rose by 6.4 percent to €129.5 billion. Around 84 percent of the network’s equity continues to be held by the local cooperative banks. The consolidated Tier 1 capital ratio, the calculation of which has been aligned with IFRS requirements since 2021, remained virtually unchanged at 15.2 percent (down by 0.1 percent) despite strong customer growth. The total capital ratio declined from 16.3 percent to 15.8 percent as the application period for the transitional guidance came to an end. The leverage ratio remained unchanged at 8.0 percent and thus above the average for the industry.