In brief

In 2023, the Volksbanken Raiffeisenbanken Cooperative Financial Network achieved a consolidated profit before taxes of €14.4 billion. This represents a significant increase compared with the 2022 figure of €4.2 billion, which had been influenced by interest-rate-related valuation effects. The biggest drivers were reversals of impairment losses in the securities portfolios and, in particular, the cooperative banks’ traditional customer banking business. Consolidated loans and advances to customers rose by 2.4 percent. Moreover, deposits from customers – which saw a significant reallocation to fixed-term products – held steady year on year at €1,033 billion.

Net interest income rose to €24.1 billion thanks to slight growth in the lending business and more risk-appropriate terms and conditions in view of the currently difficult economic situation. Customers reallocated their deposits to higher-interest liability-side products, causing interest expense to increase fourfold, primarily on deposits from customers. Solid intermediary and payments processing business fueled the growth in net fee and commission income to €8.8 billion.

Loss allowances went up by €0.3 billion to €1.8 billion, reflecting muted economic prospects, interest-rate rises, and the higher number of corporate and retail customer insolvencies. Gains and losses on investments improved from a net loss of €6.8 billion in 2022 to a net gain of €1.3 billion in 2023. This was largely attributable to reversals of impairment losses in the cooperative banks’ securities portfolios. Administrative expenses advanced by €1.3 billion to €20.4 billion. This rise of 6.8 percent was predominantly due to higher staff expenses resulting from measures previously introduced in response to inflation. The cost/income ratio fell from 77 percent in 2022 to approximately 56 percent in 2023 due to the aforementioned valuation effects. Consolidated total assets increased to around €1.6 trillion as at December 31, 2023.

The Cooperative Financial Network strengthened its equity position in 2023. Equity rose by 8.6 percent to €143.2 billion due to profit retention. The consolidated Tier 1 capital ratio and the total capital ratio each rose by 0.6 percentage points to stand at 15.6 percent and 16.2 percent respectively. The Cooperative Financial Network has very sound capital adequacy and is well equipped to cope with risks and future funding needs. This is confirmed by the major rating agencies: Both Fitch and Standard & Poor’s rate the Cooperative Financial Network very highly relative to the rest of the sector and have awarded ratings of AA– and A+ respectively with a stable outlook.