The customers of the approximately 400 German savings banks are apparently keeping their nerves despite the recent price slump on the stock markets and have not yet parted with fund shares or shares in droves. “We are not yet seeing any unrest or even panic in the securities business,” said Helmut Schleweis, President of the German Savings Banks and Giro Association on Wednesday. “We assume that we will continue to have stability there,” he said. Since war broke out in Ukraine at the end of February, stock market prices have fluctuated extremely. In the past week, the German leading index Dax lost five percent twice in a row, only to rise significantly the following day. Even before the US interest rate decision on Wednesday, the Dax rose. However, the uncertainty on the markets remains high.
It is therefore uncertain whether the securities boom from last year, when German savers suddenly invested an exceptional amount in shares, will continue. In 2021, however, the boom brought Germany’s savings banks hefty profits: Risk provisions in the lending business fell, while the sale of securities reached an all-time high. Net sales were the highest of all time at 29.5 billion euros. “The Savings Banks have succeeded in convincing their customers more strongly about the securities business. This is a great success for the securities culture in our country,” said Schleweis on Wednesday. It recommended investors to get through the current uncertainties caused by the Ukraine war “with a long-term investment perspective”.
The low risk provisions in the lending business also ensured high profits, which the financial sector also owed to the thick cushions of medium-sized companies and the courageous intervention of the state in the Corona crisis. Because there was no mass bankruptcy after the crisis, the risk provisioning was only 122 million euros and was thus around 91 percent lower than in 2020.
Of course, the provision could now increase again: Savings banks and state banks are hardly directly affected by the war in Ukraine. However, according to Schleweis, clear “second and third round effects” must be expected. Although these will only be felt slowly, they will weigh on the economy in the long term: the rising energy prices would not only affect many energy-intensive companies, but also German households: “We expect that around 60 percent of German households will lose their entire disposable income – or more – every month,” said Schleweis. It is correct that the federal government is preparing to relieve high energy costs, above all by abolishing the green electricity surcharge in the middle of the year and wanting to pay out an initial subsidy for basic security.