Hardly anyone knows that DZ Bank is the largest financial group in Germany after Deutsche Bank.

Better known than the central institute of the Volks- und Raiffeisenbanken are its subsidiaries, above all the Bausparkasse Schwäbisch Hall, the fund company Union and the insurance company R+V.

And year in, year out, these subsidiaries also contributed the most to the group profit.

But this year it's different so far: With 369 (previous year: 215) million euros, DZ Bank with its corporate loan and certificate business provided the lion's share of the group pre-tax profit of 1.14 billion euros, followed by the real estate bank DZ Hyp, which had 335 (215) million euros taxed.

Drop in profits at Union and R+V

Hanno Mussler

Editor in Business.

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The fund company Union Investment pushes itself between the profits from the "real" banking business, but its pre-tax profit collapsed by 55 percent to 371 million euros.

The insurance company R+V even made a loss of 30 million euros after a profit of 482 million euros in the same half of the previous year.

As the two co-CEOs Uwe Fröhlich and Cornelius Riese explained, R+V's earnings would have been 300 million higher if the value of assets and liabilities had been reduced in equal measure following the abrupt rise in interest rates in the first half of the year.

However, accounting rules only allowed the reduction of debt on the liabilities side in the summer of 2023, while they required the assets to be valued at market prices immediately.

The CET1 capital ratio fell by 2 percentage points to 13,

On the other hand, thanks to rising interest rates, the pre-tax profit of Bausparkasse Schwäbisch Hall recovered from 54 to 168 million euros.

Nevertheless, the group record half-year profit from 2021 in the amount of 1.8 billion euros is a long way off due to the slump in profits at Union and R+V.

On June 30, the DZ Bank Group had 1.14 billion euros in its books.

Enough with the zigzag in the forecast

In March, shortly after the Russian attack on Ukraine, the board of directors had forecast that the upper end of the target profit range of 1.5 to 2 billion euros could be reached in 2022.

In May, at the Annual General Meeting, he then announced that he would end up at the lower end.

Co-CEO Cornelius Riese is not a friend of a zigzag course and therefore did not want to raise the forecast again on Tuesday.

But: "We are hopeful that we will definitely exceed the 1.5 billion euros before taxes," said Riese.

Above all, the risk situation, which is relaxed despite the looming recession, gives the Management Board confidence.

As a precaution, DZ Bank made around 270 million euros in general value adjustments (“Adjustments”) on loans.

At the same time, it could no longer be justified not to release risk provisions of roughly the same magnitude that were not required during the corona pandemic.

The two effects in risk provisioning thus almost canceled each other out.

Only 60 million euros had to be added to the risk provision.

For the year as a whole, the Management Board expects risk provisioning requirements of between EUR 450 and 500 million for the Group.

Due to the weak economy, DZ Hyp should approach its new real estate business with caution.

At the urging of the banking supervisory authority, DZ Bank has to improve its money laundering controls in corporate customer business.

The transport financier DVB, which has been in deficit for years, will be merged into DZ Bank AG retrospectively as of January 1, 2022.

150 employees in Germany are taken over.