German banks have prospered in a higher interest rate environment, with profitability being accompanied by generally resilient asset quality. The extensive restructuring of the country’s biggest lenders, and broader efforts to cut costs and diversify revenues across the sector at large, have put most banks in good stead to continue this trajectory over the near term.
However, changing economic conditions have contributed to substantial shifts among Germany’s best-performing banks. DekaBank takes first place this year thanks to its high profitability, return on risk, leverage and soundness indicators.
The lender, which is the 14th largest bank in Germany by total assets, registered a 44.4 per cent increase in pre-tax profits, which hit $1.23bn in 2023, along with 11 per cent growth in its core capital. In taking the crown of Germany’s best-performing lender, DekaBank displaces Hamburg Commercial Bank, which drops to fourth in the ranking.
Commerzbank, which came in fourth place in last year’s ranking, jumps to second position among Germany’s best-performing banks, lifted by its first place in the leverage table and second in operational efficiency.
The lender’s pre-tax profits increased by 77 per cent over the review period to reach $3.78bn, an outcome underpinned by substantial increases to both net interest income and net commission income. Commerzbank’s Tier 1 capital also grew by 11.5 per cent in 2023.
DZ Bank, Germany’s second-largest by total assets, lands in third place this year among the best-performing names, close behind Commerzbank in terms of its overall score. The lender’s strong showing in the rankings is largely thanks to its broad-based success, securing second place in the profitability, return on risk, leverage and asset quality tables.
This performance marks a big turnaround for DZ Bank, which came in 10th position among the country’s best-performing banks last year. Healthy Tier 1 capital growth of 34 per cent, a pre-tax profit expansion of 85 per cent and asset growth of 7 per cent, among other metrics, facilitated this shift up the overall performance table.
Meanwhile, Germany’s largest lender by total assets and Tier 1 capital, Deutsche Bank, drops to seventh place in the best-performing table from third place last year. The lender is among the top five on the liquidity, return on risk and leverage tables, but fared less well in terms of growth, operational efficiency and soundness.
Deutsche Bank’s pre-tax profits expanded by 6 per cent over 2023 to reach $6.3bn, while its total assets increased by 2.5 per cent and its Tier 1 capital rose by 4 per cent. This rounded out a generally solid year for the German banking giant as it imposed greater cost and risk discipline across its business footprint.
