The German banking sector is considered to be a stable, if conservative, system that generates regular, if unspectacular, profit margins. Even so, in recent years strong forces have been at play that point to both its enviable fundamentals as well as the more challenging banking environment that exists.
German banks are seeing strong lending growth at a time when they are struggling to maintain their profits, with low interest rates, weak non-interest income and still-high cost structures putting a strain on profit margins. Overall, however, confidence in the German banking sector remains high, linked to the liquidity strengths of the banks as well as their strong asset risk and funding structures.
