Germany’s banking sector performed well in 2021, helped by the phasing out of the Covid-19 lockdowns and the subsequent economic bounce back. This positive trend continued at the start of this year, but then things took a turn for the worse because of macroeconomic and geopolitical events.
Pandemic-related bottlenecks started to build up in Germany’s supply chains, labour shortages began to bite, energy prices soared as a result of Russia’s invasion of Ukraine, inflation in Europe began to climb, and economic growth faltered — all of which will have a detrimental effect on banks’ bottom lines. All types of German banks — private banks, co-operative banks and public sector-held savings banks — face the same challenges.