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Western EuropeJuly 4 2022

German banks hold firm in difficult times

While Germany’s banks face serious economic and geopolitical headwinds, they have been generating good profits and are well capitalised, so should be able to ride out the storm. Michael Imeson reports.
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German banks hold firm in difficult times

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.

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