1. Research
  2. Products & Topics
  3. Topics
  4. Banking and financial markets

English version of ˮWarum sparen ältere Deutsche? Vor allem, um zu vererben und für das hohe Alter vorzusorgenˮ

March 5, 2019
Saving money is near and dear to Germans. Remarkably, Germans increase their saving rate in the second half of retirement. Those aged 75 and older save for a potential emergency situation and in order to bequeath and thereby improve their heirs’ living conditions. High intergenerational transfers might affect wealth distribution in a society in the long run. In 2018, banks in Germany benefited from record volumes of new retail loans (EUR 48.9 bn) and net flows into household deposits (EUR 108.7 bn). Mortgages accounted for the lion’s share of new loans. Consumer lending was above average in 2018, but lost momentum in the last quarter. [more]

More documents about "Banking and financial markets"

197 Documents
January 12, 2023
Climate stress tests have emerged as a key tool for looking into the financial system’s vulnerability to climate risks. Banks’ exposure to climate risks stems from (1) physical risks that are closely related to geography, and (2) transition risks mainly from loans to carbon-intensive sectors. Exercises by the ECB and BoE suggest that banks’ credit losses in a disorderly transition would be higher than in an orderly transition scenario, and even higher in a “hot house world” with unabated global warming. Banks would be able to absorb climate-related losses due to strong capital buffers. Results are subject to data limitations and modelling constraints. So far, climate stress tests are declared learning exercises with no direct implications for capital requirements. However, supervisors are urging banks to set up a comprehensive climate risk management. [more]
December 20, 2022
For more than a decade, European banks have sought to catch up and narrow the gap to their US peers. For many years, they were not particularly successful, due to a number of reasons: economic growth in the US outpaced that in Europe, interest rates were consistently higher (and never negative) on the other side of the Atlantic, and restructuring and capital raising needs were greater in Europe which constrained the banks’ ability to expand their business. In the past few years, however, European banks’ performance has indeed improved and they have not just made substantial progress, but also seem well positioned to finally reduce the distance to their US competitors. [more]
December 19, 2022
We look at the expected recession in the winter half-year 2022/23 and the onset of recovery, how inflation will peak, while the labor market loses momentum and private consumption is hit by the loss of purchasing power. Construction and Capex spending are set to deteriorate. Fiscal policy continues to lean against the headwinds but should normalize somewhat. Loan growth, both with corporates and private households, may slow substantially. In a medium-term perspective, we discuss risks for the manufacturing industry and Germany’s geopolitical and competitive position. [more]
November 17, 2022
The European banking sector is currently enjoying a sweet spot. Recent interest rate increases by central banks in most advanced economies combined with strong credit growth are having a pronounced positive impact on revenues, while loan loss provisions remain fairly low so far, although they have started to climb. Bottom line, growth in administrative expenses, individual banks’ tax and litigation payments as well as Russia-related losses have reduced net income, but the industry is still on track for a decent full-year result. More importantly, fundamentally higher-for-longer interest rates may support banks’ business prospects also in the medium term. [more]
September 14, 2022
On July 21, the ECB announced that it would raise the interest rate on the deposit facility from -0.5% to 0%, effective July 27. By the end of that very month, banks in Germany had reduced their stock of banknotes and coins by a record EUR 11 billion. There is much to suggest that they will continue to reduce their non-interest-bearing cash holdings, as the ECB interest rate will rise further to 0.75% in mid-September. [more]
September 2, 2022
For the financial sector, sustainable finance is steadily moving up the priority list. It is about incorporating environmental, social and governance (ESG) considerations into finance. The global volume of ESG-labelled assets grew to USD 35 tr in 2020 and may reach USD 41 tr by the end of this year. Despite strong growth, sustainable finance still faces obstacles such as the absence of a universally accepted definition of ESG and a lack of data on ESG metrics. Regulation is trying to keep pace with market dynamics to facilitate the flow of funds into sustainable activities. Key initiatives include the establishment of taxonomies, disclosure rules and product-related regulation. In the short term, sustainable finance faces headwinds from adverse macroeconomic conditions and emerging regulatory requirements, but the fundamental growth drivers remain intact. [more]
August 26, 2022
In an unusual constellation, the banking industry is at the same time suffering and benefiting from the current difficult macroeconomic situation. Inflation is driving up expenses, but also triggering a monetary policy normalisation which has fuelled a jump in net interest income. Meanwhile, recession fears require higher loan loss provisions. The net effect has been manageable so far, but is hard to foresee in the second half of the year. The largest capital distributions to shareholders since the financial crisis have pushed the CET1 and leverage ratios lower, though they remain at robust levels. Balance sheet growth has accelerated due to buoyant corporate and mortgage lending, but this may not last given the looming economic slowdown and further interest rate increases. [more]
July 26, 2022
Rising interest rates due to rampant inflation will have a mixed impact on the banking industry. They are a boon for net interest income but also cool down loan demand (currently still buoyant) and may lead to higher loan losses. This will probably be reinforced by a mild recession in Europe caused by macroeconomic and geopolitical headwinds. As a result, net income may decline yet banks should remain solidly profitable. From a comfortable starting position, capital ratios could come under pressure if risk-weighted assets continue to rise which would dampen prospects for further significant shareholder returns through dividends and share buybacks. Liquidity levels have stayed strong so far. [more]
July 19, 2022
Stablecoins and the DeFi ecosystem have taken a hard hit recently. However, the current stress for cryptos caused by tighter monetary policy may reveal which services offer real value for customers. In fact, leading collateral-backed stablecoins have weathered the storm quite well. The ecosystem will probably face further losses but emerge consolidated and well positioned for continued growth. [more]
May 20, 2022
In this edition of Focus Germany we look at the cyclical, short-term challenges brought about by the Ukraine war with regard to growth, inflation and public finances. We also analyse the more structural longer-term challenges, such as reducing the countries’ energy dependence on Russia and the governing coalition’s efforts to integrate new priorities precipitated by the historic watershed into its already very ambitious agenda. [more]
April 29, 2022
Like the real economy, the European banking sector is facing headwinds due to Russia’s war in Ukraine. Nevertheless, balance sheets and profitability are strong; indeed, 2021 was banks’ most successful year since the financial crisis and capital ratios are at record highs. And while loan loss provisions may now rise from unusually low levels, net interest income should also benefit considerably from higher interest rates as central banks combat surging inflation. However, both geopolitical and macroeconomic policy uncertainty remain remarkably high. [more]
March 25, 2022
In 2021, stablecoins’ market capitalization increased multifold to USD 170 bn. More importantly, they are the most traded coins in the entire crypto space and crucial for decentralized finance (DeFi). In the future, stablecoins could also gain traction in the real world – adding to the competition in the fields of retail and corporate payments. Stablecoins differ considerably in their price stabilization mechanisms and can pose risks, which have come into the spotlight of regulators. [more]