Large provisions for potential loan losses caused Teambank's pre-tax profit to plummet by almost three quarters to 22.6 million euros last year. The DZ Bank subsidiary increased its risk provisioning from 133 million euros in 2023 to 205 million euros, an increase of 54%.

In an interview with Börsen-Zeitung, Christian Polenz, CEO since April 2024, and Marion Thielemann, Chief Financial Officer and Chief Risk Officer, cited the difficult overall economic conditions, which have caused many customers to struggle.

The economy is faltering, the number of unemployed has risen to almost 3 million, the highest figure for ten years. Consumers are also being hit by the continuing price increases, which is dampening consumer demand. „People feel extremely insecure,“ says Polenz. The increased risk is here to stay.

The times of low risk provisioning are over. The institution will therefore not achieve new record figures. In view of the challenging environment, Polenz considers the latest results to be solid. However, there is not an aim to stay at this level, says the banker, who succeeded Frank Mühlbauer at the helm of the bank almost a year ago. „We are working on it and have a plan on how to deal with it.“

DZ Bank CEO Cornelius Riese, who chairs the Supervisory Board of Teambank, pointed out in August when presenting the group's half-year figures that people are becoming poorer as disposable incomes are falling. At the same time, he held out the prospect of a triple-digit result for Teambank again in 2026. However, it is currently unclear whether this statement will hold true given the deterioration in the economic situation. „According to current planning, we will also return to the three-digit million euro range,“ emphasises Polenz, but qualifies this with "whether it will be possible in this environment in 2026 or perhaps a year later cannot be said conclusively at the moment.’

The Nuremberg-based financial institution has been increasing its risk provisioning year upon year. While it was still 57 million euros in 2021, it was just under 100 million euros the following year, then 133 million euros in 2023, and finally 205 million euros last year. According to Polenz, the trend will continue for the time being, albeit less drastically than recently. „We assume that we will still see an increase in risk provisioning, but that it will level off significantly.“

Chief Financial and Risk Officer Marion Thielemann does not expect the deterioration trend in creditworthiness, which has to be backed by risk provisions, to change in the short term. At the same time, however, she points to Teambank's decades of experience in assessing credit risk in the unsecured consumer credit business. „Risk provisioning is a burden on the P&L, but does not cause us sleepless nights,“ she says.

Marion Thielemann has been Chief Financial Officer (CFO) and Chief Risk Officer and Chief Risk Officer (CRO) of Teambank.

Borrowers who get into difficulties can be accommodated by the bank by extending the term, and reducing or delaying instalments. Polenz rejects the sale of loans. „We do not transfer risk to third parties and do not sell receivables", she says.

Although the bank is also aiming for growth this year, this is currently taking a back seat, says Polenz. „For us, risk management comes before growth momentum.“ Even though the past year was characterised by high risk provisioning, there were positive developments, for example in net interest income, which Teambank was able to increase by 0.7% to 534 million euros, and in costs, which fell by 0.8%. „Even in times of inflation, we managed to maintain 20 to 25 million euros per year for future investments and slightly reduce personnel and operating expenses,“ commented Polenz.

The cost-income ratio, an important measure of competitiveness, fell accordingly by 3% to 55.4% but is still a long way from the target once formulated of reducing it to below 50% by 2026. In general, this target is being adhered to, but not at the expense of future investments.

Thielemann speaks of a solid, albeit sideways, trend in the instalment loan portfolio. It increased by 0.3%, roughly in line with the market, and reached 9.48 billion euros. Teambank's share of the German consumer credit market is 4.2%, while the cooperative financial group accounts for 14%.

The number of customers has also grown slightly. „We are pleased that we have gained a good 32,000 net new customers,“ says Thielemann, and points to the high Net Promotor Score (NPS). This is a measure of customer satisfaction and has continued to rise. The score is currently 54, compared to 51 in 2023.

Teambank has now made official what was already on the horizon: the instalment loan product will be discontinued at the end of June. „We don't believe in the future of the classic instalment loan and will discontinue the product this year,“ Polenz announces. Instead, every new customer will be provided with an individual financial framework depending on their creditworthiness, with financial leeway that can be utilised independently as required. Polenz's predecessor Mühlbauer had already said that the trend was moving away from the classic instalment loan to a credit line.

This goes hand in hand with a higher degree of customer self-determination. They will also be less work for the bank, which reduces costs. At the same time, customers appear more satisfied, with the Net Promotor Score for those who already utilise an individual financial framework standing at 69.

With the phasing out of the instalment loan, the biggest transformation in the company's 75-year history will also be largely completed, says Polenz. This process was initiated in 2021 and includes the restructuring of the organisational structure and processes, as well as new products and technological solutions, including the use of artificial intelligence.

The CEO is confident that this will generate new growth. The expansion of the embedded finance solutions offered by Teambank should also contribute to this. Around 3,000 cooperative corporate customers and multi-channel providers are currently cooperating with the Nuremberg-based company. „We are growing within the cooperative group, but also outside the sector via embedded finance,“ says Polenz. „This means that we provide liquidity to retail customers who want to fulfil a wish. In this market, which grew by 1 to 1.5% last year, we grew by 13%.“