The savings banks performed better than expected last year. The 343 institutions from the Sparkassen group reported total income before valuation of 18.2 billion euros for 2024. A year ago, German Savings Banks Association (DSGV) President Ulrich Reuter suggested that very strong profitability might be a thing of the past. But as with the cooperative banks, which topped their record from 2023 by 2% with a pre-tax profit of 9.48 billion euros, the savings banks have exceeded expectations. Net interest income rose slightly, and net commission income increased significantly.

Reuter expects a slightly weaker result for 2025. There is not only the uncertainty caused by Donald Trump's erratic decisions, which are a challenge for the global economy. There are also rising insolvencies, which are increasing in economically challenging times even without Trump, and with them credit risk provisions. There are administrative expenses, which tend to increase because expenditure on sustainability, IT and personnel is more significant, especially in times of a shortage of skilled labour.

Net interest income is likely to trend downwards. The six ECB interest rate cuts since mid-2024 are causing net interest income to shrink. Hopes that the recent tentative upturn in mortgage lending will be able to compensate for narrowing margins could be dashed. This is because mortgage loans are becoming more expensive again. The reason for this is the billion-euro programme for defence and infrastructure, which is driving up the yields on ten-year German government bonds, which are used as a benchmark for mortgage interest rates. There is another looming effect: It is to be feared that the interest rate hikes will again result in write-downs on securities held in the banks' portfolios. Recently, write-ups have been the order of the day here.