Germany: Financial Sector Assessment Program-Technical Note-The Determinants of Bank Profitability

International Monetary Fund

No 2022/273, IMF Staff Country Reports from International Monetary Fund

Abstract: German bank profitability is low by international standards. Although German banks rank more favorably in risk-adjusted terms, as low profitability is partially compensated by lower volatility of returns, their profitability ratios remain low. On other measures (such as returns on assets, equity, and risk-weighted assets), German banks, on aggregate, rank among the least profitable in Europe. Several factors affect bank profitability, including a complex tiered industry structure with barriers to entry and an explicit mandate of a large part of the banking system – cooperative and savings banks – to maximize welfare of stakeholders rather than profits.

Keywords: Germany FSAP; asset productivity; commission income; income component; FSAP's finding; net fee; Cooperative banks; Commercial banks; Bank soundness; Loans; Income; Europe; Global (search for similar items in EconPapers)
Pages: 46
Date: 2022-08-16
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