The German Banking Industry Committee on the Survey by the Bundesbank and BaFin of the Financial Performance and Resilience of German Credit Institutions in the 2017 Low Interest Rate Environment

The reports published by the Deutsche Bundesbank and the German Federal Financial Supervisory Authority (BaFin) on August 30, 2017 on the 'Multi-institutional request for information concerning the financial performance and resilience of German credit institutions in the 2017 low interest rate environment' reflect the currently stable financial position of credit institutions in Germany, say the leading banking-sector organizations that make up the German Banking Industry Committee (DK). The findings show that the institutions have spent the past few years further improving their capital adequacy. The stress tests carried out by the German regulators also confirm that the institutions examined are well equipped to withstand theoretically possible stress situations.

As the DK expected, the survey findings show in particular that the lending standards of the German institutions remain high. The German banks and savings banks do not anticipate any erosion of these standards in the future. 

The falls in operating profit reported by the institutions are largely due to the low interest rate policy of the European Central Bank (ECB). The DK is therefore continuing to advocate strongly for a gradual scaling back of this very expansionary monetary policy, emphasizing that it must not be allowed to become permanent. Once the situation has returned to normal, the squeeze on the earnings of the German banking industry will be eased and it will be able to counter potential risks more effectively.

The DK still fully agrees with the objective pursued by the German regulators in carrying out this survey. It welcomes the setting up of a specialist sub-committee and the associated opportunity to have a hand in shaping the methodology of the data survey. The pilot phase carried out for the first time this year at the suggestion of the DK, for example, has helped to increase transparency concerning the availability of data in the institutions. The DK takes an equally positive view of the organizational processes and the bilateral communications of this year's survey. This constructive and transparent approach of the Bundesbank and BaFin should provide a model for other European regulators planning similar surveys.

The DK believes that further dialog between the regulatory authorities and the German banks and savings banks ahead of future surveys will help to reduce the amount of work involved. Such surveys are currently very labor intensive, especially for small and medium-sized institutions.