Press Release

DBRS Morningstar Confirms DZ BANK Group at AA (low) / R-1 (middle), Stable Trend

Banking Organizations
November 02, 2023

DBRS Ratings GmbH (DBRS Morningstar) confirmed the Long- and Short-Term Issuer Ratings of DZ BANK AG Deutsche Zentral-Genossenschaftsbank (DZ BANK Group or the Group) at AA (low) / R-1 (middle). The trend on all ratings is Stable. The DZ BANK Group benefits from the membership of the Genossenschaftliche Finanzgruppe Volksbanken und Raiffeisenbanken (Cooperative Financial Network or CFN), and as a result the AA (low) Long-Term Issuer Rating incorporates one notch of uplift from the A (high) intrinsic assessment (IA). The support assessment for the DZ BANK Group is SA1, reflecting the expectation of support in case of need from within the CFN.

The BVR (Bundesverband der Deutschen Volksbanken und Raiffeisenbanken) organises the interests of the CFN and is in charge of the BVR Institutional Protection Scheme and Deposit Protection Scheme (BVR Institutssicherung GmbH (BVR-ISG)). As of end- 2022, 737 institutions are part of these protection schemes which are financed without government support. They reduce the default risk for each individual member by making financial resources available to each institution within the Group. The strength and structure of the Scheme are a key element in the one-notch uplift of the Group’s Issuer Rating from the IA.


DZ BANK Group’s A (high) IA takes into account the Group’s diversified franchise in Germany, centred around the Group’s role as a central clearing bank and specialty financial service provider to the local cooperative banks in Germany. It also reflects the sound risk profile, the Group’s diversified liquidity and funding profile, including access to the liquidity of the CFN, as well as the healthy capital cushions. The IA also takes into consideration the adequate but somewhat volatile earnings. While revenues are generally diversified, the Group’s insurance and asset management business are exposed to capital market volatility. In 2022, the valuation impact from weak capital markets outweighed the improved net interest income (NII) results. However, in H1 2023 markets recovered and valuation gains added to the increase in NII. DBRS Morningstar expects revenue support from higher interest rates to continue, but to a lesser extent as margins may have peaked and macroeconomic uncertainties could pose a number of challenges such as higher credit costs and weaker loan demand.


An upgrade of DZ BANK Group’s Issuer Ratings would require a significant and sustainable improvement in the overall credit profile of the CFN. A sustained strengthening of DZ BANK Group’s bottom line profitability along with reduced earnings volatility, while maintaining solid risk and capital metrics, would lead to an upgrade of the IA.

A substantial deterioration in the overall credit profile of the CFN would lead to a downgrade of DZ BANK Group’s Issuer ratings. A downgrade of the IA could result from a material deterioration in DZ BANK Group’s risk profile or a sustained decline in profitability.


Franchise Combined Building Block (BB) Assessment: Strong

DZ BANK Group serves as the central institution for the cooperative financial network in Germany and a commercial bank. It is Germany’s second largest banking group by total assets, offering a large product range including corporate finance, asset management, insurance, commercial and residential real estate finance, and consumer finance, and thereby acts as the specialty finance provider for the extensive network of cooperative banks. The Group’s business profile provides a significant degree of revenue diversification, however, its geographical focus is on Germany. Further progress in digitalisation, sustainability and efficiency are among the Group’s core priorities.

Earnings Combined Building Block (BB) Assessment: Good/Moderate

DBRS Morningstar views DZ BANK Group’s earnings power as solid, albeit more modest when compared to international peers. Non-interest income averaged 55% of revenues in 2021 and 2022, which is relatively high. This reduced the pressure on net interest income in recent years, but also means that the Group’s revenues have been benefitting less from interest rate increases. At the same time, the Group’s various non-interest income lines are exposed to capital markets, and therefore earnings may be somewhat volatile, which accounted for weaker results in 2022. However, H1 2023 net profit jumped to EUR 1,412 million from EUR 577 million a year earlier as capital markets recovered and net interest income increased. The return on average equity as calculated by DBRS Morningstar was 10.7% in H1 2023, up significantly from 6.0% in H1 2022, but could end the year weaker, depending on capital market results.

Risk Combined Building Block (BB) Assessment: Strong/Good

The Group’s main risk is credit risk, mostly related to the Bank’s commercial loan portfolio. The risk is largely aligned with the Bank’s cooperative bank owners’ risk appetite. The non-performing loan (NPL) ratio for the Group, as calculated by DBRS Morningstar (excluding loans to financial institutions), was 1.6% at end-H1 2023, stable YOY. Despite the resilience borrowers have shown in recent years, higher interest costs, a slowdown in economic activity, still high energy prices and supply chain disruptions point to downside risk in terms of asset quality. The Bank also has sizeable commercial real estate exposure, which comprised around 23% of total customer loans in H1 2023,. The exposure is largely in Germany and the underwriting is conservative in our view. However, given the cyclicality of the CRE business, we are carefully monitoring developments.

Funding and Liquidity Combined Building Block (BB) Assessment: Strong/Good

DBRS Morningstar views DZ BANK Group’s liquidity as solid. Reflecting its asset mix and its role as a central banking institution, the Group’s diversified funding profile comprises corporate deposits and retail deposits, along with bank deposits from affiliated cooperative banks and other banks, and wholesale funding, including Pfandbriefe. The Group’s customer loan to deposit ratio (LTD) stood at 124% at end-H1 2023, however, this is mitigated by the stable access to liquidity from the cooperative banking network. The liquidity surplus of the local cooperative banks is a major contributor to meeting DZ BANK Group’s short-term funding needs. The liquidity coverage ratio (LCR) remained strong at 137.1% as of end-H1 2023.

Capitalisation Combined Building Block (BB) Assessment: Good

DZ BANK Group’s capitals levels are strong with significant cushions above minimum requirements. Solid capital generation is somewhat mitigated by the limited access to capital markets. The Group’s fully loaded Basel III Common Equity Tier 1 (CET1) ratio at end-H1 2023 increased to 15.6% from 13.7% at end-2022. The 2022 CET1 ratio was affected by a temporary accounting effect that reverted in 2023 driven by the transition to IFRS 17 at R+V. In addition, retained profits and the absence of a voluntary capital deduction for nonperforming exposures also led to an increase in the CET1 ratio. The ratio comfortably exceeds the minimum capital requirements of 9.84% for 2023. DZ BANK Group’s fully-loaded leverage ratio increased to 6.0% at end-H1 2023 from 4.7% at end-2022 also driven by the implementation of IFRS 17 at R+V, and was well above external and internal targets of 3.0% and 4% respectively. The Bank’s MREL ratio as of June 30, 2023 was 41.1%, significantly higher than the 2022 external minimum target of 25.1% specified by the supervisory authorities and the internal threshold of 26.8%.

Further details on the Scorecard Indicators and Building Block Assessments can be found at


There were no Environmental, Social, or Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (4 July 2023) -

All figures are in EUR unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (22 June 2023). In addition DBRS Morningstar uses the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at:

The sources of information used for this credit rating include Morningstar Inc. and Company Documents, DZ BANK and CFN 2022 Annual Reports, DZ BANK H1 2023 Interim Report, DZ BANK H1 2023 Presentation, DZ BANK 2022 Facts and Figures, Cooperative Banks 2022 Annual Report, Cooperative Banks Press Releases, Press Conference Presentations 2018-2022. DBRS Morningstar considers the information available to it for the purposes of providing this credit rating to be of satisfactory quality.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, this is an unsolicited credit rating. This credit rating was not initiated at the request of the issuer.

With Rated Entity or Related Third-Party Participation: YES
With Access to Internal Documents: NO
With Access to Management: NO

DBRS Morningstar does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar's outlooks and credit ratings are under regular surveillance.

For further information on DBRS Morningstar historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: For further information on DBRS Morningstar historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see

The sensitivity analysis of the relevant key credit rating assumptions can be found at:

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Sonja Forster, Vice President, Global FIG
Rating Committee Chair: William Schwartz, Senior Vice President – Credit Practices
Initial Rating Date: May 22, 2007
Last Rating Date: November 7, 2022

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