German Landesbanken: Solid Profits in 2024 Amid Uncertain Environment

This commentary focuses on the performance and challenges of the four largest German Landesbanken: LBBW, BayernLB, Helaba, and NORD/LB.

Key highlights include the following:

-- Results for 2024 showed stability despite some pressure on NII and higher provisions.

-- Challenges in CRE and rising corporate insolvency led to further asset quality deterioration in 2024.

-- Some risks will likely persist as the German economy stagnates.

-- Stable outlook on the credit ratings incorporates our view that the four largest Landesbanken are in a stronger position to navigate uncertainty.

"The results for 2024 were supported by lower costs, higher commission income, and gains on fair value adjustments. These factors helped to absorb the impact from lower NII and higher provisions." said Nicola De Caro, Senior Vice President and Sector Lead, European Financial Institution Ratings. "NPLs might continue to increase in
2025, while the persistent uncertainty could also lead to higher reclassification of Stage 2 loans."