Shortly before Weihachten 2019, Winkelmeier presented a multi-year plan up to 2024, the core of which is the expansion of the DKB online bank, the real estate and the joint business with the savings banks. To this end, BayernLB, which has so far largely operated as a universal bank, is to become a special bank with a focus on future issues and digitalization. The multi-year plan entitled “Zukunftsbank BayernLB” is the first major project that Winkelmann tackled after taking office last summer.
Even if the goals remain the same, the bank’s priorities have shifted since the turn of the year. “We will control the conversion appropriately in order to be close to the customers,” emphasized Winkelmeier. The corona crisis, for example, has brought back to the fore a sector within the bank that has played a minor role in future plans: the corporate division
As the house bank of the Free State of Bavaria, the Landesbank has a particularly important position these days: Together with the savings banks in the state, it should ensure that funds from the KfW Bankengruppe and the LfA Förderbank Bayern reach the companies.
To date, more than 300 million euros have been passed on to the Landesbank’s accounts to affected companies. The Landesbank is expecting a total of 10,000 applications. For this reason, the team responsible for funding was strengthened by employees from other areas. In the multi-year plan up to 2024, however, the merger of the corporate customer business with the financial market business is still planned. The corona crisis is not to change anything, it said on Friday.
Financial market business makes loss
Both areas have long been among the low-profit parts of the bank – nothing has changed in the past year. The corporate customer business, which officially bears the name Corporates & Mittelstand, only made a small profit of 13 million euros, after there were still 161 million euros in 2018. High reversals of loan loss provisions led to the significant decline.
The financial market business even slipped into the red. After a slight pre-tax result of twelve million euros, this time there was a loss of 21 million euros. Above all, negative valuation effects for emissions and derivatives led to the minus.
The end of the financial market business in its previous form was already sealed at the end of last year. It was then announced that a total of 400 jobs were to be cut, of which around a third were directly in the capital market business and two thirds in the back office areas.
For BayernLB, this meant job cuts of five percent. Meanwhile, 150 employees have already left the house, it was said on Friday. The remaining 250 employees are expected to follow in the near future. However, it should not stop there. “Another reduction will come. We will announce this later in the year, ”announced bank manager Winkelmeier.
It has been clear for a long time that the major international banks, particularly from the USA, are increasingly taking over the financial market business. Smaller houses like BayernLB hardly have the opportunity to make sustainable profits. Especially since the IT costs in this segment are very high.
Two profit drivers remain
On the other hand, the Landesbank still has two profit drivers with its real estate and association business with the savings banks and especially with the online bank DKB. The combined real estate and network area in particular grew in the past year. With a pre-tax profit of EUR 298 million, it contributed more than 45 percent to the overall result of EUR 653 million.
The reason for this is simple: New business in the real estate sector was far from any mood of crisis last year. That should have been different since the outbreak of the corona crisis. Nevertheless, BayernLB boss Winkelmeier does not expect any negative effects, for example for retail space, from the effect that customers have only been able to make extensive purchases via the Internet in recent weeks. “There was a trend towards online shopping before,” said Winkelmeier.
BayernLB’s biggest profit maker, however, remains the DKB online bank – even if it earned a little less with a pre-tax profit of EUR 301 million than in 2018. It is only slightly above the real estate and network segment with the savings banks.
The Berlin online bank, the leader in the German market ING number two, their customer base increased by 300,000 to 4.3 million last year. “The DKB remains our growth engine and an indispensable part of BayernLB”, Winkelmeier made clear on Friday.
There have always been rumors in the past that the high-growth online bank could be sold or possibly brought to the stock exchange. Winkelmeier had already given a clear rejection when he made his first public appearance as head of the Landesbank last summer. Instead, he held on to the pre-Christmas planning on Friday. Thereafter, the number of DKB customers is expected to grow to eight million by 2024.
No profit forecast
At the current level, this would almost double. Nevertheless, Stephan Winkelmeier remains optimistic: the past few weeks, when many people at home had time to check their personal financial products, have brought a clear plus.
In addition, there should be new payment transaction solutions for private customers as well as an enlarged product range. The range of financing solutions is to be expanded for business customers who come from the DKB primarily from the areas of housing, renewable energies, agriculture and nutrition as well as the liberal professions.
This time, the CEO did not dare to make a profit forecast for the current year, which at BayernLB is traditionally in the mid three-digit million range in normal times. “We expect the deepest recession since World War II, so it would be presumptuous to give an outlook.” Instead, he alluded to the bank’s rescue of government billions in times of the financial crisis. “We are very aware of our responsibility as a formerly saved institute in these times.”
More: What consumers can do if real estate financing shakes through Corona.