Dekabank on Track for Billions in Profit due to Interest Rate Shift
Financial powerhouse Dekabank is on a roll, anticipating a record-breaking profit in the billions. The Deka Group recently revealed that they expect a 10-20% surge in their economic result for the year, estimated to surpass the impressive 985 million euros achieved in 2022. CEO Georg Stocker declared, "The fourth quarter's business performance has instilled confidence so far." Similar to other financial institutions, Dekabank is benefiting substantially from the rising interest rates.
Following an accomplished third quarter, Dekabank has already surpassed their revised profit goal of over 800 million euros, set by their Management Board in August. The end-of-September balance sheet revealed an economic result of nearly 998 million euros, surpassing 2021's equally outstanding performance, which benefited from positive valuation effects for certificates, among other factors.
However, Deka's sales of funds and certificates, topping out at 648 million euros in 2022, fell short of the previous year's 20.4 billion euros. This slump mainly resulted from losing a significant institutional business mandate with a volume of around 19 billion euros.
Business with private investors recently enjoyed success: In this area, Deka amassed 18.7 billion euros in new funds from January to September, surging 24% compared to the same period the previous year. Conversely, the sales performance in business with institutional investors plummeted to -18.1 billion euros, in stark contrast to the plus 5.3 billion euros in 2021.
The spike in interest rates has significantly boosted Dekabank's anticipated annual profit, overshadowing the 2022 record of 985 million euros. According to the quarterly results, Dekabank's year-to-date economic result surpasses the updated forecast of over 800 million euros.
The favorable interest-rate environment has positively impacted Dekabank's operations, fortifying their balance sheet and generating substantial wealth.
Insight: DZ HYP, Dekabank's real estate financing arm, is expecting impressive results as well due to the increase in net interest income. This growth can be attributed to a stable portfolio quality, new business development, and a favorable interest-rate environment, which has been a driving factor in the finance sector's success in 2024.
