DZ Bank

Germany’s Most Profitable Bank

  • Why it matters

    Why it matters

    DZ Bank is succeeding at a time when many German banks are struggling to earn a living, though rivals won’t easily be able draw lessons from the bank’s rather unique business model.

  • Facts


    • DZ Bank, a sort of central bank for nearly 1,000 cooperatives in Germany, posted a net profit of €1.6 billion ($1.7 billion) in 2016.
    • Larger rivals such as Deutsche Bank and Commerzbank recorded a €1.9-billion loss and €279-million profit respectively.
    • DZ Bank expects another profit of between €1.5 billion and €2.2 billion this year, though likely on the lower end of that scale.
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DZ Bank
DZ Bank towers above its rivals – at least when it comes to profits. Source: DPA

It’s only Germany’s third or fourth-largest bank and not exactly a household name – certainly not internationally known and really not even in Germany itself.

Yet DZ Bank, which acts as a sort of central bank for hundreds of community-backed credit unions spread across Germany, has an important distinction to its name: It was the country’s most profitable bank in 2016.

While Germany’s better-known Deutsche Bank and Commerzbank battled with legal fees, major restructurings and a mountain of bad loans from the past, the Frankfurt-based DZ Bank quietly posted a cool €1.6 billion ($1.7 billion) in profits after taxes or €2.2 billion before taxes for the year. That was more than expected and only a touch below 2015.

Before other rivals look to DZ Bank for tips, a closer look at the results shows it has profited from its rather unique business model.

It’s not the first time DZ Bank has claimed the title. It was the most profitable in 2014, churning out steady returns at a time when many of its rivals have struggled under the weight of record low interest rates and tough financial regulation that critics complain has made it hard for many to earn a living.

Not that the bank hasn’t faced its own challenges. DZ Bank is in the middle of a difficult merger with WGZ Bank, a smaller rival that acted as the umbrella group for credit unions in parts of western Germany.

That merger has had its costs, yet DZ Bank chief Wolfgang Kirsch on Tuesday predicted the financial firm will still post a pre-tax profit on the lower end of its forecast of between €1.5 billion and €2.2 billion for this year. Beginning in 2018, he expects the merger will already start to bear some fruit as the two banks merge some of their divisions.

That’s a pretty optimistic target compared to its larger rivals. Germany’s largest bank, Deutsche Bank, posted another loss of nearly €2 billion in 2016 and the number two Commerzbank a net profit of just €279 million, about half its level from 2015. Both are in the middle of deep restructuring that will depress their bottom lines well into next year – Deutsche Bank just announced another major overhaul this week.

But before rivals look to DZ Bank for tips, a closer look at the results shows it has profited from its rather unique business model. The lead cooperative bank has a reliable set of clients in the hundreds of smaller cooperatives spread around Germany that rely on it for providing financial products.

That model allows it to stay above the fray even as the smaller credit unions are struggling and contemplating mergers of their own. It also means DZ Bank can spread its wings across a wide variety of financial businesses, including insurance arm R+V, an asset management arm in Union Investment and a home-loan division. That kind of diversity isn’t easy for individual banks to achieve these days, but those that can are insulated from downturns in any one area.

In DZ Bank’s case, the bank posted a loss for example in its troubled shipping division of €285 million. Its home-loan division also only provided half the profits it did in 2015.

Yet with other divisions holding up, the bank still managed to hand out dividends to shareholders – its own community banks – of €0.18 per share and even increase its capital reserves to 14.5 percent. Both of those measures are higher than Deutsche and Commerzbank, too.


Yasmin Osman is a senior banking correspondent for Handelsblatt in Frankfurt. Christopher Cermak is an editor covering primarily finance and economics for Handelsblatt Global in Berlin. To contact the authors: and

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