© Reuters. FILE PHOTO: The logo of Germany’s Federal Financial Supervisory Authority BaFin (Bundesanstalt fuer Finanzdienstleistungsaufsicht) is pictured outside an office building of the BaFin in Bonn, Germany, April 15, 2019. REUTERS/Wolfgang Rattay
FRANKFURT (Reuters) – The head of Germany’s financial market regulator said that 2024 will be less rosy for bank profits than 2023, when they benefited from higher interest rates, and that commercial property was the biggest risk at the moment.
BaFin President Mark Branson, speaking in a podcast with Finanz-Szene broadcast on Tuesday, said that 2023 was especially good for profitability but 2024 will be “more difficult”.
Higher interest rates and the income that generates was a boon to banks in 2023, Branson said in the interview.
“But a lot of costs in the loan books come with a time lag and we will see that in 2024 and in the following years,” he said.
Branson said the commercial property sector, which is suffering from the abrupt rise in interest rates, insolvencies and a sharp slowdown in transactions, was “risk No. 1” in the regulator’s view.
“Many went overboard in times of extremely low interest rates. That is why a necessary correction has come,” he said.
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