The economic and political conditions have changed significantly since 2022, influenced by geopolitical conflicts and changes in government. These circumstances have negatively amplified structural changes and led to noticeable adjustments in energy prices, construction costs, and interest rates between 2020 and 2025. Consequently, there has been an increased number of insolvencies and a noticeable reluctance to invest. This also impacts Volksbank BRAWO’s business area, where large corporations and regional SMEs face challenging business developments.
Volksbank BRAWO’s traditional banking business delivered solid results in the 2025 financial year. Business volume rose by 4.5 percent to EUR 12.7 billion, and managed customer deposit volume increased by 7.2 percent to EUR 7.2 billion. Managed customer loan volume saw a modest increase from EUR 5.4 billion to EUR 5.5 billion, representing a gain of 0.7 percent. The total balance sheet sum rose by approximately 0.8 percent to EUR 6.47 billion. Despite these positive developments in core business, earnings were affected by special and one-off effects. Net interest income decreased significantly by 21.5 percent from EUR 120.7 million to EUR 94.7 million, primarily due to a lack of income from equity investments and other assets, which declined to EUR 16.3 million (previous year: EUR 45.2 million). Interest income from traditional banking business increased to EUR 144.1 million, while interest expenses rose from EUR 63.1 million to EUR 65.7 million. Net commission income, thanks to above-average securities business, exceeded the EUR 40 million threshold for the first time, reaching EUR 40.2 million.
Lars Berkefeld, interim Spokesperson for the Management Board of Volksbank BRAWO, pointed out at the presentation of the 2025 annual financial statements that the earnings side of the traditional banking business is negatively affected by the effects of the previous business model. Expenses are heavily influenced by the complexity of the bank’s other business areas. Audit costs, IT investments, and increased marketing and sponsoring activities led to significant additional expenditure. Other administrative expenses increased by 10.6 percent to EUR 62.4 million. Personnel expenses rose by nearly 4.2 percent to EUR 56.9 million. However, the main cost drivers in 2025 were depreciation on property, plant, and equipment, which included extraordinary write-downs due to revaluations in addition to scheduled depreciation. Mr. Berkefeld emphasised that, given the strained earnings situation, there is a considerable need for action to sustainably reduce the cost base and align structures more closely with the earning power of the core business.
The 2025 annual result was particularly burdened by high negative valuation effects on loans, securities, equity investments, and real estate, which are related to Volksbank BRAWO’s previous business model. This resulted in significantly lower valuations and an exceptionally high impact on earnings due to changed market conditions and valuation parameters. The preliminary result before further measures would be minus EUR 608.1 million. To compensate, the fund for general banking risks (Section 340g reserves) was partially dissolved by EUR 136 million in a first step.
To ensure a balanced annual result and strengthen the equity base, support measures from the protection scheme of the National Association of German Volksbanks and Raiffeisenbanks (BVR) were utilised. These include coverage measures in the form of guarantees to shield existing risks and the subscription of cooperative shares to comply with regulatory capital requirements during the restructuring process. Mr. Berkefeld assured that all deposits and cooperative shares at Volksbank BRAWO are absolutely secure and that the bank remains fully operational thanks to these measures. Customer figures, with over 7,200 new customers and a total customer base of nearly 166,500, as well as slightly increased membership numbers to nearly 55,000, underscore the high level of customer trust.
Due to the enormous need for write-downs, 96 percent of which are attributable to non-banking business areas – and about four-fifths of that solely to the Real Estate business area – Volksbank BRAWO’s previous business model and business strategy must be fundamentally revised. The Corporate Investments business area, which primarily bundles minority stakes in SMEs, is also affected by the economic crisis.
