Landesbank Baden-Württemberg (LBBW) recorded robust financial development in the first half of 2026. Despite a persistently challenging economic environment, marked by economic weakness in Germany, geopolitical uncertainties and volatile markets, a pre-tax profit of 708 million Euros was achieved. This result is on a par with the previous year's high level of 705 million Euros, underscoring the stability of the bank's earning power.
LBBW CEO Rainer Neske emphasised that the half-year result demonstrated the bank's performance, customer proximity and resilience. He explained that the strength of the business model and the performance of the entire team are leveraged to reliably support customers, even in economically uncertain times, with comprehensive expertise, financial strength and a diverse range of solutions as a universal bank. LBBW's balanced business model is based on four customer segments, all of which generated triple-digit million Euro profits by mid-year, thus forming a broad and stable earnings base.
Revenues reached 2.09 billion Euros, almost matching the previous year's level of 2.12 billion Euros, driven by robust customer business. Positive developments were observed, among others, in infrastructure financing, investment business, and deposit revenues. At the same time, the reluctance to invest in parts of the German economy and the continued subdued real estate markets were noticeable. Despite high investments in IT, such as for cyber security and AI capabilities, as well as the expansion of international business, expenses decreased by 4 percent to 1.26 billion Euros. This was significantly influenced by the discontinuation of Berlin Hyp's integration costs and lower levies for the S-Finanzgruppe's security systems.
Development of Risk Provisions and Segment Results
The weak economic development led, as expected, to a moderate increase in risk provisions to 121 million Euros, compared to 107 million Euros in the previous year. This increase primarily results from individual exposures in real estate business and corporate clients. Risk costs of 15 basis points of the loan book remain at a low level in comparison to the industry. The additional provisions in the form of so-called 'Model Adjustments' decreased slightly but remain at a high level of almost 800 million Euros. The portfolio quality is rated as good, which is reflected in a low default rate of 0.9 percent.
In the Real Estate/Infrastructure Finance segment, the pre-tax profit amounted to 171 million Euros, down from 190 million Euros in the previous year. The decline in earnings in this area is due to the challenging environment in the real estate markets. However, new business in commercial real estate financing, which is bundled at Berlin Hyp, reached a good level of around 7 billion Euros. In the growth area of infrastructure financing, a slight increase in earnings was recorded with new business of 2.8 billion Euros, focusing on renewable energies and the expansion of digital infrastructure. Risk provisions for this segment amounted to 74 million Euros, below the previous year's figure of 96 million Euros. Costs in this segment were also down, mainly due to the discontinuation of Berlin Hyp's integration costs and the realisation of initial efficiencies from the integration.
- —Corporate Clients: Pre-tax profit of 312 million Euros (previous year: 360 million Euros), revenues almost at previous year's level despite subdued credit demand.
- —Capital Markets Business: Pre-tax profit stable at 186 million Euros (previous year: 187 million Euros).
- —Private Clients/Savings Banks: Pre-tax profit significantly increased to 135 million Euros (previous year: 105 million Euros), driven by deposit business, securities business and asset management.
