... banks dominated the German banking sector's imbalanced profit generation in 2013. Large parts of the system (most universal and wholesale banks) cannot earn their cost of capital as overall performance is still moderate. The overall profit was stable, and just a few banks made losses despite vast downsizing and one-off items affecting wholesale and universal banks. Major changes seem unlikely in 2014, but profit generation should gradually shift from retail to universal banks in the longer term. A Few Loss-Making Banks: 95% of the banking sector (based on total assets) was profitable in 2013, which compares favourably with most developed European markets. Most of the four loss-making banks have been restructuring for five years or more. Years of downsizing by the weakest wholesale banks have increasingly diluted the impact of their losses on the system. Local GAAP Supports Stability: Most medium-sized banks report under German GAAP only,...
