Annual Report 2020 of the Savings Banks Finance Group of Baden-Wuerttemberg 1 The 50 savings banks in Baden-Wuerttemberg (April 2021) Rhein Neckar Nord Tauberfranken Neckartal-Odenwald Heidelberg Hohenlohe- kreis Kraichgau Heilbronn Schwäbisch Hall- Crailsheim Karlsruhe Ludwigsburg Rastatt-Gernsbach Waiblingen Ostalb Baden-Baden Gaggenau Pforzheim LBBW Calw Stuttgart Ra-Ge * Bühl * Hanauerland Böblingen Esslingen- Göppingen Heidenheim Nürtingen Offenburg/ Ortenau Freudenstadt Tübingen Kinzigtal Reutlingen Ulm ** Wolfach Zollernalb Rottweil Freiburg- Nördlicher Breisgau Schwarzwald- Biberach Baar Tuttlingen Sigmaringen P-M Staufen- Pfullendorf- Breisach Hochschwarzwald Meßkirch Mark- Ravensburg St. gräfler- Salem- Blasien Bonndorf- Hegau- land Wiesental Stühlingen Bodensee Heiligen- berg Hochrhein Engen- Bodensee Gottmadingen Reichenau Lörrach-Rheinfelden 2021 Stand: Januar Stand: Januar 2021 Stand: Januar * Auf dem Gebiet der Landeshauptstadt Stuttgart erfüllt die LBBW (BW-Bank) auch die Aufgaben einer Sparkasse. ** On Auf thedem territoryGebiet of theder stateLandeshauptstadt capital Stuttgart Stuttgartthe LBBW complieserfülltdie withLBBW the tasks(BW-Bank) of a savingsdieAufgaben bank. einerSparkasse. ** DieThe savingsSparkasse bankGengenbach Gengenbach andund thedie savingsSparkasse bank Haslach-ZellHaslach-Zell mergedhaben toam form1. Januarthe savings2021 bankzur KinzigtalSparkasse on 1Kinzigtal January 2021.fusioniert. Foreword The Savings Banks Finance Group of Baden-Wuerttemberg: a strong and reliable companion The crisis year of 2020 placed intense demands on the Savings Banks Finance Group of Baden-Wuerttemberg. As the largest financial services providers in the country, the savings banks and their associated companies have been at the side of their customers from the very beginning. The business operations were adapted in a very short time. Digital communi- cation channels in particular, which have been steadily developed in recent years, have impressively demonstrated their power. Unfortunately, even now, in April 2021, there is no end in sight to the lockdown, even though more people are being vaccinated against Covid-19 every day. We went through the crisis with our clients last year and will continue to do so. What is increasingly worrying, however, is the length of the lockdown: with each additional day, more businesses and self- employed people get into trouble. As the market leader, the savings banks accompany more than five million people in Baden- Wuerttemberg. The trusting cooperation with clients is reflected in the institutions‘ good results despite all adversities. This proves once again the viability of the savings bank model. Our annual report shows how well and flexibly the partners of the Savings Banks Finance Group and the Savings Banks Association worked together last year. At the same time, the crisis reveals the weaknesses of overly cautious, sweeping regulation. Well-intentioned regulatory requirements turn out to be pitfalls in the endurance test, which ultimately do not serve to protect consumers, but rather put them at a disadvantage – for example, when advising customers over the phone in the securities business. Personal responsibility and room for manoeuvre are necessary when it comes to mastering crises – the Corona pandemic clearly shows this. Instead of rigid systems, individual solutions are required. As a financial group, we will continue to look for new solutions and ways for our customers so that society and the economy in Baden-Wuerttemberg can cushion and overcome the consequences of the Corona pandemic. People‘s trust in the savings banks has even grown during the crisis. This trust is an incentive for the daily work of the approximately 50,000 employees and the many members of the committees. I thank them all for their great commitment. Stuttgart, 26 April 2021 Peter Schneider President 3 Chronicle Chronicle 2020 February 4th: Annual press conference A successful year for the savings banks in Baden- Wuerttemberg: President Peter Schneider and Association Managing Director Dr. Joachim Herrmann present the annual results for 2019. March to June: First Corona lockdown A few weeks after the first detection of the Corona virus in Europe, all pub- lic institutions, schools, day-care centres, cultural institutions, restaurants and many shops in Germany are closed. The savings banks are classified as systemically relevant and remain open. The first lockdown will last until June 2020. From 17 March to 15 June, the savings banks’ academy of Baden-Wuerttemberg is also closed for 90 days for classroom events. Instead, 500 webinars are held and 200 learning videos are produced for the savings banks. May 6th : Legal basis for virtual committee meetings The state parliament of Baden-Wuerttemberg passes the „Law to amend the Municipal Code“, the „County Code“ and other laws, thus creating the legal basis for committee meetings in the form of video conferences. May 28th and 29th : Digital Business Summit Together with the presidents of the Baden- Wuerttembergischer Genossenschaftsverband, the Association of Chambers of Commerce and Industry of Baden-Wuerttemberg, the Confederation of Skilled Crafts Baden-Wuerttemberg and the Bankenverband Baden-Wuerttemberg, the savings banks’ President Peter Schneider is taking part in a virtual business summit linking Baden-Wuerttemberg with Brussels. At the invitation of Minister of Economic Affairs Dr. Nicole Hoffmeister-Kraut, the delegates from Baden- Wuerttemberg speak with leading representatives of the EU Commission. 4 June 15th: Regulatory conference for savings banks board members On the first day after the end of the lockdown, the specialist conference Regulatory Affairs for Managing Boards takes place at Baden-Wuerttemberg’s savings banks academy. Speakers include the financial and economic policy spokesperson of the Greens in the European Parliament, Sven Giegold, and the head of sustainability at BaFin, Frank Pierschel. July 21st : Association meeting The 32nd Association Assembly of the Savings Banks Association of Baden-Wuerttemberg meets at the savings banks’ academy in Stuttgart in compliance with the Corona hygiene and distance rules. July 29th: Press briefing President Peter Schneider and Association Managing Director Dr. Joachim Herrmann present the half-year figures of the savings banks in Baden-Wuerttemberg. As from November: Second Corona lockdown In a second lockdown, all cultural institutions and restaurants are closed again from 1 November. Schools and day- care centres as well as numerous shops follow in mid-December. Award ceremony Gruenderpreis (start-up award) Baden-Wuerttemberg 2020 In order to promote promising start-ups and make the diversity of the start-up scene visible, the Savings Banks Finance Group awards the Baden-Wuerttemberg Start-up Prize. In December 2020, at least two award winners can be honoured at the local savings banks. The other awards will be postponed to 2021. 5 Savings banks in Baden-Wuerttemberg The savings banks in Baden- Wuerttemberg in the Corona year 2020 A high demand for loans as well as significantly increasing deposits characterised the pandemic year 2020. The growth in both areas reflects the ambivalent situation of customers due to the lockdown. While one part fears for their economic existence, there is a lack of opportunities to spend money on the other side. In view of the pandemic-related uncertainty, many private and corporate customers saved more than in previous years. Companies also postponed investments until the post-pandemic period. The total assets of the savings banks in Baden-Wuerttemberg rose signif- icantly in 2020 by 16.4 billion Euros to 223.2 billion Euros. This increase is mainly due to the good customer business. The savings banks recorded an above-average growth of 11.7 billion Euros in customer deposits. This corresponds to a significant plus of 7.9 percent. The deposits have never grown so rapidly within a year. As of December 31, 2020 private customers and companies entrusted their savings banks with EUR 159.0 billion. Deposits from private customers increased by 7.2 per cent to 118.5 billion Euros. An increase of 3.5 billion Euros was achieved with corporate customers. That is 14.7 per cent more than in 2019. Even though some of the new deposits will presumably flow out again after the end of the lockdown, they still weigh on the savings banks’ results. The association has therefore campaigned in 2020 for the ECB to expand the release of excess reserves. Securities turnover (purchases plus sales) increased significantly in 2020 compared to the previous year by 7.4 billion Euros to 23.9 billion Euros. This is also a peak value. In 2020, customers bought securities from the savings banks of 13.4 billion Euros and sold securities worth 10.5 billion Euros. Many savings bank customers were able to build up wealth with the help of securities. In 2020 the loan volume increased again significantly – this time by 6.8 billion Euros or 5.0 percent. At the end of 2020, the savings banks had extended loans totalling 67.7 billion Euros to private customers. That is 5.8 per cent more than in 2019. In corporate customer business, the loan amount rose by 4.6 percent to 67.9 billion Euros. The market for real estate loans continued to develop at high growth rates in 2020 regardless of the Corona pandemic. The portfolio grew by 7.1 per- cent to 75.4 billion Euros. Around 80 percent of the sum of 75.4 billion Euros is accounted for by loans for private customers. Property developers and other companies have currently borrowed around 15.5 billion Euros from the savings banks. 6 The portfolio of loans to businesses and the self-employed continued to grow – by 4.6 percent to 67.9 billion Euros in 2020. This development is even more evident in the loan commitments, which have reached a new high of 31.8 billion Euros. The savings banks pledged 16.6 billion Euros to companies and the self-employed. That is an increase of over 16 percent. The savings banks submitted more than 6,200 promotional loans with a volume of over EUR 2 billion to KfW and L-Bank. At the same time, they sus- pended the instalments on about 60,000 loans for at least three months.