Overview
- The report finds the macro‑financial backdrop worsened over the past year, with credit risks increasing and non‑performing loan ratios rising since late 2022.
- Despite high capital ratios, the Bundesbank warns that low risk weights at systemically important institutions could mask weaker underlying resilience.
- Commercial real estate remains fragile despite recent price stabilization, as reduced office demand and retail vacancies continue to pressure the sector.
- Residential property shows signs of recovery, with prices and transactions picking up and most overvaluation unwound during 2024.
- Rising European sovereign debt is flagged as a stability risk, and board member Michael Theurer urges stronger growth, structural reforms and strict fiscal rules with Germany acting as a stabilizing example.