German bank turns wary on consumers as borrowers get poorer

FRANKFURT (Reuters) - DZ Bank, one of Germany's top lenders, has grown more wary of the risks consumers pose as they get poorer, the bank's chief executive said on Thursday.

The risk identified by Cornelius Riese, chief executive of the bank, adds to concerns of banks, which in recent months have been faced with corporate defaults and the faltering commercial real estate sector.

DZ Bank on Thursday disclosed that for the first half of the year it had set aside provisions for 86 million euros ($95.41 million) in possible unpaid loans at a consumer credit unit that has around one million customers.

That is up by nearly 70% from a year earlier and makes up just under half of the bank's overall risk provisions in the period.

"People are getting poorer. Disposable incomes are falling. And that translates into increased risk provisioning," said Riese.

German bankers tend to stress the stability of German consumers, who benefit from a strong safety net.

The German economy unexpectedly contracted in the second quarter after skirting a recession at the beginning of the year, showing the continuing struggles of the euro zone's biggest economy.

($1 = 0.9014 euros)

Source: Investing.com