Record Profits for Allianz and Telekom Amid ECB's Billion-Euro Loss

The German capital market was dominated by the publication of financial reports from the largest DAX index players, which in most cases exceeded analysts' expectations. Insurance giant Allianz achieved a historic operating result of €17.4 billion, representing an 8 percent increase compared to the previous year. The main driver turned out to be the property and casualty insurance segment, which benefited from a relatively low scale of losses caused by natural disasters. Reinsurer Munich Re celebrates similar successes, posting a net profit of €6.1 billion, although management warns of pricing pressure paradoxically resulting from a lower number of catastrophes last season. At the same time, positive signals are coming from the telecommunications and industrial sectors. Deutsche Telekom reported revenues exceeding €119 billion and ambitious plans to expand its fiber-optic network, which by 2030 is to cover 25 million households in Germany. Meanwhile, the pharmaceutical industry, represented by the VCI association, recorded a 4.5 percent increase in production. This sector demonstrated remarkable resilience to trade turbulence with the USA, partly due to a rapid increase in exports before the introduction of new tariffs. In the defense industry, Hensoldt reported an unprecedented 62 percent surge in orders, driven by the modernization of the Bundeswehr. Since the financial crisis in 2008 and the subsequent period of negative interest rates, the financial architecture of the eurozone has undergone fundamental changes, which are now impacting the results of central banks. In contrast, the European Central Bank's results show a loss of €1.254 billion for 2025. Although this is significantly lower than last year's nearly €8 billion, it still prevents dividend payments to national central banks. However, the ECB President noted that the institution is effectively fulfilling its price stability mandate, bringing inflation down to 1.7 percent. The situation in the real estate and technology markets appears less optimistic. Despite signals of a housing construction crisis bottoming out, a clear investment rebound is still lacking. On the stock market, shares of Freenet and Hensoldt were heavily discounted as investors took profits following results that in some aspects did not match lofty market forecasts. „The ECB’s decisive monetary policy response played a crucial role in bringing inflation back to the target level.” (The ECB's decisive monetary policy response played a crucial role in bringing inflation back to the target level.) — President of the European Central Bank, commenting on the decline in inflation and the bank's results. Summarizing current trends, German economic champions seem to be navigating skillfully in an environment of high interest rates and global tensions. However, a key challenge remains maintaining growth momentum in the face of weakening domestic demand and a potential tightening of trade protectionism. Investors are also closely watching the artificial intelligence market, where the results of the American conglomerate Nvidia dictate technological sentiment, indirectly affecting valuations of companies like SAP. Stabilizing inflation offers hope for better credit conditions, which could revive the stagnant construction sector in 2026 and the years to come.