Financial performance in 2011: net interest income (IFRS) rises by € 11 million

Due to higher margins, net interest income reported for the fiscal year 2011 was above the prior-year level, both under HGB and IFRS. Net interest income as reported under IFRS grew by 3.1% to € 362 million (2010: € 351 million). The Group's operating result before profit and loss from fair value measurement and hedge accounting under IFRS amounted to € 283 million, thus remaining roughly at the prior-year level of € 296 million. Administrative expenses at € 48 million were slightly below the previous year's figure of € 49 million.


Measurement results under IFRS affected by turmoil on the financial markets

The turmoil on the financial markets in connection with the European debt crisis caused measurement results to fluctuate strongly. While measurement results were still positive in mid-year, measurement results as of year-end were clearly in negative territory. Fair value measurement and hedge accounting resulted in a measurement loss of € 352 million (2010: € 144 million). In addition, the consolidated statement of comprehensive income for fiscal year 2011 includes measurement losses in the amount of € 360 million (2010: € 230 million) which were recognized in the revaluation reserve. The measurement losses reflect higher credit spreads for securities, leading to corresponding decreasing values in the IFRS financial statements, as well as measurement losses due to own issues being marked higher. "As a non-trading book institution (Nichthandelsbuchinstitut), we pursue a buy-and-hold strategy. Provided that no counterparty defaults, these measurement losses will be merely of a temporary nature. They will be reversed in subsequent years in form of measurement gains through changes in market prices, shortening of remaining time to maturity or redemption," said Hans Bernhardt. In the first quarter 2012, the measurement gains of € 584 million already compensated the largest part of the measurement loss as of       year-end 2011.


Net profit used for promotional purposes

Appropriation of profits is based on the HGB financial statements. In 2011, the operating result under HGB amounted to € 370 million (2010: € 366 million). After deducting depreciation, amortization and impairment, promotional contributions for special promotional loans and additions to reserves, net income for the year under HGB amounted to € 49 million (2010: € 47 million). The net profit of € 12.3 million (2010: € 11.8 million) is utilized exclusively for promotional purposes. One half of the accumulated profit is transferred to the Special Purpose Fund (Zweckvermögen) and the other half to the Promotional Fund (Förderungsfonds). The Special Purpose Fund is used to support the development and the introduction of innovations to the market. The main focuses of the Promotional Fund are grants for agriculture-related research projects as well as advanced training measures for people employed in the agricultural sector. In addition, Rentenbank used an amount of € 73 million (2010: € 79 million) from its income to reduce the interest rates of its special promotional loans. Furthermore, the capital of Edmund Rehwinkel Foundation was increased by € 2.7 million from Rentenbank's income. Thus, total promotional benefit of Rentenbank financed from its income came to € 88 million (2010: € 93 million).


60% of all promotional loans are special promotional loans

At year-end 2011, the promotional volume reported in the balance sheet amounted to € 66.7 billion (2010: € 66.5 billion), of which € 44.1 billion (2010: € 42.6 billion) were attributable to promotional loans. The growth impulses mainly came from special promotional loans which rose by 16.5% to € 26.8 billion (2010: € 23.0 billion). Thus, the proportion of these promotional loans granted for specific promotional purposes and assistance measures increased to 60% of the total loan portfolio. Securitized promotional business is reported in the balance sheet under "Debt securities and other fixed-income securities." Higher redemptions and a lower new business volume led to a decline of the securities portfolio to € 25.2 billion (2010: € 26.9 billion).


Rising capital ratios: solid basis for Basel III

Total capital reported in the balance sheet grew to € 3.6 billion in 2011 (2010: € 3.1 billion). Of that figure, € 1.9 billion (2010: € 1.3 billion) was attributable to the fund covering general banking risks which was increased by € 580.2 million (2010: € 178 million). Both the total capital ratio (2011: 25.7%; 2010: 24.5%), which is calculated pursuant to the German Solvency Regulation, and the core capital ratio (2011: 16.7%; 2010: 15.5%) are well above the legal requirements. "We have made good progress in strengthening our capital base. We therefore are well positioned to fulfill the regulatory requirements which will increase in the future due to the introduction of Basel III," emphasized Hans Bernhardt.


Issuing business: banks as the most important investor group

Securitized liabilities amounted to € 62.8 billion (2010: € 62.1 billion), representing the largest liability item of the balance sheet for 2011. This includes medium term notes in the amount of € 43.6 billion (2010: € 40.4 billion) as well as global bonds of € 12.2 billion (2010: € 11.5 billion) and Euro Commercial Papers of € 7.0 billion (2010: € 10.1 billion). In the reporting year, Rentenbank raised funds in the amount of € 12.0 billion (2010: € 10.6 billion) in order to refinance its medium and long-term promotional business, with international investors accounting for a share of 77% (2010: 82%). Almost one third (30%) of the issue volume is attributable to central banks and another 44% to banks. For banks, the zero-risk weight of Rentenbank's issues is particularly attractive. The most important issue currency was the euro with a share of 38%, followed by the U.S. dollar with a share of 36%. The Australian dollar continues to rank in third place with a share of 17%. Rentenbank continues to be the third-largest foreign issuer in the domestic Australian market with an outstanding volume of AUD 8.3 billion.