Fiscal year 2009: Rentenbank reported again extraordinary results
2009 earnings trend: group's operating result above prior-year level
For the promotional bank, the earnings trend in fiscal year 2009 was again characterized by an overall very positive margin development on the financial markets. The group's operating result before profit or loss from fair value measurement and hedge accounting and after deducting administrative expenses amounted to € 291.8 million in accordance with IFRS, up from € 202.3 million in 2008. Despite a measurement loss of € 102.4 million, the group's total comprehensive income at € 190.4 million was significantly above the prior-year level of € 66.5 million. This measurement loss primarily reflects lower refinancing costs which reduce earnings as a result of the increased carrying amounts of securitized liabilities in accordance with IFRS. "These measurement losses are largely of a temporary nature as they will be reversed in subsequent years through changes in market data, reductions of remaining terms to maturity or redemption," said Hans Bernhardt. Rentenbank has accounted for the financial market crisis and the high volatility of the results reported under IFRS by recognizing appropriate risk provisions and increasing reserves.
Promotional benefit in 2009: € 95 million for the agriculture
In 2009, Rentenbank used approx. € 82 million (2008: € 75 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 million from Rentenbank's income. The net profit of € 11.3 million (2008: € 10.8 million) is utilized exclusively for promotional purposes. One half of the net profit is transferred to the Special Purpose Fund (Zweckvermögen) and the other half to the Promotional Fund (Förderungsfonds). The core activities of the Promotional Fund in fiscal year 2009 were benefits for agriculture-related research projects as well as advanced training measures for people employed in the agricultural sector. Thus, total promotional benefit financed from Rentenbank's income came to € 95 million (2008: € 86 million).
Portfolio of special promotional loans increases by 22.5 %
In the balance sheet, the volume of special promotional loans continued to grow at an above-average rate of 22.5 % and amounted to € 19.6 billion (2008: € 16.0 billion). Accordingly, the share of these loans in total medium and longterm loan portfolio increased to 47 % (2008: 40 %). These loans are offered for specific promotional purposes and assistance measures at very favourable interest rates. In total, the volume of medium and long-term promotional loans reported in the balance sheet reached € 41.8 billion (2008: € 40.4 billion). The securities portfolio also made a positive contribution to growth. Due to the new business in securitized lending, this balance sheet item slightly exceeded the prior-year level, reaching € 28.1 billion after € 27.7 billion in 2008. In total, the medium and long-term promotional lending volume reported in the balance sheet amounted to € 65.8 billion (2008: € 63.5 billion). As Rentenbank continued to reduce the volume of short-term loans and advances to banks and customers in 2009, in particular against the backdrop of the financial market crisis, total assets declined to € 76 billion (2008: € 88 billion), despite further growth of the promotional lending volume.
Normalization of refinancing conditions since April
Securitized liabilities amounted to € 61.6 billion (2008: € 68.9 billion), representing the largest liability item in the balance sheet. In 2009, Rentenbank raised funds in an amount of € 10.0 billion (2008: € 11.2 billion) in order to refinance its medium and long-term lending activities. The rise of the costs for refinancing due to the increasing number of government bonds and government-backed bank issues continued in the first months of the reporting year. However, in the second quarter, the framework for issuing transactions started to return to normal levels, leading to continuously declining refinancing costs. In contrast to the trend in previous years, Rentenbank placed more than half of its issue volume with domestic investors. Nevertheless, the Euro Medium Term Note (EMTN) program represented the most important refinancing instrument with a volume of € 5.8 billion (2008: € 7.7 billion), followed by registered securities, which were placed primarily with domestic insurance companies. Proceeds from the issue of registered securities came to € 1.9 billion, thus exceeding funds raised through global bonds for the first time. Due to the high share of domestic investors, the foreign currency portion fell to approx. 35 % (2008: 80 %). To refinance its short-term lending activities, Rentenbank mainly uses the Euro Commercial Paper (ECP) program. Program utilization at year-end was € 10.5 billion (2008: € 13.3 billion).
Solid capital base: ratios increase once more
Total capital as reported in the balance sheet for 2009 amount to € 3.1 billion (2008: € 3.0 billion). This amount includes subordinated liabilities of € 1.1 billion (2008: € 1.1 billion). The capital stock, reserves and the fund covering general banking risks amounted to € 2.0 billion (2008: € 1.9 billion). Both the total capital ratio (2009: 23.8 %; 2008: 19.1 %), and the Tier 1 ratio (2009: 15.3 %; 2008: 12.3 %) which are calculated pursuant to the German Solvency Regulation (SolvV), continued to significantly exceed the regulatory requirements. Thus, Rentenbank's capital base has been further improved.