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Half-Yearly Financial Report 2007: Improved profitability allows higher promotional volume

25 July 2007

  • In the first half year of 2007, new business for special loans 25 % over the previous year,
  • buoyant issuance activity,
  • interest surplus and operating result slightly increased, group cost-income ratio falls from 15.7 to 14.4 %.

The business performance of Landwirtschaftliche Rentenbank, based in Frankfurt am Main, was denoted by buoyant new business and a slightly improved profitability in the first half of 2007. As the promotional bank for agriculture and rural areas states in its half yearly report published today, it was again possible to grant more financing for promoting agriculture and rural areas than in the first six months of the previous year. The impulse for growth came particularly from special loans for specific promotional purposes. It compensated for the somewhat weaker demand for standard promotional loans for agriculture and rural areas. Financing of farm buildings, the purchase of farmland, biogas plants as well as promotional lending for infrastructure measures and rural development were more strongly in demand. Overall new completions for promotional business including prolongations and interest-rate adjustments reached € 8.7 bn (8.2). Thereof € 2.8 bn (3.0) was accounted for by standard promotional loans for agriculture and rural areas, € 1.5 bn (1.2) for special loans and € 2.2 bn (2.2) for securitised lending. In the consolidated balance sheet, the portfolio of medium and long-term loans grew by 4.3 % to € 36.7 bn due to buoyant demand for new business.

In the first half of the year 2007, the interest surplus and operating result also stood above the previous half year. The interest and commission surplus of the group climbed to € 121.7 m (116.5). Administrative expenses fell slightly to € 17.7 m (18.4) and thereby equally contributed to the improvement in the cost-income ratio of 14.4 % (15.7). Operating result before valuation reached € 105.1 m (98.8) thereby exceeding the previous year's level by 6.4 %. In spite of the probable lower growth rate in the interest surplus for the second half of the year, the Board of Managing Directors expects that the positive growth in earnings for the promotional bank should continue in the coming months and the result of the previous year will also be reached once again for the current year or even slightly exceeded.

As the bank in its half-yearly financial report further confirms, the consolidated total assets at the end of June 2007 stood at € 104.1 bn, € 7.6 bn over the reported level in the middle of last year. According to the particular business structure of the promotional bank, 'Due to banks' forms the largest item on the asset side of the balance sheet. This balance sheet item grew in comparison to the first half year of 2006 by 9.5 % to € 79.5 bn. Due to new business through securitised lending, the securities portfolio increased in the first six months of the current year to € 23.8 bn (21.8).

On the liability side of the balance sheet, the increase in securitised liabilities reflected lively issuing activity in the first half of the year 2007. With an amount of € 72.0 bn, this balance sheet item at the end of June 2007 was 10.4 % above the reported portfolio on 30.6.2006. To refinance its lending business, the promotional bank raised € 8.3 bn (7.5) of new medium and long-term capital market funds in the first six months of the current year of which € 5.4 bn (4.3) were within the framework of the Euro Medium Term Note Programme (EMTN) and € 2.0 bn (2.2) through the issue of SEC registered global bonds. Total capital in the balance sheet (including subordinated liabilities) amounted to € 2.8 bn on the 30.6.2007.

Forward-Looking Statements: This news release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of Rentenbank's management and currently available information. Such statements include, in particular, statements about our plans, strategies and prospects. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", variations of such words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Except as required by law, Rentenbank does not have any intention or obligation to update publicly any forward-looking statements after they are made, whether as a result of new information, future events or otherwise.

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