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Rentenbank in 2023: Lower volume of new loans granted, substantially higher operating result

30 January 2024

Frankfurt. 2023 was a challenging year for Landwirtschaftliche Rentenbank. The volume of new promotional loans declined by 13.6% to EUR 5.9 billion (2022: EUR 6.9 billion). Declines were registered in all promotional lines, but they were especially pronounced in the Agriculture and Renewable Energy lines, where promotional lending activity was dampened particularly by a lack of investment in farm buildings and machinery and by weakening demand for wind power financing. However, the volume of new loans granted in the Rural Development line rose again thanks to strong demand for Rentenbank’s global loans by the development banks of the German federal states. To fund its promotional lending business, Rentenbank raised approximately EUR 10.5 billion (2022: EUR 11.8 billion) in medium- and long-term funds in the capital market. The bank’s operating result before provisions for loan losses and valuation effects came to EUR 197.3 million, well above the level of the previous year (EUR 157.8 million), mainly due to higher net interest income on the back of rising interest rates. The bank’s capital ratios were nearly unchanged from the previous year.

2023-12-15 PR_Rentenbank plans funding volume of up to EUR 11 billion in 2024

The Rural Development line accounted for the largest share of new promotional loans in 2023. The volume of new loans granted in this line rose by 33.8% to EUR 2.7 billion (2022: EUR 2.1 billion). The most important driver of this development was considerably higher demand for Rentenbank’s global loans by the development banks of the German federal states. They use these loans particularly to finance municipal infrastructure projects in rural areas, including public mass transit, buildings (administration, schools), waste management projects, and water management projects. The volume of new loans granted in the Agriculture line declined substantially by 21.1% to EUR 1.6 billion (2022: EUR 2.0 billion). This decline was felt in all areas, but especially in the level of investments in farm buildings and machinery. The volume of new loans granted in the Renewable Energy line fell by 46% to EUR 850 million (2022: EUR 1.6 billion), mainly due to pull-forward effects in the previous year.

“The mood among farmers is not good. As shown by the results of the latest Agrar economic barometer, many farmers are unsettled by the lack of government engagement and are therefore putting off investments. This trend is also affecting our promotional lending business. Nevertheless, our promotional
loans continue to provide key support to the agricultural sector”, said Nikola Steinbock, Chairwoman of Rentenbank’s Management Board. She continued by saying that “Agricultural enterprises are under intense pressure to adapt their farming practices; therefore, now is actually the right time to invest in sustainability and digitalisation. We help them do that with our “Areas of Future Development” programme. Rentenbank added two more areas of future development to this programme last year, increasing the total number to six. This programme also promotes the use of efficient irrigation systems and reservoirs, as well as the self-employment and business start-ups of female successors of farms and founders in agriculture and forestry.

Euro was the most important currency of issuance
To fund its promotional lending activity, Rentenbank raised about EUR 10.5 billion (2022: EUR 11.8 billion) in medium-term and long-term funds in the capital market in financial year 2023. As in the previous year, the most important currency of issuance was the euro, which accounted for 66% (2022: 65%) of total issuance. The share of the US dollar rose considerably to 27% (2022: 19%) and that of the Australian dollar to 7% (2022: 4%). Commercial banks are still the most important investor group, accounting for 57% (2022: 62%) of total issuance. Rentenbank placed 30% (2022: 22%) of its bonds with central banks.

Higher operating result
The operating result before provisions for loan losses and valuation effects rose to EUR 197.3 million (2022: EUR 157.8 million). Net interest income rose to EUR 309.9 million (2022: EUR 268.8 million) on the back of higher interest rates. At the same time, administrative expenses rose only modestly by EUR 1.1 million to EUR 113.6 million (2022: EUR 112.5 million), mainly due to higher material expenses (EUR +10.2 million), most of which for IT investments (EUR +8.0 million). On the other hand, personnel expenses declined as a result of lower pension expenses compared to the previous year (EUR -8.6 million). The cost-income ratio improved to 35.6% (2022: EUR 36.7%).

Capital ratios nearly unchanged
At the end of 2023, Rentenbank’s capital ratios, which are calculated on the basis of the EU Capital Requirements Regulation (CRR), were nearly unchanged from the previous year. The Common Equity Tier 1 ratio was 31.3% (2022: 31.7%) and the leverage ratio was 10.3% (2022: 10.4%). Thus, the capital ratios are well above the minimum regulatory requirements applicable to Rentenbank.

Rentenbank’s CFO, Dr. Marc Kaninke, concluded: “We generated very good results in the past financial year 2023. Our income benefited from the higher level of interest rates and our costs have remained in line with expectations. Therefore, we can easily meet the challenges posed by the market environment and regulations”.

Key Figures 2023 (PDF)


About Rentenbank:

Landwirtschaftliche Rentenbank is Germany’s development agency for agribusiness and rural areas. Its promotional mandate covers not only agriculture and forestry, but also the entire food value chain, the increased use of energy from renewable sources, and the promotion of bio-economy solutions. Rentenbank attaches particular importance to the promotion of innovation, including research and development in universities, the early-stage financing of agriculture-related start-ups, and the market introduction and practical use of new technologies and products. Rentenbank’s promotional instruments are subsidies and special promotional loans. The special promotional loans are granted via the local banks of the ultimate borrowers on a competitively neutral basis. Rentenbank provides funding to banks, savings banks, and local authorities operating in rural areas. The Bank is a federal institution under public law whose capital stock was formed by contributions from the German agriculture and forestry sectorsIt is subject to the German Banking Act (KWG) and is regulated by the Federal Financial Supervisory Authority (BaFin) and the Bundesbank. Rentenbank raises funds in the capital markets as one of the few triple-A rated institutions in Germany.

This press release contains certain forward-looking statements that are based on current expectations, estimates, assumptions and projections of the Management Board and on the information currently available to it. These statements particularly include statements about our plans, business strategies and prospects. Such forward-looking statements are identified by words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’ and similar expressions. These statements are not to be understood as guarantees of future performance; instead, they are dependent on factors that involve risks and uncertainties and are based on assumptions that may prove to be incorrect. Except where required by law, we assume no obligation to update forward-looking statements after the publication of the present press release.