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Rentenbank's business year 2006: Increased promotional business and stable profitability

10 January 2007

  • New promotional business increases to € 14.5 billion; the balance sheet medium and long-term promotional loan portfolio increases by 5.3 % to € 36 billion
  • Net interest income and operating result slightly above the previous year's level, cost-income ratio 17.2 % (17.1 %)
  • Total assets reach € 82.5 billion (€ 77 billion)

Landwirtschaftliche Rentenbank, Germany's agency for agriculture and rural areas based in Frankfurt/Main, showed once again an increase in new promotional business and slightly improved profitability in the business year 2006. In particular, there was a higher demand for standard promotional loans for agriculture and rural areas. Special loans for specific promotional purposes almost reached the high level achieved in the previous year despite a lower demand for loans in the area of renewable energy. Together with prolongations and interest rate adjustments, total new promotional business reached € 14.5 billion (€ 12.9 billion). Of this, € 4.2 billion (€ 3.4 billion) was accounted for by standard promotional loans for agriculture and rural areas, € 2.7 billion (€ 2.8 billion) for special loans, € 3.3 billion (€ 3.4 billion) for securitised lending and € 4.3 billion (€ 3.3 billion) for prolongations and interest rate adjustments. The balance sheet medium and long-term promotional loan portfolio grew by 5.3 % (6.2 %) to € 36 billion (€ 34.2 billion).

According to preliminary figures, total assets in 2006 increased by 7.1 % (6.8 %) to € 82.5 billion (€ 77 billion). As the promotional bank for agriculture and rural areas grants its loans principally via other banks, the amounts due from banks with a share of 70.8 % (71.2 %) or € 58.4 billion (€ 54.8 billion) are of fundamental importance for the balance sheet. In addition to the loan portfolio, the securities portfolio also contributed to the growth of total assets. New business in securitised lending resulted in an increase of the securities portfolio by 7.9 % (16.8 %) to € 21.8 billion (€ 20.2 billion).

To refinance its lending business, the agency raised medium and long-term funds in 2006 amounting to € 9.9 billion (€ 10 billion), € 5.5 billion (€ 5.7 billion) of which were drawn from its Euro Medium Term Note Programme (EMTN). Rentenbank's issuance of global bonds registered with the Securities and Exchange Commission (SEC) accounted for € 3 billion (€ 2.6 billion). New issues under the Australian Dollar Medium Term Note Programme amounted to € 0.8 billion (€ 1.2 billion). At the balance sheet date, medium and long-term external funds reached a total of € 67.5 billion (€ 62.6 billion).

In their first review, the Board of Managing Directors was very satisfied with the cost and earnings situation. Net interest income and operating result could be slightly increased. Net interest income amounted to € 222.7 million (€ 219.3 million). After deduction of administrative expenses, the Board of Managing Directors is expecting an operating result (before risk provisions and net valuation adjustments) of € 185.3 million (€ 182.1 million) for 2006. The cost-income ratio of 17.2 % (17.1 %) remained on a very low level. Net income for the year is expected to reach € 41 million (€ 40 million) of which € 30.8 million (€ 30 million) will be added to revenue reserves. Liable capital will be further strengthened by an amount of € 91 million being allocated to the fund covering general banking risks.

In the 2006 balance sheet, total capital amounts to € 2,842.7 million (€ 2,624.7 million). This is made up of the capital stock of € 135 million, revenue reserves of € 655.5 million (€ 624.7 million) and the fund covering general banking risks of € 981 million (€ 890 million). Total capital in the balance sheet also includes subordinated liabilities for an amount of € 1,071.2 million (€ 975 million). The core capital ratio at 10.7 % (10.6 %) and the total capital ratio at 16.8 % (16.7 %) are well above the legal requirement of 4 % and 8 %, respectively.

 

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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