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Business year 2007: Rentenbank increases profits and promotional lending

23 January 2008

Landwirtschaftliche Rentenbank, Frankfurt am Main, further increased its promotional lending, income and profits in 2007.

Total assets (according to German accounting standards [HGB]) grew by 7.1 percent from €82.5 billion to €88.8 billion. The Management Board expects the operating result (before risk provisions) to rise by 8.6 percent to €201.2 million. The cost/income ratio improved further to 16.3 percent (17.2 percent).

"These results reflect our successful sustainability-orientated strategy and have once again enabled us to disburse a larger volume of promotional loans", stressed Dr. Marcus Dahmen, spokesman for the Management Board of Landwirtschaftliche Rentenbank. The total volume of promotional loans grew by 6.5 percent to €59.1 billion.

Including rollovers and interest rate adjustments, the total volume of new lending in 2007 came to €17.2 billion (€14.5 billion). Of this total, €7.0 billion (€6.9 billion) was attributable to standard promotional loans for agriculture and rural areas as well as special loans and programme loans, while €5.6 billion (€4.4 billion) stemmed from rollovers. Growth in special loans and programme loans was mainly spurred by the promotional loans granted for farm buildings and the purchase of land, but also by the growing demand for liquidity assistance loans. By contrast, the volume of promotional loans provided in the field of renewable energies continued to decline. The volume of new business in securitised lending amounted to €4.5 billion (€3.3 billion).

Landwirtschaftliche Rentenbank raised €11.2 billion (€9.9 billion) in the domestic and international capital markets to refinance its medium and long-term lending in 2007. The borrowing costs improved in virtually all currencies and maturity segments. The zero-risk weighting applicable to Rentenbank's issues for the first time in 2007 also had a positive impact. Issues under the Euro Medium Term Note (EMTN) programme totaled €7.9 billion (€5.5 billion), while SEC-registered global bonds amounted to €2.0 billion (€3.0 billion). Rentenbank's total medium and long-term borrowing came to €65.5 billion at the end of 2007 (€67.5 billion).

Net interest income and operating result both increased year on year. Net interest income amounted to €238.7 million (€222.6 million). After deducting of administrative expenses, the Management Board is forecasting an operating result of €201.2 million for 2007 (€185.2 million). The Management Board will also prepare annual financial statements for 2007 in accordance with International Financial Reporting Standards (IFRSs) and will publish these at the company's annual press conference.

In the balance sheet, amounts due from banks which account for a share of 68.8 percent (70.8 percent) or €61.1 billion (€58.4 billion) are particularly significant, because Rentenbank principally channels its promotional loans through other banks. Its securities portfolio also made a valuable contribution to growth in 2007, rising to €25.9 billion at the end of 2007 (€21.8 billion). Total capital for the year under review is reported at €2.9 billion (€2.8 billion). This amount includes subordinated liabilities of €1.0 billion (€1.1 billion). The core capital ratio (Tier I) and the total capital ratio amounted to 10.6 percent (10.7 percent) and 16.5 percent (16.8 percent) respectively, thereby remaining well above the regulatory requirements of 4 percent and 8 percent respectively.

Services:
Landwirtschaftliche Rentenbank is Germany's promotional bank for agriculture and rural areas. Its statutory purpose is to provide assistance for agricultural projects by granting loans at preferential interest rates which are principally channeled through other banks. Its statutory purpose as a promotional bank also determines how its profits are appropriated. Landwirtschaftliche Rentenbank is a public-sector agency whose capital base has been paid up by the German agricultural and forestry sectors. It raises most of its funding in the international capital markets and is one of the few banks in Germany with triple-A credit ratings.

 

Forward-Looking Statements

This press 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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