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First Half of 2008: Double-digit growth rates for promotional loans and operating result

27 August 2008

- Demand for special loans increases by approx. 35% to €2.0 billion, margins for new issues improve, net interest income and operating result clearly above prior year level, cost/income ratio declines to 12.7% from 14.5% -

The business trend of Landwirtschaftliche Rentenbank, Frankfurt/Main, Germany, in the first half of 2008 was characterized by exceptionally brisk new business activity and a significant improvement in financial performance. As stated in Rentenbank's half-yearly report published today, the German promotional bank for agriculture and rural areas benefited from growth spurred by special loans for specific promotional purposes as well as standard promotional loans for the agricultural sector and rural areas and securitized lending. Promotional loans for farm buildings and purchases of land continued to grow at a rapid rate. Financings for photovoltaic installations saw the first increase in demand in many years. New promotional business volume, including renewals and interest rate adjustments, totaled €13.4 billion (H1 2007: €8.9 billion), of which €3.7 billion (H1 2007: €2.8 billion) related to standard promotional loans for the agricultural sector and rural areas, €2.0 billion (H1 2007: €1.5 billion) to special loans, and €3.6 billion (H1 2007: €2.2 billion) to securitized lending. The portfolio of medium and long-term loans reported on the balance sheet grew 8.3% to €40.5 billion (year-end 2007: €37.4 billion).

In the first half of 2008, the growth in new business volume and improved margins led to significantly higher net interest income (as reported under the German Commercial Code, HGB) than in the first half of 2007. Although general administrative expenses increased to €20.1 million (H1 2007: €16.6 million), the cost/income ratio improved to 12.7% from 14.5%. The operating result before valuation adjustments under HGB was €144.0 million (H1 2007: €101.5 million), up 41.9% from the first half of 2007. Similar growth rates were achieved with respect to the group's net interest income as determined in accordance with IFRS as well as the group's operating result before profit and loss from fair value measurement and hedge accounting. This was compensated by measurement-based corrections resulting from a deterioration in the credit quality of partner banks in the wake of the financial market crisis. However, no defaults occurred. "We still expect that all business partners will be able to meet their obligations and that all measurement-based corrections can be reversed at least upon maturity," said Dr. Marcus Dahmen, Spokesman of the Board of Management. Despite increased write-downs in accordance with the principle of the lower of cost or market as stipulated under HGB, the unconsolidated financial statements in accordance with HGB include an interim net income after valuation adjustments for the first half of 2008 amounting to €27.9 million (H1 2007: €65.6 million). "Although we will not be able to maintain the high growth rates with respect to both new business volume and operating result in the second half of 2008, we still expect the positive trend to continue in the coming months. We are confident that we will exceed our prior-year operating results in the current fiscal year," said Dr. Marcus Dahmen.

As stated in its half-yearly report, the bank's total assets (HGB) amounted to €95.9 billion as of the end of June 2008, up 8.0% from the amount reported at the end of 2007. In line with the promotional bank's specific business structure, loans and advances to banks represent the largest item on the asset side of the balance sheet. This item increased 6.9% to €65.3 billion in the first half of 2008. Due to new business in securitized lending, the securities portfolio increased to €29.4 billion in the first six months of the current fiscal year (year-end 2007: €25.9 billion).

Securitized liabilities reported on the balance sheet grew to €72.4 billion as a result of the issuance activity in the first half of 2008 (year-end 2007: €70.0 billion). In the medium and long-term maturity range, the bank raised funds from the capital markets in the amount of €7.9 billion (H1 2007: €8.3 billion) in order to finance its lending business. Of that amount, €5.3 billion (H1 2007: €5.4 billion) referred to the Euro Medium Term Note (EMTN) program and €2.0 billion (H1 2007: €2.0 billion) to global bonds registered with the U.S. Securities and Exchange Commission. Total capital as reported on the balance sheet (including subordinated liabilities) amounted to €2.9 billion as of June 30, 2008 (year-end 2007: €2.9 billion).

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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