- Demand for special promotional loans up 7.2%, growth fueled by renewable energies, farm buildings and machinery
- Higher proportion of domestic investors in new issues
- Net interest income and operating result with double-digit growth, total capital ratio increases to 22.7%
Rentenbank, the German development agency for agribusiness, experienced increases in promotional lending volume and another significant improvement of its financial performance during the first half of 2009. As stated in Rentenbank's half-yearly financial report published today, further growth was fueled by special promotional loans granted at particularly low interest rates. Thanks to a surge in new business in promotional loans for biogas and photovoltaic facilities, farm buildings and machinery, the loan portfolio for this promotional segment grew by 6.9% to €17.1 billion. "Our special promotional loans are the focus of our promotional strategy. They offer a variety of financing possibilities in agriculture, food industry, renewable energies and rural development, making an important contribution to stable financing conditions and low financing costs in the agricultural sector, especially during the current economic crisis," said Dr. Marcus Dahmen, Spokesman of the Board of Managing Directors of Rentenbank. This key promotional segment accounted for 26.1% (end of 2008: 25.2%) of Rentenbank's total promotional lending volume. Despite the decrease in total assets and declining investment sentiment in the agricultural sector, total promotional volume grew by 3.1% to €65.5 billion.
After the extraordinarily positive earnings trend in fiscal year 2008, both net interest income and operating result once again grew at double-digit rates in the first half of the current fiscal year. Operating result before valuation adjustments under the German Commercial Code (HGB) reached €195.7 million (first half of 2008: €144.0 million), which represents an increase of 35.9%. Taking into account valuation adjustments, Rentenbank reported an interim net income of €141.4 million (first half of 2008: €27.9 million) in its unconsolidated financial statements (HGB).
Earnings trend expected to normalize in the second half-year 2009
The operating result reported under IFRS climbed to €136.6 million (first half of 2008: €110.4 million). Taking into account the positive result from fair value measurement and from hedge accounting of €237.1 million (first half of 2008: €123.8 million), the group's interim net income under IFRS for the first half of 2009 came to €373.6 million (first half of 2008: €13.6 million). "These extraordinarily high growth rates cannot be achieved during the second half-year. For the months to come, we expect significantly lower growth rates for the operating result. We anticipate a normalization of the earnings trend with operating results to be below the levels of the exceptional year 2008, but above the level achieved in prior years. Given the continued high volatility of market parameters, it is impossible to predict the measurement result," said Marcus Dahmen.
Total assets at €78.6 billion: reduction of short-term loans and advances
As reported in the bank's half-yearly financial report, total assets under HGB at €78.6 billion as of the end of June 2009 declined by 10.6% compared to the year-end 2008 due to a significantly lower volume from money market transactions. According to Rentenbank's special business structure, "loans and advances to banks" is the largest item on the asset side of the balance sheet and amounted to €49.1 billion as of mid-year 2009 (end of 2008: €53.3 million). The decline primarily reflects the reduction of short-term loans and advances. As a result of new business for securitized lending, the securities portfolio amounted to €28.4 billion as of the end of June 2009 (end of 2008: €27.7 billion).
Growing importance of domestic investors
On the liability side of the balance sheet, securitized liabilities declined in the first half of 2009 to €59.9 billion (end of 2008: €68.9 billion) as a result of the lower Commercial Paper portfolio. In the first six months of the current fiscal year, Rentenbank raised medium and long-term funds in capital markets of €6.0 billion (first half of 2008: €7.9 billion) to refinance its lending business, of which €4.0 billion (first half of 2008: €5.3 billion) relate to the Euro Medium Term Note (EMTN) program. At €1.8 billion (first half of 2008: €0.1 billion), domestic refinancing sources accounted for almost one third of the issue volume. 70% of the issue volume could be placed with German investors. The most important issue currency was the euro with a share of 86.7%. Total capital as reported on the balance sheet (including subordinated liabilities) was €3.0 billion as of June 30, 2009 (end of 2008: €3.0 billion). Both total capital ratio at 22.7% (end of 2008: 19.1%) and core capital ratio at 14.6% (end of 2008: 12.3%) as calculated in accordance with the German Solvability Regulation improved compared to year-end 2008, and were again significantly above the regulatory requirements.
Key Figures
Service:
Landwirtschaftliche Rentenbank is Germany's agency for agribusiness. As partner to an important growth sector with global responsibility, the bank promotes this sector with various programmes. The bank is Triple A rated by the three major rating agencies and raises funds in domestic and international capital markets. With total assets of €78.6 billion, Rentenbank is among the 20 largest German banks.
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.