The sharpest declines in the volume of new promotional loans were registered in the Renewable Energy (-91%) and Agribusiness and Food (-53.8%) promotional lines. The main reason for these declines was the high level of the EU base interest rate, which meant that Rentenbank was only able to grant new promotional loans at high subsidy-free interest rates or had to contribute sizeable subsidies. The volume of new promotional loans granted in the Rural Development line, which is largely influenced by the demand for global loans on the part of the state development banks of the German federal states, declined by 40.4%. This decrease should be seen particularly in the context of the very strong performance in the previous year. Furthermore, the decline in new promotional loans granted across all promotional lines is a reflection of the general investment restraint in the agricultural sector.
“Like practically all other sectors in Germany, the agricultural sector is also investing too little at the present time. And yet, farmers want to invest and indeed must invest to meet the challenges of the future”, said Nikola Steinbock, Chairwoman of Rentenbank’s Management Board. She continued by saying: “In the many conversations I had at Green Week in Berlin, I was again able to see how forward-looking and engaged farmers really are. For them, greater planning certainty is an indispensable prerequisite for making economically sensible and sound decisions for their agricultural enterprises. We at Rentenbank make our contribution to their cause by helping them make the necessary investments with our promotional programmes. Furthermore, we are continuously refining our promotional programmes to better meet the needs of the agricultural sector. Last year, for example, we added a new area, “Rebuilding Stalls to Improve Animal Welfare“ to our “Areas of Future Development” programme. And since July 2024, we have offered the “ANK-NABO” promotional programme on behalf of the German Federal Environment Ministry. Both these programmes have gotten off to a very good start,” said Nikola Steinbock. “The basic market conditions affecting our promotional activity have improved. First, the EU base interest rate moved lower at the end of 2024. Second, the latest results of Rentenbank’s Agriculture Barometer show that the mood in the agricultural sector is gradually brightening and investment propensity is rising. Both these trends will have a positive effect on our promotional activity”.
Euro was the most important currency of issuance
To fund its promotional lending activity, Rentenbank raised about EUR 8.2 billion (2023: EUR 10.5 billion) in medium- and long-term funds in the capital market in financial year 2024. The most important currency of issuance was again the euro, which accounted for 55% (2023: 66%) of total issuance. The US dollar’s share of total bond issues rose to 32% (2023: 27%), while the share of the Australian dollar was unchanged at 7% (2023: 7%). For the first time in 2024, Rentenbank issued bonds in British pounds, which represented 6% of total capital raised. Commercial banks were again the most important group of investors, representing 55% (2023: 57%) of total issuance. Rentenbank placed 35% (2023: 30%) of its bonds with central banks.
Lower operating result
At EUR 161.6 million, the operating result before provisions for loan losses and valuation effects was below the high level of the previous year (EUR 197.3 million), but was still well above the plan figure. At the same time, administrative expenses rose to EUR 130.8 million (2023: EUR 113.6 million), mainly due to higher office expenses (EUR +8.6 million), most of which consisted of IT investments. Finally, personnel expenses increased by EUR 4.5 million due to the growing number of employees.
Capital ratio and leverage ratio are well above the required levels
At year-end 2024, the bank’s Common Equity Tier 1 capital ratio, which is calculated in accordance with the EU Capital Requirements Regulation (CRR), rose to 38.3% (2023: 31.3%). The ratio will be lower after the first-time application of CRR III as of 1 January 2025. The leverage ratio was largely unchanged at 10.2% (2023: 10.3%). Also with the application of CRR III, both ratios are still well above the minimum regulatory requirements applicable to Rentenbank.
Dr. Marc Kaninke, Rentenbank’s CFO, drew the following conclusions regarding the bank’s financial performance and balance sheet structure: “We must ensure that we are well prepared to master the challenges of a changing market environment, increasingly strict regulations, and technological developments, particularly by investing in modern IT systems and well educated, highly committed employees, as before. In the last five years alone, Rentenbank’s staff has increased by around 150 employees to a total of 450 today. Thanks to our excellent financial ratios, we believe that we are ideally equipped to take all the necessary steps towards the future”.
Key Figures 2024 (PDF)
Background:
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 promotion of 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 sectors. It is subject to the German Banking Act (KWG) and is regulated by the Federal Financial Supervisory Authority (BaFin) and the Bundesbank. As one of the few triple-A rated institutions in Germany, Rentenbank raises funds in the capital markets.
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, 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.
