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Rentenbank – Fiscal Year 2022

Rentenbank - anticipated funding volume 2023

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Germany's development agency for agribusiness and rural areas

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Promotional Activities

We provide funding to banks involved in financing agriculture, its upstream and downstream sectors and rural areas.

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Rentenbank: Strong promotional activity in 2022

25 April 2023

Frankfurt. Landwirtschaftliche Rentenbank encountered sharply higher demand for its promotional loans in 2022. The volume of new, low-interest special promotional loans increased by around 23% to EUR 6.9 billion (2021: EUR 5.6 billion), while the volume of total promotional business rose significantly to EUR 11.5 billion (2021: EUR 9.8 billion). To provide better financing options to agtech, foodtech, and bioeconomy start-ups, Rentenbank invested in venture capital funds for the first time in 2022. To fund its promotional activity, Rentenbank raised medium- and long-term funds totalling EUR 11.8 billion (2021: EUR 10.7 billion) in the capital market. The Bank’s capital ratios were nearly as good as in the previous year. Rentenbank has gotten off to a successful start in 2023, having already granted new special promotional loans totalling EUR 1.7 billion.

“We fulfilled our promotional mandate very well again in 2022 despite the challenging environment”, said Nikola Steinbock, Chairwoman of Rentenbank’s Management Board. “The much higher demand for promotional loans shows that our programmes make a crucial contribution to infrastructure development in rural areas. In addition, there are projects in the context of environmental and climate protection, such as the expansion of renewable energy use. We intend to continue this work in the current year by addressing the future challenges of the agricultural sector with our targeted promotional programmes.”



Substantial increase in the volume of new special promotional loans

The Rural Development promotional line accounted for the largest share of new special promotional loans granted in 2022. Propelled by much higher demand from the German federal states’ development banks for loans to finance infrastructure development projects in rural areas, the volume of new loans granted in this promotional line rose by 71.1% to EUR 2.1 billion (2021: EUR 1.2 billion). Dynamic growth was also seen in the volume of new loans granted in the Renewable Energy promotional line, which rose by 47.6% to EUR 1.6 billion (2021: EUR 1.1 billion), mainly due to strong demand for wind power financing.

The volume of new loans granted in the Agriculture promotional line in 2022 came to EUR 2.0 billion (2021: EUR 2.5 billion). The decrease resulted from the lower volume of loans granted to finance investments in machinery and buildings. Loans granted to finance land acquisitions nearly reached the level of the previous year. At EUR 16.7 million, the overall demand for loans granted under the liquidity protection programmes was lower in 2022 than in the previous year. Particularly those agricultural enterprises that had increased liquidity needs as a result of the coronavirus pandemic or the war in Ukraine or that were affected by storms and flooding in 2021 took advantage of these loans in the reporting period.

Rentenbank increased the volume of new promotional loans granted in the Agribusiness and Food promotional line to EUR 1.2 billion (EUR 843.0 million), mainly due to the higher volume of promotional loans granted to finance machinery investments, which accounted for the largest share of new loans in this promotional line, representing 60% or EUR 717.1 million.



Continued strong demand in the “Agriculture Investment Programme”

Rentenbank was able in 2022 to replicate the success it enjoyed in the previous year from its participation in the programme launched by the German Federal Ministry of Food and Agriculture in 2021 under the title “Promotion of Investments under the Investment and Future Programme for Agriculture”. The expression-of-interest procedure conducted in July 2022 proved that agricultural enterprises continue to take a strong interest in resource-conserving land management and greater climate and environmental protection. The planned investment volume of EUR 1.8 billion expressed in the 2022 procedure was higher than the investment volume expressed in April 2021 (EUR 1.3 billion). Rentenbank approved loans totalling EUR 237.1 million and grants totalling EUR 131.0 million in 2022.



New promotional programme “Future areas in focus”

To encourage agricultural enterprises to invest even more in climate and environmental protection projects, Rentenbank launched a new lending programme “Future areas in focus” featuring additionally subsidised terms in November 2022. The programme currently has four future areas which Rentenbank has identified as being especially worthy of promotion on the basis of the current social and political discourse. They are: expansion of regional food production, use of agrivoltaic systems, environmentally friendly farming, including a transition phase to ecological farming, and the establishment of agroforestry systems and paludiculture. By the end of 2022, the first promotional loans granted at “premium terms” amounted to EUR 2.1 million. Rentenbank will continually broaden the future areas and adapt them as needed to promote the faster adoption of new solutions in practice.



Promoting innovation: Investment in two venture capital funds

From its Innovation Fund, Rentenbank promoted 19 project partners with grants totalling EUR 5.6 million in 2022 (2021: 11 project partners with EUR 2.5 million). Among the projects so promoted was the extension of the joint project “F.R.A.N.Z.” (“Developing and Testing of Suitable Measures to Enhance Agricultural Biodiversity”). Under the Bank’s start-up promotion programme, nine start-ups received EUR 5.4 million in subordinated loans and EUR 0.4 million in innovation vouchers from the Special-Purpose Fund of the Federal Republic of Germany.

Since February 2022, Rentenbank has also relied on venture capital investments in various stages in its promotion of innovation. “Agriculture is one of the keys to the successful transformation to a sustainable economic system. Climate and environmental protection would hardly be conceivable without innovation, new technologies, and business models”, Nikola Steinbock said. “And one of the most important drivers of innovation is growth capital. By investing in venture capital funds, we improve the financing options of agtech, foodtech, and bioeconomy start-ups. But we also raise their visibility to venture capital investors, which mobilises additional capital. This is important to ensure the financing of young, up-and-coming enterprises particularly now, when conditions are tough.”

In February 2022, Rentenbank invested EUR 25 million in the European Circular Bioeconomy Fund, a European growth fund that invests in bioeconomy enterprises. And in December, the Bank invested EUR 5 million in the Green Generation Fund, which invests in foodtech and greentech enterprises in Europe and the United States at an early stage of their development.



Modest increase in funds raised

To fund its promotional activities, Rentenbank raised EUR 11.8 billion (EUR 10.7 billion) in medium- and long-term capital market funds in 2022. This total includes a green bond in the benchmark format with an issue volume of EUR 1.0 billion. Green bonds are used exclusively to fund loans in the special promotional lending programme “Energy from the Countryside” as an essential element of Rentenbank’s sustainability strategy.



Lower operating result, higher net income compared to the previous year

Net interest income amounted to EUR 268.8 million in 2022 (EUR 285.7 million). It was particularly weighed down by the considerably higher volume of interest rate grants compared to the previous year. Administrative expenses rose to EUR 112.5 million (EUR 90.0 million). The increase is particularly attributable to the higher personnel expenses (plus EUR 14.8 million) resulting from a considerable increase in pension obligations due to inflation. The EUR 5.2 million increase in material expenses was driven by higher expenses for IT investments, external support of the transformation process, and personnel recruitment. The operating profit before provision for loan losses and valuation came to EUR 157.8 million (EUR 187.7 million). This result, which exceeded Rentenbank’s expectations by a considerable margin, was especially due to the extremely high level of net interest income generated in the Treasury Management segment.

Rentenbank allocated a net amount of EUR 121.8 million to its loan loss provisions. Net income rose from EUR 34.5 million in the previous year to EUR 36.0 million in 2022. After the EUR 18.0 million (EUR 17.2 million) appropriation to the principal reserve, the distributable profit amounted to EUR 18.0 million, slightly more than the previous-year figure (EUR 17.3 million). Rentenbank uses the full amount of distributable profit to fund its promotional activities.



Capital ratios nearly unchanged

At 31 December 2022, the Common Equity Tier 1 capital ratio came to 31.7% (2021: 31.8%). The total capital ratio was likewise 31.7% (2021: 32.0%). As before, both capital ratios are well above the minimum regulatory requirements applicable to Rentenbank.



First quarter of 2023: Successful start to the current year

Rentenbank has gotten off to a successful start in 2023. The volume of new, low-interest special promotional loans granted in the first quarter amounted to EUR 1.7 billion (Q1 2022: EUR 1.9 billion). Thus, it was not quite as high as the record amount loaned in the first quarter of 2022, which was favoured by pull-forward effects in view of expected interest rate hikes. The volume of new promotional loans granted in the Rural Development promotional line, which is traditionally volatile, showed a very positive development, more than doubling from the first quarter of last year (Q1 2022: EUR 429.9 million) to EUR 886.6 million in the first quarter of the current year.

Rentenbank raised EUR 5.1 billion in medium- and long-term capital market funds in the first three months of 2023. This amount represents almost half of the funding planned for 2023.

“The good result for 2022 strengthens our capital base so that we can continue to fulfil our promotional mandate successfully. To do this more efficiently in the future, we are currently investing particularly in the modernisation of our IT landscape and the further digitalisation of our processes”, said Dr. Marc Kaninke, Chief Financial Officer and Chief Information Officer of Rentenbank’s Management Board.

More detailed information is provided in the 2022 annual report which can be found on Rentenbank’s homepage.

 

Key figures 2022 (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 early-stage financing of agriculture-related start-ups, and the market introduction and practical use of new technologies and products. Rentenbank’s promotional instruments are grants, subordinated loans, 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.

 

 

This press release as PDF

Rentenbank in 2022: Substantial increase in demand for special promotional loans

31 January 2023

Frankfurt. 2022 was a very successful year for the promotional lending business of Landwirtschaftliche Rentenbank. The volume of new promotional loans rose substantially. The increase in demand was especially strong in the Rural Development and Renewable Energy lines. The main driver in the Rural Development line was the strong demand for Rentenbank’s global loans by the development banks of the German states, while in the Renewable Energy line it was the strong demand for wind power financing. In total, the volume of new, low-interest special promotional loans granted rose to EUR 6.9 billion (2021: EUR 5.6 billion). To fund its promotional lending business, Rentenbank raised about EUR 11.8 billion (2021: EUR 10.7 billion) in medium- and long-term funds in the capital market. The capital ratios were nearly unchanged from the previous year.

Rentenbank Schriftzug

Considerable gains in the Rural Development and Renewable Energy lines

In 2022, the Rural Development line accounted for the largest share of new special promotional loans, the volume of such loans rising by 71.1% to EUR 2.1 billion (2021: EUR 1.2 billion). The main reason for this development was the considerable increase in demand for Rentenbank’s global loans by the German states’ development banks. They use the loans particularly to finance infrastructure projects in rural areas. There was also a substantial increase in the volume of new promotional loans granted in the Renewable Energy line again, which rose by 47.6% to EUR 1.6 billion (2021: EUR 1.1 billion), particularly as a result of strong demand for wind power financing. In the Agriculture line, on the other hand, the volume of new promotional loans fell to EUR 2.0 billion (2021: EUR 2.5 billion).

“We are especially pleased with the strong increase in our Renewable Energy line,” said Nikola Steinbock, Chairwoman of Rentenbank’s Management Board. “That is because these loans make an important contribution to environmental and climate protection, as well as the security of energy supplies. To further incentivise the agricultural sector to invest in climate and environmental protection measures, we have offered loans at even more preferential terms under our “Areas of Future Development” programme since November 2022”, Nikola Steinbock said. The programme is currently divided into four areas of future development across Rentenbank’s promotional lines, which have been identified as being especially worth of promotion on the basis of the social and political discourse of our time. These four areas of future development are the expansion of regional food production, the increased use of agrivoltaic systems, environmentally friendly land use including a transition phase to ecological farming, and the establishment of agroforestry and paludiculture systems. The programme supports the transformation of the agricultural and food sector to make it more sustainable. For this reason, the areas of future development are continuously being expanded and adapted. This way, new ideas and approaches to solutions should be implemented more quickly in practice.

 

Euro is the most important currency of issuance

To fund its promotional lending business, Rentenbank raised about EUR 11.8 billion (2021: EUR 10.7 billion) in medium- and long-term funds in the capital market in the 2022 financial year. The euro was the most important currency of issuance, accounting for 65% (2021: 62%) of the total issuance volume, followed by the US dollar at 19% (2021: 25%). The British pound accounted for 6% (2021: 4%) of total issuance volume. The biggest investor groups were still commercial banks and central banks, together accounting for 84% (2021: 74%) of the total volume placed.

 

Lower operating profit

The operating profit before provision for loan losses/valuation came to EUR 157.8 million (2021: EUR 187.7 million). Net interest income declined to EUR 268.8 million (2021: EUR 285.7 million). Compared to the previous year, Rentenbank extended EUR 17.6 million more interest rate grants for its special promotional loans, which reduced the bank’s net interest income. Administrative expenses rose to EUR 112.5 million (2021: EUR 90.0 million), particularly as a result of higher expenses for employee pensions and extensive IT investments. The cost/income ratio came to 36.7% (2021: 32.9%).

 

Capital ratios nearly unchanged

At the end of 2022, Rentenbank’s capital ratios calculated on the basis of the EU Capital Requirements Regulation (CRR) were nearly unchanged from the previous year. The Common Equity Tier 1 capital ratio was 31.7% (2021: 31.8%) and the total capital ratio was 31.7% (2021: 32.0%). Both capital ratios are well above the regulatory minimum requirements applicable to Rentenbank.

CFO Marc Kaninke said the following about Rentenbank’s results and balance sheet structure: “We are proud and satisfied to have generated such a good result in an extremely challenging environment. Moreover, our capital base is strong enough that we have an ample cushion for additional promotional lending to the agricultural sector” even in turbulent times.


Key figures 2022

 

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 early-stage financing of agriculture-related start-ups, and the market introduction and practical use of new technologies and products. Rentenbank’s promotional instruments are subsidies, subordinated loans, 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, forecasts and projections of the Management Board and on the information currently available to it. These statements include, in particular, 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. Unless required by law, we assume no obligation to update forward-looking statements after the publication of the present press release.

 

This press release as PDF

Rentenbank plans EUR 11 billion funding volume in 2023

21 December 2022

Frankfurt. Landwirtschaftliche Rentenbank anticipates a funding volume of EUR 11 billion in 2023, to be raised on bond issues with terms of longer than two years.

Rentenbank Schriftzug

Emphasis on benchmark bonds in euros and US dollars

Germany’s development agency for agribusiness and rural areas plans to raise up to 50% of its medium-term and long-term funding volume by issuing benchmark bonds denominated in euros and US dollars. These strategic issues will be supplemented by other liquid issues and private placements in various currencies, especially in euros, US dollars, British pounds, and Australian dollars. A benchmark issue under the ICMA Green Bond Framework is also planned.

“The further expansion of renewable energy is an indispensable prerequisite for making energy supplies in Germany more sustainable and independent. And agribusiness in particular has a key role to play in this regard. The necessary increase in the investment needs of this sector is fuelling the growth of our sustainable promotional lending activities and enlarging the loan portfolio of our Green Bond Framework. Moreover, we are currently seeking to incorporate biogas plants into the Green Bond Framework, in addition to wind power and photovoltaic plants. These two factors together can be expected to increase our potential for additional green bonds in 2023 and enable us to broaden our investor base further”, said Rentenbank Chairwoman Nikola Steinbock.

Euro the most important issue currency in 2022

Rentenbank has raised approximately EUR 11.8 billion in the capital markets so far in 2022. This included Rentenbank’s largest euro benchmark bond to date, with a volume of EUR 2 billion. The order book for the 5-year bond reached a record level of approximately EUR 8 billion. Rentenbank also issued a 10-year euro benchmark bond in the form of a green bond and a US dollar benchmark issue with a term of 5 years. The average term of the bank’s issues increased to 7.0 years (2021: 6.5 years).

Rentenbank raised funds in seven currencies. While the percentage of euro issues rose to 65% (2021: 62%), the percentage of US dollar issues fell to 19% (2021: 25%). At 6%, the percentage of issues denominated in British pounds was slightly higher than in the previous year (2021: 4%).

ECP Programme dominated by US dollar issues

Under its Euro Commercial Paper Programme (ECP Programme), Rentenbank issued bonds with terms of up to 364 days in seven different currencies. The most important issue currency in the ECP Programme was still the US dollar, with a share of 75%. The average utilisation of the ECP Programme was EUR 13.3 billion (2021: EUR 11.1 billion).

 

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 early-stage financing of agriculture-related start-ups, and the market introduction and practical use of new technologies and products. Rentenbank’s promotional instruments are subsidies, subordinated loans, 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, forecasts and projections of the Management Board and on the information currently available to it. These statements include, in particular, 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. Unless required by law, we assume no obligation to update forward-looking statements after the publication of the present press release.

This press release as PDF

News

The members of the Management Board of Landwirtschaftliche Rentenbank at the Annual Press Conference 2023

25 April 2023

Rentenbank: Strong promotional activity in 2022

Rentenbank Schriftzug

31 January 2023

Rentenbank in 2022: Substantial increase in demand for special promotional loans

Rentenbank Schriftzug

21 December 2022

Rentenbank plans EUR 11 billion funding volume in 2023

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