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Rentenbank Fiscal Year 2020

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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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More than 1,000 Kauri trees planted for Rentenbank’s New Zealand bonds

24 May 2017

Landwirtschaftliche Rentenbank, based in Frankfurt am Main, also raises funds in New Zealand’s domestic capital market. This so-called Kauri market is named after the largest native tree in New Zealand. Ten years ago, Germany’s development agency for agribusiness and rural areas issued its first Kauri bond of 275 million New Zealand dollars (NZD). This equals roughly EUR 170 million at the current exchange rate. Since its Kauri debut, Rentenbank has become a regular issuer in the NZD market. With almost NZD 4 billion (equivalent to roughly EUR 2.49 billion) Rentenbank is one of the most important issuers.

Kauri trees, which are protected and play an important role in Māori mythology, are not just the market’s namesakes. They also benefit from the Kauri market via a program launched by the Bank of New Zealand (BNZ). Together with the Kauri 2000 Trust, a non-profit NGO, BNZ plants 100 Kauri trees on the Coromandel Peninsula for each transaction arranged. To date, 11 of Rentenbank’s Kauri transactions have been led by BNZ, creating a small forest of 1,100 young Kauri trees over the course of the past ten years.

“We permanently strive to broaden and diversify our investor base in the international capital markets. Raising funds at favorable rates is a prerequisite for effectively fulfilling our statutory promotional mandate. We are, of course, very pleased that our funding activities also contribute to a nature conservation project on the other side of the world,” said Horst Reinhardt, Speaker of Rentenbank’s Board of Managing Directors.

A decision by the Reserve Bank of New Zealand (RBNZ) served as an initial catalyst for the birth of the Kauri market for foreign issuers. Due to its low public debt, New Zealand kept scaling back government bond issuance, which led to a severe lack of liquidity. In response, the RBNZ decided to add Rentenbank’s bonds, among others, to the local repo-eligibility list in 2007. Due to its status as a public law institution benefitting from the explicit guarantee of the Federal Republic of Germany for its obligations, Rentenbank is triple-A rated by the three major rating agencies.

Service:

Landwirtschaftliche Rentenbank is Germany’s development agency for agribusiness. Under its statutory promotional mandate, Rentenbank provides low-interest loans for agriculture-related investments via other banks on a competitively neutral basis. The appropriation of profits is also subject to the promotional mandate. The bank is a public law institution whose capital stock was formed by contributions paid by the German agricultural and forestry sectors. The bank is one of the few triple-A rated institutions in Germany and raises funds primarily in the international capital markets.

 

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Fiscal year 2016: Rentenbank’s promotional business at near-record high

26 April 2017

- Fiscal year 2016: Special promotional loans and new issuance at near-record highs, increased operating profit under HGB and IFRS, improved capital ratios 

- First quarter 2017: Significantly higher demand for special promotional loans, successful issuance activities

 

Geschäftsjahr 2016: Förderneugeschäft der Rentenbank nahezu auf Rekordniveau

Frankfurt. The Board of Managing Directors of Rentenbank, Germany’s development agency for agribusiness, expressed its satisfaction with the bank’s performance in 2016 at the annual press conference. “Despite the economic headwinds in agriculture, new business in our low-interest special promotional loans almost reached the prior year’s record high. This was driven by growth in the Renewable Energy, Agribusiness, and Rural Development promotional lines. In the second half of 2016, the agricultural sector saw a turnaround in challenging market conditions,” said Horst Reinhardt, Speaker of the Board of Managing Directors.

The bank has continued its strong performance in the current fiscal year. In the first quarter of 2017, new business in special promotional loans amounted to almost EUR 2.0 billion, an increase of roughly 31% compared to the same period in 2016. With EUR 4.8 billion in new issuance, Rentenbank was able to raise more than a third of its planned annual funding volume during the first three months of 2017.

Special promotional loans: strong demand for renewable energy loans  

In the fiscal year 2016, Rentenbank’s new business in special promotional loans totaled EUR 7.7 billion, thus nearly reaching the prior year’s record level (2015: EUR 7.8 billion). In particular, promotional loans for renewable energy projects increased considerably to EUR 1.9 billion (2015: EUR 1.5 billion). The focus of the Renewable Energy promotional line remains on wind turbine financing. The commitment volume amounted to EUR 1.5 billion (2015: EUR 1.1 billion), of which EUR 0.5 billion (2015: EUR 0.5 billion) was accounted for by Rentenbank’s Community Wind Farms program. 

In the Agriculture promotional line, Rentenbank provides funds primarily for typical agricultural investments. Due to the challenging economic situation faced by some agricultural enterprises, commitments in agriculture financing of EUR 2.4 billion were markedly below the prior-year level (2015: EUR 3.2 billion). Promotional loans granted for buildings, particularly livestock housing, totaled EUR 814 million (2015: EUR 1.1 billion). Land finance amounted to EUR 626 million (2015: EUR 773 million) and funding for machinery to EUR 501 million (2015: EUR 630 million). 

In addition, Rentenbank promotes rural development. The bank finances predominantly rural infrastructure projects, partly through global refinancing agreements with the promotional banks of the federal states. In 2016, Rentenbank committed a total of EUR 2.4 billion to investments in rural areas (2015: EUR 2.3 billion). 

New issuance: banks remain the leading group of investors  

To refinance its promotional business, Rentenbank raised EUR 12.7 billion (2015: EUR 13.0 billion) in medium and long-term funding in the domestic and international capital markets in 2016. Of this volume, 47% (2015: 46%) was placed with banks. The zero-risk weighting of Rentenbank bonds and notes makes the bank’s issuances highly attractive to this group of investors. In addition, central banks and other official institutions continued to play an important role in Rentenbank’s funding. In 2016, their share decreased slightly to 32 % (2015: 35%). 

USD cemented its position as the main issuance currency, retaining its share of 50% (2015: 50%) of total issuance. It was followed by EUR, the share of EUR issuance amounting to 32% (2015: 22%). GBP ranked third with a share of 10% (2015: 5%). 

Balance sheet (HGB): Steady growth in the share of special promotional loans  

In 2016, total assets under HGB (German Commercial Code) increased to EUR 86.3 billion (2015: EUR 83.9 billion). In accordance with its competitive neutrality, Rentenbank extends its promotional loans via other banks. Hence, loans and advances to banks make up a large proportion of the asset side of the bank’s balance sheet. In 2016, they stood at EUR 57.8 billion (2015: EUR 55.7 billion), accounting for 67% of total assets (2015: 66%). The volume of special promotional loans in the balance sheet continued to grow as disbursements exceeded redemptions. At year-end 2016, special promotional loans were valued at EUR 41.9 billion (2015: EUR 40.1 billion). 

Securitized promotional business, recognized in the balance sheet as bonds and other fixed-income securities, amounted to EUR 15.9 billion (2015: EUR 16.6 billion). At year-end 2016, the securities portfolio was valued at EUR 17.8 billion (2015: EUR 18.3 billion). 

Securitized liabilities of EUR 70.0 billion (2015: EUR 67.3 billion) represent the largest item on the liability and equity side of the balance sheet. In 2016, they comprised medium-term notes of EUR 50.2 billion (2015: EUR 50.0 billion), global bonds of EUR 14.0 billion (2015: EUR 13.9 billion) and euro commercial paper of EUR 5.7 billion (2015: EUR 3.4 billion). 

In 2016, own funds reported in the balance sheet (HGB) rose to EUR 4.9 billion (2015: EUR 4.7 billion). Of this amount, EUR 3.1 billion (2015: EUR 2.9 billion) was allocated to the fund for general banking risks. 

Increased operating profit under HGB 

In 2016, the operating profit before loan losses and valuation (under HGB) reached EUR 254.4 million (2015: EUR 233.5 million). The prior-year figure was adjusted for the one-off effect due to an intra-group special payout in the amount of EUR 49.8 million. Net income after provision for loan losses and valuation climbed to EUR 59.0 million (2015: EUR 57.0 million). The distributable profit of EUR 14.8 million (2015: EUR 14.3 million) remaining after allocation to reserves is also used for promotional purposes. It is divided equally between the Special Purpose Fund of the Federal Republic of Germany and the Promotional Fund of Rentenbank. 

Slight rise in operating profit under IFRS 

The operating profit for the fiscal year 2016 amounted to EUR 239.1 million, slightly above the prior-year figure of EUR 238.2 million. The increased expenses for credit losses/promotional contribution, as well as the higher administrative expenses were more than offset by the increase in net interest income and the improvement in net other income/expenses. 

Compared to net gains from fair value and hedge accounting of EUR 204.9 million in the prior year, Rentenbank recorded net losses from fair value and hedge accounting of EUR -235.0 million in 2016. This was mainly driven by measurement losses due to narrowing credit spreads on the bank’s own issuances. Accordingly, the Group’s total comprehensive income was also significantly down year-on-year, decreasing by EUR 384.4 to EUR 7.9 million as of year-end 2016 (2015: EUR 392.3 million). “As a non-trading book institution, Rentenbank follows a buy-and-hold strategy. Therefore, measurement gains and losses are only of a temporary nature. They are reversed at maturity of the relevant transactions, if no counterparty defaults,” said Hans Bernhardt, Member of the Board of Managing Directors responsible for finance. 

Strengthened capital ratios 

Rentenbank’s capital ratios in accordance with the CRR improved on the previous year. The Common Equity Tier 1 capital ratio ended the year at 23.2% (2015: 20.2%) and the total capital ratio at 25.7% (2015: 23.2%).

 

 

Overview of key figures 2016

 

Service:

Landwirtschaftliche Rentenbank is Germany’s development agency for agribusiness. Under its statutory promotional mandate, Rentenbank provides low-interest loans for agriculture-related investments via other banks on a competitively neutral basis. The appropriation of profits is also subject to the promotional mandate. The bank is a public law institution whose capital stock was formed by contributions paid by the German agricultural and forestry sectors. The bank is one of the few triple-A rated institutions in Germany and raises funds primarily in the international capital markets. 

Forward-Looking Statements: This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of the Board of Managing Directors and information currently available to it. These statements include, in particular, statements about our plans, strategies and prospects. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and similar expressions are intended to identify such forward-looking statements. These statements are not to be understood as guarantees of future performance, but rather as being dependent on factors that involve risks and uncertainties and are based on assumptions that may prove to be incorrect. Unless required by law, we shall not be obligated to update forward-looking statements after their publication.

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Fiscal year 2016: Demand for Rentenbank’s promotional loans close to record high

26 January 2017

Landwirtschaftliche Rentenbank, based in Frankfurt am Main, reported continued strong demand for its promotional loans. New business in special promotional loans totaled EUR 7.7 billion in 2016, thus nearly reaching the prior year’s record high (2015: EUR 7.8 billion). In particular, the financing of wind turbines in rural areas was on the rise. However, many agricultural enterprises faced financial constraints, which dampened new business in the Agriculture promotional line. “Our low-interest special promotional loans cover a remarkably broad spectrum of financing opportunities. In 2016, w...

Ansicht 3

Landwirtschaftliche Rentenbank, based in Frankfurt am Main, reported continued strong demand for its promotional loans. New business in special promotional loans totaled EUR 7.7 billion in 2016, thus nearly reaching the prior year’s record high (2015: EUR 7.8 billion). In particular, the financing of wind turbines in rural areas was on the rise. However, many agricultural enterprises faced financial constraints, which dampened new business in the Agriculture promotional line.

“Our low-interest special promotional loans cover a remarkably broad spectrum of financing opportunities. In 2016, we not only helped to accelerate growth but also supported agricultural enterprises in crisis. On the one hand, our special promotional loans served to fuel the boom in renewable energy projects in rural areas. On the other hand, our liquidity assistance program played a crucial role especially in the first half of 2016, helping many agricultural enterprises to get through price crises and their aftermath,” said Horst Reinhardt, Speaker of Rentenbank’s Board of Managing Directors. 

Significant rise in demand for renewable energy and agribusiness loans  

New business in the Renewable Energy promotional line increased sharply by approximately 27 % to EUR 1.9 billion in 2016 (2015: EUR 1.5 billion). Demand for the financing of wind turbines was particularly high, rising by around 37 % to EUR 1.5 billion. 

The Agribusiness promotional line also saw impressive growth in 2016. New business grew by one fifth to EUR 954.4 million (2015: EUR 793.5 million), driven by the substantial increase in demand for the financing of buildings and farm inputs. 

Demand for agricultural loans dampened by price crisis 

In contrast, new business was down in the Agriculture promotional line. The volume of new loans decreased by roughly 25 % to EUR 2.4 billion (2015: EUR 3.2 billion) as many agricultural enterprises were adversely affected by low prices for milk, pork, and other agricultural commodities. However, the situation improved considerably in the second half of 2016, leading to a drop in demand for Rentenbank’s liquidity assistance loans from EUR 345.2 million in 2015 to EUR 108.0 million. 

Increase in promotional performance 

In 2016, Germany’s development agency for agribusiness used EUR 66.4 million of its income to provide interest rate reductions for its special promotional loans. Further, Rentenbank awarded grants of EUR 3.0 million for the Research on Agricultural Innovation program. The total amount of income used for promotional measures (promotional performance) was EUR 84.2 million (2015: EUR 82.9 million), including the distributable profit of EUR 14.8 million. 

Borrowing activities: EMTN program as the most important funding instrument  

In 2016, Rentenbank raised EUR 12.7 billion of medium and long-term funding in the domestic and international capital markets, thus almost reaching the prior year’s record high of EUR 13.0 billion. The share of foreign investors amounted to 82 % (2015: 93 %). Rentenbank placed 47 % of the funding volume with commercial banks (2015: 46 %) and a further 32 % (2015: 35 %) with central banks. The Euro Medium Term Note (EMTN) program remained the most important funding instrument, accounting for EUR 9.0 billion (2015: EUR 7.3 billion) or more than 70 % of the total funding volume. The bank also issued two USD global bonds, equivalent to a total of EUR 2.8 billion (2015: EUR 3.0 billion). 

Rise in operating profit 

The preliminary operating profit before provision for loan losses and valuation, reported in accordance with the German Commercial Code (HGB), increased by 9 % to EUR 254.4 million (2015: EUR 233.5 million). The 2015 figure was adjusted for a positive one-off effect of EUR 49.8 million, involving a special payout from the subsidiary LRB. After provision for loan losses and valuation as well as allocation to reserves, the Board of Managing Directors expects to report net income of EUR 59.0 million for 2016 (2015: EUR 57.0 million). 

Growth in total assets 

According to initial calculations, total assets (HGB) amounted to EUR 86.3 billion at year-end 2016 (December 31, 2015: EUR 83.9 billion). Loans and advances to banks increased to EUR 57.8 billion (2015: EUR 55.7 billion). In contrast, the securities portfolio decreased to EUR 17.8 billion (2015: EUR 18.3 billion). Securitized liabilities rose to EUR 70.0 billion (2015: EUR 67.3 billion). Own funds increased to EUR 4.9 billion (2015: EUR 4.7 billion). 

Stronger capital ratios 

The bank’s capital ratios, based on the Capital Requirements Regulation (CRR), continued to improve in 2016. The Common Equity Tier 1 capital ratio was 23.2 % (December 31, 2015: 20.2 %) and the total capital ratio 25.7 % (December 31, 2015: 23.2 %).

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News

BNZ Kauri Forest

24 May 2017

More than 1,000 Kauri trees planted for Rentenbank’s New Zealand bonds

Geschäftsjahr 2016: Förderneugeschäft der Rentenbank nahezu auf Rekordniveau

26 April 2017

Fiscal year 2016: Rentenbank’s promotional business at near-record high

Ansicht 3

26 January 2017

Fiscal year 2016: Demand for Rentenbank’s promotional loans close to record high

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