“Evidently, the uncertainties regarding the future political framework, the considerably higher interest rates, and market volatility are increasingly impacting the investment propensity of agricultural enterprises, especially in livestock farming. On top of that, we find ourselves in the middle of the transformation to a climateneutral, more sustainable economic model. Much is uncertain and still under discussion. But one thing is certain: Agriculture can offer solutions for the transformation. And we will help. To ensure that forwardlooking farmers can seize these opportunities, we are continually fine-tuning our line-up of promotional products in close consultation with the agricultural industry”, said Nikola Steinbock, Chairwoman of Rentenbank’s Management Board.

Strong growth in the Rural Development promotional line

At EUR 801 million, the volume of new promotional loans granted in the Agriculture promotional line was lower than in the first half of last year (H1 2022: EUR 1,104 million). In particular, agricultural enterprises took out fewer special promotional loans to finance land acquisition and farm buildings. Demand was likewise lower in the Agribusiness and Food promotional line, especially for special promotional loans to finance machinery and buildings. The volume of new promotional loans granted in this promotional line came to EUR 415 million (EUR 613 million). On the other hand, the volume of special promotional loans granted in the Rural Development promotional line rose sharply, by around 75%, to EUR 1.6 billion (EUR 914 million). This increase was driven by stronger demand for Rentenbank’s global loans on the part of the federal states’ development banks. They use these loans particularly to finance infrastructure projects in rural areas. In the Renewable Energy promotional line, demand fell to EUR 339 million (EUR 1.0 billion) from the unusually high level in the first half of last year. There was less demand for wind power financing, for example, mainly as a result of last year’s anticipatory effects due to the emerging trend of rising interest rates. Rentenbank’s total promotional lending in the first half of 2023 amounted to EUR 3.2 billion (EUR 3.8 billion).

Expansion of special promotional lending

Rentenbank expanded its “Future Areas in Focus” programme in July by adding two new areas: “Female farm heirs and start-up founders in agriculture and forestry” and “Efficient irrigation and storage basins”. Moreover, additional investment opportunities were created in two other future areas. In all future areas, agricultural enterprises benefit from additionally subsidised “LR premium” terms.

Rentenbank also updated and supplemented its two rural development promotional programmes. The promotional lending opportunities offered in the “Rural Living” programme were expanded to include investments in social infrastructure. And in the “Rural Infrastructure Development” programme, the Bank now offers daily updated standard terms in addition to individualised terms upon request and it streamlined the application process further.

In addition to its promotional lending activity, Rentenbank is also expanding the scope of its collaboration with the German federal government. Having already worked with the Agriculture Investment Programme of the German Federal Ministry of Food and Agriculture (BMEL), Rentenbank it is now working out the details of its planned collaboration with German Federal Ministry for Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV), in which the Bank will administer specific promotional measures under the Action Plan on Nature-based Solutions for Climate and Biodiversity (ANK). The ANK is an important federal government programme to balance the needs of agriculture and climate protection to a greater degree.

 

Further expansion of innovation and start-up promotion

Rentenbank promotes innovation in all stages of the process, including the development, introduction to practical use, and dissemination of cutting-edge methods and products. In the first half of 2023, three agriculture-related start-ups received subordinated loans totalling EUR 1.6 million (EUR 1.3 million) and additional support in the form of innovation vouchers from the “Special-Purpose Fund of the German Federal Republic”. From the Innovation Fund, moreover, Rentenbank supported eight project partners with grants totalling EUR 2.6 million (EUR 1.6 million).

As part of its venture capital activities, Rentenbank invested a total amount of EUR 15 million in the two venture capital Fonds Astanor und Zintinus in the first half of 2023. Astanor pursues a global investment approach in the agri-food tech sector. Zintinus rounds out Rentenbank’s portfolio by way of its strict focus on food investment. Rentenbank plans to invest around EUR 140 million in VC funds by the end of 2024 as it continues to promote cutting-edge innovation for the transformation of agribusiness.

In collaboration with the German Federal Ministry of Food and Agriculture (BMEL) and Frankfurt-based TechQuartier, Rentenbank expanded the ag-tech and food-tech entrepreneurs programme “Growth Alliance” further in the current year to date. The now four different components of this programme address the phase-specific challenges of start-ups in all stages of the lifecycle. These programmes help the participating start-ups successfully tackle the problems and challenges of their business development. As a partner, moreover, Rentenbank supports numerous initiatives and programmes to advance innovative and sustainable ideas and promote networking in this sector.

Euro is still the most important currency of issuance

To fund its promotional activity, Rentenbank raised funds totalling EUR 7.4 billion (EUR 8.2 billion) in the international capital markets by issuing bonds with terms of more than two years in the first half of 2023. This amount represents roughly 67% of the planned issuance volume for the full year 2023, that being EUR 11 billion. The euro remained the most important currency of issuance, accounting for 65% (70%) of funds raised. This amount also contains a 7.5-year benchmark bond for EUR 1.5 billion. The US dollar’s share rose to 25% (12%), particularly due to the issuance of a 5-year global bond for USD 1.25 billion. Commercial banks were the largest group of investors, accounting for 56% (69%) of the total issue volume, followed by central banks with 31% (15%).

Substantially higher operating result

In the first half of 2023, Rentenbank generated an operating result before provisions for loan losses and valuation effects of EUR 103.9 million, that being considerably higher than the corresponding figure for the year-ago comparison period (EUR 74.3 million). The increase was mainly driven by the higher level of interest rates, which led to higher net interest income. Administrative expenses rose to EUR 49.3 million (EUR 45.6 million), particularly as a result of higher IT investments under the IT Road Map 2026.

Capital ratios remain at high levels

At the end of the first half of 2023, Rentenbank again reported high capital ratios on the basis of the EU Capital Requirements Regulation (CRR). The Common Equity Tier 1 capital ratio came to 31.6% (31.12.2022: 31.7%) and the total capital ratio was 31.7% (31.12.2022: 31.7%).

 

Key figures - first half 2023 (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.

“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.

 

 

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.