Economic position

Financial performance

The Bank’s financial performance is presented in the table below:

	1/1 to 31/12/2024 mEUR	1/1 to 31/12/2023 mEUR	Change mEUR
Net interest income1	287.5	310.0	- 22.5
Net commission income	- 4.7	- 2.5	- 2.2
Administrative expenses	130.8	113.6	17.2
Other operating result	11.3	4.8	6.5
Income taxes/ other taxes	1.7	1.4	0.3
Operating result before loan loss provisions and valuation effects	161.6	197.3	- 35.7
Loasn loss provisions and valuation effects	123.6	160.3	- 36.7
Net income for the year	38.0	37.0	1.0

Operating result before loan loss provisions and valuation effects

The operating result before loan loss provisions and valuation effects came to euro 161.6 million, which was considerably better than planned, but still below the high level of the previous year. The year-over-year decrease resulted from lower income in the “Promotional Activity” and “Treasury Management” segments. Administrative expenses were also higher.

Net interest income

Interest income, including income from equity interests, amounted to euro 3,860.2 million (euro 3,464.9 million). After deducting interest expenses of euro 3,572.7 million (euro 3,154.9 million), net interest income came to euro 287.5 million (euro 310.0 million).

Net interest income by segment:

	1/1 to 31/12/2024 mEUR	1/1 to 31/12/2023 mEUR	Change mEUR
Net interest income
Promotional Activity	195.0	206.9	- 11.9
Capital Investment	75.6	66.9	8.7
Treasury Management	16.9	36.2	- 19.3
Zinsüberschuss gesamt	287.5	310.0	- 22.5

 

The net interest income of the Promotional Activity segment amounted to euro 195.0 million, which was less than the strong previous-year figure of euro 206.9 million, as expected. The year-over-year decline resulted in part from the 23% reduction in new issuance of registered bonds, promissory note bonds, and securities.

As anticipated, the net interest income of the Capital Investment segment amounted to euro 75.6 million, which was higher than the previous-year figure (euro 66.9 million). The returns on new investments exceeded the returns on maturing securities. In addition, the dividend collected from DZ-Bank was higher than in the previous year. The higher funding costs of prior investments represented a countervailing effect.

The net interest income of the Treasury Management segment amounted to euro 16.9 million. As expected, this result was less than the strong previous-year figure of euro 36.2 million due to the ECB’s decision to pay interest of 0% on minimum reserves, as well as the sharper-than-expected interest rate reductions totalling a full percentage point and narrowing spreads in the market.

Administrative expenses

Administrative expenses rose by 15.1% to euro 130.8 million (euro 113.6 million), mainly due to higher material expenses (+ o 8.6 million). In addition, personnel expenses were euro 4.5 million higher and depreciation, amortisation and impairments were euro 4.0 million higher than in the previous year.

The higher material expenses resulted mainly from higher expenses for IT investments.

The increase in personnel expenses resulted mainly from the higher number of employees compared to the previous year. The average staff level (according to Section 267 (5) HGB) is now 451 employees (420 employees). This increase was partially offset by somewhat lower pension expenses due to inflation effects.

Depreciation, amortisation and impairments of intangible assets as well as property and equipment increased to euro 14.2 million (euro 10.2 million) due to higher software amortisation charges.

Other operating result

The Other operating result increased from euro 4.8 million to euro 11.3 million, mainly due to lower grants for innovation promotion, which resulted from an unscheduled special allocation to the Innovation Fund in 2023.

Loan loss provisions / valuation effects

A net amount of euro 123.6 million was allocated to the loan loss provisions under the heading of “Loan loss provisions / valuation effects”. Of this total, euro 73.7 million was allocated to the Fund for general banking risks, thus further increasing the Bank’s regulatory capital.

Net income / distributable profit

The net income for the year rose from euro 37.0 million to euro 38.0 million in the past financial year.

Subject to an approving resolution to be adopted by the Supervisory Board, a total amount of euro 19.0 million (euro 18.5 million) was allocated to the principal reserve from net income in the course of preparing the annual financial statements.

The distributable profit of euro 19.0 million remaining after the allocation of funds to the principal reserve was modestly higher than the previous-year figure (euro 18.5 million). One half the distributable profit is to be allocated to the German federal government’s Special-Purpose Fund administered by Rentenbank and the other half to Rentenbank’s Promotional Fund.

Financial position and cash flows

Rentenbank’s financial position according to the financial statements is presented in the table below:

Changes in significant asset items

	1/1 to 31/12/2024 mEUR	1/1 to 31/12/2023 mEUR	Change mEUR
Loans and advances to banks	65,615.4	67,244.3	- 1,628.9
Loans and advances to customers	7,003.2	7,502.4	- 499.2
Bonds and other fixed-income securities	16,742.6	15,855.2	887.4

 

Loans and advances to banks totalled euro 65.6 billion at 31 December 2023 (euro 67.2 billion). They accounted for 69.1% of total assets and were slightly higher than the previous-year figure. Thus, they still represent the largest constituent of total assets. The decrease in loans and advances to banks resulted mainly from a reduction of the portfolio of special promotional loans. This decrease was partially offset by an increase in money market instruments due to reporting date effects.

Loans and advances to customers mainly include the promissory notes issued to the German federal states, German rural districts, and German municipalities. This balance sheet item declined by euro 0.5 billion to euro 7.0 billion because the amount of maturing loans exceeded the amount of new loans granted.

The portfolio of bonds and other fixed-income securities rose by euro 0.9 billion to euro 16.7 billion in 2024. As in the previous year, this portfolio is assigned in full to Fixed assets.

 

Changes in key items of liabilities and equity

	1/1 to 31/12/2024 mEUR	1/1 to 31/12/2023 mEUR	Change mEUR
Liabilities
Liabilities to banks	1,528.3	1,765.1	- 236.8
Liabilities to customers	1,490.4	1,834.5	- 344.1
Securitised liabilities	83,752.3	85,756.5	- 2.004.2
Subordinated liabilities	0.0	40.0	- 40.0
Total	86,771.0	89,396.1	- 2,625.1
Equity (including Fund for general banking risks)
Subscribed capital	135.0	135.0	0.0
Retained earnings	1,252.6	1,233.6	19.0
Distributable profit	19.0	18.5	0.5
Fund for general banking risks	3,553.5	3,479.8	73.7
Total	4,960.1	4,866.9	93.2

Liabilities

Liabilities to banks amounted to euro 1.5 billion, which was euro 0.2 billion less than in the previous year. Moreover, liabilities to customers fell by euro 0.3 to euro 1.5 billion. The overall decline resulted mainly from the decrease in registered bonds.

Securitised liabilities decreased by euro 2.0 billion or 2.3% to euro 83.8 billion. The Medium-Term-Note Programme (MTN) amounted to euro 61.5 billion. It was still the Bank’s most important funding source despite the fact that it was euro 2.0 billion less than in the previous year. Outstanding euroo Commercial Paper (ECP) issues fell to euro 7.0 billion (euro 8.5 billion), whereas outstanding global bonds rose to euro 14.8 billion (euro 13.4 billion).

Equity

Equity including the fund for general banking risks pursuant to Section 340g HGB rose in total by euro 93.2 million to euro 4,960.1 million. Half of net income totalling euro 38.0 million was allocated to retained earnings and half to the distributable profit. The Fund for general banking risks was increased by euro 73.7 million.

Regulatory capital ratios

Both the total capital ratio and the CET 1 capital ratio were 38.3% (31.3%). They reflect Rentenbank’s strong capitalisation and are still well above the minimum regulatory requirements.

Please refer to the chapter entitled “Risk-bearing capacity” for details on the amounts and development of regulatory own funds and risk-weighted assets (RWA). 

Capital expenditures

Capital expenditures in the past year were still focused on modernising the Bank’s IT systems, particularly the replacement of the internally developed, host-based core banking system. In this respect, major milestones were achieved with the successful migrations to SAP and Murex. The Bank also conducted preliminary studies for additional implementation measures and launched the corresponding projects. Moreover, considerable funds were invested to implement regulatory requirements and improve IT security.

The Promotion Portal introduced in cooperation with the Federal Agriculture Programme in December 2020 was further optimised and the internal IT systems were integrated into it.

To digitalise the Bank’s processes, additional bots were developed to perform routine application processing tasks, thus enhancing efficiency.

Aside from modernising the IT landscape, Rentenbank is also investing in the energy-efficient refurbishment of the landmark-status building on Hochstraße in Frankfurt am Main.

Liquidity

The Federal Republic of Germany bears the institutional responsibility and guarantee for the liabilities of Rentenbank (statutory funding guarantee).

Thanks to the resultant AAA rating, Rentenbank is able to procure liquid funds in the market without any problems. The considerable holdings of debt instruments eligible as collateral for borrowings from the Bundesbank represent an additional liquidity reserve. For more information on this subject, please refer to the description of liquidity risks in the Risk Report section of the present Management Report.

 

Summary assessment of business development and economic position

The Management Board judges the Bank’s business development and the development of its financial position, cash flows, and financial performance to be satisfactory. The same goes for the financial and non-financial key performance indicators defined in the chapter entitled “Management system”.