Risk-bearing capacity

Rentenbank’s risk-bearing capacity concept is the central element of the Internal Capital Adequacy Assessment Process (ICAAP) and the basis for the operational implementation of the risk strategy. The objectives of the risk-bearing capacity concept are to ensure the institution’s continuation in fulfilling its promotional mandate while complying with regulatory requirements, as well as to safeguard the institution’s substance over the long term and to protect creditors against losses from an economic perspective. These objectives are reflected in the two perspectives of the risk-bearing capacity concept, which comprises a normative approach and an economic approach. Risk management processes are designed to meet these objectives and requirements on an equal footing. Monitoring of limits within risk-bearing capacity is supplemented by stress tests. These are reported regularly to the Management Board and discussed there as well as in the Risk Committee.

Normative approach

The management objective of the normative approach is to comply with all minimum regulatory capital requirements and provisions. It is assessed whether the capital base, both on a reporting-date basis and within the multi-year capital planning horizon (covering five years), ensures compliance with all regulatory requirements and thus the institution’s continued existence in the baseline scenario and in the adverse scenarios. The capital base should also enable the sustainable pursuit of the business strategy in these scenarios.

The following table shows regulatory own funds under the normative approach at the reporting date compared with the previous year:

	31 December 2025 mEUR	31 December 2024 mEUR
Subscribed capital	135.0	135.0
Retained earnings	1,252.6	1,233.6
Fund for general banking risks	3,553.5	3,479.8
Intangible assets	- 56.2	- 48.4
Tier 2 capital	0.0	0.7
Regulatory own funds	4,884.9	4,800.0

The increase in own funds compared with the previous year resulted from an increase in retained earnings and an increase in the fund for general banking risks following the adoption of the 2024 annual financial statements.

Risk-weighted assets (RWA) are shown in the following table:

	Risk amount 31 December 2025 mEUR	Risk amount 31 December 2024 mEUR
Credit risk	13,909.6	11,454.8
CVA charge	612.1	530.5
Operational risk	487.3	544.3
Total RWA	15,008.9	12,529.6

The expected significant increase in RWA is due to the application of CRR III; the effect on capital ratios is mitigated to some extent by profit retention. Even after application of CRR III, the capital ratios remain well above the regulatory minimum requirements:

	Reporting date	Baseline scenario
(%)	31 December 2025	2026	2027	2028
Total capital ratio	32.6	33.3	33.5	33.9
Tier 1 capital ratio	32.6	33.3	33.5	33.9
Common Equity Tier 1 capital ratio	32.6	33.3	33.5	33.9
Leverage ratio	11.5	10.7	11.1	11.8

In 2025, no material impact of the geopolitical crises and Germany’s economic stagnation on Rentenbank’s risk metrics could be observed. For the baseline scenario of capital planning, it is assumed that the conflicts will persist while the economy recovers slightly. Rentenbank therefore expects the portfolio to develop in a relatively stable manner from a risk perspective in the baseline scenario. This is reflected accordingly in the capital ratios.

Regulatory requirements are met at the reporting date and in the baseline scenario of capital planning at all points in time considered.

In addition to the baseline scenario, various adverse scenarios with significantly negative market-wide and institution-specific developments are analysed in the capital planning. Even taking CRR III effects into account, all regulatory requirements are met at all times.

Economic Approach

The objectives of the economic approach are to safeguard the institution’s substance over the long term and to protect creditors against losses from an economic perspective. For this purpose, the economic risk coverage potential is compared with the aggregate risk amount and reviewed both at the reporting date and within the baseline scenario of capital planning.

The risk coverage potential includes hidden reserves and hidden charges from securities and promissory notes of German federal states, including the related hedging transactions, as well as the reserves pursuant to Section 340f HGB. The profit and loss result accrued during the year is taken into account, whereas planned profits that have not yet been realised are not included.

At the reporting date, the risk coverage potential under the economic approach was as follows compared with the previous year:

	31 December 2025 mEUR	31 December 2024 mEUR
Subscribed capital	135.0	135.0
Retained earnings	1,272.1	1,252.6
Fund for general banking risks	3,576.3	3,553.5
Hidden charges / reserves	596.9	211.1
Risk coverage potential	5,580.3	5,152.2

In the economic risk coverage potential, the planned appropriation of the result achieved in 2025 is taken into account. This results in slightly higher figures for retained earnings (+EUR 19.5 million) and for the fund for general banking risks (+EUR 22.8 million), as well as an addition to reserves. The substantial increase in risk coverage potential in 2025 is attributable mainly to higher hidden reserves or lower hidden charges on securities, promissory notes and registered bonds.

Under the economic approach, risks arising from all positions are considered irrespective of their accounting treatment. The risks are calculated on the basis of a confidence level of 99.9% and a time horizon of one year. The risk amounts of the individual risk types are added without taking diversification effects into account and are distributed as follows:

	Risk amount 31 December 2025 mEUR	Risk amount 31 December 2024 mEUR
Credit risks	468.3	470.5
Market risks	1,732.8	1,826.6
of which: interest rate risks	562.0	558.6
of which: CVA risk from derivatives	43.9	39.6
of which: spread and other risks	1,111.9	1,213.4
of which: risk buffer	15.0	15.0
Non-financial risks	101.4	93.1
of which: operational risks	72.8	62.1
of which: strategic risks	28.6	31.0
Total risk	2,302.5	2,390.2

Risk-bearing capacity under the economic approach was ensured at all observation dates in 2025. All limits were complied with. Owing to the higher risk coverage potential and a decline in spread risks, utilisation of risk coverage potential at the reporting date was significantly lower at 41.26% than in the previous year (46.39%).

Stress tests

The purpose of stress tests is to analyse whether Rentenbank’s risk-bearing capacity remains ensured even under extraordinary but plausible cross-risk scenarios. For this purpose, a hypothetical scenario (economic downturn) and a historical scenario (financial market crisis followed by the sovereign debt crisis) are simulated. The scenarios consider both market-wide and institution-specific aspects. In doing so, geopolitical tensions and conflicts, as well as the resulting macroeconomic uncertainties – such as volatile energy prices, recurring supply bottlenecks and increased capital market volatility – were taken into account. These developments were translated qualitatively and quantitatively into their potential effects on refinancing costs, credit risks and Rentenbank’s capital market environment, so that the key risk impulses of the global environment are adequately reflected in the scenarios.

The key risk parameters underlying the stress scenarios are the deterioration in credit quality, changes in interest rates and increases in credit spreads. In the stress tests, the effects of the stress scenarios are analysed from both the normative and the economic perspective. Under the normative approach, the effects of the scenarios on the income statement and on equity, in particular the effects on risk-weighted assets, are simulated over a three-year horizon. Under the normative approach, the dominant risk is counterparty default risk, while under the economic approach counterparty default risk and market risk are particularly relevant.

Risk-bearing capacity is ensured under both approaches even in the stress scenarios without recourse to regulatory relief measures relating to capital and liquidity requirements, thereby confirming Rentenbank’s comfortable capital position. In addition to these stress scenarios, a reverse stress test is used to examine which events would cause risk-bearing capacity no longer to be ensured. Furthermore, the effects of sustainability risks are examined in various scenarios (see separate section).