Original-Research: UmweltBank AG (von GBC AG): Hold

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Original-Research: UmweltBank AG - von GBC AG

Einstufung von GBC AG zu UmweltBank AG

Unternehmen: UmweltBank AG
ISIN: DE0005570808

Anlass der Studie: Research Report (Anno)
Empfehlung: Hold
Kursziel: 17.20 EUR
Kursziel auf Sicht von: 31.12.2022
Letzte Ratingänderung:
Analyst: Cosmin Filker, Marcel Goldmann

- Germany's 'greenest' bank with new record figures in 2021
- Solid and stable business model should prove itself in the crisis
scenario
- Target price reduction as a result of the increased cost of capital due
to the rise in interest rates

In the past financial year 2021, UmweltBank AG significantly expanded its
business activities. With a view to its core business, the granting of
loans for ecological purposes, the credit institution achieved a
significant expansion of the outstanding loan volume by 10% to EUR 3,072.52
million (31.12.2020: EUR 2,792.66 million). High demand was achieved in all
sectors (solar, wind energy, real estate) and relevant market shares were
also secured. In the photovoltaic sector, for example, a market share of
20.5% was achieved in the financing of systems (systems larger than 250
kWp). In the financing of wind turbines, the market share was 4.7%.

With the expansion of the lending business, interest income was 2.6 %
higher than in the previous year at EUR 70.90 million (previous year: EUR
69.08 million). In the past business year, the conditions for borrowers
improved further. On the interest expense side, UmweltBank AG also
benefited from the low interest rates as well as from the favourable GLRG
financing, so that the interest result of EUR 63.24 million (previous year:
EUR 52.10 million) was 21.4 % higher than in the previous year. In addition
to the core business, net commission income and net trading income also
increased significantly to EUR9.42 million (previous year: EUR5.15
million). Both the fund business and the investment business contributed to
this.

Against this backdrop, the fact that the pre-tax result (before allocation
to the fund for general banking risks) of EUR 38.09 million (previous year:
EUR 37.85 million) was only a slight increase on the previous year's figure
is due to the rise in operating costs. General administrative expenses
climbed to EUR 33.67 million (previous year: EUR 27.07 million), on the one
hand due to the further increase in personnel and, on the other hand, due
to a higher allocation to deposit protection after the insolvency of the
Greensill Group. The insolvency of the Greensill Group reduced the deposit
insurance portfolio by around EUR 3.5 billion The constant development of
results is also due to the discontinuation of special income which, in
2020, had led to extraordinarily high other income in the amount of EUR
6.35 million stemming from the termination of a legal dispute. In the 2021
financial year, other income in the amount of EUR 0.21 million was
reported.

In balance sheet terms, UmweltBank AG has an above-average equity base
compared to the rest of the sector. Following the successful capital
increase of EUR 73.08 million in October 2021, equity improved visibly to
EUR 245.12 million (31.12.2020: EUR 162.89 million). The regulatory equity
ratio climbed to 16.6% (31.12.2020: 14.6%) and is thus significantly above
the minimum requirement of 12.0%.

According to corporate guidance, a stable development of the interest
margin is expected for the current financial year 2022, but the absolute
net interest income should decrease moderately due to the expiry of special
corona conditions for GLRG funds. Personnel expenses and the introduction
of a new core banking system are expected to increase operating expenses,
so that a pre-tax result at the level of the previous year is again
anticipated.

We concur with the company's guidance and expect continued high levels of
new client activity. With regard to the company's core sectors, demand
remains high, even though the real estate sector, for example, is currently
characterised by a high degree of uncertainty. However, shifts in project
financing could be countered by an increase in lending rates, so that an
increase in interest income could still be achieved. Apart from the war and
pandemic-related burdens, both the real estate sector and especially the
wind energy and solar sectors should benefit from a positive market
environment.

With the increase in the ECB's key interest rate since July 2022 and the
generally visible rise in lending rates, it is clear that the turnaround in
interest rates has already begun, even though the general interest rate
level remains at a low level. UmweltBank AG is already passing on interest
rate increases in new business and in the refinancing of existing loans to
customers. Parallel to this, however, the liabilities side is also likely
to become more expensive. In this context, the UmweltBank Board of Managing
Directors expects a constant development of the interest margin. In an
environment of rising interest rates, the interest margin is expected to
increase in the future.

Even if new business remains below expectations, the existing loan
portfolio provides the basis for at least a stable income development. The
loans, which are usually secured, have a long-term maturity, which means
that the majority of future interest income is already secured. In
addition, these are project financings, so that the counterparty default
risk is comparatively low.

Against this background, we expect net interest income to decline to EUR
60.26 million (EUR 63.24 million) in the current financial year 2022. In
the coming financial years, the return to growth should be successful and
we expect net interest income of EUR 62.19 million (2023e) and EUR 62.90
million (2024e). This should be accompanied by a significant increase in
income from the securities, investment and fund business. At the end of the
day, we expect a pre-tax result at the level of the 2021 financial year, in
line with the corporate guidance. Slight increases should be achieved in
the coming financial years against the backdrop of an expansion of the core
business and the gradual phasing out of expenses for the introduction of
the core banking system.

We have determined the fair value of UmweltBank AG within the framework of
a residual income model. Due to the market-related increase in the risk-
free interest rate to 0.80% (previously: 0.25%), the cost of equity has
risen to 3.50% (previously: 2.96%), which has a price target-reducing
effect. The new price target of EUR 17.20 (previously: EUR 19.05) is
therefore below the previous valuation result. We assign the rating HOLD
(previously: BUY).

Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/24521.pdf

Kontakt für Rückfragen
GBC AG
Halderstraße 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG und Art. 20 MAR Beim oben analysierten Unternehmen ist folgender möglicher Interessenkonflikt gegeben: (1,4,5a,6a,7,11); Einen Katalog möglicher Interessenkonflikte finden Sie unter:
http://www.gbc-ag.de/de/Offenlegung
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Date and time of completion of the study: 04.07.2022 (04:03 pm)
Date and time of the first dissemination of the study: 05.07.2022 (11:00 am)

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