Classification of GBC AG to UmweltBank AG

Company Name:	UmweltBank AG
ISIN:	DE0005570808
Reason for the research:	Research Comment
Recommendation:	Buy
Target price:	EUR 10.00
Target price on sight of:	31.12.2025
Last rating change:
Analyst:	Cosmin Filker, Marcel Goldmann

Nine months 2024: operating performance in line with expectations; sharp increase in interest result expected from 2025

For the current financial year 2024, UmweltBank AG has started to report the most important key figures on a quarterly basis for the first time. Even though the Q3 figures presented here are missing a comparable figure from the previous year, they still provide a good interim status for the current financial year.

After nine months, UmweltBank AG reports net interest income of €28.80 million and is thus well on track to achieve the expected increase over the previous year's figure for the year as a whole. The basis for the increase in net interest income during the year lies, on the one hand, in the rise in customer deposits to €3.7 billion (31 December 2020: €2.8 billion), which were invested in a higher interest rate environment at higher interest rates. In addition, legacy treasury holdings were reinvested, which, according to the company, accounts for a difference of up to 100 basis points. Although the company recorded new lending business of €115 million in the first three quarters, the total volume of loans fell to €3.50 billion (31 December 2023: €3.72 billion) due to repayments and redemptions. Net interest income is therefore likely to have benefited in particular from the reallocation of own investments and the investment of customer deposits.

At the same time, the credit institution reported a financial result of €18.10 million after nine months of 2024. This includes the sale of a total of six wind farm investments and two real estate investments. In principle, UmweltBank AG plans to sell its investment portfolio in the next three financial years in order to release equity. Further investment disposals are planned for the fourth quarter, although the expected income from these cannot yet be quantified.

Together with commission and trading income of €3.10 million, the company reports total income of around €50 million after nine months. This is offset by total expenses of €45.4 million. The expenses also include increased expenses in connection with investments in marketing and IT. According to the company, expenses in the range of €7-10 million are expected to be of a one-off nature by the end of the 2024 financial year. Earnings before taxes as of 30 September 2024 were €3.6 million.

With the publication of the Q3 figures for 2024, the management of UmweltBank confirmed the guidance, according to which a pre-tax result between € -5 million and € -10 million is to be achieved for the current financial year 2024. Total income of around €70m is expected to be offset by total expenses of around €75m (including the bank deposit). In the coming financial year 2025, an improvement in total income should even be accompanied by a decline in total expenses, which should lead to a significantly positive pre-tax result again.

During the presentation of the Q3 figures, UmweltBank's CEO Dietmar von Blücher showed how net interest income should benefit from the repositioning in treasury. In particular, new investments at better conditions should improve net interest income in the 2025 financial year to between €65 million and €70 million, an increase of over €20 million compared to the previous year. By contrast, the financial result, which is still benefiting in the current financial year from a high contribution from the sale of investments, is expected to decline. Although the company still plans to gradually reduce its investment portfolio, it is not possible at present to forecast the expected contribution to earnings.

In our adjusted forecasts, we take into account a stronger development of the interest result, particularly for the estimate years 2025 and 2026, but at the same time reduce our forecasts of the financial result. Overall, we expect total income to increase from €57.33m (2023) to €70.74m (2024e), €77.97m (2025e) and €87.13m (2026e). As we expect costs to rise at a disproportionately low rate from 2025, UmweltBank AG should return to profit.

On the basis of the adjusted valuation according to the residual income model, we have determined a new fair value of €10.00 (previously: €9.63). We are maintaining our BUY rating.

You can download the research here: http://www.more-ir.de/d/31323.pdf

Contact for questions:
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:
https://www.gbc-ag.de/de/Offenlegung
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Date (time) Completion: 15.11.24 (7:30 am)
Date (time) first transmission: 15.11.24 (10:00 am)