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

Classification of GBC AG to UmweltBank AG

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

Management Board presents convincing growth scenario at the Capital Markets Day

At the Capital Markets Day, which UmweltBank AG held for the first time on 15 January 2025, the company provided an update on its strategic direction up to the 2028 financial year and a rudimentary review of the past 2024 financial year. The preliminary figures will be published on 31 March 2024. In addition to a presentation by Dietmar von Blücher who, on that very day, reached the one-year mark as a member of Umweltbank's Executive Board, having begun on 15 January 2024, the heads of the various departments (Private Clients, HR, Corporate Clients) gave keynote speeches, providing a good insight into the inner workings of the bank.

The expansion of the liabilities side, i.e. the deposit business, is an important cornerstone of their corporate strategy and should contribute significantly to the growth of net interest and commission income in the future. According to the company, an interest margin of around 100 basis points can be achieved by investing customer funds at matching maturities (ECB investment). Against this backdrop, the expansion of private customer deposits to around € 3.5 billion in 2024 (2023: € 2.5 billion) should be seen as a good basis for an expected increase in the financial result. The 'UmweltFlexkonto' call money (currently: 2.0% interest) in particular is likely to have generated high demand.

While deposits from private customers are growing dynamically, growth in the corporate customer business, which primarily comprises loan financing for sustainable projects (property, wind, solar), is dependent on the restrictive equity factor. With a total capital ratio of 16.9% (30 October 2024), there is a sufficient capital buffer to the regulatory value of 15.5%, but strong growth in credit volume cannot be achieved without additional equity. On the one hand, additional equity is to be obtained by reducing the higher capital surcharge for lending set by BaFin. On the other hand, it is to come from the planned complete sale of equity investments by 2026.

At the Capital Markets Day, Dietmar von Blücher also presented a detailed earnings and expenses scenario up to the financial year 2028. Net interest income is expected to rise significantly again from the current financial year 2025 onwards, having bottomed out in 2023 and 2024. The scenario graphic presented at the Capital Markets Day indicates a range of € 60 – € 70 million for the current financial year 2025 and of around € 70 – € 80 million for the coming financial year 2026. The main driver for this growth is expected to be a significant increase in the deposit business, which can then be invested risk-free at the ECB at improved conditions.

At the same time, net interest income should benefit from an improvement in the interest margin in the corporate customer business, i.e. in the lending business. Expiring loans will be replaced by new loans with improved conditions. By 2028, the annual new lending business is expected to increase from around € 245 million in 2024 to over € 650 million. At the same time, the ratio of lending to capital commitment is to be improved by, among other things, taking out syndicated loans.

The company expects net commission and trading income to benefit from rising income in the securities and lending business. In the middle of the past financial year, the successful issue of the first UmweltBank ETF was added to their own issues business. Further ETFs and the expansion of their fund business should lead to an increase in commission and trading income.

The expected increase in net interest income and net commission and trading income is likely to be offset by a disproportionately low increase in administrative expenses. This is particularly true in light of the transformation implemented in recent years, which should lead to a significant reduction in administrative expenses from 2025 onwards. The target of achieving a cost-income ratio of less than 60% by the 2028 financial year is therefore confirmed. Compared to the previous growth scenario, the Management Board of UmweltBank expects a flatter increase in earnings before taxes, particularly from the 2027 financial year onwards. This is primarily due to lower momentum in the lending business.

Our previous estimates (see Research Comment dated 15 November 2024), which cover the forecast period from 2024 to 2026, are largely in line with the company's updated scenario. We therefore confirm these and at the same time the price target of €10.00 determined within the framework of a residual income model. The rating remains BUY.

 

You can download the research here: http://www.more-ir.de/d/31671.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: 27.01.2025 (8:56 am)
Date (time) first transmission: 27.01.25 (2:30 pm)