Classification of GBC AG to UmweltBank AG

Preliminary figures for 2024 in line with guidance, return to profitability expected from 2025 onwards

According to the preliminary figures published as at 31 March 2025, UmweltBank AG significantly improved its total income compared to the previous year, as expected. This was due in particular to net interest income, which at € 44.95 million (previous year: € 41.11 million) was slightly above our expectations (old GBC forecast: € 43.44 million). This is likely to have benefited primarily from the strong increase in customer deposits to € 3,824 million (31/12/2013: € 2,854 million). By investing customer deposits at matching maturities (ECB investment), UmweltBank AG is able to achieve an interest margin of around 100 basis points, meaning that a higher volume of deposits automatically leads to higher interest income.

At € -8.52 million (previous year: € -5.61 million), earnings before taxes and reserves were within the company's guidance range (€ -5 million to € -10 million). In our previous forecast, we had assumed a pre-tax result of € -5.76 million. The higher total income of € 59.02 million (previous year: € 52.23 million) was offset by a significant increase in total expenses totalling € 67.52 million (previous year: € 57.83 million). This is particularly related to the transformation that was continued in 2024 and has now been largely completed, which includes the digitalisation of processes and the completion of the conversion of the core banking system.

As part of the preliminary figures, the Management Board of UmweltBank is forecasting a return to profitability in 2025 and expects earnings before taxes in the range of € 5 million to € 10 million. Dietmar von Blücher had already provided an outlook on the future drivers of business development at the Capital Markets Day in mid-January. These were confirmed by the preliminary figures.

UmweltBank's earnings situation will be characterised by a significant increase in net interest income. This is due to the expansion of the deposit business with private customers, which is to be increased to EUR 4.3 billion in the current financial year and to EUR 5.9 billion by 2028. In addition to savings products, the deposit business will be driven in particular by the current account, which is about to be launched. At the same time, the Management Board of UmweltBank expects the lending volume to move sideways, but expiring loans are to be replaced by new loans at improved conditions, which should be reflected in an increase in net interest income. New lending business in the range of € 250 million to € 350 million is expected for the current financial year. An expansion to € 650 million is planned by 2028. The lending business remains subject to capital restrictions, which will be further tightened by the implementation of CRR III. 

The expected increase in net interest income and net commission and trading income will initially be offset by a disproportionately low increase in administrative expenses. This is against the backdrop of the transformation implemented in recent years, which should lead to a significant decrease in administrative expenses from 2025 onwards. We expect administrative expenses to increase again in subsequent years due to rising marketing expenses and higher IT expenses.

As part of this study, we have refined our forecasts for the current and coming financial year and, for the first time, formulated a forecast for the 2027 financial year. We are assuming a gradual, significant increase in total income, which will be offset by a disproportionately low increase in costs. According to our estimates, the cost-income ratio will fall below the 100% threshold in the 2025 financial year at 89.7% and fall significantly to 76.6% by the 2027 financial year.

The sum of the discounted residual earnings results in a value of € 370.80 million. With 35.66 million shares outstanding, this results in a fair enterprise value per share of € 10.40 (previously: € 10.00), which corresponds to a slight increase in the target price. This is due in particular to the first-time inclusion of the estimates for the 2027 financial year, which provides a higher basis for calculating the terminal value than the 2026 financial year. Based on the current share price, we continue to assign a BUY rating.