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:	€9.00
Last rating change:
Analyst:	Cosmin Filker, Marcel Goldmann

Operational turnaround achieved in 2025, continued growth expected

According to preliminary figures for the 2025 financial year, UmweltBank AG achieved a significant increase in operating income to €83.10 million (previous year: €63.47 million), as expected. The increase in net interest income to €58.45 million (previous year: €44.95 million) made a significant contribution to this. In our view, this is due in particular to strong growth in the core private customer business. As already announced in January 2026, retail customer deposits climbed to the previously forecast figure of around €4.3 billion (previous year: €3.5 billion) as of December 31, 2025.

The strong growth in retail deposits also offset the below-expectations performance in corporate banking. Outstanding environmental loans fell to €3.12 billion as of December 31, 2025 (December 31, 2024: €3.46 billion). This is the result of low gross new lending of €120 million (previous year: €250 million). Originally, new loans of €200 million to €250 million had been promised. The limited capital resources during the year had a restrictive effect here. In addition, the company reports project postponements into the current fiscal year.

In view of the significant increase in total revenue, earnings before taxes and reserves climbed to €6.43 million (previous year: €-8.50 million), which was in line with the guidance, which had forecast earnings before taxes in a range of €5 million to €10 million. The bottom line is that net income for the year increased to €14.26 million (previous year: €0.73 million). The reversal of reserves in accordance with Section 340g of the German Commercial Code (HGB) in the amount of €5.0 million contributed to this in particular. This is a passive exchange, i.e., a conversion into retained earnings recognized in equity. These reserves were formed in previous financial years on the basis of after-tax earnings and are not related to the risk structure of UmweltBank AG.

With the publication of the preliminary figures, UmweltBank's management has published forecasts for the current 2026 financial year for the first time and at the same time updated its forecast scenario up to 2028. For 2026, the bank anticipates earnings before taxes and reserves of €12.5 million to €17.5 million, which would represent at least a doubling of earnings.

This is based in particular on a sharp rise in expected interest income to a range of €62.5 million to €67.5 million. This is based on the planned expansion of retail customer deposits to €5.4 billion, before they are expected to increase further to €6.2 billion by 2028. The special conditions that have been introduced are to be continued for the time being. However, positive effects in connection with the introduction of current accounts and the expansion of the product portfolio are likely to come to the fore increasingly.

At the same time, the now significantly more comfortable capital base should be used to expand the loan portfolio. According to UmweltBank AG's plan, the implementation of postponed projects and the development of new business areas (such as battery storage and PPA financing for wind power plants) should increase gross new lending to €450 million. This would also increase the outstanding loan volume to €3.2 billion by the end of the 2026 financial year. UmweltBank AG expects this figure to rise to €3.8 billion by the end of 2028. On this basis, and based on a continued improvement in its treasury positioning, where it plans to build up short- to-medium-term investment portfolios while the yield curve rises, the increase in net interest income is expected to be achieved. Our forecasts for the following years are based on the company's updated plan scenario with regard to customer deposits and lending volume. In the last estimation period, however, we assume a slightly flatter growth curve.

According to our estimates, the noticeable increase in net interest income would be sufficient to compensate for the expected low financial result. Commission and trading income are also likely to contribute to the increase in total income. The company plans to gradually expand its product portfolio in this area. The introduction of various equity and bond ETFs is planned for the current financial year.

The earnings growth we assume is likely to be accompanied by a disproportionately low increase in costs. After UmweltBank AG invested in digitalization and transformation in previous fiscal years, savings should be achieved as part of the current efficiency and cost program. This is particularly true as the resolution of regulatory deficits has freed up personnel capacities. Based on the company scenario, we initially expect operating expenses (personnel expenses and other administrative expenses) to decline to €67.14 million (previous year: €71.29 million) in the current 2026 financial year, before rising again in the course of the expected business expansion. For 2028, we are calculating a CIR (cost-income ratio) of 80.9%. According to UmweltBank's plan scenario, this is expected to fall to below 60% by 2028. Due to the flatter growth curve, we are anticipating a CIR of 67.4% in this final estimation period.

All in all, we expect a significant increase in both pre-tax earnings and net income. Since we do not anticipate any reversal of reserves and will also include tax expenses again after returning to sustainable profitability, the forecast net income for the current 2026 financial year will initially decline. However, tax expenses are likely to continue to benefit from the reversal of loss carryforwards for which UmweltBank had not recognized deferred tax assets.

We used a residual income model to value UmweltBank AG. The sum of the discounted residual earnings amounts to €380.14 million (previously: €388.30 million). Taking into account the 41.28 million outstanding shares, the fair enterprise value per share is €9.00 (previously: €9.40). The reduction in fair value is mainly due to the increase in the discount rate to 5.84% (previously: 5.34%). This results from an increase in the risk-free interest rate. We continue to assign a BUY rating.

You can download the research here: 20260303_UmweltBank_Comment_engl

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: 02.03.2026 (1:52 pm)
Date (time) first transmission: 03.03.2026 (10:00 am)