KfW enhances its promotional capacity with another very positive result

Frankfurt (ots) -

- Promotional business volume EUR 73.4 billion in Germany and
abroad
- Very good funding position and special effects in the valuation
result favour the income situation
- Group profit of EUR 2.4 billion

In 2012 KfW Bankengruppe achieved an overall promotional business
volume of EUR 73.4 billion. After EUR 70.4 billion in the previous
year, it remains on a path of moderate long-term quality growth. In
2012 KfW committed EUR 50.6 billion to enterprises, municipalities
and retail clients in Germany (2011: EUR 50.9 billion). In its
international business (which includes the business areas of KfW
Development Bank, KfW IPEX-Bank and DEG) the volume of commitments
totalled EUR 19.7 billion (EUR 19.2 billion). KfW's financings thus
provided stability in a difficult financial and economic environment
in 2012 as well.

With a group profit of EUR 2,384 million (EUR 2,068 million) KfW
again achieved a very good result in the 2012 financial year. The
purely IFRS-related effects from the valuation of derivatives, which
KfW uses solely for hedging purposes, overdraw the income situation
by EUR 155 million (EUR 167 million), a similar volume as in the
previous year. The consolidated profit before IFRS effects from
hedging*, which is relevant for the management of KfW's business, was
also on a very high volume at EUR 2,229 million (EUR 1,900 million).

"KfW's group profit this year is again on a very high level, it is
significantly above the sustainable income potential and cannot be
continued into the future", said Dr Ulrich Schröder, Chief Executive
Officer of KfW Bankengruppe, on the occasion of the press conference
on annual results held in Frankfurt on Tuesday. "Given the current
economic trends, the more stringent regulatory requirements and the
additional cost of KfW's modernisation, the enhancement of our
capital base through this result ensures KfW's long-term promotional
capacity."

The operating result before valuation was EUR 2,246 million (EUR
1,869 million). This strong improvement is primarily due to net
interest income of EUR 2,933 million, which increased against
significantly on the previous year (EUR 2,399 million) and continues
to be the main source of the group's income. The above-average
increase is due to the continuing positive funding situation of KfW,
but also to the strong decrease in variable reference interest rates
in the year under review. The interest rate reductions which KfW
granted in its promotional lending business totalled EUR 535 million
(EUR 557 million).

Risk provisions for lending business resulted in moderate expenses
of EUR 155 million compared with the previous year, when this still
led to an improvement of EUR 185 million in the result. Above-average
valuation adjustments were made in the "Maritime Industry" segment of
Export and Project Finance. Risk provisions in the domestic lending
business and the promotion of developing and transition countries, in
turn, were on a moderate level. These charges are offset by positive
one-time effects in other segments and the reversal of portfolio
impairments.

Responding to the improved overall conditions, the securities
portfolio developed well and yielded a positive effect of EUR 77
million that was recognised in income (-EUR 255 million). The profit
contribution of the equity portfolio in the sum of EUR 135 million
(EUR 54 million) resulted primarily from a special effect, as the
necessary impairment losses of the previous years were recovered and
recognised in profit.

The consolidated total assets of the group rose by EUR 16.8
billion to EUR 511.6 billion in financial year 2012. This growth is
mainly due to changes in market value in connection with hedging
transactions and to increased liquidity maintenance. Due to the
continuing high level of off-schedule repayments, new lending led to
an increase of total net loans and advances by only EUR 4.7 billion
to EUR 364.8 billion.

Taking into account the consolidated comprehensive income, the
total capital ratio was 20.6% and the Tier 1 ratio was 18.2%. Under
Basel III the Tier 1 ratio is currently 15.1% (12.7%).

Key financial figures (IFRS) An overview of the key financial
figures is available at http://ots.de/mJBTI

*Explanation of consolidated profit before IFRS effects from
hedging: Under IFRS, derivatives must be recognised at fair value in
the balance sheet even if they are not used for trading, as in the
case of KfW, but to hedge interest and currency risks. The opposing
valuation effects of the underlying on-balance transactions thus
hedged can be reported only inadequately under IFRS and therefore
lead to economically inappropriate temporary earnings effects in
KfW's income situation. These effects offset each other in total in
the course of the overall maturity of the hedged items.

Service:

- You will find our digital press kit online at
www.kfw.de/bpk2013.

It provides access to the KfW Financial Report, the Annual Report,
the KfW Promotional Report and other resources.

- KfW's new web presence is online since 2 April 2013: www.KfW.de

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM) Sybille Bauernfeind
Tel. +49 (0)69 7431 2038, Fax: +49 (0)69 7431 3266,
E-Mail: Sybille.Bauernfeind@kfw.de, Internet: www.kfw.de