Successful first half of 2018 for KfW promotion

Frankfurt am Main (ots) -

- Total promotional business volume of EUR 36.1 billion
- Domestic promotion at a high level
- Strong demand for housing finance continues
- Commitments at KfW IPEX-Bank increase to EUR 6.7 billion
- Businesses show high level of interest in promotion for
innovation and digitalisation
- Consolidated profit of EUR 822 Million

KfW Group's promotional activity achieved a total volume of EUR
36.1 billion for the first half of 2018 (same period in the previous
year: EUR 36.5 billion). With a commitment volume of EUR 27.1
billion, domestic promotion is again at the previous year's high
level (EUR 27.6 billion). This was mainly driven by the strong demand
in housing finance. At EUR 8.2 billion, the business volume in KfW's
international financing is close to the previous year's figure of EUR
8.3 billion. New commitments in KfW IPEX-Bank's business sector rose
to EUR 6.7 billion (EUR 5.7 billion), in line with expectations. At
EUR 1.2 billion, the volume of commitments at KfW Development Bank
came in lower in comparison to the previous year's figure (EUR 2.1
billion). However, the financing volume for 2018 as a whole is
expected to reach a level similar to the previous year. DEG committed
financing in the amount of EUR 0.4 billion (EUR 0.5 billion).

"The strong economic situation in Germany has resulted in a
successful first half of the year for KfW's promotional business.
There has been a great deal of demand for our energy efficiency
programmes for SMEs and private costumers, confirming the importance
of our work in the field of the environment and sustainability. We
are also pleased with the high level of interest that businesses have
been showing in our enhanced promotional offers for innovation and
digitalisation," says Dr Günther Bräunig, Chief Executive Officer of
KfW Group.

At EUR 822 billion, the earnings position came in slightly above
the previous year's level (EUR 801 million), benefiting in particular
from a good valuation result.

"All things considered, this is a very pleasing result. At the
mid-point in the year, earnings have developed better than we
expected. The fall in operating profit is primarily a result of lower
margins and the ongoing effects of the low-interest phase. However,
this is more than balanced out by the extraordinarily positive
development of our valuation result, which incorporates figures such
as risk provisions, currency effects, equity investments and the
valuation of derivatives," says Dr Günther Bräunig.

At EUR 739 million, operating income before valuation (before
promotional expense) came in significantly lower than in the previous
year (EUR 935 million). Net interest income (before promotional
expense) amounting to EUR 1,199 million (EUR 1,352 million) continues
to be the main source of income for KfW.

Promotional expense - mainly interest rate reductions for new
business - totalled EUR 123 million and was slightly higher than the
previous year (EUR 110 million).

The risk provisions in the loan business developed significantly
better than expected in the first six months of the year with a total
yield of EUR 2 million (previous year: negative yield of EUR 63
million). The private equity and securities portfolio of the group
had a very positive effect overall on earnings amounting to EUR 138
million (EUR 22 million). This development is due, among other
things, to DEG's equity finance business. Purely IFRS-related effects
from the valuation of derivatives used for hedging purposes amount to
EUR 121 million (previous year: EUR 33 million) and support the
positive earnings performance.

Total assets increased up to EUR 489.6 billion (compared to EUR
472.3 billion as of 31 December 2017), mainly due to greater reserves
of cash and cash equivalents.

The group's regulatory equity ratios are still at a good level. As
of 30 June 2018, the total capital ratio amounted to 19.9% (31 March
2018: 20.8%). The downturn in the second quarter was caused mainly by
adjustments to the valuation method and exchange rate effects from
EUR/USD. Furthermore, the interim results for the first half of 2018
have not yet been taken into account in the capital ratios. Details
on the business sectors' promotional activities In the first half of
the year, the SME Bank & Private Clients business sector achieved
commitments of EUR 23.1 billion (EUR 23.0 billion), with the SME Bank
alone contributing a stable promotional business volume of EUR 10.7
billion (EUR 10.9 billion).

With a commitment volume of EUR 2.9 billion (EUR 0.3 billion),
developments in the priority area of innovation were particularly
dynamic. Most of the demand was focused on the ERP Digitalisation and
Innovation Loan, which was introduced in the second half of 2017. In
an effort to cover the high demand and continue offering this
important financing offer, the promotional conditions have been
refined since the programme's launch, with commitments available
under the new modified conditions since June 2018.

Start-ups and general corporate finance recorded a promotional
business volume of EUR 3.4 billion (EUR 5.1 billion). While the KfW
Entrepreneur Loan experienced a downturn (EUR 1.2 billion; prior-year
period: EUR 3.0 billion), financing for business start-ups at EUR 1.9
billion was able to retain last year's strong performance.

The priority area of energy efficiency & renewables for commercial
clients achieved a total commitment volume of EUR 4.2 billion (EUR
5.4 billion), thus maintaining a similarly high level to the
prior-year period.

The private clients segment generated a promotional business
volume of EUR 12.4 billion (EUR 12.2. billion) by the mid-way point
of the year. The persisting strong conditions in the construction
sector as well as the favourable interest environment continued to
generate a high level of interest in real estate finance. The
promotional business volume for the energy efficiency & renewables
priority area in this segment amounted to EUR 9.2 billion (EUR 8.6
billion), with the majority of this sum generated by the
Energy-efficient Construction and Refurbishment programmes. There was
parti-cularly high demand for the energy-efficient refurbishment
programmes for existing property. In contrast, there was a slight
decline in demand in the education and housing & living priority
areas, which also include the Age-appropriate Conversion programme.
This area generated a total promotional business volume of EUR 3.2
billion (EUR 3.6 billion).

The Costumised Finance & Public Clients business sector generated
a commitment volume of EUR 4.0 billion in the first half of the year,
which means that new commitments were lower than in the respective
prior-year period (EUR 4.6 billion).

At EUR 1.3 billion, the commitment volume for municipal & social
infrastructure was below last year's figure (EUR 2.0 billion). This
development is primarily the result of improvements to
municipalities' financial situations and the coinciding shortage of
capacity in administration and the construction industry. At EUR 0.9
billion, basic funding made a major contribution to the total
promotional business volume. In addition, funding for
energy-efficient construction and refurbishment at municipal level
accounted for a significant share at EUR 0.4 billion.

With a contract volume of EUR 2.6 billion, individual financing
for banks was slightly up on last year's figure of EUR 2.2 billion.
This area received a particular boost from brisk demand for global
loans for leasing investments and refinancing packages for export
credits with federal backing. At the end of June, KfW also
contributed EUR 50 million to the Connecting Europe Broadband Fund
(CEBF), which will be used to support investment in neglected
regions.

The commitment volume for customised corporate finance amounted to
EUR 38 million and was thus significantly lower than last year's
figure (EUR 352 million). Two large-scale commitments in the offshore
wind power sector led to the much higher figure in 2017.

In the area of equity finance, the promotional business volume of
EUR 58 million was much higher than the figure for the prior-year
period (EUR 20 million). This rise can be traced back to increased
ERP venture capital fund investments and the "High-Tech Start-up
Fund", a specialist fund for high-tech start-ups. In future, the
equity financing business will be consolidated within a wholly-owned
KfW subsidiary in order to substantially enhance KfW's activities in
the field of venture capital and equity finance. The venture capital
company is scheduled to launch operations at the start of the 4th
quarter of 2018.

KfW IPEX-Bank, which is responsible for the group's Export and
project finance business, generated a new commitment volume of EUR
6.7 billion (EUR 5.7 billion) in the first half of 2018 and thus met
its own expectations. New commitments focused on the sector
departments of Financial Institutions and Trade Finance (EUR 1.2
billion; prior-year period EUR 0.6 billion), Basic Industries (EUR
1.2 billion; prior-year period EUR 0.5 billion) and Maritime
Industries (EUR 1.0 billion; prior-year period EUR 1.0 billion). The
commitment volume for the Promotion of developing countries and
emerging economies business sector amounted to EUR 1.6 billion (EUR
2.6 billion). In the first half of 2018, KfW Development Bank
committed EUR 1.2 billion to global projects and programmes, which is
significantly lower than the previous year's figure (EUR 2.1
billion). As a great number of new projects have already been checked
and prepared, the business area is expecting the financing volume for
2018 as a whole to reach a similar level to last year. A total of 52%
of new commitments from the first half of the year are benefiting
environmental and climate action. Almost 56% of all new commitments
go to development projects in Africa and the Middle East, and a good
68% of the Federal Government's budget funds are channelled to this
region. As of 30 June 2018, DEG had committed a total of EUR 359
million (EUR 473 million) for private sector investments in
developing countries, with business developing, as expected, much
more dynamically in the second quarter of 2018 than at the beginning
of the year. A total of EUR 119 million of the commitments are
earmarked for project finance. These funds will be used to finance
infrastructure projects in areas such as renewables and
telecommunications with long-term loans. Africa received around one
quarter of new commitments.

In the Financial markets business sector, the promotional business
volume for the first half of 2018 amounted to EUR 731 million (EUR
808 million). Of this figure, EUR 551 million (EUR 586 million) was
invested in securitisation transactions for capital market-oriented
promotion of SMEs. For its green bond portfolio, KfW invested a
volume of EUR 179 million (EUR 222 million) in six securities to
promote climate and environmental protection projects.

To fund its promotional business, KfW raised long-term funds in
twelve different currencies on the international capital markets
amounting to the equivalent of EUR 46.3 billion (EUR 46.9 billion) as
of 30 June 2018 and looks back on a successful first half. Funding
requirements for the year 2018 as a whole have been increased from
initially EUR 70 to 75 billion to a total of EUR 75 to 80 billion.

Key figures of the income statement 01/01/2018 01/01/2017
(EUR in millions) - -
30/06/2018 30/06/2017

Operating result before valuation 739 935
(before promotional expense)
Promotional expense 123 110
Consolidated profit 822 801
Consolidated profit before 700 768
IFRS effects from hedging

Key figures of the statement 30/06/2018 31/12/2017
of financial position
(EUR in billions)

Total assets 489.6 472.3
Equity 29.4 28.7
Volume of business 594.6 572.2

Key regulatory figures 30/06/2018 31/03/2018
(in %)1)
(Core) tier 1 capital ratio 19.9 % 20.8 %
Total capital ratio 19.9 % 20.8 %

1) The capital ratios stated do not consider the interim results
of the first half of 2018. KfW reports no significant tier 2
capital in its equity, meaning that the (core) tier 1 capital
ratio and the total capital ratio are virtually the same.

Service: An overview of the promotional figures in table form is
available for download at www.kfw.de/geschaeftszahlen.

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

Original-Content von: KfW, übermittelt durch news aktuell