Third quarter of 2019: A successful financial year continues
Geschrieben am 06-11-2019
Frankfurt am Main (ots) -
- Total promotional business volume reaches EUR 53.5 billion
- Domestic promotion totals EUR 31.6 billion
- Export and project finance grows to EUR 17.5 billion
- Development cooperation at EUR 3.5 billion
- Consolidated profit at EUR 1,245 Million
In the first nine months of 2019, the promotional business of KfW Group reached
a total volume of EUR 53.5 billion (prior-year period: EUR 51.3 billion). As a
result of the sustained positive financing conditions for commercial and private
investors in a consistent low-interest environment, demand for domestic
promotion fell to EUR 31.6 billion (EUR 34.7 billion). Commitments for Export
and project finance at KfW IPEX-Bank rose significantly to reach EUR 17.5
billion (EUR 11.9 billion). A large portion of this commitment volume was based
on the brisk demand for bank refinancing from the CIRR ship refinancing scheme
and the ERP export financing programme. Promotion for development cooperation
totalled EUR 3.5 billion (EUR 3.8 billion). At EUR 2.6 billion, the volume of
funds committed by KfW Development Bank was slightly below the previous year's
level (EUR 3.0 billion). Traditionally, commitments tend to rise significantly
in the fourth quarter. DEG finished the third quarter on a positive note with
EUR 0.9 billion (EUR 0.8 billion).
"In terms of promotion, 2019 looks to be a good year," said Dr Günther Bräunig,
Chief Executive Officer of KfW Group. "Demand for export and project finance has
been particularly noteworthy, confirming the importance of KfW's portfolio of
financing options. This makes an important contribution to future-proofing and
ensuring the success of the German economy in globalised markets."
Development of the earnings position was generally stable during the first three
quarters with a consolidated profit of EUR 1,245 million (EUR 1,252 million).
Both the positive operating income before valuation and a positive valuation
result contributed to this development.
The operating income before valuation (before promotional expense) totalled EUR
1,295 million (EUR 1,125 million). At EUR 1,851 million, net interest income
(before promotional expense) is slightly above the previous year's level (EUR
1,797 million). Administrative expense remained close to the previous year's
level at EUR 944 million (EUR 945 million). Reaching EUR 387 million (EUR 272
million), commission income rose as a result of deferred compensation from
previous years, which covered costs for new programmes such as the launch of the
Baukindergeld help-to-buy scheme.
In the current interest environment, demand for interest rate reductions
continued to fall. As a result, domestic promotional expense - which has a
negative impact on the earnings position and relates primarily to interest rate
reductions for new business - remains at a very low level at EUR 101 million
(EUR 149 million).
"The positive development of KfW's earnings continued in the third quarter of
2019 and exceeded our expectations. It is worth highlighting the increase in
operating income compared with the previous year thanks to improvements to the
interest income and commission result and the continued stability of
administrative expense. In view of the end of the year, we expect consolidated
profit to fall below last year's level but to once again exceed KfW's long-term
income potential," commented Bräunig.
Risk provisions in the lending business pulled earnings down slightly by EUR 45
million (EUR 34 million) but remained significantly below standard risk costs.
The risk provision result benefited from the overall stable risk situation
within the group. A slight increase in specific valuation allowances was
recorded in only a small number of areas, particularly for promotional
activities in developing and transition countries. This development was
counteracted by factors such as income from recoveries of receivables that had
been written off.
At EUR 128 million (EUR 88 million), the Group's private equity and securities
portfolio had an overall positive effect on earnings. This result was mainly due
to value increases caused by changes in exchange rates in DEG's equity finance
business. Purely IFRS-related effects from the valuation of derivatives used for
hedging purposes had almost completely levelled off by September at just EUR 9
million (EUR 296 million).
Total assets rose to EUR 527.2 billion (compared with EUR 485.8 billion as at 31
December 2018) mainly as a result of greater reserves of cash and cash
equivalents (increase of EUR 20.5 billion) and due to fair value changes -
brought on by interest and exchange rates - in connection with derivatives used
for hedging and their presentation under the hedge accounting method.
The Group's regulatory capital ratios are still at a good level. As of 30
September 2019, the total capital ratio amounted to 21.1% (30 June 2019: 21.2%).
Details on the business sectors' promotional activities
By the end of the third quarter 2019, the SME Bank & Private Clients business
sector achieved commitments of EUR 26.4 billion (EUR 28.4 billion). The SME Bank
segment contributed a promotional business volume of EUR 11.4 billion.
- The focus area of start-ups and general corporate finance
achieved a total of EUR 5.2 billion (EUR 4.7 billion). This rise
is largely attributable to high demand of over EUR 2.6 billion
(EUR 1.6 billion) for the KfW Entrepreneur Loan.
- At EUR 5.8 billion, the commitment volume in the focus area of
energy efficiency & renewables exceeded the previous year's
level of EUR 5.4 billion. The main forces behind this
development include the KfW Renewable Energy Programme with a
promotional business volume of EUR 1.6 billion (EUR 1.1
billion). The programme supports the financing of renewables
used for power generation and combined heat and power generation
in combined heat and power plants, as well as financing measures
for integrating renewables into the energy system.
- With a commitment volume of EUR 0.4 billion, the priority area
of innovation was significantly below the previous year's
record-breaking figure of EUR 3 billion. The main reason for the
significant drop from the previous year's level was the
disproportionately high demand for the ERP Digitalisation and
Innovation Loan last year. The promotional conditions for this
programme have since been refined, causing demand to decline. In
a further step in the middle of this year, this promotional
offering was expanded to encompass innovative businesses and
The private clients segment generated a promotional business volume of EUR 15
billion (EUR 15.3 billion) and was therefore at a similar level to the previous
- With commitments totalling EUR 5.0 billion, the housing & living
priority area has exceeded the prior-year figure (EUR 3.4
billion). The main cause for this rise is the Baukindergeld
grant introduced in the previous year. Under this programme,
government funds are used to help families with children to
purchase their first home for private use. The promotional aim
of the Baukindergeld scheme is to increase the rate of home
ownership by families in Germany, which is very low by European
- The priority area of energy efficiency & renewables for private
customers achieved EUR 8.7 billion, which is below the previous
year's record-breaking level (EUR 10.4 billion). This can be
traced back to the good supply of credit for building loans in
Germany at present.
- There was a slight decline in the education priority area (EUR
1.3 billion; prior-year period EUR 1.5 billion). This has
affected the KfW Student Loan in particular. Thanks to the good
economic situation, a large number of students are benefiting
from increased support from their parents or relatives.
The Customised Finance & Public Clients business sector
generated a commitment volume of around EUR 5.1 billion by the
end of the third quarter 2019, which is lower than the previous
year's level (EUR 6.2 billion).
At EUR 2.6 billion, the business volume for municipal & social infrastructure
exceeded the prior-year figure (EUR 2.3 billion). In addition to basic funding
for general infrastructure investments for municipalities and municipal and
social enterprises, programmes to support the energy transition at municipal
level at EUR 0.7 billion also contributed significantly to the positive
development. For the first time, grants under the new "Smart Cities Pilot
Projects" promotional approach were committed with a value of EUR 60 million.
With a commitment volume of EUR 2.2 billion, individual financing for banks &
promotional institutions of the federal states was significantly below the
previous year's high figure (EUR 3.8 billion), which was influenced by factors
including large contracts in the global lending business for lease financing.
The commitment volume for customised corporate finance totalled EUR 206 million
(EUR 98 million). Contracts for the newly introduced KfW Loan for Growth were a
decisive factor in this development.
In the first three quarters of 2019, the KfW Capital business sector recorded
commitments totalling EUR 103 million (EUR 95 million). With support from the
ERP Special Fund, KfW Capital has completed seven venture capital fund
investments so far this year (30 September). The investment volume totals around
EUR 102 million (+29% compared with the prior-year period: EUR 79 million).
After 12 months of operations, the deal pipeline remains well filled a long way
into 2020, while the VC fund community's interest in KfW Capital is still high.
For the year 2019 as a whole, KfW Capital is planning to invest over
approximately EUR 150 million; from 2020, the fund investor intends to invest an
average of around EUR 200 million p.a. in German and European VC funds. KfW
Capital's goal is to strengthen the VC market, enabling innovative tech
companies in Germany to enjoy better access to growth capital through
financially strong funds.
New commitments at KfW IPEX-Bank - which is responsible for the Export and
project finance business sector and provides financing to promote the
competitiveness and internationalisation of German and European businesses -
remain significantly above the prior-year figure (EUR 11.9 billion), totalling
EUR 17.5 billion. The main cause for this is the significant increase in the
business volume from bank refinancing in the CIRR ship refinancing scheme and
the ERP export financing programme (EUR 3.5 billion; prior-year value EUR 0.9
billion). All sector departments contributed equally to generally good new
business volume in the original credit business, reflecting the sector expertise
and structuring competence of KfW IPEX-Bank, which is divided into various
sectors. As in the previous quarter, the Maritime Industries sector department
accounted for the largest share with EUR 2.7 billion (EUR 1.6 billion). Further
focus areas are the Power, Renewables and Water sector department with EUR 2.3
billion (EUR 2.3 billion) and Financial Institutions and Trade Finance with EUR
2.3 billion (EUR 1.6 billion).
The commitment volume for the Promotion of developing countries and emerging
economies business sector amounted to EUR 3.5 billion (EUR 3.8 billion) in the
third quarter. In the past quarter, commitments by KfW Development Bank rose
significantly to EUR 2.6 billion. The predominant share of budget funds - around
EUR 1 billion - and almost half of all commitments went to countries in Africa
and the Middle East. A commitment volume similar to that of the previous year
(approximately EUR 8.7 billion) is expected for 2019 as a whole. New business at
DEG also developed well in the third quarter. Commitments for investments in
private companies in developing countries and emerging economies totalled EUR
869 million (EUR 809 million). A total of EUR 347 million was earmarked for
financial institutions, which could then provide loans to local small and
medium-sized enterprises, for instance. A total of EUR 217 million was allocated
to infrastructural measures in the renewables and mobile communications sectors,
for example. From a regional standpoint, commitments for investments in Asia
accounted for the largest share at around EUR 240 million, closely followed by
Latin America with EUR 228 million and Africa with EUR 227 million.
In the Financial markets business sector, the promotional business volume for
the third quarter of 2019 amounted to EUR 1,018 million (EUR 1,023 million). Of
this figure, EUR 841 million (EUR 739 million) was invested in securitisation
transactions for capital market-oriented promotion of SMEs. For its green bond
portfolio, KfW invested a total volume of EUR 177 million (EUR 284 million) in
eight securities to promote climate action and environmental protection
To fund its promotional business, KfW raised long-term funds on the
international capital markets amounting to the equivalent of EUR 73.1 billion
(EUR 61.7 billion) as of 30 September 2019. Around 52% of the funds were raised
in euros, while around 27% was raised in US dollars. In addition to the two main
currencies of euros and US dollars, bonds were also issued in nine other
currencies, with the British pound representing the third largest currency (12%
share as at 30 September). Thus far, EUR 6.9 billion of the funding was raised
by issuing seven green bonds in seven currencies. The largest USD green bond
from a Sovereign, Supranational or Agency issuer (SSA segment) to date was
issued in September with a volume of USD 2 billion. Funding requirements for
2019 as a whole amount to EUR 80 billion.
Key figures of the income statement 01/01/2019 - 01/01/2018 -
(EUR in millions) 30/09/2019 30/09/2018
Operating result before
valuation (before promotional
expense) 1,295 1,125
Promotional expense 101 149
Consolidated profit 1,245 1,252
Consolidated profit before
IFRS effects from hedging 1,255 956
Key figures of the statement of
financial position (EUR in billions) 30/09/2019 31/12/2018
Total assets 527.2 485.8
Equity 31.0 30.3
Volume of business 627.9 590.7
Key regulatory figures
(in %)1) 30/09/2019 31/06/2019
(Core) tier 1 capital ratio 21.1% 21.2%
Total capital ratio 21.1% 21.2%
1) The capital ratios listed take into account the interim results
of the half of the year 2019 (as opposed to 30 June 2019). KfW
records no material 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 business and promotional figures in table form is
available for download at: www.kfw.de/geschaeftszahlen.
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
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