First quarter of 2017: demand for KfW promotion still strong in Germany

Frankfurt am Main (ots) -

- Total promotional business volume of EUR 18.2 billion (+16%)
- Domestic promotion up to EUR 14.6 billion (+20%)
- Strong demand for SME and housing construction finance continues
- New commitments at KfW Development Bank rise to EUR 1.1 billion
(+62%)
- Consolidated profit of EUR 421 million

In the first three months of 2017, the promotional business of KfW
Group reached a total volume of EUR 18.2 billion (prior-year period:
EUR 15.6 billion, +16%). Domestic promotion underwent very brisk
development in the first quarter, with commitments rising to EUR 14.6
billion (EUR 12.2 billion, +20%). This result was boosted by demand
from companies as well as private customers' persistently strong
interest in promotional loans. At EUR 3.3 billion (EUR 3.3 billion),
the business volume of international financing by KfW remained at the
prior-year level. The commitments of KfW IPEX-Bank fell short of the
previous year at EUR 2.1 billion (EUR 2.5 billion). Due to the
closing of two large-volume financing transactions KfW Development
Bank recorded a significant increase in its commitments, rising by
+62% to EUR 1.1 billion (EUR 674 million). DEG enjoyed a good first
quarter as well, posting a figure of EUR 155 million (EUR 146
million).

"The 2017 promotional year has got off to a successful start. The
vibrant economic activity in Germany has meant that demand for KfW
promotion from companies and individuals has remained high for the
time being. This bodes well for 2017", said Dr Günther Bräunig,
Member of the Executive Board of KfW Group.

The earnings position improved in the first quarter of 2017 with a
consolidated profit of EUR 421 million (EUR 246 million), benefiting
in particular from the better valuation result. The purely
IFRS-related effects from the valuation of derivatives used for
hedging purposes understate the earnings position only marginally by
EUR 14 million. At EUR 434 million, consolidated profit before IFRS
effects from hedging, which is relevant for the management of KfW,
came in much higher than in the same period of 2016 (EUR 262
million).

"KfW's earnings trend was encouraging in the first quarter of 2017
and still exceeds our expectations thanks to the good valuation
result. As the year progresses we expect to see a normalisation of
risk provisions for lending, among other things", said Dr Bräunig.

The operating result before valuations (before promotional
activity) totalled EUR 500 million (EUR 419 million). Net interest
income (before promotional activity) amounting to EUR 709 million
(EUR 631 million) continues to be the main source of income.

Promotional activity - mainly interest rate reductions for new
business - totalled EUR 63 million, slightly higher than the previous
year (EUR 56 million) despite the still low rate reduction margin in
the current interest rate environment.

Risk provisions in the lending business pulled earnings down by
EUR 2 million (by EUR 78 million in the previous year). The private
equity and securities portfolio of the group had a positive effect
overall on earnings amounting to EUR 10 million (EUR -43 million).

Total assets came in lower than at 31 December 2016 (EUR 507
billion), registering a figure of EUR 498.5 billion. This was mainly
due to fair value changes in connection with hedging transactions.

The group's regulatory equity ratios are still at a good level.
The total capital ratio amounts to 21.9% when applying the IRBA
analogously (31 December 2016: 22.3%). KfW has been subject to the
regulatory reporting requirements for capital ratios since the start
of the year 2016. Until regulatory approval is received for the IRBA,
likely around mid-2017, KfW reports to the banking supervisory
authorities in accor-dance with the credit risk standardised approach
(CRSA), based on which the total capital ratio as of 31 March 2017 is
16.1% (31 December 2016: 15.9%, with due consideration of the 2016
annual profit).

Details on the business sectors' promotional activities

With a promotional business volume of EUR 5.6 billion (EUR 4.2
billion) the Mittelstandsbank (SME Bank) enjoyed a very successful
start to the new year, registering significant growth compared to the
same quarter in 2016. The positive business outlook of German
companies, in spite of the many global uncertainties, coupled with
the continuously good funding conditions are contributing to the
lively demand for commercial promotional loans.

The priority area of business start-ups and general corporate
finance easily exceeded the previous year's level with commitments of
EUR 2.7 billion (EUR 1.9 billion). This development was largely
driven by the strong demand for general corporate finance (EUR 1.7
billion, previous year: EUR 1.0 billion). What is also pleasing is
the stable development in start-up finance with a volume of EUR 1.1
billion (EUR 0.9 billion), in spite of the general decline in
start-up activity in Germany.

Promotion in the field of innovation totalled EUR 0.1 billion (EUR
0.2 billion). At the start of the year, the ERP Venture Capital Fund
Investment programme was launched for investments in venture debt
funds. Additionally, KfW is to subscribe to the High Tech Gründer
Fonds III in the course of the second quarter.

With commitments of EUR 2.8 billion (EUR 2.1 billion) the
environment priority sector posted a very positive result. Demand in
the renewable energies segment was particularly pleasing, with
commitments of EUR 1.4 billion (EUR 0.9 billion). In the promotional
programme for commercial energy efficiency projects, even the
impressive figure from the previous year was beaten in Q1 2017 at EUR
1.4 billion (EUR 1.1 billion).

The promotional business volume of EUR 9.0 billion (EUR 8.0
billion) meant that Kommunal- und Privatkundenbank / Kreditinstitute
(Municipal and Private Client Bank / Credit Institutions) also
enjoyed a successful start to the new financial year, registering
marked growth compared to the previous year.

The priority area of housing reached a new high here with a
commitment volume of EUR 6.1 billion (EUR 4.5 billion). The
persistently strong construction sector and the still favourable
interest-rate climate helped the energy-efficient construction and
refurbishment programmes, on the market for ten years now, to record
a promotional business volume of EUR 4.7 billion, well in excess of
the previous year's first quarter (EUR 3.1 billion).

With a figure of EUR 1.1 billion, infrastructure financing made a
stable contribution to promotional business. The higher figure
registered in the previous year (EUR 1.4 billion) was influenced by
the special "refugee accommodation" facility, which has since
expired. In the first quarter of 2017 there was higher demand for the
programmes related to energy supply for neighbourhoods and
energy-efficient construction and refurbishment for municipal
companies.

In the area of education and social development the commitment
volume of EUR 0.5 billion was roughly the same as the previous year
(EUR 0.6 billion). New business in the general funding for
promotional institutions of the federal states rose slightly to EUR
1.1 billion (EUR 0.9 billion).

For the priority area of individual financing of banks the
commitment volume in the first quarter totalled EUR 0.1 billion (EUR
0.6 billion), which although is markedly down on the previous year,
there are some large contracts ahead in the second quarter.

In the Export and project finance business sector, for which KfW
IPEX-Bank is responsible, new business commitments totalled EUR 2.1
billion, less than the same period in 2016 (EUR 2.5 billion). The
Industries and Services segment is a priority here with EUR 0.6
billion (EUR 0.3 billion). Aviation and Rail as well as Financial
Institutions and Trade Finance also got the year off to a start with
EUR 0.4 billion each (prior-year period: Aviation and Rail EUR 0.4
billion, Financial Institutions and Trade Finance EUR 0.8 billion).

The commitment volume for the Promotion of developing countries
and emerging economies business sector totalled EUR 1.2 billion (EUR
0.8 billion). The KfW Development Bank business area raised its
commitment volume markedly by more than 62% at the end of the first
quarter of 2017 compared to the same period of the previous year. The
total commitment volume for programmes in developing and emerging
countries stood at EUR 1.1 billion (EUR 0.7 billion). Half of all the
projects benefited climate protection and the environment. The higher
overall volume compared to the previous year is mostly explained by
two large projects of more than EUR 200 million each in India,
regarding energy efficiency and social housing. DEG's new business
went well in the first quarter of 2017, amounting to EUR 155 million
(EUR 146 million). From a regional perspective, most of the financing
commitments went to Asia again, at EUR 94 million (EUR 86 million).
DEG provided around EUR 58 million for banks specialised in financing
SMEs in developing countries (EUR 32 million). In terms of
infrastructure, for example, DEG finances investments in renewable
energies, logistics and telecommunications. The new commitments in
this context totalled EUR 54 million (EUR 16 million).

Investments totalling roughly EUR 270 million (EUR 108 million)
were made in the financial markets business sector in the first
quarter of 2017. Some EUR 170 million of this (EUR 75 million)
pertained to investments in securitisation transactions in the field
of capital market-oriented support for SMEs. For the green bond
portfolio KfW invested roughly EUR 100 million (EUR 33 million) in
four securities to promote climate and environmental protection
projects.

The volume of long-term funding in the global capital markets
totalled the equivalent of EUR 27.4 billion in the first quarter of
2017 (EUR 22.2 billion). After about two years, the euro (52%)
replaced the US dollar again (34%) as the currency with the highest
share in total borrowings. The third-strongest currency in the first
three months of the year was the same as in 2016, the British pound
(8%). For the year as a whole KfW is expecting a funding volume of
roughly EUR 75 billion. This estimate will be revised as planned
based on current market developments at the end of the first six
months.

Service:

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

Pressekontakt:
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