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Press Release from 2021-05-17 / Group

First quarter of 2021: year off to a very good start

  • Increase in KfW’s promotional business volume to EUR 24.5 billion
  • Coronavirus aid programmes still provide key support to businesses
  • Continued high level of interest in promotion of energy-efficient housing
  • Consolidated profit of EUR 569 million

KfW Group got off to a very good start to the 2021 promotional year. In the first three months, the promotional business volume reached a record EUR 24.5 billion. (prior-year period: EUR 19.8 billion, +24%). The commitment volume in domestic promotional business developed particularly strongly (EUR 19.7 billion; prior-year period: EUR 13.6 billion, +45%), due to the continued strong demand for KfW coronavirus aid. Financing for energy-efficient housing also experienced a steep rise in demand to EUR 7.8 billion (EUR 5 billion, +55%). KfW Capital commitments totalled EUR 74 million (EUR 69 million, +8%). As anticipated, the commitment volume in export and project finance was below the previous year’s level (EUR 3.4 billion; prior-year period EUR 5.7 billion, -41%), due to the effects of the ongoing coronavirus crisis on world trade. Promotion of developing countries and emerging economies increased to EUR 1.2 billion (EUR 0.5 billion, +116%). After a slump in 2020 related to the coronavirus, KfW Development Bank was back at the level of the years prior to the coronavirus pandemic with EUR 0.9 billion (EUR 0.3 billion, +193%). DEG committed financing in the amount of EUR 249 million (EUR 227 million, +10%).

KfW’s 2021 financial year will once again be heavily dominated by domestic KfW coronavirus aid. In this context, the KfW Special Programme, the core of the coronavirus aid programmes, continues to provide key support to enterprises, as the first quarter shows. However, demand, at EUR 3.5 billion, dropped significantly compared to the previous quarter and is concentrated in particular on micro-enterprises. More than 80% of the loans in the KfW Instant Loan programme were granted to enterprises with fewer than 10 employees. Around 98% of loans in the KfW Entrepreneur Loan and KfW Start-up Loan coronavirus aid programmes are now committed in the lowest turnover class. Currently, the total commitment volume since the start of coronavirus aid for all target groups at home and abroad is EUR 56.0 billion (as of 30 April 2021).

“A historically strong start to the year marks the new promotion year. The main drivers are the KfW coronavirus aid programmes, although demand has levelled off compared to the first year of the pandemic. This is a good sign: the liquidity situation of companies could be stabilised, and Germany can look forward to solid economic growth in 2021 as a whole. At the same time, overcoming the coronavirus crisis remains the central mission with KfW as an important cornerstone,” said Dr Günther Bräunig, Chief Executive Officer of KfW Group.

KfW Group’s earnings position in the first quarter of 2021 saw consolidated profit of EUR 569 million (EUR -592 million) This development benefited both from a positive valuation result, which was impacted by net reversals in loan loss provisions and positive developments in the value of the investment portfolio, as well as from a good operating result, which remained unchanged. All business sectors made above-average contributions to group profit after the crisis year 2020. The consolidated profit before IFRS effects from hedging, relevant for managing KfW, came in at EUR 644 million (EUR -517 million).

“KfW’s positive earnings trend of the second half of 2020 continued in the first quarter of 2021. The continued strong operating result and the positive performance of the investment portfolio, combined with a stable risk situation, led to a very good consolidated profit of EUR 569 million,” said Bräunig.

The operating income before valuation (before promotional expense) was EUR 468 million, exceeding the previous year’s very strong result of EUR 435 million. At EUR 658 million, net interest income (before promotional expense) came in slightly above the prior-year level (EUR 638 million) and remains KfW's main source of income. Net commission income of EUR 149 million significantly exceeded the prior-year figure of EUR 116 million. At EUR 339 million (EUR 318 million), administrative expense was below expectations, as is typical for this period of the financial year.

In the current interest environment, demand for interest rate reductions continued to be low. As a result, the domestic promotional expense – which negatively impacts the earnings position and relates primarily to interest rate reductions for new business – remained very low at EUR 22 million (EUR 24 million).

The valuation result is characterised by reversals in impairment losses in the loan and investment portfolio, after the previous year’s result suffered heavily from the economic effects of the coronavirus pandemic. The risk provision result in the lending business totalling EUR +60 million (EUR -385 million) is marked by isolated reversals of loan loss provisions as well as income from recoveries on written-off receivables. The valuation result from the equity investment portfolio of EUR 181 million (EUR -608 million) is driven by reversals of impairment losses particularly in the promotion of developing countries and emerging economies business sector. EUR 94 million of the valuation result of EUR 107 million in this business sector is attributable to DEG, resulting in particular from the positive development of the US dollar.

Purely IFRS-related effects from the valuation of derivatives used for hedging purposes as in the previous year negatively impact the earnings position with EUR 75 million.

Total assets of EUR 560.5 billion are above the level of 31 December 2020 (EUR 546.4 billion), mainly due to greater reserves of cash and cash equivalents (+EUR 10.2 billion) and an increased lending volume (+EUR 5.8 billion) as a result of coronavirus aid disbursements. Equity rose to EUR 32.5 billion (31 December 2020: EUR 31.8 billion) due to the very good quarterly result and the reductions in the revaluation reserve.

The group’s regulatory equity ratios continue to be at a good level. The total capital ratio amounted to 24.9% as of 31 March 2021 (31 December 2020: 24.3%).

Details on the business sectors’ promotional activities

With a promotional business volume of EUR 17.0 billion as of 31 March 2021, new business in SME Bank & Private Clients experienced strong growth compared to the same period of the previous year (EUR 11.9 billion).

SME Bank got off to a good start in 2021 with a promotional business volume of EUR 6.1 billion (EUR 3.8 billion). This was mainly based on the coronavirus aid programmes, which continued to be in demand. Through these programmes, companies received loans totalling EUR 3.4 billion (EUR 0.5 billion) on behalf of the German Federal Government.

  • The priority area of start-ups and general corporate finance recorded commitments of EUR 4.3 billion (EUR 1.8 billion). The main drivers here were also the coronavirus aid programmes: the KfW Entrepreneur Loan reported commitments of EUR 2.1 billion (EUR 1.1 billion), almost all of which were committed under the Coronavirus Special Programme. The KfW Instant Loan achieved commitments of EUR 1.1 billion.
  • In the priority area of energy efficiency & renewables, which comprises programmes to support the German Federal Government’s climate targets, new commitments of EUR 1.6 billion are below the previous year’s level (EUR 2.0 billion).
  • The innovation priority area generated a promotional business volume of EUR 0.2 billion (EUR 0.1 billion), which is largely attributable to the ERP Digitalisation and Innovation Loan. The grant to the loan introduced in 2020 continues to be well received.

At EUR 10.9 billion as of 31 March 2021, the Private Clients segment continues its record run in promotional business volume and significantly exceeds the prior-year result (EUR 8.0 billion).

  • The largest contribution, with a commitment volume of EUR 8.0 billion (EUR 5.0 billion), was again accounted for by the priority area of energy efficiency & renewables with the Energy-efficient Construction and Refurbishment product family. The investment grant for charging stations in residential buildings for electric cars (private charging infrastructure) continued to be in high demand in the first quarter. Since the programme was launched, promotional funds have been provided for applications for over 450,000 charging points (as of 30 April 2021).
  • Despite the coronavirus crisis, demand in the housing sector (promotion for home ownership and age-appropriate conversion) also continued to record high commitments of EUR 2.4 billion (EUR 2.5 billion).
  • The priority area of education generated commitments of EUR 0.6 billion (EUR 0.5 billion). Demand for the coronavirus aid measures in the KfW Student Loan (zero interest and expansion of the group of eligible applicants) remained particularly strong.

The Customised Finance & Public Clients business sector generated a commitment volume of around EUR 2.7 billion in the first quarter of 2021, which means that new business was much higher than in the first quarter of 2020 (EUR 1.6 billion).

  • With new commitments of over EUR 956 million, t business volume for municipal & social infrastructure was significantly higher than in the prior-year period (EUR 709 million). The increase is due in particular to the drawdown of financing provided under the coronavirus aid for working capital for municipal enterprises.
  • With a business volume of over EUR 1.5 billion, individual financing for banks & promotional institutions of the federal states significantly exceeded the previous year’s figure (EUR 0.7 billion). Two major transactions within the global loans for leasing investments in particular led to a strong start to the year in this area.
  • The commitment volume for customised corporate finance totalled EUR 177 million (EUR 241 million). The value mainly comprises transactions in the Coronavirus Special Programme for syndicated financing.

Commitments in the KfW Capital business sector amounted to a total of EUR 74 million in the first quarter of 2021 (EUR 69 million, including commitments by the European Investment Fund (EIF) under the German Federal Government’s coronavirus package of measures for start-ups). In the ERP Venture Capital Fund Investments programme, which KfW Capital is implementing with the support of the ERP Special Fund, EUR 57 million (EUR 67 million) was committed to VC funds, which are now gradually investing these funds in start-ups and young technology companies in Germany. KfW Capital has thus got off to a good start in 2021; the slight decline in the ERP-VC Fund Investments programme is due to fluctuations in commitments during the year. Under Pillar 1 of the German Federal Government’s coronavirus package of measures for start-ups, which includes the Corona Matching Facility (via KfW Capital and EIF), around EUR 16 million was committed in the first three months of 2021.

At KfW IPEX-Bank – which is responsible for the Export and project finance business sector and provides financing to support German and European businesses on global markets – the effects of the ongoing coronavirus crisis on world trade and large parts of the entire global economy were, as expected, strongly reflected again in new business. Although the new commitments of EUR 3.4 billion are in the range of the three previous quarters, they are clearly below the level of the above-average prior-year period (EUR 5.7 billion), which was still unaffected by the crisis. All sector departments contributed to new business, most notably the infrastructure sector department with EUR 0.7 billion (EUR 0.5 billion).

The commitment volume for the Promotion of developing countries and emerging economies business sector amounted to EUR 1.2 billion (EUR 0.5 billion). In the first half of 2021, KfW Development Bank committed EUR 0.9 billion (EUR 0.3 billion) for projects in developing countries and emerging economies. Following the slump in the previous year due to the coronavirus, commitments have thus returned to the average level of previous years. KfW is continuing to support its partner countries in their efforts to combat the pandemic and its consequences in the current year.

DEG recorded positive business development. It was able to commit EUR 249 million for business investments in emerging and developing countries, exceeding the previous year’s figure (EUR 227 million). Of this amount, DEG provided EUR 113 million for investments in Latin America, such as financing in the agricultural sector or for financial institutions (EUR 56 million). At EUR 82 million, around one third of new commitments (EUR 58 million) were directed to Asia. DEG also continued to support its customers in managing the coronavirus pandemic through special promotional and advisory services.

For the green bond portfolio, the Financial markets business sector invested in securities to promote climate action and environmental protection projects with a volume of around EUR 240 million in the first quarter of 2021. The promotional portfolio volume as at the reporting date was thus EUR 2,075 million. The portfolio, which has existed since 2015, is now being maintained and expanded at a level of EUR 2 to 2.5 billion on behalf of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety after having reached the target of EUR 2 billion.

KfW raised EUR 31.9 billion (EUR 27.7 billion) in the international capital markets to fund its promotion business and thus had a successful start to its funding activities. KfW is planning a funding volume of EUR 70-80 billion for the entire year 2021. The annual target includes EUR 10 billion to be issued in the form of green bonds – of which EUR 2.6 billion had already been raised in a wide variety of currencies as at the quarterly reporting date.

Key figures of the income statement (EUR in millions)01.01.2021 – 31.03.202101.01.2020 – 31.03.2020
Operating result before valuation (before promotional expense)468 435
Promotional expense2224
Consolidated profit569-592
Consolidated profit before IFRS effects from hedging644-517

Key figures of the statement of financial position (EUR in billions)31.03.202131.12.2020
Total assets560.5 546.4
Volume of business688.7673.8

Key regulatory figures (in %) 1)31.03.202131.12.2020
(Common equity) tier 1 capital ratio24.824.1
Total capital ratio24.924.3

1) The capital ratios indicated take into account the eligible interim results according to Art. 26 (2) of the Capital Requirements Regulation, which deviate from the respective annual/quarterly results according to IFRS.

An overview of the business and promotional figures is available in table form at:

KfW Annual Report online:


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Sybille Bauernfeind

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