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Press Release from 2021-11-03 / Group, Domestic Promotion

Third quarter of 2021: outstanding year of promotional activities continues with clear recovery effects

  • Total promotional business volume of EUR 73.1 billion
  • Domestic promotional activities total EUR 60.3 billion
  • High demand for energy-efficient residential financing
  • Consolidated profit of EUR 1.929 billion

In the first nine months of 2021, KfW Group reached a promotional business volume of EUR 73.1 billion (nine-month period 2020: EUR 109.1 billion; nine-month period 2019: EUR 53.5 billion). The weakening demand for coronavirus support as a result of lockdown coming to an end caused the decrease in commitments compared to the prior-year period. At the same time, the main promotional business areas developed as follows: Domestic promotional business experienced a significant increase in commitments compared to 2019, the year preceding the coronavirus crisis, and rose to EUR 60.3 billion (nine-month period 2020: EUR 89.8 billion EUR; nine-month period 2019: EUR 31.6 billion). Strong demand for financing for energy-efficient housing played a key role here, coming to EUR 26.7 billion (nine-month period 2020: EUR 19.5 billion; nine-month period 2019: EUR 8.7 billion). KfW Capital commitments totalled EUR 230 million (same period previous year: EUR 773 million). The reduction can mainly be attributed to the phase-out of the Corona Matching Facility within the scope of the assistance programme for start-ups during the coronavirus crisis. The commitment volume in Export and project finance was below the previous year’s level (EUR 9.3 billion; same period previous year: EUR 14.8 billion) due to the effects of the ongoing coronavirus crisis on the global economy. Promotion of developing countries and emerging economies reached a total of EUR 3.1 billion (same period previous year EUR 4.5 billion). EUR 2.4 billion of this amount was accounted for by KfW Development Bank (same period previous year: EUR 3.7 billion) and EUR 0.7 billion by KfW subsidiary DEG (same period previous year: EUR 0.8 billion). The lower figure at KfW Development Bank is due to the decrease in coronavirus support.

Since the coronavirus aid programmes were launched (on 23 March 2020), KfW committed loans totalling EUR 59.8 billion in Germany and abroad (as of 30 September 2021). In Germany, it is still small and medium-sized enterprises that have benefitted the most from these programmes with credit volumes of up to EUR 3 million. As expected, demand is declining even though coronavirus support programmes continue to make up a significant portion of commitments with EUR 8.4 billion (EUR 46.1 billion).

“The exceptional 2021 promotional year is continuing. KfW saw strong demand for promotional instruments. Fortunately, we are seeing declining demand for coronavirus aid”, said Stefan Wintels, Chief Executive Officer of KfW Group. “Now we need to concentrate on the challenges this country is facing, two of which are undisputedly climate and environmental action, and digitalisation and innovation. These challenges are enormous, but the economic goal is clear. German industry needs to convert its processes to ensure sustainability, and our country needs to ensure that it remains internationally competitive over the long term.”

KfW Group’s earnings position in the first three quarters of 2021 saw a consolidated profit of EUR 1.929 billion (EUR 145 million). This positive development is based on a stable operative result and benefitted from a very positive valuation result, which was impacted by the loan and investment portfolios. 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, amounted to EUR 2.092 billion (EUR 251 million).

“KfW’s favourable earnings trend over the first half of 2021 continued in the third quarter of 2021. The exceptionally good result of EUR 1.929 billion is due to reversal effects of the valuation discounts for loans and investments during the previous year within the context of the coronavirus crisis as operative returns continue to be stable. The recovery effects have been welcome overall and are evidence of the quality of our loan and investment portfolios. The positive development of the operating result also reinforces KfW’s capital base”, said Wintels.

The operating result before valuation (before promotional expense) was EUR 1.363 billion, falling slightly below the previous year’s very strong result of EUR 1.426 billion. At EUR 1.924 billion, net interest income (before promotional expense) was similar to the prior-year level (EUR 1.936 billion) and remains KfW’s main source of income. Net commission income of EUR 479 million (before promotional expense) exceeded the prior-year amount of EUR 450 million. Administrative expense (before promotional expense) at EUR 1.041 billion slightly exceeded the prior-year level (EUR 960 million), which was mainly due to IT investments and the envisaged further expansion of international business.

In the current interest environment, demand for interest rate reductions continued to be low. As a result, domestic promotional expense – which negatively impacts the earnings position and relates primarily to interest rate reductions for new business – remained exceptionally low at EUR 94 million (EUR 71 million).

The valuation result is characterised by reversals in impairment losses in the loan and investment portfolios, after the prior-year result suffered heavily from the economic effects of the coronavirus pandemic. Risk provisions in the lending business totalling EUR +312 million (EUR -784 million) is marked by reversals of, in particular, latent risk provisions as a result of an improved macroeconomic environment, as well as of income from recoveries of loans previously written off. The valuation result from the equity investment portfolio of EUR +644 million (EUR -366 million) is driven by reversals of impairment losses particularly in the Promotion of developing countries and emerging economies business sector (EUR +378 million, of this EUR +332 million from DEG) and KfW Capital (EUR +172 million).

At EUR 561.8 billion, total assets are EUR 15.4 billion above the figure as at 31 December 2020 (EUR 546.4 billion). The rise resulted from the increase in loan volume by EUR 11.7 billion in particular, also as a result of disbursements in the context of coronavirus aid (EUR +5.7 billion), among other factors. Equity rose due to the very good mid-year result and relief in the revaluation reserve resulting from the interest-based valuation of pension provisions to EUR 33.9 billion (31 December 2020: EUR 31.8 billion).

The group’s regulatory equity ratios continue to be at a good level. The total capital ratio amounted to 23.8% as of 30 September 2021 (30 June 2021: 24.1%). Any effects from the finalisation of Basel III have not been taken into account.

Details on the business sectors’ promotional activities

As of 30 September 2021, the SME Bank & Private Clients business sector generated new commitments amounting to EUR 53.6 billion (nine-month period 2020: EUR 69.5 billion; nine-month period 2019: EUR 26.4 billion). This business sector thus continues to operate at a high level. As expected, a much smaller amount of EUR 7.4 billion (EUR 32.3 billion) was attributable to the coronavirus aid programmes when compared to the previous year.

  • The Start-ups & Corporate investment priority area recorded a commitment volume of EUR 11.1 billion (EUR 35.3 billion). In addition to the coronavirus aid programmes, the ERP Start-up Loan – Universal was the largest item, coming to EUR 2.8 billion (EUR 1.8 billion).
  • The priority area of Energy Efficiency & Renewables recorded new commitments amounting to EUR 8.0 billion as of 30 September 2021 and thus achieved a significant increase over the previous year’s level (EUR 5.8 billion). The majority of new commitments were made within the scope of KfW’s Renewable Energy Standard programme with EUR 2.6 billion (EUR 2.7 billion) and its Energy-efficient Construction and Refurbishment programme with EUR 1.7 billion (EUR 2.1 billion), which ended on 30 June 2021 and was replaced by the Federal Funding for Efficient Buildings (BEG) programme, which has since seen high demand. Within the BEG programme, commitments in the commercial field (including grants) amount to EUR 2.8 billion.
  • At EUR 0.7 billion, the promotional priority area of Innovation grew slightly compared to the previous year (EUR 0.6 billion). The increase can be attributed to increased commitments in the ERP Digitalisation and Innovation Loan.

The Private Clients segment achieved a promotional volume of EUR 33.8 billion as of 30 September 2021, which is also significantly higher than the previous year’s result (nine-month period 2020: EUR 27.8 billion; nine-month period 2019: EUR 15.0 billion).

  • The priority area of Energy Efficiency & Renewables made the largest contribution here with EUR 27.3 billion (EUR 19.5 billion). In addition to the Energy-efficient Construction and Refurbishment programme family, which ended on 30 June 2021 with a volume of EUR 19.5 billion, there was high demand for the successor programme, Federal Funding for Efficient Buildings (BEG). This also made a significant contribution to the result within this priority area with EUR 7.2 billion.
  • At EUR 3.4 billion, new business in the Housing segment (home-ownership promotion and age-appropriate conversion) remained below the previous year’s level (EUR 4.7 billion).
  • Demand in the priority area of Education at EUR 1.5 billion was slightly below the previous year’s level (EUR 1.7 billion). This is mainly due to a slight decline in demand for the Student Loan, which students are making less use of due to the improved part-time job market.

The Customised Finance & Public Clients business sector generated a commitment volume of around EUR 6.4 billion by the end of the third quarter of 2021 (nine-month period 2020: EUR 19.5 billion, nine-month period 2019: EUR 5.1 billion). After the extremely high volume of the previous year due to special coronavirus measures, business volume normalised again.

Customised corporate finance achieved a commitment volume amounting to EUR 0.2 billion after recording EUR 12.6 billion during the previous year (nine-month period 2019: EUR 0.2 billion). The previous year’s volume was characterised by utilisation of the Coronavirus Special Programme syndicate financing.

There was a slight decrease in the Municipal & Social Infrastructure priority area with EUR 2.9 billion) (EUR 3.1 billion). Demand for promotional programmes in the area of climate change and the environment was very robust.

With a commitment volume of EUR 3.3 billion, Individual financing for banks & promotional institutions of the federal states was slightly below the previous year’s figure (EUR 3.8 billion). Several large-volume transactions within the global loans for leasing investments stand in contrast to a limited demand from the promotional institutions of the federal states for general funding.

In the third quarter of 2021, commitments in the KfW Capital business sector amounted to a total of around EUR 230 million (EUR 773 million EUR, including commitments by the European Investment Fund (EIF) under the German Federal Government’s coronavirus package of measures for start-ups, which ended on 30 June 2021). In the ERP Venture Capital Fund Investments programme, which KfW Capital is implementing with the support of the ERP Special Fund, by 30 September 2021, EUR 112 million (EUR 172 million) had been committed to VC funds, which are now gradually investing these funds in start-ups and young technology companies in Germany. The lower volume of the fund investments made can be attributed to typical variations throughout the year in commitments in fund business; the investment pipeline is well filled as planned through the end of the year. Pillar 1 of the German Federal Government’s coronavirus package of measures for start-ups, which includes the Corona Matching Facility (via KfW and EIF), ended as planned on 30 June 2021. The commitments of EUR 20 million were made in the first half of 2021 (01/-09/2020: EUR 599 million, including the HTGF and EIF). The first three components have launched within the context of the German Federal Government’s Future Fund (“Zukunftsfonds”), which KfW Capital is structuring. The first commitments amounting to EUR 97 million were already made as of 30 September 2021 within the scope of the EIF-GFF Growth Facility. Further investment commitments in the components are planned for this year.

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 large parts of the entire global economy continued to strongly affect new business. New commitments of EUR 9.3 billion remained within the range of the previous quarters; however, they clearly remain below the level of the prior-year period (EUR 14.8 billion).

Commitments in the Promotion of developing countries and emerging economies business sector amounted to EUR 3.1 billion (EUR 4.5 billion). KfW Development Bank recorded a lower commitment volume of EUR 2.4 billion in the third quarter (EUR 3.7 billion). In the prior-year period, coronavirus support in developing countries and emerging economies amounted to EUR 1 billion; the total commitment volume for 2020 was EUR 4 billion. The predominant share of budget funds, amounting to EUR 776 million, went to countries in Africa and the Middle East. Expectations for 2021 as a whole are that the commitment volumes will settle back to pre-coronavirus levels. As of 30 September 2021, DEG had committed EUR 693 million for investments in private companies in developing countries and emerging economies (EUR 784 million). In addition to loan financing amounting to EUR 517 million, it invested around EUR 176 million of investment capital in financial technology companies in Asia and in the production of consumer goods in Nigeria. Regionally, the largest share of the newly committed financing went to Africa/MENA (EUR 238 million) and Latin America (EUR 205 million). DEG has also been in demand in 2021, having established itself as a reliable partner during the pandemic, providing over EUR 20 million for health and preventative measures for businesses as part of its COVID-19 response programme.

For the green bond portfolio, the Financial markets business sector made 20 investments to the tune of EUR 527 million (EUR 323 million) to support projects promoting climate change mitigation and environmental protection in the first three quarters of 2021. As a result, the volume of the promotional portfolio was EUR 2.2 billion as of the reporting date.

To fund its promotional business, KfW has raised EUR 70.9 billion (EUR 57.3 billion) in funds on the international capital markets in 15 different currencies. Green Bond issuance continued to experience very positive development – KfW had already exceeded its announced record volume of EUR 10 billion in Green Bonds by EUR 1.5 billion within nine months. The range of KfW Green Bonds is noteworthy with 12 different currencies in nine months, as well as the issuance with a 10-year term, which is the longest KfW EUR Green Bond to date with an order book at record levels of over EUR 22 billion. For 2021 as a whole, KfW planned a funding volume of EUR 75–80 billion and will slightly exceed this range due to high demand for loans.

Key figures of the income statement
(EUR in millions)
01.01.2021 – 30.09.202101.01.2020 – 30.09.2020
Operating result before valuation
(before promotional expense)
Promotional expense9471
Consolidated profit1,929145
Consolidated profit before IFRS effects from hedging2,092251

Key figures of the statement of financial position (EUR in billions)30.09.202131.12.2020
Total assets561.8546.4
Volume of business695.1674.1

Key regulatory figures (in %) 1)30.09.202130.06.2021
(Common equity) tier 1 ratio23.824.1
Total capital ratio23.824.1

1) The recorded capital ratio for 30 September 2021 takes into account interim results from the first half of 2021 (contrary to 30 June 2021). KfW records no material tier 2 capital in its equity, meaning that the (common equity) tier 1 capital ratio and the total capital ratio are virtually the same.

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

KfW Annual Report online:


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Sybille Bauernfeind

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