2021: an exceptional promotional year

• Promotional business volume of EUR 107 billion
• 1.3 million individual domestic commitments with a total volume of EUR 82.9 billion
• Of which EUR 10.1 billion for KfW coronavirus aid programmes
• KfW IPEX-Bank’s new business affected by pandemic
• Development cooperation impacted by coronavirus – DEG shows positive development

KfW’s promotional business volume at EUR 107 billion in 2021 remained at a high level (2020: EUR 135.3 billion; 2019: EUR 77.3 billion) but declined compared to the crisis year 2020 (-21%). Weakened demand for coronavirus aid due to the end of the lockdown caused the decrease in commitments compared to the prior-year period.

“KfW had an exceptional promotional year in 2021. We are seeing strong demand in the areas of climate change and the environment and, fortunately, a decline in demand for coronavirus aid. However, the evolution and impact of the pandemic are still associated with risks. This is why KfW will continue to support the economy and society in this area too,” said Stefan Wintels, Chief Executive Officer of KfW Group.

In Germany alone, KfW made around 1.3 million individual commitments for a volume of EUR 82.9 billion (2020: EUR 106.4 billion; 2019: EUR 43.4 billion), which made a major contribution to stabilising Germany’s economy. Commitments for domestic coronavirus aid programmes stood at EUR 10.1 billion, well below the crisis year 2020 level of EUR 46.9 billion.

At EUR 34.5 billion, the high demand for financing for energy-efficient housing continued to play a key role in the high domestic busines volume (2020: EUR 26.8 billion; 2019: EUR 11.2 billion). The enormous influx of applications in recent weeks completely depleted the budgetary funds made available by the German Federal Government for the Federal Funding for Efficient Buildings (BEG) and resulted in the programme being suspended on 24 January 2022. In addition, the priority area of energy efficiency and renewables in the SME Bank segment has also increased significantly to EUR 11.8 billion (2020: EUR 7.4 billion; 2019: EUR 7.9 billion). Commitments by KfW Capital for start-ups and young, innovative technology companies in Germany amounted to a total of EUR 502 million in 2021.

Due to the pandemic and other factors, the Export and project finance business sector as expected finished the year with a clear decline in new commitments, which came in at EUR 13.6 billion (2020: EUR 16.6 billion; 2019: EUR 22.1 billion), and has thus returned to the level of former years. KfW IPEX-Bank thus continues to be a reliable and strong partner for the German and European economies, particularly when it comes to expanding digital infrastructure.

Challenging conditions in partner countries, delays in projects due to the pandemic and a decline in the coronavirus aid provided led to modest commitments in the business sector Promotion of developing countries and emerging economies as well (EUR 10.1 billion, 2020: EUR 12.4 billion; 2019: EUR 10.6 billion). DEG has seen a very encouraging recovery in the crisis-related valuations of the investment portfolio as well as positive new business.

“We find ourselves in a decade of decisions that will influence the conditions under which our children and grandchildren will live in the future. The way we deal with climate change, digitalisation and our country’s capacity for innovation will determine whether we can fulfil our democracy’s promise of prosperity for generations to come. KfW will continue to make an effective contribution to meeting these and the global challenges - just as it has consistently demonstrated its ability to deliver in the past. At the same time, we aim to become a transformative and digital promotional bank in this decade to fulfil our promotional mandate in the best possible way,” said Stefan Wintels.

Details on the business sectors’ promotional activities

1. SME Bank and Private Clients

New business in the SME Bank & Private Clients business sector reached a high level with a promotional business volume of EUR 73.0 billion as of 31 December 2021 (2020: EUR 86.3 billion). EUR 29.6 billion of the promotional business volume was accounted for by the SME Bank commercial segment (2020: EUR 48.1 billion). The decline from the previous year is due to lower demand from the coronavirus aid programmes initiated by the Federal Government.

Start-ups and corporate investment
The promotional priority area of start-ups and corporate investment generated a promotional business volume of EUR 16.2 billion in 2021 (2020: EUR 39.7 billion). The coronavirus aid programmes experienced much lower demand at EUR 9.0 billion (2020 EUR 35.6 billion). However, all other programmes in this priority area increased their commitment volume. The ERP Start-up Loan doubled its volume to EUR 5.8 billion since the previous year (2020: EUR 2.9 billion).

Climate change and the environment
In the priority area of climate action and the environment, new commitments in the SME Bank segment amounted to EUR 12.3 billion and thus came in considerably higher than the previous year (2020: EUR 7.6 billion). The main drivers here were, in particular, the Energy-efficient Construction and Refurbishment Programme, which ended on 30 June 2021 (EUR 1.7 billion), as well as the new Federal Funding for Efficient Buildings (BEG) introduced on 1 July 2021, which accounted for EUR 5.5 billion (of which loans: EUR 2.8 billion, grants: EUR 2.7 billion) of the promotional business volume. The enormous influx of applications in recent weeks completely depleted the budgetary funds made available by the German Federal Government for the Federal Funding for Efficient Buildings (BEG) and, in view of the provisional nature of budgeting, resulted in the programme being suspended on 24 January 2022. In addition, the commercial charging infrastructure grant programme for the installation of new charging stations for electric cars in non-publicly accessible areas of companies and municipalities was introduced on 23 November 2021 and generated a commitment volume of EUR 31 million by the end of the year.

Innovation
New commitments in the priority area of innovation amounted to EUR 1.1 billion in 2021 (2020: EUR 0.8 billion). The increase in commitments can be largely attributed to the higher commitments in the ERP Digitalisation and Innovation Loan.
With a promotional volume of EUR 43.4 billion, the Private Clients segment reached an all-time high (2020: EUR 38.2 billion). The main drivers were the Energy-efficient Construction and Refurbishment product family, which ended on 30 June 2021, with a commitment volume of EUR 19.3 billion, and the new Federal Funding for Efficient Buildings (BEG), introduced on 1 July 2021, with EUR 15.2 billion. Both programme families are part of the priority area of energy efficiency and renewables, which generated a total commitment volume of EUR 35.2 billion (2020: EUR 26.9 billion). The investment grant for charging stations in residential buildings for electric cars (private charging infrastructure) also significantly exceeded expectations, which ended in October 2021 with a volume of a good EUR 0.7 billion (2020: EUR 0.1 billion).

Housing
Compared to the previous year, the housing segment (promotion of home ownership and age-appropriate conversion) posted a decline of EUR 2.7 billion and closed the year with a commitment volume of EUR 6.1 billion (2020: EUR 8.8 billion).

Education
Commitments in the Education priority area were also slightly below the previous year’s level at EUR 2.0 billion (2020: EUR 2.5 billion). The higher volume in 2020 year was mainly due to product adjustments in the KfW Student Loan as a coronavirus aid measure (zero interest rate and expansion of the scope of applicants), which saw less demand in 2021 than in the previous year, as this was the case for the SME Bank aid programmes.

2. Customised Finance and Public Clients

In the Customised Finance and Public Clients business sector, the commitment volume reached a figure of EUR 9.5 billion (2020: EUR 19.2 billion). The business volume thus normalised after the very high volumes of the previous year, which was marked by the special coronavirus measures.

Customised corporate finance achieved a commitment volume amounting to EUR 0.3 billion after recording EUR 9.3 billion during the previous year. The previous year’s volume was caused in particular by the high demand in the special coronavirus programme for syndicate financing.

Demand in the Municipal & Social Infrastructure segment was robust. With a commitment volume of EUR 4.6 billion (EUR 4.8 billion), increases in all three priority areas of municipal financing – innovation, public infrastructure, and climate change and the environment – largely compensated for the previous year’s one-off effects from the special coronavirus support for non-profits (EUR 0.5 billion).

At EUR 4.5 billion, Individual financing for banks and promotional institutions of the federal states was below the previous year’s figure (EUR 5.1 billion), which had also been strongly marked by commitments related to the coronavirus pandemic. Several large-volume transactions within the global loans for leasing investments stood in contrast to limited demand from the promotional institutions of the federal states for general funding.

3. KfW Capital

Commitments in the KfW Capital business sector amounted to around EUR 502 million in 2021 (including commitments by the European Investment Fund‚ EIF, under the Federal Government’s coronavirus package of measures for start-ups and the Future Fund, 2020: around EUR 871 million). The decline is solely due to the scheduled phase-out of the coronavirus aid programme for start-ups launched in 2020 (pillar 1 of the coronavirus package of measures for start-ups 2021: around EUR 20 million, 2020: around EUR 685 million/including EIF/High-Tech Start-up Fund, excluding the ERP Start-up Fund) on 30 June 2021. The commitment volume in the ERP Venture Capital Fund Investment programme, which KfW Capital is implementing with the support of the ERP Special Fund, reached the previous year’s level as planned (EUR 187 million, 2020: around EUR 184 million). Since June 2021, KfW Capital has also been investing in European VC funds with a focus on Germany through the ERP/Zukunftsfonds Growth facility, which was launched as part of the Federal Government’s Future Fund (“Zukunftsfonds”). By the end of the year, around EUR 111 million had already been invested here. The EIF also invested resources from the Future Fund administered by KfW Capital on behalf of the Federal Government for the first time – it has committed EUR 183 million since June under the GFF (German Future Fund) EIF Growth Facility managed by the EIF. The capital committed through these three programmes benefits start-ups and young, innovative technology companies in Germany.

4. KfW IPEX-Bank

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 coronavirus crisis on world trade and large parts of the entire global economy were, as expected, reflected in new business. New commitments totalling EUR 13.6 billion were once again significantly below the previous year’s figure (2020: EUR 16.6 billion). All sector departments contributed to new business equally. At EUR 2.7 billion, the Power and Environment sector department again accounted for the largest share (2020: EUR 2.8 billion). This mainly included projects in the area of renewables, such as wind farms and photovoltaic systems, which emphasises KfW IPEX-Bank’s commitment to protecting the environment and mitigating climate change. Financing to expand digital infrastructure, such as fibre-optic projects, is playing an increasingly important role.

5. Promotion of developing countries and emerging economies

KfW Development Bank commitments declined compared to the previous year, roughly to the level of 2019 (EUR 8.8 billion). In 2021, KfW provided EUR 8.6 billion (2020: EUR 11 billion) in financing to developing countries and emerging economies on behalf of the German Federal Government. This decline is largely due to project delays and travel restrictions caused by the pandemic as well as difficult political conditions in some partner countries. All the same, KfW continued to support the Federal Ministry for Economic Cooperation and Development (BMZ) in 2021 in mitigating the consequences of the pandemic for developing countries and emerging economies. By the end of the year, around EUR 2.7 billion had been mobilised through KfW for the implementation of the Emergency COVID-19 Support Programme. KfW promoted projects in the area of climate and environmental protection with EUR 3.7 billion. These new commitments will reduce or prevent 7.5 million tonnes of CO2 equivalents of annual greenhouse gas emissions. Commitments in the area of biodiversity conservation amounted to around EUR 685 million in 2021, an increase of 27% compared to the previous year. Furthermore, KfW Development Bank supported vaccine procurement and the necessary logistics in 2021 as part of the Emergency COVID-19 Support Programme. DEG is also focusing on entrepreneurial projects to improve healthcare during the coronavirus pandemic. For example, it arranged loan financing of EUR 144 million for the South African vaccine manufacturer Aspen in 2021.

With around EUR 1.5 billion in the 2021 financial year, DEG committed more funds for investments by private companies in developing countries and emerging economies than in 2020 (EUR 1.4 billion), despite the continuing pandemic. In addition, EUR 507 million was mobilised from other investors, which means over 30 per cent more than in the previous year.

From a regional standpoint, DEG committed EUR 566 million for investments in Latin America, significantly more than in 2020 (EUR 334 million). DEG used these funds to help small and medium-sized local enterprises in countries that were particularly affected by the pandemic to gain access to capital and continue to exist. Asia accounted for about one third of new financing commitments, followed by Africa and Europe.

6. Financial markets

KfW’s Financial markets business sector supported climate change mitigation and environmental protection by investing EUR 527 million in green bonds. For 2022, KfW is again planning to make a new investment of EUR 400 million for its green bond portfolio.
To fund its promotional business, KfW raised funds of EUR 82.6 billion in the international capital markets in 2021. In comparison to the prior year, KfW issued around EUR 3 billion more in euros (55%). With a share of 26%, the US dollar was the second most important currency and continued to play an important role for KfW. There was a total of 211 transactions in 15 different currencies. Making up around 20% of the refinancing, 37 “Green Bonds – Made by KfW” contributed EUR 16.2 billion, more than ever before.

To fund KfW’s special programme to support the German economy in the context of the coronavirus crisis, funds in the amount of EUR 3 billion were raised through the Economic Stabilisation Fund (WSF) in the 2021 financial year. This brings the total amount of WSF funds raised since the beginning of the pandemic to EUR 42 billion. The currently outstanding volume of refinancing funds is around EUR 35 billion. At the beginning of December 2021, the Federal Government and KfW extended the deadline for applications under the KfW special programme until 30 April 2022.

Long-term borrowing via the capital markets of EUR 80 to 85 billion is planned for 2022. At least EUR 10 billion of this amount is to be raised by issuing large-volume green bonds in various currencies.

The diversification of products and currencies guarantees continuity and flexibility to achieve the best possible funding results for KfW’s promotional business. Currently, the funding volume for 2022 already exceeds EUR 20 billion.

To find out more about the promotional figures, please visit
www.kfw.de/digitalpressportfolio