KfW in Q1 2025: strong start to the new year despite geopolitical challenges

• Volume of new commitments increased to EUR 17.7 billion
• Positive consolidated earnings of EUR 117 million despite conservative risk provisioning – economic profit of EUR 386 million
• SMEs investing again, primarily in climate and environmental protection, and in innovation – continued high demand from private customers for energy-efficient building promotion
• After implementation of CRR III, slightly lower but still very robust risk-bearing capacity with a common equity tier 1 ratio of 28.6 per cent
• KfW CEO Stefan Wintels: “KfW has demonstrated stable profitability in a particularly challenging environment, while advancing competitiveness and sustainable transformation”

Frankfurt am Main - KfW Group has made a solid start to the new year, as evidenced by the latest promotional figures. New business commitments in the first quarter of 2025 increased slightly to EUR 17.7 billion (01-03/2024: EUR 17.5 billion). Domestic promotional business in particular posted growth to EUR 12.5 billion (01-03/2024: EUR 10.7 billion), driven by renewed demand in the SME segment for financing, primarily for climate, environmental and innovation-related projects (EUR 3.4 billion compared with EUR 1.5 billion in the prior-year period). Due to the lower EU reference interest rate and the resulting attractive financing terms, demand for the “Renewable Energies - Standard” programme increased significantly to EUR 2.0 billion (01-03/2024: EUR 4 million). Furthermore, the programmes for private customers were in very high demand. The focus here continued to be on energy-efficient building promotion, including promotion of heating systems.

“Our new business in the first three months shows that demand for KfW promotion is strong,”

said Stefan Wintels, Chief Executive Officer of KfW.

"SMEs use KfW funding primarily to invest in innovation and climate protection. That’s good news for Germany as a business location."

New business in export and project finance amounted to EUR 4.5 billion, which was below the high level of the previous year (01-03/ 2024: EUR 6.1 billion). However, this decline is due to the nature of the business model, which includes large individual transactions that are not evenly distributed throughout the year.

Commitments at KfW Development Bank stood at EUR 509 million, on par with the previous year’s level (01-03/01-03/2024: EUR 508 million). At EUR 129 million, DEG’s financing commitments in the first quarter were lower than in the prior-year period (01-03/01-03/2024: EUR 228 million).

At EUR 117 million in the first quarter of 2025, KfW’s consolidated profit was significantly lower compared with the EUR 461 million in the previous year. This was primarily due to conservative risk provisioning and a negative result from equity investments, which reflects the challenging geopolitical environment. The economic result as consolidated profit before IFRS effects, promotional expense and taxes reached EUR 386 million (01-03/ 2024: EUR 600 million).

“The message for the first quarter is that KfW’s profitability remains stable even in a very challenging environment,”

said Stefan Wintels.

“This is very important because it is only thanks to this resilience that we can further strengthen Germany's and Europe's competitiveness and push forward sustainable change.”

Against this background, KfW’s quarterly profit of EUR 117 million was satisfactory and based on a stable operating result. At EUR 432 million, this was only slightly lower than the previous year (01-03/ 2024: EUR 454 million). At EUR 658 million, net interest income before promotional expense, which remains the group’s main source of income, was close to the previous year’s level (01-03/ 2024: EUR 673 million). At EUR 173 million (before promotional expense), net commission income exceeded the prior-year amount of EUR 167 million. This was primarily the result of remuneration for promotional activities on behalf of the Federal Government. Administrative expense before promotional expense increased to EUR 399 million (01-03/ 2024: EUR 387 million), in part due to the implementation of new promotional programmes.

KfW expanded its promotional expense in domestic business – in the form of using own funds, for example for interest rate reductions for new business to EUR 115 million. This significantly exceeded the prior- year figure (01-03/ 2024: EUR 77 million) and was due to higher interest rate reductions for new business, focusing on start-ups and corporate investments, innovation as well as energy efficiency and renewable energies.

The negative risk provision result in the lending business totalling EUR 34 million was shaped by additions to general credit risk provisions (01-03/ 2024: EUR +108 million). These risk provisions take into account the uncertainties arising from increasing global trade conflicts.

The valuation result from the investment portfolio in the amount of EUR -66 million (01-03/ 2024: EUR +49 million) was mainly shaped by the weaker US dollar. This had a dampening effect on the DEG business sector, whereas the portfolio results of KfW Capital and KfW Development Bank rose. Purely IFRS-related valuation effects from derivatives used for hedging purposes reduced earnings by EUR 120 million (01-03/ 2024: EUR +19 million).

Taxes on income amounting to EUR 34 million (01-03/ 2024: EUR 81 million) almost entirely affected current tax expenses, mainly thanks to the strong earnings performance at KfW IPEX-Bank.

At EUR 542.3 billion, total assets were slightly below their level as at the end of the previous year (EUR 545.4 billion). The decline resulted in particular from a decrease in the volume of lending, mainly in the coronavirus special programme, and from the repayment of credit lines in the package of measures for energy suppliers.

With a total capital ratio and (common equity) tier 1 capital ratio of 28.6 per cent, the regulatory capital ratios remained at a very good level (31 December 2024: 30.3 per cent and 30.2 per cent respectively). The decline in capital ratios was mainly attributable to the regulatory implementation of the third version of the Capital Requirements Regulation (CRR III) into EU law, which increased the total risk exposure amount, especially in credit risk. On the other hand, the inclusion of the result from the second half of 2024 increased the capital ratios.

Details on the business sectors’ promotional activities

1. SME Bank and Private Clients

In the SME Bank and Private Clients business sector, the promotional business volume amounted to EUR 10.9 billion as of 31 March 2025 (01-03/ 2024: EUR 9.0 billion).

SME Bank

At the end of the first quarter, new commitments in the SME Bank amounted to over EUR 4.9 billion (01-03/ 2024: EUR 3.0 billion).

In the promotional priority areas of start-ups and corporate investments, the previous year’s result was slightly exceeded with new commitments amounting to EUR 1.6 billion (01-03/ 2024: EUR 1.4 billion).

By the end of March 2025, new commitments amounted to EUR 2.9 billion (01-03/ 2024: EUR 1.3 billion) in the area of climate change and the environment. With new commitments of EUR 2.0 billion, a strong increase in demand was seen here, particularly in the Renewable Energies - Standard programme (01-03/ 2024: EUR 4 million). This was mainly due to the fall in the EU reference interest rate as of 1 January 2025, which allows for the design of more incentivising conditions.

There was also increased demand for innovation financing of over EUR 0.5 billion (01-03/ 2024: EUR 0.2 billion).

Private Clients

At EUR 5.9 billion, the new commitment volume in the Private Clients segment was slightly below the previous year’s level at the end of March (01-03/ 2024: EUR 6.1 billion).

New commitments amounting to EUR 3.9 billion were made in the priority area of energy efficiency and renewable energies (01-03/ 2024: EUR 4.3 billion). The decrease was largely due to lower new commitments in the Climate-friendly Construction programme (EUR 0.9 billion compared with EUR 2.8 billion in the prior-year period). The reason for the decline lies in adjustments to the funding conditions. In the Federal Funding for Efficient Buildings including promotion of heating systems the volume of new commitments almost doubled to EUR 2.9 billion compared with the previous year (01-03/ 2024: EUR 1.5 billion). Note: in the same period last year, promotion of heating systems was not yet open to all applicant groups.

The area of residential and housing also exceeded the previous year’s level with new commitments of EUR 1.6 billion (01-03/ 2024: EUR 1.3 billion).

In the area of education, new commitments as of 31 March 2025 were at around EUR 0.4 billion, the same level as the previous year (01-03/ 2024: EUR 0.4 billion).

2. Customised Finance and Public Clients

The Customised Finance and Public Clients business sector generated a commitment volume of approx. EUR 1.6 billion in the first quarter of 2025, on par with the previous year.

The Customised Finance for Corporates segment reached almost EUR 129 million (01-03/ 2024: EUR 99 million). A positive development was seen in the increased commitments under venture tech growth financing and the KfW syndicated loan for sustainable transformation.

The volume of business for municipal and social infrastructure was on par with the previous year, with new commitments of EUR 1.2 billion. This robust development is mainly due to the stable business in the basic and environmental programmes of municipal financing. As a result, the expected decline in disbursements from emergency aid and the gas and heat price brake to EUR 175 million was offset (01-03/ 2024: EUR 551 million).

Individual financing for banks and promotional institutions of the federal states recorded a business volume of EUR 306 million, slightly below the previous-year figure of almost EUR 331 million. Both the general funding for promotional institutions of the federal states at EUR 228 million and the refinancing of export credits covered by federal guarantees at EUR 66 million were slightly below their prior-year figures.

3. KfW Capital

Commitments in the KfW Capital business sector amounted to around EUR 41 million in 2024 (01-03/ 2024: EUR 43 million). The relatively low volume in the first quarter for venture capital (VC) fund investments was due to usual fluctuations during the year for large-volume individual commitments. The investment pipeline is already well filled as planned for the year as a whole.

Since it was founded, KfW Capital has already invested a total volume of around EUR 2.5 billion in 134 venture capital funds and has thus indirectly co-financed around 2,500 start-ups via these venture capital funds. On average, the VC funds invest more than four times the capital contributed by KfW Capital in start-ups and innovative companies in Germany.

KfW Capital also acts as an investment advisor for the “Growth Fund Germany”, one of the largest VC fund-of-funds in Europe with EUR 1 billion, which reached its final closing in November 2023 and was able to attract a substantial share of private capital (two thirds). In the first quarter of 2025, the “Growth Fund Germany” committed EUR 65 million (bringing the total to around EUR 690 million so far).

4. KfW IPEX-Bank

KfW IPEX-Bank, which is responsible for the export and project finance business sector and provides financing to support German and European businesses in global markets had a strong start to the year: By the end of the first quarter, its new commitments reached EUR 4.5 billion, although this fell short of the high level of the prior-year period (01-03/ 2024: EUR 6.1 billion). This was due to the nature of the business model, which involves large individual transactions that are not evenly distributed over the year. All sector departments contributed to new business. Particularly noteworthy once again was the “Mobility” sector, which includes rail traffic (industry), maritime industries and aviation, and with EUR 1.7 billion accounted for more than one third of total commitments. For example, financing was provided for new electric and hybrid locomotives for the rail transport leasing platform Northrail, various state-of-the-art cargo ships for fleet renewal (e.g. for Hapag-Lloyd), investments in electricity grids and generation facilities in Germany, as well as for an offshore wind farm in Poland. Through these projects, KfW IPEX-Bank is supporting the global transformation process.

5. Promotion of developing countries and emerging economies

KfW Development Bank

At EUR 509 million, commitments at KfW Development Bank in the first quarter were slightly above the previous year’s volume (01-03/ 2024: EUR 508 million). Of this, EUR 192 million came from the federal budget, EUR 140 million were KfW funds, and EUR 177 million were mandate financing. In cooperation with the West African Development Bank (Banque Ouest Africaine de Développement, BOAD), KfW funds of EUR 100 million support small and medium-sized enterprises in countries of the West African Monetary Union.

DEG

After reaching a new record in new business in the previous year, DEG was able to commit around EUR 130 million from its own funds to private companies for investments in emerging and developing countries in the first quarter of 2025 (01-03/ 2024: EUR 228 million). More dynamic business growth is expected for the remainder of the year. In 2025, DEG will continue to focus in particular on supporting transformation processes and strengthening the resilience of the companies it finances.

6. Financial markets

To fund its promotional business, KfW raised funds in the amount of EUR 30.6 billion on the international capital markets in the first quarter of 2025 (01-03/2024: EUR 35.6 billion). This corresponds to around 45 per cent of its planned funding volume of EUR 65 to 70 billion for the whole of 2025. The first quarter is typically the strongest in terms of bond issuance for large-volume and regular issuers such as KfW.

The share of funding in the domestic currency, the euro, stood at 55 per cent in the first quarter, while the strategically important US dollar accounted for 22 per cent of total funding volume. In addition to the euro and US dollar, KfW issued bonds in seven other currencies in the first quarter, including pound sterling (13 per cent), the Australian dollar (3 per cent) and the Hong Kong dollar (3 per cent, with a euro-equivalent volume of over EUR 930 million). Proceeds generated by the issue of green bonds amounted to EUR 4.7 billion, which is almost half of the annual green bond target of EUR 10 billion. In total, KfW completed five green bond transactions in four different currencies (euro, Australian dollar, pound sterling, Hong Kong dollar) in the first quarter.

_{1) The capital ratios stated take into account the eligible interim results according to Art. 26 (2) of the Capital Requirements Regulation, which deviate from the respective annual results in accordance with IFRS.}

A tabular overview of the business and promotional figures is available at: Business and Promotional Figures | KfW.

KfW Annual Report online: Reporting Portal | KfW