An enormous volume of investment is necessary to make Germany future-proof. This cannot be sourced from public funds alone, and KfW is therefore challenged more than ever, in two different ways:
Firstly, we are enhancing the attractiveness of our promotional offering. In addition to the funds the Federal Government provides to us for interest rate reductions and grants, we use our own funds to improve the terms of our promotional programmes. For instance, we employed EUR 504 million of our own funds in 2024 to lower the interest rates on our loan products even further. This has been the largest amount in over ten years. We plan to maintain this promotional expense at least at this level in 2025 as well.
Secondly, we are deepening our commitment to boosting the capital market and mobilising private capital. The Capital Markets Conference on Energy Transition for Germany (CMCET) that we initiated and was held for the first time in July 2024 ignited more in-depth dialogue between policymakers and international investors on financing a sustainable energy infrastructure. The launch just a few weeks later of the WIN initiative coordinated by KfW represented a successful breakthrough in mobilising private capital for the growth capital ecosystem. Not least, we are supporting the German financial sector’s initiative to revive the European securitisation market – another key component in mobilising private capital.
Climate action remains a core obligation
As a bank committed to responsibility, KfW continues to support climate action and the related national and international goals. Climate action is not only an obligation to future generations but also an important instrument to ensure Germany’s competitiveness. We have committed around EUR 350 billion to climate and environmental financing since 2017, of which around EUR 30 billion in 2024 alone.
Domestic promotional business characterised by private investment in sustainable transformation
Domestic promotional business recorded slight growth to EUR 79 billion in 2024. The volume of new promotional business in the building sector - for private, municipal and commercial customers - proved the main growth driver, increasing by 15.9% to EUR 23.7 billion. The volume of EUR 22.4 billion in the Private Clients segment considerably exceeded the prior-year level. The focus in this segment was on promoting energy efficiency and renewable energy. The result clearly shows that private households are on board with the transformation.
Business volume in the SME Bank segment, by contrast, declined to EUR 13.4 billion. The main factors behind this were a weak economic environment and a marked reluctance to invest on the part of companies, an overall high level of interest rates, and state aid legislation limiting KfW’s options in drawing up terms.
In addition, KfW executed transactions directly mandated by the Federal Government totalling EUR 33.2 billion. This corresponds to 42% of total domestic new business. In contrast to previous years, the focus has shifted from crisis aid to financing infrastructure projects crucial to a sustainable transformation. The EUR 24 billion commitment for developing the hydrogen core network constituted the largest component. KfW also committed EUR 8.5 billion for follow-on financing to secure Germany’s energy supply.
International activities to bolster Germany as a business location
KfW is active around the globe through its business sectors KfW IPEX-Bank, KfW Development Bank and DEG. This puts KfW in a unique strategic position to strengthen Germany's competitiveness and resilience. KfW stands by the side of large German industrial industrial companies, supports German SMEs and represents German interests vis-à-vis governments and partners with whom it has been working for decades. The focus here also remains strongly on the transformation of the economy and on energy and climate. KfW’s international business units have achieved new business totalling EUR 34.2 billion in 2024.
New commitments totalling EUR 23.9 billion put KfW IPEX-Bank, responsible for the business sector Export and project finance, close to the record volume of the previous year of EUR 24.2 billion. The promotion of developing countries and emerging economies achieved a total commitment volume of EUR 10.3 billion (2023: EUR 10.9 billion). Almost EUR 7.8 billion (2023: EUR 9.0 billion) of this amount was attributable to KfW Development Bank. As a partner to private enterprises in developing countries and emerging economies, KfW’s subsidiary DEG succeeded once again in clearly surpassing its record volume of the previous year. DEG provided EUR 2.5 billion of own funds (2023: EUR 1.9 billion) for private investments in developing countries and emerging economies under globally challenging conditions. Moreover, it mobilised EUR 583 million in private capital.
KfW Capital boosts Germany’s VC ecosystem
Commitments in the business sector KfW Capital totalled around EUR 1.6 billion in 2024 (2023: EUR 2.1 billion). The year-on-year decline resulted, among other things, from the subdued commitments of the European Investment Fund (EIF) in connection with the Growth Facility as a component of the Future Fund managed by KfW Capital. KfW Capital has meanwhile invested EUR 2.5 billion in 132 VC funds and has indirectly co-financed 2,400 start-ups in this way. On average, VC funds invest close to four times the amount of capital provided by KfW Capital in start-ups and innovative companies in Germany. KfW Capital thus makes a powerful contribution to Germany as an innovation hub.
Consolidated profit considerably above expectations
The earnings position of KfW Group in 2024 was satisfactory given the persistent challenging geopolitical and macroeconomic environment, and with a consolidated profit of EUR 1.4 billion, it was considerably above expectations. The earnings position was largely characterised by the very strong operating result, which, at EUR 504 million, enabled the highest promotional expense on record of the past ten years.
Risk-bearing capacity remains very high
The regulatory capital ratios at year-end 2024, with a total capital ratio of 30.3% and a (common equity) tier 1 capital ratio of 30.2%, remained at a healthy level and significantly above the overall capital requirements. The rise of around 2.4 percentage points year-on-year was due to both a reduction in the total risk exposure amount and to an increase in regulatory capital compared to the previous year (31 December 2023: total capital ratio and (common equity) tier 1 capital ratio 27.9%). The capital ratios are expected to remain high for 2025 despite the more capital-intensive CRR III rules.
Business policy priorities in 2025
Given the political, social and economic challenges facing Germany, we have set three priority areas for 2025.
- We are placing a greater focus on Germany as a business location and will keep an even closer watch on our activities to determine whether they reinforce Germany’s competitiveness.
- As a responsible bank, we are committed to climate action as a central task. This is not only an obligation to future generations but also an important instrument to ensure Germany’s competitiveness.
- We reliably support our clients and partners and strive to effectively fulfil our role as partner to the Federal Government.
KfW’s role continues to develop
The experiences of the past year have shown us that reinforcing Germany’s competitiveness and financing a sustainable transformation demand a reinterpretation of KfW’s role. It needs more than just providing funding.
What sets us apart is our unique position: close and stable networking with policymakers, our national and international financing partners, companies and their associations, municipalities and consumers, and last but not least, the global financial markets. This extends our role to that of an advisor on overall conditions, an enabler of customised solutions and, most notably, as driving force for new initiatives.
In order to fulfil this role as a “bank committed to responsibility” in times of major challenges, global conflicts and profound upheavals, it is always useful to remember our roots. They lie in the social market economy, European unification and in upholding a rules-based world order, and they will continue to support and guide us in the years ahead.
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