KfW Bankengruppe increases financing volume by 11% to EUR 76.8 billion

Frankfurt (ots) -

- Stronger support for climate protection planned
- KfW Initiative "Small SMEs" started

In 2006 KfW Bankengruppe achieved a total financing volume of EUR
76.8 billion. This was an increase of 11% over the previous year (EUR
68.9 billion), said Ingrid Matthäus-Maier, Spokeswoman of the Board
of Managing Directors of KfW Bankengruppe at the annual prelude press
conference in Frankfurt on Wednesday. The balance sheet total of KfW
Bankengruppe rose by more than 5% to EUR 360 billion (EUR 341
billion). In addition, KfW presented the 2006 results for the
individual group brands. Matthäus-Maier: "2006 was a good year for
KfW Bankengruppe. We clearly raised the financing volume and reached
more for the SME sector, environmental and climate protection, the
education of our children, infrastructure, the German and the
European economy and not least for the developing and transforming
countries. And in 2007, too, we want to reach a lot. We will again
enhance our efforts in the areas of climate protection and small-size
SMEs."

"In the area of climate protection we will step up the promotion
of energy conservation, energy efficiency and CO2-reduction and same
time will expand the support for renewable energies", explained
Matthäus-Maier. The Spokeswoman of the Board of Managing Directors
also stressed the improvements and expansions introduced at the
beginning of the year in the CO2 Housing Rehabilitation Programme.
Home builders who not only comply with the legal standards for new
buildings but also reduce energy consumption by at least 30% below
the standard for new buildings may obtain a further grant of 12.5% of
the loan (not more than EUR 6,250 per housing unit) in addition to
the very favourable conditions. As an alternative to a loan, it has
been possible since 1 January 2007 to get an investment grant.
Special promotional opportunities are now also offered to
municipalities which want to rehabilitate schools and kindergartens
with regard to energy efficiency.

"Here we have a lot to catch up, because many investments were
postponed due to strained public finances", said Matthäus-Maier. The
promotion of energy-saving building rehabilitation was also extended
to include charitable and non-profit making organisations. To
increase energy efficiency also in the commercial field KfW is
preparing a new concept which will offer enterprises both advice and
financing for energy efficiency measures. "In particular small
enterprises often underestimate how much money they can save when
using energy more efficiently", said Matthäus-Maier.

KfW also launched the "Small SMEs" initiative to improve the
financing conditions of business start-ups, young enterprises and
small SMEs. The intention pursued by KfW with the different measures
is to incite the banks and savings banks to relax their restraint,
though understandable from a micro-economic point of view, in
providing small-volume loans to this target group. In order to reduce
the costs for processing such small-volume loans KfW is preparing a
new standardised and lean loan product for small, established SMEs.
KfW also intends to become a stronger risk partner for the banks than
in the past by assuming 50% of the risk of default in the KfW
Entrepreneur Loan presumably from April onwards. This will apply to
enterprises which have existed at least for two years. The two
Programmes "StartGeld" and "Microloans", both targeting business
start-ups and young enterprises, will be combined as from 2008.
"Instead of providing an 80% exemption from liability as in the past,
we want to release the on-lending banks complete from liability under
this new start-up product", said Matthäus-Maier.

Results of the individual financing activities:

KfW Förderbank (KfW promotional bank) achieved a lending volume of
EUR 27.9 billion (EUR 22.4 billion) in 2006. The initiative "Housing,
Environment, Growth" accounted for most of this growth of 25%. The
aim of the initiative is through energy-saving rehabilitation
measures in the housing sector to reduce CO2-emissions and at the
same time to strengthen the German domestic economy. In the framework
of the initiative KfW Förderbank extended approx. 260.000 loans worth
a total of EUR 17 billion in 2006. This helped to launch investments
of approx. EUR 28 billion. At the same time around 400,000 jobs were
safeguarded for at least one year. Thus, the initiative also
represented an important promotional programme for the construction
industry. Environmental financing (EUR 4.6 billion against EUR 4.2
billion), the financing of investments in municipal infrastructure
(EUR 3.2 billion compared with EUR 2.8 billion) and education finance
(EUR 1.3 billion compared with EUR 0.9 billion) also developed
positively. Under the Student Loan Programme, which was introduced in
April 2006 to finance students' living expenses, KfW has so far
granted approx. 19,000 loans. Including securitisation of housing
loans (EUR 7.6 billion compared with EUR 16.3 billion) KfW Förderbank
reached a financing volume of EUR 35.5 billion (EUR 38.7 billion).

In 2006 KfW Mittelstandsbank provided EUR 22.8 billion to support
small and medium-sized enterprises, EUR 9.5 billion of which was
securitisation. Thus, KfW Mittelstandsbank was able to raise its
financing volume by 47%. Excluding securitisation, the increase was
16%. "This shows that the cyclical dynamics has also reached the SME
sector", said Matthäus-Maier. In the basic promotional programme for
small and medium-sized enterprises alone - the KfW Entrepreneur Loan
- the commitment volume rose by 28% to EUR 6.1 billion. Mezzanine
financing, which increased to EUR 2.1 billion (EUR 0.6 billion), also
contributed to this very good result. In addition, KfW invested
approx. EUR 800 million in the framework of the new ABS SME portfolio
and made commitments of more than EUR 280 million in private equity
financing (EUR 300 million).

In 2006 the total business volume of KfW Entwicklungsbank (KfW
development bank) rose far stronger than expected, accounting for
commitments of EUR 2.5 billion (previous year: EUR 1.9 billion). In
addition to funds of EUR 1.4 billion provided from the German federal
budget, KfW Entwicklungsbank made available EUR 1 billion in own
funds for projects in developing and transforming countries. This is
around twice as much as in 2005 and accounts for 43% of total
commitments made by KfW Entwicklungsbank. This commitment volume is
only possible because KfW acts as a bank. Besides classical priority
areas of development cooperation (for example the construction of
roads and schools, water and electricity supply, the financial
sector) the promotion of environmental and climate protection, which
amounted to commitments of approx. EUR 1 billion in 2006 has also
become a major priority. By securitising micro-loans in Bangladesh
KfW was able again in 2006 to show what innovative approaches are
possible in Financial Cooperation.

In addition, the KfW subsidiary DEG provided EUR 918 million (plus
37%) in 2006 to finance investments by private enterprises in
developing countries.

The new business of KfW IPEX-Bank in 2006 amounted to approx. EUR
15 billion (against EUR 12 billion in the previous year). One third
of this was new commitments in Germany, another third each went to
the financing of investment projects in Europe and in the rest of the
world. In 2008 the international project and export finance bank will
be separated into an independent subsidiary of KfW Bankengruppe. The
preparatory works have already well advanced: Applications for a
banking licence and admission as an IRB advanced bank have been filed
in 2006.

To fund its business activities KfW Bankengruppe raised funds
amounting to EUR 54.2 billion in 2006 (2005: EUR 50.6 billion). Bonds
and notes were issued in 23 different currencies in the international
capital markets in more than 500 transactions, thus further
diversifying KfW's funding base and accessing new investors.

Service: All documents of the annual prelude press conference of
KfW Bankengruppe are available in the internet under www.kfw.de.

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For further information please call:
Alexander Mohanty,
Phone: +49 (0)69 7431-4494,
E-Mail: alexander.mohanty@kfw.de

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