KfW posts strong growth in demand for financing and continues its modernisation drive

Frankfurt (ots) -

- At EUR 70.4 billion, promotional business volume moderately
exceeds expectations
- After phase-out of economic stimulus programmes, bank is
reverting to long-term qualitative growth
- Environmental and climate protection received one-third of
financing
- KfW Energy Turnaround Action Plan launched

In the year 2011, overall promotional business volume of KfW
Bankengruppe reached EUR 70.4 billion, more than the originally
expected EUR 66 billion. After EUR 63.9 billion in 2009 and an
augmented business volume of EUR 81.4 billion as a result of the
economic stimulus programmes in 2010, KfW's promotional business is
now returning to a path of moderate and long-term qualitative growth.
In 2011 KfW committed EUR 50.9 billion to enterprises, municipalities
and retail clients in Germany (2010: EUR 64.4 billion). Its
international business rose sharply to EUR 19.2 billion, an increase
of 28% over the EUR 15 billion committed in 2010.

"As we had announced, KfW reduced its promotional business volume
again last year after the end of the crisis-induced, significantly
augmented promotional measures of 2010. The promotional business
volume of 2011 has reverted to the moderate path of growth of
pre-crisis years. This also proves that KfW takes its subsidiary role
seriously and pulls back once overall conditions permit", said Dr
Ulrich Schröder, Chairman of the Executive Board of KfW Bankengruppe,
at the Annual Prelude Press Conference in Frankfurt on Wednesday.

Besides small and medium-sized businesses, environmental and
climate protection were another main-focus area. Here KfW committed
EUR 22.8 billion, around 32% of the overall promotional business
volume. This means that in 2011 almost one out of every three euros
of KfW's promotional funds went to climate and environmental
protection. This share is to increase this year.

KfW has continued its modernisation process which, in its client
relations, encompasses focusing its promotional offering more
strongly on socially relevant developments and sustainability
criteria and aligning it more closely with clients' expectations and
needs. Within the group itself, KfW is continuing to develop its
processes and organisation. Measures include, among others,
optimising business processes, renewing and standardising its
IT-systems, applying the tightened regulatory requirements for banks
(Basel III, MaRisk) as well as applying German Banking Act
(Kreditwesengesetz, KGW) taking into account the special role of KfW.
This modernisation course will be continued at the same pace this
year, and be publicly documented by a new corporate design and image.

"KfW has already achieved important milestones in implementing its
modernisation, but major challenges still lie ahead. We will invest a
total of EUR 500 million over the coming years to assure our future
viability and promotional capacity", said Dr Schröder.

Results of the activities of the individual business areas

The promotional business volume of KfW Mittelstandsbank was EUR
22.4 billion. The 21.7% decline against the year 2010 is essentially
due to the phase-out of the KfW Special Programme on 31 December
2010. Nevertheless, the volume of commitments exceeds the expected
target volume of EUR 18.8 billion, which primarily reflects the
economic growth achieved in 2011 and the associated business
investment activity. Commitments in the priority area of
"Innovations" almost matched the previous year's level at EUR 2.2
billion (EUR 2.1 billion), as did the priority area of "Environmental
Protection", with a volume of EUR 10.8 billion (EUR 11.1 billion). A
split trend became apparent here. On the one hand, demand for loans
for photovoltaic solar systems from the "KfW Renewable Energies
Programme - Standard" dropped as a result of the reduced feed-in
tariff under the Renewable Energy Sources Act. On the other hand,
commitments under the "Environmental and Energy Efficiency Programme"
with a volume of EUR 3.2 billion were more than double the previous
year's level.

In the business area KfW Privatkundenbank the overall volume of
commitments reached EUR 16.7 billion, meeting the planned level. The
drop in the volume of commitments against the EUR 20.0 billion of
2010 is primarily due to pull-forward effects from that year, in
which the more stringent requirements of the Energy Saving Ordinance
(EnEV) 2009 were gradually applied to KfW's financing programmes.

Demand also receded as a result of the decline in available
federal budget funds for interest-rate reductions in 2011 and the
discussion about possible tax benefits for energy-efficient
refurbishment. Commitments for "Senior-friendly Conversion" developed
very favourably, reaching a volume of EUR 0.4 billion (2010: EUR 0.2
billion). Commitments in the promotional focus of "Education and
Social Development" totalled EUR 2.2 billion (2010: EUR 2.1 billion).

The business area KfW Kommunalbank achieved a volume of EUR 11.8
billion in 2011, slightly exceeding the target volume of EUR 11.5
billion. The decline against the previous year (EUR 15.8 billion) was
primarily due to the phase-out of the "Investment Offensive
Infrastructure" and the scheduled reduction of non-programme-related
funding for promotional institutions of the federal states. The mass
programmes such as "KfW-Investitionskredit Kommunen" or "Kommunal
Investieren" recorded strong demand, so that the volume of
infrastructure financing of EUR 4.2 billion roughly doubled from the
year 2009.

The business area of Export and Project Finance, which is under
the responsibility of KfW IPEX-Bank, achieved a commitment volume of
EUR 13.4 billion. The highest commitments were achieved in the sector
Energy and Environment, at EUR 2.1 billion, followed by Shipping as
well as Aviation and Rail Transport with EUR 2.0 billion each. The
reasons for the increase were enterprises' propensity to invest and
the relative restraint on the part of banks and capital market
players in individual segments.

The volume of commitments in the business area Promotion of
Developing and Transition Countries was EUR 5.8 billion (2010: EUR
5.7 billion). KfW Entwicklungsbank accounted for EUR 4.6 billion
(2010: EUR 4.5 billion). KfW Entwicklungsbank contributed EUR 2.6
billion in own funds Seventy-nine per cent of the commitments of KfW
Entwicklungsbank in 2011 count as ODA(2010: 75%, 2009: 64%) count as
ODA. This underscores the growing importance of KfW's role as a
partner of the Federal Government in this area. DEG, which is active
in the financing of small and medium-sized enterprises in developing
and transition countries, committed EUR 1.2 billion, the same volume
as in the previous year (EUR 1.2 billion).

The KfW Programme to Refinance German Export Loans, which was
launched in 2009 to mitigate the financial and economic crisis, was
continued at changed terms and conditions in February 2011. Under
this programme KfW provides banks with long-term funds to finance
German exports. As banks' funding conditions tightened particularly
in the second half of 2011 the programme has met with strong demand.
With commitments in the equivalent of EUR 650 million the programme
has contributed to safeguarding German export projects.

To fund its promotional business KfW raised EUR 79.7 billion in
long-term funds in the capital markets (2010: EUR 76.4 billion). For
this purpose KfW issued around 350 bonds in eleven different
currencies. The success of KfW's funding operations is due not only
to the first-class credit quality of the Federal Republic and the
explicit state guarantee but also to its own transparent and
long-term issuing strategy. In 2011, a year characterised by great
anxiety and high volatility, KfW benefited from investors' "flight to
quality". For 2012, KfW is again planning a funding volume of around
EUR 80 billion.

Pressekontakt:
KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM)
Tel. 069 7431-4400, Fax: 069 7431-3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de/newsroom

Press Contact:
Wolfram Schweickhardt, Phone: +49 (0)69 7431 1778, E-Mail:
wolfram.schweickhardt@kfw.de.