First quarter 2012: KfW concentrates its promotion

Frankfurt (ots) -

- "Environment quota" rises to 44% (previous year: 32%)
- Strong demand for export and project finance
- Consolidated profit of EUR 0.7 billion

KfW has continued to concentrate its promotional activity, just as
it had announced at the beginning of the year, and has shifted its
focus even more strongly to products and programmes of high
promotional quality. One priority in the first quarter of 2012 were
commitments in the area of environmental and climate protection, at
EUR 6.5 billion or 44% of the promotional business volume. This was a
significant rise over 2011, when that share was 32%. For the year
2012 as a whole, the bank anticipates an environment quota of 36%.

"KfW's new focus on important promotional areas such as climate
protection and demographic change is now showing first results. For
example, the environment quota in new promotional business rose
strongly in the first quarter. This is a sign that we have charted
the right course", said Dr Ulrich Schröder, Chief Executive Officer
of KfW.

The total financing volume of KfW per 31 March 2012 was EUR 14.7
billion. This change compared to the same period last year (EUR 22.7
billion) resulted not only from the implementation of the strategic
focus but mostly from changes in the methodology of general
refinancing of state promotional institutions. KfW used to enter into
the agreements at the beginning of the year for the entire year, but
from 2012 onwards will negotiate them for each quarter. As a result,
the commitment volume will be distributed across the quarters. This
explains the decline in volume in this segment by EUR 6,75 billion in
the first quarter (1st quarter 2011: EUR 7.95 billion; 1st quarter
2012: EUR 1.2 billion).

The year began on a positive note also with regard to KfW's income
situation, continuing the good trend of the 2011 business year. In
the first quarter a consolidated profit of EUR 697 million (EUR
1,021 million) was generated. The consolidated profit before IFRS
effects from hedging*, which is relevant for the management of KfW,
was even higher than in the same period last year, at EUR 685 million
(EUR 588 million).

"KfW can be very satisfied with its income situation in the first
quarter of 2012, which is significantly above the long-term
potential. However, it is not a basis for projection of the annual
result given the strong influence of valuation effects", Dr Schröder
added.

The operating result before valuation was EUR 576 million (EUR 509
million). This was due primarily to net interest income of EUR 721
million (EUR 624 million), which improved again as KfW main source of
income. KfW continues to benefit from favourable funding conditions
based on its first-class credit rating in what is again an improved
interest rate environment, particularly in the short-term segment. At
EUR 135 million, the interest rate reductions granted in the
promotional lending business remained on the high level of the
previous year (EUR 139 million).

The risk situation of the KfW group developed as expected. The
consistent continuation of an ongoing, conservative risk policy led
to corresponding impairment requirements particularly in the business
area of export and project finance. Individual special effects in
connection with the risks assumed as part of the IKB rescue had
positive effects. Overall risk provisions for lending business were
reduced by EUR 99 million in total (EUR 71 million).

The result from the equity investment and securities portfolio in
the amount of EUR 49 million (EUR 23 million) was mostly due to the
improved development of the market for Eurozone securities in the
first quarter of 2012. KfW's participation in the consolidation of
Greek debt and the ensuing sale of all securities with Greek
sovereign risk had only insignificant earnings effects.

The purely IFRS-related effects from the valuation of derivatives
used for hedging purposes overdraw the income situation only to a
minor degree by EUR 12 million, after this had still been a major
factor in the group's high consolidated profit last year (EUR 433
million).

Total assets decreased slightly by EUR 1.4 billion to EUR 493.4
billion particularly as a result of a drop in derivative market
values due to exchange rates, while net loans and advances remained
virtually unchanged at EUR 360.6 billion. In contrast, the business
volume generated by new lending business and the resulting increase
in irrevocable loan commitments increased by EUR 2.1 billion to EUR
575.7 billion.

The positive development of the result and the adjustment of the
risk models due to the changes made to the legal situation of
financial securities in 2011 lead to significantly improved
regulatory ratios. With a Tier 1 ratio of 17.0% (31 December 2011:
15.4%) and 14.2% according to Basel III, KfW already meets the new
regulatory requirements.

The results of the group's activities

In the business area KfW Mittelstandsbank the volume of new
business reached EUR 5.2 billion (EUR 5.6 billion). In the area of
business start-ups and general corporate finance the volume of
commitments decreased as planned from EUR 3.2 billion to EUR 2.6
billion. This decrease is mainly due to the closing of the economic
stimulus programmes, in particular the KfW Special Programme.
Remaining commitments were still being made from this programme in
the first quarter of 2011. A significant increase to EUR 2.3 billion
was recorded in the promotional area of environmental protection (EUR
1.9 billion). Commitments under the KfW Renewable Energies Programme
in particular developed positively, reaching EUR 1.8 billion (EUR 1.2
billion). In the KfW Offshore Wind Energy Programme KfW has not yet
made any commitments in 2012, although the interest in it remains at
a very high level. Some projects, however, are being postponed
particularly because of delays in the connection to the grid. KfW is
participating in considerations aimed at improving the financing
situation of offshore project grid connection and further grid
expansion.

In the business area KfW Privatkundenbank, the volume of financing
amounted to EUR 3.8 billion (EUR 4.5 billion). This change resulted
from the strategically intended termination of the Housing
Modernisation Programme and the reduction of the maximum financing
amount under the KfW Home Ownership Programme at the end of 2011.
Both were implemented as KfW shifted the focus of its financing
activities towards the energy turnaround and demographic change. The
volume of the climate protection-relevant Energy-efficient
Construction and Refurbishment programmes was EUR 2.3 billion, more
than 50% higher than the EUR 1.5 billion committed in the same period
last year. Demand was stimulated particularly by the continuing
favourable conditions of the Energy-efficient Refurbishment Programme
(from 1.00% effective annual interest rate). In education finance
commitments reached EUR 519 million, exceeding the previous year's
EUR 478 million. Demand for the KfW Student Loan in particular
increased by 16%.

In the business area KfW Kommunalbank, commitments for
infrastructure finance reached EUR 365 million, falling short of the
very high volume in the same period last year (EUR 1.1 billion).
Among other fac¬tors, this was due to the municipalities' current
budget situation, which is influenced by higher tax revenues. In
addition, several large-volume financings led to very high quarterly
figures last year. On the other hand, commitments in the environment
and climate protection relevant financing windows increased to a
pleasing EUR 29 million (EUR 13 million). In the general refinancing
of promotional institutions of the federal states KfW changed the
contractual basis from annual to quarterly. As a result of this
change in methodology, the volume in the first quarter 2012 was
significantly below that of last year's first quarter, at EUR 1.2
billion (EUR 7.95 billion).

In the business area of export and project finance, which KfW
IPEX-Bank handles within KfW, new business commitments totalled EUR
3.1 billion (EUR 2.8 billion). With a share of EUR 0.7 billion (EUR
0.3 billion), a major driver was the business unit Manufacturing
Industries/ Commerce/ Health/ Telecommunications, which financed
primarily projects in the area of energy efficient plant and
equipment, sales and production facilities.

In the business area promotion of developing and transition
countries, the commitments in the business area KfW Entwicklungs¬bank
fell slightly to EUR 589 million (EUR 713 million). The largest share
of funding went to social infrastructure programmes, at EUR 285
million. In this area KfW is supporting water supply and sanitation
as well as education and health projects as priority areas.
Commitments by DEG amounted to EUR 244 million, significantly more
than the EUR 136 million committed in the same period last year. New
commitments for infrastruc¬ture projects developed very positively,
at EUR 75 million (EUR 26 million), as did commitments for projects
in agriculture and food security, at EUR 50 million (EUR 16 million).

In the first quarter of 2012 KfW raised long-term funds for the
equivalent of EUR 33.8 billion in the international capital markets
in eleven different currencies. For the business year 2012 KfW is
planning a funding volume of around EUR 80 billion. This estimate is
scheduled to be reviewed at the end of the second quarter of 2012
based on the current business performance. As at 30 April 2012, KfW
has already raised EUR 40.4 billion, more than half the funding
volume planned for the year. KfW committed EUR 230 million for
capital market-related products.

*Explanation of consolidated profit before IFRS effects from
hedging: Under IFRS, derivatives must be recognised at fair value in
the balance sheet even if they are not used for trading, as in the
case of KfW, but to hedge interest and currency risks. The opposing
valuation effects of the underlying on-balance transactions thus
hedged can be reported only inadequately under IFRS and therefore
lead to economically inappropriate temporary earnings effects in
KfW's income situation. These effects offset each other in total in
the course of the overall maturity of the hedged items.

Contact:
KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM), Eske Ennen,
Tel. 069 7431-9766, Fax: 069 7431-3266,
E-Mail: eske.ennen@kfw.de, Internet: www.kfw.de/newsroom