First half of 2012: KfW's financing focused on environmental and climate protection

Frankfurt (ots) -

- Strong focus of financing activity shows positive results
- "Environment quota" rises to 41 %
- Consolidated profit of EUR 992 million
- Very high net interest income
- Tier 1 ratio under Basel III exceeded at 14.2 %

KfW has continued its previously announced strategic focus on
products and programmes of high promotional quality. The financing of
environmental and climate protection under the KfW Action Plan to
support the energy turnaround is a priority of this strategy. In the
first half of 2012, 41 % of the promotional business volume, or EUR
12.1 billion, went to the promotion of environmental and climate
protection. For the year 2012 as a whole, the bank anticipates an
environment quota of 36 % - a significant increase over the 32 % of
the year 2011.

"In implementing the project of the century, the energy
turnaround, KfW has taken responsibility as a promotional bank. In
the next five years we intend to extend loans totalling EUR 100
billion for renewable energies and energy efficiency", said Dr Ulrich
Schröder, Chief Executive Officer of KfW Bankengruppe. As well as
supporting enterprises in developing and implementing new
technologies, KfW has lowered interest rates in many programmes of
the "Energy Turnaround Action Plan" to a historic low of 1 %."

The total financing volume fell to EUR 29.9 billion (EUR 40.6
billion). This trend, however, is due not only to the strategic focus
but to the changes in the methodology of general refinancing of
promotional institutions of the federal states from annual to
quarterly agreements, as a result of which the overall commitment
volume for 2012 is distributed across the individual quarters. As at
today, this results in a decline of EUR 6.2 billion (1st half of
2011: EUR 8.4 billion; 1st half of 2012: EUR 2.2 billion).

KfW continued the favourable income trend. In the first half, it
earned a consolidated profit of EUR 992 million (EUR 1,764 million).
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 52 million. Last year this had still been a major
factor (EUR 592 million) in the group's significantly higher
consolidated profit. The consolidated profit before IFRS effects from
hedging*, which is relevant for the management of KfW's business, was
EUR 940 million, below the very high volume of the previous year (EUR
1,173 million).

The operating result before valuation was EUR 1,132 million (EUR
982 million). This positive development was due primarily to net
interest income of EUR 1,431 million (EUR 1,224 million), which
increased again as KfW Bankengruppe's main source of income. KfW
continues to benefit from favourable funding conditions based on its
first-class credit quality in what is again an improved interest
environment. At EUR 267 million, the interest rate reductions granted
in the promotional lending business were only slightly below the
previous year's level (EUR 280 million).

"In what is again an improved interest environment, KfW achieved a
high net interest income. We are very satisfied with the income
situation in the first half of 2012, which continues to be
significantly above the long-term potential and our expectations.
Given the renewed increase in uncertainty on the financial markets
and the possible consequences this has for the real economy, the
result for the year cannot be extrapolated on this basis", Dr
Schröder added.

KfW has consistently pursued its conservative risk policy and
taken into account the more negative risk situation, particularly in
the business segment shipping within export and project finance,
increasing its risk provisions for lending business to EUR 166
million. In the previous year, KfW was still able to reverse risk
provisions in the amount of EUR 169 million.

Of the result from the private equity and securities portfolio in
the sum of EUR 89 million (EUR 8 million), EUR 41 million was from
equity and fund financing operations under promotional policy, the
rest was from securities.

Total assets increased by EUR 21.7 billion to EUR 516.5 billion,
particularly as a result of rising derivative market values due to
exchange rates and higher cash collateral taken in, while net loans
and advances rose moderately to EUR 363.9 billion (31 December 2011:
EUR 360.1 billion).

The positive development of the result leads to a further
improvement of the regulatory ratios. With a tier 1 ratio of 17.3 %
(31 December 2011: 15.4 %) and 14.2 % under Basel III, KfW already
meets the new regulatory requirements significantly.

The results of the group's activities

In the business area KfW Mittelstandsbank the volume of new
business was EUR 10.6 billion (EUR 11.6 billion). In the area of
business start-ups and general corporate finance, the volume of
commitments decreased as planned from EUR 5.8 billion to EUR 5.3
billion. This decrease is mainly due to the closing of the economic
stimulus programmes, in particular the KfW Special Programme.
Remaining commitments had still been made under this programme in the
first half of 2011. A significant increase to EUR 4.9 billion was
achieved in the promotional area of environmental protection (EUR 4.1
billion). Commitments under the KfW Renewable Energies Programme in
particular developed positively, reaching EUR 3.8 billion (EUR 2.8
billion). In the Offshore Wind Energy Programme KfW has not yet made
any commitments in 2012, although interest in the programme remains
at an invariably high level. However, given the delays in the grid
connection of offshore wind farms, further projects have been
postponed for the time being. KfW is involved 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
commitments was EUR 7.7 billion, slightly below the previous year's
level (EUR 8.4 billion). This is due to the strategic focus of
promotion on the energy turnaround and demographic change. The
Housing Modernisation Programme was terminated and the maximum
financing amount under the KfW Home Ownership Programme was reduced
in this context. Commitments and investment grants under the housing
programmes totalled EUR 6.7 billion (EUR 7.5 billion). Especially
under the Energy-efficient Construction and Refurbishment programmes,
an increase of more than 50 % over the previous year was achieved,
with commitments totalling EUR 4.5 billion (EUR 2.9 billion). This
trend was supported by the continuing favourable loan conditions
(from 1 % effective annual interest rate). In education finance KfW
also made higher commitments than in the first half of the previous
year, at EUR 959 million (EUR 886 million).

In the business area KfW Kommunalbank, EUR 1.1 billion was
committed to the financing of infrastructure. This volume is EUR 0.8
billion lower than the volume of the same period last year (EUR 1.9
billion), which was characterised by particularly high demand. Now
demand is lower mainly in the financing of general investment
projects (basic promotion). In contrast, the development in the
environment and climate protection relevant promotional programmes
has remained positive. Commitments in this area have more than
doubled over the previous year to reach EUR 95 million (EUR 37
million). Commitments for the general refinancing of promotional
institutions of the federal states were as expected, at EUR 2.2
billion. The drop below last year's level (EUR 8.4 billion) is
primarily due to the changeover in the methodology from annual to
quarterly agreements.

In the business area of capital market-related financings the
volume of new business was EUR 1 billion (EUR 0.2 billion). Demand
was particularly high in the programme for the refinancing of export
loans covered by federal guarantees, reaching EUR 577 million (EUR 53
million). A further EUR 424 million (EUR 130 million) was made
available to leasing companies and credit institutions for the
financing of investment projects by SMEs.

In the business area of Export and Project Finance, which KfW
IPEX-Bank handles within KfW Bankengruppe, new business commitments
totalled EUR 5.7 billion (EUR 8.4 billion). The change against the
same period last year is fundamentally due to the decline in demand
for funding for banks under the CIRR for ship financing, which IPEX
is conducting as agency business for the Federal Republic. The
original lending business developed positively, and all business
segments have contributed equally to this trend. The regional
distribution of new commitments is equally balanced across Germany,
Europe and the rest of the world.

KfW Entwicklungsbank committed a total of EUR 983 million (EUR 1.6
billion) in the business area Promotion of Developing and Transition
Countries. The decline in the volume of commitments is due to the
fact that commitments for some large-scale projects will not be
finalised before the second half of the year. More than half the
funds, EUR 457 million, were committed to the partner countries for
projects in the area of "social infrastructure". After its positive
start of the year 2012, DEG continued its high commitment volume in
the second quarter. At EUR 579 million the financing volume was again
significantly higher than in the same period last year (EUR 411
million). New commitments to German enterprises developed
particularly well. They received EUR 88 million (EUR 22 million) from
DEG for private investments in developing and industrialising
economies.

As at 31 July 2012, KfW raised long-term funds for the equivalent
of EUR 55.0 billion in the international capital markets. For the
overall business year KfW is planning a funding volume of around EUR
80 billion.

*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.

Service: An overview of the business and financial figures of KfW
Bankengruppe is available for download at www.kfw.de/businessfigures.

Pressekontakt:
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