Business and financial figures for September 2012: KfW continues intensive promotion in priority area of environmental and climate protection

Frankfurt (ots) -

- Environment quota of 40 % again well above target for the year
(36 %)
- Supporting the energy turnaround is a central theme of domestic
finance
- Consolidated profit of EUR 1.7 billion

In the third quarter of 2012 KfW continued to concentrate its
financing activity on the themes of environment and climate,
demographic change and globalisation. By 30 September of this year,
KfW's financing commitments for environmental and climate protection
alone amounted to EUR 19.1 billion. This is a share of 40.0% of the
overall promotional business volume and significantly higher than the
target of 36% planned for the year as a whole. In domestic financing,
the focus is on supporting the energy turnaround with financing
offers to enterprises, private individuals and municipalities for
energy efficiency improvements, expansion of renewable energies and
innovations in the areas of energy, climate and environment.

"In designing its promotion, KfW ensures that its financing offers
make an effective contribution to addressing the major social
challenges. We are currently doing this with our successful Energy
Turnaround Action Plan. But in no way does this mean losing sight of
our original promotional functions, such as supporting the SME
sector. In fact, we allocated EUR 17.3 billion or 49% of our domestic
financing commitments to SMEs", said Dr Ulrich Schröder, Chief
Executive Officer of KfW.

The total financing volume in the first three quarters was EUR
48.2 billion against EUR 52.9 billion in the same period of 2011. The
drop is mainly due to the changes in the methodology of general
refinancing of promotional institutions of the federal states from
annual to quarterly agreements, and to delays in contractual
commitments for some major projects in the promotion of developing
and transition countries. With a consolidated profit of EUR 1,739
million (EUR 1,806 million in the same period of 2011), the positive
development of our earnings situation continued in the third quarter.
As in the previous year, however, the purely IFRS-related effects
from the valuation of derivatives used for hedging purposes overstate
the income situation with EUR 227 million (EUR 258 million). The
consolidated profit before IFRS effects from hedging*, which is
relevant for the management of KfW's business, was EUR 1,512 million,
matching the very high volume of the previous year (EUR 1,548
million).

"KfW continued the favourable income trend of the first half of
2012 in the third quarter as well. So we remain well above the
long-term potential of EUR billion 1.0 to EUR 1.2 billion per year.
Looking ahead to the end of the year, we currently expect a
consolidated profit before IFRS effects that is slightly below that
of the previous year, although of course risks remain from the
uncertainties over the further economic trend", said Dr Schröder.

The operating result before valuation was EUR 1,717 million (EUR
1,411 million). This significant improvement was due primarily to net
interest income, which was again higher at EUR 2,175 million (1,783
million) as KfW's main source of income. KfW continues to benefit
from very favourable funding conditions based on its first-class
credit quality and the favourable interest environment. At EUR 401
million (EUR 421 million), the interest rate reductions granted in
the promotional lending business remained on a high level.

KfW has consistently pursued its conservative risk policy and
increased its risk provisions for lending business significantly by
EUR 210 million. At the same time in the previous year, it was able
to reverse its risk provisions in the amount of EUR 260 million. The
need for risk provisions is mostly a result of the more negative risk
situation in the shipping segment of Export and Project Finance.

Of the positive result from the private equity and securities
portfolio in the sum of EUR 118 million, EUR 81 million was from
securities as a result of the general market recovery, while the rest
resulted from the positive development of individual commitments in
equity finance operations under promotional policy.

Total assets increased by EUR 23.0 billion to EUR 517.9 billion.
While net loans and advances rose moderately to EUR 363.4 billion (31
December 2011: EUR 360.1 billion), this development was due in
particular to rising derivative market values due to exchange and
interest rates and higher cash collateral taken in.

The regulatory ratios remain stable on a high level (tier 1 ratio:
17.1%, total capital ratio 19.5%). Under Basel III the tier 1 ratio
is currently 14.1%.

The results of the group's activities

In the business area KfW Mittelstandsbank the volume of new
business was EUR 17.3 billion (EUR 16.4 billion). Commitments in the
promotional area environment rose substantially to EUR 8.4 billion
(EUR 6.9 billion). Commitments under the KfW Renewable Energies
Programme in particular developed positively, reaching EUR 6.0
billion (EUR 4.4 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. In the area of
business start-ups and general corporate finance the volume of
commitments increased from EUR 7.6 billion to EUR 8.2 billion. The
main driver was the high demand for the KfW "Entrepreneur Loan".

In the business area KfW Privatkundenbank the volume of
commitments was EUR 12.3 billion, higher than in the third quarter of
2011 (EUR 11.4 billion). Especially the Energy-efficient Construction
and Refurbishment programmes, which make a key contribution to
achieving the environmental and climate protection targets, achieved
a significantly higher commitment volume than in the same period last
year, at EUR 6.9 billion (EUR 4.1 billion). This trend was supported
by the continuing favourable loan conditions (from 1% effective
annual interest rate and repayment bonuses of up to 12.5%), which was
made possible by additional funds provided from the federal budget in
2012.

Commitments in education finance reached EUR 1.6 billion, also
exceeding the previous year's level of EUR 1.4 million.

The development of commitments in the business area KfW
Kommunalbank shows a split picture in regard to infrastructure
finance. While the number of applications increased noticeably by 28%
to 1,661 commitments, the total financing volume of EUR 2.3 billion
remained below the very strong volume of the previous year (EUR 2.9
billion). The special environmental and climate protection relevant
financing programmes showed a very positive development. Here the
volume of commitments in the first three quarters increased from EUR
83 million in the previous year to now around EUR 159 million.
Commitments for the general refinancing of promotional institutions
of the federal states were in line with expectations at around EUR
3.5 billion.

In the business area of capital market-based financing, the volume
of new business amounted to some EUR 1.5 billion in the first nine
months (EUR 0.4 billion). At EUR 900 million, the KfW promotional
programme for the refinancing of export loans covered by federal
guarantees took the lion's share (EUR 73 million). Some EUR 600
million (EUR 316 million) was made available to leasing companies and
credit institutions through the products of asset securitisation and
global loans to finance 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 8.5 billion, the same level of the previous year. The
focus was on export and investment finance in the markets that are
relevant for the German economy. Supporting German enterprises in the
big industrialising countries and financing projects that are
relevant for protecting the environment and the climate and securing
the supply of raw materials for industry continue to play an
important role. The business area therefore continues to be a
reliable partner of German industry, particularly as long-term
large-volume financings become scarce.

In the business area of Financial Cooperation, commitments
totalled EUR 1.6 billion (EUR 2.6 billion). The volume of commitments
is lower than in the same period last year because unlike in the year
2011 some major projects will not be contractually committed until
the end of the year. KfW used EUR 1.0 billion from funds it raised in
the capital market.

Regionally, Asia/Oceania accounted for the greatest share of the
funds at EUR 730 million. By sector, the highest volume of
commitments was made in the area of "social infrastructure" which
received EUR 645 million. The priority areas are water supply and
sanitation projects and education and health sector programmes.

For DEG the positive trend continued in the third quarter as well.
At EUR 941 million, new business commitments were almost 50 per cent
higher than in the same period last year (EUR 650 million).
Commitments to food and agribusiness enterprises developed
particularly positively. In this sector DEG committed EUR 142 million
(EUR 55 million) for private investments in developing and
industrialising economies in the third quarter. The region that
received the highest volume of commitments was Latin America, at EUR
381 million.

As at 31 October 2012, KfW raised long-term funds for the
equivalent of EUR 76.7 billion in the international capital markets.
KfW is planning a funding volume of around EUR 80 billion for the
overall business year.

*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.

Contact:
KfW, Palmengartenstraße 5-9, 60325 Frankfurt
Kommunikation (KOM), Wolfram Schweickhardt,
Tel. 069 7431-1778, Fax: 069 7431-3266,
E-Mail: wolfram.schweickhardt@kfw.de, Internet: www.kfw.de/newsroom