KfW: successful financial year 2014

Frankfurt/Main (ots) -

- Increased total commitment volume of EUR 74.1 billion
- Consolidated profit increased to EUR 1.5 billion
- Total assets risen to EUR 489.1 billion
- Tier 1 capital ratio pursuant to Basel III: 14.1%

In spite of the challenging market environment, KfW Group in 2014
registered high demand for its financial products, as had also been
the case in previous years. The volume of new promotional commitments
rose to a total of EUR 74.1 billion (2013: EUR 72.5 billion). The
focus of these commitments was still on promoting SMEs, start-ups and
innovative companies. KfW also continued to strengthen its position
as one of the world's leading financiers in the field of climate and
environmental financing (EUR 26.6 billion). In particular, KfW's
international operations (including KfW Development Bank, KfW
IPEX-Bank and DEG) grew by 25% to EUR 25.5 billion (2013: EUR 20.5
billion).

Recording a consolidated profit of EUR 1,514 million, KfW achieved
a very good result in the 2014 financial year, which exceeded
expectations and also the previous year's result (EUR 1,273 million).
The positive trend primarily results from the very good valuation
result, which in particular more than offset the decline in net
interest income caused by the difficult interest environment. Posting
a result of EUR 364 million, the promotional activity that KfW
provided - mainly in the form of interest rate reductions - was down
on the previous year's level (EUR 597 million) due to a decline in
demand.

"KfW has achieved a very good result in 2014 too; this includes,
however, extraordinary effects and is above the sustainable yield
potential" said Dr Ulrich Schröder, Chief Executive Officer of KfW
Group, during the press conference on annual results held on
Wednesday in Frankfurt am Main. "Against the backdrop of the
persistently difficult interest environment and the additional costs
to be expected for modernisation and application of the German
Banking Act, the result strengthens our capital base and helps to
ensure KfW's promotional capability".

The operating result before valuation (before promotional
activity) of EUR 2,023 million was below the previous year's value
(EUR 2,302 million) as expected. The interest result - the most
important source of income within the Group - amounted to EUR 2,768
million (EUR 2,997 million). With stable interest margins in asset
operations, the decline largely resulted from declining interest
structure contributions in line with expectations, due to the very
low interest level and the interest curve which is persistently
flattening out. KfW continued to benefit from its first-class
creditworthiness. The result was still impacted by the rise in
administrative expenses due to the regulatory measures implemented
and the investments made in modernising KfW.

The risk provisions for the lending business had a total impact on
earnings of EUR 143 million. This is well below the planned value and
still below what was already a low value from the previous year (EUR
311 million), which was still characterised by high net allocations
in the Maritime Industries business department.

The central banks' monetary policy shaped the situation on the
financial markets during 2014. The securities portfolio subsequently
enjoyed another positive trend and contributed to a very good
valuation result with EUR 57 million, as it had done in the previous
year.

The contribution to earnings of EUR 122 million (EUR 46 million)
from the equity investment portfolio largely resulted from the
Promotion of developing and transition countries business sector, in
particular from DEG.

During the 2014 financial year, KfW Group's consolidated total
assets increased by EUR 24.3 billion to EUR 489.1 billion. The rise
is primarily due to interest-rate and exchange-rate-induced fair
value changes in derivatives used for hedging purposes and their
recognition in hedge accounting. The increase in the volume of new
business is reflected in the net loans and advances which rose by EUR
7.1 billion to EUR 365.3 billion. In this regard, unscheduled
repayments in the domestic promotional lending business were down on
the previous year.

In 2014, KfW changed the way it calculates the Group's regulatory
capital ratios. The ratios are now calculated based on the regulatory
requirements according to CRR (Basel III) and IFRS accounting. As a
result, capital ratios recorded a significant decline year-on-year,
with comparability of figures being very limited. As of 31 December
2014, the total capital ratio taking into account consolidated
comprehensive income was 15.1% (22.3%), while the tier 1 capital
ratio was 14.1% (20.6%). There is still clear compliance with the
current regulatory capital requirements.

** The full press release incl. A tabular overview of financial
measures, see www.kfw.de/bpk2015.

Service:

- You can find our digital press portfolio online under
www.kfw.de/BPK2014: the KfW Financial and Annual Report, and the
KfW Promotional Report, among other things, are accessible here.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Sybille Bauernfeind
Tel. +49 (0)69 7431 2038, Fax: +49 (0)69 7431 3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de