First quarter of 2015: strong demand for KfW promotion

Frankfurt am Main (ots) -

- Total commitment volume of EUR 17.4 billion (+26%)
- International financing doubles to EUR 7.6 billion
- Domestic promotion stable at high level, in spite of difficult
overall conditions
- Consolidated profit of EUR 417 million
- Total assets roughly EUR 530 billion

KfW Group reached a total commitment volume in Q1 2015 of EUR 17.4
billion (+26%) (prior-year period: EUR 13.9 billion). The volume
pledged for international business increased to around EUR 7.6
billion (+98%) (EUR 3.8 billion). The main contributors here were the
business sector Export and project finance with EUR 6.8 billion
(+105%), and the KfW Development Bank business area with EUR 0.5
billion (+43%). Despite the challenging conditions on the market,
KfW's domestic promotional business achieved a high, stable volume
with new commitments amounting to EUR 9.8 billion (EUR 10.0 billion).

"Demand for KfW promotion developed very well during the first
quarter of 2015. We continue to fulfil our role as a subsidiary
promotional bank", said Dr Ulrich Schröder, Chief Executive Officer
of KfW Group. "The current trend for a shift in our commitments from
Germany to abroad persisted in the first three months. This means we
are continuing to support the German economy, strong in exports."

The earnings position evolved well in the first quarter of 2015
with a consolidated profit of EUR 417 million (EUR 391 million). This
development, which exceeded expectations, was primarily driven by the
excellent valuation result.

"KfW's earnings development in the first quarter of 2015 was
pleasing and marked by extraordinary effects. Owing to the low risk
provision requirement for lending business observed, as usually, in
the first quarter, it is not possible to extrapolate the annual
result from the quarterly result", explained Dr Schröder.

The operating result before valuation (and before promotional
activitiy) totaled EUR 515 million (EUR 507 million). Net interest
income (before promotional activitiy) amounting to EUR 713 million
(EUR 682 million) is still the main source of income for KfW based on
its persistently good funding conditions.

Promotional activity - mainly interest rate reductions for new
business in 2015 - was significantly lower (EUR 48 million) than the
previous year (EUR 99 million) due to the low interest levels.

Risk provisions in the lending business once again were only a
very moderate drag on the earnings position, totaling EUR 4 million
(EUR 37 million).

The still pleasing result from the private equity and securities
portfolio amounting to EUR 138 million (EUR 42 million) is
attributable especially to DEG's private equity business that was
positively influenced by exchange rates.

The purely IFRS-induced effects of hedging relationships, had a
major adverse effect on the result at EUR 277 million, which was
largely caused by the fair value measurement of own issues due to
central banks' measures designed to boost market liquidity.

Total assets came in much higher than at 31 December 2014 (EUR
489.1 billion) registering a figure of EUR 530.4 billion. This
development is primarily due to currency-related changes in market
value connected to hedges. The regulatory capital ratios of the Group
decreased compared to 31 December 2014. As of 31 March 2015 the total
capital ratio sits at 13.9% (31 December 2014: 15.1%) with due
consideration of the consolidated result, while the Tier 1 ratio is
13.8% (31 December 2014: 14.1%). Impacts from the appreciation of the
US dollar and new business in the Export and project finance business
sector are the main reason for the decline.

Results of KfW's promotional activities by business sector

The promotional business volume in the Kommunalbank and
Privatkundenbank/Kreditinstitute business sector amounted to EUR 6.1
billion - a significant rise compared to the previous year's quarter
(EUR 4.9 billion). Growth was registered in almost every promotional
area; a commitment volume of EUR 3.4 billion in housing, the largest
priority area by volume, almost managed to match the excellent result
of the prior-year quarter (EUR 3.5 billion). The strong demand in the
KfW programmes for energy-efficient construction and home ownership,
supported by the German Federal Government, reflect the high level of
new construction activity in Germany.

In the promotional area of infrastructure financing the commitment
volume totaled EUR 0.8 billion - an increase compared to the previous
year (EUR 0.6 billion). Both standard programmes for municipalities
(IKK) as well as municipal and social enterprises (IKU) generated
strong demand, as did the programme for efficient municipal energy
supplies. At EUR 639 million, the commitments for education finance
are just above the previous year's level (EUR 590 million).

KfW's activities in the field of general funding for promotional
institutions of the federal states evolved very well in the first
quarter at EUR 735 million (EUR 213 million) as did the individual
financing of banks with a figure of EUR 524 million (EUR 15 million).

The volume of new business in the Mittelstandsbank business sector
amounted to commitments of EUR 3.7 billion (EUR 5.1 billion) as of 31
March. The expectation of weaker demand for loans is largely caused
by the historically low interest rates. What is more, SMEs are in
many cases turning first to their own funds when it comes to
financing their investments. Against the background of the
persistently low interest rates, conditions for end-customers were
further improved as of 1 April 2015 with the reduction of
end-borrower rates. It remains to be seen how this will affect
demand, but developments were positive in April.

The priority area of business start-ups and general corporate
finance generated a commitment volume of EUR 2.1 billion (EUR 2.7
billion). The decline in demand was primarily observed with general
corporate finance. At EUR 0.7 billion, commitments with start-up
financing remained largely at the same level as the previous year.

For environmental and climate protection financing, a total of EUR
1.5 billion was committed (EUR 2.1 billion). Compared to the previous
year's first quarter, commitments dropped for investments in the
areas of renewable energy and energy efficiency. Higher promotional
business volumes were achieved for environmental projects on the
other hand.

In the Export and project finance business sector, for which KfW
IPEX-Bank is responsible, new commitments added up to EUR 6.8
billion. This is about double the commitment volume in the prior-year
period (EUR 3.3 billion) and is attributable primarily to financings
carried out together with other banks. The sector department Aviation
and Rail accounts for the largest share overall with EUR 1.4 billion
(EUR 0.4 billion), mainly through a number of financings carried over
from the 2014 to the 2015 financial year. Industries and Services are
another focal area at EUR 1.1 billion (EUR 0.3 billion), with some
large-volume transactions particularly in the field of
telecommunications/infrastructure. The Maritime Industries sector
department is traditionally strong at EUR 0.9 billion (EUR 1.1
billion). Another large financing transaction in the
mid-triple-digit-million range is the NordLink undersea cable
project, on which the bank had been working for years and which was
closed in the first quarter.

In the first quarter of 2015, the Promotion of developing and
transition countries business sector recorded commitments adding up
to EUR 863 million (EUR 539 million). The KfW Development Bank
business area committed EUR 539 million (EUR 378 million) on behalf
of the German Federal Government. The first quarter was very
promising for DEG: new business was expanded substantially with
commitments amounting to EUR 324 million (EUR 161 million). The
increase in financing for Africa, a strategic focus of DEG, was
especially pleasing, coming in at EUR 125 million (EUR 33 million)
along with EUR 90 million (EUR 19 million) for Latin America.
Commitments tor companies in the industrial sector underwent dynamic
development, too, at roughly EUR 102 million (EUR 40 million). DEG
pledged EUR 72 million (EUR 49 million) for investments of German
companies in developing countries.

To fund its promotional business, KfW has raised long-term funds
on the international capital markets as of 31 March 2015 amounting to
the equivalent of EUR 12.6 billion in 12 different currencies (as of
30 April 2015: EUR 22.5 billion). For the year as a whole, KfW is
banking on a funding volume of EUR 55-60 billion. A planned review of
this estimate will take place at the end of the second quarter based
on current business developments.

** ** The full press release including the tabular overview of the
business and financial figures can be found on www.kfw.de.

Service:

An overview of KfW's business and promotional figures in table
form is available for download at www.kfw.de/geschaeftszahlen.

Pressekontakt:
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