Promotion in 2016: sustained demand for KfW promotion in Germany

Frankfurt am Main (ots) -

- KfW promotional business volume rises to EUR 81 billion (+2%)
- EUR 55.1 billion for domestic promotion
- Strong demand for the promotion of energy efficiency in the home
(EUR 15.5 billion) and at companies (EUR 5.2 billion)
- Very good year in Development Cooperation
- Demand for financing normalises at KfW IPEX-Bank

KfW Group registered very strong demand for its financing products
again in financial year 2016. The volume of promotional commitments
rose to a total of EUR 81 billion (2015: EUR 79.3 billion, +2%).

With a volume of commitments totalling EUR 55.1 billion (2015: EUR
50.5 billion, +9%), domestic promotional business spurred the growth
of the German economy. The increase is above all due to very strong
demand for housing finance, combined with robust demand for finance
from industry.

"The strong demand shows that KfW promotion is having an impact on
citizens and business owners, and therefore playing a large part in
tackling the economic and social challenges that we currently face,"
said Dr Ulrich Schröder, Chief Executive Officer of KfW Group.

Commitments in the international business are stable at EUR 24.9
billion (2015: EUR 27.9 billion). The financing and promotion in
development cooperation recorded a very good year (EUR 8.8 billion).
The volume of financing offered by KfW IPEX-Bank as a specialist for
export and project finance normalised again at EUR 16.1 billion
following the previous year's exceptional figure.

Demand for promotion of environmental and climate protection
projects was once again very strong (EUR 35 billion, or 44% of all
commitments).

"This year the share of KfW's total promotional business volume
that was committed for environmental and climate financing was the
highest in its history. In this way, KfW is continuing in its role as
one of largest financiers of environmental and climate protection
measures in Germany and around the world," Dr Schröder said.

Between 2012 and 2016, KfW issued commitments with a total volume
of EUR 103 billion for projects in connection with the energy
transition, in line with the KfW Energy Turnaround Action Plan, thus
making an important contribution towards achieving the German Federal
Government's environmental and climate goals. The measures for which
financing was provided include off-shore wind farms, energy-efficient
construction and refurbishment, municipal investments and
technological innovations aimed at climate protection.

The digitalisation of KfW's business continues, with new
approaches for promotion in Germany and in other countries. In
Germany, the expansion of the Bankdurchleitung Online 2.0 (BDO)
promotional funding platform is taking advantage of the opportunities
offered by digitalisation. At the end of 2016, almost all housing
sector promotional products between KfW and its financing partners
were processed digitally via the BDO platform. The first commercial
promotional loan was also granted via BDO in the summer of 2016.
Since December 2016, private clients have been applying for all of
the investment grants offered by KfW via the KfW grants portal, and
receive their funding commitment immediately. Digitalisation also
serves as a catalyst for modernisation and development in the
promotion of developing countries and emerging economies.

"KfW is undergoing a digital transformation process, and sees
these new technologies as an opportunity. In doing so, we are meeting
our costumers' growing demand for the streamlined and digital
processing of their promotional loans. We also want to do our bit to
promote Germany's digital transformation," said Dr Schröder.

KfW is helping the German Federal Government, states and
municipalities with direct crisis management as well as sustainable
integration in connection with the refugee issue. The "refugee
accommodation" special facility that was launched in September 2015
was already exhausted four months later, in January 2016.
Accommodation for up to 150,000 people was created in 700
municipalities. KfW has been assisting the German federal states with
promotional programmes for affordable housing since April 2016, and
in so doing making a valuable contribution towards long-term
integration.

Internationally, the KfW Development Bank business area currently
has almost 100 ongoing projects relating to refugees in 27 different
countries with an overall volume of EUR 2 billion. A total of around
EUR 575 million in new commitments was going to 30 projects that are
providing direct support for towns and villages taking in refugees in
partner countries.

Details on the business sectors' promotional activities

Domestic promotional business:

The volume of new business in the Mittelstandsbank business sector
last year amounted to EUR 21.4 billion. This put it around EUR 1
billion above the figure recorded for the previous year (2015: EUR
20.4 billion).

With a volume of EUR 10.7 billion (2015: EUR 9.3 billion), the
environment and energy priority sector achieved strong growth in
2016. This was largely due to the energy efficiency programme, which
was restructured and significantly improved in 2015 and through which
a total of EUR 5.2 billion (2015: EUR 3.8 billion) were handed out
already in the first year following its restructuring. Since May 2016
the promotion of systems aimed at avoiding or using exhaust heat has
tapped into additional potential for reducing energy consumption. At
EUR 4.7 billion, the high volume achieved in the previous year by
KfW's renewable energies programme (EUR 4.5 billion) was also
exceeded again.

The priority area of start-ups and general corporate finance held
steady year-on-year with a volume of EUR 10.1 billion (2015: EUR 10.3
billion), as did start-up finance, which was already the subject of
strong demand in the previous year (2016: EUR 3.6 billion, 2015: EUR
3.7 billion).

Commitments of EUR 0.6 billion in the innovation financing
business were down slightly on the previous year's level (2015: EUR
0.8 billion). The issue of digitalisation is an important factor with
respect to the future competitiveness and innovation of the German
SME sector. KfW is currently refining its activities to promote
innovation in partnership with the German Federal Ministry for
Economic Affairs and Energy (BMWi) in order to create targeted
incentives for digitalisation projects. The financing of innovation
already received a significant boost in 2016 thanks to the successful
implementation of the new equity finance strategy. Following the good
start of the ERP Venture Capital Fund Investments, the programme is
now being expanded to include venture debt funds in order to provide
even better support to fast-growing tech companies. The VC Fund set
up by KfW and the BMWi in March 2016 has also been very well received
by the market. In total, this new form of equity finance will enable
KfW to leverage up to EUR 2.5 billion in private capital for
innovative start-ups over the next few years.

The volume of new business for the Kommunalbank and
Privatkundenbank/Kreditinstitute business sector amounted to EUR 33.7
billion (2015: EUR 30.1 billion).

Growth was very strong in the housing priority area in particular.
Commitments reached a volume of EUR 20.8 billion (2015: EUR 16.5
billion), with more than EUR 11 billion disbursed in the
energy-efficient construction programme alone (2015: EUR 7.0
billion). The strength of the new construction sector and low
interest rates provided a strong and lasting boost to demand.

Commitments with a volume of EUR 4.1 billion were issued in the
infrastructure finance segment (2015: EUR 5.0 billion). As was
already the case in the previous year, the special facility for
refugee accommodation was once again a major factor at just under EUR
450 million (2015: EUR 1 billion). The amount of EUR 1.5 billion was
quickly used up in connection with the acute measures implemented.
What was also particularly encouraging was that promotion for
municipal environmental and climate protection measures doubled from
EUR 378 million in 2015 to EUR 745 million.

The promotional business volume in the education and social
development priority area at around EUR 2.3 billion was once again at
a good level (2015: EUR 2.6 billion). At EUR 4.4 billion, the
contract volume in the global funding of promotional institutions of
the federal states was also down slightly on the previous year (2015:
EUR 4.7 billion). Individual financing for banks increased its volume
of promotion to EUR 2.1 billion (2015: EUR 1.3 billion), above all
thanks to the issue of global loans for lease finance.

International finance:

In 2016 the Financial markets business sector contributed a total
of EUR 1.3 billion (2015: EUR 1.1 billion) to promote the SME sector
and finance climate and environmental protection by investing in
securitisation transactions and green bonds.

While around EUR 1 billion was invested in securitisation
transactions in 2016, a volume of EUR 1.3 billion is planned for
2017. KfW launched the European securitisation initiative "ENSI"
together with the European Investment Fund (EIF) and national
promotional institutions with the aim of improving the financial
opportunities available to SMEs. KfW has invested in six different
transactions to date as part of this initiative, and in so doing
supported Europe's SME sector. The cooperation is to be intensified
in 2017.

KfW worked to protect the climate through its green bond portfolio
in 2016, buying green bonds with a volume of around EUR 300 million.
This means that KfW held green bonds with a total volume of around
EUR 580 million at the end of 2016. In 2017, KfW is planning to
invest an additional amount of around EUR 300 million in green bonds.
The target volume for this portfolio is EUR 1 billion.

In the Export and project finance business sector, which is
handled by KfW IPEX-Bank, new commitments of EUR 16.1 billion were
achieved (2015: EUR 20.2 billion). This means that the volume of
commitments stabilised again at the normal level for past years after
spiking in the previous year due to exceptional effects. The largest
contributions stemmed from the Power, Renewables and Water (EUR 3.1
billion), Maritime Industries (EUR 2.4 billion) and Financial
Institutions and Trade Finance (EUR 2.1 billion) sector departments,
often working as part of a syndicate with other banks. Financing in
the Power, Renewables and Water department mainly relates to on-shore
and off-shore wind farms as well as highly efficient combined-cycle
power plants.

KfW Development Bank saw a substantial increase in commitments.
Around EUR 7.3 billion in finance was provided to developing
countries and emerging economies over the past year on behalf of the
German Federal Government (2015: EUR 6.7 billion), with 66% of this
amount going to projects in the field of protecting the climate and
environment (2015: 60%). This percentage mainly stems from the
financing of environmentally friendly power generation and
distribution. Almost a third of all new commitments went towards
development projects in Africa.

DEG, a subsidiary of KfW, achieved the highest volume of new
business in its almost 55-year history. It committed around EUR 1.6
billion in 2016 for investments by private companies in developing
countries and emerging economies, which is 46% more than in the
previous year (2015: EUR 1.1 billion). Financing for SMEs was once
again a focus, with more than half of all new commitments (EUR 871
million) going to SMEs. DEG committed EUR 253 million, almost twice
as much as it did in the previous year, for German companies, which
are one of its strategic priorities. Investments in sub-Saharan
Africa accounted for one fifth of all new commitments (EUR 316
million).

To fund its promotional business, KfW in 2016 raised funds
amounting to EUR 72.8 billion in the international capital markets.
To this end, it issued 206 bonds in 15 different currencies. The core
currencies were still the euro and the US dollar, which together
accounted for a share of 83%. The US dollar was the currency with the
greatest share of the total volume of funding (47%, EUR 34.3
billion), as it was in 2015 (45%, EUR 28.0 billion). As part of its
green bond activities, KfW issued Green Bonds in four different
currencies in 2016 (euro, pound sterling, US dollar, Swedish krona),
with an equivalent value of EUR 2.8 billion.

KfW expects its funding requirements for 2017 to be slightly
higher (approx. EUR 75 billion) than in the previous year. With its
established issue strategy and an explicit and direct guarantee from
the German Federal Government, KfW considers itself to be in an ideal
position to achieve its planned volume of funding.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Dr. Charis Pöthig,
Tel. +49 (0)69 7431 4683, Fax: +49 (0)69 7431 3266,
E-Mail: Charis.Poethig@kfw.de, Internet: www.kfw.de

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