KfW enhances its promotional capacity with another very positive result
- Promotional business volume EUR 73.4 billion in Germany and abroad - Very good funding position and special effects in the valuation result favour the income situation - Group profit of EUR 2.4 billion
In 2012 KfW Bankengruppe achieved an overall promotional business volume of EUR 73.4 billion. After EUR 70.4 billion in the previous year, it remains on a path of moderate long-term quality growth. In 2012 KfW committed EUR 50.6 billion to enterprises, municipalities and retail clients in Germany (2011: EUR 50.9 billion). In its international business (which includes the business areas of KfW Development Bank, KfW IPEX-Bank and DEG) the volume of commitments totalled EUR 19.7 billion (EUR 19.2 billion). KfW's financings thus provided stability in a difficult financial and economic environment in 2012 as well.
With a group profit of EUR 2,384 million (EUR 2,068 million) KfW again achieved a very good result in the 2012 financial year. The purely IFRS-related effects from the valuation of derivatives, which KfW uses solely for hedging purposes, overdraw the income situation by EUR 155 million (EUR 167 million), a similar volume as in the previous year. The consolidated profit before IFRS effects from hedging*, which is relevant for the management of KfW's business, was also on a very high volume at EUR 2,229 million (EUR 1,900 million).
"KfW's group profit this year is again on a very high level, it is significantly above the sustainable income potential and cannot be continued into the future", said Dr Ulrich Schröder, Chief Executive Officer of KfW Bankengruppe, on the occasion of the press conference on annual results held in Frankfurt on Tuesday. "Given the current economic trends, the more stringent regulatory requirements and the additional cost of KfW's modernisation, the enhancement of our capital base through this result ensures KfW's long-term promotional capacity."
The operating result before valuation was EUR 2,246 million (EUR 1,869 million). This strong improvement is primarily due to net interest income of EUR 2,933 million, which increased against significantly on the previous year (EUR 2,399 million) and continues to be the main source of the group's income. The above-average increase is due to the continuing positive funding situation of KfW, but also to the strong decrease in variable reference interest rates in the year under review. The interest rate reductions which KfW granted in its promotional lending business totalled EUR 535 million (EUR 557 million).
Risk provisions for lending business resulted in moderate expenses of EUR 155 million compared with the previous year, when this still led to an improvement of EUR 185 million in the result. Above-average valuation adjustments were made in the "Maritime Industry" segment of Export and Project Finance. Risk provisions in the domestic lending business and the promotion of developing and transition countries, in turn, were on a moderate level. These charges are offset by positive one-time effects in other segments and the reversal of portfolio impairments.
Responding to the improved overall conditions, the securities portfolio developed well and yielded a positive effect of EUR 77 million that was recognised in income (-EUR 255 million). The profit contribution of the equity portfolio in the sum of EUR 135 million (EUR 54 million) resulted primarily from a special effect, as the necessary impairment losses of the previous years were recovered and recognised in profit.
The consolidated total assets of the group rose by EUR 16.8 billion to EUR 511.6 billion in financial year 2012. This growth is mainly due to changes in market value in connection with hedging transactions and to increased liquidity maintenance. Due to the continuing high level of off-schedule repayments, new lending led to an increase of total net loans and advances by only EUR 4.7 billion to EUR 364.8 billion.
Taking into account the consolidated comprehensive income, the total capital ratio was 20.6% and the Tier 1 ratio was 18.2%. Under Basel III the Tier 1 ratio is currently 15.1% (12.7%).
Key financial figures (IFRS) An overview of the key financial figures is available at http://ots.de/mJBTI
*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.
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Original content of: KfW, transmitted by news aktuell