First Quarterly Report 2008.

Transcription

1 First Quarterly Report 2008.

2 KFW BANKENGRUPPE. At the beginning of the year 2008 KfW adapted the reporting system of KfW Bankengruppe to take better account of the greater need for information about its promotional activities and to better portray its financing programmes. In the case of global loans, for example, starting this year only those tranches that have been disbursed are included in the statistics instead of the entire contract volume. To ensure comparability, the data for Q were recalculated by analogy. If these statistics had not been adjusted, KfW's total lending volume in the first quarter would have been far higher. This purely statistical effect will, however, level out during the course of the year. KfW s business volume at EUR 14.3 billion mark The total financing and securitisation volume of KfW Bankengruppe amounted to EUR 14.3 billion in the first quarter of 2008, thus remaining below the result for Q1 of the record year 2007 of EUR 20.0 billion. Measured against the quarterly results of the normal years 2004 through 2006 (EUR 13 billion on average), though, the bank's promotional performance was again above average. The most important pillar of KfW s promotional business remains the financing transactions carried out by KfW Mittelstandsbank and KfW Förderbank, which, at EUR 9.2 billion, roughly matched the quarterly result one year ago.

3 The decline in the business volume can be attributed mainly to securitisation business (down by EUR 3 billion), which is subject to high volatility owing to the difficult market conditions. Securitisations in the housing sector were impacted particularly heavily, with no transactions being carried out in this area. On a positive note, the securitisation of SME loans achieved a very good result of EUR 1.6 billion. This is a healthy indication that demand for securitisation via KfW's platform is continuing, and that the right assets can be placed in the market.

4 KEY FIGURES. in EUR billions Jan 31 Mar Jan 31 Mar Jan 31 Mar I. KfW Mittelstandsbank Financing Global loans to commercial banks and Europe Securitisations Advisory support (grants) II. KfW Förderbank Financing Global loans to commercial banks, Europe and general refinancing for promotional institutions of the federal states Securitisations Advisory support (grants) Investment finance III. KfW IPEX-Bank 16,1 5,4 5,4 3,0 Industry, telecommunications, basic industries Power, renewables and water Transport and transport infrastructure Other (AKA export loans, grants) IV. KfW Entwicklungsbank V. DEG Total volume Financing Loans Financial guarantees Grants ABS SME portfolio Securitisations Advisory support (grants) Environmental and climate protection Funding Group balance sheet total The figures for Q were computed on the basis of a new statistical concept introduced for KfW as at 31 March For this reason the quartely figures for 2007 are also stated according to both the old (non-comparable) and the new calculation method. 1 Calculated according to the old statistical method. 2 Calculated according to the new statistical method. 3 Inclusion of the item of advisory support as at 1 January Commitments made in previous years are not shown. 4 Included in the total volume as general promotional business of KfW Mittelstandsbank and KfW Förderbank. 5 As at 31 December Differences in the totals are due to rounding.

5 KFW MITTELSTANDSBANK. KfW Mittelstandsbank. In the first quarter of 2008 KfW Mittelstandsbank generated a business volume of EUR 3.9 billion, marking a significant rise over the same quarter last year (EUR 2.9 billion) that is attributable to securitisation transactions. The volume of financing carried out by KfW Mittelstandsbank surpassed EUR 2.3 billion. This amount included loan financing for business start-ups, self-employed professionals and SMEs totalling EUR 2.1 billion, thus remaining just below the very good result for Q of over EUR 2.3 billion. This came about primarily because, at EUR 1.5 billion, the commitment volume of the KfW Entrepreneur Loan the bank's basic financing programme for small and mediumsized enterprises could not match the extraordinarily high volume generated in the first quarter of Mezzanine finance commitments made during the first three months of the year added up to EUR 0.2 billion. Half of this sum is attributable to the Entrepreneur Capital programme and the other half to the ERP Innovation Programme. During Q EUR 42 million were committed by KfW in the field of equity finance. KfW StartGeld a new promotional programme for start-ups and young enterprises. On 1 January of this year we introduced the new KfW StartGeld. This programme combines the preceding programmes Mikrodarlehen and StartGeld and offers even better conditions. Through its KfW StartGeld, KfW Mittelstandsbank supports business founders, self-employed professionals and small enterprises that have been in the market for less than three years and whose financing requirements do not exceed EUR 50,000. 2

6 The main product features of the KfW StartGeld programme are: Maximum loan amount of EUR 50,000 with a term of five or ten years and one to two repayment-free grace years in the start-up phase; Applications can be filed by start-ups and young entrepreneurs/ self-employed professionals whose business is not more than three years old; sideline business start-ups may also apply if their medium-term objective is to establish a full-time business; Monthly repayment of interest and principal in order to make financial planning and liquidity management easier for the companies; Off-schedule repayment is possible at any time at no extra charge; If several founders are investing in the same project, each may apply for the maximum loan amount. The tried and tested on-lending principle, according to which borrowers do not submit their application for funds directly to KfW but instead to their regular business bank, also applies to KfW StartGeld. The banks and savings banks face particular risks in the area of start-up finance, which is why in its new KfW StartGeld programme, too, KfW Mittelstandsbank offers the on-lending banks 80 % exemption from liability. 3

7 KFW FÖRDERBANK. KfW Förderbank. The total business volume of KfW Förderbank attained EUR 6.9 billion in the first quarter, remaining below the 2007 figure of EUR 11.1 billion. This difference is attributable to a decrease in housing loan securitisation transactions (EUR 4.6 billion). On the other hand, the financing provided by KfW Förderbank saw positive development, rising by approx. EUR 0.4 billion compared to Q1 2007, with financing commitments made during the first three months of 2008 totalling some EUR 6.9 billion. Commitments to environmental projects contributed a major share, rising by 35 % to EUR 1.2 billion (same quarter previous year: around EUR 900 million). KfW's housing finance programmes also developed well during the first quarter, with loan commitments adding up to approx. EUR 100 million more than in the same quarter last year. Support for housing investment. In the first quarter of 2008 the EUR 3.1 billion in financing provided through KfW's housing investment programmes (not including global loans) increased slightly over the commitments made in Q Loans totalling EUR 1.4 billion were committed in the programmes targeting energy-efficient construction and rehabilitation within the framework of the Housing, Environment, Growth promotional initiative. This corresponds to a substantial increase in loan commitments for energy-efficient construction and rehabilitation of 40 %. EUR 0.9 billion in commitments went towards the modernisation of the energy systems in 42,700 housing units under the CO 2 Building Rehabilitation Programme and the Housing Modernisation ECO-PLUS Programme. In the Ecological Construction Programme another EUR 0.5 billion were committed to support the construction of 12,400 KfW Energy-Saving Houses including passive houses as well as the construction of new homes with a heating system based on renewable energies. 4

8 Since the beginning of the year grants have been available to cover construction supervision for measures applied in single and twofamily homes being financed under the CO 2 Building Rehabilitation Programme. The grants may cover 50 % of eligible advisory, planning and construction supervision costs up to but not exceeding EUR 1,000 per housing unit. To qualify for a grant the building must have been constructed before 31 December 1983 and the rehabilitation work must lower the building's energy consumption to at least match that of a new house as defined in the German Energy Conservation Ordinance (EnEV). The German Energy Agency GmbH (dena) is organising a day of energy-saving records on 31 May 2008 together with KfW. Interested visitors can have a look inside energy-efficient houses of the future, including the dena pilot project Efficient Homes, which illustrates the savings potential in the refurbishment of existing buildings. The spectrum ranges from timbered houses to single-family homes built in the 1960s all the way to prefabricated concrete buildings and listed buildings. During tours architects and builders explain what is special about the houses, which, once they have been rehabilitated, require about 50 % less energy than comparable new buildings. Tips for individual construction or rehabilitation projects and experiences can also be exchanged during talks with the experts. Steady demand for low-interest housing loans. Promotional loans totalling EUR 1.1 billion were provided under the KfW Home Ownership Programme during the first three months of this year to support the construction or purchase of 21,000 owner-occupied houses or apartments. The financial support continues to target the purchase and modernisation of pre-existing buildings, reflecting the steep decline in construction activity in Germany's housing market of the past years. Investments in the housing stock now account for more 5

9 than half of all investments in housing construction in the economy as a whole. These mainly include energy-saving rehabilitation measures supported through the Housing, Environment, Growth promotional initiative of the Federal Government and KfW. The one millionth promotional loan to support home ownership was granted in February Since the programme started in 1996 loans adding up to some EUR 50 billion have been extended. Each day on average 225 home builders and buyers are helped to realise their dream of owning their own home. Municipal infrastructure development. In Q loan commitments in the field of municipal infrastructure reached a total of around EUR 362 million. The main contributors to this result were the Municipal Investment and Social Investment programmes, which accounted for EUR 139 million and EUR 127 million, respectively. Whereas the lending volume declined over the same period in 2007, the number of commitments under both programmes rose by 16 %. Educational programmes KfW Student Loan well established. With more than 3,000 applications approved in the first quarter of 2008, the KfW Student Loan has established itself as an important source of support for covering students' cost of living. Since the programme started two years ago a total of 40,000 loans have been approved, making the KfW Student Loan a further key element of individual student financing. The Student Loan may reach up to EUR 650 monthly and is available for a standard period of study of 10 semesters. With a good 10,000 applications additionally approved for the Meister BAföG (financial assistance for master craftsmen trainees) provided for technical professions, a further 3,000 applications for 6

10 Education Loans open to advanced students, and 2,600 additional BAföG and tuition fee loans, KfW committed some EUR 0.3 billion in the field of education during the first quarter. Financing environmental protection investments. In the first quarter of 2008 KfW Förderbank provided a total of EUR 1.2 billion in loans to finance industrial pollution control investments and the use of renewable energies, marking an increase of 35 % over the same period in 2007 (last year approx. EUR 900 million). On 21 February 2008 the German Federal Ministry of Economics and Technology (BMWi) and KfW Förderbank launched their joint initiative entitled Special Fund for Energy Efficiency in SMEs. This fund aims at helping small and medium-sized enterprises to tap their energy saving potential, which helps them in the long run by lowering their energy costs and thus improving their competitive position an aspect that is becoming increasingly important in view of rising energy prices. The Special Fund closely combines consulting and financing: to be better able to inform businesses about energy savings potential in their operations, KfW provides grants covering up to 80 % of the cost of qualified energy advice. KfW also offers reduced-interest loans under its new ERP Energy Efficiency Programme to provide incentives for companies to carry out energysaving investments. KfW Carbon Fund. KfW continued to purchase emission certificates from climate protection projects as planned during the last quarter. Following the successful closing of the first tranche of the KfW Carbon Fund the focus was on implementing the second purchase programme set up jointly with the European Investment Bank (EIB). The EIB-KfW Carbon Programme is to be closed by the end of In it, KfW buys emission certificates that are then used by enterprises 7

11 KFW IPEX-BANK. to fulfill their obligations under the European Emissions Trading Scheme. KfW thus acts as a service provider, especially for companies that lack independent access to projects abroad and/or the intent to build up their own capacities for this purpose. Starting with the second period of EU emissions trading in 2008, for the first time the emission credits for European enterprises will no longer be issued completely for free; rather, they will in part be sold or auctioned in the market. The German Federal Government has commissioned KfW to act on behalf of Germany in handling the sale of 40 million EU emission credits annually in the years 2008 and This assignment by the Government consolidates KfW's position as a competent service provider for the Federal Government for tasks connected with EU emissions trading. KfW IPEX-Bank. KfW IPEX-Bank concluded new business totalling around EUR 3 billion in the first quarter. Financing operations in Germany accounted for EUR 1.1 billion, while commitments in other European countries added up to EUR 1.0 billion, leaving EUR 0.9 billion for regions outside Europe. Manufacturing and ship finance both made a major contribution to this result. Projects in the fields of basic industries and energy accounted for large shares as well. Energy finance projects placed special focus on renewable energies. In this area the bank financed wind farms in Taiwan and the USA as well as solar power systems in the USA. 8

12 KFW ENTWICKLUNGSBANK AND DEG. KfW Entwicklungsbank and DEG. Climate and environmentally relevant investments in developing countries. During the first three months of the year KfW Entwicklungsbank committed approx. EUR 270 million (2007: approx. EUR 390 million) for the promotion of developing and transition countries, with EUR 165 million having been provided out of KfW's own funds. The KfW subsidiary DEG financed private-sector investments in developing and industrialising countries with EUR 290 million (2007: EUR 235 million). International climate and environmental protection has become increasingly important over the past years. Owing to Germany's generally recognised know-how in this field and to competitive technologies and suitable financing instruments, it is the declared goal of the German Federal Government to also make a visible contribution to climate protection in Development Cooperation. Given their dynamic economies, the industrialising countries have an equally great need for both energy and climate protection measures. These countries need economic growth to reduce poverty. Yet growth brings with it a significant increase in harmful emissions that pollute the environment and the climate. At the same time, poor developing countries need to be shielded from the possible impacts of climate change and an exacerbation of both the international distribution and opportunity discrepancies and the potential for conflict. KfW Entwicklungsbank's past experience has shown that partner countries are willing to invest in climate protection if they have the necessary resources to do so. Together with the German Government KfW Entwicklungsbank launched the Initiative for Climate Change and Environmental Protection. Between 2008 and 2011 this 9

13 FUNDING. initiative aims at providing low-interest loans and grants for climate and environmentally relevant investments in developing countries. In April 2008 the first commitment was made during German- Vietnamese intergovernmental negotiations: EUR 39 million to support urban development. Funding. In the first quarter of 2008 KfW raised long-term funds for the equivalent of EUR 27.0 billion in the international capital markets. This sum was almost 40 % of the total funding volume of around EUR 70 billion planned for the year. After KfW's announcement at the end of 2007 of an increase in its refinancing requirements to approx. EUR 70 billion for the year 2008 was well received by the capital market, investor demand for KfW's bonds especially in US dollars was extraordinarily strong in the first quarter of this year. As a result, in January KfW was able to issue its first benchmark bond for USD 5 billion. It was followed by three more benchmark bonds, two in US dollars and one in Euro. As in the previous year, demand for KfW's sterling bonds was also very keen. The most important (in terms of volume) of KfW's three funding pillars, the two benchmark programmes in Euro and US dollars, accounted for 48 % of total funds raised by the bank. KfW's second funding pillar, other public bonds, contributed 43 % of the financial resources. The remaining 9 % were raised through privately placed bonds tailored to the specific needs of institutional investors. 10

14 KfW concluded 143 individual transactions during the first quarter. Despite a higher refinancing volume compared to the same quarter in the previous year, in Q1 the number of individual transactions declined over Q (177 transactions) owing to a stronger focus on high-volume benchmark bonds. The heavy demand for KfW's bonds in US dollars and British pounds is reflected in the funds raised by KfW to date. The share of US dollars has been 37 % thus far and that of the pound sterling, 23 %. The Euro accounted for 31% and the Japanese yen for 3 %. Thirteen other currencies contributed the remaining 6 %. 11

15 KfW Bankengruppe Palmengartenstrasse 5 9, Frankfurt am Main, Germany Tel , Fax , infocenter@kfw.de,