| Stable demand for SME loans and KfW Special Programme |
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06/11/2009 15:19 (14 Day 12:45 minutes ago) | |||||
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The FINANCIAL -- KfW has in the third quarter successfully continued the positive development of results of the first half of 2009. After the good start into the 2009 financial year, the interim accounts of the KfW Group according to IFRS as at 30 September 2009 show a group profit of EUR 781 million.
The operating result before valuation was EUR 1,757 million, higher than the previous year’s figure of EUR 1,137 million. What deserves particular mention is the continuing positive third-quarter development of net interest income, which builds on the steady profitability of KfW and reflects the favourable funding conditions from which KfW benefits. This positive development enables KfW to generate a high promotional business volume sustainably and from its own resources.
In response to the still difficult global economic situation, KfW has continued its conservative risk provisioning policy and has so far made provisions for individual and portfolio impairments in the sum of EUR 593 million in the current financial year. These provisions take into account the particular risks existing in the real economy as at 30 September 2009.
"In the valuation result, reversals of impairments in the securities portfolio which were made in the reporting period contributed a welcome EUR 167 million to net income. This was offset by purely IFRS-induced charges of EUR 381 million from the valuation of derivatives. KfW uses derivatives solely to hedge risks, and they dissolve over the term together with the underlying positions without affecting the income position," KfW informed.
In the first three quarters of 2009, KfW Bankengruppe financed investments in an overall volume of EUR 37.2 billion. The decline in comparison with the third quarter of 2008 (EUR 52 billion) is due to the difficult economic situation and the related lower demand for debt capital.
In the business area KfW Mittelstandsbank, which combines all of KfW's loan products for enterprises, the financing volume after three quarters is EUR 13.9 billion, just short of the EUR 14.4 billion attained in the same period last year. The KfW Special Programme, which was launched in the context of the Federal Government's two economic stimulus packages, established itself more firmly, providing important impetus in the third quarter of 2009. Through 30 October 2009 KfW received 3,295 loan applications for a volume of EUR 14.9 billion. Small and medium-sized enterprises accounted for 95% of the applications. KfW has already processed a good 80% of all applications received.
Since the end of the third quarter KfW has been offering banks a new instrument under the KfW Special Programme - global loans - to refinance corporate loans. The financing advantages of global loans are passed on to the ultimate borrowers. A first agreement for a global loan of EUR 1 billion to finance SMEs has already been signed with Deutsche Bank. Another novelty is that independent leasing companies are eligible for financing under the KfW Special Programme. KfW has also launched a programme that offers banks long-term refinancing of export loans guaranteed by the Federal Republic, thus improving the financing situation for the export industry. This programme is directed at credit institutions that have access to Hermes cover.
"Small and medium-sized enterprises in Germany face challenging times; as a promotional bank KfW lends its support to enterprises and start-ups", said Dr Ulrich Schröder, Chairman of the Managing Board of KfW Bankengruppe. "We are continuously working on our promotional programmes and instruments to counteract the economic and financial crisis."
In the business area KfW Privatkundenbank KfW provided EUR 11.3 billion to promote housing and education up to the end of September 2009. The commitment volume did not quite match the extraordinarily high volume of EUR 12.5 billion for the same period last year. Most notably, the promotional programmes for energy-efficient construction and rehabilitation provided important stimulus - not only for the climate but also for the small and medium-sized construction industry and the job market. In spite of the difficult market environment, this segment achieved an unprecedented commitment volume of EUR 6.6 billion, a 24% increase on the EUR 5.3 billion of the same period last year.
The commitment volume of the business area KfW Kommunalbank at the end of the third quarter 2009 was EUR 3.2 billion, below the EUR 6.4 billion committed in the reference period. This was also due to the fact that the federal states are providing direct subsidies to the municipalities under economic stimulus package II for almost exactly the same purpose as KfW's promotional loans. The decline in this area is also a result of the restrained use of global loans by the promotional institutions of the federal states, which are asking for lower volumes of refinancing funds. They had taken up large volumes of refinancing funds by the end of 2008, and they are also feeling the effects of generally lower demand for credit.
The volume of securitisations remains on a low level, at EUR 1.5 billion (previous year: EUR 1.9 billion). "The securitisation market has not yet recovered. Simply structured securitisations, which banks use primarily as a means to reduce their capital charge and to refinance their core business, will remain important in the future as well. KfW will therefore continue to offer its securitisation platforms and expertise in order to secure the supply of credit, particularly for enterprises", Dr Schröder added.
In the business area of export and project finance, which KfW IPEX-Bank handles within KfW Bankengruppe, new business commitments totalled EUR 5.1 billion through 30 September 2009. The commitment volume was lower than in the same period last year (EUR 14.2 billion), mostly because major investment projects were postponed, resulting in lower demand for financing. As the bank is currently preparing a large number of new operations, however, it anticipates an increase in the overall commitment volume by the end of the year.
For the promotion of developing and transition countries KfW Entwicklungsbank committed EUR 1.6 billion in the first three quarters of 2009 (previous year: EUR 1.6 billion). With new commitments of EUR 0.5 billion the promotional volume of DEG was lower than in the same period last year, when it committed EUR 0.9 billion. However, DEG's new business picked up considerably against the first half of 2009.
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