Semi-Annual Report 2004.

Transcription

1 Semi-Annual Report 2004.

2 1ST HALF AT A GLANCE. Financing volume exceeds last year s level. During the first half of 2004 KfW Bankengruppe (KfW banking group) achieved a volume of commitments of EUR 26.3 billion, marking an improvement year-on-year of 4 % (first half of 2003: EUR 25.3 billion). This increase was brought about by strong demand for promotional loans for municipal infrastructure finance (EUR 2.5 billion against EUR 1.8 billion in the first half of 2003). KfW s equity financing operations also expanded noticeably: Here, commitments rose by 39% to reach EUR 190 million. Kf W Mittelstandsbank (Kf W SME Bank). The brand name of KfW Mittelstandsbank was created and SME financing was restructured through the integration of DtA into KfW in August Many innovative approaches were already realised and important targets achieved in the previous year. In the future KfW Mittelstandsbank will continue to proactively face the changing conditions and respond to them by further developing its financing instruments. These efforts will focus in particular on systematic promotional approaches designed to improve the financing conditions for SMEs through the financing system as a whole. These approaches will centre around ensuring that small and mediumsized enterprises will continue to have access to financing.

3 In the first half of 2004 KfW Mittelstandsbank reached the commitment level of the same period of the previous year, with a total volume of EUR 4.8 billion. Loan commitments on previous year s level Unternehmerkredit posted a strong rise. A positive result was recorded in the individual commitments under the programmes for SMEs, start-ups and selfemployed professionals, which reached a total commitment volume of EUR 4.0 billion (EUR 3.6 billion). This corresponded to the previous year s level, even though EUR 0.6 billion less was committed in the first six months of this year than in the same period of the previous year under the global loans segment a product with relatively few, irregular transactions. On the other hand, our programme loans showed a positive trend in commitments which compensated the decline in the global loans segment and is reflected particularly in our new promotional product Unternehmerkredit (Entrepreneur Loan). In the first half of 2004, 14,500 commitments totalling nearly EUR 3 billion were made in this segment. This is a rise of 30 % over the volume of the first six months of the previous year in the predecessor products KfW SME Programme and DtA Start-up Programme. The market is receiving the simple, transparent and lean basic credit programme very well, and it is a great success.

4 Mezzanine finance is coming of age. Mezzanine finance is becoming more and more important as an alternative to credit and as an instrument for the formation of equity. In March 2004 KfW Mittelstandsbank completely redesigned and considerably expanded its promotional offer in this segment. Between January and June 2004 EUR 408 million was committed, falling short of the level in the first half of 2003 (EUR 539 million). This is largely due to the current transition between the phase-out of predecessor programmes and the start of the new mezzanine product family Unternehmerkapital, which is still in the run-up phase. The new product family offers start-ups, young entrepreneurs and established SMEs a comprehensive, standardised spectrum of subordinate financing for the first time. Equity finance posted high growth. The German Equity Barometer, set up by KfW together with the Federal Association of German Corporations, has detected a positive trend in the business climate of the German equity market for quite some time. This gives reason to hope that the important venture capital market is also recovering after years of stagnation. The extremely positive development of the demand for KfW s equity finance products is another sign of this upward trend. Here commitments in the first six months rose strongly by 39% against the same period of the previous year to reach EUR 190 million. SME loans for a total volume of EUR 200 million were securitised on the securitisation platform PROMISE.

5 Kf W Förderbank (Kf W Promotional Bank). KfW Förderbank finances investments in the areas of environmental and climate protection, housing modernisation, renovation of energy systems in existing homes, municipal infrastructure and education. In the first half of 2004 the volume of commitments was EUR 15.9 billion, EUR 2.5 billion higher than in the same period of the previous year. Expanded KfW CO 2 Building Rehabilitation Programme was a complete success. In the first half of 2004 KfW Förderbank committed a total of EUR 5.8 billion to promote owner-occupied housing and CO 2 reduction in emissions from residential buildings. Of this sum, EUR 2.5 billion went to promote the construction and acquisition of new homes under the KfW Home Ownership Programme, EUR 2.2 billion to finance CO 2 reduction in existing homes and housing modernisation, and EUR 1.1 billion to global loans to finance owner-occupied housing. Under the KfW CO 2 Building Rehabilitation Programme commitments were 80 % higher than in the first half of 2003, at EUR 690 million. This is mostly due to last year s expansion of the programme. For 27% of all loan commitments made thus far, partial debt relief was granted for old buildings that were successfully brought to lowenergy housing standard. This bonus promotion is being granted since last year whenever modernisation of an old building brings it up to the energy standards required by the German Energy Conservation Directive for new buildings.

6 KfW Housing Modernisation Programme 2003 and Special Fund for Growth Impulses give domestic economy a noticeable boost. Under the KfW Housing Modernisation Programme 2003 KfW so far has committed loans in a total of EUR 3 billion; commitments in the first half of this year alone amounted to EUR 0.9 billion. Under the Special Fund Growth Impulses of the KfW Infrastructure Programme for municipalities, commitments so far have even reached EUR 5.6 billion; in the first half of 2004 commitments totalled EUR 2.3 billion. The investment volume mobilised thus far amounts to just under EUR 20 billion. The investments they encouraged benefit primarily the small and medium-sized construction industry and trade. Over 300,000 jobs have already been assured for one year under the two programmes. Moreover, the high demand for the Special Fund Growth Impulses contributes significantly to lowering the interest burden for the municipalities and relieving the financial burden on their budgets. Under the securitisation programme PROVIDE mortgage loans for privately-owned homes were additionally securitised in a total sum of EUR 4.2 billion. Education finance. Qualified human capital is one of the most important resources for a country poor in raw materials like Germany. A qualified workforce is an important local asset. Education is becoming an increasingly important production and competition

7 factor. Only a good education system can produce highly qualified professionals who bring out successful innovations for Germany as a business location. These, in turn, guarantee the future competitiveness of our economy. With its education finance KfW Förderbank promotes the structural transformation from the industrial society to the knowledge-based service society. In the first half of 2004 alone, more than 31,000 students, pupils, scholars and professionals were supported with loans totalling just under EUR 400 million. Demand for a Bildungskredit offered by KfW Förderbank which is independent from the income of the student or his or her parents increased over 2003 by 48% to reach EUR 40 million. Commitments of BAföG bank loans, or federal education and training assistance, also rose by 27% to EUR 14 million. Environmental protection is an important cross-cutting task of KfW Förderbank and KfW Mittelstandsbank. In the first half of 2004 the volume of commitments for environmental and climate protection investments totalled EUR 3.3 billion, 43% more than in the same period of the previous year. Around 24% of the promotional loans were committed for investments in renewable energies, 48% for measures to conserve energy in private homes, approximately 9% for the promotion of industrial pollution control and climate protection, and 21% for environment-related municipal infrastructure.

8 Kf W IPEX-Bank. In the first half KfW IPEX-Bank successfully continued its organisational and strategic redesign to act as legally independent KfW subsidiary in the competitive banking arena from Already it is generally meeting the legal and regulatory requirements for its banking operations. KfW IPEX Bank, which competes with the other players of the banking industry, posted a good half-year result with new commitments of EUR 4.9 billion, and it is well on track to reach the target corridor of EUR 8 10 billion set for New domestic operations contributed EUR 2.3 billion to this result while financings abroad accounted for EUR 2.6 billion. In its international business the European market is the main target region, with nearly two-thirds of commitments. Investment finance and other corporate-finance schemes were in stronger demand than loans tied to exports. The shipping and raw materials industry recorded particularly dynamic growth. Loans to the processing industry also made a significant individual contribution to the overall result.

9 Financing examples: The bank is financing an innovative project for basic chemical materials in Schwarzheide that helps to preserve jobs in the region of the former GDR s traditional chemical industry locations. In Saxony KfW IPEX Bank is participating in the financing of a wind park. In its international financing operations its contribution to an equity fund for European infrastructure investment is a novelty in KfW IPEX-Bank s business. The bank has demonstrated its commitment to Private Finance Initiatives by financing further school training projects in Great Britain. Kf W Entwicklungsbank (Kf W Development Bank). In June KfW Entwicklungsbank presented its 2003 Annual Report on Cooperation with Developing Countries together with DEG. The title of the Annual Report is: Strong partnerships. Achieving more together. In it KfW Entwicklungsbank reports mainly on the fight against poverty in partner countries as a joint international task requiring coherent action between industrialised and developing countries and also among various social stakeholders: the state, the private sector, and civil society. In the first half KfW Entwicklungsbank and DEG committed some EUR 0.7 billion to promote developing and transition countries.

10 Funding. In the first half of 2004 KfW raised funds in the equivalent of just under EUR 30 billion in the capital market. This is more than half the total funds of around EUR billion which it planned to raise over the year. Of the total volume of its issues, 47% was in Euros and 31% in US dollars. Issues in pounds sterling were in a substantially lower proportion (11%) as were papers in 11 further currencies (11%). In the first six months KfW issued a five-year global bond with a volume of EUR 5 billion and a ten-year global bond with a volume of EUR 3 billion under its L-Benchmark-Programme. In addition, a five-year bond in a global format for USD 3 billion was placed very successfully in the capital market under the KfW US$-Benchmark- Programme. For the ongoing year the bank plans to launch largevolume bond issues in the equivalent of at least EUR 20 billion in total under these two programmes.

11 At the end of June KfW participated in a capital market innovation of the German government in which for the first time liabilities of the Russian Federation due to the Federal Republic of Germany under Paris Club agreements were placed in the market in the form of public bonds. Here KfW takes on the role of the reinvestment partner. In other words, KfW acts as an intermediary by transforming the cash flows arising under payments due in the framework of the Paris Club agreements into standard payment flows to be paid out on the notes issued by way of a special-purpose vehicle. KfW s involvement has made it much easier for investors to assess the structure and contributed to the great success of this EUR 5 billion transaction.

12 Group Figures for KfW Bankengruppe, in EUR billion Jan 1 June 30 Jan 1 June 30 I. KfW Mittelstandsbank Loan financing of which: Unternehmerkredit Global Loans for Commercial Enterprises Mezzanine financing Equity financing PROMISE Securitisations II. KfW Förderbank Housing investments of which: Global loans for the housing industry Education Municipal infrastructure Environmental investments Global credit lines to special credit institutions of the federal states PROVIDE securitisations Investment finance in Germany and Europe III. KfW IPEX-Bank Manufacturing, Telecommunications, Raw Materials Energy, Environment Transport and Transport Infrastructure AKA Export Credits IV. KfW Entwicklungsbank V. DEG Total financing volume Environmental and climate protection Funds raised Group balance-sheet total As of September 1, 2003, the KfW SME Programme and the DtA Start-up Programme were combined to create a new product the Unternehmerkredit, or entrepreneur loan including the variants Leasing, Abroad, Working Capital, and GuW (start-up and growth financing). 2 Contained in the total financing volume as cross-cutting promotion of KfW Mittelstandsbank and KfW Förderbank. 3 Without DtA. Amounts may not add up to totals due to rounding KfW Bankengruppe Palmengartenstrasse 5 9, Frankfurt am Main Telephone , Fax , info@kfw.de,