Press Conference on Annual Results Frankfurt am Main, 15 April 215
Germany and Europe facing enormous challenges Demands on banks are growing Weak global growth Persistently low interest rates Regulatory restrictions for banks Geopolitical crises No answer to climate change 2
Breakdown of KfW Group business activities in 214 Volume of promotional business rises to around EUR 74 billion 9 8 7 6 5 4 3 2 1 63,9 5.9 81,4 66.6 13,4 15, Breakdown of business activities (EUR in billions) Domestic promotional business KfW Special Programme 7,4 5.9 19,2 International business Capital market-related financing 73,4 72.5 5,6 51.6 19,7 2,5 74.1 47,6 25,5 29 21 211 212 213 214 Development of promotional business Promotional business model stable on the whole despite the low interest rate environment Demand-driven decline in promotion in Germany, as expected Significant increase in international financing has a compensating effect 8 6 4 2 Promotional activity (expense) (EUR in millions) 597 364 213 214 3
Consolidated profit of EUR 1.5 billion achieved Result above the sustainable yield potential Positive trend in terms of the valuation result Consolidated profit (in accordance with IFRS) (EUR in millions) Main effects on earnings 214 3. 2.631¹ 2.5 2.413 2.68¹ 2. 1.514 1.5 1.273 1.127¹ 1. 5 29 21 211 212 213 214 1 Before conversion to NPV accounting of interest rate reductions. Operating result impacted by net interest income down in the low interest rate environment higher expenditure on modernisation and measures implemented as part of the application of the German Banking Act Valuation result better than expected due to risk provisions well below expectations positive result in the securities and the investment portfolio Interest rate reductions in decline due to demand-driven decline in domestic promotion (particularly for SMEs) 4
Operating result Net interest income impacted by low interest rate environment 2.5 3, Net interest income (before promotional activity) (EUR in millions) 2.997 2.768 Administrative expenses (before promotional activity) (EUR in millions) 2. 2,5 1.5 2, 1. 976 1.59 5 213 214 213 214 5
Valuation result Actual risk provisions for lending business well below expectations 15 1 5-143 214 (EUR in millions) 57 122 Risk provisions for lending business Risk provisions well below standard risk costs Provisions particularly affect domestic education financing and DEG s lending business No further impacts from the KG (single-vessel companies) portfolio -5-1 -15-2 Risk provisions for lending business Securities portfolio Investment portfolio -54 Derivative effects Investment portfolio Positive title and currency result in the case of DEG investments At approx. EUR 15 million, the effect on earnings is around double the provisions in DEG s lending business 6
Risk profile Economic and regulatory risk-bearing capacity Economic risk-bearing capacity (EUR in billions; solvency level 99.99 %) Regulatory risk-bearing capacity 1 25 2 15 1 5 Capital requirement 21,4 21,7 7,9 6,2 13,6 15,5 Risk-covering potential 213 Excess coverage Risk-covering potential 214 Lowering of excess coverage, essentially due to the calculation of capital requirements for credit risks being converted to IFRS accounting Excess coverage used to cushion stress scenarios and upcoming regulatory changes 213 214 1 Tier I capital ratio (TICR) 2.6 % 14.1 % Total capital ratio (TCR) 22.3 % 15.1 % Capital ratios declined substantially in 214, essentially due to the application of Basel III (-3.4 % tier I capital ratio/-4.1 % total capital ratio) calculation of capital ratios converted to IFRS accounting (-2.8 % tier I capital ratio/ -3. % total capital ratio) Clear compliance with current capital requirements 1 For internal purposes, voluntarily calculated on the basis of the main legal provisions. In 214, the capital ratio was calculated according to CRR (Basel III) and based on IFRS. 7
Total assets increased Interest rate and exchange rate-induced increase in market values of hedging derivatives 55 Total assets (EUR in billions) Factors in increase in total assets 214 (EUR in billions) Change in balance sheet assets + 24.3 5 59,4 489,1 Changes in market value in connection with hedging transactions + 21.4 45 464,8 Cash collateral received for derivatives and liquidity maintenance -8.1 4 Other + 4. Lending business + 7.1 35 212¹ 213 214 1 Total assets from 212 adjusted (mainly due to NPV accounting of interest rate reductions). 8
Outlook for 215 Good start to 215 challenges remain Demand for funding Development of consolidated profit Modernisation Promotion Europe Demand still weak in domestic promotion due to the low interest rate environment Persistently strong demand in export and project finance Persistently low interest rates Regulatory impacts Necessary expenses for modernisation Implementation of regulatory requirements well underway Important major projects at the implementation stage Expansion of the BDO 2. online platform Stronger cooperation with national promotional banks Supporting the establishment of national promotional banks Supporting implementation of the Juncker Plan 9
Press Conference on Annual Results Frankfurt am Main, 15 April 215