What we have achieved
Letter from the Management Board
For KfW IPEX-Bank, as for others, 2020 was largely dominated by coronavirus.
To protect against the spread of infection, many countries ordered restrictions on travel and business activities, closures of schools and childcare facilities and other similar measures. Contact between people was significantly reduced overall, which impacted demand for certain goods and services, such as air travel.
KfW IPEX-Bank maintained its own business operations throughout 2020, tackling the knock-on effects in partnership and dialogue with our existing customers from very early on. Our business is driven by investment decisions and a consequent need for credit, so coronavirus had different effects depending on the industry and region of our customers. Some economies started feeling the effects quite early in the year, others not until later. Whereas economic output in a number of Asian countries had already picked up by the end of 2020, many countries, to this day, are still struggling hugely with the economic fallout of the virus. The picture is similarly diverse in the various sectors in which we operate. The aviation and cruise industries have been hit extremely hard. Some sectors have been less severely affected, while others are even experiencing a spike in demand - including the digital economy, which is benefiting from a partial shift of social and business communication into the virtual sphere.
In concert with our customers, we designed tailor-made solutions. For example, we provided large, creditworthy companies with the liquidity they needed by granting new loans and restructuring existing exposures. We provided fast support, based on justifiable banking criteria, to a number of existing customers through tailored deferral solutions. This also included our participation in the joint initiative of the governments of Germany, France, Italy and Finland to defer loans for the entire cruise industry.
Overall, we proved ourselves to be a reliable partner to our customers, as testified by EUR 16.6 billion in new commitments that we provided in export and project finance for the benefit of the German and European economies. Although below the record volume posted in 2019 (EUR 22.1 billion) due to the challenges set out above, it compares well with the average in previous years.
We achieved this in no small measure through our focus on future technologies, providing some EUR 800 million to finance projects for fibre optic, broadband and mobile network expansion and the construction of modern, energy-efficient data centres. The still very high level of environmental awareness in large parts of the world is reflected – as in previous years – by our extensive involvement in financing environmental and climate change mitigation measures. Through this important contribution to growth, prosperity and employment, as well as to the energy transition, we are helping to ensure a liveable, sustainable future. This is clearly demonstrated by new commitments from the Power and Environment sector department totalling EUR 2.8 billion, an amount that highlights our mission to support the energy sector’s transition and to develop country-specific solutions in dialogue with customers and business partners. In addition to expanding our portfolio of renewable energy projects, we will also continue supporting conventional energy projects in order to balance seasonally fluctuating and weather-dependent technologies and to ensure security of supply.
The knock-on effects of the coronavirus pandemic also posed internal challenges for us. As soon as it became clear that the pandemic would have far-reaching consequences for the global economy, we analysed our loan portfolio and initiated measures to manage and de-risk it. Through these actions, and despite a much higher risk provisioning requirement, we achieved a small but satisfactory annual profit.
This all goes to show that 2020 was a very challenging and busy year of work for our employees – alongside the challenges posed by coronavirus in their private lives, such as childcare, home schooling and caring for elderly relatives.
We would therefore like to express our particular thanks to our staff, both in Germany and abroad. The commitment, team spirit, solidarity and expertise of our employees were important factors in positioning KfW IPEX-Bank as a provider of solutions and a competence centre, even in difficult times. Tremendous solidarity was also evident within KfW Group, which we experienced, for example, in the form of support from functions we outsourced to KfW. And we, too, played our part in KfW’s special coronavirus support programme by lending staff and taking over rating calculations for large companies on behalf of KfW.
One more reason we are so proud of the past year is that, even in the ‘new normal’, we fulfilled our mission of supporting German and European companies involved in the export economy on global markets.
In 2021, we want to continue consolidating our position as a specialist bank for structuring sophisticated export and project finance – in part via placements with risk partners, such as institutional investors and insurance companies – and as a partner to the German and European economies. Despite the shock waves emanating from the coronavirus crisis, the anticipated growth in sales markets in industrialised and emerging countries still offers export opportunities for our customers. In order to assist these customers, we will continue to play our role, both this year and beyond, of supporting German and European companies in their international activities through tailored medium and long-term financing for exports and foreign investments. KfW IPEX-Bank is selectively adding to its product portfolio and has expanded its representative office in Singapore into a subsidiary with a merchant banking licence. These steps should help deepen existing customer relationships and onboard new customers and customer groups for KfW IPEX-Bank financings.
Despite the challenges and uncertainties that lie ahead, we are confident and enthusiastic about the new financial year and look forward to working with you in 2021.
Wishing you continued health.
The information contained in this online Annual Report 2020 is based on KfW IPEX-Bank’s Management Report 2020, which you can download (in German, English version will follow soon). Should this online Annual Report 2020, despite the great care taken in preparation of its content, contain any contradictions or errors compared to the Management Report, KfW IPEX-Bank’s Management Report 2020 takes priority.