What we have achieved
Letter from the Management Board
2021 was another strange year: once again, both our daily activities and global economic development were dominated by the coronavirus pandemic.
While economies recovered from the first year of coronavirus, with solid economic growth reported globally, individual sectors reacted differently to the challenges posed by the pandemic. Demand for financing of investment assets in tourism-related sectors, such as cruise shipping and aviation, has stagnated. Financing of industrial projects was postponed, for example due to supply shortfalls in raw materials and intermediate industrial goods, as was financing for projects to secure raw materials. Conversely, demand for financing of infrastructure projects, especially in the digital sector, as well as initiatives relating to the energy transition, has remained stable.
At KfW IPEX-Bank, as elsewhere, we have had to adjust to new waves of infection and to adapt our work processes. Our priority was to safeguard the health and wellbeing of our employees and to keep our processes running smoothly. We were able to maintain our business operations throughout 2021, tackling the knock-on effects in partnership and dialogue with our existing customers from very early on.
Against this backdrop, together with our customers we focused on advancing the transformation to a sustainable society around the world, across the three dimensions of economy, environment and social. To support this process of transformation, KfW IPEX-Bank provides tailored medium and long-term financing solutions, especially for future technologies. Overall, we proved ourselves to be a reliable partner to our customers, as testified by the strong volume of new commitments (EUR 13.6 billion) we provided in export and project finance for the benefit of the German and European economies.
The relevance of renewable energy sources to combat climate change is clearly demonstrated by new commitments from the Power and Environment sector department totalling EUR 2.6 billion. 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. Our activities are driven – both now and in the future – by a prevailing environmental awareness in large parts of the world, not just among civil society and governments but also in business and at banks such as ours. Accordingly, KfW IPEX-Bank has done extensive work internally to address the issue of sustainability.
As part of the group-wide tranSForm project, we were able to implement guidelines for our lending practices for five of our particularly CO2-intensive sectors. In this way we can ensure that the business concluded by KfW IPEX-Bank in these sectors in 2022 is fully compatible with the goals of the Paris Agreement. Further sector guidelines are currently under development and will be implemented as soon as possible.
With the help of external consultants, a greenhouse gas accounting system is being established for the whole of KfW Group and thus also for KfW IPEX-Bank. Implementation of the new system is expected to take place during the current year, probably towards year-end. In addition, during the past financial year we introduced impact reporting, the initial findings of which will be presented during 2022. Using 70 indicators as a basis, it will be possible to illustrate the positive impact of our financing transactions across the 17 Sustainable Development Goals.
At the same time, by providing some EUR 1 billion of financing in the digital sector for projects relating to fibre optic, broadband and mobile network expansion, we are reinforcing our strong position in relation to the development of resilient digital infrastructure. The need for investment in this sector will increase sharply over the next few years as well. Here, too, we will act as a reliable partner to both our existing and new customers, continuing to offer attractive financing solutions.
Over the past financial year our business was also characterised by extremely prudent risk management. We analysed the consequences of the pandemic continually with regard to its impact on the global economy as well as on our own loan portfolio, both now and looking ahead. As a result, we were able to initiate portfolio management and de-risking measures to address the challenging, volatile economic environment. These actions made it possible to keep the risk provisioning requirements at a low level, despite a conservative approach, and to achieve a good annual profit given the circumstances.
In the current year we would like to further consolidate our position as a specialist bank for structured export and project finance and as a partner to the German and European economies in their transformation process. The anticipated growth in sales markets in industrialised and emerging countries still offers export opportunities. KfW IPEX-Bank will therefore continue in its role of supporting German and European companies in 2022, assisting them in their international activities by providing medium and long-term financing for exports and investment projects that is geared towards customers' requirements and supports sustainability. The bank seeks to play leading roles in syndicate financing arrangements and to include risk partners in financing structures.
Despite the challenges and uncertainties that lie ahead, let us be confident and enthusiastic about the new financial year. We look forward to working with you in 2022!
Wishing you continued health.
The information contained in this online Annual Report 2021 is based on KfW IPEX-Bank’s Management Report 2021, which you can download . Should this online Annual Report 2021, 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 2021 takes priority.