We support internationalisation
Challenging market environment — Satisfactory result from new commitments
The economic situation in the past financial year was stable, although growth varied across different regions of the world. Demand for capital goods financed by KfW IPEX-Bank was therefore also favourable. As in previous years, the supply of high-volume project and export financing was fiercely competitive in 2018. Both banks and institutional investors continued to experience high levels of liquidity and investment pressure.
In this market environment, KfW IPEX-Bank concentrated primarily on supporting longstanding customers, on borrowers with good ratings and on structuring financing for projects backed by good collateral. In most cases, KfW IPEX-Bank acted as a partner in club or syndicate financing arrangements with other national and international banks. It provided financing totalling EUR 17.7 billion in 2018.
Loan commitments: EUR 17.0 billion / EUR 0.7 billion from CIRR Ship and ERP Export Financing programmes
Of this amount, EUR 17.0 billion (2017: EUR 12.1 billion) was attributable to original lending business and EUR 0.7 billion (2017: EUR 1.7 billion) to bank refinancing under the CIRR Ship and ERP Export Financing programmes. Here KfW IPEX-Bank acts indirectly on behalf of the German Federal Government. Of its total commitments, EUR 13.0 billion constituted KfW IPEX-Bank’s market business, while EUR 4.8 billion was trust business performed on behalf of and for the account of KfW.
Against the backdrop of the market environment described, KfW IPEX-Bank continued to prioritise the quality of its credit exposure in 2018, thereby creating a balanced risk/return ratio. KfW IPEX-Bank’s commitment confirms its role as a specialist bank for the German and European export economies, which it assists in their international ventures by providing individually structured financing.
New commitments by sector department
All sector departments made a positive contribution to KfW IPEX-Bank’s result in 2018. The contribution made by the ‘Power, Renewables and Water’ sector department was particularly noteworthy, recording new business of EUR 3.4 billion, the majority of which was attributable to onshore and offshore wind farms. This result underlines KfW IPEX-Bank’s commitment to making a significant contribution to supporting the energy transition and creating a sustainable world.
With new commitments of EUR 2.3 billion in 2018, KfW IPEX-Bank helped to maintain the innovative capacity of maritime companies in Germany and Europe and to reduce emissions from ship propulsion systems – for example, by financing two LNG-powered cruise ships. It is thus supporting efforts to make the booming cruise industry as low as possible in emissions harmful to people and the environment.
KfW IPEX-Bank plays an active, competent and authoritative role in driving change to promote economic, social and ecological development in Germany, Europe and around the globe on a long-term basis. It provides individual medium and long-term financing solutions in order to support this process of transformation. In doing so, KfW IPEX-Bank is promoting advances in technology, with the aim of securing the basic needs and quality of life of future generations.
KfW IPEX-Bank makes a positive contribution to implementing the Sustainable Development Goals (SDG) of the United Nations. It complies with the Equator Principles and the OECD’s ECA Common Approaches. It also incorporates its own extensive appraisals in its decision-making processes within the context of lending, to verify that the conduct of its borrowers is environmentally and socially sound.
Economic and financial results
Based on the financial result from the Export and Project Finance business sector, KfW IPEX-Bank can look back on a highly successful 2018. With a contribution to KfW’s consolidated earnings of EUR 537 million (previous year: EUR 469 million), it played a part in securing KfW’s long-term promotional capacity, thereby affirming its role as one of KfW Group’s main sources of earnings.
Valuations were the main driving force behind this positive result. While net interest income and net commission income were down year-on-year and administrative expense rose slightly – the operating result of EUR 483 million before valuations was consequently down on the previous year’s result (EUR 581 million) – valuations led to a very good result for the business sector overall. All recognisable risks continued to be assessed conservatively, however the net positive valuation was EUR 89 million (previous year: EUR -92 million), meaning that the overall result from ordinary business activities rose to EUR 572 million (previous year: EUR 489 million).
KfW IPEX-Bank GmbH is a legally independent and separate reporting entity which performs all export and project finance market transactions. The bank also recorded a satisfactory pre-tax annual profit of EUR 238 million (2017: EUR 113 million).
The volume of lending in the Export and Project Finance business sector increased to EUR 66.6 billion as of 31 December 2018 (2017: EUR 61.9 billion). This was mainly because of the above-average commitment volume in 2018 and the change in the EUR/USD exchange rate compared to the previous year-end, since around 45% of the bank’s loans are denominated in US dollars.
The information contained in this online Annual Report 2018 is based on KfW IPEX-Bank’s Management Report 2018, which you can download here. Should this online Annual Report 2018, 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 2018 takes priority.