∆Annual Report 2015 Taking responsibility KfWKfWKfW Group Group Group key key key figures figures figures KfWKfW GroupKfW Group businessGroup business business activities activities activities 201520152015 201420142014 201320132013 EUR EUR in billionsEUR in billions in billionsEUREUR in billionsEUR in billions in billionsEUREUR in billionsEUR in billions in billions KfWKfW GroupKfW Group1) Group1) 1) 79.379.379.3 74.174.174.1 72.572.572.5 DomesticDomesticDomestic promotional promotional promotional business business business 50.550.550.5 47.647.647.6 51.651.651.6 of which:of which:of which: BusinessBusinessBusiness sector sector Mittelstandsbank sector Mittelstandsbank Mittelstandsbank (SME (SME Bank) (SME Bank) Bank) 20.420.420.4 19.919.919.9 22.622.622.6 BusinessBusinessBusiness sector sector Kommunal- sector Kommunal- Kommunal- und undPrivatkundenbank/Kreditinstitute Privatkundenbank/Kreditinstituteund Privatkundenbank/Kreditinstitute (Municipal(Municipal(Municipal and andPrivate Privateand ClientPrivate Client Bank/Credit Client Bank/Credit Bank/Credit Institutions) Institutions) Institutions) 30.130.130.1 27.727.727.7 28.928.928.9 BusinessBusinessBusiness sector sector Capital sector Capital marketsCapital markets markets 1.1 1.1 1.1 1.2 1.2 1.2 0.7 0.7 0.7 InternationalInternationalInternational business business business 27.927.927.9 25.525.525.5 20.520.520.5 of which:of which:of which: BusinessBusinessBusiness sector sector Export sector Export and Export andproject projectand fiproject nance fi nance fi nance 20.220.220.2 16.616.616.6 13.713.713.7 BusinessBusinessBusiness area area KfW areaKfW Development KfWDevelopment Development Bank Bank Bank 6.7 6.7 6.7 7.4 7.4 7.4 5.3 5.3 5.3 DEGDEGDEG 1.1 1.1 1.1 1.5 1.5 1.5 1.5 1.5 1.5 1) Adjustment1) Adjustment1) Adjustment for commitments for commitments for commitments of Export of Export ofand Export projectand project and fi nanceproject fi nance with fi nance withfunding fundingwith from funding from KfW from KfWprogramme programmeKfW programme loans loans (2013: loans (2013: EUR (2013: EUR193 193million,EUR million,193 2014: million, 2014: EUR 2014: EUR153 153million,EUR million,153 million, 2015:2015: EUR2015: EUR229 229million)EUR million)229 million) The fiThe gures fi Thegures in fitables gures in tables werein tables were calculated werecalculated calculated exactly exactly and exactly addedand added and up. added up. up. FiguresFigures mayFigures maynot addnotmay upadd not to up addtotals to up totals becauseto totals because of because rounding. of rounding. of rounding. Key fi gures of the income statement 2015 2014 EUR in millions EUR in millions Net interest income (before promotional activity) 2,904 2,768 Net commission income (before promotional activity) 286 313 Administrative expense (before promotional activity) 1,125 1,059 Operating result before valuation (before promotional activity) 2,066 2,023 Risk provisions for lending business –48 –143 Net gains/losses from hedge accounting and other fi nancial instruments at fair value through profi t or loss 478 69 Net gains/losses from securities and investments and from investments accounted for using the equity method 43 4 Operating result a er valuation (before promotional activity) 2,539 1,953 Net other operating income 107 20 Profi t/loss from operating activity (before promotional activity) 2,647 1,973 Promotional activity (expense) 345 364 Taxes on income 130 95 Consolidated profi t 2,171 1,514 Consolidated profi t before IFRS eff ects from hedging 1,900 1,467 Cost/income ratio before promotional activity1) 35.2 % 34.4 % Key fi gures of the statement of fi nancial position 31 Dec. 2015 31 Dec. 2014 EUR in billions EUR in billions Total assets 503.0 489.1 Volume of lending 447.0 440.3 Volume of business 587.2 572.5 Equity 25.2 21.6 Equity ratio 5.0 % 4.4 % Key regulatory fi gures 31 Dec. 2015 31 Dec. 2014 EUR in billions EUR in billions Risk position 131.8 144.1 Tier 1 capital 24.1 20.3 Regulatory capital 24.2 21.7 Tier 1 capital ratio 18.3 % 14.1 % Total capital ratio 18.4 % 15.1 % Employees of KfW Group2) 2015 2014 5,807 5,518 1) Administrative expense (before promotional activitiy) in relation to adjusted income. Adjusted income is calculated from Net interest income and Net commission income (in each case before promotional activity). 2) The average number of employees including temporary staff but without members of the Executive Board and trainees ∆Sustainably improving living ˚Responsible Banking conditions. That is what our work is all about. Climate change, demographic trends and a globalised economy: people across the globe are contemplating how to meet the major challenges of our time. KfW is one of the world’s leading promotional banks. It has been dedicated to improving environmental, social and economic conditions worldwide since 1948 in accordance with its mandate from the German Federal Government and the federal states. To this end, KfW is active in all areas where promotion serves this mission. Change begins with responsibility – in Germany, in Europe and around the world. ˚ We promote Germany Responsible Banking We supportWe internationalisation We promote development promote We Other notes Other Other notes We promote development We support internationalisation We promote Germany Contents ˚Prospects for globalisation and technical progress Page 6 We promote Germany We support internationalisation We promote development Page 67 Page 87 Page 99 KfW sets things in motion – experience this report interactively in three ways 01 | App Download the KfW Annual Report 2015 as a convenient app from the App Store or Google Play Store (search for: KfW Annual Report) or scan the QR code. 02 | Videos Download the free Layar app to your smartphone or tablet (www.layar.com/download), and scan the pages marked with the icon. The video will be loaded and then played. 03 | Online Check out the Annual Report microsite at: www.kfw.de/verantwortung 4 | KfW Annual Report 2015 Contents Contents Prospects for globalisation and technical progress 6 Editorial 17 Prospects in crisis countries and new homelands 19 ˚Prospects for globalisation Product and process innovations 34 and technical progress International division of labour and location attractiveness 42 Page 6 International trade and infrastructure 46 Prospects for forward-looking projects – the KfW Awards 53 Letter from the Executive Board 56 We promote Germany 67 At a glance: Domestic promotion in 2015 68 What we off er start-ups and businesses 74 The promotional off ering for private customers 78 The promotional off ering for municipalities 80 Special fi nancing for fi nancing partners and special tasks 81 KfW funding – simple, digital and everywhere 84 We support internationalisation 87 At a glance: Export and project fi nance in 2015 88 KfW IPEX-Bank 92 We promote development 99 At a glance: Promotion of developing and emerging market countries in 2015 100 Business area KfW Development Bank 106 We promote Germany DEG 113 Capital markets 117 The men and women on our staff 127 Financial reporting 133 Corporate governance 139 We supportWe internationalisation Report of the Board of Supervisory Directors 140 We promote Germany We support internationalisation We promote development Corporate Governance Report 143 Page 67 Page 87 Page 99 Executive Board, Directors and Managing Directors of KfW Group 153 Members and tasks of the Board of Supervisory Directors 154 Photographs 156 Imprint 157 We promote development promote We KfW sets things in motion – experience this report interactively in three ways 01 | App Download the KfW Annual Report 2015 as a convenient app from the App Store or Google Play Store (search for: KfW Annual Report) or scan the QR code. 02 | Videos Download the free Layar app to your smartphone or tablet notes Other (www.layar.com/download), and scan the pages marked with the icon. The video will be loaded and then played. 03 | Online Check out the Annual Report microsite at: www.kfw.de/verantwortung 4 | KfW Annual Report 2015 Contents KfW Annual Report 2015 Contents | 5 ˚How does global thinking become a driving force? We promote international trade. ˚How does global thinking become a driving force? We promote international trade. We promote Germany We supportWe internationalisation We promote development promote We Our goal New prospects for an increased variety of goods, to improve and maintain prosperity around the world. New sea lock | Amsterdam | Read more on page 46 Other notes Other ˚How do growth markets become environmentally clean? We promote climate protection worldwide. ˚How do growth markets become environmentally clean? We promote climate protection worldwide. We promote Germany We supportWe internationalisation We promote development promote We Our goal New prospects for sustainable transport concepts to meet the growing demand for mobility while conserving resources and the environment. Traffi c management | China and Brazil Read more on page 50 Other notes Other ˚How does solar energy lead to independence? We promote alternative energy concepts. ˚How does solar energy lead to independence? We promote alternative energy concepts. We promote Germany We supportWe internationalisation We promote development promote We Our goal New prospects for green energy to meet the world’s energy needs and provide power where there is none. Renewable energy | Africa | Read more on page 42 Other notes Other ˚How do you mass produce individuality? We promote innovative production processes. ˚How do you mass produce individuality? We promote innovative production processes. We promote Germany We supportWe internationalisation We promote development promote We Our goal New prospects for innovations to maintain competitiveness, jobs and prosperity in Germany. Promoting innovation | Germany | Read more on page 34 Other notes Other ˚How do basic services provide a secure foundation? We promote accommodation for refugees. ˚How do basic services provide a secure foundation? We promote accommodation for refugees. We promote Germany We supportWe internationalisation We promote development promote We Our goal New prospects for people seeking refuge in Germany.