Financial Report 2015 Financial Report 2015 of NRW.BANK Contents 2 The Promotion Business of NRW.BANK 7 Report on Public Corporate Governance 24 Declaration of Conformity 25 Report of the Supervisory Board 26 Management Report 64 Balance Sheet 68 Income Statement 70 Notes 104 Cash Flow Statement 106 Statement of Changes in Equity 107 Reproduction of the Auditor’s Report 108 Responsibility Statement 109 Members of the Advisory Board for Housing Promotion 111 Members of the Parliamentary Advisory Board 112 Members of the Advisory Board 116 Organisation Chart 118 NRW.BANK at a Glance This is an unofficial translation of the Finanzbericht 2015 (German Financial Report 2015) and is provided for convenience purposes only. In the event of any ambiguity, the German text will prevail. Financial Report 2015 1 The Promotion Business of NRW.BANK The Promotion Business of NRW.BANK 1 Overview NRW.BANK takes into account the existing offers by As the state development bank and central development the Federal Government in the arrangement of its pro- platform of North Rhine-Westphalia, NRW.BANK supports motion and supports the sizable use of Federal and EU its owner and guarantor, the State of North-Rhine West­­ promotion funds in the State of North Rhine-Westphalia. phalia, in the fulfilment of its public duties and in the The Bank serves as a conduit for the federal promotion efficient implementation of development and promotion programmes of KfW Bankengruppe and Landwirtschaft- programmes in North Rhine-Westphalia with a view to liche Rentenbank in its capacity as the central institution minimising the impact of these activities on the state of the North Rhine-Westphalian savings banks. To refi- budget. NRW.BANK offers the full range of lending nance its promotion activities, NRW.BANK also uses funds tools and is also in a position to act in cases where made available to it by KfW Bankengruppe, Landwirt- financial know-how shapes the development process. schaftliche Rentenbank, the European Investment Bank as well as the Council of Europe Development Bank (CEB). The chargeless facilitating of monetary and non-mone- tary resources for the promotion business – referred to NRW.BANK’s promotion offerings and their further as “Förderleistung” – is an integral element of the Bank’s development are driven by the promotion policy promotion strategy. Interest waivers are a central com- principles adopted by the Board of Guarantors and ponent of NRW.BANK’s “Förderleistung” and occur NRW.BANK’s promotion strategy, which is based in two different forms: “margin waivers”, where thereon. In developing the contents of its promotion NRW.BANK charges reduced interest rates on promo- offerings, NRW.BANK takes current developments into tion loans, and “investment waivers”, where the Bank account. In response to the challenges resulting from uses equity capital to extend non-interest-bearing or the growing number of refugees, for instance, the Bank low-interest promotion loans and thus refrains from has launched separate promotion programmes catering using this equity capital for alternative interest-bearing the specific needs of the State of North Rhine-West- investments. Other components of the “Förderleistung” phalia and, most importantly, its municipalities in include risk assumptions as well as free services and mastering the respective tasks. The growing digitali- benefits in kind, e.g. advisory services for customers sation of society is a challenge of another kind. This and support services for multipliers and house banks. year’s “prospect” publication is dedicated to this Especially, the supply of the „Förderleistung“ enables special aspect. The promotion projects presented here NRW.BANK to make available attractive promotion show that the diverse and multi-faceted promotion options to the respective target groups. offerings of NRW.BANK already address most of the Promotion offerings of NRW.BANK Promotion offerings “Housing & Living” “Seed & Growth” “Development & Protection” Housing SME Environment/Climate/Energy Municipalities Start-ups Innovation Infrastructure Exports Education 2 Financial Report 2015 special promotion requirements of the municipalities, promotion products of NRW.BANK put the individual enterprises and people in North Rhine-Westphalia that promotion themes into concrete terms. Each promotion result from digitalisation. product is therefore assigned to a single promotion theme. In terms of contents, NRW.BANK’s promotion offerings are divided into three fields of promotion: “Seed & In 2015, NRW.BANK’s new promotion business con- Growth”, “Development & Protection” and “Housing tinued the successful trend of the previous years in a & Living”. They denote the target areas in which difficult economic environment characterised by per- NRW.BANK’s promotion activities are to take effect. sistently low interest rates. New promotion business Each field of promotion comprises specific promotion stayed at a high level and the Bank committed promotion themes which outline the promotion focal points of the funds in a total amount of € 9.7 billion (2014: € 8.9 billion), Bank. They are elaborated in NRW.BANK’s promotion with on-lending accounting for roughly 19%. The table strategy. Each field of promotion is currently divided below breaks down the total net new commitments by into three specific promotion themes. The different fields of promotion and promotion themes: Net volume of new commitments Dec. 31, 2015 Dec. 31, 2014 Changes € millions € millions € millions Field of promotion “Housing & Living” 5,148 4,278 870 – Housing 1,641 1,430 211 – Municipalities 2,846 2,279 567 – Infrastructure 661 569 92 Field of promotion “Seed & Growth” 3,344 3,178 166 – SME 2,700 2,607 93 – Start-ups 582 521 61 – Exports 62 50 12 Field of promotion “Development & Protection” 1,185 1,441 –256 – Environment/Climate/Energy 1,037 1,323 –286 – Innovation 4 54 –50 – Education 144 64 80 Total net volume of new commitments 9,677 8,897 780 2 Field of promotion “Housing & Living” coordinating these tasks across its three promotion The activities of NRW.BANK in this field of promotion themes of “Housing”, “Municipalities” and “Infrastruc- are designed to improve housing and living standards ture”, NRW.BANK contributes to the forward-looking as well as the urban environment. Key elements needed development of the cities and communities in North to reach these goals include the promotion of (social) Rhine-Westphalia and their neighbourhoods. housing to ensure high-quality and affordable living. A functioning community additionally relies on com- Promotion theme “Housing” prehensive public services provided by solidly funded Social housing promotion programmes have special municipalities as well as an appropriate infrastructure importance in the context of the promotion theme that meets actual requirements. By combining and “Housing”. The relevant promotion loans of NRW.BANK Financial Report 2015 3 The Promotion Business of NRW.BANK are applied for with the local governments and dis- support to the North Rhine-Westphalian municipalities bursed directly to the recipients. The promotion activi- for the accommodation of refugees. This programme ties reflect the State of North Rhine-Westphalia’s supports municipal investments relating to refugee housing promotion plan (Wohnraumförderprogramm, housing through long-term interest-free loans. WoFP) as well as the respective development guidelines. In addition to its financial offerings, NRW.BANK offers NRW.BANK’s social housing promotion programmes the North Rhine-Westphalian municipalities extensive are designed to support, in particular, the creation of advisory services regarding its promotion offerings affordable, high-quality housing for lower-income as well as economic and financial issues. The latter households. In this context, the programme for the services comprise both financial management support promotion of rent-controlled and occupancy-controlled for municipalities and advice on projects, e.g. for the housing construction and the support in the acquisition development and implementation of municipal action and construction of owner-occupied housing by low- plans or public private partnership projects. income households plays an important role. In the field of social housing promotion, NRW.BANK additionally Promotion theme “Infrastructure” promotes the removal of barriers in owner-occupied A well-functioning infrastructure is an essential pre- and rented residential buildings. In response to the requisite for the economic growth of individual regions growing number of refugees and the resulting challen- and the State of North Rhine-Westphalia as a whole. ges for the housing market, a new social housing pro- Financing offerings for the maintenance and expansion motion service was launched last year to encourage of the general infrastructure are assigned to the promo- investors to create and provide housing for refugees. tion theme “Infrastructure”. In contrast to the other fields of promotion and pro- The capital expenditure needed to maintain and expand motion themes, more than half of the net volume of new North Rhine-Westphalia’s infrastructure requires not commitments of the “Housing” promotion theme relates only public funds but also private capital. NRW.BANK to (housing) programmes of KfW Bankengruppe, which therefore offers favourable terms and conditions to are passed on by NRW.BANK in its capacity as the encourage corporate investment in social and public central institution of the North Rhine-Westphalian