KfW

This report does not constitute a rating action. Overview Key strengths Key risks Almost certain likelihood of support from the German government due to KfW?s key role as national development bank and agent of choice for many financial support operations. Limited profit margins in government delegated business fields, partially mitigated by a legal ban on dividend payouts. Legal maintenance obligation and explicit guarantee from the German government for the bank's financial liabilities, which S&P Global Ratings considers would support timely payment. Increasing complexity of bank regulation and expansion of mandates, which could increase KfW's future capital requirements. Reduced credit exposure to ultimate borrowers thanks to use of intermediary banks, collateral, and government risk absorption for delegated lending operations. Possible requirement

...After several years of responding to different acute economic crises on behalf of the German government, we expect 2023 to be a year where KfW's regular promotional banking role takes center stage again. Outstanding commitments and disbursements in support of crisis-affected energy companies have reduced significantly from their November 2022 peak. At the same time, KfW's regular promotional activies--with the notable exception of the federally-funded program in support of more energy efficient buildings--show growing or at least resilient volumes. Absent currently unforeseen shocks, KfW's operating results should remain solid in 2023. Despite significantly lower new business volumes during the first half of the year, the bank reported only marginally weaker operating results before valuation effects compared with the first half of 2022. KfW plans capital market issuance of 85 billion in 2023, marginally below the volume raised in 2022. With 54 billion issued already during the first half...

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