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, provider of financial support in times of crises, and agent of choice for holding selected strategic equity stakes. Limited profit margins in government-delegated business fields, partly 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 potentially broader mandate could increase KfW's future capital requirements. Reduced credit exposure to ultimate borrowers due to the use of intermediary banks, collateral, and government

...S&P Global Ratings predicts resilient operating results for German development bank KfW, despite its new business volumes reducing significantly in 2023. KfW's new commitments fell by 33% in 2023 compared to 2022. However, as of Sept. 30, 2023, the bank's operating results before valuation did not deteriorate, suggesting solid full-year 2023 results. Domestic political issues and a volatile geopolitical situation limit visibility from 2024. Momentarily, there is no need for new emergency lending to, for example, the German energy sector, which produced the extraordinarily elevated business volume of 2022. If a new acute economic crisis arises, we would expect KfW to again play a role in the German government's policy response. Until then, the development of KfW's domestic promotional lending in support of better energy efficiency and reducing carbon dioxide emissions from residential and non- residential buildings could, as in previous years, become the key determinant of business growth...

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