DEG: successful results for 2018 financial year
Press Release from 2019-04-03 / DEG
DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH can look back on a good financial year in 2018. The subsidiary of KfW Group provided loans and equity capital amounting to some EUR 1.9 billion from its own funds for companies in developing and emerging-market countries. This sets a new record (2017: EUR 1.6 billion). DEG once again generated positive operating result, which strengthens its equity and consequently its promotional potential.
DEG customers employ 1.7 million people
"We successfully expanded our business in 2018. The DEG portfolio grew to around EUR 8.4 billion. The companies we co-finance employ 1.7 million people in developing countries – one of the key impacts of our work," said Christiane Laibach, Chairwoman of DEG's Management Board.
The operating result before risk provisions amounted to EUR 212 million (2017: EUR 220 million). A major factor in income was the result from participating interests of EUR 156 million (2017: EUR 147 million), which resulted chiefly from the successful disposal of participating interests. On the charges side, essential additions to provisions for pensions of EUR 17 million (2017: EUR 8.8 million) in particular had an impact. In the 2018 financial year, a net amount of EUR 111 million (2017: EUR 126 million) was allocated to risk provisions. Annual net income before taxes amounted to EUR 87 million (2017: EUR 104 million).
Good result strengthens DEG's promotional potential
DEG closed the 2018 financial year with a balance sheet profit of EUR 65 million (2017: EUR 94 million). As in previous years, it will be transferred to retained earnings to further strengthen DEG's equity. With an equity ratio of 43%, DEG continues to have adequate risk-bearing capacity to fulfil its mandate.
In relation to the developmental impact, the 2018 financial year was also encouraging. The evaluation based on the "Development Effectiveness Rating" (DERa) shows that the companies co-financed by DEG generate local income of EUR 80 billion, of which around EUR 11 billion is for wages and salaries. DEG financing for financial institutions and funds also provides capital to around 1.9 million small and medium-sized enterprises in developing and emerging countries.
"The DERa is based on the "harmonized indicators for private sector operations" and was developed in consultation with a number of experts. It embraces international best-practice approaches and uses internationally harmonised, predominantly quantitative indicators to increase verification," commented DEG Chairwoman Laibach.
DEG expects to operate in an increasingly dynamic and challenging market environment in 2019. New business and portfolio volumes are expected to remain at the previous year's level. Africa will remain a focus region for DEG. To expand its product range, it will offer loans in other local currencies, for example. DEG will also place additional emphasis on promoting greater participation of women entrepreneurs in the business sphere.