DEG presents its results for 2019
Press Release from 2020-03-25 / DEG
During the 2019 financial year, DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH, a subsidiary of KfW, enabled entrepreneurial investment of EUR 11.1 billion in developing and emerging market countries. It provided around EUR 1.85 billion for this purpose from its own funds, thus building on the good result of the previous year (2018: EUR 1.87 billion), despite a challenging environment at times. DEG’s portfolio grew by around eight per cent to EUR 9.0 billion.
Impact on development confirmed: DEG customers generate local income of EUR 92 billion
2019 demonstrated the impact of DEG-financed investments on development: DEG customers employ 2.1 million people in developing countries and generate local income of EUR 92 billion. “It is essential that people can perform skilled work and earn an income in order to improve their prospects,” explains Christiane Laibach, CEO of DEG.
Market uncertainties and investor hesitance reduce income from participating interests; risk provision rises
As a development finance institution for private-sector promotion, DEG operates in challenging markets. The past year was marked by further increases in trade and geopolitical tensions, leading to market uncertainties and caution among investors. This had an impact on DEG’s business as well. Disposals of participating interests were considerably lower than had been anticipated, leading to a corresponding fall in the resulting income. On the other hand, net interest income rose slightly compared to the previous year. The operating result before risk provision was EUR 153 million (2018: EUR 212 million).
Result is a net loss for 2019 overall
In order to reflect the overall increase in risks from an economically challenging environment, during the year DEG also increased its risk provision on a net basis by EUR 82 million to EUR 194 million. As a result, for the first time in ten years an annual net loss before taxes of EUR 52 million was recorded for the financial year 2019.
“Our equity capital base of around EUR 2.5 billion and an equity ratio of 38.5% continue to provide us with a sound foundation to act as a reliable partner in advising and financing private companies,” said DEG CEO Laibach.
2020 expected to hold particularly tough challenges
DEG expects to continue operating in a significantly more difficult market environment in 2020. Current developments in relation to the spread of coronavirus will also have an impact on the economic climate in developing and emerging market countries. “We anticipate that in this situation we have a particular responsibility as a development finance institution – this is part of our mandate,” said Christiane Laibach. “In the current circumstances in particular, our close and trust-based relationship with customers and partners will enable us to find short- and medium-term solutions for their respective issues and challenges, in consultation with them. We are working on finding appropriate tools to support companies in developing market countries.”