NRW.BANK continued to expand its integrated promotional approach in 2018. Besides its existing promotional loans, which again recorded high demand, the Bank now offers much more equity capital and advisory services that go beyond its own programmes. In this context, the Bank focuses not only on entrepreneurs, company founders, municipalities and housing construction companies but also on multipliers such as house banks, chambers, economic development companies and approval authorities.
“It is our aim to make sure that our promotional products and services reach the people in our federal state,” said Eckhard Forst, Managing Board Chairman of NRW.BANK. “Each of our promotion themes is endowed with sufficient capital – whether it’s the creation of affordable housing, support for start-ups and SMEs or financing North Rhine-Westphalia’s infrastructure. We make sure that there is greater awareness of the available possibilities – independently of our own programmes.”
In addition, NRW.BANK also provides advice on other matters, such as how SMEs should plan their succession or how municipalities can operate as efficiently as possible.
There was particularly strong demand for the financing of digitisation and innovation projects, two future trends. In line with the objectives set by the state of North Rhine-Westphalia, NRW.BANK has provided special promotional incentives for such projects. Under the newly launched NRW.BANK.Digitalisierungskredit, an amount of € 30.8 million was drawn in the first four months alone, plus € 27.6 million under the NRW.BANK.Innovationskredit (previous year: € 4.3 million; +>100%). The NRW.SeedCap Digitale Wirtschaft programme also showed a positive trend, with NRW.BANK investing a total of € 2.2 million in 30 digital start-up together with business angels (previous year: € 730,000; +>100%).
The expanded framework for equity financing was well used in the past year. The (accumulated) capital invested rose by € 50.3 million to € 397.9 million (+14%).
NRW.BANK’s total new commitments in 2018 amounted to € 10.3 billion (previous year: € 11.6 billion; -12%). Although the promotional volume was lower than in the previous year, this was NRW.BANK’s third best promotional result, which even exceeded its plans. The reduced demand for promotional solutions was due, among other things, to the good funding currently available from house banks and to the generally good economic situation.
Moreover, NRW.BANK conducted 28,000 promotional advisory sessions across all target groups in the past year.
The promotional field “Economy” remained at a high level of € 3.6 billion (previous year: € 3.7 billion; -2%). In keeping with its strategy, NRW.BANK expanded the volume of new commitments for start-up and innovation projects by an impressive 30 per cent to a total of € 885. 3 million (previous year: € 683.5 million). New commitments for other economic promotion purposes totalled € 2.7 billion; demand in this segment declined by a moderate 9 per cent (previous year: 3.0 billion). The NRW.BANK.Universalkredit, one of the Bank’s standardised credit programmes, was a key volume driver (€ 1.7 billion; previous year: € 1.8 billion; -5%). Start-up financing accounted for € 308 million of this programme (previous year: € 281.1 million; +10%).
The Bank’s equity investment exposures totalled € 397.9 million; seed financings accounted for about half of this amount (€ 169.4 million). NRW.BANK committed an additional € 14 million for additional investments in young and innovative companies in 2018 and activated the third generation of its seed funds.
“North Rhine-Westphalia has an active start-up scene and has become one of the leading locations for start-ups together with Berlin,” said Michael Stölting, member of NRW.BANK’s Managing Board. “We want to provide company founders in the important seed phase with both advice and sufficient starting capital to make sure that no idea in NRW will fail because of a lack of capital.”
As a complement to its financial offerings, NRW.BANK provides comprehensive advisory services on economy-related matters. In some 15,200 talks, the Bank provided advice to multipliers as well as company founders and SMEs in the past year; this breaks down into 1,200 intensive advisory sessions and some 14,000 initial telephone consultations.
The volume of new commitments in the promotional field “Housing” declined by 15 per cent to € 2.2 billion in 2018 (previous year: € 2.6 billion). This includes the funds of the housing promotion programme, for which a total of € 1.1 billion was available. Of this total amount, € 923.4 million was drawn, up 1.9 per cent on the previous year’s € 906.6 million).
“We need more affordable housing in NRW and we will not fail to reach this objective because of a lack of money,”said Managing Board member Dietrich Suhlrie. “But we are seeing more and more investment obstacles in the construction sector.” Among the reasons, he cited the lack of skilled labour in the construction sector and, most importantly, the lack of available land in places where demand is particularly high. “We provide the capital that is needed – now the municipalities are challenged to activate more building land than before,” Suhlrie added.
In the past year, NRW.BANK supported municipalities and investors with some 12,200 housing-related consultations and training measures.
In mid-February 2019, NRW.BANK added another promotional loan to its range of home ownership promotion programmes; entitled “NRW.BANK.Wohneigentum” it has a total volume of € 5.0 million and had been committed 50 times as at March 15. “As the cost of home ownership continues to rise, more and more people who are not eligible for social housing promotion are having difficulties in affording their own homes,” Suhlrie said. “The new programme is designed to help middle- income earners to fulfil their dream of their own home – at conditions that remain favourable in the long term.”
The promotional field “Infrastructure/Municipalities” was down by 16 per cent on the previous year to € 4.5 billion (previous year: € 5.4 billion). This is attributable, on the one hand, to the improved budget situation of some municipalities and their good overall financing possibilities and, on the other hand, to the noticeable decline in the NRW.BANK.Energieinfrastruktur programme (€ 274.6 million; previous year: € 693.0 million; -60%). This is due to the fact that the energy sector is a highly regulated market and therefore highly dependent on the regulatory environment. The tenders for renewable energy at federal government level initially caused uncertainty among investors and slowed down the expansion of wind energy. In addition, North Rhine-Westphalia placed a strong focus on electromobility in the past year. Consequently, no large-scale wind park projects were promoted in 2018, whereas the low-volume electromobility projects promoted in the promotional field “Economy” increased sharply (NRW.BANK.Elektromobilität, € 10.3 million; previous year: € 3.3 million; +>100%).
Ever since it was launched, the NRW.BANK.Gute Schule 2020 programme has been well received, with NRW.BANK approving more than 800 applications in the total amount of € 729.7 million for North Rhine-Westphalian schools. Over a period of four years, municipalities are provided with a total amount of € 2 billion for the refurbishment and modernisation of local schools. Funds that are not used in the first three years are transferred to the next year.
NRW.BANK also offers competition-neutral advisory services that are independent of products and providers to the municipalities in North Rhine-Westphalia, which used these services 600 times in 2018. “We see ourselves as sparring partners to the municipalities,” said Managing Board Chairman Eckhard Forst. “Together with the municipalities, we try to find the most sensible solution for any financing matter.”
As a result of an increased loan portfolio, NRW.BANK’s total assets amounted to € 149.1 billion as at December 31, 2018 (previous year: € 147.6 billion). At € 196.1 million, the operating result before risk provisions/valuation adjustments was much lower than in the previous year, primarily due to higher expenses for old age pension obligations and an increased “Förderleistung”. Equity capital as defined in the German Commercial Code (HGB) amounted to € 18 billion and the CET-1 capital ratio stood at 41.56 per cent (previous year: 41.34%).
The effectiveness and the efficiency of NRW.BANK’s activities increasingly depend on factors, requirements and conditions that equally affect economic, infrastructure and housing promotion.
“Topics such as Europe, digitisation and connectivity influence NRW.BANK’s promotion activities to different extents. They entail challenges for all our promotional fields while at the same time offering new opportunities,” said Managing Board member Gabriela Pantring. “To further develop our promotional offerings in an efficient manner, 2019 will see us increase the degree of digitisation of our promotion and leverage European potential for promotion in North Rhine-Westphalia.” Furthermore, NRW will expand the connectivity of the promotional landscape and the demand-oriented integration of the individual financing and advisory solutions.
NRW.BANK is the promotional bank of North Rhine-Westphalia (NRW). Its mission is to support its owner – the state of North Rhine-Westphalia – in the completion of its structural and economic policy tasks. In its three promotional fields “Economy”, “Housing” and “Infrastructure/Municipalities”, NRW.BANK uses a wide range of promotion tools – from low-interest promotion loans to equity financing to advisory services. It cooperates with all banks and savings banks based in NRW on a competition-neutral basis. NRW.BANK takes into account the existing offers by the Federal Government, the North Rhine-Westphalian government and the European Union in the arrangement of its promotion.
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