Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — FY2014 Earnings Presentation
55 slides from Deutsche Pfandbriefbank's earnings presentation, Mar 9, 2015
Slide 1: Preliminary Results 2014 (IFRS, pbb Group, unaudited)
Preliminary Results 2014 (IFRS, pbb Group, unaudited) Strong operating performance – adjusted PBT at EUR 174 mn (before effect from value adjustment on non-strategic HETA exposure of EUR -120 mn) Results Call Munich/Unterschleissheim, 9th March 2015 Andreas Arndt, Co-CEO/CFO Preliminary Results 2014
Slide 2: Disclaimer
Disclaimer This presentation is not an offer or invitation to subscribe for or purchase any securities. No warranty is given as to the accuracy or completeness of the information in this presentation. You must make your own independent investigation and appraisal of the business and financial condit
Slide 3: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 3
Slide 4: Highlights 2014: Continued execution of strategy
Highlights 2014 Continued execution of strategy New business up +24% y-o-y to a record level of EUR 10.2 bn Higher-margin strategic business growing (+9%), low-margin non-strategic business continues to run down Stable and diversified funding base with attractive German Pfandbrief as major funding i
Slide 5: Operating performance indicators of core lending business show a strong positive trend
Highlights 2014 Operating performance indicators of core lending business show a strong positive trend Business volume development Income statement development New business PIF Net interest income and similar General administrative expenses EUR millions (Commitments, incl. extensions >1 yr) EUR mill
Slide 6: Market environment continued to be favorable in pbb's relevant markets
Highlights 2014 Market environment continued to be favorable in pbb‘s relevant markets ECB continued extensive stimulus measures – however, low interest rate levels burden net interest income Banking Sector AQR/stress test results provided more transparency on European banking sector – ECB took over
Slide 7: Value adjustment on HETA exposure burdens P&L by EUR -120 mn
Highlights 2014 Value adjustment on pbb‘s exposure to Heta Asset Resolution AG (HETA) burdens P&L by EUR -120 mn Non-strategic legacy exposure of nominal EUR 395 mn (Value Portfolio) − 8 bonds + one promissory note − Securities issued between 2002 and 2006 − Maturity dates 2017 (EUR 295 mn) and 2018
Slide 8: Operating performance quality of core lending business improving as targeted
Highlights 2014 Operating performance quality of core lending business improving as targeted New business (Commitments, EUR bn) 2013 2014e 2014 ∆ y-o-y Key drivers 2014: New business (incl. extensions >1 year) 8.2 10.2 +24.4% New business marks new record level, benefiting from ongoing favorable mar
Slide 9: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 9
Slide 10: Net interest income continuously strengthened
Income statement Net interest income continuously strengthened Income from lending business EUR millions 2013 2014 Key drivers 2014: Net interest and similar 319 421 NII driven by an increased portfolio margin as well as income benefiting from thereof: prepayment fees − higher prepayment fees + one-
Slide 11: Loan-loss provisions in core lending business remained at low level
Income statement Loan-loss provisions in core lending business remained at low level Loan-loss provisions: Income statement EUR millions 2013 2014 Key drivers 2014: Loan-loss provisions -17 -27 Loan-loss provisions in core lending business only thereof: HETA - -8 slightly up, but remaining on low le
Slide 12: Operating cost base significantly reduced following termination of FMS-WM servicing
Income statement Operating cost base significantly reduced following the termination of the FMS-WM servicing by end of Sep 2013 and due to strict cost containment Income/expenses from further business activities EUR millions 2013 2014 Key drivers 2014: Net other operating 100 14 No fee income from F
Slide 13: Income/expenses from financial instruments driven by derivative valuation and one-off effects
Income statement Income/expenses from financial instruments primarily driven by derivative valuation and one-off effects Income/expenses from financial instruments EUR millions 2013 2014 Key drivers 2014: Net trading income -51 -30 Pull-to-par effect from positive derivative fair values thereof: HET
Slide 14: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 14
Slide 15: New business of EUR 3.2 bn in Q4 and EUR 10.2 bn in 2014
New business New business of EUR 3.2 bn in Q4 and EUR 10.2 bn in 2014, both mark new record levels Total new business PIF Total new business PIF EUR billions (Commitments, incl. extensions >1 yr) EUR billions (Commitments, incl. extensions >1 yr) REF REF +21% +24% 3.2 10.2 2.7 2.7 2.7 0.3 1.2 8.2 2.
Slide 16: Strategic portfolios continuously growing
Portfolio Strategic portfolios continuously growing 12/131 09/14 12/14 Total portfolio EUR billions (EaD, Basel III) -6% Strategic Non-strategic Bank steering/ 69.4 portfolios portfolios ALM 65.4 65.3 (run-down) +9% 22.2 23.9 24.3 +10% 25.0 24.9 24.9 13.8 8.4 9.1 9.2 7.6 6.9 REF PIF VPnew2 C&A2,3 To
Slide 17: High portfolio quality reflected in remaining sound risk profile
Portfolio High portfolio quality reflected in remaining sound risk profile Total portfolio: Internal ratings (EL classes) Total problem loans 31/12/2014: EUR billions (EaD, Basel III)1 EUR millions (EaD, Basel III)3 24.3 9.2 24.9 6.9 65.3 1.9% 10% 0% 3% 0% 5% 1.4% 1.2% 1,256 90% 100% 97% 100% 95% 94
Slide 18: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 18
Slide 19: Real Estate Finance (REF): Portfolio growing and net interest income positive trend
Real Estate Finance (REF) Portfolio growing and net interest income with continued positive trend New business (incl. extensions >1 year) 2012 2013 2014 New business: Regions/property types Volume (EUR bn, commitments) 4.9 7.0 9.0 2014: EUR 9.0 bn (commitments, incl. extensions >1 year) No. of deals
Slide 20: Real Estate Finance (REF): Stable and well diversified portfolio structure
Real Estate Finance (REF) Stable and well diversified portfolio structure with core focus on investment loans in Germany, UK and France Portfolio: Regions Portfolio: Property types 31/12/2014: EUR 24.3 bn (EaD, Basel III) 31/12/2014: EUR 24.3 bn (EaD, Basel III) Japan <1% Benelux 1% Portugal <1% Swi
Slide 21: Public Investment Finance (PIF): Portfolio growing and business turned profitable
Public Investment Finance (PIF) Portfolio growing and business turned profitable New business (incl. extensions >1 year) 2012 2013 2014 New business: Regions/counterparty types Volume (EUR bn, commitments) 0.7 1.2 1.2 2014: EUR 1.2 billions (commitments) No. of deals 42 34 41 Average maturity(WAL) (
Slide 22: PIF: New business focus on highly-rated public counterparties
Public Investment Finance (PIF) New business focus on highly-rated public and publicly-backed German, French and Nordic counterparties Portfolio: Regions Portfolio: Counterparty types EUR billions (EaD, Basel III)1 EUR billions (EaD, Basel III)1 Nordic countries 3% Supra <1% Austria 3% UK <1% Sovere
Slide 23: Value Portfolio (VP): 97% investment grade
Value Portfolio (VP) 97% investment grade and more than 25% to mature within the next three years Portfolio: Internal ratings (EL classes) Income statement (IFRS, EUR mn) 2012 20133 2014 2014 31/12/2014: EUR 24.9 bn (EaD, Basel III)1 (adjusted)4 Operating income 91 -21 89 Investment grade: 97% Non-i
Slide 24: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 24
Slide 25: New long-term funding activities reduced on comfortable liquidity position
Funding New long-term funding activities reduced on the basis of a comfortable liquidity position New long-term funding Key drivers 2014: 2013 EUR billions1 2014 New long-term funding of EUR 6.0 bn at longer X.X Avg. maturity (yrs) average maturities illustrates well-established capital market acces
Slide 26: New funding costs significantly reduced
Funding New funding costs significantly reduced – strong private placements with significantly longer maturities have been actively balanced with shorter and reduced public issuances Mortgage Pfandbriefe: Spread development Private placements Unsecured (avg. maturity) bp vs. mid-swap1 EUR billions2
Slide 27: pbb is largest Pfandbrief issuer with 9% market share
Funding pbb is largest Pfandbrief issuer with 9% market share (in terms of outstanding Pfandbriefe) – cover pools managed on comfortable OC levels Top 5 Pfandbrief issuers Key drivers 2014: Mortgage Pfandbriefe 31/12/14: EUR billions (Nominal outstanding)1 Public Sector Pfandbriefe pbb is one of the
Slide 28: Retail deposit platform 'pbbdirekt.com' well established
Funding Retail deposit platform ‘pbbdirekt.com’ well established as alternative source of unsecured funding Retail deposits: Total volume No. of clients1 Key drivers 2014: EUR billions Overnight deposits Number of clients and total volume significantly Term deposits increased, contributing to a more
Slide 29: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 29
Slide 30: On-balance sheet lender with well balanced ALM profile
Balance sheet On-balance sheet lender with attractive German Pfandbrief as major funding instrument and well balanced ALM profile Balance sheet: 31/12/2014 (31/12/2013)1 IFRS, EUR billions LCR >200% NSFR >100% 75.5 (74.6) 75.5 (74.6) Hedging derivatives (pos. FV) 8.5 (6.2) 8.0 (5.9) Hedging derivati
Slide 31: Capital: pbb with strong capital ratios under Basel III
Capital The regulatory capital ratios stated are calculated on an unaudited pro-forma basis. According to the ‘Waiver Rule’ regulated in Article 7 CRR, Deutsche Pfandbriefbank AG, being a subsidiary of Hypo Real pbb with strong capital ratios under Basel III Estate Holding AG, is currently exempt fr
Slide 32: Agenda
Agenda 1 Highlights 2014 2 Financials 3 New business and portfolio 4 Segment performance 5 Funding 6 Balance sheet and capitalisation 7 Outlook Appendix Contact details Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 32
Slide 33: Key take-aways
Key take-aways ✓ Operating performance indicators of core lending business show a strong positive trend Flexible and scalable business platform with strong European presence and broad in-house expertise ✓ across the entire financing process Successful new business activities reflect the bank’s stand
Slide 34: Strategic targets 2015
Strategic targets 2015 Further increase of average portfolio margin based on slight growth of the higher-yielding strategic portfolio and continued run-down of the low-yielding Value Portfolio Further slight increase of new business volume On the basis of this new business development, slight growth
Slide 35: Appendix
Appendix Preliminary Results 2014 (IFRS, pbb Group, unaudited), 9th March 2015 35
Slide 36: Key figures
Key figures Income statement (EUR millions, IFRS) 2012 2013 2014 2014 (adjusted)1 Operating income 467 482 326 438 thereof: Net interest and similar income 296 319 421 421 Loan-loss provisions 4 -8 -21 -13 General and administrative expenses -341 -312 -251 -251 Profit before tax 124 165 54 174 Key r
Slide 37: Income statement
Income statement EUR millions, IFRS 2012 Q1/13 Q2/13 Q3/13 Q4/13 2013 Q1/14 Q2/14 Q3/14 Q4/14 2014 2014 (adjusted)1 Operating income 467 101 113 155 113 482 89 114 112 11 326 438 Net interest and similar income 296 79 74 79 87 319 89 106 108 118 421 421 Net fee and commission income 23 1 1 3 4 9 0 0
Slide 38: Portfolio: Total portfolio
Portfolio Total portfolio Regions 31/12/2013 / Total: EUR 69.4 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 65.3 bn 33.5 27.3 6.5 7.3 5.2 5.2 4.9 6.1 4.5 4.9 3.8 3.9 3.4 3.3 1.7 1.9 1.7 2.0 1.4 1.4 1.1 0.9 0.8 0.2 0.6 0.4 0.4 0.4 <0.1 <0.1 <0.1 <0.1 Germany2 Austria Spain France UK CEE
Slide 39: Portfolio: Problem loans
Portfolio Problem loans Total problem loans No. of individual cases Regions EUR millions (EaD, Basel III)1 EUR million (EaD, Basel III)1 VP (thereof: HETA) REF 81 941 808 1,256 Japan 100% 62 12% Italy 60 23% 25% 11% Hungary 18% 17% 17% Benelux +33% Spain 24% 17% 26% 941 1,256 Nordic countries 808 Ge
Slide 40: Portfolio: Real Estate Finance (REF) regions
Portfolio Real Estate Finance (REF) Regions 31/12/2013 / Total: EUR 22.2 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 24.3 bn 12.1 12.5 4.2 3.5 2.7 2.1 2.3 1.8 1.4 1.5 0.5 0.4 0.3 0.2 0.2 0.3 0.1 <0.1 <0.1 0.2 <0.1 <0.1 <0.1 <0.1 Germany UK CEE France Nordic Spain Benelux Switzer- Italy
Slide 41: Portfolio: REF property types
Portfolio Real Estate Finance (REF) Property types 31/12/2013 / Total: EUR 22.2 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 24.3 bn 6.9 7.2 6.7 6.2 4.9 4.7 2.3 1.7 1.6 1.0 1.2 1.2 0.7 0.4 Office Retail/ Residential Warehouse/ Mixed use Hotel/ Other Shopping Logistics Leisure 31/12/2013
Slide 42: Portfolio: REF loan types
Portfolio Real Estate Finance (REF) Loan types 31/12/2013 / Total: EUR 22.2 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 24.3 bn 21.6 20.4 1.2 2.0 0.4 0.5 0.2 0.1 Investment loans Development loans Customer derivatives Other 31/12/2013 31/12/2014 Customer derivatives 2% Other <1% Custome
Slide 43: Portfolio: REF internal ratings
Portfolio Real Estate Finance (REF) Internal ratings (EL classes) 31/12/2013 / Total: EUR 22.2 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 24.3 bn Investment grade Non-investment grade 5.7 4.9 3.4 3.4 3.6 3.4 3.0 2.9 2.6 2.0 1.2 1.5 1.1 1.2 0.8 0.8 0.8 0.7 0.5 0.5 0.2 0.2 0.1 0.0 <0.1 0
Slide 44: Portfolio: PIF regions
Portfolio Public Investment Finance (PIF) Regions 31/12/2013 / Total: EUR 8.4 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 9.2 bn 2.5 2.1 2.2 2.1 2.0 1.7 1.6 1.5 0.3 0.3 0.3 0.3 0.2 0.2 <0.1 <0.1 <0.1 <0.1 <0.1 0.0 Spain Germany France Italy Benelux Austria Nordic Supra UK Switzerland co
Slide 45: Portfolio: PIF counterparty types
Portfolio Public Investment Finance (PIF) Counterparty types 31/12/2013 / Total: EUR 8.4 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 9.2 bn 4.6 4.4 2.1 1.8 1.7 1.7 1.0 0.3 Local Authorities Public Sector Entities1 Corporates and other2 Sovereign 31/12/2013 31/12/2014 Sovereign Sovereign
Slide 46: Portfolio: PIF internal ratings
Portfolio Public Investment Finance (PIF) Internal ratings (EL classes) 31/12/2013 / Total: EUR 8.4 bn EUR billions (EaD, Basel III) 31/12/2014 / Total: EUR 9.2 bn Investment grade Non-investment grade 4.5 4.1 1.6 1.6 1.4 1.2 1.0 0.4 0.4 0.5 0.4 0.2 0.3 <0.1 0.0 <0.1 0.0 <0.1 0.0 0.0 0.0 0.0 0.0 0.0
Slide 47: Portfolio: Value Portfolio regions
Portfolio Value Portfolio (VP) Regions 31/12/2013 / Total: EUR 25.0 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 24.9 bn 10.1 8.8 6.9 6.0 1.8 1.9 1.6 1.8 1.6 1.5 1.4 1.4 1.1 1.1 0.8 0.9 0.3 0.3 0.2 0.2 0.1 0.1 <0.1 <0.1 <0.1 0.0 <0.1 0.0 <0.1 0.0 Germany Austria Spain Italy CEE Portugal
Slide 48: Portfolio: Value Portfolio counterparty types
Portfolio Value Portfolio (VP) Counterparty types 31/12/2013 / Total: EUR 25.0 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 24.9 bn 9.7 8.1 6.3 6.4 6.0 4.8 3.3 3.1 1.3 0.8 Sovereign Local Authorities Financial Institutions Public Sector Entities2 Corporates and other3 31/12/2013 31/12/2
Slide 49: Portfolio: Value Portfolio internal ratings
Portfolio Value Portfolio (VP) Internal ratings (EL classes) 31/12/2013 / Total: EUR 25.0 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 24.9 bn Investment grade Non-investment grade 18.0 17.3 HETA 2.0 1.3 1.0 1.0 <0.1 0.7 0.9 0.9 1.5 1.8 0.4 1.1 0.2 0.0 0.0 0.0 0.8 0.0 <0.1 0.0 0.0 0.0 0
Slide 50: Portfolio: Consolidation & Adjustments regions
Portfolio Consolidation & Adjustments (C&A) Regions 31/12/2013 / Total: EUR 13.8 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 6.9 bn 9.4 3.5 1.0 0.7 0.8 0.7 0.9 0.2 0.6 0.4 0.5 0.8 0.2 <0.1 0.2 0.2 0.1 0.1 <0.1 <0.1 <0.1 <0.1 <0.1 0.0 <0.1 <0.1 <0.1 <0.1 <0.1 <0.1 Germany2 UK USA Spain
Slide 51: Portfolio: C&A counterparty types
Portfolio Consolidation & Adjustments (C&A) Counterparty types 31/12/2013 / Total: EUR 13.8 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 6.9 bn 6.1 3.5 2.2 2.0 1.8 1.9 1.7 1.4 <0.1 <0.1 Sovereign2 Financial Institutions Local Authorities Public Sector Entities3 Corporates and other4 31/
Slide 52: Portfolio: C&A internal ratings
Portfolio Consolidation & Adjustments (C&A) Internal ratings (EL classes) 31/12/2013 / Total: EUR 13.8 bn EUR billions (EaD, Basel III)1 31/12/2014 / Total: EUR 6.9 bn Investment grade Non-investment grade 11.3 4.5 1.6 1.7 0.7 0.7 0.0 0.0 0.1 <0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Slide 53: Funding: Public benchmark issuances since 2013
Funding Public benchmark issuances since 2013 Type WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Senior Unsecured A1RFBU 17.01.2013 19.07.2016 EUR 500 mn +138bp 2.000% 99.587% Mortgage Pfandbrief A1RFBY 23.01.2013 30.01.2017 EUR 500 mn +8bp 0.875% 99.585% Senior Unsecured (1s
Slide 54: Ratings overview (as of 03.03.2015)
Ratings Ratings overview (as of 03.03.2015) Fitch Moody’s S&P DBRS1 Pfandbrief Ratings Public Sector Pfandbriefe Aa1 AA+2 Mortgage Pfandbriefe Aa2 AA+2 Bank Ratings Long term A- Baa2 BBB A (low) Outlook Negative Negative Developing Negative Short term F1 P-2 A-2 R-1 (low)3 Stand-alone Rating4 bb+ E+
Slide 55: Contact details
Contact details Communications Walter Allwicher +49 (0)89 2880 28787 walter.allwicher@pfandbriefbank.com Investor Relations Michael Heuber +49 (0)89 2880 28778 michael.heuber@pfandbriefbank.com Website www.pfandbriefbank.com/investor-relations.html © Deutsche Pfandbriefbank AG Freisinger Strasse 5 8
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