Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q1 2024 Earnings Presentation
62 slides from Deutsche Pfandbriefbank's earnings presentation, May 14, 2024
Slide 1: Results Q1/24 - Analyst Presentation
Results Q1/24 - Analyst Presentation 14 May 2024
Slide 2: Disclaimer
Disclaimer This presentation is not an offer or invitation to subscribe for or purchase any securities in any jurisdiction, including any jurisdiction of the United States. Securities may not be offered or sold in the United States absent registration or pursuant to an available exemption from reg
Slide 3: Key Messages: Solid start into 2024
KEY MESSAGES Solid start into 2024 Pre-tax profit of € 34 mn, slightly higher than previous year (Q1/23: € 32 mn) Pre-provision profit of € 81 mn, benefitting from strong NII and realisation income Risk provisioning remains elevated in line with guidance Strategic active balance sheet management sta
Slide 4: Agenda
1. Highlights Q1/24 and P&L 2. Portfolio Quality Focus AGENDA USA Development Germany 3. Funding 4. Capital & Balance Sheet Management 5. Economic Outlook & Summary 6. Appendix Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 4
Slide 5: Highlights Q1/24: Strong KPIs despite challenging markets
HIGHLIGHTS Q1/24 Strong KPIs despite challenging markets Solid PBT of € 34 mn on the back of intact PBT Operating income operating trends Strong operating income compensates for € 34 mn € 146 mn still elevated level of risk provisioning (Q1/23: € 32 mn; Q4/23: € -1 mn) (Q1/23: € 119 mn; Q4/23: €
Slide 6: Operating & Financial Overview: Selective new business at strong margins
OPERATING & FINANCIAL OVERVIEW Selective new business at strong margins REF new business REF portfolio € bn (commitments, incl. extensions > 1 yr.) € bn (financing volume) ~200 bp ~245 bp 31.1 31.2 Selective new business REF portfolio stable 1.0 volume with focus on Improved gross portfolio 0.
Slide 7: Operating trends intact – risk provisioning on elevated level
OPERATING & FINANCIAL OVERVIEW Operating trends intact – risk provisioning on elevated level, as expected Operating income NII/NCI General admin. expenses Personnel € mn (IFRS) Realisation & other income € mn (IFRS) Non-personnel 146 NII/NCI up y-o-y, GAE stable y-o-y 58 58 119 20 benefitting fr
Slide 8: Operating Income: Pre-provision profit remains strong
OPERATING INCOME Pre-provision profit remains strong and well ahead previous year Operating income NII/NCI Net other op. income Net income from realisations € mn (IFRS) Realisation income Other Q1/24: € mn (IFRS) Income from fair value measurement Prepayment fees 2 188 Derecognition of 15 1 146 time
Slide 9: Risk Costs: Risk provisioning elevated but lower vs. Q4/23
RISK COSTS Risk provisioning on elevated level, but significantly lower vs. Q4/23, as expected Net income from risk provisioning Stage 1&21 Stage 1&2 € mn (IFRS) Stage 3 Other Other2 UK -1 1 -7 5 -9 1 -10 -2 € -10 mn -37 -100 -47 -10 -108 USA Q1/23 Q4/23 Q1/24 (incl. release of € 9 mn management ove
Slide 10: Risk Costs: REF loan loss allowance coverage strengthened
RISK COSTS REF loan loss allowance coverage further strengthened Balance sheet – loss allowances Stage 1&2 Stage 1 Other Germany € mn Stage 2 14 15 Stage 3 UK REF 189 bp 199 bp 24 coverage 589 623 41 39 € 181 mn 134 142 USA (incl. € 22 mn 414 442 mgmt. overlay) 128 12/23 03/24 Mgmt. overlay 31 22 St
Slide 11: Agenda
1. Highlights Q1/24 and P&L 2. Portfolio Quality Focus AGENDA USA Development Germany 3. Funding 4. Capital & Balance Sheet Management 5. Economic Outlook & Summary 6. Appendix Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 11
Slide 12: REF Portfolio Performing: Solid portfolio in demanding market
REF PORTFOLIO PERFORMING Solid portfolio in still demanding market environment Performing Portfolio € bn (EaD, Basel III) Portfolio quality remains solid – focus on senior lending only 30.1 31.5 31.3 100% of the portfolio reviewed/revalued in last 12 months – avg. value change of -10%2 Strong
Slide 13: REF Portfolio NPL: Slowing dynamic in NPL portfolio
REF PORTFOLIO NPL Slowing dynamic in NPL portfolio NPL Portfolio € mn (EaD, Basel III) Additions driven by two US office loans and one German development 1,647 Only small increase of NPL portfolio, benefitting from active 1,535 +35 -91 +168 management of NPL portfolio 3 loans 2 loans 1 loan (€
Slide 14: Focus: USA Performing – Continued pressure on valuations
FOCUS: USA PERFORMING Continued pressure on valuations Performing Portfolio € bn (EaD, Basel III) Full focus on risk mitigation in existing portfolio 4.5 4.5 4.6 100% of the portfolio reviewed/revalued in last 12 months – avg. value change of -17%2 LTV-stress: Exposure at risk: ~4.7% of port
Slide 15: Focus: USA NPL – Successful workout and restructuring limited
FOCUS: USA NPL Successful workout and restructuring limited NPL increase to € ~50 mn (before FX effects) Non-Performing Portfolio € mn (EaD, Basel III) Additions (office) mitigated by active NPL management 1 loan (€ 46 mn) restructured +14 672 1 loan (€ 46 mn) repaid -91 607 +142 2 loans bot
Slide 16: Focus: Development Portfolio further reduced
FOCUS: DEVELOPMENT PORTFOLIO Development portfolio further reduced Portfolio Performing Phase Portfolio reduced by € 0.2 bn in Q1/24 – significantly reduced since € bn (EaD, Basel III) Non-performing 31/03/2024 (commitments, Basel III) 2019 (12/19: € 4.7 bn, 03/24: € 3.0 bn) 3.2 3.2 24 loans 15 lo
Slide 17: Focus: Germany Performing – High portfolio quality
FOCUS: GERMANY PERFORMING High portfolio quality – well diversified, senior lending portfolio with ~90% of loans collateralised at LTV ≤50% Performing Portfolio € bn (EaD, Basel III) German CRE portfolio well diversified by region and property type with focus on big 5 cities – Hamburg, Berlin, Dus
Slide 18: Agenda
1. Highlights Q1/24 and P&L 2. Portfolio Quality Focus AGENDA USA Development Germany 3. Funding 4. Capital & Balance Sheet Management 5. Economic Outlook & Summary 6. Appendix Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 18
Slide 19: Funding and Liquidity: Strong liquidity position further improved
FUNDING AND LIQUIDITY Strong liquidity position further improved Capital market funding needs for 2024 largely covered Further growth of Retail deposits LCR NSFR Strong reaction function on basis of broadened cooperations (ytd-growth € 1.5 bn) Current volume of € 8.1 bn (04/24) well exceeds ne
Slide 20: Retail Deposits: Growth exceeds expectations and needs
RETAIL DEPOSITS Retail deposit growth exceeds expectations and needs Retail Deposits – development & maturity profile1 Strong growth to € 8.1 bn – expected to be lower by € bn year-end in line with further active balance sheet WAL WAL management 3.1 yrs 3.6 yrs Elastic source of funding – strong
Slide 21: Capital Market funding focused on Pfandbrief
FUNDING AND LIQUIDITY Capital Market funding focused on Pfandbrief New long-term funding1 € bn Secured capital market funding largely covered for 2024 Q1/23: € 1.4 bn Q1/24: € 0.8 bn 4M/24: € 0.9 bn Secured funding is ahead of plan Spread 19 210 65 - 66 - Markets open for public issues and pri
Slide 22: Funding costs at manageable levels
FUNDING AND LIQUIDITY Funding costs at manageable levels Spread 3Y Pfandbrief vs Midswap 90 in bps 85 Benchmark Benchmark tap Pfandbrief 80 Successful 3Y Pfandbrief benchmark issued at +58 bp end of 75 January 2024 70 65 Spreads are back to previous levels, (9th May) at +53 bp 60 Benchmark has
Slide 23: Agenda
1. Highlights Q1/24 and P&L 2. Portfolio Quality Focus AGENDA USA Development Germany 3. Funding 4. Capital & Balance Sheet Management 5. Economic Outlook & Summary 6. Appendix Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 23
Slide 24: Capital: pbb well capitalised
CAPITAL pbb well capitalised Basel III: Capital and leverage ratios Pro-forma 15.2% CET 1 ratio including interim result – slightly increased RWA (IFRS) B4 F-IRBA reflect internal rating developments and new business 21.4% 19.5% 18.7% 20.0% Strong MDA buffer of 550 bp (€ 1 bn) over regulatory re
Slide 25: Pro-active management of pbb's balance sheet
BALANCE SHEET MANAGEMENT Pro-active management of pbb’s balance sheet Portfolio transaction in Q2/24 – sale of € 0.9 bn performing loan Portfolio transaction portfolio to be signed shortly, RWA relief of € 0.7 bn (€ bn, financing volume) Active REF 0.9 0.9 Transaction targets to improve REF port
Slide 26: Agenda
1. Highlights Q1/24 and P&L 2. Portfolio Quality Focus AGENDA USA Development Germany 3. Funding 4. Capital & Balance Sheet Management 5. Economic Outlook & Summary 6. Appendix Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 26
Slide 27: Economic Outlook: Base case modest growth
ECONOMIC OUTLOOK Base case: modest economic growth outlook GDP growth picks up moderately in Europe In 2024 and 2025, pbb expects GDP growth in Continental Europe % by ~0.8% and ~1.5%, while the UK is expected to grow again by 3 2.5 1.8 ~0.5% this year, and ~1.3% in 2025. US GDP is expected to exp
Slide 28: Guidance 2024
GUIDANCE 2024 Solid operating income strength; PBT expected significantly above 2023 level New business (incl. extensions > 1 year) € 6-7 bn REF Portfolio Financing volume € 30-31 bn Operating Income € 525-550 mn thereof: NII + NCI € 475-500 mn P&L LLPs << 2023 CIR ~50% Pre-tax profit >> 2023 Profit
Slide 29: Summary: Solid start into 2024
SUMMARY Solid start into 2024 PBT in line with guidance Risk provisioning in Q1/24 remains elevated as expected, but lower than Q4/23 Slowing dynamic in NPL portfolio supported by active management Strategic active balance sheet management started with focus on REF portfolio – performing/non-perfo
Slide 30: Agenda
1. Highlights Q1/24 and P&L 2. Portfolio Quality Focus AGENDA USA Development Germany 3. Funding 4. Capital & Balance Sheet Management 5. Economic Outlook & Summary 6. Appendix Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 30
Slide 31: pbb's Leadership Team
PBB‘s LEADERSHIP TEAM Extensive experience Kay Wolf Marcus Schulte Thomas Köntgen Andreas Schenk Dr. Pamela Hoerr Chief Executive Officer Chief Financial Officer Deputy-CEO & Chief Risk Officer pbb invest, & Treasurer Real Estate Finance HR & ESG Member of the Management CFO since December 2023,
Slide 32: Appendix
1. Financials & Outlook 2. REF New Business APPENDIX 3. Portfolio profile 4. Funding & Ratings 5. ESG Contact Details Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 32
Slide 33: Key Figures pbb Group
KEY FIGURES pbb Group Income statement (€ mn) 2021 Q1/22 Q2/22 Q3/22 Q4/22 2022 Q1/23 Q2/23 Q3/23 Q4/23 2023 Q1/24 Net interest income 494 122 120 116 131 489 106 110 132 134 482 125 Net fee and commission income 8 2 1 1 4 8 1 1 1 0 3 1 Net income from fair value measurement 10 9 5 7 -1 20 1 -1 2 -2
Slide 34: Key Figures Real Estate Finance (REF)
KEY FIGURES Real Estate Finance (REF) Income statement (€ mn) 2021 Q1/22 Q2/22 Q3/22 Q4/22 2022 Q1/233 Q2/233 Q3/233 Q4/233 20233 Q1/24 Net interest income 417 104 103 101 112 420 97 101 118 121 437 116 Net fee and commission income 8 2 1 2 3 8 1 1 2 0 4 1 Net income from fair value measurement 6 6
Slide 35: Key Figures Non-Core (PIF & VP)
KEY FIGURES Non-Core (PIF & VP) Income statement (€ mn) 2021 Q1/22 Q2/22 Q3/22 Q4/22 2022 Q1/233 Q2/233 Q3/233 Q4/233 20233 Q1/24 Net interest income 75 17 17 15 18 67 9 9 14 13 45 9 Net fee and commission income 0 0 0 -1 1 0 0 0 -1 0 -1 0 Net income from fair value measurement 4 3 1 3 -1 6 1 0 0 -1
Slide 36: Balance Sheet
BALANCE SHEET Balance sheet IFRS, € bn Assets 31/03/24 31/12/23 Liabilities & equity 31/03/24 31/12/23 Financial assets at fair value through P&L 1.0 0.9 Financial liabilities at fair value through P&L 0.8 0.7 thereof thereof Positive fair values of stand-alone derivatives 0.5 0.5 Negative fair valu
Slide 37: Appendix
1. Financials & Outlook 2. REF New Business APPENDIX 3. Portfolio profile 4. Funding & Ratings 5. ESG Contact Details Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 37
Slide 38: REF New Business: Portfolio growth with improved margins
REF NEW BUSINESS REF portfolio growth with improved margins Volume of strategic REF portfolio in € bn Strategic REF portfolio stable q-o-q, benefitting from drawdowns (financing volume) of new business and low level of prepayments and repayments +€ 1.8 bn Avg. portfolio margin further up Selec
Slide 39: REF New Business: Diversification supports management of the cycle
REF NEW BUSINESS Diversification supports management of the cycle As of 31/03/24 Regions Property types Mixed use/ Hotel other Other Germany Logistics/ 9% 0% storage 0% 18% € 0.7 bn 24% Nordics 18% 46% Office New business 3% CEE (commitments, incl. 18% 35% Retail extensions > 1 year) 16% France USA
Slide 40: Appendix
1. Financials & Outlook 2. REF New Business APPENDIX 3. Portfolio profile 4. Funding & Ratings 5. ESG Contact Details Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 40
Slide 41: Portfolio: Total portfolio
PORTFOLIO Total portfolio Regions (EaD, Basel III ) 31/12/2023 / Total: € 51.3 bn 31/03/2024 / Total: € 49.5 bn Czech Republic 1% Czech Republic 1% Other Rest of World 1% Finland 1% Other Rest of World 1% Finland 1% Sweden 2% Hungary < 1% Sweden 2% Hungary < 1% Spain 1% Spain 1% Italy 3% Italy 3% 3%
Slide 42: Portfolio: Real Estate Finance (REF)
PORTFOLIO Real Estate Finance (REF) Regions Property types 31/12/2023: € 33.0 bn 31/03/2024: € 32.9 bn 31/12/2023: € 33.0 bn 31/03/2024: € 32.9 bn Austria 1% Mixed use 1% Mixed use 1% Austria 1% Other Europe Other Europe Hotel 3% Other 1% Hotel 3% Other 1% Czech Republic 2% Czech Republic 2% Retail
Slide 43: REF Portfolio LTV development reflects market environment
REF PORTFOLIO LTV development reflects market environment REF Portfolio: LTV cluster1 € bn Avg. LTV1 03/23: 51% 03/24: 54% 66% 58% 55% 53% 53% 52% 58% 51% 50% 50% 56% 49% 55% 48% 48% 54% 53% 53% 53% 46% 52% 51% 45% 45% 49% 48% 47% 45% Germany UK France Sweden Poland Rest of Europe USA Office Residen
Slide 44: REF Portfolio Sub-segments
REF PORTFOLIO Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning Net absorption has recovered compare to Covid, but is Cooling of tenant market due to overall economic Focus on good locations in main European still relatively weak as a result of both the
Slide 45: REF Portfolio Sub-segments
REF PORTFOLIO Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning Inflation and high interest rates weakened retail Short Term: threats to income stability as well as Selective approach with planned sales in 2023. In 2024 lower inflation stabilises real de
Slide 46: REF NPL Portfolio: Small increase in Q1/24
REF NPL PORTFOLIO Small increase in Q1/24 – active restructuring/ work-out ongoing Geographical breakdown Breakdown by property type € mn (EaD, Basel III) € mn (EaD, Basel III) 1,648 1,648 1,535 1,535 194 164 350 194 187 339 Other & Guaranteed 374 Others 835 835 364 441 Hotel France 404 Logistics CE
Slide 47: Portfolio: Non-Core Unit (PIF & VP)
PORTFOLIO Non-Core Unit (PIF & VP) Regions Borrower classification1 31/12/2023: € 13.2 bn 31/03/2024: € 12.4 bn 31/12/2023: € 13.2 bn 31/03/2024: € 12.4 bn Supranational 1% Supranational 1% Finland <1% Other Europe 3% Finland <1% Other Europe 3% Financial Institution 2% Corporation 1% Financial Inst
Slide 48: Portfolio: Consolidation and Adjustments (C&A)
PORTFOLIO Consolidation and Adjustments (C&A) Regions Borrower classification2 Internal ratings (EL classes) 31/12/2023: € 5.1 bn 31/12/2023: € 5.1 bn 31/12/2023: € 5.1 bn Sweden <1% Other Europe UK <1% Other Rest of World Supra Corporation 2% 6-8 USA <1% <1% 8% Financial 8% Poland 1% 7% Italy 3% In
Slide 49: Appendix
1. Financials & Outlook 2. REF New Business APPENDIX 3. Portfolio profile 4. Funding & Ratings 5. ESG Contact Details Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 49
Slide 50: Funding and Liquidity: Diversified funding base
FUNDING AND LIQUIDITY Diversified funding base Diversified Funding Base Unsecured Funding 31/03/2024: € bn, nominal values 4.1 18% 26% 40% 44% 0.6 2.3 15.6 82% 74% 6.6 60% 56% € 47.2 bn 12/19 12/22 12/23 03/24 Retail Deposits Wholesale Unsecured 7.1 7.2 2.8 0.9 Over 55% resilient secured funding3
Slide 51: Mortgage Cover Pool
MORTGAGE COVER POOL Diversification by countries and property types Mortgage Cover Pool Regions Property types Key metrics Spain 1.5% Switzerland 0.3% Austria 1% Italy 0.4% Benelux Nordic countries 3% Other Mortgage cover pool (nominal) 31/03/2024 6% 25% Pfandbriefe outstanding € 16.2 bn CEE 11% Ger
Slide 52: Pfandbrief Cover Pool: ISCR and Mortgage Lending Value
PFANDBRIEF COVER POOL ISCR and the effect of the Mortgage Lending Value – very simplified example! Interest Service Cover Loan-to-Value Ratio Loan Valuation Refinancing MV € 100 mn € 4.0 mn rent p.a. at 4% property yield Borrower’s Difference results in a market MV Equity e.g. 35% value of € 100 mn
Slide 53: Funding: Own Funds and Eligible Liabilities exceed requirements
FUNDING Own Funds and Eligible Liabilities exceed regulatory requirements € bn Buffer for Senior Preferred (SP) MREL2 Composition of Rundown investors due to high volume of (31/03/2024) Liabilities capital instruments and Senior (31/03/2024) Non-Preferred (SNP) liabilities Existing Senior Non-Pr
Slide 54: Funding: Public benchmark issuances since 2020
FUNDING Public benchmark issuances since 2020 Types WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Mortgage Pfandbrief A2YNVY 14.01.2020 21.01.2028 € 750 mn +5 bp 0.10% 99.992% Mortgage Pfandbrief (2nd Tap) A1X3LT 15.01.2020 21.01.2022 € 150 mn 0 bp 1.875% 104.36% Mortgage Pfa
Slide 55: Mandated Ratings
MANDATED RATINGS Bank ratings S&P Long-term BBB- Outlook/Trend Negative Short-term A-3 1 Stand-alone rating bb+ Long Term Debt Ratings “Preferred” senior unsecured Debt2 BBB- “Non-preferred” senior unsecured Debt3 BB- Subordinated Debt B+ Pfandbrief ratings Moody’s Mortgage Pfandbrief Aa1 Public Sec
Slide 56: Appendix
1. Financials & Outlook 2. REF New Business APPENDIX 3. Portfolio profile 4. Funding & Ratings 5. ESG Contact Details Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 56
Slide 57: ESG Program provides for holistic approach
ESG ESG Program provides for holistic approach ESG Program ESG at core of pbb’s strategy: pbb can help to reduce the real estate sector`s significant CO2 impact Green finance bank and transformation partner Current KPIs set initial roadmap for establishing green products, science-based decar
Slide 58: ESG: pbb continues to execute on its strategy
ESG pbb continues to execute on its strategy P P 2021: 2017: 2020: P Holistic organisational set-up of 1st Non-financial Report Introduction of Green ESG Programm (NFRD) Bond Framework Introduction of green building Focus on scoring model & pbb Green Loan Transparency of Framework pbb‘s portfolio an
Slide 59: Green Loan Criteria
GREEN LOAN pbb Green Loan Framework aligned with current regulatory and market developments – specific metrics defined for each criterion pbb Scoring Model EU Taxonomy MAX SCORE: 100 Points III. Additional Sustainability I. Energy Efficiency II. Building Certification Factors Energy demand/-consum
Slide 60: ESG: Continued progress in sustainable finance activities
ESG Continued progress in sustainable finance activities Green share of REF portfolio1 (commitments, green loan eligible assets, %) 78% of REF portfolio scored – scoring of remaining portfolio ongoing Green share of total REF portfolio currently at 23% resp. >30% € 7.3 bn (30% based on scored po
Slide 61: Definition of Borrower Classifications
DEFINITION OF BORROWER CLASSIFICATIONS Borrower classification Definition Sovereign Direct and indirect obligations of Central Governments, Central Banks and National Debt Agencies Sovereign (related) Indirect obligations of Non Sovereigns with an explicit first call guarantee by a Sovereign Regiona
Slide 62: Contact Details
CONTACT DETAILS Grit Beecken Axel Leupold Head of Communications, Marketing and Investor Relations Investor Relations/Rating Agency Relations +49 (0)89 2880 28787 +49 (0)89 2880 23648 grit.beecken@pfandbriefbank.com axel.leupold@pfandbriefbank.com Michael Heuber Head of Investor Relations/Rating Age
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