Deutsche Pfandbriefbank AG · XETR:PBB
Deutsche Pfandbriefbank — Debt Investor Presentation (March 2023)
37 slides from Deutsche Pfandbriefbank's debt investor presentation, Mar 9, 2023
Slide 1: Debt Investor Presentation – FY Results 2022
pbb Deutsche Pfandbriefbank Debt Investor Presentation – FY Results 2022 Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023
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: Agenda
Agenda 1. Introduction 2. Operative highlights 4. ESG 5. Strategic outlook 6. Appendix Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023 3
Slide 4: pbb's growth strategy
pbb‘s growth strategy We are expanding our leading position as a European specialist bank for commercial real estate financing to create added value for all our stakeholders We intend to grow in our core In all we do, we are fully We intend to remain a reliable business – commercial real estate comm
Slide 5: Agenda
Agenda 1. Introduction 2. Operative highlights 3. ESG 4. Strategic outlook 5. Appendix Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023 5
Slide 6: Results 2022
Results 2022 pbb demonstrates resilient business performance thanks to its robust business model Strong resilience Sound operative performance Strong capital base with against market trend: with pre-tax profit of € 213 mn CET1 ratio of 16.7% REF portfolio growth of within forecast range (Basel IV-ca
Slide 7: CRE Markets
CRE Markets Investment volumes plunged in Q4/22, both in Europe and the US European and US Investment volume1 (€ bn) – European and US CRE investment volumes declined 1,000 € significantly in Q4/22 as due to weak sentiment number 900 € of buyers and sellers fell to the lowest level since 2013 800 €
Slide 8: REF new business & portfolio
REF new business & portfolio Strategic portfolio grows slightly while new business margins pick up in Q4 Volume of strategic REF portfolio (financing volume) – Growth driven by strategic initiatives and low pre- € bn 77% payments – Strong new business margin pick-up of 40bp in Q4/22 Share of strateg
Slide 9: REF new business & portfolio
REF new business & portfolio Diversification by countries and property types enables for flexible approach Regions Property types – New business 2022 USA 17% with focus on Germany, Logistics USA, Nordics Germany 42% 22% France 9% Office 45% – Main property types € 9.0 bn Office, Residential Nordics
Slide 10: Funding
Funding Strong funding based on resilient and cost efficient Pfandbrief – unsecured funding increasingly shifted into more favorable retail deposit base New long-term funding1 – Strong focus on benchmarks, asset matching currencies (USD, € bn GBP, SEK) and green refinancing in 2022 – Pfandbrief fund
Slide 11: Funding
Funding Own Funds and Eligible Liabilities significantly exceed 8% TLOF (in € bn as of 31/12/2022)1 MREL2 Composition of Rundown (31/12/2022) Liabilities (31/12/2022) – Buffer for Senior Preferred (SP) investors due to high volume of capital instruments ~ 16.1 and Senior Non-Preferred (SNP) liabilit
Slide 12: Capital
Capital Strong capital base allows taking advantage of profitable growth opportunities even in current market environment Basel III: RWA – RWA already calibrated towards anticipated Basel IV levels (fully € bn (IFRS) loaded) 17.7 17.3 17.0 – RWA up y-o-y mainly due to 16.8 – increase in REF portfoli
Slide 13: Funding
Funding Regional and Counterparty distribution of Cover Pools mirror total portfolio Regions Collateral types Spain 1.1% Austria 1% Switzerland 0.3% Benelux Italy 0.3% Mortgage cover pool (nominal) 30/12/2022 Nordic countries Other Pfandbriefe outstanding € 16 bn 4.5% CEE 3.8% 22.2% Cover funds € 19
Slide 14: Mandated Ratings
Mandated Ratings Bank ratings S&P Long-term BBB+ Outlook/Trend Stable Short-term A-2 Stand-alone rating1 bbb Long Term Debt Ratings “Preferred” senior unsecured Debt2 BBB+ “Non-preferred” senior unsecured Debt3 BBB- Subordinated Debt BB+ Pfandbrief ratings Moody’s Public Sector Pfandbrief Aa1 Mortga
Slide 15: Agenda
Agenda 1. Introduction 2. Operative highlights 3. ESG 4. Strategic outlook 5. Appendix Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023 15
Slide 16: ESG
ESG pbb as sustainable finance bank and transformation partner – > 30% green REF portfolio share targeted by 2026 Green share of REF portfolio (green loan eligible assets) – Sustainable finance defined as key element of pbb’s ESG strategy % – Ambitious green new business and portfolio goals to becom
Slide 17: Green Loan Criteria
Green Loan pbb Green Loan Framework aligned with current regulatory and market developments – specific metrics defined for each criteria pbb Scoring Model EU Taxonomy MAX SCORE: 100 Points III. Additional Sustainability I. Energy Efficiency II. Building Certification Factors • Energy demand/-consump
Slide 18: ESG Ratings
ESG Ratings Continuous improvement reflected in ESG ratings – Upgrade by MSCI from “A“ to “AA“ pbb rating/score ISS ESG MSCI Moody‘s ESG Solutions Continuous improvement of ESG LAST UPDATE: November 2022 LAST UPDATE: May 2022 LAST UPDATE: February 2023 organisational set-up, governance, strategy A
Slide 19: Agenda
Agenda 1. Introduction 2. Operative highlights 3. ESG 4. Strategic outlook 5. Appendix Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023 19
Slide 20: pbb's path to a > 9% RoE after tax by 2026
pbb’s path to a > 9% RoE after tax1 by 2026 We have put concrete initiatives in motion to further strengthen pbb’s profitability growth trajectory and adapt our strategic focus to changing market conditions 1 2 3 4 5 6 Digitalisation Profitable Green Revenue Focus on core Funding & operational growt
Slide 21: Profitable growth
1 Profitable growth We accelerate profitable, organic growth in our core business Strategic Rationale Measures KPIs We grow our core REF We re-allocate portfolios to continue to improve our margins REF portfolio (€ bn) business in two dimensions: based on current market opportunities across our asse
Slide 22: Green Finance
2 Green Finance Become the leading green CRE transformation financing partner in Europe Strategic Rationale Measures KPIs We set pbb up as sustainable Green Lending Green REF portfolio share1 (%) finance bank and real estate • We increase share of financed green properties in our transformation part
Slide 23: Revenue diversification
3 Revenue diversification We leverage our core CRE competencies for capital-efficient diversification of our income Strategic Rationale Measures KPIs We continue to diversify pbb Real Estate Investment Management (IM) pbb Group: share of net fee and our business model • We finalize the ramp-up of ou
Slide 24: Focus on core business and funding diversification
4/5 Focus on core business and funding diversification Diversify funding base to drive cost savings & optimise balance sheet for core business 4 Focus on core business Measures KPIs We optimise our balance • We focus on our REF core business and merge Total assets PIF & VP (€ bn) sheet structure for
Slide 25: Digitalisation & operational revamp
6 Digitalisation & operational revamp Catalyze profitable growth through digital processes and steadfast cost discipline compensating for investments in strategic initiatives Digitalisation Measures KPIs We continue our digitalisation We further expedite the successful introduction of our digital CI
Slide 26: Guidance 2023
Guidance 2023 In 2023, we invest in our business to lay the foundation for accelerated growth and a higher profitability level 2022 2023 financial targets REF new business1 € 9.0 bn € 9.0-10.0 bn Pre-tax profit € 213 mn € 170-200 mn NII + NCI € 497 mn > € 450 mn Income from realisations € 15 mn € 20
Slide 27: Appendix
Appendix 1. Financials 2. Portfolio Profile Contact details Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023 27
Slide 28: NII and NCI
NII and NCI pbb proves strong NII resilience – income from realisations significantly lower NII and NCI – NII supported by resilient portfolio profitability and growth € mn (IFRS) 502 497 – + € 1.4 bn avg. REF financing volume 482 – + € 1.2 bn build-up of favorable pbb direkt retail deposits 127 135
Slide 29: Risk provisioning
Risk provisioning Level of risk provisioning confirms risk conservative positioning throughout the cycle Net income from risk provisioning – Stage 1&2: Net additions of - € 5 mn (Q4/22: net release € 7 mn) – € mn (IFRS) improved macro and model parameter compensate for stage movements and increase i
Slide 30: Risk provisioning
Risk provisioning Comfortable buffer for challenges to come – conservative risk profile aims at a long-term sustainable provisioning level of 40-80bp on the REF portfolio throughout the cycle Balance sheet – loss allowances € mn 135 bp 133 bp 125 bp 398 400 5 4 358 85 bp 29 38 bp 261 REF coverage 26
Slide 31: GAE
GAE Costs under control while investing in strategic development General and admin. expenses – Cost discipline to remain integral part of strategy € mn (IFRS) – CIR on competitive level 46% 42% – Investment in strategic projects to continue in difficult CIR1 40% times, e.g., customer portal, digital
Slide 32: PBT
PBT pbb‘s business model and positioning provide for reliable and resilient earnings performance Pre-tax profit – PBT with strong resilience throughout the cycle € mn (IFRS) – Interest rate driven decline in prepayment fees from 242 extraordinarily high previous year level by - € 66 mn y-o-y 213 56
Slide 33: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 Q3/22 Q4/22 2022 7 Net interest income 476 123 123 123 125 494 122 120 116 131 489 Net fee and commission income 6 2 3 1 2 8 2 1 1 4 8 Net income from fair value measurement -8 2 - 1 7 10 9 5 7 -1 20 Net inco
Slide 34: Appendix
Appendix 1. ESG 2. Portfolio Profile Contact details Annual Results 2022 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2023 34
Slide 35: REF portfolio
REF portfolio Portfolio shift over the years reflects pbb´s conservative risk approach 31/12/2013 / Total: € 22.2 bn1 31/12/20152 / Total: € 25.8 bn1 31/12/2022 / Total: € 31.0 bn1 Austria 1% Other 6% Other 5% Other Europe Regions Nordics Nordics Czech Republic 1% 7% Sweden 3% 9% France 6% CEE Polan
Slide 36: REF new business & portfolio
REF new business & portfolio Business approach reflected in stable risk parameters and continued low average LTV of 51%, providing solid risk buffer REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) 09/22 12/22 (commitments)1 € bn (EaD, Basel III) Non-investment grade
Slide 37: Contact details
Contact details Götz Michl Head of Funding & Debt Investor Relations +49 (0)6196 9990 2931 goetz.michl@pfandbriefbank.com Silvio Bardeschi Funding & Debt Investor Relations +49 (0)6196 9990 2934 Website silvio.bardeschi@pfandbriefbank.com www.pfandbriefbank.com/investor-relations.html © Deutsche Pfa
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