Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — FY2019 Earnings Presentation
49 slides from Deutsche Pfandbriefbank's earnings presentation, Mar 4, 2020
Slide 1: Preliminary Annual Results 2019
pbb continues strong performance in 2019 – PBT of EUR 216 mn Preliminary Annual Results 2019 Analyst Conference 4 March 2020 Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020
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. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 3
Slide 4: Highlights 2019
Highlights 2019 pbb continues strong performance in 2019 – PBT of EUR 216 mn slightly above latest guidance Strong PBT of € 216 mn in 2019 based on good operating performance and slightly above latest guidance (Nov. 2019: € 205-215 mn) NII slightly up y-o-y due to reduced funding costs and suppo
Slide 5: Operating and financial overview
Highlights Operating and financial overview New business Q4 Net interest and commission income General and admin. expenses € bn (commitments, incl. extensions >1 yr) Q3 € mn (IFRS) € mn (IFRS) Q2 47% 44% 43% Q1 CIR1 11.6 456 464 199 202 10.5 193 415 9 9.3 119 4.2 118 Q4 58 57 61 Q4 111 4.7 2.1 115 1
Slide 6: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 6
Slide 7: Low interest rate environment continues to support and prolong CRE cycle
Markets Low interest rate environment continues to support and prolong CRE cycle – slowing economic growth and individual market risks require even more cautious approach European CRE Investment volume (€ bn) Office vacancy in % European and US CRE investment volumes remain on 90 300 25 solid leve
Slide 8: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 8
Slide 9: Strong operating performance maintained
Financials Strong operating performance maintained – supported by increased average REF financing volume, funding costs below maturities and high prepayment fees Income statement € mn Q4/18 Q4/19 FY18 FY19 Key drivers 2019: Operating Income 121 135 471 506 NII slightly up y-o-y due to reduced fund
Slide 10: NII benefited from higher financing volume and lower funding costs
Financials NII benefited from higher financing volume and higher portfolio margin and was supported by lower funding costs – significantly higher prepayment fees Income from lending business (€ mn) Key drivers 2019: Q4/18 Q4/19 FY18 FY19 NII slightly up y-o-y Net interest income 116 117 450 458
Slide 11: Risk provisioning reflecting expected worsening market conditions
Financials Risk provisioning mainly reflecting the expectation of worsening market conditions as well as revaluation effects on UK shopping centres Net income from risk provisioning Key drivers 2019: € mn Risk provisioning mainly driven by two effects: Q4/18 Q4/19 FY18 FY19 (a) Provisioning for St
Slide 12: Operating costs increased y-o-y as expected
Financials Operating costs increased y-o-y as expected, mainly driven by investments and regulatory projects General & administrative expenses and depreciations € mn Key drivers 2019: Q4/18 Q4/19 FY18 FY19 GAE slightly up y-o-y (€ 202 mn; 2018: € 193 mn) to a more normalised level – in line with e
Slide 13: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 13
Slide 14: Capitalisation remains strong
Capital Capitalisation remains strong – as expected and already communicated RWA increase in Q4 due to LGD parameter recalibration; EBA and Basel IV anticipated Basel III: RWA Key drivers Q4/19: € bn (IFRS) Risk weights geared to expected requirements from EBA and Basel IV 17.7 Recalibration of
Slide 15: Dividend proposal of € 0.90 per share
Dividend Shareholders to participate from continued strong performance – in line with pbb’s dividend policy, management intends to propose dividend of € 0.90 per share (payout 75%1) Profit attributable to shareholders 2018 2019 € mn (IFRS) 215 216 -36 -37 179 179 167 162 -12 -17 Profit before taxes
Slide 16: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 16
Slide 17: New business
New business REF new business volume of € 9.0 bn in line with guidance – avg. REF gross interest margin stable at ~155 bp y-o-y REF New business REF new business € bn (commitments, incl. extensions >1 yr) 26.8 27.1 FY18 9M/19 FY19 24.9 Financing Total volume (€ bn) 9.5 6.9 9.0 volume thereof: 10.7 E
Slide 18: Segment reporting
Segment reporting Overall key drivers also reflected in segment performance REF PIF Value Portfolio Income statement (IFRS, € mn) Q4/18 Q4/19 FY/18 FY/19 Q4/18 Q4/19 FY/18 FY/19 Q4/18 Q4/19 FY/18 FY/19 Operating income 101 117 391 433 15 8 38 34 3 9 37 34 thereof: Net interest income 96 98 372 385 8
Slide 19: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 19
Slide 20: Continued high portfolio quality
Portfolio Continued high portfolio quality – internal rating distribution reflects recalibration of risk parameters REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)2 € bn (EaD, Basel III) 09/19 12/19 Non-investment grade1 54% 54% Investment grade1 53%
Slide 21: Non-performing loans up in 2019, but still on low level
Portfolio Non-performing loans up in 2019, but still on low level Non-performing loans Workout1 Key drivers 2019: € mn (EaD, Basel III) Restructuring2 Non-performing loans (NPL) with NPL ratio3 of 0.9% 0.9% up in 2019, but still on ow level 0.6% 0.6% Increase by € 162 mn y-o-y reflects NPL ratio
Slide 22: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 22
Slide 23: Successful funding activities in line with plan
Funding Successful funding activities in line with plan New long-term funding1 € bn Funding 2019 2018: € 5.2 bn4 2019: € 6.7 bn Strong funding activities (2019: € 6.7 bn; 2018: 5.2 bn) with Spread 6 0 42 15 21 74 focus on foreign currencies (avg, bp)2 Pfandbrief volume dominated by benchmark iss
Slide 24: Senior unsecured spreads back on lower level
Funding Senior unsecured spreads back on lower level, after widening in 2018 New long-term funding HyPfe € bn1 Öpfe 2.7 Sen. Unsec. 1.2 1.5 1.3 1.1 1.2 0.3 0.1 0.9 0.6 0.7 1.2 1.2 Spread development of pbb Senior Benchmarks vs iTraxx Bank Senior 0.4 0.6 0.6 (Spread in bp vs. 6m Euribor) Q4/18 Q1/19
Slide 25: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. Capital 5. New Business & Segment Reporting 6. Portfolio Profile 7. Funding 8. Outlook Appendix Contact details Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 25
Slide 26: Strategic Initiatives: Innovation & Digitalisation, Sustainable Finance
Strategic Initiatives Innovation & Digitalisation to strengthen competitiveness – Sustainable Finance to take responsibility Digitalisation Sustainable Finance Project to integrate ESG factors into the Customer Interfaces – development and credit process / lending initiated in 2019 implementatio
Slide 27: Outlook 2020
Outlook 2020 Cautious outlook for 2020 given market and competitive conditions Strategic Priorities Focus on stable operative Further fortifying Focus on profitable but risk results including increased pbb’s capital base conservative new business risk provisioning Stable development of NII, GAE an
Slide 28: Outlook 2020
Outlook 2020 Operating trends 2018 2019 Guidance 2020 Real Estate Finance (REF) New business volume1 (€ bn) 9.5 9.0 € 8.0-9.0 bn Avg. gross margin (bp) ~155 ~155 Slightly lower Financing volume (€ bn) 26.8 27.1 Moderate increase (strategic portfolio) Public Investment Finance (PIF) Avg. gross margin
Slide 29: Appendix
Appendix Annual Results 2019 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2020 29
Slide 30: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2017 Q1/18 Q2/18 Q3/18 Q4/18 2018 Q1/19 Q2/19 Q3/19 Q4/19 2019 Net interest income 407 107 113 114 116 450 116 113 112 117 458 Net fee and commission income 8 1 2 1 2 6 1 2 1 2 6 Net income from fair value measurement -5 - 4 -2 -11 -9 -2 -5 5 -5 -7 Net i
Slide 31: Key figures pbb Group 2018 vs. 2019
Key figures pbb Group 2018 vs. 2019 Income statement REF PIF VP C&A pbb Group (€ mn) 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Net interest income 372 385 34 35 39 33 5 5 450 458 Net fee and commission income 6 7 1 - -1 -1 0 - 6 6 Net income from fair value -8 -8 -2 -2 1 3 0 - -9 -7 measurem
Slide 32: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (€ mn) 20173 Q1/18 Q2/18 Q3/18 Q4/18 2018 Q1/194 Q2/19 Q3/19 Q4/19 2019 Net interest income 334 89 94 93 96 372 97 95 95 98 385 Net fee and commission income 9 1 2 2 1 6 1 2 2 2 7 Net income from fair value measurement - - -4 -1 -3 -8 - -5 - -3
Slide 33: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (€ mn) 20173 Q1/18 Q2/18 Q3/18 Q4/18 2018 Q1/194 Q2/19 Q3/19 Q4/19 2019 Net interest income 30 8 8 10 8 34 9 8 9 9 35 Net fee and commission income - - - - 1 1 - - - - - Net income from fair value measurement -2 - -1 -1 - -2 - -1 - -1 -2 N
Slide 34: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (€ mn) 20173 Q1/18 Q2/18 Q3/18 Q4/18 2018 Q1/194 Q2/19 Q3/19 Q4/19 2019 Net interest income 37 8 10 10 11 39 9 9 6 9 33 Net fee and commission income -1 - - -1 - -1 - - -1 - -1 Net income from fair value measurement -3 - 9 0 -8 1 -2 1 5 -1 3 Net inco
Slide 35: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 31/12/19 31/12/18 Liabilities & equity 31/12/19 31/12/18 Financial assets at fair value through P&L 1.3 1.7 Financial liabilities at fair value through P&L 0.8 0.9 thereof th
Slide 36: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2018 / Total: € 58.1 bn 31/12/2019 / Total: € 55.5 bn Hungary <1% Other Europe 5% Hungary <1% Other Europe 6% Czech Republic 1% Czech Republic 1% Other Rest of World 3% Other Rest of World 2% Finland 1% Finland 1% Sweden 2% Sweden 2% Pola
Slide 37: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31/12/2018: € 29.9 bn 31/12/2019: € 29.8 bn 31/12/2018: € 29.9 bn 31/12/2019: € 29.8 bn Mixed use 2% Other 3% Mixed use 2% Czech Republic 1% Other Europe Czech Republic 1% Other Europe Other 3% Hotel 5% Hotel 5% Austria
Slide 38: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2018 / Total: € 29.9 bn € bn (EaD, Basel III) 31/12/2019 / Total: € 29.8 bn 14.8 14.2 4.3 3.7 3.2 3.5 2.8 1.9 1.3 1.3 1.5 1.4 1.2 0.9 0.5 0.5 0.4 0.4 0.4 0.5 0.4 0.3 0.1 0.1 0.1 0.1 Germany UK France USA Poland Sweden Austria Czech Finland Spain Hung
Slide 39: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2018: € 7.6 bn 31/12/2019: € 7.1 bn 31/12/2018: € 7.6 bn 31/12/2019: € 7.1 bn Infrastructure Sweden 1% Sweden 1% Corporation 1% Finance <1% Corporation 2% Infrastructure Other Europe 4% Other Europ
Slide 40: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2018 / Total: € 7.6 bn € bn (EaD, Basel III) 31/12/2019 / Total: € 7.1 bn 3.9 3.7 1.7 1.5 1.0 1.0 0.3 0.3 0.2 0.2 0.1 0.1 0.3 0.3 0.1 0.1 <0.1 <0.1 France Germany Spain Austria UK Finland Sweden Other Europe Other Rest of World Borrower classif
Slide 41: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2018: € 16.3 bn 31/12/2019: € 15.6 bn 31/12/2018: € 16.3 bn 31/12/2019: € 15.6 bn Financial Finland <1% Finland <1% Czech Rep. <1% Other Other Rest Czech Rep. <1% Other Other Rest Financial Institution Supran
Slide 42: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2018 / Total: € 16.3 bn € bn (EaD, Basel III) 31/12/2019 / Total: € 15.6 bn 5.9 5.6 4.4 4.2 2.0 1.9 1.2 1.0 0.8 1.0 0.9 0.9 0.7 0.7 0.2 0.2 0.1 0.1 <0.1 <0.1 <0.1 <0.1 Austria Germany Italy Spain France Poland Hungary Czech Finland Other Europe Rest of Wo
Slide 43: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31/12/2018: € 4.3 bn 31/12/2019: € 2.9 bn 31/12/2018: € 4.3 bn 31/12/2019: € 2.9 bn Financial Other Rest of World Other Rest of World Corporation <1% Institution Corporation <1% Germany1 Financial Germ
Slide 44: Ambition level for Own Funds and Eligible Liabilities of more than 8% TLOF
Funding Ambition level for Own Funds and Eligible Liabilities of more than 8 % TLOF (in € as of 31/12/2019) Composition of MREL1 Liabilities Rundown (31/12/2019) (31/12/2019) € ~ 15 bn Substantial buffer for Senior Preferred (SP) investors due to high volume of capital instruments and Senior Non-
Slide 45: Public benchmark issuances since 2017
Funding Public benchmark issuances since 2017 Type WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Mortgage Pfandbrief A2ADASA 05/01/2017 01/03/2022 GBP 250 mn +55 bp2 3m-Libor +55 bp 100.00% Mortgage Pfandbrief (5th Tap) A1PG3M 16/01/2017 20/12/2019 GBP 50 mn +50 bp2 1.875% 10
Slide 46: Mandated Ratings
Mandated Ratings Bank ratings S&P Long-term A- Outlook/Trend Negative Short-term A-2 Stand-alone rating1 bbb Long Term Debt Ratings “Preferred” senior unsecured Debt2 A- “Non-preferred” senior unsecured Debt 3 BBB- Subordinated Debt BB+ Pfandbrief ratings Moody’s Public Sector Pfandbrief Aa1 Mortgag
Slide 47: Definition of key ratios
Financial reporting Definition of key ratios General admin. Expenses + Net income from write-downs Calculation method of CIR: and write-ups on non-financial assets CIR CIR = Operating income IFRS9 Expected Credit Loss Model with 3 stage logic: Credit loss allowances on Stage 1: impaired with 1
Slide 48: 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 49: Contact details
Contact details Walter Allwicher Head of Communications +49 (0)89 2880 28787 walter.allwicher@pfandbriefbank.com Michael Heuber Head of Investor Relations / Rating Agency Relations +49 (0)89 2880 28778 michael.heuber@pfandbriefbank.com Axel Leupold Investor Relations / Rating Agency Relations +49 (0
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