Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q3 2018 Earnings Presentation
47 slides from Deutsche Pfandbriefbank's earnings presentation, Nov 12, 2018
Slide 1: PBT of € 171 mn after 9 months – full-year guidance raised
PBT of € 171 mn after 9 months – full-year guidance raised to € 205-215 mn Results Q3/9M 2018 12 November 2018 Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018
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 regis
Slide 3: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 3
Slide 4: Highlights 9M/18
Highlights 9M/18 pbb shows continued good performance PBT of € 49 mn in Q3/18 (Q3/17: € 51 mn) results in € 171 mn in 9M/18 (+11% y-o-y; 9M/17: € 154 mn) − Strong NII (Q3/18: € 114 mn; 9M/18: € 334 mn), mainly benefitting from reduced funding costs and supported by higher interest-related fees and i
Slide 5: Highlights: 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 New structure (IFRS9) New structure (IFRS9) Q1 47% 42% 11.6 443 216 CIR1 10.5 412 415 198 199 122 111 33
Slide 6: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 6
Slide 7: Income statement
Income statement Good performance based on continued solid underlying trends and one-off gain in Q2/18 Income statement (new structure following IFRS 9)1 € mn Q3/17 Q3/18 9M/17 9M/18 Key drivers Q3/9M 2018: Operating Income 108 119 336 351 NII +12% y-o-y, mainly benefitting from reduced Net interest
Slide 8: Income statement: NII up 12% y-o-y
Income statement NII up +12% y-o-y, mainly benefitting from reduced funding costs Income from lending business € mn Key drivers Q3/9M 2018: Q3/17 Q3/18 9M/17 9M/18 NII continued to benefit from solid underlying drivers Net interest income 102 114 298 334 − Funding costs reduced y-o-y due to maturiti
Slide 9: Income statement: Risk provisioning
Income statement Risk provisioning reflects risk conservative business approach and local market developments Net income from risk provisioning Key drivers Q3/9M 2018: € mn In general, risk provisioning driven by two counterbalancing effects: Q3/17 Q3/18 9M/17 9M/18 (a) Overall portfolio provisionin
Slide 10: Income statement: Operating costs
Income statement Operating costs slightly up in Q3/18, but on low level – further increase expected in Q4/18 General & administrative expenses and depreciations € mn Key drivers Q3/9M 2018: Q3/17 Q3/18 9M/17 9M/18 GAE slightly up in Q3/18, but on low level − FTEs up to 747 y-o-y, but below plan (06/
Slide 11: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 11
Slide 12: REF: New business at stable margin levels
New business & segment reporting REF: New business at stable margin levels – continued selective approach with focus on conservative risk positioning REF: New business 9M/17 2017 9M/18 € bn 10.7 REF: Income statement (IFRS, € mn) Q3/175 Q3/18 9M/175 9M/18 9.5 Total volume (€ bn) 6.9 10.7 5.5 Operati
Slide 13: PIF: Strong competition weighs on new business
New business & segment reporting PIF: Strong competition weighs on new business volume and margins PIF: New business 9M/17 2017 9M/18 € bn 1.0 PIF: Income statement (IFRS, € mn) Q3/173 Q3/18 9M/173 9M/18 0.9 Operating income 9 9 21 23 Total volume (€ bn) 0.6 0.9 0.4 Q4 0.5 0.3 thereof: Net interest
Slide 14: VP: Run-down of non-strategic Value Portfolio
New business & segment reporting VP: Run-down of non-strategic Value Portfolio continued in line with strategy € bn VP: Income statement (IFRS, € mn) Q3/172 Q3/18 9M/172 9M/18 -6% Operating income 9 8 38 34 14.2 13.8 thereof: Net interest income 9 10 25 28 13.5 13.4 Net income from risk provisioning
Slide 15: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 15
Slide 16: Portfolio: Conservative business and risk strategy
Portfolio Conservative business and risk strategy continued – high portfolio quality with 95% investment grade and avg. LTV of 54% Total portfolio: Internal ratings (EL classes) REF Portfolio: Avg. weighted LTVs € bn (EaD, Basel III) 12/17 09/18 % (commitments)2 Non-investment grade1 Investment grad
Slide 17: Portfolio: Non-performing loans
Portfolio Non-performing loans up in Q3/18, but continue to be at historically low level Non-performing loans Workout1 Key drivers Q3/9M 2018: € mn (EaD, Basel III) Restructuring2 Only small portfolio of non-performing loans (NPL) 0.7% with NPL ratio of 0.7% 0.6% − In Q3/18, addition of UK loan expo
Slide 18: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 18
Slide 19: Funding: Significant reduction of funding costs
Funding Significant reduction of funding costs y-o-y – further broadening of investor base with Pfandbriefe in £ and SEK and “new” senior preferred product New long-term funding1 € bn Pfandbriefe 9M/17: € 5.3 bn2 9M/18: € 4.2 bn3 Mortgage Pfandbrief Benchmarks: € 750 mn 5y, € 500 mn 6y, € 500 mn 9y
Slide 20: Funding: Senior unsecured spreads widening
Funding Senior unsecured spreads are widening in line with market trends Spread development of pbb Senior Unsecured Benchmarks vs iTraxx Bank Senior (Spread vs. 6m Euribor) 2017 2018 100 90 ITRAXX (84bp) 80 70 pbb 02/23/22 (69bp) pbb 01/29/21 (64bp) 60 50 40 30 New long-term funding HyPfe € bn1 Öpfe
Slide 21: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 21
Slide 22: Capital: Capitalisation remains strong
Capital Capitalisation remains strong Basel III: RWA Basel III: Capital ratios (fully-loaded) € bn (IFRS) % (IFRS) Ambition in % 09/171 12/172 06/184 09/184 levels 14.7 CET 1 17.1 17.6 19.4 19.7 ≥12.5 14.5 Tier 1 17.1 17.6 21.5 21.9 ≥16 13.7 13.5 Own funds 21.8 22.2 26.3 26.7 16-18 Leverage ratio 4.
Slide 23: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 23
Slide 24: Summary & Outlook
Summary & Outlook Strong 9M/18 paves way for good 2018 results pbb shows continued good performance with PBT of € 171 mn in 9M/18 based on continued solid underlying trends and one-off gain in Q2/18 Full-year PBT guidance for 2018 raised to € 205-215 mn, assuming for Q4 stable NII, further additions
Slide 25: Appendix
Appendix Results Q3/9M 2018 (IFRS, pbb Group, unaudited), 12 November 2018 25
Slide 26: Digitalisation: Integral concept in pbb
Digitalisation Integral concept in pbb Strategic & Action Fields Approach Solutions operational gains Client interface via digital portal – Smooth/efficient „customer portal“ for REF clients Customer interaction launched in April 2018 satisfaction/retention between bank Provision of payment and loan
Slide 27: Income statement: New structure
Income statement New structure based on internationally common disclosure – changes increase transparency of financial reporting Major changes: A. Depreciations for non financial assets in „GAE“ and „net other operating income“ are allocated to „net results from write-downs and write-ups on non-fina
Slide 28: Financial reporting: Change in key ratio definitions
Financial reporting Change in definition of key ratios and segment allocation in 2018 New calculation method of CIR as a result of new P&L structure: General admin. Expenses + Net income from write-downs and write-ups on non-financial assets CIR − In principal, continuation of past structure CIR = −
Slide 29: Key figures pbb Group
Key figures pbb Group Income statement – former structure Income statement – new structure 20161 2017 Q1/17 Q2/17 Q3/17 9M/17 2017 Q1/18 Q2/18 Q3/18 9M/18 (€ mn) (€ mn) Net interest income 404 435 Net interest income 97 99 102 298 407 107 113 114 334 Net fee and commission income 8 8 Net fee and com
Slide 30: Key figures pbb Group 9M/17 vs. 9M/18
Key figures pbb Group 9M/17 vs. 9M/18 Income statement – new REF PIF VP C&A pbb Group structure (€ mn) 9M/17 9M/18 9M/17 9M/18 9M/17 9M/18 9M/17 9M/18 9M/17 9M/18 Net interest income 247 276 22 26 25 28 4 4 298 334 Net fee and commission income 7 5 0 0 -1 -1 0 0 6 4 Net income from fair value 0 -5 -
Slide 31: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement – former structure 2016 2017 Income statement – new structure Q1/173 Q2/173 Q3/173 9M/173 20173 Q1/18 Q2/18 Q3/18 9M/18 (€ mn) (€ mn) Net interest income 321 350 Net interest income 81 82 84 247 334 89 94 93 276 Net fee and commission income 9 9
Slide 32: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement – former structure 2016 2017 Income statement – new structure Q1/173 Q2/173 Q3/173 9M/173 20173 Q1/18 Q2/18 Q3/18 9M/18 (€ mn) (€ mn) Net interest income 35 36 Net interest income 7 7 8 22 30 8 8 10 26 Net fee and commission income - - Net
Slide 33: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement – former structure 20161 2017 Income statement – new structure Q1/174 Q2/174 Q3/174 9M/174 20174 Q1/18 Q2/18 Q3/18 9M/18 (€ mn) (€ mn) Net interest income 41 42 Net interest income 8 8 9 25 37 8 10 10 28 Net fee and commission income -1 -1 Net fee an
Slide 34: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet: 30/09/2018 (01/01/18) IFRS, € bn 57.3 (58.0) 57.3 (58.0) Pos. FV of derivatives 2.9 (3.5) 3.5 (3.8) Neg. FV of derivatives 10.3 (11.6) Other liabilities (customers/FIs)2 <0.1 (0.0) Money Mark
Slide 35: Markets: CRE market environment
Markets CRE market environment remains highly competitive and challenging – pbb maintains selective approach European CRE investment volume (€ bn) Despite ongoing political uncertainties, underlying trends look Quarter total (LHS) 12 month rolling total (RHS) rather positive for the European economy
Slide 36: Portfolio: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2017 / Total: € 57.5 bn 30/09/2018 / Total: € 57.6 bn Hungary 1% Other Europe 5% Hungary <1% Other Europe 5% Finland 1% Other Rest of World 3% Finland 1% Other Rest of World 3% Czech Republic 1% Czech Republic 1% USA 2% USA 3% Sweden 3% S
Slide 37: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31.12.2017: € 28.3 bn 30.09.2018: € 28.7 bn 31.12.2017: € 28.3 bn 30.09.2018: € 28.7bn Czech Republic 1% Hungary 1% Hungary <1% Mixed use 2% Other 4% Czech Republic 1% Other Europe 7% Mixed use 3% Other 4% Austria 2% Ot
Slide 38: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2017 / Total: € 28.3 bn € bn (EaD, Basel III) 30/09/2018 / Total: € 28.7 bn 13.9 14.0 4.7 4.3 3.4 3.4 1.6 1.2 1.4 1.4 1.6 1.1 1.3 0.9 0.5 0.5 0.4 0.4 0.2 0.3 0.2 0.3 0.2 0.1 <0.1 <0.1 Germany UK France Sweden Poland USA Austria Czech Finland Spain Hu
Slide 39: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31.12.2017: € 7.9 bn 30.09.2018: € 7.5 bn 31.12.2017: € 7.9 bn 30.09.2018: € 7.5 bn Sweden 1% Sweden 1% Other Europe 4% Infrastructure Corporation 1% Infrastructure Finland 2% Other Europe 4% Corporation
Slide 40: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2017 / Total: € 7.9 bn € bn (EaD, Basel III) 30/09/2018 / Total: € 7.5 bn 3.5 3.6 1.9 1.8 1.5 1.1 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: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31.12.2017: € 17.0 bn 30.09.2018: € 16.4 bn 31.12.2017: € 17.0 bn 30.09.2018: € 16.4 bn Other Other Rest Other Other Rest Finland <1% Finland <1% Czech Rep. <1% Czech Rep. <1% Financial Financial Hungary 1% Europe
Slide 42: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2017 / Total: € 17.0 bn € bn (EaD, Basel III) 30/09/2018 / Total: € 16.4 bn 5.6 5.5 4.8 4.5 2.0 2.1 1.2 1.2 1.2 1.0 1.1 1.0 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: Portfolio: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31.12.2017: € 4.3 bn 30.09.2018: € 5.0 bn 31.12.2017: € 4.3 bn 30.09.2018: € 5.0 bn Other Rest of World Germany1 Other Rest of World Financial Corporation <1% Financial Corporation <1% Other Europe Ger
Slide 44: Funding: Public benchmark issuances since 2016
Funding Public benchmark issuances since 2016 Type WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Mortgage Pfandbrief A13SWC 12/01/2016 19/01/2023 EUR 750 mn +8 bp 0.50% 99.221% Senior Unsecured A13SWD 28/01/2016 04/02/2019 EUR 500 mn +140 bp 1.25% 99.816% Mortgage Pfandbrief
Slide 45: Ratings
Ratings Bank ratings S&P DBRS1 Long-term A- BBB Outlook/Trend Negative Positive Short-term A-2 R-2 (high) Stand-alone rating2 bbb BBB Long Term Debt Ratings “Preferred” senior unsecured Debt3 A- BBB “Non-preferred” senior unsecured Debt4 BBB- BBB (low) Subordinated Debt BB+ BB (high) Pfandbrief rati
Slide 46: 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 47: 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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