Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q1 2017 Earnings Presentation
58 slides from Deutsche Pfandbriefbank's earnings presentation, May 15, 2017
Slide 1: Analyst Conference Call Results Q1/17
Analyst Conference Call Results Q1/17 Solid start into 2017 with PBT of EUR 47 mn Andreas Arndt, CEO/CFO Unterschleissheim, 15 May 2017 Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017
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 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 3
Slide 4: Highlights Q1/17
Highlights Q1/17 Solid start into 2017 – full-year guidance 2017 unchanged Pre-tax profit of EUR 47 mn in Q1/17 up +4% y-o-y (Q1/16: EUR 45 mn) Operating income increased by +9% y-o-y to EUR 98 mn (Q1/16: EUR 90 mn), benefiting from strong underlying NII and slightly higher positive one-offs General
Slide 5: Operating and financial overview – solid underlying financial performance despite headwinds
Highlights Operating and financial overview – solid underlying financial performance despite headwinds New business Q4 Net interest and commission income Q4 General and admin. expenses Q4 EUR billions (Commitments, incl. extensions >1 yr) EUR millions (IFRS) Q3 EUR millions (IFRS) Q3 Q3 77% Q2 Q2 CI
Slide 6: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 6
Slide 7: Income statement: Underlying NII with slightly positive development
Income statement Income statement Income from lending business Underlying NII with slightly positive development over the last Loan loss provisions General & admin. expenses quarters Result from financial instruments Result from other business act. Profit before tax Income from lending business EUR
Slide 8: Income statement: Loan-loss provisions stay low
Income statement Income statement Income from lending business Loan-loss provisions stay low Loan loss provisions General & admin. expenses Result from financial instruments Result from other business act. Profit before tax Loan-loss provisions EUR millions Q1/16 Q4/16 Q1/17 Key drivers Q1/17: Speci
Slide 9: Income statement: Operating costs remain under control
Income statement Income statement Income from lending business Operating remain under control – increase of personnel costs as Loan loss provisions General & admin. expenses expected Result from financial instruments Result from other business act. Profit before tax General and administrative expens
Slide 10: Income statement: Result from financial instruments stable y-o-y
Income statement Income statement Income from lending business Result from financial instruments stable y-o-y – no major effects Loan loss provisions General & admin. expenses Result from financial instruments Result from other business act. Profit before tax Result from financial instruments EUR mi
Slide 11: Income statement: Result from other business activities
Income statement Income statement Income from lending business Result from other business activities mainly driven by bank levy Loan loss provisions General & admin. expenses and one-off gains from asset sales Result from financial instruments Result from other business act. Profit before tax Result
Slide 12: Capitalisation remains strong, providing buffer for regulatory changes
Capitalisation Capitalisation remains strong, providing buffer for regulatory changes to come Basel III: RWA Basel III: Capital ratios (fully loaded) EUR billions (IFRS)1 % (IFRS) 13.4 13.1 13.0 Mid-term in % 12/15 12/163 03/174 targets CET 1 18.2 19.0 19.2 >12.5 Tier 1 18.2 19.0 19.2 >16 Own funds
Slide 13: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 13
Slide 14: Segment reporting: Real Estate Finance (REF)
Segment reporting: Real Estate Finance (REF) New business on solid level – unchanged conservative business approach; US with 8% share in total new business New business Extensions >1 year Income statement (IFRS, EUR mn) Q1/16 Q1/17 EUR billions (commitments, incl. extensions >1 yr) New commitments O
Slide 15: Segment reporting: Public Investment Finance (PIF)
Segment reporting: Public Investment Finance (PIF) New business and financing volume up y-o-y New business Income statement (IFRS, EUR mn) Q1/16 Q1/17 EUR billions (commitments) Operating income 9 5 thereof: Net interest income 9 9 0.5 0.4 Loan-loss provisions - - 0.2 0.2 General administrative expe
Slide 16: Segment reporting: Value Portfolio (VP)
Segment reporting: Value Portfolio (VP) Run-down of non-strategic Value Portfolio continued in line with strategy – financial performance affected by one-offs Value Portfolio RWA Income statement (IFRS, EUR mn) Q1/16 Q1/17 EUR billions (financing volumes) Operating income 11 19 thereof: Net interest
Slide 17: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 17
Slide 18: Strategic portfolio slightly up q-o-q
Portfolio Strategic portfolio slightly up q-o-q Total portfolio 12/15 12/16 03/17 EUR billions (Financing volumes) Strategic Non-strategic portfolios portfolios (run-down) 50.0 47.3 47.3 24.0 24.1 24.1 18.7 15.8 15.5 7.3 7.4 7.7 REF PIF VP Total PIF REF 31.3 31.5 31.8 7.3 7.4 7.7 Key drivers Q1/17:
Slide 19: Stable and well diversified portfolio with focus on European markets
Portfolio Stable and well diversified portfolio with continued focus on European markets, particularly on Germany – cautious growth of US business 31/03/2017 (EaD, Basel III) Real Estate Finance1 Public Investment Finance Value Portfolio USA 1% Other 7% Other 9% Other 14% Nordics 2% Nordics 6% Germa
Slide 20: Conservative business and risk strategy to continue
Portfolio Conservative business and risk strategy to continue – stable high portfolio quality with 97% investment-grade, avg. LTV of 56% Total portfolio: Internal ratings (EL classes) REF Portfolio: Avg. weighted LTVs EUR billions (EaD, Basel III) % (Commitments)2 27.1 27.1 8.5 8.7 19.5 18.9 5.5 4.7
Slide 21: Sustained low share of problem loans
Portfolio Sustained low share of problem loans Total problem loans Workout1 Problem loan ratio Total portfolio (thereof: HETA) EUR millions (EaD, Basel III) Restructuring2 (thereof: HETA) % (EaD, Basel III) Real Estate Finance 2.1% 1.3% 1.4% 1.3% 777 3 241 388 360 0.6% 0.6% 3 2 533 385 358 2015 2016
Slide 22: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 22
Slide 23: Diverse funding base through Pfandbriefe, senior unsecured and retail deposits
Funding Diverse funding base through Pfandbriefe, senior unsecured and retail deposits; focus on currency matched Pfandbrief funding New long-term funding Pfandbriefe EUR billions1 Focus on currency matched funding: Q1/16: EUR 2.3 bn Q1/17: EUR 2.7 bn − Mortgage Pfandbriefe: GBP 300 mn, SEK 1.2 bn −
Slide 24: Improved S&P Issuer Credit Rating and MREL eligible material
Funding Improved S&P Issuer Credit Rating (ICR) and extensive MREL eligible material S&P Rating action on 28 March 20171 MREL eligible items (fully-loaded)2 31.12.2016 (EUR billions) Previous Current 11.2 >80%of RWA ICR = „Preferred“ A- Senior Unsecured +2 notches ICR = Senior BBB Unsecured -1 notch
Slide 25: Spreads have converged – senior unsecured spreads tightened relative to peers
Funding Spreads have converged – pbb’s senior unsecured spreads in secondary markets tightened relative to peers Spread development of pbb Senior Unsecured Bonds vs peers and iTraxx Bank Senior (Spread vs. 6m Euribor) pbb Senior Unsecured Benchmark issuances/taps New long-term funding HyPfe EUR bill
Slide 26: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 26
Slide 27: Strategic initiatives underway to strengthen market position
Summary & Outlook Strategic initiatives underway to strengthen market position and support profitability US market entered in Q3/16 – focused business approach with strict guidelines So far, total new business of EUR 0.4 bn closed 1 Expand Further business expansion envisaged US business Establish l
Slide 28: Summary & Outlook: Solid start into 2017
Summary & Outlook Solid start into 2017 – strategic initiatives underway pbb well on track despite remaining headwinds – solid start into 2017 with good operating and financial performance Full-year guidance 2017 unchanged Strategic initiatives underway to strengthen market position and support prof
Slide 29: Appendix
Appendix Results Q1/17 (IFRS, pbb Group, unaudited), 15 May 2017 29
Slide 30: Key figures pbb Group
Key figures pbb Group Income statement (EUR millions) 2014 2015 2016 Q1/17 Net interest income 421 426 404 103 Net fee and commission income 1 14 8 3 Net trading income -30 15 -6 -2 Net income from financial investments -77 -32 125 1 Net income from hedging relationships -3 11 6 1 Net other operatin
Slide 31: Key figures pbb Group Q1/16 vs. Q1/17
Key figures pbb Group Q1/16 vs. Q1/17 Income statement (EUR millions) REF PIF VP C&A pbb Group Q1/16 Q1/17 Q1/16 Q1/17 Q1/16 Q1/17 Q1/16 Q1/17 Q1/16 Q1/17 Net interest income 77 83 9 9 14 10 2 1 102 103 Net fee and commission income 2 3 - - - - - - 2 3 Net trading income -5 - - -1 - -1 - - -5 -2 Net
Slide 32: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (EUR millions) 2014 2015 Q1/16 Q2/16 Q3/16 Q4/16 2016 Q1/17 Net interest income 294 308 77 75 82 87 321 83 Net fee and commission income 2 14 2 1 2 4 9 3 Net trading income -13 14 -5 -2 1 4 -2 - Net income from financial investments 14 18 3 - -
Slide 33: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (EUR millions) 2014 2015 Q1/16 Q2/16 Q3/16 Q4/16 2016 Q1/17 Net interest income 40 44 9 9 7 10 35 9 Net fee and commission income - - - - - - - - Net trading income -4 - - - -1 - -1 -1 Net income from financial investments 3 5 - 1 - - 1 1
Slide 34: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (EUR millions) 20141 20151 Q1/16 Q2/16 Q3/161 Q4/16 20161 Q1/17 Net interest income 79 68 14 8 7 12 41 10 Net fee and commission income -1 - - - - -1 -1 - Net trading income -13 1 - - -3 - -3 -1 Net income from financial investments -94 -55 1 - 123 -
Slide 35: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet: 31/03/2017 (31/12/2016) IFRS, EUR billions 61.2 (62.6) 61.2 (62.6) Pos. FV of derivatives 4.2 (4.6) 4.7 (5.1) Neg. FV of derivatives 12.9 (13.1) Liabilities to other banks and customers 0.0 (
Slide 36: Portfolio: Total portfolio
Portfolio Total portfolio Regions 31/12/2016 / Total: EUR 60.6 bn EUR billions (EaD, Basel III)1 31/03/2017 / Total: EUR 59.4 bn 25.0 23.3 7.6 7.9 6.8 6.6 4.3 4.1 5.0 5.4 2.3 2.3 1.6 1.7 1.4 1.3 2.1 2.1 1.2 1.2 1.2 1.1 0.6 0.6 0.4 0.4 0.4 0.5 0.9 1.0 Germany3 Austria France Spain UK Italy Poland Sup
Slide 37: Portfolio: Problem loans
Portfolio Problem loans Total problem loans VP (thereof: HETA) Regions EUR millions (EaD, Basel III) REF EUR million (EaD, Basel III) No. of individual 44 cases 777 777 -54% 40 117 France 241 84 38 Finland Italy 388 241 388 CEE 360 360 83 56 Spain 536 115 114 Germany 388 360 335 HETA (Austria) 1904
Slide 38: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Portfolio: Regions Portfolio: Property types 31/03/2017: EUR 27.1 bn (EaD, Basel III) 31/03/2017: EUR 27.1 bn (EaD, Basel III) Hungary 1% Austria 2% Other Rest of World 1% Spain <1% Czech Republic 2% Italy <1% Mixed Use 3% Other Other Europe Hotel/Leisure 5% Polan
Slide 39: Portfolio: Real Estate Finance (REF) regions
Portfolio Real Estate Finance (REF) Regions 31/12/2016 / Total: EUR 27.1 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 27.1 bn 13.1 12.7 4.7 5.0 3.3 3.4 1.4 1.4 1.3 1.3 1.2 1.1 0.3 0.2 0.3 0.3 0.4 0.5 0.2 0.2 0.5 0.5 0.0 0.0 0.1 0.1 0.3 0.4 Germany UK France Poland Sweden Spain Hungary Cz
Slide 40: Portfolio: Real Estate Finance (REF) property types
Portfolio Real Estate Finance (REF) Property types 31/12/2016 / Total: EUR 27.1 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 27.1 bn 8.9 8.9 7.1 7.3 4.4 4.2 3.0 3.2 1.2 1.3 1.4 1.4 1.3 0.9 Office Retail/ Residential Warehouse/ Mixed use Hotel/ Other Shopping Logistics Leisure 31/12/2016
Slide 41: Portfolio: Real Estate Finance (REF) loan types
Portfolio Real Estate Finance (REF) Loan types 31/12/2016 / Total: EUR 27.1 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 27.1 bn 23.0 22.9 3.6 3.9 0.4 0.3 <0.1 <0.1 Investment loans Development loans Customer derivatives Other 31/12/2016 31/03/2017 Customer derivatives 1% Other <1% Custo
Slide 42: Portfolio: Real Estate Finance (REF) internal ratings
Portfolio Real Estate Finance (REF) Internal ratings (EL classes) 31/12/2016 / Total: EUR 27.1 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 27.1 bn Investment grade Non-investment grade 6.2 6.4 5.5 5.4 3.7 3.3 2.8 2.9 2.8 2.9 2.3 1.6 1.5 1.8 0.8 1.0 1.0 0.6 0.3 0.3 0.1 0.1 <0.1 0.0 <0.1
Slide 43: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Portfolio: Regions Portfolio: Borrower classification1 31/03/2017: EUR 8.7 bn (EaD, Basel III) 31/03/2017 : EUR 8.7 bn (EaD, Basel III) Supra <1% UK 1% Sweden <1% Corporation 3% Infrastructure Finance <1% Finland 2% Other Europe 3% Supra <1% Sovereign Austri
Slide 44: Portfolio: Public Investment Finance (PIF) regions
Portfolio Public Investment Finance (PIF) Regions 31/12/2016 / Total: EUR 8.5 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 8.7 bn 3.4 3.5 2.6 2.6 1.7 1.5 0.3 0.3 0.3 0.3 0.2 0.2 <0.1 <0.1 <0.1 0.1 <0.1 <0.1 Germany France Spain Austria Finland Supra UK Sweden Other Europe 31/12/2016 31/0
Slide 45: Portfolio: Public Investment Finance (PIF) borrower classification
Portfolio Public Investment Finance (PIF) Borrower classification1 31/12/2016 / Total: EUR 8.5 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 8.7 bn 3.9 3.6 1.6 1.7 1.5 1.4 0.9 0.9 0.6 0.6 0.3 0.3 <0.1 <0.1 0.0 <0.1 Sovereign Sovereign (related) Regional Regional Public Sector Supra Corpor
Slide 46: Portfolio: Public Investment Finance (PIF) internal ratings
Portfolio Public Investment Finance (PIF) Internal ratings (EL classes) 31/12/2016 / Total: EUR 8.5 bn EUR billions (EaD, Basel III) 31/03/2017 / Total: EUR 8.7 bn Investment grade Non-investment grade 4.44.4 2.6 2.6 1.2 1.0 <0.1 0.10.1 <0.1 <0.1 0.3 0.3 <0.1 <0.1 <0.1 0.0 0.0 0.00.0 0.0 0.0 0.0 0.0
Slide 47: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Portfolio: Regions Portfolio: Borrower classification2 31/03/2017: EUR 18.9 bn (EaD, Basel III)1 31/03/2017 : EUR 18.9 bn (EaD, Basel III)1 Czech Republic <1% Finland <1% Poland 1% Other Europe 1% Hungary 1% Rest of World 2% Supranational France 4% Supra 4% 4% Austria
Slide 48: Portfolio: Value Portfolio (VP) regions
Portfolio Value Portfolio (VP) Regions 31/12/2016 / Total: EUR 19.5 bn EUR billions (EaD, Basel III)1 31/03/2017 / Total: EUR 18.9 bn 6.0 5.8 5.7 5.5 2.2 2.1 1.8 1.8 1.2 1.1 0.8 0.8 0.7 0.7 0.2 0.2 0.2 0.2 0.3 0.3 0.4 0.4 <0.1 0.0 <0.1 0.0 Germany Austria Italy Spain Portugal Supra France Poland Hun
Slide 49: Portfolio: Value Portfolio (VP) borrower classification
Portfolio Value Portfolio (VP) Borrower classification1 31/12/2016 / Total: EUR 19.5 bn EUR billions (EaD, Basel III)2 31/03/2017 / Total: EUR 18.9 bn 8.0 7.9 5.3 5.1 2.3 2.2 1.4 1.3 1.2 1.2 0.4 0.4 0.8 0.8 0.0 0.0 <0.1 0.0 0.0 0.0 Sovereign Sovereign Regional Regional Public Sector Public Sector Su
Slide 50: Portfolio: Value Portfolio (VP) internal ratings
Portfolio Value Portfolio (VP) Internal ratings (EL classes) 31/12/2016 / Total: EUR 19.5 bn EUR billions (EaD, Basel III)1 31/03/2017 / Total: EUR 18.9 bn Investment grade Non-investment grade 14.0 13.6 3.5 3.5 <0.1 0.30.3 0.8 0.8 0.6 0.5 0.2 0.2 <0.1 <0.1 0.0 0.0 0.0 0.0 0.0 0.00.0 0.0 0.0 0.0 0.0
Slide 51: Portfolio: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) Portfolio: Regions Portfolio: Borrower classification3 31/03/2017: EUR 4.7 bn (EaD, Basel III)1 31/03/2017 : EUR 4.7 bn (EaD, Basel III)1 Rest of World Corporation <1% Other Europe Financial Institution 5% 10% 20% UK Sovereign2 6% 35% France 6% Supra 7% 55
Slide 52: Portfolio: Consolidation & Adjustments (C&A) regions
Portfolio Consolidation & Adjustments (C&A) Regions 31/12/2016 / Total: EUR 5.5 bn EUR billions (EaD, Basel III)1 31/03/2017 / Total: EUR 4.7 bn 3.6 2.6 0.7 0.5 0.5 0.3 0.3 0.3 0.3 0.2 0.3 0.2 0.1 0.2 0.0 0.0 0.0 <0.1 0.0 0.0 Germany2 Spain Supra UK France Italy Sweden Austria Other Europe Rest of W
Slide 53: Portfolio: Consolidation & Adjustments (C&A) borrower classification
Portfolio Consolidation & Adjustments (C&A) Borrower classification1 31/12/2016 / Total: EUR 5.5 bn EUR billions (EaD, Basel III)2 31/03/2017 / Total: EUR 4.7 bn 2.1 1.6 1.3 1.2 1.2 0.9 0.4 0.4 0.3 0.3 0.2 0.2 <0.1 <0.1 Sovereign3 Sovereign (related) Regional Government Public Sector Supra Financial
Slide 54: Portfolio: Consolidation & Adjustments (C&A) internal ratings
Portfolio Consolidation & Adjustments (C&A) Internal ratings (EL classes) 31/12/2016 / Total: EUR 5.5 bn EUR billions (EaD, Basel III)1 31/03/2017 / Total: EUR 4.7 bn Investment grade Non-investment grade 3.9 3.3 1.0 0.7 <0.1 0.20.3 0.20.2 <0.1 0.1 <0.1 <0.1 <0.1 0.00.0 0.0 0.0 0.00.0 0.00.0 0.00.0
Slide 55: Funding: Public benchmark issuances since 2015
Funding Public benchmark issuances since 2015 Issue/Reoffer Type WKN Launch Date Maturity Date Size Spread1 Coupon Price Senior Unsecured A12UA6 13/01/2015 20/01/2017 EUR 500 mn +78 bp 0.875% 99.874% Senior Unsecured (1st Tap) A12UAR 19/01/2015 17/09/2019 EUR 200 mn +100 bp 1.50% 100.918% Mortgage P
Slide 56: Ratings: Mandated ratings as of 12 May 2017
Ratings Mandated ratings as of 12 May 2017 Bank ratings S&P DBRS Long-term A- BBB Outlook/Trend Negative Stable Short-term A-2 R-2 (high) 1 Stand-alone rating bbb BBB Long Term Debt Ratings “Preferred” senior unsecured Debt2 A- BBB “Non-preferred” senior unsecured Debt3 BBB- BBB BBB (low) / Review S
Slide 57: 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 58: 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
Deutsche Pfandbriefbank — Q1 2017 Earnings Presentation on 6ix