Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q3 2016 Earnings Presentation
57 slides from Deutsche Pfandbriefbank's earnings presentation, Nov 14, 2016
Slide 1: Analyst Conference Call Results Q3/9M 2016
Analyst Conference Call Results Q3/9M 2016 Q3/16: PBT of EUR 159 mn supported by HETA gain – operating result stable q-o-q at PBT of EUR 42 mn Andreas Arndt, CEO/CFO Unterschleissheim, 14 November 2016 Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016
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 Outlook Appendix Contact details Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 3
Slide 4: Highlights Q3/16
Highlights Q3/16 Operative outlook 2016 confirmed; full-year PBT target raised to EUR 280-290 mn – pbb considers special dividend for 2016 on HETA gain Pre-tax profit of EUR 159 mn in Q3/16: − HETA gain (EUR +132 mn) booked and partially used for precautionary provisions and expenses (EUR -15 mn) −
Slide 5: Operating and financial overview
Highlights Operating and financial overview – underlying financial performance steady 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) EUR millions (IFRS) Q3 Q3 Q3 77.0% Q2 Q2
Slide 6: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting / New business 4 Portfolio 5 Funding 6 Outlook Appendix Contact details Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 6
Slide 7: Income statement: Underlying NII relatively stable
Income statement Underlying NII relatively stable since Q3/15 Income from lending business EUR millions Key drivers Q3/9M 2016: Q3/15 9M/15 Q3/16 9M/16 Underlying NII relatively stable since Q3/15, reflecting Net interest income 95 324 97 292 thereof: Prepayment fees 6 12 8 22 − resistant gross new
Slide 8: Income statement: Loan-loss provisions
Income statement Loan-loss provisions remain well below plan – in Q3/16, release related to HETA compensates for additions on a few single cases Loan-loss provisions EUR millions Key drivers Q3/9M 2016: Q3/15 9M/15 Q3/16 9M/16 LLPs well below plan – in Q3/16, release related to HETA (EUR 9 mn) compe
Slide 9: Income statement: Operating costs kept under control
Income statement Operating costs kept under control – some one-offs in Q3/16 General and administrative expenses EUR millions Key drivers Q3/9M 2016: Q3/15 9M/15 Q3/16 9M/16 GAE EUR 4 mn higher q-o-q because of EUR 4 mn one-offs related to a Bank-wide General admin. expenses -52 -150 -53 -147 projec
Slide 10: Income statement: Result from financial instruments
Income statement Result from financial instruments benefiting from HETA gain Result from financial instruments EUR millions Key drivers Q3/9M 2016: Q3/15 9M/15 Q3/16 9M/16 NTI down y-o-y, mainly driven by derivative Net trading income - 7 -3 -10 valuation thereof: HETA - -3 - - − EUR -9 mn pull-to-p
Slide 11: Income statement: Result from other business activities
Income statement Result from other business activities mainly driven by bank levy and provisioning Result from other business activities EUR millions Key drivers Q3/9M 2016: Q3/15 9M/15 Q3/16 9M/16 Bank levy of EUR -21 mn (after EUR 4 mn cash collateral) recognised upfront in Q1/16 Net other operati
Slide 12: Capitalisation
Capitalisation Capitalisation remains strong, providing buffer for regulatory uncertainties – significant structural changes in risk-weights expected from 2017 onwards Basel III: RWA Basel III: Capital ratios (fully loaded)2,3,4 EUR billions (IFRS)1 % (IFRS) Mid-term in % 12/15 06/165 09/165 targets
Slide 13: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting / New business 4 Portfolio 5 Funding 6 Outlook Appendix Contact details Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 13
Slide 14: Segment reporting: Real Estate Finance (REF)
Segment reporting: Real Estate Finance (REF) Unchanged conservative business approach – first US transaction successfully closed New business Extensions >1 year Income statement (IFRS, EUR mn) Q3/15 Q3/16 9M/15 9M/16 EUR billions (commitments, incl. extensions >1 yr) New commitments Operating income
Slide 15: Segment reporting: Public Investment Finance (PIF)
Segment reporting: Public Investment Finance (PIF) New business volume up q-o-q, but remains at low level – financing volume relatively stable New business Income statement (IFRS, EUR mn) Q3/15 Q3/16 9M/15 9M/16 EUR billions (commitments) Operating income 5 5 27 23 thereof: Net interest income 6 7 2
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 HETA Value Portfolio RWA Income statement (IFRS, EUR mn) Q3/15 Q3/16 9M/15 9M/16 EUR billions (financing volumes) Operating income 22 125 -6 144 -16%
Slide 17: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting / New business 4 Portfolio 5 Funding 6 Outlook Appendix Contact details Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 17
Slide 18: Portfolio: Strategic portfolio slightly up y-o-y
Portfolio Strategic portfolio slightly up y-o-y and stable in 2016 Total portfolio 09/15 12/15 06/16 09/16 EUR billions (Financing volumes) Strategic Non-strategic portfolios portfolios (run-down) 50.2 50.0 48.7 47.8 23.4 24.0 24.0 24.0 19.7 18.7 17.4 16.6 7.1 7.3 7.3 7.2 REF PIF VP Total PIF Key dr
Slide 19: Portfolio: Stable high portfolio quality
Portfolio Stable high portfolio quality Total portfolio: Internal ratings (EL classes) REF Portfolio: Avg. weighted LTVs EUR billions (EaD, Basel III)1 (Commitments)3 25.8 25.9 8.3 8.3 21.7 20.9 5.6 5.0 61.4 60.2 58% 57% 56% 8% 7% 0% 4% 1% 1% 0% 0% 4% 4% 92% 93% 100%96% 99% 99% 100%100% 96% 96% REF
Slide 20: Portfolio: 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 44% 43% 2.1% 24% Coverage ratio 1.6% 1.6% 777 778 1.3% 1.3% 3 653 2 1.1%
Slide 21: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting / New business 4 Portfolio 5 Funding 6 Outlook Appendix Contact details Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 21
Slide 22: Funding: Strong funding activities
Funding Strong funding activities New long-term funding Retail deposits: Total volume Overnight deposits EUR billions1 EUR billions Term deposits 9M/15 (EUR 2.9 bn) 9M/16 (EUR 4.8 bn)3 3.5 3.4 2.6 0.8 0.9 10Y-term Spread 5 12 82 23 28 122 2.3 5Y-term 6% Call money (Ø, bp)2 0.8 16% 26% 0.7 Tenor 5% 6
Slide 23: Funding: Wholesale funding spreads have converged
Funding Wholesale funding spreads have converged – pbb’ s senior unsecured spreads in secondary markets tightened relative to peers Spread development of pbb Senior Unsecured Bonds and iTraxx Bank Senior bp vs. 6M Euribor pbb Senior Unsecured Benchmark issuances/taps 150 125 100 75 50 25 0 01.01.16
Slide 24: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting / New business 4 Portfolio 5 Funding 6 Outlook Appendix Contact details Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 24
Slide 25: Outlook 2016
Outlook 2016 Operative outlook 2016 confirmed; PBT full-year target raised to EUR 280-290 mn – pbb considers special dividend for 2016 on HETA gain Unchanged conservative approach to new business while transaction volumes have come down and Operating competitive headwinds remain business Strategic p
Slide 26: Outlook 2017
Outlook 2017 Continued low interest rate levels and available excess liquidity expected to support robust and equity-rich demand for CRE – pre-tax profit target for 2017of EUR 150-170 mn Macro-economics to stay reasonably intact, some political risks may dampen outlook (e.g. Brexit, elections France
Slide 27: Appendix
Appendix Results Q3/9M 2016 (IFRS, pbb Group, unaudited), 14 November 2016 27
Slide 28: Key figures pbb Group
Key figures pbb Group Income statement (EUR millions) 2013 2014 2014 2015 9M/16 (reported) (adjusted)1 Net interest income 319 421 421 426 292 Net fee and commission income 9 1 1 14 5 Net trading income -51 -30 -27 15 -10 Net income from financial investments 96 -77 32 -32 128 Net income from hedgin
Slide 29: Key figures pbb Group Q3/15 vs. Q3/16
Key figures pbb Group Q3/15 vs. Q3/16 Income statement (EUR millions) REF PIF VP C&A pbb Group Q3/15 Q3/16 Q3/15 Q3/16 Q3/15 Q3/161 Q3/15 Q3/16 Q3/15 Q3/161 Net interest income 68 82 6 7 19 7 2 1 95 97 Net fee and commission income 3 2 - - - - - - 3 2 Net trading income 4 1 -1 -1 -3 -3 - - - -3 Net
Slide 30: Key figures pbb Group 9M/15 vs. 9M/16
Key figures pbb Group 9M/15 vs. 9M/16 Income statement (EUR millions) REF PIF VP C&A pbb Group 9M/15 9M/16 9M/15 9M/16 9M/151 9M/162 9M/15 9M/16 9M/151 9M/162 Net interest income 226 234 28 25 66 29 4 4 324 292 Net fee and commission income 12 5 - - - - - - 12 5 Net trading income 7 -6 - -1 - -3 - -
Slide 31: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (EUR millions) 2013 2014 Q1/15 Q2/15 Q3/15 9M/15 Q4/15 2015 Q1/16 Q2/16 Q3/16 9M/16 Net interest income 258 294 75 83 68 226 82 308 77 75 82 234 Net fee and commission income 10 2 7 2 3 12 2 14 2 1 2 5 Net trading income -21 -13 2 1 4 7 7 14 -5
Slide 32: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (EUR millions) 2013 2014 Q1/15 Q2/15 Q3/15 9M/15 Q4/15 2015 Q1/16 Q2/16 Q3/16 9M/16 Net interest income 24 40 8 14 6 28 16 44 9 9 7 25 Net fee and commission income 1 - - - - - - - - - - - Net trading income -6 -4 1 - -1 - - - - - -1 -1 Ne
Slide 33: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (EUR millions) 2013 20141 Q1/151 Q2/15 Q3/15 9M/151 Q4/15 20151 Q1/16 Q2/16 Q3/161 9M/161 Net interest income 30 79 28 19 19 66 2 68 14 8 7 29 Net fee and commission income -1 -1 - - - - - - - - - - Net trading income -24 -13 2 1 -3 - 1 1 - - -3 -3 N
Slide 34: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet: 30/09/2016 (31/12/2015) IFRS, EUR billions 65.0 (66.8) 65.0 (66.8) Pos. FV of derivatives 5.6 (6.6) 5.8 (6.5) Neg. FV of derivatives 12.6 (13.3) Liabilities to other banks and customers 0.0 (
Slide 35: Portfolio: Total portfolio
Portfolio Total portfolio Regions 31/12/2015 / Total: EUR 61.4 bn EUR billions (EaD, Basel III)1 30/09/2016 / Total: EUR 60.2 bn 25.4 24.5 7.1 7.2 6.9 7.5 5.1 4.8 4.2 4.1 2.3 2.4 1.5 1.3 1.7 1.2 1.6 1.7 1.4 1.2 1.8 2.2 0.7 0.5 0.6 0.6 0.5 0.4 0.6 0.7 Germany2 France Austria UK Spain Italy Sweden Sup
Slide 36: 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 43 43 cases 777 778 777 778 653 117 653 106 241 France 84 115 3684 124 Italy 244 241 88 CEE Spain 3684 244 Nordics 536 409 410 335 Germany HETA (
Slide 37: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Portfolio: Regions Portfolio: Property types 30/09/2016: EUR 25.9 bn (EaD, Basel III) 30/09/2016: EUR 25.9 bn (EaD, Basel III) Finland <1% Italy <1% Spain <1% Other Europe 5% Hungary 1% Other 5% USA <1% Mixed Use 4% Austria 2% Czech Republic 2% Hotel/Leisure Swede
Slide 38: Real Estate Finance (REF): Regions
Portfolio Real Estate Finance (REF) Regions 31/12/2015 / Total: EUR 25.8 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 25.9 bn 12.2 12.6 5.0 4.5 3.2 3.2 1.4 1.2 1.3 1.4 0.6 0.5 0.3 0.5 0.4 0.3 0.3 0.2 0.3 0.2 0.8 1.2 <0.1 0.0 <0.1 <0.1 0.0 <0.1 Germany UK France Sweden Poland Czech Austri
Slide 39: Real Estate Finance (REF): Property types
Portfolio Real Estate Finance (REF) Property types 31/12/2015 / Total: EUR 25.8 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 25.9 bn 8.5 8.8 7.5 6.9 4.1 4.0 2.7 2.9 1.1 1.1 1.0 1.1 1.3 0.9 Office Retail/ Residential Warehouse/ Mixed use Hotel/ Other Shopping Logistics Leisure 31/12/2015
Slide 40: Real Estate Finance (REF): Loan types
Portfolio Real Estate Finance (REF) Loan types 31/12/2015 / Total: EUR 25.8 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 25.9 bn 23.3 22.9 1.9 2.6 0.4 0.5 0.2 <0.1 Investment loans Development loans Customer derivatives Other 31/12/2015 30/09/2016 Customer derivatives 1% Other <1% Custom
Slide 41: Real Estate Finance (REF): Internal ratings
Portfolio Real Estate Finance (REF) Internal ratings (EL classes) 31/12/2015 / Total: EUR 25.8 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 25.9 bn Investment grade1 Non-investment grade1 6.3 5.9 5.1 4.6 4.1 3.2 2.9 2.62.8 2.2 1.7 1.8 1.7 1.4 0.90.7 0.9 <0.1 <0.1 <0.1 <0.1 <0.1 0.6 0.50.
Slide 42: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Portfolio: Regions Portfolio: Borrower classification1 30/09/2016: EUR 8.3 bn (EaD, Basel III) 30/09/2016: EUR 8.3 bn (EaD, Basel III) Supra <1% Sweden <1% UK 1% Corporation Other Europe 4% Sovereign Finland 2% Supra Austria 4% <1% 7% Public Sector Enterpris
Slide 43: Public Investment Finance (PIF): Regions
Portfolio Public Investment Finance (PIF) Regions 31/12/2015 / Total: EUR 8.3 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 8.3 bn 3.0 2.9 2.8 2.7 1.7 1.6 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 UK Supra Sweden Other Europe 31/12/2015 30/
Slide 44: Public Investment Finance (PIF): Borrower classification
Portfolio Public Investment Finance (PIF) Borrower classification1 31/12/2015 / Total: EUR 8.3 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 8.3 bn 3.5 3.5 1.5 1.6 1.5 1.5 0.8 0.8 0.6 0.6 0.4 0.3 <0.1 <0.1 Sovereign Sovereign (related) Regional Government Regional Public Sector Supra Corp
Slide 45: Public Investment Finance (PIF): Internal ratings
Portfolio Public Investment Finance (PIF) Internal ratings (EL classes) 31/12/2015 / Total: EUR 8.3 bn EUR billions (EaD, Basel III) 30/09/2016 / Total: EUR 8.3 bn Investment grade1 Non-investment grade1 4.64.6 2.02.1 0.80.6 0.40.2 0.3 <0.1 0.3 0.20.1 0.0 <0.1 0.20.0 0.0 0.00.0 0.00.0 0.00.0 0.00.0
Slide 46: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Portfolio: Regions Portfolio: Borrower classification2 30/09/2016: EUR 20.9 bn (EaD, Basel III)1 30/09/2016: EUR 20.9 bn (EaD, Basel III)1 Czech Republic <1% Finland <1% Poland 1% Other Europe 2% Hungary 1% Rest of World 2% Supra Corporation <1% France 3% Financial Ins
Slide 47: Value Portfolio (VP): Regions
Portfolio Value Portfolio (VP) Regions 31/12/2015 / Total: EUR 21.7 bn EUR billions (EaD, Basel III)1 30/09/2016 / Total: EUR 20.9 bn 6.6 6.7 6.1 6.3 2.3 2.4 1.8 1.8 1.4 1.2 1.1 0.8 0.7 0.7 0.3 0.2 0.3 0.2 0.5 0.3 0.3 0.4 <0.1<0.1 <0.1 <0.1 Germany Austria Italy Spain Portugal Supra France Hungary P
Slide 48: Value Portfolio (VP): Borrower classification
Portfolio Value Portfolio (VP) Borrower classification1 31/12/2015 / Total: EUR 21.7 bn EUR billions (EaD, Basel III)2 30/09/2016 / Total: EUR 20.9 bn 8.5 8.1 6.0 5.6 2.4 2.4 1.6 1.4 1.6 1.6 0.8 1.1 0.8 0.6 <0.1 0.0 <0.1 <0.1 Sovereign Sovereign Regional Regional Public Sector Public Sector Supra Fi
Slide 49: Value Portfolio (VP): Internal ratings
Portfolio Value Portfolio (VP) Internal ratings (EL classes) 31/12/2015 / Total: EUR 21.7 bn EUR billions (EaD, Basel III)1 30/09/2016 / Total: EUR 20.9 bn Investment grade2 Non-investment grade2 15.1 15.1 3.4 3.5 <0.1 1.1 1.1 0.7 0.8 0.6 <0.1 <0.1 0.4 0.3 0.0 0.0 0.0 0.0 0.00.0 0.0 0.0 0.0 0.0 0.2
Slide 50: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) Portfolio: Regions Portfolio: Borrower classification3 30/09/2016: EUR 5.0 bn (EaD, Basel III)1 30/09/2016: EUR 5.0 bn (EaD, Basel III)1 Rest of World 6% Corporation <1% Other Europe 8% Financial Institution UK 23% Sovereign2 3% 32% France 5% Supra 7% Supr
Slide 51: Consolidation & Adjustments (C&A): Regions
Portfolio Consolidation & Adjustments (C&A) Regions 31/12/2015 / Total: EUR 5.6 bn EUR billions (EaD, Basel III)1 30/09/2016 / Total: EUR 5.0 bn 3.8 3.2 0.4 0.6 0.3 0.3 0.3 0.4 0.3 0.3 0.3 0.1 0.2 <0.1 Germany2 Spain Supra France UK Other Europe Rest of World 31/12/2015 30/09/2016 Rest of World 5% R
Slide 52: Consolidation & Adjustments (C&A): Borrower classification
Portfolio Consolidation & Adjustments (C&A) Borrower classification1 31/12/2015 / Total: EUR 5.6 bn EUR billions (EaD, Basel III)2 30/09/2016 / Total: EUR 5.0 bn 1.9 1.6 1.6 1.3 1.2 0.9 0.6 0.4 0.4 0.3 0.2 0.2 0.0 <0.1 Sovereign3 Sovereign (related) Regional Government Public Sector Supra Financial
Slide 53: Consolidation & Adjustments (C&A): Internal ratings
Portfolio Consolidation & Adjustments (C&A) Internal ratings (EL classes) 31/12/2015 / Total: EUR 5.6 bn EUR billions (EaD, Basel III)1 30/09/2016 / Total: EUR 5.0 bn Investment grade3 Non-investment grade3 4.4 3.5 0.50.6 0.60.4 0.3 <0.1 0.2 <0.1 0.00.0 0.00.0 0.00.0 0.00.0 0.00.0 0.00.0 0.00.0 0.00
Slide 54: Funding: Public benchmark issuances since 2014
Funding Public benchmark issuances since 2014 Type WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Mortgage Pfandbrief A1X3LT 14/01/2014 21/01/2022 EUR 500 mn +17bp 1.875% 99.362% Mortgage Pfandbrief (2nd Tap) A1MLUW 13/02/2014 03/06/2019 EUR 50 mn +10bp 2.125% 104.988% Mortgag
Slide 55: Ratings: Mandated ratings
Ratings Mandated ratings as of 13 November 2016 S&P DBRS Moody’s Pfandbrief ratings Public Sector Pfandbrief Aa1 Mortgage Pfandbrief Aa1 Bank ratings Long-term BBB BBB Outlook/Trend Stable Stable Short-term A-2 R-2 (high) Stand-alone rating1 bbb- BBB Other Ratings Subordinated Debt BB BBB (low)2 Dis
Slide 56: 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 57: 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 Website www.pfandbriefbank.com/investor-relations.html © Deutsch
Deutsche Pfandbriefbank — Q3 2016 Earnings Presentation on 6ix