Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q2 2017 Earnings Presentation
58 slides from Deutsche Pfandbriefbank's earnings presentation, Aug 14, 2017
Slide 1: pbb shows continued good performance – PBT of EUR 56 mn in Q2/17
pbb shows continued good performance – PBT of EUR 56 mn in Q2/17 Results Q2/H1 2017 Analyst Conference Call Andreas Arndt, CEO/CFO Unterschleissheim, 14 August 2017 Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 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 Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 3
Slide 4: Highlights
Highlights pbb shows continued good performance – for the full-year, PBT now expected at upper end or slightly above guidance of EUR 150-170 mn Pre-tax profit of EUR 56 mn in Q2/17 up +19% q-o-q and +33% y-o-y (H1/17: EUR 103 mn; +18% y-o-y) − Solid NII (Q2/17: EUR 103 mn; H1/17: EUR 206 mn) based o
Slide 5: Markets and Strategy
Highlights Markets and Strategy CRE markets Diverse picture in Europe and US – while UK and US transaction volumes recede since 2016/2017, Continental Europe shows overall solid performance Continental Europe: Yields further down but fundamentals (office take-up, vacancy rates, rents, etc.) remain s
Slide 6: Operating and financial overview
Highlights Operating and financial overview 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 CIR Q2 Q1 Q1 Q1 12.0 422 440 52% 51%2 50% 412 10.2 10.5 3.1 1
Slide 7: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 7
Slide 8: Income statement: Underlying NII with positive development
Income statement Underlying NII with positive development over the last quarters, benefiting from relatively stable margin levels and reduced funding costs Income from lending business EUR millions Q2/16 Q2/17 H1/16 H1/17 Key drivers Q2/H1 2017: Net interest income 93 103 195 206 NII up y-o-y, less
Slide 9: Income statement: LLPs stay low
Income statement LLPs stay low, benefiting from portfolio quality and remaining supportive market environment Loan-loss provisions EUR millions Q2/16 Q2/17 H1/16 H1/17 Key drivers Q2/H1 2017: Specific allowances -2 - -1 -4 (Net) release of EUR 2 mn portfolio-based LLPs in Additions -3 -1 -3 -5 Q2/17
Slide 10: Income statement: Operating costs
Income statement Operating costs determined by regulatory requirements and project investments – further increase expected from H2/17 General and administrative expenses EUR millions Q2/16 Q2/17 H1/16 H1/17 Key drivers Q2/H1 2017: General admin. expenses -49 -52 -94 -102 GAE up but in line with expe
Slide 11: Income statement: Result from financial instruments
Income statement Result from financial instruments: No major one-off effects in Q2/17 Result from financial instruments EUR millions Q2/16 Q2/17 H1/16 H1/17 Key drivers Q2/H1 2017: Net trading income -2 2 -7 - NTI mainly driven by derivative valuation - - − EUR -2 mn pull-to-par effect from positive
Slide 12: Income statement: Result from other business activities
Income statement Result from other business activities: No major one-off effects in Q2/17 Result from other business activities EUR millions Q2/16 Q2/17 H1/16 H1/17 Key drivers Q2/H1 2017: Net other operating -1 -2 -15 -10 Other operating income/expenses include bank levy of income/expenses EUR -19
Slide 13: Capitalisation remains strong
Capitalisation Capitalisation remains strong, providing buffer for regulatory changes to come – own funds ratio up due to T2 issuances Basel III: RWA Basel III: Capital ratios (fully loaded) EUR billions (IFRS)1 % (IFRS) 13.1 13.0 12.9 Mid-term in % 12/163 03/174 06/174 targets CET 1 19.0 19.2 19.4
Slide 14: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 14
Slide 15: Segment reporting: Real Estate Finance (REF)
Segment reporting: Real Estate Finance (REF) New business on solid level – US with 11% share in new business New business Extensions >1 year Income statement (IFRS, EUR mn) Q2/16 Q2/17 H1/16 H1/17 EUR billions (commitments, incl. extensions >1 yr) New commitments Operating income 74 86 142 159 4.5 4
Slide 16: Segment reporting: Public Investment Finance (PIF)
Segment reporting: Public Investment Finance (PIF) New business and financing volumes up y-o-y, mainly driven by good demand in Q1/17 New business Income statement (IFRS, EUR mn) Q2/16 Q2/17 H1/16 H1/17 EUR billions (commitments) Operating income 9 9 18 14 thereof: Net interest income 9 9 18 18 0.5
Slide 17: 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 Financing volume Income statement (IFRS, EUR mn) Q2/16 Q2/17 H1/16 H1/17 EUR billions (financing volumes) RWA Operating incom
Slide 18: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 18
Slide 19: Strategic portfolio up in Q2/17
Portfolio Strategic portfolio up in Q2/17 Total portfolio 12/16 03/17 06/17 EUR billions (financing volumes) Strategic Non-strategic portfolios portfolios (run-down) 47.3 47.3 46.6 24.1 24.1 24.4 15.8 15.5 14.6 7.4 7.7 7.6 REF PIF VP Total PIF REF Key drivers Q2/H1 2017: Strategic portfolio up in Q2
Slide 20: Stable and well diversified portfolio
Portfolio Stable and well diversified portfolio with continued focus on European markets, particularly on Germany – continued cautious growth of US business 30/06/2017 (EaD, Basel III) Real Estate Finance1 Public Investment Finance Value Portfolio USA 3% Other 7% Other 9% Other 14% Nordics 2% Nordic
Slide 21: 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 27.3 8.5 8.4 19.5 17.8 5.5 5.8
Slide 22: Further reduction of problem loans
Portfolio Further reduction of problem loans – problem loan ratio of the total portfolio down to 0.5% Total problem loans Workout1 Problem loan ratio Total portfolio EUR millions (EaD, Basel III) Restructuring2 % (EaD, Basel III) Real Estate Finance 388 1.4% 360 1.3% 3 322 2 1.2% 2 385 358 0.6% 0.6%
Slide 23: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 23
Slide 24: Focus on currency matched Pfandbrief funding
Funding Focus on currency matched Pfandbrief funding – inaugural Tier 2 benchmark issued in June New long-term funding Pfandbriefe EUR billions1 Focus on currency matched funding: H1/16: EUR 3.5 bn H1/17: EUR 4.0 bn2 − Mortgage Pfandbriefe: GBP 300 mn, SEK 2.6bn; first USD Mortgage Pfandbrief benchm
Slide 25: Senior unsecured spreads have significantly converged
Funding Senior unsecured spreads have significantly converged Spread development of pbb Senior Unsecured Benchmarks vs peers and iTraxx Bank Senior (Spread vs. 6m Euribor) New long-term funding HyPfe Öpfe Sen. Unsec. EUR billions1 pbb Senior Unsecured Benchmark issuances/taps 2.7 1.2 1.2 1.1 1.3 140
Slide 26: Agenda
Agenda 1 Highlights 2 Financials 3 Segment reporting & New business 4 Portfolio 5 Funding 6 Summary & Outlook Appendix Contact details Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 26
Slide 27: Summary & Outlook
Summary & Outlook pbb remains well on track – PBT for the full-year now expected at upper end or slightly above guidance of EUR 150-170 mn pbb remains well on track despite remaining headwinds – Q2/17 with good operating and financial performance − New business up q-o-q while overall approach remain
Slide 28: Appendix
Appendix Results Q2/H1 2017 (IFRS, pbb Group, unaudited, but reviewed), 14 August 2017 28
Slide 29: Key figures pbb Group
Key figures pbb Group Income statement (EUR millions) 2014 2015 2016 H1/17 Net interest income 421 426 404 206 Net fee and commission income 1 14 8 5 Net trading income -30 15 -6 - Net income from financial investments -77 -32 125 1 Net income from hedging relationships -3 11 6 1 Net other operating
Slide 30: Key figures pbb Group Q2/16 vs. Q2/17
Key figures pbb Group Q2/16 vs. Q2/17 Income statement (EUR millions) REF PIF VP C&A pbb Group Q2/16 Q2/17 Q2/16 Q2/17 Q2/16 Q2/17 Q2/16 Q2/17 Q2/16 Q2/17 Net interest income 75 84 9 9 8 9 1 1 93 103 Net fee and commission income 1 2 - - - - - - 1 2 Net trading income -2 2 - - - - - - -2 2 Net incom
Slide 31: Key figures pbb Group H1/16 vs. H1/17
Key figures pbb Group H1/16 vs. H1/17 Income statement (EUR millions) REF PIF VP C&A pbb Group H1/16 H1/17 H1/16 H1/17 H1/16 H1/17 H1/16 H1/17 H1/16 H1/17 Net interest income 152 167 18 18 22 19 3 2 195 206 Net fee and commission income 3 5 - - - - - - 3 5 Net trading income -7 2 - -1 - -1 - - -7 -
Slide 32: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (EUR millions) 2014 2015 Q1/16 Q2/16 H1/16 Q3/16 Q4/16 2016 Q1/17 Q2/17 H1/17 Net interest income 294 308 77 75 152 82 87 321 83 84 167 Net fee and commission income 2 14 2 1 3 2 4 9 3 2 5 Net trading income -13 14 -5 -2 -7 1 4 -2 - 2 2 Net inco
Slide 33: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (EUR millions) 2014 2015 Q1/16 Q2/16 H1/16 Q3/16 Q4/16 2016 Q1/17 Q2/17 H1/17 Net interest income 40 44 9 9 18 7 10 35 9 9 18 Net fee and commission income - - - - - - - - - - - Net trading income -4 - - - - -1 - -1 -1 - -1 Net income from
Slide 34: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (EUR millions) 20141 20151 Q1/16 Q2/16 H1/16 Q3/161 Q4/16 20161 Q1/17 Q2/17 H1/17 Net interest income 79 68 14 8 22 7 12 41 10 9 19 Net fee and commission income -1 - - - - - -1 -1 - - - Net trading income -13 1 - - - -3 - -3 -1 - -1 Net income from
Slide 35: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet: 30/06/2017 (31/03/2017) IFRS, EUR billions 60.7 (61.2) 60.7 (61.2) Pos. FV of derivatives 4.0 (4.2) 4.2 (4.7) Neg. FV of derivatives 12.6 (12.9) Liabilities to other banks and customers 0.0 (
Slide 36: Portfolio: Total portfolio
Portfolio Total portfolio Regions 31/12/2016 / Total: EUR 60.7 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 59.4 bn 25.2 24.2 7.6 7.9 6.8 6.4 4.3 3.6 5.0 5.3 2.3 2.2 1.6 1.6 1.4 1.4 2.1 2.0 1.2 1.2 1.2 1.0 0.6 0.4 0.4 0.4 0.4 0.5 0.9 1.3 Germany1 France Austria Spain UK Italy Poland Supr
Slide 37: Portfolio: Problem loans
Portfolio Problem loans Total problem loans (only REF) Regions EUR millions (EaD, Basel III) EUR million (EaD, Basel III) No. of individual cases 40 38 36 388 388 360 360 322 117 322 France 83 46 Finland 115 114 91 Italy CEE Spain 190 190 185 Germany UK4 12/16 03/17 06/17 12/16 03/17 06/17 Total pro
Slide 38: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Portfolio: Regions Portfolio: Property types 30/06/2017: EUR 27.3 bn (EaD, Basel III) 30/06/2017: EUR 27.3 bn (EaD, Basel III) Austria 2% Hungary 1% Spain <1% Finland <1% Czech Republic 2% Italy <1% Mixed Use 3% Other Other Europe Hotel/Leisure 4% USA 4% 5% Sweden
Slide 39: Real Estate Finance (REF): Regions
Portfolio Real Estate Finance (REF) Regions 31/12/2016 / Total: EUR 27.1 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 27.3 bn 13.1 12.9 4.7 4.8 3.3 3.5 1.4 1.3 1.3 1.4 1.2 1.1 0.3 0.7 0.3 0.2 0.3 0.3 0.4 0.4 0.2 0.2 0.5 0.5 0.0 0.0 0.1 0.1 Germany UK France Poland Sweden USA Spain Hungar
Slide 40: 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) 30/06/2017 / Total: EUR 27.3 bn 9.5 8.9 7.1 7.1 4.4 4.3 3.0 3.0 1.2 1.3 1.4 1.4 1.2 0.8 Office Retail/ Residential Warehouse/ Mixed use Hotel/ Other Shopping Logistics Leisure 31/12/2016
Slide 41: 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) 30/06/2017 / Total: EUR 27.3 bn 23.0 22.8 3.6 4.1 0.4 0.3 0.1 0.1 Investment loans Development loans Customer derivatives Other 31/12/2016 30/06/2017 Customer derivatives 1% Other <1% Custome
Slide 42: 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) 30/06/2017 / Total: EUR 27.3 bn Investment grade Non-investment grade 6.7 6.2 5.5 5.0 3.74.0 2.8 2.9 2.82.9 1.6 1.8 2.1 1.2 1.0 0.8 0.80.9 0.30.3 0.10.1 <0.1 <0.1 0.00.0 0.
Slide 43: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Portfolio: Regions Portfolio: Borrower classification1 30/06/2017: EUR 8.4 bn (EaD, Basel III) 30/06/2017 : EUR 8.4 bn (EaD, Basel III) Supra <1% UK 2% Sweden <1% Corporation 3% Infrastructure Finance <1% Finland 2% Other Europe 4% Supra <1% Sovereign Austri
Slide 44: Public Investment Finance (PIF): Regions
Portfolio Public Investment Finance (PIF) Regions 31/12/2016 / Total: EUR 8.5 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 8.4 bn 3.4 3.5 2.6 2.3 1.7 1.5 0.3 0.3 0.3 0.3 0.2 0.1 <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 30/06
Slide 45: 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) 30/06/2017 / Total: EUR 8.4 bn 3.8 3.6 1.5 1.6 1.6 1.3 0.9 0.8 0.6 0.5 0.3 0.2 <0.1 <0.1 0.0 <0.1 Sovereign Sovereign (related) Regional Regional Public Sector Supra Corpor
Slide 46: 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) 30/06/2017 / Total: EUR 8.5 bn Investment grade Non-investment grade 4.4 4.1 2.6 2.5 1.2 1.0 0.1 0.2 <0.1 <0.1 0.3 0.3 <0.1 <0.1 0.1 <0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.00.
Slide 47: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Portfolio: Regions Portfolio: Borrower classification1 30/06/2017: EUR 17.8 bn (EaD, Basel III) 30/06/2017 : EUR 17.8 bn (EaD, Basel III) <1% Finland <1% Hungary <1% Other Europe 1% Poland 1% Rest of World 2% Supranational Corporation <1% France 4% Supranational PSE Po
Slide 48: Value Portfolio (VP): Regions
Portfolio Value Portfolio (VP) Regions 31/12/2016 / Total: EUR 19.6 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 17.8 bn 5.9 6.0 5.4 5.6 2.2 2.1 1.8 1.2 1.2 1.0 0.8 0.8 0.7 0.7 0.2 0.2 0.2 <0.1 0.3 0.2 0.4 0.3 <0.1<0.1 <0.1 <0.1 Germany Austria Italy Spain Portugal Supra France Poland Hu
Slide 49: Value Portfolio (VP): Borrower classification
Portfolio Value Portfolio (VP) Borrower classification1 31/12/2016 / Total: EUR 19.6 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 17.8 bn 8.0 7.6 5.3 4.9 2.3 1.5 1.4 1.6 1.2 1.1 0.4 0.4 0.8 0.8 0.0 0.0 <0.1 <0.1 0.0 0.0 Sovereign Sovereign Regional Regional Public Sector Public Sector Su
Slide 50: Value Portfolio (VP): Internal ratings
Portfolio Value Portfolio (VP) Internal ratings (EL classes) 31/12/2016 / Total: EUR 19.6 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 17.8 bn Investment grade Non-investment grade 14.1 13.3 3.5 2.8 0.3 0.3 0.8 0.6 0.60.5 <0.1 <0.1 0.00.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00.0 0.0 0.0 0.
Slide 51: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) Portfolio: Regions Portfolio: Borrower classification3 30/06/2017: EUR 5.8 bn (EaD, Basel III)1 30/06/2017 : EUR 5.8 bn (EaD, Basel III)1 Rest of World Corporation <1% Other Europe 4% Financial Institution 8% UK 20% 7% France 3% Supra 6% Supra 6% 50% Sover
Slide 52: Consolidation & Adjustments (C&A): Regions
Portfolio Consolidation & Adjustments (C&A) Regions 31/12/2016 / Total: EUR 5.5 bn EUR billions (EaD, Basel III) 30/06/2017 / Total: EUR 5.8 bn 3.6 3.6 0.7 0.6 0.4 0.5 0.3 0.4 0.3 0.1 0.2 0.2 0.2 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 Wo
Slide 53: 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) 30/06/2017 / Total: EUR 5.8 bn 2.9 2.1 1.3 1.2 1.2 0.8 0.4 0.4 0.3 0.4 0.2 0.2 <0.1 <0.1 Sovereign3 Sovereign (related) Regional Government Public Sector Supra Financial
Slide 54: 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) 30/06/2017 / Total: EUR 5.8 bn Investment grade Non-investment grade 4.2 3.9 1.0 0.9 0.0 0.1 0.2 0.3 0.2 0.4 0.0 <0.1 0.0 <0.1 0.0 0.0 0.0 0.0 0.00.0 0.0 0.0 0.0 0.0
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
Ratings Mandated ratings as of 14 August 2017 Bank ratings S&P DBRS Long-term A- BBB Outlook/Trend Negative Stable Short-term A-2 R-2 (high) Stand-alone rating1 bbb BBB Long Term Debt Ratings “Preferred” senior unsecured Debt2 A- BBB “Non-preferred” senior unsecured Debt3 BBB- BBB Subordinated Debt
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
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