Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Investor Day (October 2024)
37 slides from Deutsche Pfandbriefbank's investor day presentation, Oct 10, 2024
Slide 1: Capital Markets Day Strategy Update
Capital Markets Day Strategy Update 10th of October 2024 1
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 ca. 1:00 pm Kay Wolf Strategy Update CEO Leveraging pbb’s strengths and diversify business model ca. 1:30 pm Thomas Koentgen Real Estate Finance Solutions Deputy CEO Diversify asset allocation and increase profitability Dr. Walter Hampel Head of Real Estate Finance Continental Europe ca. 2:00
Slide 4: Building on existing strengths
Building on existing strengths INTRO LEARNINGS FROM THE PAST LEVERAGING STRENGTHS Trends and developments Origination capacity Spot trends and developments early and Deep sourcing and structuring act on them expertise on quality financing deals Portfolio concentration Real estate track record Reduce
Slide 5: Unique access to real estate financing deals
Unique access to real estate financing deals INTRO pbb market access funnel € ~560 bn total financing volume Driven by declining interest rates the real estate market in Europe is expected to recover by 2026/ 2027after a Large market potential for period of downturn pbb to grow € ~90 bn deal volume
Slide 6: Leveraging current trends for strategic evolution
Leveraging current trends for strategic evolution INTRO Emergence of new asset classes Transformation of capital markets Accelerating eco transformation RE financing markets are in transition – Rise in alternative investing in real estate As sustainability increasingly influences trends such as demo
Slide 7: Strategy 2027 builds on three key pillars
Strategy 2027 builds on three key pillars INTRO RE FINANCE RE INVESTMENT NON- W H AT ? SOLUTIONS SOLUTIONS CORE Diversification and increase in pbb invest and Originate & Value preserving run-down of profitability Cooperate Non-Core portfolio Flexible, international and efficient platform Flexible,
Slide 8: RE Finance Solutions
RE FINANCE SOLUTIONS Diversify asset allocation and increase profitability 8
Slide 9: Structural shift in recovering markets
Structural shift in recovering markets RE FINANCE SOLUTIONS Market recovery until 2026... ...with structural changes in asset attractiveness New RE financing volumes Europe (in € bn) ~770 ~740 Office Retail Ø pre-Covid ~660 Decline in attractiveness due E-Com as threat, but risk ~600 to new ways of
Slide 10: Focus on sustainable finance
Focus on sustainable finance RE FINANCE SOLUTIONS Increase share of green loans ... ... to continued commitment Green share of RE Finance Solutions portfolio1 (in %) +5 ppt. GREEN EMBEDDED IN ORGANIZATION >30% Dedicated green finance divisional heads to drive additional commitment towards green loan
Slide 11: Diversifying asset allocation
Diversifying asset allocation RE FINANCE SOLUTIONS pbb performing portfolio June 2024 (EAD) Optimization levers Strategy 2027 REGIONAL VIEW 8% Germany UK Profitability ENHANCEMENT OF below market average PROFITABILITY 6% 6% 45% France Scandi 4% 10% USA Benelux 12% 13% CEE Other Low (<5%) exposure DO
Slide 12: Benefitting from strong macro trends
Benefitting from strong macro trends RE FINANCE SOLUTIONS MACROTRENDS PBB ASSET ALLOCATION AI and data consumption Cloud-Migration Edge-Computing DATA CENTERS Growth in college Growing need for Double down on Undersupply of student student numbers accommodation flexible short- to mid- SERVICED LIVIN
Slide 13: Potential of growth assets classes
Potential of growth assets classes RE FINANCE SOLUTIONS Customer demand is expected to grow ... ... as structural trends persist Financing volume p.a. in growth asset classes in Europe (in € bn) CAGR (2023-2027) GROWING DATA CONSUMPTION +100% 15-20% Major trends such as AI/automation drive data cons
Slide 14: Portfolio optimization to increase profitability
Portfolio optimization to increase profitability RE FINANCE SOLUTIONS Diversify portfolio into growth asset classes… ...with size of € ~29 bn Asset class view GERMANY Now 2027E Germany will continue to be the largest market for pbb Data Center Grow Senior Living Serviced Living Hotel Maintain EUROPE
Slide 15: Real Estate Investment Solutions
REAL ESTATE INVESTMENT SOLUTIONS pbb invest and Originate & Cooperate aim to accelerate growth and diversify revenue mix 15
Slide 16: Comprehensive CRE product offering for institutional investors
Comprehensive CRE product offering for institutional investors RE INVESTMENT SOLUTIONS Value chain Portfolio Origination Underwriting Loan Servicing/ Investor Fund Services Management Transactions Transactions Asset Mgmt Reporting Real Estate Investment Management (Debt & Equity Products) pbb invest
Slide 17: Attractive market opportunities
Attractive market opportunities PBB INVEST Fundraising environment Market trends Fundraising (in € bn) Global Investment Fundraising FUNDING MARKET UNDER PRESSURE Avg. 2018-23: € ~1,500 bn Anticipated continued lower levels of fundraising volume until 2028 BUY-SIDE OPPORTUNTIES As banks scale back l
Slide 18: Leveraging our core strengths
Leveraging our core strengths PBB INVEST What investors seek ... ... and what pbb is offering Strengths Exposure to diversifying, Offering specialized RE investment opportunities (to enhance investors’ risk-adjusted returns diversification across asset classes) Access to high-quality Multi-national
Slide 19: Accelerating organic growth and M&A
Accelerating organic growth and M&A PBB INVEST Growth levers Strategy 2027 2027 GOAL PBB INVEST € 4-6 bn AUM ORGANIC Assets under Management Acceleration via dedicated debt and equity funds and individual mandates/ club deals Growth of AuM until 2027 aggregated across INORGANIC all funds based upon
Slide 20: Structural growth and large potential in Europe
Structural growth and large potential in Europe ORIGINATE & COOPERATE US revenue pool in third-party credit ...due to higher non-bank share of real estate positioning allocation 4x larger... financing Revenue pool third-party credit allocation excl. Share of non-bank real estate new business financi
Slide 21: Leveraging pbb's existing client base
Leveraging pbb’s existing client base ORIGINATE & COOPERATE Deep Dive Direct credit allocation Credit allocation through third-party (Broker) customers providers Buy-side Credit Investment Investment Insurances/ pension Banks Investment Banks/ Insurances/ pension Banks Investment Banks/ Manager/ Fam
Slide 22: Leveraging existing expertise
Leveraging existing expertise ORIGINATE & COOPERATE Originate & Cooperate: pbb product offering Investor with limited market access in search for RE deal 2027 GOAL ORIGINATE & COOPERATE Deal Sourcing pbb product offering Due Diligence & Structuring AUFGABEN BROKER € ~2 bn Servicing Volume Offering b
Slide 23: Enlarging existing product offering
Enlarging existing product offering ECO What clients are telling us Why they seek ECO related offerings REGULATORY PUSH 93% 83% Increasing regulations are requiring clients to ensure ECO compliance, manage risks, and future-proof operations include ESG criteria in their have experienced an investmen
Slide 24: Financials
FINANCIALS Increase overall profitability and build a more diversified and resilient business model 24
Slide 25: Key Performance Indicators for 2027
Key Performance Indicators for 2027 FINANCIALS OPERATING INCOME FEE INCOME CIR € ~600 mn ~10% <45% RoTE1 CAPITAL DISTRIBUTION CET-1 RATIO3 ≥50% 8% >15.5% (incl. share buybacks)2 Note: 1) Return on Tangible Equity (before tax); RoTE excl. deferred taxes, goodwill & other intangible assets 2) Distribu
Slide 26: Grow operating income in and beyond the core
Grow operating income in and beyond the core FINANCIALS Operating income development Optimization and diversification Operating Income (in € mn) +4% CAGR BALANCE SHEET FOCUS ON RE FINANCE ~600 Ongoing economic re-allocation from Non-Core into higher 520-550 +10% margin RE Finance business through va
Slide 27: Focused balance sheet business
Focused balance sheet business FINANCIALS Portfolio development Re-allocation into higher profitability Outstanding portfolio (in € bn) BALANCE SHEET FOCUS ON RE FINANCE Continued reduction of Non-Core business through balanced mix of maturities, opportunistic value accretive asset sales and corresp
Slide 28: Optimized and lower funding
Optimized and lower funding FINANCIALS Funding mix Optimized and lower funding needs Funding volume (in € bn) LOWER FUNDING NEEDS Decline in funding requirements in line with balance sheet ~46 reduction as a result of RE Finance portfolio optimization and non-core run-down ~40 ~58% OPTIMIZED AND BAL
Slide 29: Capitalization provides for strategic flexibility
Capitaliziation provides for strategic flexibility FINANCIALS Capital ratios Solid capitalization through the cycle MDA BUFFER >550 bp Transitional period Capitalization is expected to remain well above regulatory F-IRBA1 Pro-forma requirements (Minimum Distributable Amount) despite standardised B4
Slide 30: Cost of risk expected to normalize
Cost of risk expected to normalize FINANCIALS Cost of risk development Strict risk discipline on optimized risk profile Cost of risk (in bps) Recovery & Recovery & normalization normalization High-interest STRICT RISK DISCIPLINE rate environment Stringent approach to risk. Continued focus on senior
Slide 31: Further optimize existing platform
Further optimize existing platform FINANCIALS Cost development Investments financed by total cost savings of ~20% Expenses incl. write downs/ ups (in € mn) EXECUTE EXISTING COST MEASURES Strict discipline in executing on committed cost targets (e.g. ~50% IT-Insourcing and digitalization of RE Financ
Slide 32: New Strategy 2027 aims to lift current RoTE to 8%
New Strategy 2027 aims to lift current RoTE to 8% FINANCIALS Profitability development Multiple levers contribute to RoTE growth RoTE (in %)1 OPTIMIZATION REFS ~1% 8% Increase of profitability through portfolio optimization and ~4.5% new asset classes while funding costs are reduced and risk costs a
Slide 33: Strategy provides for attractive capital distribution
Strategy provides for attractive capital distribution FINANCIALS Planned future capital distribution Sustainably increase shareholder value ATTRACTIVE DISTRIBUTION POTENTIAL Strategy provides for an attractive capital distribution Distribution potential of ≥50%1 until 2027 while remaining solidly ≥5
Slide 34: Synthesis
SYNTHESIS 34
Slide 35: Key takeaways Strategy 2027
Key takeaways Strategy 2027 SYNTHESIS RE Finance Solutions RE Investment Solutions Diversify into growth assets ~10% fee income in pbb revenue mix Focused portfolio with Originate & Cooperate as growth lever increased profitability beyond pbb invest Non-Core Platform Continued valu
Slide 36: CMD2024 Thank you
CMD2024 Thank you a aael ii. ad so pl _calaros cae
Slide 37: CMD2024 Questions
CMD2024 To ask your questions and vote, please scan the QR-Code on the left or use the following link: https://app.sli.do/event/toFhz9CcvLNcp1KpGQHJQG (please copy and paste in a browser window) 37
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