Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q1 2021 Earnings Presentation
51 slides from Deutsche Pfandbriefbank's earnings presentation, May 10, 2021
Slide 1: Strong start to 2021 with PBT of € 52 mn in Q1/21
Strong start to 2021 with PBT of € 52 mn in Q1/21 Results Q1/21 Analyst Conference 10 May 2021 Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021
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 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 3
Slide 4: Highlights Q1/21
Highlights Q1/21 Strong start into 2021 with PBT of € 52 mn in Q1/21 – confirms guidance to exceed previous year's result Strong PBT of € 52 mn in Q1/21 (Q1/20: € 2 mn) reflects continued good operating performance NII up by 11% to € 123 mn (Q1/20: € 111 mn) Financials Slight increase of GAE €
Slide 5: Operating and financial overview
Operating and financial overview New business Q4 Net interest and commission income 4 Q4 General and admin. expenses Q4 € bn (commitments, incl. extensions >1 yr) Q3 € mn (IFRS) Q3 € mn (IFRS) Q3 Q2 Q2 43% 42% Q2 CIR 38% Q1 Q1 Q1 9.3 464 482 202 204 2.1 7.4 126 59 119 61 2.6 3.0 113 126 48 48 2.6 1.
Slide 6: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 6
Slide 7: Drop in European and US Real Estate transaction volumes
Markets Drop in European and US Real Estate transaction volumes in 2020 and Q1/2021 – however, so far no severe yield shift obvious European and US Investment volume* (€ bn) European and US CRE investment volumes decreased due to COVID-19 600 € US figures were down by 32% while Europe saw a decl
Slide 8: COVID-19 Challenges
COVID-19 Challenges Successful management of COVID-19 challenges by focusing on selective business and strong risk monitoring Fundamental Challenges Business Approach Economy and subsequently Real Estate sector Selective business approach with overall conservative risk affected by COVID-19 drive
Slide 9: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 9
Slide 10: Strong operating performance continued – risk provisioning on low level
Financials Strong operating performance continued – risk provisioning on low level Income statement € mn Q1/20 Q4/20 Q1/21 Key drivers Q1/21 Operating Income 110 154 146 NII up y-o-y, driven by lower refinancing costs (incl. pos. Net interest income 3 111 124 123 effect from TLTRO III) and improve
Slide 11: NII increased by 11% y-o-y
Financials NII increased by 11% y-o-y, supported by lower refinancing costs and floor income Income from lending business Key drivers Q1/21 € mn NII up by 11% y-o-y, supported by Q1/20 Q4/20 Q1/21 lower refinancing costs (incl. pos. effect from TLTRO III) Net interest income1 111 124 123 impro
Slide 12: Risk provisioning on low level
Financials Risk provisioning on low level – comfortable buffer in place to cope with potential further impacts from COVID-19 pandemic Net income from risk provisioning Key drivers Q1/21 € mn Net income from risk provisioning of € -10 mn (Q1/20: € -34 mn) Q1/20 Q4/20 Q1/21 previous year strongly af
Slide 13: Operating costs under control
Financials Operating costs under control – only moderate increase of GAE despite ongoing investments in strategic and regulatory projects General & administrative expenses and depreciations Key drivers Q1/21 € mn GAE slightly up y-o-y: Q1/20 Q4/20 Q1/21 Personnel expenses: Increase of € 1 mn y-o
Slide 14: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 14
Slide 15: REF new business
New business REF new business volume of € 2.1 bn with avg. gross interest margin of ~170 bp and low avg. LTV of 54% underpin continued selective approach in competitive environment REF New business REF new business € bn (commitments, incl. extensions >1 yr) Q1/20 FY20 Q1/21 27.1 27.0 27.5 Financing
Slide 16: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 16
Slide 17: Stable risk parameters – average LTV of 52%
Portfolio pbb’s business approach reflected in stable risk parameters – average LTV of 52% provides solid risk buffer REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)1 € bn (EaD, Basel III) 12/20 03/21 Non-investment grade2 53% Investment grade2 52% 52
Slide 18: NPLs remain on low level
Portfolio NPLs remain on low level Workout1 Key drivers Q1/21 Non-performing loans € mn (EaD, Basel III) Restructuring2 Non-performing loans (NPLs) slightly up to € 503 mn 0.8 0.8% 0.9% (12/20: € 470 mn, 03/20: € 460 mn) Restructuring loans up to € 489 mn (12/20: € 456 mn, NPL ratio 03/20: € 445
Slide 19: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 19
Slide 20: Strong funding activities in Q1/21
Funding Strong funding activities in Q1/21 with focus on non-Euro Pfandbriefe – inaugural Green Senior Preferred Benchmark issued New long-term funding1 € bn Funding Q1/21 Q1/20: € 1.9 bn Q1/21: € 1.4 bn Strong start into 2021 with a USD 750 mn 3Y Pfandbrief Benchmark, an inaugural € 500 mn Green
Slide 21: Encouraging secondary market performance
Funding Encouraging secondary market performance after COVID-19 widening in March 2020 New long-term funding HyPfe € bn1 Öpfe Sen. Unsec. 1.9 1.4 1.2 0.9 0.6 0.5 Spread development of pbb Senior Benchmarks vs iTraxx Bank Senior 0.7 0.1 0.5 0.5 0.3 0.8 0.4 0.3 (Spread in bp vs. 6m Euribor) Q1/20 Q2/2
Slide 22: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 22
Slide 23: Capitalisation remains strong
Capital Capitalisation remains strong Basel III: RWA RWA development Q1/21 € bn (IFRS) RWA up y-o-y due to various effects mainly as a result from strong increase in REF portfolio 18.3 17.3 17.7 individual deteriorations due to COVID-19 (rating downgrades, market value adjustments) regulator
Slide 24: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 24
Slide 25: Client portal launched in March
Strategic Initiatives Client portal launched in March – digital interface between clients and pbb with further development in the light of internal process optimisation Fields of action Solution Analysis Closing Portfolio Origination & credit & handover Management decision Customer Portal Digitalisa
Slide 26: Focus 2021 on sustainable lending and climate risk
Strategic Initiatives Focus 2021 on sustainable lending and climate risk Sustainable lending ■ Structural integration of “green” criteria into credit / lending process, targeting to assess the “greenness” of pbb’s new business/ portfolio and subsequently pbb’s carbon emissions / impact from its lend
Slide 27: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 27
Slide 28: Summary & Outlook
Summary & Outlook Strong operative result in Q1/21 confirms outlook to exceed previous year's result Strong Q1 result with PBT of € 52 mn Continued solid income from lending business – NII remains on high level plus some support from prepayment fees Risk provisions on low level New business at
Slide 29: Appendix
Appendix Results Q1/21 (IFRS, pbb Group, unaudited), 10 May 2021 29
Slide 30: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2018 2019 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Q1/21 Net interest income 450 458 111 1168 1258 1248 4768 123 Net fee and commission income 6 6 2 1 1 2 6 2 Net income from fair value measurement -9 -7 -17 1 4 4 -8 2 Net income from realisations 32 48 14 2 4 6 26
Slide 31: Segment reporting
Segment reporting Segment performance reflects impact from COVID-19 pandemic REF PIF Value Portfolio Income statement (IFRS, € mn) Q1/20 Q4/20 Q1/21 Q1/20 Q4/20 Q1/21 Q1/20 Q4/20 Q1/21 Operating income 103 125 126 9 10 9 -3 18 10 thereof: Net interest income 2 93 104 104 9 9 9 8 10 9 Net income from
Slide 32: Key figures pbb Group Q1/20 vs. Q1/21
Key figures pbb Group Q1/20 vs. Q1/21 Income statement REF PIF VP C&A pbb Group (€ mn) Q1/21 Q1/21 Q1/21 Q1/21 Q1/20 Q1/20 Q1/20 Q1/20 Q1/20 Q1/21 Net interest income 93 104 9 9 8 9 1 1 111 123 Net fee and commission income 2 2 - - - - - - 2 2 Net income from fair value -4 1 -1 - -12 1 - - -17 2 mea
Slide 33: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (€ mn) 2018 20193 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Q1/21 4 Net interest income 372 388 93 95 104 104 396 104 Net fee and commission income 6 7 2 1 1 2 6 2 Net income from fair value measurement -8 -8 -4 1 -2 -1 -6 1 Net income from realisations 27
Slide 34: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (€ mn) 2018 20193 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Q1/21 Net interest income 34 37 9 10 10 9 38 9 Net fee and commission income 1 - - - - - - - Net income from fair value measurement -2 -2 -1 - - - -1 - Net income from realisations 5 1 1 - -
Slide 35: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (€ mn) 2018 20193 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Q1/21 Net interest income 39 29 8 10 10 10 38 9 Net fee and commission income -1 -1 - - - - - - Net income from fair value measurement 1 3 -12 - 6 5 -1 1 Net income from realisations - -1 2 - - -1 1 - N
Slide 36: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 31/03/21 31/12/20 Liabilities & equity 31/03/21 31/12/20 Financial assets at fair value through P&L 1.5 1.4 Financial liabilities at fair value through P&L 0.7 0.6 thereof th
Slide 37: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2020 / Total: € 58.0 bn 31/03/2021 / Total: € 57.7 bn Hungary <1% Hungary <1% Other Europe 5% Other Europe 5% Czech Republic 1% Czech Republic 1% Other Rest of World 2% Other Rest of World 2% Finland 1% Finland 1% 2% 2% Sweden 2% 5% Swede
Slide 38: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31/12/2020: € 29.3 bn 31/03/2021: € 29.8 bn 31/12/2020: € 29.3 bn 31/03/2021: € 29.8 bn Mixed use 2% Mixed use 1% Czech Republic 1% Other Europe Czech Republic 1% Other Europe Other 2% Other 3% Hotel 5% Hotel 4% Austria
Slide 39: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2020 / Total: € 29.3 bn € bn (EaD, Basel III) 31/03/2021 / Total: € 29.8 bn 14.0 14.1 3.3 3.7 3.1 3.2 2.9 2.9 1.3 1.4 1.8 1.9 0.9 0.9 0.5 0.3 0.4 0.4 0.4 0.4 0.3 0.3 0.2 0.2 0.1 0.1 Germany France UK USA Poland Sweden Finland Austria Czech Spain Hung
Slide 40: Markets: Sub-segments in special focus
Markets Sub-segments in special focus: Overall, pbb well positioned, but concerns persist about further development of real estate market in the light of COVID-19 pandemic Property Regions Evaluation of current situation Challenges Risk positioning type Shopping centres: Increased pressure, Decl
Slide 41: Markets: Sub-segments
Markets Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning type Slight rise in vacancies Financial difficulties of tenants / Focus on top locations Austria 2% Spain 1% Investment market so far less affected insolvencies expected to increase Conservati
Slide 42: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2020: € 6.5 bn 31/03/2021: € 6.3 bn 31/12/2020: € 6.5 bn 31/03/2021: € 6.3 bn Corporation 2% Infrastructure Corporation 2% Infrastructure Other Europe 3% Finland 1% Other Europe 3% Finland 1% Supra
Slide 43: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2020 / Total: € 6.5 bn € bn (EaD, Basel III) 31/03/2021 / Total: € 6.3 bn 3.4 3.4 1.3 1.2 0.9 0.8 0.3 0.3 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 France Germany Spain Austria UK Finland Other Europe Other Rest of World Borrower classification1 € bn (Ea
Slide 44: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2020: € 15.2 bn 31/03/2021: € 14.7 bn 31/12/2020: € 15.2 bn 31/03/2021: € 14.7 bn Financial Financial Other Rest Other Rest Institution Supranational 4% Institution Supranational 4% Other Other Poland 1% of W
Slide 45: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2020 / Total: € 15.2 bn € bn (EaD, Basel III) 31/03/2021 / Total: € 14.7 bn 6.1 5.8 3.9 3.8 1.9 1.8 0.9 0.9 0.7 0.7 0.7 0.7 0.8 0.8 0.2 0.1 <0.1 <0.1 Austria Germany Italy Spain France Poland Finland Other Europe Rest of World Borrower classification1 € b
Slide 46: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31/12/2020: € 7.0 bn 31/03/2021: € 6.9 bn 31/12/2020: € 7.0 bn 31/03/2021: € 6.9 bn Financial USA 1% Sweden <1% USA 1% Sweden <1% Financial Institution France 1% Other Europe Other Europe Supra Institu
Slide 47: Ambition level for Own Funds and Eligible Liabilities of more than 8 %
Funding Ambition level for Own Funds and Eligible Liabilities of more than 8 % TLOF (in € bn as of 31/03/2021)1 Composition of MREL2 Liabilities Rundown (31/03/2021) (31/03/2021) ~ 15.1 Substantial buffer for Senior Preferred (SP) investors due to high volume of capital instruments and Senior Non-
Slide 48: Public benchmark issuances since 2018
Funding Public benchmark issuances since 2018 Types WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Senior Unsecured A2GSLC6 16/01/2018 23/02/2022 EUR 500 mn +40 bp 0.625% 99.956% Mortgage Pfandbrief (1st Tap) A2E4ZE 24/01/2018 05/09/2022 EUR 250 mn -18 bp 0.05% 99.579% Mortgag
Slide 49: Mandated Ratings
Mandated Ratings Bank ratings S&P Long-term A- Outlook/Trend Negative Short-term A-2 Stand-alone rating1 bbb Long Term Debt Ratings “Preferred” senior unsecured Debt2 A- “Non-preferred” senior unsecured Debt3 BBB- Subordinated Debt BB+ Pfandbrief ratings Moody’s Public Sector Pfandbrief Aa1 Mortgage
Slide 50: 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 51: 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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