Deutsche Pfandbriefbank AG · XETR:PBB
Deutsche Pfandbriefbank — Investor Presentation (January 2020)
35 slides from Deutsche Pfandbriefbank's investor presentation, January 2020
Slide 1: Company Presentation January 2020
Company Presentation January 2020 Company Presentation, January March 2019 2020(based (IFRS,on pbb Annual Group, Results unaudited) 2018; pbb Group, IFRS, audited, approval from Supervisory Board pending)
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: Business Model & Strategy
Business Model & Strategy pbb is a leading commercial real estate lender with a complementary public investment finance business USPs Key figures (IFRS, 30/09/2019) Specialised on-balance sheet lender with extensive placement capabilities Total assets € 59.8 bn Strong franchise with long-standin
Slide 4: Highlights 9M/19
Highlights 9M/19 Strong operating performance continued with PBT of € 187 mn after nine months – full-year guidance increased to € 205-215 mn Strong PBT of € 70 mn in Q3/19 (Q3/18: € 49 mn) results in € 187 mn for 9M/19 (+9% y-o-y; 9M/18: € 171 mn) NII remains on high level due to reduced fundin
Slide 5: Highlights: Operating and financial overview
Highlights Operating and financial overview New business Q4 Net interest and commission income General and admin. expenses € bn (commitments, incl. extensions >1 yr) Q3 € mn (IFRS) € mn (IFRS) Q2 47% 44% 42% Q1 CIR1 11.6 456 199 193 10.5 415 4.2 118 345 Q4 58 57 Q4 111 141 4.7 7.2 115 113 Q3 49 48 2
Slide 6: Markets: Low interest rate environment continues to support CRE cycle
Markets Low interest rate environment continues to support and prolong CRE cycle – slowing economic growth and individual market developments urge some caution European CRE Investment volume (€ bn) Office vacancy in % Despite recent declines, European and US CRE 90 300 25 investment volume remain
Slide 7: New business
New business REF new business volume remains solid at € 2.5 bn in Q3, resulting in a total volume of € 6.9 bn in 9M/19 – avg. REF gross interest margin further up to >150bp in 9M/19 REF New business REF new business € bn (commitments, incl. extensions >1 yr) 9M/18 2018 9M/19 Total volume (€ bn) 5.5
Slide 8: Portfolio: Stable high portfolio quality
Portfolio Stable high portfolio quality with 95% investment grade and avg. LTV of 54% REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)2 € bn (EaD, Basel III) 06/19 09/19 Non-investment grade1 Investment grade1 54% 54% 54% 54% 30.6 30.7 7.6 7.6 15.9 16.
Slide 9: Portfolio: Non-performing loans up in Q3, but low level
Portfolio Non-performing loans up in Q3, but remaining at low level Non-performing loans Workout1 Key drivers Q3/9M 2019: € mn (EaD, Basel III) Restructuring2 NPLs up by € 190 mn in Q3 due to addition of two 0.7% cases 0.6% 0.6% 0.3% One UK shopping centre with LTV impairment; NPL ratio no econo
Slide 10: Funding: Strong new funding activities
Funding Strong new funding activities with high share of foreign currencies – even though avg. funding spreads increased y-o-y, spread level is still below maturities New long-term funding1 Pfandbriefe € bn Mortgage Pfandbrief Benchmarks: € 500 mn 5y in January, 9M/18: € 4.2 bn4 9M/19: € 5.5 bn fo
Slide 11: Funding: Senior unsecured spreads back on lower level
Funding Senior unsecured spreads back on lower level, after widening in 2018 New long-term funding HyPfe € bn1 Öpfe 2.7 Sen. Unsec. 1.2 1.5 1.3 1.2 1.1 0.3 0.1 0.9 1.0 0.7 1.2 1.2 Spread development of pbb Senior Non-Preferred Benchmarks vs iTraxx Bank Senior 0.3 0.4 0.6 (Spread in bp vs. 6m Euribor
Slide 12: Capital: Capitalisation remains strong
Capital Capitalisation remains strong, providing adequate buffer for expected regulatory changes Basel III: RWA Basel III: Capital ratios € bn (IFRS) % (IFRS) Ambition in % 09/181 12/182 06/193 09/193 14.6 levels 14.3 CET 1 19.7 18.5 19.4 18.3 ≥12.5 13.5 13.6 Tier 1 21.9 20.5 21.6 20.4 ≥16 Own funds
Slide 13: Capital: Pro-forma calculation on expected regulatory changes
Capital Pro-forma calculation on expected regulatory changes in line with guidance RWA Pro-forma calculation on expected regulatory changes: € bn (IFRS) Pro-forma calculation includes effects on RWA from risk models/ECB Basel III Pro-forma TRIM, EBA Guidelines and Basel IV incl. expected regulator
Slide 14: Summary & Outlook
Summary & Outlook pbb with continued strong operating performance – full-year PBT guidance increased to € 205-215 mn Strong operating performance continued in Q3/19 New business remains solid with positive margin development in 2019 – not least because of selective approach Strong financial pe
Slide 15: Appendix
Appendix Company Presentation, January 2020 (IFRS, pbb Group, unaudited) 15
Slide 16: Outlook: pbb well positioned to manage challenges ahead
Outlook pbb well positioned to manage challenges ahead Strategy / risk Challenges approach Reduction in property valuations expected, especially in certain Conservative lending Changes in economic and market segments (e.g. retail) criteria and intensive interest environment Negative effects on L
Slide 17: Outlook 2019: Full-year PBT guidance increased
Outlook 2019 Full-year PBT guidance 2019 increased to € 205-215 mn Operating trends 2017 2018 Guidance 2019 Adjusted guidance (11/19) Real Estate Finance (REF) New business volume1 (€ bn) 10.7 9.5 € 8.5-9.5 bn Avg. gross margin (bp) >155 ~155 Slightly lower Stable Financing volume (€ bn) 24.9 26.8 M
Slide 18: Dividend strategy
Dividend strategy Dividend strategy: 50% regular + 25% supplementary dividend until FY 2019 Payout1: Dividend / Pay-out ratio Extra dividend Dividend policy DPS 0.43 € 1.05 € 1.07 € 1.00 € 79% 81% 72% 4% 6% 22% 25% 25% 50%2 50% 50% 50% FY 2015 FY 2016 FY 2017 FY 2018 Dividend strategy: Dividend paym
Slide 19: Digitalisation
Digitalisation Integral concept in pbb Strategic & Action Fields Approach Solutions operational gains Client interface via digital portal – Smooth/efficient „customer portal“ for REF clients Customer interaction launched in April 2018 satisfaction/retention between bank Provision of payment
Slide 20: Financials: Strong operating performance continued
Financials Strong operating performance continued Income statement € mn Q3/18 Q3/19 9M/18 9M/19 Key drivers Q3/9M 2019: Operating Income 119 133 350 371 NII up +2% y-o-y due to reduced funding costs and Net interest income 114 112 334 341 supported by increased avg. REF financing volume Net fee an
Slide 21: Segment reporting
Segment reporting Segment performance in line with strategic approach REF PIF Value Portfolio Income statement (IFRS, € mn) Q3/18 Q3/19 9M/18 9M/19 Q3/18 Q3/19 9M/18 9M/19 Q3/18 Q3/19 9M/18 9M/19 Operating income 101 109 290 316 9 11 23 26 8 11 34 25 thereof: Net interest income 93 95 276 287 10 9 2
Slide 22: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 30/09/19 31/12/18 Liabilities & equity 30/09/19 31/12/18 Financial assets at fair value through P&L 1.5 1.7 Financial liabilities at fair value through P&0 1.0 0.9 thereof th
Slide 23: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2017 Q1/18 Q2/18 Q3/18 9M/18 2018 Q1/19 Q2/19 Q3/19 9M/19 Net interest income 407 107 113 114 334 450 116 113 112 341 Net fee and commission income 8 1 2 1 4 6 1 2 1 4 Net income from fair value measurement -5 - 4 -2 2 -9 -2 -5 5 -2 Net income from reali
Slide 24: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (€ mn) 20173 Q1/18 Q2/18 Q3/18 9M/18 2018 Q1/194 Q2/19 Q3/19 9M/19 Net interest income 334 89 94 93 276 372 97 95 95 287 Net fee and commission income 9 1 2 2 5 6 1 2 2 5 Net income from fair value measurement - - -4 -1 -5 -8 - -5 - -5 Net incom
Slide 25: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (€ mn) 20173 Q1/18 Q2/18 Q3/18 9M/18 2018 Q1/194 Q2/19 Q3/19 9M/19 Net interest income 30 8 8 10 26 34 9 8 9 26 Net fee and commission income - - - - 0 1 - - - - Net income from fair value measurement -2 - -1 -1 -2 -2 - -1 - -1 Net income
Slide 26: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (€ mn) 20173 Q1/18 Q2/18 Q3/18 9M/18 2018 Q1/194 Q2/19 Q3/19 9M/19 Net interest income 37 8 10 10 28 39 9 9 6 24 Net fee and commission income -1 - - -1 -1 -1 - - -1 -1 Net income from fair value measurement -3 - 9 0 9 1 -2 1 5 4 Net income from real
Slide 27: Portfolio: Stable and well diversified, focus on Europe
Portfolio Stable and well diversified portfolio with continued focus on European markets, particularly on Germany 30/09/2019 (EaD, Basel III) Real Estate Finance Public Investment Finance Value Portfolio Sweden 1% Finland <1% Other Europe3% Czech Rep. <1% Other Other Rest Czech Republic 1% Other Eur
Slide 28: 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 29: Funding: Ambition level for Own Funds and Eligible Liabilities
Funding Ambition level for Own Funds and Eligible Liabilites of more than 8 % TLOF (in € as of 30/09/2019) Composition of MREL1 Liabilities Rundown (30/09/2019) (30/09/2019) € ~ 14 bn Substantial buffer for Senior Preferred (SP) investors due to high volume of capital instruments and Senior Non- S
Slide 30: Funding: Public benchmark issuances since 2016
Funding Public benchmark issuances since 2016 Type WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Mortgage Pfandbrief A13SWC 12/01/2016 19/01/2023 EUR 750 mn +8 bp 0.50% 99.221% Senior Unsecured A13SWD 28/01/2016 04/02/2019 EUR 500 mn +140 bp 1.25% 99.816% Mortgage Pfandbrief
Slide 31: Pfandbrief funding – effect of the Mortgage Lending Value
Funding Pfandbrief funding – effect of the Mortgage Lending Value (very simplified example) Loan Valuation Refinancing MV € 100 mn Borrower’s Difference Equity e.g. 30 % € 40 mn 60 % LTV max. 60 % OC e.g. 20 % Loan Mortgage Pfandbrief Pfandbrief Lending Value Collateral issued (Coverpool) € 60 mn €
Slide 32: Mandated Ratings (1 October 2019)
Mandated Ratings (1 October 2019) 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 Debt 3 BBB- Subordinated Debt BB+ Pfandbrief ratings Moody’s Public Sector Pfand
Slide 33: Sustainable financing: CSR Concept
CSR Concept CSR structurally anchored in pbb – financial and non-financial aspects condition each other General framework defined by code of conduct, providing Material topics and aspects non-negotiable standards to all employees Topics Aspects Main targets Corporate Compliance Guarantee compl
Slide 34: CSR Ratings
CSR Ratings Actively supported ratings from ISS ESG and imug reflect excellent standing and continuous improvement „Prime“ from ISS ESG (formerly 2016 „oekom“) since initiation in 2012 2017 2018 Top 3 “Best of same Sector“ 2019 Top 3 “Stress Test Sustainability – How good are the 25 largest German b
Slide 35: 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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