Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — FY2020 Earnings Presentation
59 slides from Deutsche Pfandbriefbank's earnings presentation, Mar 4, 2021
Slide 1: Solid full-year results 2020 with PBT of € 154 mn despite COVID-19 pandemic
Solid full-year results 2020 with PBT of € 154 mn despite COVID-19 pandemic Preliminary Annual Results 2020 Analyst Conference 4 March 2021 Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 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 & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 4: Highlights 2020
Highlights 2020 Good operating performance while building up provisions for future potential impacts from COVID-19 Solid PBT of € 154 mn in 2020 (2019: € 216 mn) reflects good operating performance, while building up provisions for future potential impacts from COVID-19 NII up by 5% to € 479 mn
Slide 5: Operating and financial overview
Operating and financial overview New business Q4 Net interest and commission income Q4 General and admin. expenses Q4 € bn (commitments, incl. extensions >1 yr) Q3 € mn (IFRS) Q3 € mn (IFRS) Q3 Q2 Q2 44% 43% 42% Q2 Q1 Q1 CIR1 Q1 10.5 464 485 202 204 9.3 456 193 119 127 61 59 4.7 2.1 7.4 118 57 2.6 3
Slide 6: Operational stability of pbb during pandemic given at any time
COVID-19 Operational stability of pbb during pandemic given at any time – comprehensive multidimensional risk approach implemented at an early stage pbb fully operational across all areas at any time State-of-the-art IT landscape allowed for remote working from day 1 Up to 90% of staff working
Slide 7: Monitoring process at pbb intensified given COVID-19 situation
COVID-19 Monitoring process at pbb intensified given COVID-19 situation – multi-level valuation review process Valuation review cycle (simplified) Loan Origination Regular annual review (Level 1/2) – new property valuation In addition, reviews on a continuous basis: mandatory in case of significant
Slide 8: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 9: Despite drop in European and US Real Estate transactions, 2020 volumes still well above 2008/2009
Markets Despite drop in European and US Real Estate transactions, 2020 volumes are still well above global financial crisis 2008/2009 European and US Investment volume* (€ bn) European and US CRE investment volumes decreased in 2020 due to COVID-19 – US figures were down by 32% while 600 € Europe
Slide 10: 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 11: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 12: Solid operating performance apart from COVID-19 pandemic related impacts
Financials Solid operating performance apart from COVID-19 pandemic related impacts Income statement € mn Q4/19 Q4/20 FY19 FY20 Key drivers 2020: Operating Income 135 155 506 529 NII up, driven by lower refinancing costs (incl. pos. effect Net interest income 117 125 458 479 from TLTRO III since e
Slide 13: NII increased by 5% y-o-y, supported by TLTRO and floor income
Financials NII increased by 5% y-o-y, supported by positive effect from TLTRO and floor income Income from lending business Key drivers 2020: € mn NII up, supported by Q4/19 Q4/20 FY19 FY20 lower refinancing costs (e.g. USD tender of Bundesbank, maturities, pos. effect from TLTRO III since end o
Slide 14: Risk provisioning: Build-up of provisions for future potential impacts from COVID-19
Financials Risk provisioning: Build-up of provisions for future potential impacts from COVID-19 Net income from risk provisioning Key drivers 2020: € mn Net income from risk provisioning of € -126 mn (2019: € -49 mn) Q4/19 Q4/20 FY19 FY20 driven by model-based additions in stage 1&2 and revaluatio
Slide 15: Risk provision in stage 1&2 driven by economic and sector-specific scenario assumptions
Financials Risk provision in stage 1&2 driven by economic and sector-specific scenario assumptions – GDP assumptions reviewed in Q4 based on ECB requirements GDP forecasts – pbb portfolio-weighted % Scenario assumptions gradually aligned with Economic institutions pbb scenarios1 economic forecasts
Slide 16: Operating costs under control
Financials Operating costs under control General & administrative expenses and depreciations Key drivers 2020: € mn GAE stable y-o-y with two counter-balancing effects: Q4/19 Q4/20 FY19 FY20 Personnel expenses: Increase due to higher FTE number (12/20: 782; 09/20: 772; 12/19: 752), esp. driven G
Slide 17: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 18: New business
New business REF new business volume of € 7.3 bn only slightly below initial guidance despite COVID-19 related lower investment activities – avg. REF gross interest margin up to ~180 bp y-o-y REF New business REF new business € bn (commitments, incl. extensions >1 yr) FY19 9M/20 FY20 26.8 27.1 27.0
Slide 19: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 20: Average LTV of 52% provides solid risk buffer
Portfolio pbb’s business approach reflected in stable risk parameters – average LTV of 52% provides solid risk buffer; so far, no significant valuation changes visible REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)1 € bn (EaD, Basel III) 09/20 12/20
Slide 21: NPLs remain on low level
Portfolio NPLs remain on low level – decrease of NPL portfolio by 8% y-o-y despite challenging environment due to COVID-19 Workout1 Key drivers 2020 Non-performing loans € mn (EaD, Basel III) Restructuring2 Non-performing loans (NPLs) slightly down to € 470 mn 0.9% 0.9% 0.8% 0.8% (09/20: € 495 mn,
Slide 22: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 23: Good funding activities in 2020 supported by TLTRO III
Funding Good funding activities in 2020 at relatively stable avg. funding spreads compared to 2019, supported by TLTRO III – strong start into 2021 New long-term funding1 € bn Funding 2020 2019: € 6.7 bn 2020: € 3.6 bn2 Good funding activities in 2020 at relatively stable avg. funding spreads comp
Slide 24: Encouraging secondary market performance after COVID-19 widening in March
Funding Encouraging secondary market performance after COVID-19 widening in March New long-term funding HyPfe € bn1 Öpfe Sen. Unsec. 1.9 1.2 1.2 0.9 0.6 0.5 Spread development of pbb Senior Benchmarks vs iTraxx Bank Senior 0.6 0.7 0.1 0.5 0.5 0.3 0.4 0.3 (Spread in bp vs. 6m Euribor) Q4/19 Q1/20 Q2/
Slide 25: Strong success for pbb's latest benchmark issuances
Funding Strong success for pbb’s latest benchmark issuances Order Order Order ~ 2bn GBP ~1.3bn USD ~1.2bn EUR Inaugural £500mn $750mn Inaugural €500mn SONIA-linked 3-year 0.500% 5-year GREEN Senior Hypothekenfandbrief Hypothekenpfandbrief Preferred Bond September 2020 January 2021 January 2021 Besid
Slide 26: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 27: Capitalisation remains strong
Capital Capitalisation remains strong Basel III: RWA RWA development 2020: € bn (IFRS) RWA stable y-o-y as a result of the recalibration to expected Basel IV levels in Q4/19, which tends to enhance the stability of risk- 17.7 17.8 17.7 weights So far, no significant systematic deterioration in t
Slide 28: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 29: Digitalisation: pbb's digital transformation follows 3 strategic directions
Strategic Initiatives Digitalisation: pbb’s digital transformation follows 3 strategic directions – strong focus on process efficiency and customer interaction Fields of action Approach Solution Strategic & operative Target Digitalisation of the customer Customer satisfaction / Positive customer i
Slide 30: ESG structurally anchored in pbb
Strategic Initiatives ESG structurally anchored in pbb – ESG criteria integrated into credit process/lending, factors more strongly integrated into risk management and ecological footprint extended Board Member involvement and Focus / Achievements responsibility Comprising representatives from a
Slide 31: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business & Segment Reporting 5. Portfolio Profile 6. Funding 7. Capital 8. Strategic Initiatives 9. Summary & Outlook Appendix Contact details Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 20
Slide 32: Summary & Outlook
Summary & Outlook pbb well positioned to manage challenges ahead Summary 2020 Guidance 2021 ■ Better PBT compared to 2020, based on solid operating performance but depending on ■ Solid performance with PBT of € 154 mn COVID-19 developments and subsequent impact on loan-loss provisions ■ NII remains
Slide 33: Appendix
Appendix Annual Results 2020 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 04 March 2021 33
Slide 34: Impact from COVID-19 pandemic depends on stringency and duration of measures
Markets Impact from COVID-19 pandemic very much depending on stringency and duration of measures with accelerating effect on structural challenges – overall, pbb well positioned COVID-19 Pandemic Challenges Structural Challenges Key drivers Key drivers Stringency of measures Digitalisation Dur
Slide 35: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2017 2018 Q1/19 Q2/19 Q3/19 Q4/19 2019 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Net interest income 407 450 116 113 112 117 458 111 117 126 125 479 Net fee and commission income 8 6 1 2 1 2 6 2 1 1 2 6 Net income from fair value measurement -5 -9 -2 -5 5 -5 -7 -17
Slide 36: Segment reporting
Segment reporting Segment performance reflects impact from COVID-19 pandemic REF PIF Value Portfolio Income statement (IFRS, € mn) Q4/19 Q4/20 FY/19 FY/20 Q4/19 Q4/20 FY/19 FY/20 Q4/19 Q4/20 FY/19 FY/20 Operating income 117 126 433 445 9 10 36 41 8 18 30 39 thereof: Net interest income 98 105 385 39
Slide 37: Key figures pbb Group 2019 vs. 2020
Key figures pbb Group 2019 vs. 2020 Income statement REF PIF VP C&A pbb Group (€ mn) 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 Net interest income 388 399 37 38 29 38 4 4 458 479 Net fee and commission income 7 6 - - -1 - - - 6 6 Net income from fair value -8 -6 -2 -1 3 -1 - - -7 -8 measurem
Slide 38: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (€ mn) 20173 2018 Q1/194,5 Q2/195 Q3/195 Q4/195 20195 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Net interest income 334 372 98 96 96 98 388 93 96 105 105 399 Net fee and commission income 9 6 1 2 2 2 7 2 1 1 2 6 Net income from fair value measurement - -8 -
Slide 39: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (€ mn) 20173 2018 Q1/194,5 Q2/195 Q3/195 Q4/195 20195 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Net interest income 30 34 9 9 9 10 37 9 10 10 9 38 Net fee and commission income - 1 - - - - - - - - - - Net income from fair value measurement -2 -2 - -1
Slide 40: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (€ mn) 20173 2018 Q1/194,5 Q2/195 Q3/195 Q4/195 20195 Q1/20 Q2/20 Q3/20 Q4/20 FY/20 Net interest income 37 39 8 7 6 8 29 8 10 10 10 38 Net fee and commission income -1 -1 - - -1 - -1 - - - - - Net income from fair value measurement -3 1 -2 1 5 -1 3 -
Slide 41: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 31/12/20 31/12/19 Liabilities & equity 31/12/20 31/12/19 Financial assets at fair value through P&L 1.4 1.3 Financial liabilities at fair value through P&L 0.6 0.8 thereof th
Slide 42: Portfolio: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2019 / Total: € 55.5 bn 31/12/2020 / Total: € 58.0 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 43: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31/12/2019: € 29.8 bn 31/12/2020: € 29.3 bn 31/12/2019: € 29.8 bn 31/12/2020: € 29.3 bn Mixed use 2% Mixed use 2% Czech Republic 1% Other Europe Other 3% Other 2% Czech Republic 1% Other Europe Hotel 5% Hotel 5% Austria
Slide 44: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2019 / Total: € 29.8 bn € bn (EaD, Basel III) 31/12/2020 / Total: € 29.3 bn 14.8 14.0 3.5 3.1 3.2 3.3 2.8 2.9 1.3 1.3 0.9 0.9 1.4 1.8 0.5 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.1 0.2 0.1 0.1 Germany UK France USA Poland Sweden Finland Austria Czech Spain Hung
Slide 45: REF portfolio: Special focus: Retail
REF portfolio Special focus: Retail REF portfolio: Property types Retail: Countries Structural changes to overall retail segment (e.g. 31/12/2020: € 29.3 bn (EaD, Basel III) 31/12/2020: € 4.3 bn (EaD, Basel III) e-Commerce, Brexit) resulted in foresighted reduction of pbb’s retail exposure (12/20:
Slide 46: REF portfolio: Special focus: Hotel
REF portfolio Special focus: Hotel REF portfolio: Property types Hotel: Countries Focus on business hotels in metropolitan regions of 31/12/2020: € 29.3 bn (EaD, Basel III) 31/12/2020: € 1.4 bn (EaD, Basel III) Germany – Frankfurt, Hamburg, Munich, Berlin, Stuttgart, Industrial/ Others 4% Austri
Slide 47: REF portfolio: Special focus: Developments
REF portfolio Special focus: Developments REF portfolio: Loan types Developments: Countries 31/12/2020: € 29.3 bn (EaD, Basel III) 31/12/2020: € 4.1 bn (EaD, Basel III) Portfolio share of 14% with focus on Office (52%) and Residential (25%) mainly in Germany (81%) and France (9%) Strong risk-mit
Slide 48: Markets: Sub-segments
Markets Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning type Already slight rise in vacancies Financial difficulties of tenants / Focus on top locations Austria 2% Spain 1% Yields slightly increased in a few insolvencies expected to increase Conser
Slide 49: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2019: € 7.1 bn 31/12/2020: € 6.5 bn 31/12/2019: € 7.1 bn 31/12/2020: € 6.5 bn Infrastructure Sweden 1% Other Europe 3% Corporation 2% Finance 1% Corporation 2% Infrastructure Other Europe 4% Finlan
Slide 50: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2019 / Total: € 7.1 bn € bn (EaD, Basel III) 31/12/2020 / Total: € 6.5 bn 3.7 3.4 1.5 1.3 1.0 0.9 0.3 0.3 0.2 0.2 0.3 0.2 0.1 0.1 <0.1 0.0 0.1 0.1 France Germany Spain Austria UK Finland Sweden Other Europe Other Rest of World Borrower classifi
Slide 51: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2019: € 15.6 bn 31/12/2020: € 15.2 bn 31/12/2019: € 15.6 bn 31/12/2020: € 15.2 bn Financial Financial Finland <1% Czech Rep. <1% Other Other Rest Other Other Rest Institution Supranational 4% Institution Supr
Slide 52: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2019 / Total: € 15.6 bn € bn (EaD, Basel III) 31/12/2020 / Total: € 15.2 bn 5.9 6.1 4.2 3.9 1.9 1.9 0.9 0.9 0.7 0.7 0.8 0.7 0.9 0.8 0.2 0.2 0.1 <0.1 <0.1 <0.1 Austria Germany Italy Spain France Poland Hungary Czech Finland Other Europe Rest of World Repub
Slide 53: Portfolio: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31/12/2019: € 2.9 bn 31/12/2020: € 7.0 bn 31/12/2019: € 2.9 bn 31/12/2020: € 7.0 bn Financial Sweden <1% Institution USA 1% Supra Other Europe Regional France 1% Other Rest of World Germany1 Other Rest
Slide 54: Ambition level for Own Funds and Eligible Liabilities of more than 8% TLOF
Funding Ambition level for Own Funds and Eligible Liabilities of more than 8 % TLOF (in € bn as of 31/12/2020)1 Composition of MREL2 Liabilities Rundown (31/12/2020) (31/12/2020) ~ 15.5 Substantial buffer for Senior Preferred (SP) investors due to high volume of capital instruments and Senior Non-
Slide 55: Public benchmark issuances since 2017
Funding Public benchmark issuances since 2017 Types WKN Launch Date Maturity Date Size Spread1 Coupon Issue/Reoffer Price Mortgage Pfandbrief A2ADASA 05/01/2017 01/03/2022 GBP 250 mn +55 bp2 3m-Libor +55 bp 100.00% Mortgage Pfandbrief (5th Tap) A1PG3M 16/01/2017 20/12/2019 GBP 50 mn +50 bp2 1.875% 1
Slide 56: 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 57: Financial reporting: Definition of key ratios
Financial reporting Definition of key ratios General admin. Expenses + Net income from write-downs Cost-Income-Ratio and write-ups on non-financial assets CIR CIR = Operating income IFRS9 Expected Credit Loss Model with 3 stage logic: Credit loss allowances on Stage 1: impaired with 1 year exp
Slide 58: 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 59: 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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