Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — H1 2022 Earnings Presentation
58 slides from Deutsche Pfandbriefbank's earnings presentation, Aug 9, 2022
Slide 1: Solid H1/22 with PBT of € 107 mn – full-year PBT guidance confirmed
Solid H1/22 with PBT of € 107 mn – full-year PBT guidance confirmed Results Q2/H1 2022 Analyst Conference 9 August 2022 Please think about the environment before printing!
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. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 3
Slide 4: Highlights Q2/H1 2022
Highlights Q2/H1 2022 pbb remains on track – solid PBT of € 107 mn in H1/22, increased REF new business volume with margins on previous year level Financials Solid PBT of € 107 mn in H1/22 (H1/21: € 114 mn) reflects continued good performance in core business NII relatively stable (H1/22: € 242
Slide 5: Operating and financial overview
Operating and financial overview New business Q4 Net interest and commission income 1 Q4 General and admin. expenses Q4 € bn (commitments, incl. extensions >1 yr) Q3 € mn (IFRS) Q3 € mn (IFRS) Q3 Q2 Q2 42% 42% Q2 40% Q1 Q1 CIR4 Q1 9.1 482 502 219 204 7.4 127 3.3 126 59 68 3.0 124 4.3 126 245 48 49 1
Slide 6: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 6
Slide 7: CRE Markets
CRE Markets Investment volumes remain solid in Q2/22, but expectations more subdued European and US Investment volume1 (€ bn) Despite slowing volume growth US CRE investment volumes still with 1.000 € strong performance in Q2 2022 900 € European property investment volume declined in the second
Slide 8: Macroeconomic Challenges
Macroeconomic Challenges Inflation, increasing interest rates and slow down of global economic growth Downside risks to the economic outlook have increased, due to elevated and persistent inflation, anticipated aggressive monetary policy tightening as well as the threat of a sudden end of Russian
Slide 9: Special focus: Developments
Special focus: Developments Due to rather strict credit quality approach, at present pbb’s development portfolio is not of particular concern REF portfolio: Loan types Portfolio profile Current developments 30/06/2022: € 30.2 bn (EaD, Basel III) Others < 1% Derivative <1% Portfolio share of 12% wi
Slide 10: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 10
Slide 11: Solid operating performance continued
Financials Solid operating performance continued Income statement € mn Q2/21 Q2/22 H1/21 H1/22 Key drivers Q2/H1 2022 Operating Income 141 123 287 272 NII relatively stable y-o-y – mainly affected by lower Net interest income 123 120 246 242 floor income, largely compensated by increased average R
Slide 12: Underlying income from lending business remains solid
Financials Underlying income from lending business remains solid Income from lending business Key drivers Q2/H1 2022 € mn NII relatively stable y-o-y Q2/21 Q2/22 H1/21 H1/22 Continued low refinancing costs (incl. positive effect from TLTRO III) and Net interest income 123 120 246 242 increase
Slide 13: Risk provisioning down y-o-y
Financials Risk provisioning down y-o-y – scenarios adequately cover current macroeconomic forecasts, management overlay maintained Net income from risk provisioning Key drivers Q2/H1 2022 € mn Net income from risk provisioning of € -1 mn in Q2/22 (H1/22: Q2/21 Q2/22 H1/21 H1/22 € -19 mn; H1/21: €
Slide 14: NPLs remain on low level
Financials NPLs remain on low level – solid loss allowances on balance sheet Key drivers Q2/H1 2022 Non-performing loans – regions € mn (EaD, Basel III) Non-performing loans (NPLs) remain on low level No. of 22 22 22 22 22 indiv. Restructuring loans slightly up at € 577 mn (03/22: € 564 mn) case
Slide 15: Operating costs under control
Financials Operating costs under control General & administrative expenses and depreciations Key drivers Q2/H1 2022 € mn GAE slightly up y-o-y € mn Q2/21 Q2/22 H1/21 H1/22 Personnel expenses up € 1 mn y-o-y due to vacation accruals in Q1 – Q4/21 impacted from € 11 mn provision in connection with
Slide 16: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 16
Slide 17: New business
New business REF new business volume up by € 0.5 bn to € 4.3 bn y-o-y – average gross margin with ~170 bp back on previous year level REF New business REF new business € bn (commitments, incl. extensions >1 yr) H1/21 FY21 H1/22 27.6 28.4 Financing 27.0 Total volume (€ bn) 3.8 9.0 4.3 volume thereof:
Slide 18: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 18
Slide 19: Portfolio: stable risk parameters and low average LTV
Portfolio Business approach reflected in stable risk parameters and low average LTV of 51%, which provides solid risk buffer REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)1 € bn (EaD, Basel III) 03/22 06/22 Non-investment grade2 52% 52% Investment gr
Slide 20: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 20
Slide 21: Strong funding in H1/22
Funding Strong funding in H1/22 – focus on Pfandbriefe, asset matching currencies and Green refinancing New long-term funding1 Funding Q2/H1 2022 € bn Strong Pfandbrief funding ytd.: US$ 750 mn Pfandbrief H1/21: € 2.3 bn H1/22: € 3.2 bn € 1.5 bn Pfandbrief Benchmarks (2 x € 750 mn in April and
Slide 22: Widening secondary spreads reflect volatility
Funding Widening secondary spreads reflect high volatility and uncertainty in capital markets Spread development of pbb Senior Benchmarks vs iTraxx Bank Senior (Spread in bp vs. 6m Euribor) 2018 2019 2020 2021 2022 200 pbb 02/02/26 (196bp) pbb 27/10/25 (195bp) pbb 17/01/25 (163bp) 150 Green Senior P
Slide 23: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 23
Slide 24: Capitalisation remains strong
Capital Capitalisation remains strong Basel III: RWA RWA development Q2/H1 2022 € bn (IFRS) RWA down mainly due to Maturity, interest rate movements; reclassification and 16.8 16.7 16.5 syndication effects Smaller opposite effect from increase in REF portfolio and FX effects No material RWA
Slide 25: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 25
Slide 26: Initiatives – good progress achieved
Summary & Outlook Initiatives – good progress achieved Initiatives Key measures Status quo H1/22 Product expansion All prerequisites for respective product lines in place; (Loan-on-loan, non-senior lending) origination started ~32* 28 Strong origination focus on the US – new business Organic 1 growt
Slide 27: PBT remains on track – guidance confirmed
Summary & Outlook PBT remains on track despite current geopolitical and economic developments – full-year PBT guidance of € 200-220 mn confirmed Strong H1/22 result with PBT of € 107 mn NII remains on high level – lower floor income, largely compensated by increased average REF financing volume
Slide 28: Appendix
Appendix Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 28
Slide 29: Appendix
Appendix 1. Guidance 2022 and mid-term ambition 2. ESG 3. P&L / Balance Sheet 4. Portfolio Profile 5. Funding & Ratings Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 29
Slide 30: Guidance 2022 and mid-term ambition
Guidance 2022 and mid-term ambition Sustainable PBT level in 2022 despite income headwinds and investments to achieve growth ambition 2024/25 – uncertainties from geopolitical situation Financials (€ mn) 2020 2021 Guidance 2022 Ambition 2024/2025 PBT of € 200-220 mn in line with past 1 Organic growt
Slide 31: Appendix
Appendix 1. Guidance 2022 and mid-term ambition 2. ESG 3. P&L / Balance Sheet 4. Portfolio Profile 5. Funding & Ratings Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 31
Slide 32: Green Loan criteria
Green Loan pbb Green Loan Framework aligned with current regulatory and market developments – specific metrics defined for each criteria pbb Scoring Model EU Taxonomy MAX SCORE: 100 Points III. Additional I. Energy Efficiency II. Building Certification Sustainability Factors • Energy demand/- • “Gre
Slide 33: ESG Ratings
ESG Ratings Continuous improvement reflected in ESG ratings – Upgrade from MSCI from “A“ to “AA“ pbb rating/score ISS ESG MSCI Moody‘s ESG Solutions Continuous improvement of ESG organisational set-up, LAST UPDATE: March 2022 LAST UPDATE: May 2022 LAST UPDATE: April 2022 governance, strategy and A
Slide 34: Appendix
Appendix 1. Guidance 2022 and mid-term ambition 2. ESG 3. P&L / Balance Sheet 4. Portfolio Profile 5. Funding & Ratings Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 34
Slide 35: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2019 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 H1/22 Net interest income 458 4768 123 123 123 125 494 122 120 242 Net fee and commission income 6 6 2 3 1 2 8 2 1 3 Net income from fair value measurement -7 -8 2 - 1 7 10 9 5 14 Net income from realisa
Slide 36: Segment reporting
Segment reporting Segment performance reflects strong performance of strategic REF portfolio in H1/22 REF PIF Value Portfolio Income statement (IFRS, € mn) Q2/21 Q2/22 H1/21 H1/22 Q2/21 Q2/22 H1/21 H1/22 Q2/21 Q2/22 H1/21 H1/22 Operating income 124 108 250 234 9 7 18 17 8 8 18 20 thereof: Net intere
Slide 37: Key figures pbb Group H1/21 vs. H1/22
Key figures pbb Group H1/21 vs. H1/22 Income statement REF PIF VP C&A pbb Group (€ mn) H1/21 H1/21 H1/21 H1/21 H1/22 H1/22 H1/22 H1/22 H1/21 H1/22 Net interest income 208 207 18 16 19 18 1 1 246 242 Net fee and commission income 5 3 - - - - - - 5 3 Net income from fair value 1 10 - 1 1 3 - - 2 14 me
Slide 38: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (€ mn) 20193 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 H1/22 Net interest income 388 3964 104 104 103 106 417 104 103 207 Net fee and commission income 7 6 2 3 1 2 8 2 1 3 Net income from fair value measurement -8 -6 1 - 1 4 6 6 4 10 Net inc
Slide 39: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (€ mn) 20193 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 H1/22 Net interest income 37 38 9 9 10 9 37 8 8 16 Net fee and commission income - - - - - - - - - - Net income from fair value measurement -2 -1 - - - 1 1 1 - 1 Net income from re
Slide 40: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (€ mn) 20193 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Q1/22 Q2/22 H1/22 Net interest income 29 38 9 10 9 10 38 9 9 18 Net fee and commission income -1 - - - - - - - - - Net income from fair value measurement 3 -1 1 - - 2 3 2 1 3 Net income from realisations
Slide 41: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 30/06/22 31/12/21 Liabilities & equity 30/06/22 31/12/21 Financial assets at fair value through P&L 1.0 1.2 Financial liabilities at fair value through P&L 0.7 0.6 thereof th
Slide 42: Appendix
Appendix 1. Guidance 2022 and mid-term ambition 2. ESG 3. P&L / Balance Sheet 4. Portfolio Profile 5. Funding & Ratings Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 42
Slide 43: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2021 / Total: € 57.5 bn 30/06/2022 / Total: € 53.8 bn Hungary <1% Hungary <1% Finland 1% Other Europe 5% Finland 1% Other Europe 5% Czech Republic 1% Other Rest of World 2% Czech Republic 1% Other Rest of World 2% Sweden 2% 5% Sweden 2% 5
Slide 44: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31/12/2021: € 29.7 bn 30/06/2022: € 30.2 bn 31/12/2021: € 29.7 bn 30/06/2022: € 30.2 bn Austria 1% Other Europe Mixed use 2% Other 2% Mixed use 1% Other 2% Austria 1% Other Europe Czech Republic 1% Hotel 4% Hotel 4% Cze
Slide 45: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2021 / Total: € 29.7 bn € bn (EaD, Basel III) 30/06/2022 / Total: € 30.2 bn 13.9 13.5 4.8 3.8 3.7 3.7 2.6 2.4 1.4 1.5 1.9 1.8 0.9 0.8 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.1 0.1 Germany France UK USA Poland Sweden Finland Austria Czech Spain Hung
Slide 46: Markets Sub-segments
Markets Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning type Shopping centres: increased pressure, Short Term: threads to income Selective approach with foresighted fashion dominated shopping centres stability as well as decreasing reduction of retail
Slide 47: Markets Sub-segments
Markets Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning type Slight rise in vacancies; but still on Financial difficulties of tenants / Focus on good locations comparatively low levels. insolvencies expected to increase due Conservative risk position
Slide 48: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2021: € 5.7 bn 30/06/2022: € 5.1 bn 31/12/2021: € 5.7 bn 30/06/2022: € 5.1 bn Finland 1% Other Europe 3% Corporation 2% Infrastructure Other Europe 3% Corporation 3% Finland 1% Supranational Financ
Slide 49: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2021 / Total: € 5.7 bn € bn (EaD, Basel III) 30/06/2022 / Total: € 5.1 bn 3.1 2.9 1.1 0.9 0.7 0.7 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.0 0.1 0.1 France Germany Spain Austria UK Finland Other Europe Other Rest of World Borrower classification1 € bn (Ea
Slide 50: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2021: € 13.8 bn 30/06/2022: € 11.3 bn 31/12/2021: € 13.8 bn 30/06/2022: € 11.3 bn Financial Financial Institution Other Other Rest Other Rest Institution Supranational 4% Supranational 4% Other PSE <1% Poland
Slide 51: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2021 / Total: € 13.8 bn € bn (EaD, Basel III) 30/06/2022 / Total: € 11.3 bn 5.6 4.5 3.6 3.1 1.6 1.5 0.9 0.7 0.7 0.8 0.8 0.3 0.6 0.3 0.1 0.0 <0.1 <0.1 Austria Germany Italy Spain France Poland Finland Other Europe Rest of World Borrower classification1 € b
Slide 52: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31/12/2021: € 8.3 bn 30/06/2022: € 7.2 bn 31/12/2021: € 8.3 bn 30/06/2022: € 7.2 bn UK <1% Financial Sweden <1% UK <1% Sweden <1% Financial Poland 1% Institution Other Europe Poland 1% Other Europe Sup
Slide 53: Appendix
Appendix 1. Guidance 2022 and mid-term ambition 2. ESG 3. P&L / Balance Sheet 4. Portfolio Profile 5. Funding & Ratings Contact details Results Q2/H1 2022 (IFRS, pbb Group, unaudited, but reviewed), 9 August 2022 53
Slide 54: Own Funds and Eligible Liabilities exceed 8% TLOF
Funding Own Funds and Eligible Liabilities significantly exceed 8 % TLOF (in € bn as of 30/06/2022)1) Composition of MREL2 Liabilities Rundown (30/06/2022) (30/06/2022) Buffer for Senior Preferred (SP) investors due to high volume of capital ~ 15.8 instruments and Senior Non-Preferred (SNP) liabil
Slide 55: 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 56: Mandated Ratings
Mandated Ratings Bank ratings S&P Long-term BBB+ Outlook/Trend Stable Short-term A-2 Stand-alone rating1 bbb Long Term Debt Ratings “Preferred” senior unsecured Debt2 BBB+ “Non-preferred” senior unsecured Debt3 BBB- Subordinated Debt BB+ Pfandbrief ratings Moody’s Public Sector Pfandbrief Aa1 Mortga
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 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)89 2880 23648 axel.leupold@pfandbriefbank.com Website © Deutsche Pfandbriefbank AG Parkring 28 w
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