Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — FY2021 Earnings Presentation
57 slides from Deutsche Pfandbriefbank's earnings presentation, Mar 9, 2022
Slide 1: Strong performance with PBT of EUR 242 mn in 2021
Strong performance with PBT of EUR 242 mn in 2021 – leveraging business model for growth going forward Results Q4/12M 2021 Analyst Conference 9 March 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 & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 3
Slide 4: pbb with strong performance – PBT of EUR 242 mn above guidance
Highlights 2021 pbb with strong performance – PBT of EUR 242 mn above guidance Financials Strong PBT of € 242 mn in 2021 based on good operating performance NII + NCI up >4% y-o-y (2021: € 502 mn; 20201: € 482 mn) supported by continued low refinancing costs (incl. ECB refinancing facilities), f
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 43% 42% Q2 40% Q1 Q1 CIR Q1 9.3 9.1 482 502 219 464 202 204 2.1 7.4 127 3.3 119 126 59 68 61 2.6 3
Slide 6: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 6
Slide 7: Ukraine/Russia crisis – impact on global economy, CRE and pbb
Ukraine/Russia crisis – impact on global economy, CRE and pbb No direct exposure in/to Ukraine and Russia – but uncertainties on overall economic impacts pbb – Status quo & Challenges Market impacts No direct exposure in/to Ukraine and Markets Russia (country of risk) Indirect risks from resp. count
Slide 8: CRE Markets: Investment volumes back on pre-Covid-19 level in Europe
CRE Markets Investment volumes are on pre-Covid-19 level again in Europe – at all-time high in the US European and US Investment volume1 (€ bn) European and US CRE investment volumes showing strong 800 € performance in Q4/21 700 € Quarterly US figures were far above the pre-pandemic trend Euro
Slide 9: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 9
Slide 10: Strong operating performance continued, supported by income from realisations
Financials Strong operating performance continued, supported from high income from realisations Income statement € mn Q4/20 Q4/21 12M/20 12M/21 Key drivers Q4/12M 2021 Operating Income 154 162 526 591 NII up y-o-y, supported by continued low refinancing Net interest income 1 124 125 476 494 costs
Slide 11: NII+NCI up by >4% y-o-y
Financials NII+NCI up by >4% y-o-y Income from lending business Key drivers Q4/12M 2021 € mn NII + NCI up by >4% y-o-y, supported by Q4/20 Q4/21 12M/20 12M/21 continued low refinancing costs (incl. positive effect from TLTRO III) Net interest income1 124 125 476 494 improved floor income from
Slide 12: Risk provisioning significantly down y-o-y
Financials Risk provisioning significantly down y-o-y – solid buffer to cope with potential further market risks Net income from risk provisioning Key drivers Q4/12M 2021 € mn Net income from risk provisioning of € -81 mn (FY 2020: Q4/20 Q4/21 12M/20 12M/21 € -126 mn) – previous year strongly affe
Slide 13: Operating costs under control
Financials Operating costs under control – increase of GAE in line with expectation, including provision for efficiency measures Key drivers Q4/12M 2021 GAE up y-o-y as expected, including € 11 mn provision in connection with our efficiency initiatives (personnel € mn Q4/20 Q4/21 12M/20 12M/21 exp
Slide 14: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 14
Slide 15: New business: strong REF new business volume of € 9.0 bn
New business Strong REF new business volume of € 9.0 bn above full-year guidance of € 7-8 bn in further challenging environment REF New business REF new business € bn (commitments, incl. extensions >1 yr) FY20 9M/21 FY21 27.1 27.0 27.6 Financing Total volume (€ bn) 7.3 5.7 9.0 volume thereof: 9.0 9.
Slide 16: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 16
Slide 17: Portfolio: stable risk parameters and low average LTV of 52%
Portfolio Business approach reflected in stable risk parameters and low average LTV of 52%, which provides solid risk buffer REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)1 € bn (EaD, Basel III) 09/21 12/21 Non-investment grade2 52% 52% 52% 52% Inves
Slide 18: Portfolio: NPLs remain on low level
Portfolio NPLs remain on low level Key drivers Q4/12M 2021 Non-performing loans € mn (EaD, Basel III) Non-performing loans (NPLs) up to € 580 mn y-o-y (12/20: € 470 0.9% 1.0% 1.0% mn) 0.8% 0.9% NPL Restructuring loans up to € 566 mn (12/20: € 456 mn) ratio 590 580 Q2/21: € 70 mn transfer of 2
Slide 19: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 19
Slide 20: Strong funding activities focused on non-Euro Pfandbriefe and Green Senior Preferred
Funding Strong funding activities focused on non-Euro Pfandbriefe and “Green” Senior Preferred – funding optimised with TLTRO III New long-term funding1 € bn Funding Q4/12M 2021 Solid Pfandbrief funding with focus on foreign currencies 2020: € 3.6 bn4 2021: € 5.1 bn4 USD 750 mn Pfandbrief GBP
Slide 21: Secondary spread performance generally in line with broader market
Funding Secondary spread performance generally in line with broader market – current crisis with only moderate effect so far Spread development of pbb Senior Benchmarks vs iTraxx Bank Senior (Spread in bp vs. 6m Euribor) 2018 2019 2020 2021 2022 200 150 Green Senior Preferred Benchmark issued 01/12/
Slide 22: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 22
Slide 23: Capitalisation remains strong – RWA reduction
Capital Capitalisation remains strong – RWA reduction mainly reflecting RWA relief according to CRR II (reduction of add-ons) in Q4/21 Basel III: RWA RWA development Q4/12M 2021 € bn (IFRS) RWA down y-o-y due to 18.1 Reduction of add-ons acc. to Art. 501 CRR II4 17.7 Maturity effects and techn
Slide 24: Dividend proposal for 2021
Dividend proposal for 2021 Shareholders to participate from continued strong performance – management intends to propose dividend of € 1.18 per share Profit attributable to shareholders € mn (IFRS) Dividend proposal 2021 Management intends to propose a dividend of € 1.18 per share 242 PAT attribut
Slide 25: Agenda
Agenda 1. Highlights 2. Markets 3. Financials 4. New Business 5. Portfolio Profile 6. Funding 7. Capital & Dividend 8. Outlook Appendix Contact details Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 25
Slide 26: Starting point: business model has provided stable returns since the IPO
Starting point Our business model has provided stable returns since the IPO and shows good resilience even in global pandemic crisis PBT (in € mn) 301 PBT bandwidth HETA around € 200 mn 242 Stable and profitable PBT 132 204 215 216 +3.7% 195 since IPO despite various one- p.a. 151 off effects in 202
Slide 27: Challenges and Opportunities
Challenges and Opportunities Challenges carry on – pbb is well prepared and positioned with three initiatives Challenges and opportunities persist pbb’s perspective and response pbb's initiatives Macroeconomic risks and pandemic Conservative risk approach Increasing political and macroeconomic R
Slide 28: Initiatives: building out business on core competencies
Initiatives Taking advantage of pbb’s strengths in building out business, based on core competencies, market reach and risk profile Initiatives Key measures Impact Product expansion Widened product portfolio allows broader, diversified (Loan-on-loan, non-senior lending) risk-return combinations ~32*
Slide 29: Initiatives – Organic growth
1 Initiatives – Organic growth pbb maintains conservative risk approach and leverages existing strengths and expertise Achievements Evolution Key measures Strong market standing and Volume of REF new business (€ bn) origination power Leverage scalable platform Product expansion Constructive and lo
Slide 30: Initiatives – Green finance
2 Initiatives – “Green” finance pbb is part of the solution in climate transition with products and processes, and a dedicated internal sustainability program Achievements Strategic levers Key measures Comprehensive ESG program implemented – providing Financial industry plays a special Grow pbb's im
Slide 31: Initiatives - Digitalization
3 Initiatives - Digitalization pbb is scaling up its digitalization initiatives to support organic growth Achievements Evolution Initiatives & key measures Efficiency Digitization roadmap – Client portal Client value-add through digital interface Established digital client portal Focus on digi
Slide 32: Impact of initiatives
Impact of initiatives Conservative risk positioning provides room to maneuver for new strategic growth initiatives Outlook 2024/25 stable REF pbb maintains a stable risk profile, beneficial diversification Non-senior portfolio characteristics help to reduce overall risk 53% 52% 52% Green financing
Slide 33: 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 34: Appendix
Appendix Annual Results 2021 (IFRS, pbb Group, audited, approval from the Supervisory Board pending), 09 March 2022 34
Slide 35: 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 36: Key figures pbb Group
Key figures pbb Group Income statement (€ mn) 2019 Q1/20 Q2/20 Q3/20 Q4/20 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Net interest income 458 111 1169 1259 1249 4769 123 123 123 125 494 Net fee and commission income 6 2 1 1 2 6 2 3 1 2 8 Net income from fair value measurement -7 -17 1 4 4 -8 2 0 1 7 10 Net i
Slide 37: Segment reporting
Segment reporting Segment performance reflects strong performance of strategic REF portfolio in 2021 REF PIF Value Portfolio Income statement (IFRS, € mn) Q4/20 Q4/21 FY20 FY21 Q4/20 Q4/21 FY20 FY21 Q4/20 Q4/21 FY20 FY21 Operating income 125 139 442 511 10 12 41 40 18 11 39 38 thereof: Net interest
Slide 38: Key figures pbb Group 12M/20 vs. 12M/21
Key figures pbb Group 12M/20 vs. 12M/21 Income statement REF PIF VP C&A pbb Group (€ mn) 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 Net interest income 396 417 38 37 38 38 4 2 476 494 Net fee and commission income 6 8 - - - - - - 6 8 Net income from fair value -6 6 -1 1 -1 3 - - -8 10 measure
Slide 39: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement (€ mn) 20193 Q1/20 Q2/20 Q3/20 Q4/20 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Net interest income 388 93 954 1044 1044 3964 104 104 103 106 417 Net fee and commission income 7 2 1 1 2 6 2 3 1 2 8 Net income from fair value measurement -8 -4 1 -2 -1 -6
Slide 40: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement (€ mn) 20193 Q1/20 Q2/20 Q3/20 Q4/20 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Net interest income 37 9 10 10 9 38 9 9 10 9 37 Net fee and commission income - - - - - - - - - - - Net income from fair value measurement -2 -1 - - - -1 - - - 1 1 Net
Slide 41: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement (€ mn) 20193 Q1/20 Q2/20 Q3/20 Q4/20 2020 Q1/21 Q2/21 Q3/21 Q4/21 2021 Net interest income 29 8 10 10 10 38 9 10 9 10 38 Net fee and commission income -1 - - - - - - - - - - Net income from fair value measurement 3 -12 - 6 5 -1 1 - - 2 3 Net income f
Slide 42: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 31/12/21 31/12/20 Liabilities & equity 31/12/21 31/12/20 Financial assets at fair value through P&L 1.2 1.4 Financial liabilities at fair value through P&L 0.6 0.6 thereof th
Slide 43: Portfolio: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2020 / Total: € 58.0 bn 31/12/2021 / Total: € 57.5 bn Hungary <1% Hungary <1% Other Europe 5% Czech Republic 1% Other Europe 5% Czech Republic 1% Other Rest of World 2% Finland 1% Other Rest of World 2% Finland 1% 5% Sweden 2% 5% Sweden 2
Slide 44: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31/12/2020: € 29.3 bn 31/12/2021: € 29.7 bn 31/12/2020: € 29.3 bn 31/12/2021: € 29.7 bn Mixed use 2% Mixed use 2% Czech Republic 1% Other Europe Czech Republic 1% Other Europe Other 2% Other 2% Hotel 5% Hotel 4% Austria
Slide 45: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2020 / Total: € 29.3 bn € bn (EaD, Basel III) 31/12/2021 / Total: € 29.7 bn 14.0 13.9 3.3 3.8 3.1 2.6 2.9 3.7 1.3 1.4 1.8 1.9 0.9 0.9 0.5 0.3 0.4 0.3 0.4 0.4 0.3 0.4 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 in some countries could reduction of retai
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 Conservative risk positioning: S
Slide 48: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2020: € 6.5 bn 31/12/2021: € 5.7 bn 31/12/2020: € 6.5 bn 31/12/2021: € 5.7 bn Infrastructure Corporation 2% Infrastructure Finance 1% Other Europe 3% Finland 1% Other Europe 3% Corporation 2% Finan
Slide 49: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2020 / Total: € 6.5 bn € bn (EaD, Basel III) 31/12/2021 / Total: € 5.7 bn 3.4 3.1 1.3 1.1 0.9 0.7 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 50: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2020: € 15.2 bn 31/12/2021: € 13.8 bn 31/12/2020: € 15.2 bn 31/12/2021: € 13.8 bn Financial Financial Other Rest Other Other Rest Institution Supranational 4% Institution Supranational 4% Other Poland 1% of W
Slide 51: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2020 / Total: € 15.2 bn € bn (EaD, Basel III) 31/12/2021 / Total: € 13.8 bn 6.1 5.6 3.9 3.6 1.9 1.6 0.9 0.9 0.7 0.7 0.7 0.8 0.8 0.6 0.2 0.1 <0.1 <0.1 Austria Germany Italy Spain France Poland Finland Other Europe Rest of World Borrower classification1 € b
Slide 52: Portfolio: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31/12/2020: € 7.0 bn 31/12/2021: € 8.3 bn 31/12/2020: € 7.0 bn 31/12/2021: € 8.3 bn USA <1% Financial Financial USA 1% Sweden <1% Sweden <1% Institution France 2% Institution France 1% Other Europe Oth
Slide 53: Own Funds and Eligible Liabilities significantly exceed 8% TLOF
Funding Own Funds and Eligible Liabilities significantly exceed 8 % TLOF (in € bn as of 31/12/2021)1) Composition of MREL2 Liabilities Rundown (31/12/2021) (31/12/2021) Substantial buffer for Senior Preferred (SP) investors due to high volume of ~ 15.5 capital instruments and Senior Non- Preferred
Slide 54: 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 55: Mandated Ratings
Mandated Ratings Bank ratings S&P Long-term BBB+ Outlook/Trend Negative Short-term A-2 Stand-alone rating1 bbb- Long Term Debt Ratings “Preferred” senior unsecured Debt2 BBB+ “Non-preferred” senior unsecured Debt3 BB+ Subordinated Debt BB Pfandbrief ratings Moody’s Public Sector Pfandbrief Aa1 Mortg
Slide 56: 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 57: 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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