Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q2 2018 Earnings Presentation
49 slides from Deutsche Pfandbriefbank's earnings presentation, Aug 13, 2018
Slide 1: Results Q2/H1 2018
Good performance with PBT of € 122 mn in H1/18 Results Q2/H1 2018 13 August 2018 Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018
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 regis
Slide 3: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 3
Slide 4: Highlights H1/18
Highlights H1/18 pbb shows continued good performance – PBT full-year guidance raised to € 175-195 mn PBT of € 74 mn in Q2/18 (Q2/17: € 56 mn) results in € 122 mn in H1/18 (+18% y-o-y; H1/17: € 103 mn) due to solid underlying trends and one-off gain − Strong NII (Q2/18: € 113 mn; H1/18: € 220 mn) ma
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 New structure (IFRS9) New structure (IFRS9) Q1 47% 11.6 443 41% 10.5 412 415 CIR1 122 111 216 4.2 Q4 115
Slide 6: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 6
Slide 7: Income statement
Income statement Good performance with strong NII, GAE on low level and no net risk provisioning – in addition, one-off gain Income statement (new structure following IFRS 9)1 € mn Q2/17 Q2/18 H1/17 H1/18 Key drivers Q2/H1 2018: Operating Income 111 120 228 232 NII +12% y-o-y, benefitting from reduc
Slide 8: Income statement: NII up 12% y-o-y
Income statement NII up +12% y-o-y, mainly benefitting from reduced funding costs Income from lending business € mn Key drivers Q2/H1 2018: Q2/17 Q2/18 H1/17 H1/18 NII continues to benefit from solid underlying drivers Net interest income 99 113 196 220 − Avg. strategic financing volume slightly up
Slide 9: Income statement: Net income from risk provisioning
Income statement No net additions to risk provisions required, reflecting risk conservative business approach and overall market environment Net income from risk provisioning Key drivers Q2/H1 2018: € mn Q2/17 Q2/18 H1/17 H1/18 Net release of provisions in stage 1 and 2 of € 4 mn in Q2/18 (H1/18: 9
Slide 10: Income statement: Operating costs on low level
Income statement Operating costs on low level – regulatory costs and strategic investments will continue to weigh on overall cost level General & administrative expenses and depreciations € mn Key drivers Q2/H1 2018: Q2/17 Q2/18 H1/17 H1/18 GAE on low level − costs remain under control General admin
Slide 11: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 11
Slide 12: REF: New business with stable margins
New business & segment reporting REF: New business with stable margins – continued focus on conservative risk positioning New business H1/17 2017 H1/18 € bn 10.7 Income statement (IFRS, € mn) Q2/175 Q2/18 H1/175 H1/18 9.5 Total volume (€ bn) 4.5 10.7 3.6 Operating income 102 93 184 189 3.8 thereof:
Slide 13: PIF: Strong competition weighs on new business
New business & segment reporting PIF: Strong competition weighs on new business volume and margins € bn 1.0 Income statement (IFRS, € mn) Q2/173 Q2/18 H1/173 H1/18 New business H1/17 2017 H1/18 0.9 Operating income 7 7 13 14 Total volume (€ bn) 0.5 0.9 0.2 Q4 0.5 0.3 thereof: Net interest income 7 8
Slide 14: VP: Run-down of Value Portfolio continued
New business & segment reporting VP: Run-down of non-strategic Value Portfolio continued in line with strategy € bn Income statement (IFRS, € mn) Q2/172 Q2/18 H1/172 H1/18 -8% Operating income 8 19 32 26 14.6 thereof: Net interest income 8 10 16 18 13.8 13.6 13.5 Net income from risk provisioning -
Slide 15: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 15
Slide 16: Portfolio: Conservative business and risk strategy continued
Portfolio Conservative business and risk strategy continued – high portfolio quality with 95% investment grade and avg. LTV of 55% Total portfolio: Internal ratings (EL classes) REF Portfolio: Avg. weighted LTVs € bn (EaD, Basel III) 03/18 06/18 % (commitments)2 Non-investment grade1 Investment grad
Slide 17: Portfolio: Total problem loans at historically low level
Portfolio Total problem loans continue to be at historically low level Total problem loans Workout1 Key drivers Q2/H1 2018: € mn (EaD, Basel III) Restructuring2 Total problem loans down -30% y-o-y Total problem 0.5% − No problem loans in PIF and VP loan ratio 0.4% 0.4% 0.4% − Only € 16 mn workout lo
Slide 18: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 18
Slide 19: Funding: Further reduction of funding costs in H1/18
Funding Further significant reduction of funding costs in H1/18 New long-term funding1 € bn Pfandbriefe H1/17: € 4.0 bn2 H1/18: € 3.0 bn3 Mortgage Pfandbrief Benchmarks: € 750 mn 5y, € 500 mn 6y, € 250 mn tap; additionally foreign currencies (£ 50 mn and Spread 22 11 80 -1 0 48 SEK 2 bn) (Ø, bp)4 Te
Slide 20: Funding: Senior unsecured spreads are widening
Funding Senior unsecured spreads are widening in line with market trends Spread development of pbb Senior Unsecured Benchmarks vs peers and iTraxx Bank Senior (Spread vs. 6m Euribor) New long-term funding HyPfe € bn1 Öpfe Sen. Unsec. 2.0 2016 2017 1.5 1.3 140 1.1 0.9 0.9 0.8 0.9 >0.1 130 0.1 0.5 0.9
Slide 21: MREL requirements
MREL requirements pbb specific MREL requirement set below 8% TLOF – MREL eligible items significantly exceed MREL requirements MREL eligible items (abs.) MREL eligible MREL eligible items (% of RWA) MREL eligible senior non-preferred 31/12/2017: %, fully loaded, pro-forma incl. AT11 senior non-prefe
Slide 22: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 22
Slide 23: Capital: Capitalisation remains strong
Capital Capitalisation remains strong Basel III: RWA Basel III: Capital ratios (fully-loaded) € bn (IFRS) % (IFRS) incl. approx. € +2 bn RWA from ECB harmonisation Ambition in % 06/171 12/172 03/184 06/185 levels 14.5 CET 1 19.4 17.6 18.8 19.4 ≥12.5 14.2 13.7 Tier 1 19.4 17.6 18.8 21.5 ≥16 Own funds
Slide 24: Agenda
Agenda 1. Highlights 2. Financials 3. New Business & Segment Reporting 4. Portfolio Profile 5. Funding 6. Capital 7. Summary & Outlook Appendix Contact details Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 24
Slide 25: Summary & Outlook
Summary & Outlook Strong H1/18 paves way for good 2018 results Good performance with solid underlying trends – PBT of € 122 mn in H1/18 Stable net interest income and low risk costs One-off gain from conditional additional purchase price adjustment on Heta New business slightly higher q-o-q but belo
Slide 26: Appendix
Appendix Results Q2/H1 2018 (IFRS, pbb Group, unaudited, but reviewed), 13 August 2018 26
Slide 27: Income statement: new structure
Income statement New structure based on internationally common disclosure – changes increase transparency of financial reporting Major changes: A. Depreciations for non financial assets in „GAE“ and „net other operating income“ are allocated to „net results from write-downs and write-ups on non-fina
Slide 28: Financial reporting: change in key ratio definitions
Financial reporting Change in definition of key ratios and segment allocation in 2018 New calculation method of CIR as a result of new P&L structure: General admin. Expenses + Net income from write-downs and write-ups on non-financial assets CIR − In principal, continuation of past structure CIR = −
Slide 29: Key figures pbb Group
Key figures pbb Group Income statement – former structure Income statement – new structure 20161 2017 Q1/17 Q2/17 H1/17 2017 Q1/18 Q2/18 H1/18 (€ mn) (€ mn) Net interest income 404 435 Net interest income 97 99 196 407 107 113 220 Net fee and commission income 8 8 Net fee and commission income 3 2 5
Slide 30: Key figures pbb Group Q1/17 vs. Q1/18
Key figures pbb Group Q1/17 vs. Q1/18 Income statement – new REF PIF VP C&A pbb Group structure (€ mn) H1/17 H1/18 H1/17 H1/18 H1/17 H1/18 H1/17 H1/18 H1/17 H1/18 Net interest income 163 183 14 16 16 18 3 3 196 220 Net fee and commission income 5 3 - 5 3 Net income from fair value 2 -4 -1 -1 -1 9 -
Slide 31: Key figures Real Estate Finance (REF)
Key figures Real Estate Finance (REF) Income statement – former structure 2016 2017 Income statement – new structure Q1/173 Q2/173 H1/173 20173 Q1/18 Q2/18 H1/18 (€ mn) (€ mn) Net interest income 321 350 Net interest income 81 82 163 334 89 94 183 Net fee and commission income 9 9 Net fee and commis
Slide 32: Key figures Public Investment Finance (PIF)
Key figures Public Investment Finance (PIF) Income statement – former structure 2016 2017 Income statement – new structure Q1/173 Q2/173 H1/173 20173 Q1/18 Q2/18 H1/18 (€ mn) (€ mn) Net interest income 35 36 Net interest income 7 7 14 30 8 8 16 Net fee and commission income - - Net fee and commissio
Slide 33: Key figures Value Portfolio (VP)
Key figures Value Portfolio (VP) Income statement – former structure 20161 2017 Income statement – new structure Q1/174 Q2/174 H1/174 20174 Q1/18 Q2/18 H1/18 (€ mn) (€ mn) Net interest income 41 42 Net interest income 8 8 16 37 8 10 18 Net fee and commission income -1 -1 Net fee and commission incom
Slide 34: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet: 30/06/2018 (01/01/18) IFRS, € bn 57.8 (58.0) 57.8 (58.0) Pos. FV of derivatives 3.2 (3.5) 3.6 (3.8) Neg. FV of derivatives 11.5 (11.6) Other liabilities (customers/FIs)2 <0.1 (0.0) Money Mark
Slide 35: Markets: CRE market environment remains competitive
Markets CRE market environment remains highly competitive and challenging – pbb maintains risk-conservative approach European CRE investment volume (€ bn) CRE investment market in Europe at elevated levels 90,00 Quarter total (LHS) 12 month rolling total (RHS) 300 − Volume saw another pick-up in Q4/
Slide 36: Portfolio: Total portfolio
Portfolio Total portfolio In € billion (EaD, Basel III) Regions 31/12/2017 / Total: € 57.5 bn 30/06/2018 / Total: € 57.7 bn Hungary 1% Other Europe 5% Hungary 1% Other Europe 5% Finland 1% Other Rest of World 3% Finland 1% Other Rest of World 3% Czech Republic 1% Czech Republic 1% USA 2% USA 2% Swed
Slide 37: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) In € billion (EaD, Basel III) Regions Property types 31.12.2017: € 28.3 bn 30.06.2018: € 28.8 bn 31.12.2017: € 28.3 bn 30.06.2018: € 28.8 bn Czech Republic 1% Hungary 1% Hungary 1% Czech Republic 1% Other Europe 6% Mixed use 3% Other 4% Mixed use 3% Other 4% Austr
Slide 38: Portfolio: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) Regions 31/12/2017 / Total: € 28.3 bn € bn (EaD, Basel III) 30/06/2018 / Total: € 28.8 bn 13.9 14.3 4.7 4.3 3.4 3.3 1.6 1.4 1.4 1.3 0.9 1.3 0.5 0.5 0.4 0.4 1.1 1.2 0.2 0.3 0.2 0.3 0.2 0.2 <0.1 <0.1 Germany UK France Sweden Poland USA Austria Czech Finland Spain Hu
Slide 39: Side note: Brexit and US-market entry
Side note: Brexit and US-market entry REF: High portfolio quality in UK and selective new business with low LTVs in US REF Portfolio REF New business 30/06/2018: € 28.8 bn (EaD, Basel III) H1/18: € 3.6 bn (commitments incl. extensions >1J) Other Europe Other Europe High portfolio quality USA Nordics
Slide 40: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) In € billion (EaD, Basel III) Regions Borrower classification1 31.12.2017: € 7.9 bn 30.06.2018: € 7.6 bn 31.12.2017: € 7.9 bn 30.06.2018: € 7.6 bn Sweden 1% Sweden 1% Other Europe 4% Infrastructure Corporation 1% Infrastructure Finland 2% Other Europe 4% Cor
Slide 41: Portfolio: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) Regions 31/12/2017 / Total: € 7.9 bn € bn (EaD, Basel III) 30/06/2018 / Total: € 7.6 bn 3.5 3.5 1.9 1.8 1.5 1.2 0.3 0.3 0.2 0.2 0.1 0.1 0.3 0.3 0.1 0.1 <0.1 <0.1 France Germany Spain Austria UK Finland Sweden Other Europe Other Rest of World Borrower classif
Slide 42: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) In € billion (EaD, Basel III) Regions Borrower classification1 31.12.2017: € 17.0 bn 30.06.2018: € 16.6 bn 31.12.2017: € 17.0 bn 30.06.2018: € 16.6 bn Other Other Rest Other Other Rest Finland <1% Finland <1% Czech Rep. <1% Czech Rep. <1% Financial Financial Hungary 1%
Slide 43: Portfolio: Value Portfolio (VP)
Portfolio Value Portfolio (VP) Regions 31/12/2017 / Total: € 17.0 bn € bn (EaD, Basel III) 30/06/2018 / Total: € 16.6 bn 5.6 5.5 4.8 4.6 2.0 2.1 1.2 1.2 1.2 1.1 1.1 1.1 0.7 0.7 0.2 0.2 0.1 0.1 <0.1 <0.1 <0.1 <0.1 Austria Germany Italy Spain France Poland Hungary Czech Finland Other Europe Rest of Re
Slide 44: Side note: Italy
Side note: Italy High portfolio quality in Value Portfolio, only marginal Italy exposure in REF portfolio Total Value Portfolio 30/06/2018: € 16.6 bn (EaD, Basel III) Other Rest of World High portfolio quality Other Europe 6% − ~70% Sovereign and ~30% Regional Government 13% Austria − ~99% Investmen
Slide 45: Portfolio: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) In € billion (EaD, Basel III) Regions Borrower classification2 31.12.2017: € 4.3 bn 30.06.2018: € 4.7 bn 31.12.2017: € 4.3 bn 30.06.2018: € 4.7 bn Other Rest of World Germany1 Other Rest of World Financial Corporation <1% Corporation <1% Germany1 Instituti
Slide 46: 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 47: Ratings
Ratings Bank ratings S&P DBRS Long-term A- BBB Outlook/Trend Negative Positive Short-term A-2 R-2 (high) Stand-alone rating1 bbb BBB Long Term Debt Ratings “Preferred” senior unsecured Debt2 A- BBB “Non-preferred” senior unsecured Debt3 BBB- BBB (low) Subordinated Debt BB+ BB (high) Pfandbrief ratin
Slide 48: 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 49: 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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