Deutsche Pfandbriefbank AG · XETR:PBB
Deutsche Pfandbriefbank — Debt Investor Presentation (May 2024)
40 slides from Deutsche Pfandbriefbank's debt investor presentation, May 14, 2024
Slide 1: Debt Investor Update - Results Q1/24
Debt Investor Update - Results Q1/24
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, markets & products
BUSINESS MODEL, MARKETS & PRODUCTS pbb is a leading, specialized commercial real estate lender ►Leading specialised CRE bank with high-risk competence ►Strong franchise with long- standing client relationships ►Local presence in core Europe and the US ►Resilient Pfandbrief as main funding source – i
Slide 4: Key messages: Solid start into 2024
KEY MESSAGES Solid start into 2024 Pre-tax profit of € 34 mn, slightly higher than previous year (Q1/23: € 32 mn) Pre-provision profit of € 81 mn, benefitting from strong NII and realisation income Risk provisioning remains elevated in line with guidance Strategic active balance sheet management sta
Slide 5: Operating & financial overview: Selective new business at strong margins
OPERATING & FINANCIAL OVERVIEW Selective new business at strong margins REF new business REF portfolio € bn (commitments, incl. extensions > 1 yr.) € bn (financing volume) ~200 bp ~245 bp 31.1 31.2 Selective new business REF portfolio stable 1.0 volume with focus on Improved gross portfolio 0.
Slide 6: REF portfolio performing
REF PORTFOLIO PERFORMING Solid portfolio in still demanding market environment Performing Portfolio € bn (EaD, Basel III) Portfolio quality remains solid – focus on senior lending only 30.1 31.5 31.3 100% of the portfolio reviewed/revalued in last 12 months – avg. value change of -10%2 Strong
Slide 7: REF portfolio NPL: Slowing dynamic
REF PORTFOLIO NPL Slowing dynamic in NPL portfolio NPL Portfolio Additions driven by two US office loans and one German € mn (EaD, Basel III) development 1,647 Only small increase of NPL portfolio, benefitting from active 1,535 +35 -91 +168 management of NPL portfolio 3 loans 2 loans 1 loan (€
Slide 8: Focus: USA performing
FOCUS: USA PERFORMING Continued pressure on valuations Performing Portfolio € bn (EaD, Basel III) Full focus on risk mitigation in existing portfolio 4.5 4.5 4.6 100% of the portfolio reviewed/revalued in last 12 months – avg. value change of -17%2 LTV-stress: Exposure at risk: ~4.7% of port
Slide 9: Focus: USA NPL
FOCUS: USA NPL Successful workout and restructuring limited NPL increase to € ~50 mn (before FX effects) Non-Performing Portfolio Additions (office) mitigated by active NPL management € mn (EaD, Basel III) 1 loan (€ 46 mn) restructured +14 672 1 loan (€ 46 mn) repaid -91 607 +142 both at int
Slide 10: Focus: Development portfolio
FOCUS: DEVELOPMENT PORTFOLIO Development portfolio further reduced Portfolio Performing Phase Portfolio reduced by € 0.2 bn in Q1/24 – significantly reduced since € bn (EaD, Basel III) Non-performing 31/03/2024 (commitments, Basel III) 2019 (12/19: € 4.7 bn, 03/24: € 3.0 bn) 3.2 3.2 24 loans 15 lo
Slide 11: Focus: Germany performing
FOCUS: GERMANY PERFORMING High portfolio quality – well diversified, senior lending portfolio with ~90% of loans collateralised at LTV ≤50% Performing Portfolio € bn (EaD, Basel III) German CRE portfolio well diversified by region and property type with focus on big 5 cities – Hamburg, Berlin, Dus
Slide 12: Risk costs: Risk provisioning on elevated level
RISK COSTS Risk provisioning on elevated level, but significantly lower vs. Q4/23, as expected Net income from risk provisioning Stage 1&21 Stage 1&2 € mn (IFRS) Stage 3 Other Other2 UK -1 1 -7 5 -9 1 -10 -2 € -10 mn -37 -100 -47 -10 -108 USA Q1/23 Q4/23 Q1/24 (incl. release of € 9 mn management ove
Slide 13: Risk costs: REF loan loss allowance coverage
RISK COSTS REF loan loss allowance coverage further strengthened Balance sheet – loss allowances Stage 1&2 € mn Stage 1 Other Germany Stage 2 14 15 Stage 3 UK REF 189 bp 199 bp 24 coverage 589 623 41 39 € 181 mn 134 142 USA (incl. € 22 mn 414 442 mgmt. overlay) 128 12/23 03/24 Mgmt. overlay 31 22 St
Slide 14: Funding and liquidity: Strong liquidity position
FUNDING AND LIQUIDITY Strong liquidity position further improved Capital market funding needs for 2024 largely covered Further growth of Retail deposits LCR NSFR Strong reaction function on basis of broadened cooperations (ytd-growth € 1.5 bn) Current volume of € 8.1 bn (04/24) well exceeds ne
Slide 15: Funding and liquidity: Diversified funding base
FUNDING AND LIQUIDITY Diversified funding base Diversified Funding Base Unsecured Funding 31/03/2024: € bn, nominal values 4.1 18% 26% 40% 44% 0.6 2.3 15.6 82% 74% 6.6 60% 56% € 47.2 bn 12/19 12/22 12/23 03/24 Retail Deposits Wholesale Unsecured 7.1 7.2 2.8 0.9 Over 55% resilient secured funding3
Slide 16: Retail deposits: growth exceeds expectations
RETAIL DEPOSITS Retail deposit growth exceeds expectations and needs Retail Deposits – development & maturity profile1 Strong growth to € 8.1 bn – expected to be lower by € bn year-end in line with further active balance sheet WAL WAL management 3.1 yrs 3.6 yrs Elastic source of funding – strong
Slide 17: Funding and liquidity: Funding costs at manageable levels
FUNDING AND LIQUIDITY Funding costs at manageable levels Spread 3Y Pfandbrief vs Midswap 90 in bps 85 Benchmark Benchmark tap Pfandbrief 80 Successful 3Y Pfandbrief benchmark issued at +58 bp end of 75 January 2024 70 65 Spreads are back to previous levels, (9th May) at +53 bp 60 Benchmark has
Slide 18: Funding: Own funds and eligible liabilities exceed requirements
FUNDING Own Funds and Eligible Liabilities exceed regulatory requirements € bn Buffer for Senior Preferred (SP) MREL2 Composition of Rundown investors due to high volume of (31/03/2024) Liabilities capital instruments and Senior (31/03/2024) Non-Preferred (SNP) liabilities Existing Senior Non-Pr
Slide 19: Mortgage cover pool
MORTGAGE COVER POOL Diversification by countries and property types Mortgage Cover Pool Regions Property types Key metrics Spain 1.5% Switzerland 0.3% Austria 1% Italy 0.4% Benelux Nordic countries 3% Other Mortgage cover pool (nominal) 31/03/2024 6% 25% Pfandbriefe outstanding € 16.2 bn CEE 11% Ger
Slide 20: Mandated ratings
MANDATED RATINGS Bank ratings S&P Long-term BBB- Outlook/Trend Negative Short-term A-3 Stand-alone rating1 bb+ Long Term Debt Ratings “Preferred” senior unsecured Debt2 BBB- “Non-preferred” senior unsecured Debt3 BB- Subordinated Debt B+ Pfandbrief ratings Moody’s Mortgage Pfandbrief Aa1 Public Sect
Slide 21: Capital: pbb well capitalised
CAPITAL pbb well capitalised Basel III: Capital and leverage ratios Pro-forma 15.2% CET 1 ratio including interim result – slightly increased RWA (IFRS) B4 F-IRBA reflect internal rating developments and new business 21.4% 19.5% 18.7% 20.0% Strong MDA buffer of 550 bp (€ 1 bn) over regulatory re
Slide 22: Balance sheet management: Active REF portfolio
BALANCE SHEET MANAGEMENT Pro-active management of pbb’s balance sheet Portfolio transaction in Q2/24 – sale of € 0.9 bn performing loan Portfolio transaction portfolio to be signed shortly, RWA relief of € 0.7 bn (€ bn, financing volume) Active REF 0.9 0.9 Transaction targets to improve REF port
Slide 23: Guidance 2024
GUIDANCE 2024 Solid operating income strength; PBT expected significantly above 2023 level New business (incl. extensions > 1 year) € 6-7 bn REF Portfolio Financing volume € 30-31 bn Operating Income € 525-550 mn thereof: NII + NCI € 475-500 mn P&L LLPs << 2023 CIR ~50% Pre-tax profit >> 2023 Profit
Slide 24: Summary: Solid start into 2024
SUMMARY Solid start into 2024 PBT in line with guidance Risk provisioning in Q1/24 remains elevated as expected, but lower than Q4/23 Slowing dynamic in NPL portfolio supported by active management Strategic active balance sheet management started with focus on REF portfolio – performing/non-perfo
Slide 25: Appendix
APPENDIX 25
Slide 26: REF new business: portfolio growth with improved margins
REF NEW BUSINESS REF portfolio growth with improved margins Volume of strategic REF portfolio in € bn Strategic REF portfolio stable q-o-q, benefitting from drawdowns (financing volume) of new business and low level of prepayments and repayments +€ 1.8 bn Avg. portfolio margin further up Selec
Slide 27: REF new business: Diversification supports management of the cycle
REF NEW BUSINESS Diversification supports management of the cycle As of 31/03/24 Regions Property types Mixed use/ Hotel other Other Germany Logistics/ 9% 0% storage 0% 18% 24% € 0.7 bn Nordics 18% 46% Office New business 3% CEE (commitments, incl. 18% 35% Retail extensions > 1 year) 16% France USA
Slide 28: REF NPL portfolio: Small increase in Q1/24
REF NPL PORTFOLIO Small increase in Q1/24 – active restructuring/ work-out ongoing Geographical breakdown Breakdown by property type € mn (EaD, Basel III) € mn (EaD, Basel III) 1,648 1,648 1,535 1,535 194 164 350 194 187 339 Other & Guaranteed 374 Others 835 835 364 441 Hotel France 404 Logistics CE
Slide 29: REF portfolio LTV development
REF PORTFOLIO LTV development reflects market environment REF Portfolio: LTV cluster1 € bn Avg. LTV1 03/23: 51% 03/24: 54% 66% 58% 55% 53% 53% 52% 58% 51% 50% 50% 56% 49% 55% 48% 48% 54% 53% 53% 53% 46% 52% 51% 45% 45% 49% 48% 47% 45% Germany UK France Sweden Poland Rest of Europe USA Office Residen
Slide 30: Monitoring process: Multi-level valuation review
MONITORING PROCESS Multi-level valuation review process Loan Origination Regular annual review (Level 1/2) – revaluation mandatory In addition, reviews on a continuous basis: in case of significant changes (Level 3/4) Event triggered review – revaluation mandatory in case of significant changes (e
Slide 31: Economic outlook
ECONOMIC OUTLOOK Base case: modest economic growth outlook GDP growth picks up moderately in Europe In 2024 and 2025, pbb expects GDP growth in Continental Europe % by ~0.8% and ~1.5%, while the UK is expected to grow again by 3 2.5 ~0.5% this year, and ~1.3% in 2025. US GDP is expected to expand
Slide 32: REF portfolio sub-segments
REF PORTFOLIO Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning Net absorption has recovered compare to Covid, but is Cooling of tenant market due to overall economic Focus on good locations in main European still relatively weak as a result of both the
Slide 33: REF portfolio sub-segments
REF PORTFOLIO Sub-segments Property Regions Evaluation of current situation Challenges Risk positioning Inflation and high interest rates weakened retail Short Term: threats to income stability as well as Selective approach with planned sales in 2023. In 2024 lower inflation stabilises real de
Slide 34: Portfolio: Real Estate Finance (REF)
PORTFOLIO Real Estate Finance (REF) Regions Property types 31/12/2023: € 33.0 bn 31/03/2024: € 32.9 bn 31/12/2023: € 33.0 bn 31/03/2024: € 32.9 bn Austria 1% Mixed use 1% Mixed use 1% Austria 1% Other Europe Other Europe Hotel 3% Other 1% Hotel 3% Other 1% Czech Republic 2% Czech Republic 2% Retail
Slide 35: Portfolio: Non-Core Unit (PIF & VP)
PORTFOLIO Non-Core Unit (PIF & VP) Regions Borrower classification1 31/12/2023: € 13.2 bn 31/03/2024: € 12.4 bn 31/12/2023: € 13.2 bn 31/03/2024: € 12.4 bn Supranational 1% Supranational 1% Finland <1% Other Europe 3% Finland <1% Other Europe 3% Financial Institution 2% Corporation 1% Financial Inst
Slide 36: Funding and liquidity: Capital market funding focused on Pfandbrief
FUNDING AND LIQUIDITY Capital Market funding focused on Pfandbrief New long-term funding1 € bn Secured capital market funding largely covered for 2024 Q1/23: € 1.4 bn Q1/24: € 0.8 bn 4M/24: € 0.9 bn Secured funding is ahead of plan Spread 19 210 65 - 66 - Markets open for public issues and pri
Slide 37: Pfandbrief cover pool: ISCR and Mortgage Lending Value
PFANDBRIEF COVER POOL ISCR and the effect of the Mortgage Lending Value – very simplified example! Interest Service Cover Loan-to-Value Ratio Loan Valuation Refinancing MV € 100 mn € 4.0 mn rent p.a. at 4% property yield Borrower’s Difference results in a market MV Equity e.g. 35% value of € 100 mn
Slide 38: ESG: pbb continues to execute on its strategy
ESG pbb continues to execute on its strategy P P 2021: 2017: 2020: P Holistic organisational set-up of 1st Non-financial Report Introduction of Green ESG Programm (NFRD) Bond Framework Introduction of green building Focus on scoring model & pbb Green Loan Transparency of Framework pbb‘s portfolio an
Slide 39: Green Loan criteria
GREEN LOAN pbb Green Loan Framework aligned with current regulatory and market developments – specific metrics defined for each criterion pbb Scoring Model EU Taxonomy MAX SCORE: 100 Points III. Additional Sustainability I. Energy Efficiency II. Building Certification Factors Energy demand/-consum
Slide 40: Contact details
CONTACT DETAILS Götz Michl Head of Funding & Debt Investor Relations +49 (0)6196 9990 2931 goetz.michl@pfandbriefbank.com Silvio Bardeschi Funding & Debt Investor Relations +49 (0)6196 9990 2934 Website silvio.bardeschi@pfandbriefbank.com www.pfandbriefbank.com/investor-relations.html © Deutsche Pfa
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