Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Investor Presentation (September 2011)
46 slides from Deutsche Pfandbriefbank's investor presentation, Sep 9, 2011
Slide 1: pbb Banks' Day
pbb Banks’ Day Frankfurt, 9th September 2011 Re-establishing a leading European Pfandbrief issuer
Slide 2: Agenda
Agenda 1. Business model and strategy (Manuela Better) 2. Portfolio (Manuela Better) 3. New business (Dr. Bernhard Scholz) 4. Funding and cover pools (Wolfgang Groth) 5. Financials and outlook (Alexander von Uslar) 6. Key take-aways (Manuela Better) Banks' Day, Frankfurt, 9th September 2011 2
Slide 3: Business model and strategy: well positioned for continued growth
Business model and strategy pbb well positioned for continued growth in strategic business lines Business model – pbb in excellent position Market environment – big potential in growing market Diversification in products and regions Market in upturn Two business lines High degree of synergies Need f
Slide 4: Focus on Real Estate and Public Investment Finance
Business model and strategy Focus on Real Estate and Public Investment Finance – Public Budget Finance business will be run down over time on balance sheet Public Sector Finance (PSF) Real Estate Finance (REF) Public Investment Finance1 Public Budget Finance2 (PIF) (PBF) Run-down business Strategic
Slide 5: Agenda
Agenda 1. Business model and strategy (Manuela Better) 2. Portfolio (Manuela Better) 3. New business (Dr. Bernhard Scholz) 4. Funding and cover pools (Wolfgang Groth) 5. Financials and outlook (Alexander von Uslar) 6. Key take-aways (Manuela Better) Banks' Day, Frankfurt, 9th September 2011 5
Slide 6: Total portfolio
Total portfolio Portfolio growth in strategic business lines will compensate for the decline in Public Budget Finance Total portfolio Planned portfolio development1 EUR billions (EaD) 86 81 Public Budget ~30-35% ~42% Finance Non-REF 60 Non-REF 56 Liquidity portfolio and other PIF ~65-70% ~58% REF 26
Slide 7: Real Estate portfolio
Real Estate portfolio Portfolio well diversified, reflecting strategic focus – 94% investment loans Regions Property types 30/06/2011: EUR 25 billion (EaD)1 30/06/2011: EUR 25 billion (EaD)1 Italy Spain Portugal Benelux Other Europe Hotel/Leisure Others Japan Industrial/Logistics 4% 2% Scandinavia 3
Slide 8: More than 80% of loan volume with LTVs ≤60%
Real Estate portfolio More than 80% of loan volume with LTVs ≤60% Layered LTV classes Avg. LTVs by regions 30/06/2011: EUR 24 billions (commitments)1,2 30/06/2011: EUR 24 billions (commitments)1 >90%-95% >95-100% 74% >85%-90% >100% 68% 69% 69% 65% >75-85% >60%-75% 4% 57% <1% 12% <1% <1% 2% 81% up to
Slide 9: Non-Real Estate portfolio
Non-Real Estate portfolio Portfolio well diversified and of high quality, with >90% in PD classes 1-7 Regions Counterparty types 30/06/2011: EUR 56 billion (EaD)1 30/06/2011: EUR 56 billion (EaD)1 Scandinavia Ireland2 Japan Other Europe Corporates Others Benelux Rest of the World 2% GRC/GRI4,5 CEE <
Slide 10: Exposure in selected countries
Exposure in selected countries No sovereign exposure in Greece, Spain and Ireland Non-REF portfolio by counterparty types Real Estate portfolio 30/06/2011: EUR billions (EaD)1 30/06/2011: EUR billions (EaD)1 Sovereign Non-sovereign 4.9 4.6 2.8 2.1 4.6 0.3 0.4 1.8 2.1 0.3 0.2 0.1 0.0 0.0 0.0 0.22 Por
Slide 11: Problem loans: significantly reduced and adequately covered
Problem loans Total problem loans significantly reduced and adequately covered Total problem loans 30/06/2011: EUR 1.3 bn (EaD) EUR billions (EaD) -86% Non-REF Workout loans1 8.5 REF 4% 0.1 8.4 1.2 1.2 1.3 0.1 0.1 0.1 96% 1.1 1.1 1.2 Restructuring loans2 30/09/2010 31/12/2010 31/03/2011 30/06/2011 T
Slide 12: REF problem loans mainly restructuring loans
Problem loans REF problem loans mainly consist of restructuring loans – only marginal volume of workout loans REF problem loans Restructuring loans EUR billions (EaD) 30/06/2011 Workout loans1 # Product Type Asset Type Location of EL Class -87% Restructuring loans2 Property 8.4 1 Investment Shopping
Slide 13: Risk Management
Risk Management pbb dedicated to achieve best practice in risk management approach Risk management function enhanced and set-up renewed – complete overhaul of risk processes New governance and committee structure Improved reporting standards Consistent group-wide identification, measurement and repo
Slide 14: Agenda
Agenda 1. Business model and strategy (Manuela Better) 2. Portfolio (Manuela Better) 3. New business (Dr. Bernhard Scholz) 4. Funding and cover pools (Wolfgang Groth) 5. Financials and outlook (Alexander von Uslar) 6. Key take-aways (Manuela Better) Banks' Day, Frankfurt, 9th September 2011 14
Slide 15: New business: regional focus on Germany and Europe
New business Regional focus on Germany and other European countries – expansion of local presence in the German and Scandinavian market envisaged Real Estate Finance (REF) Core countries with sales locations Public Investment Finance (PIF) Core countries with sales locations Potential new location i
Slide 16: Scope of strategic business activities
New business Scope of strategic business activities Real Estate Finance (REF) Public Investment Finance (PIF) Professional national and international real estate investors Pfandbrief eligible public borrowers (specific purpose with an (e.g. Real Estate companies, Institutional Investors, Real asset
Slide 17: Successful re-entry into the markets
New business Successful re-entry into the markets – new business volumes in H1 2011 already at full-year level 2010 Total new business1 EUR billions ~10 8-10 Public Investment Finance (PIF) ~8 4.1 1.9 4.1 Real Estate PSF 1.0 0.6 Finance (REF) 1.2 (incl. PIF) 2.2 1.3 REF 3.1 0.6 2.9 1.6 FY 2010 Q1 20
Slide 18: REF: New business origination re-started at attractive margins
New business REF: New business origination successfully re-started at attractive margins Real Estate Finance (REF) EUR billions 3.1 2.9 1.4 1.6 New commitments 1.7 1.3 Extensions >1 year FY 2010 H1 2011 FY 2010 H1 2011 No. of deals 65 41 Average maturity ~3.9 yrs ~4.3 yrs Average LTV 66% 71% Average
Slide 19: REF: Sample transaction (I) HighLight Towers, Munich
New business REF: Sample transaction (I) HighLight Towers, Munich (Germany) Borrower: Bürozentrum Parkstadt München Schwabing KG Facility Acquisition financing type: HighLight Towers – as one of the few high-rise buildings in Munich – is a striking office building in Parkstadt Schwabing, near the Mi
Slide 20: REF: Sample transaction (II) Marble Arch Tower, London
New business REF: Sample transaction (II) Marble Arch Tower, London (UK) Borrower: Almacantar Facility Acquisition financing type: Marble Arch Tower, one of the most prominent buildings in London’s West End, overlooking Hyde Park consists of 166,000 sq ft mixed-use space. Situated at Property: the c
Slide 21: PSF: New business 2011 exceeding FY 2010
New business PSF: New business 2011 already exceeding volume of FY 2010 Public Sector Finance (PSF) EUR billions 1.2 1.0 New commitments FY 2010 H1 2011 FY 2010 H1 2011 No. of deals 51 22 Average maturity ~7.4 yrs ~7.7 yrs Average gross margin >100 bp >100 bp H1 2011: EUR 1.2 bn by region by counter
Slide 22: PSF: Sample transaction, Metz-Thionville hospital
New business PSF: Sample transaction Nouvel Hôpital du Centre Hospitalier Régional Metz-Thionville (France) Borrower: Nouvel Hôpital du Centre Hospitalier Régional Metz-Thionville Facility Bilateral loan (Funding of an investment programme) type: pbb Deutsche Pfandbriefbank funded together with two
Slide 23: Agenda
Agenda 1. Business model and strategy (Manuela Better) 2. Portfolio (Manuela Better) 3. New business (Dr. Bernhard Scholz) 4. Funding and cover pools (Wolfgang Groth) 5. Financials and outlook (Alexander von Uslar) 6. Key take-aways (Manuela Better) Banks' Day, Frankfurt, 9th September 2011 23
Slide 24: Cover pools: aims to be top Pfandbrief player
Cover pools pbb aims to be top player in the Pfandbrief market constantly issuing new material Largest Pfandbriefe issuers pbb Pfandbrief volume development 03/2011: EUR billions (outstanding, nominal) EUR billion (outstanding, nominal) Mortgage Pfandbriefe Target 82 Public Sector Pfandbriefe #2 54
Slide 25: Mortgage cover pool well diversified
Cover pools Mortgage cover pool well diversified by region and property type Cover funds by region Mortgage cover pool (Nominal) 31/12/2010 30/06/2011 EUR billions (Nominal) Pfandbriefe outstanding EUR 17.4 bn EUR 14.8 bn 11.5 11.2 Cover funds EUR 22.7 bn EUR 21.0 bn 31/12/2010 / Total: EUR 20.8 bn1
Slide 26: Public Sector cover pool with a sound profile
Cover pools Public Sector cover pool with a sound profile Cover funds by region Public Sector cover pool (Nominal) 31/12/2010 30/06/2011 EUR billions (Nominal) Pfandbriefe outstanding EUR 39.5 bn EUR 37.9 bn 18.9 Cover funds EUR 43.8 bn EUR 42.0 bn 17.9 31/12/2010 / Total: EUR 41.9 bn 1,2 Over-colla
Slide 27: Relative value based on Moody's Scores
Cover pools Relative value based on Moody’s Scores Cover Pool Loss Score in % – Mortgage cover pool1 Cover Pool Loss Score in % – Public Sector cover pool1 Acc. to Moody’s Acc. to Moody’s Market Risk Market Risk Collateral Risk Collateral Risk average: 9.5 8.6 21.5 average: 20.0 Bay BHH DB DH DKB pb
Slide 28: Funding plan
Funding plan German Pfandbrief as main funding instrument – funding volumes mainly determined by new business New issuances (based on EU restructuring plan)1 New business (based on EU restructuring plan)1 EUR billions Commitments (EUR billions) ~10 8-10 2012 2013 ~8 Public Sector Pfandbriefe 1.5 3.5
Slide 29: Treasury Funding: diversification of funding sources
Treasury Funding Products CHF – Plain fixed-rate or floater as well as Zeros or step-up coupons SEK JPY USD Other – Callable / putable - structures GBP 2% – CMS-linked, CMS-spreads, amortizing issues, Inflation-linker 3% 3% 1% 2% 0% Currencies – Public Sector Pfandbrief will require EUR and minor US
Slide 30: Treasury Funding: private placement levels
Treasury Funding Private placement levels against 3-M-Euribor Min. volume EUR 5 mio years 1 2 3 4 5 6 7 8 9 10 Public Sector On 25 35 40 45 50 50 50 55 55 Pfandbriefe request Mortgage On 25 35 40 45 50 50 50 55 55 Pfandbriefe request On Senior unsecured 90 100 110 120 120 120 125 125 130 request Min
Slide 31: Treasury: New issue planned
Treasury New issue planned pbb currently visiting investors across Europe in a deal-related roadshow to verify options of a Pfandbrief issuance in benchmark format Issue and characteristics still subject to market conditions but with the intention to offer a mid-term Mortgage Pfandbrief in Jumbo for
Slide 32: Your business contacts in pbb's Treasury team
Treasury Your business contacts in pbb’s Treasury team Wolfgang Groth Head of Group Treasury Front Office Trade Support pbb / Eschborn pbb Treasury I Silvia Lein Andreas Schenk I Suni Mathew Funding Liquidity Management Asset Liability Management Götz Michl Tom Facchinetti Björn J. Treutler pbb / Es
Slide 33: Treasury: Liquidity Management
Treasury Liquidity Management Liquidity Management is responsible for managing the short term & strategic interest rate, FX and liquidity position: • Management of liquidity, short-term IR and FX risks • Management of interbank deposits and pricing of short term funding • Implementation and manageme
Slide 34: Treasury: Asset Liability Management
Treasury Asset Liability Management Interest Rate Steering Strategic Balance Sheet Management Strategic IR risk management A/L funding gap profile – Centralised management of interest rate risks > 1Y for – Structural liquidity gap modelling (with Liquidity Risk) all of pbb (short-end by Liquidity Mg
Slide 35: Agenda
Agenda 1. Business model and strategy (Manuela Better) 2. Portfolio (Manuela Better) 3. New business (Dr. Bernhard Scholz) 4. Funding and cover pools (Wolfgang Groth) 5. Financials and outlook (Alexander von Uslar) 6. Key take-aways (Manuela Better) Banks' Day, Frankfurt, 9th September 2011 35
Slide 36: Income statement: four consecutive profitable quarters
Income statement Turnaround achieved in Q3 2010 – four consecutive profitable quarters Income statement (IFRS) Transfer of assets EUR millions to FMS-WM PBT -177 -175 119 98 52 68 241 191 162 Op. Revenues 121 99 131 -17 -25 2 -1 -68 -81 -93 -175 -105 LLPs -226 Gen. admin. exp. -99 -72 and other Q1 2
Slide 37: Lower income base, reduced volatility of income lines
Income statement Lower income base, but reduced volatility of income lines Operating revenues (IFRS) Transfer of assets EUR millions to FMS-WM Total 121 99 241 191 131 162 161 Net interest income and similar 109 95 Net commission income 97 166 164 Net trading income 15 10 1 8 5 0 110 14 4 60 44 66 N
Slide 38: Operating revenues to benefit from higher-margin business
Income statement Operating revenues to benefit from higher-margin REF and PIF business, replacing Public Budget Finance over time Net interest and similar income (IFRS) Planned portfolio development2 H1 2011 Value Portfolio1 Cons. & Others Run-down portfolio 2% (on balance sheet) 4% Public Budget Pu
Slide 39: Less loan-loss provisions due to de-risked balance sheet
Income statement Less loan-loss provisions due to significantly de-risked balance sheet Loan-loss provisions (IFRS) Transfer of assets Additions EUR millions to FMS-WM Releases Other1 206 123 2 8 13 42 31 -50 -27 -12 -2 -17 3 -239 -221 -25 -1 -298 -2 -226 -17 -175 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1
Slide 40: Operating cost base supposed to come down by up to a third
Income statement Operating cost base supposed to come down by up to a third until 2015 General administrative expenses (IFRS) EUR millions -61 -61 Personnel -31 -31 -31 -15 -31 -37 -37 Personnel -70 -15 -16 -44 -14 Other non-personnel -50 -29 -27 Non-personnel -74 -56 -31 IT -11 -7 -76 -76 -11 -81 -
Slide 41: Balance sheet significantly de-leveraged
Balance sheet Operating balance sheet now at EUR 94 bn but expected to increase again mid-term Total assets (IFRS) Counter-effects resulting from the asset transfer to FMS-WM EUR billions Operating balance sheet 226 219 187 106 155 83 126 53 32 ~100 >100 113 104 102 94 30/09/2010 01/10/2010 31/12/20
Slide 42: Capitalisation: Tier I ratio of 18.0%
Capitalisation pbb significantly de-risked and sufficiently capitalised with a Tier I ratio of 18.0% Pro-forma Risk-Weighted Assets (RWA) Market risk The regulatory capital ratios stated are calculated on an unaudited pro-forma EUR billions Operational risk basis. Deutsche Pfandbriefbank AG is accor
Slide 43: Agenda
Agenda 1. Business model and strategy (Manuela Better) 2. Portfolio (Manuela Better) 3. New business (Dr. Bernhard Scholz) 4. Funding and cover pools (Wolfgang Groth) 5. Financials and outlook (Alexander von Uslar) 6. Key take-aways (Manuela Better) Banks' Day, Frankfurt, 9th September 2011 43
Slide 44: Key take-aways
Key take-aways Clearly focussed business model Sufficient room for new business growth pbb significantly de-risked and de-leveraged Now fully focussing on clients again, regaining full strength of new Diversified business model with high synergies between business lines business origination REF and
Slide 45: Contact details
Contact details Investor Relations / Rating Agency Relations Walter Allwicher +49 (0)89 2880 28787 (Head of Communications) walter.allwicher@pfandbriefbank.com Frank Ertz +49 (0)89 2880 28776 frank.ertz@pfandbriefbank.com Michael Heuber +49 (0)89 2880 28778 michael.heuber@pfandbriefbank.com Webpage:
Slide 46: Disclaimer
Disclaimer This presentation is not an offer or invitation to subscribe for or purchase any securities. No warranty is given as to the accuracy or completeness of the information in this presentation. You must make your own independent investigation and appraisal of the business and financial condit
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