Deutsche Pfandbriefbank Ag · XETR:PBB
Deutsche Pfandbriefbank — Q3 2022 Earnings Presentation
57 slides from Deutsche Pfandbriefbank's earnings presentation, Nov 14, 2022
Slide 1: Results Q3/9M 2022 Analyst Conference
pbb remains on track in difficult market environment with PBT of € 159 mn in 9M/22 – full-year PBT guidance confirmed Results Q3/9M 2022 Analyst Conference 14 November 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. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 3
Slide 4: The system works as designed
The system works as designed pbb well positioned to navigate current landscape Challenges Our response Interest rate positioning by design not part of pbb’s Low interest rate sensitivity while business model, setting stabilising floor in times of interest rates are rising declining interest rate
Slide 5: Highlights Q3/9M 2022
Highlights Q3/9M 2022 pbb remains on track with PBT of € 159 mn in 9M/22 – solid REF new business and strong REF portfolio growth Financials Solid PBT of € 159 mn in 9M/22 (9M/21: € 186 mn) despite difficult market environment NII only slightly down (9M/22: € 358 mn, 9M/21: € 369 mn) – lower flo
Slide 6: 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% 43% Q2 40% Q1 Q1 CIR4 Q1 9.1 482 502 219 204 7.4 127 3.3 6.6 126 362 59 68 157 3.0 2.3 124 126
Slide 7: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 7
Slide 8: CRE Markets
CRE Markets Investment volumes still on solid level despite further decline in Q3/22, with expectations more subdued European and US Investment volume1 (€ bn) Despite further slowing volume growth US CRE investment volumes still 1.000 € with relatively solid performance in Q3/22 but, weak sentimen
Slide 9: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 9
Slide 10: Solid operating performance despite difficult market environment
Financials Solid operating performance despite difficult market environment Income statement € mn Q3/21 Q3/22 9M/21 9M/22 Key drivers Q3/9M 2022 Operating Income 142 128 429 400 NII slightly down y-o-y – mainly affected by lower floor income, loss in TLTRO premium and slightly higher Net interest
Slide 11: Underlying income from lending business on solid level
Financials Underlying income from lending business on solid level despite lower supporting effects from floors and TLTRO Income from lending business Key drivers Q3/9M 2022 € mn NII slightly down y-o-y, mainly due to Q3/21 Q3/22 9M/21 9M/22 lower floor income from increasing interest rate enviro
Slide 12: 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 Q3/9M 2022 € mn Net income from risk provisioning of € -19 mn in Q3/22 Q3/21 Q3/22 9M/21 9M/22 (9M/22: € -38 mn; 9M/21:
Slide 13: NPLs remain on low level
Financials NPLs remain on low level – solid loss allowances on balance sheet Key drivers Q3/9M 2022 Non-performing loans – regions € mn (EaD, Basel III) Non-performing loans (NPLs) remain on low level No. of 22 22 22 22 23 indiv. Restructuring loans slightly up at € 587 mn (06/22: € 577 mn) case
Slide 14: Operating costs under control
Financials Operating costs under control General & administrative expenses and depreciations Key drivers Q3/9M 2022 € mn GAE largely stable y-o-y despite increase in inflation € mn Q3/21 Q3/22 9M/21 9M/22 Personnel expenses up € 3 mn y-o-y, mainly due to regular salary increases – Q4/21 impacted
Slide 15: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 15
Slide 16: REF new business up by € 0.9 bn y-o-y
New Business REF new business up by € 0.9 bn y-o-y – deal pipeline supports solid new business with significant positive margin trend for Q4/22 REF New business REF new business € bn (commitments, incl. extensions >1 yr) 9M/21 FY21 9M/22 29.5 Financing 27.0 27.6 Total volume (€ bn) 5.7 9.0 6.6 volum
Slide 17: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 17
Slide 18: Portfolio: stable risk parameters and low average LTV
Portfolio Business approach reflected in stable risk parameters and continued low average LTV of 51%, providing solid risk buffer REF Portfolio: Avg. weighted LTVs Total portfolio: Internal ratings (EL classes) % (commitments)1 € bn (EaD, Basel III) 06/22 09/22 Non-investment grade2 52% 52% Investme
Slide 19: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 19
Slide 20: Strong funding in 9M/22
Funding Strong funding in 9M/22 – focus on Pfandbriefe, asset matching currencies and Green refinancing New long-term funding1 Funding Q3/9M 2022 € bn Strong Pfandbrief funding year-to-date: US$ 750 mn Pfandbrief 9M/21: € 3.4 bn 9M/22: € 4.8 bn € 2.75 bn Pfandbrief Benchmarks (2 x € 750 mn in
Slide 21: Strong increase in retail deposits
Funding Strong increase in retail deposits to mitigate increased unsecured capital market spreads Development of pbb direkt volume Retail deposits Q3/9M 2022 € bn Retail deposit funding increased to counterbalance higher 4.1 4.1 capital market spreads – further increase intended 4.0 Steady incre
Slide 22: Structural shifts in funding costs
Funding Structural shifts in funding costs – contrary to Senior Preferred, retail deposits cheapened significantly while Pfandbrief spreads have remained largely stable Senior Preferred pbb direkt Pfandbrief Spread Development pbb vs peers Spread Development vs Mid-Swap Spread Development pbb vs pee
Slide 23: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 23
Slide 24: Capitalisation remains strong
Capital Capitalisation remains strong Basel III: RWA RWA development Q3/9M 2022 € bn (IFRS) RWA up mainly due to increase in REF portfolio and FX effects 17.3 only partly compensated by maturity, interest rate movements; 16.8 16.7 16.5 reclassification and syndication effects no material RWA
Slide 25: Agenda
Agenda 1. The system works as designed 2. Markets 3. Financials 4. New Business 5. Portfolio 6. Funding 7. Capital 8. Summary & Outlook Appendix Contact details Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 25
Slide 26: Summary & Outlook
Summary & Outlook System works as designed Solid PBT despite current geopolitical and economic developments Strong growth in REF portfolio, compensating decline in floor income and from TLTRO in the mid-term Best use of funding base – Pfandbrief remains stable source while expansion of our "pbb dire
Slide 27: Appendix
Appendix Results Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 27
Slide 28: 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 Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 28
Slide 29: 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 30: 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 Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 30
Slide 31: Green Loan Framework 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 32: 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 33: 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 Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 33
Slide 34: 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 Q3/22 9M/22 8 Net interest income 458 476 123 123 123 125 494 122 120 116 358 Net fee and commission income 6 6 2 3 1 2 8 2 1 1 4 Net income from fair value measurement -7 -8 2 - 1 7 10 9 5 7 21 Net inco
Slide 35: Segment reporting
Segment reporting Segment performance reflects strong performance of strategic REF portfolio in 9M/22 REF PIF Value Portfolio Income statement (IFRS, € mn) Q3/21 Q3/22 9M/21 9M/22 Q3/21 Q3/22 9M/21 9M/22 Q3/21 Q3/22 9M/21 9M/22 Operating income 122 110 372 344 10 9 28 26 9 9 27 29 thereof: Net inter
Slide 36: Key figures pbb Group 9M/21 vs. 9M/22
Key figures pbb Group 9M/21 vs. 9M/22 Income statement REF PIF VP C&A pbb Group (€ mn) 9M/21 9M/21 9M/21 9M/21 9M/22 9M/22 9M/22 9M/22 9M/21 9M/22 Net interest income 311 308 28 24 28 25 2 1 369 358 Net fee and commission income 6 5 - - - -1 - - 6 4 Net income from fair value 2 14 - 2 1 5 - - 3 21 m
Slide 37: 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 Q3/22 9M/22 Net interest income 388 3964 104 104 103 106 417 104 103 101 308 Net fee and commission income 7 6 2 3 1 2 8 2 1 2 5 Net income from fair value measurement -8 -6 1 - 1 4 6 6
Slide 38: 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 Q3/22 9M/22 Net interest income 37 38 9 9 10 9 37 8 8 8 24 Net fee and commission income - - - - - - - - - - - Net income from fair value measurement -2 -1 - - - 1 1 1 - 1 2 Net in
Slide 39: 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 Q3/22 9M/22 Net interest income 29 38 9 10 9 10 38 9 9 7 25 Net fee and commission income -1 - - - - - - - - -1 -1 Net income from fair value measurement 3 -1 1 - - 2 3 2 1 2 5 Net income fro
Slide 40: Balance sheet
Balance sheet Specialist lender with attractive German Pfandbrief as major funding instrument Balance sheet IFRS, € bn Assets 30/09/22 31/12/21 Liabilities & equity 30/09/22 31/12/21 Financial assets at fair value through P&L 1.0 1.2 Financial liabilities at fair value through P&L 0.8 0.6 thereof th
Slide 41: 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 Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 41
Slide 42: Total portfolio
Portfolio Total portfolio € bn (EaD, Basel III) Regions 31/12/2021 / Total: € 57.5 bn 30/09/2022 / Total: € 52.3 bn Hungary <1% Hungary <1% Finland 1% Other Europe 5% Other Europe 5% Finland 1% Czech Republic 1% Other Rest of World 2% Other Rest of World 2% Czech Republic 1% Sweden 2% 5% Sweden 2% 5
Slide 43: Real Estate Finance (REF)
Portfolio Real Estate Finance (REF) € bn (EaD, Basel III) Regions Property types 31/12/2021: € 29.7 bn 30/09/2022: € 31.3 bn 31/12/2021: € 29.7 bn 30/09/2022: € 31.3 bn Austria 1% Other Europe Mixed use 2% Other 2% Mixed use 1% Austria 1% Other Europe Other 2% Czech Republic 1% Hotel 4% Hotel 3% Cze
Slide 44: Real Estate Finance (REF) regions and property types
Portfolio Real Estate Finance (REF) Regions 31/12/2021 / Total: € 29.7 bn € bn (EaD, Basel III) 30/09/2022 / Total: € 31.3 bn 13.9 13.8 5.2 3.8 3.9 3.7 2.6 2.5 1.4 1.6 1.9 1.8 0.9 0.9 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 45: Markets: Sub segments (retail)
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 46: Markets: Sub segments (office)
Markets Sub segments Property Regions Evaluation of current situation Challenges Risk positioning type Slight rise in vacancies; but in most markets Financial difficulties of tenants / Focus on good locations still on comparatively low levels. insolvencies expected to increase due to Conserv
Slide 47: Public Investment Finance (PIF)
Portfolio Public Investment Finance (PIF) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2021: € 5.7 bn 30/09/2022: € 4.9 bn 31/12/2021: € 5.7 bn 30/09/2022: € 4.9 bn Finland 1% Other Europe 3% Corporation 2% Infrastructure Other Europe 3% Corporation 4% Finland 1% Supranational Financ
Slide 48: Public Investment Finance (PIF) regions and borrowers
Portfolio Public Investment Finance (PIF) Regions 31/12/2021 / Total: € 5.7 bn € bn (EaD, Basel III) 30/09/2022 / Total: € 4.9 bn 3.1 2.9 1.1 0.8 0.7 0.5 0.3 0.2 0.2 0.1 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 49: Value Portfolio (VP)
Portfolio Value Portfolio (VP) € bn (EaD, Basel III) Regions Borrower classification1 31/12/2021: € 13.8 bn 30/09/2022: € 10.7 bn 31/12/2021: € 13.8 bn 30/09/2022: € 10.7 bn Financial Financial Institution 3% Other Other Rest Other Rest Institution Supranational 4% Supranational 5% Other PSE <1% Pol
Slide 50: Value Portfolio (VP) regions and borrowers
Portfolio Value Portfolio (VP) Regions 31/12/2021 / Total: € 13.8 bn € bn (EaD, Basel III) 30/09/2022 / Total: € 10.7 bn 5.6 4.2 3.6 2.9 1.6 1.4 0.9 0.7 0.8 0.8 0.7 0.3 0.6 0.1 0.3 0.0 <0.1 <0.1 Austria Germany Italy Spain France Poland Finland Other Europe Rest of World Borrower classification1 € b
Slide 51: Consolidation & Adjustments (C&A)
Portfolio Consolidation & Adjustments (C&A) € bn (EaD, Basel III) Regions Borrower classification2 31/12/2021: € 8.3 bn Sweden <1% 30/09/2022: € 5.5 bn 31/12/2021: € 8.3 bn 30/09/2022: € 5.5 bn UK <1% Financial Other Europe Italy 2% Poland 1% Institution Other Rest Sweden <1% Other Europe Regional S
Slide 52: 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 Q3/9M 2022 (IFRS, pbb Group, unaudited), 14 November 2022 52
Slide 53: Own Funds and Eligible Liabilities exceed 8% TLOF
Funding Own Funds and Eligible Liabilities significantly exceed 8% TLOF (in € bn as of 30/09/2022)1) Composition of MREL2 Liabilities Rundown (30/09/2022) (30/09/2022) Buffer for Senior Preferred (SP) investors due to high volume of capital instruments and Senior Non-Preferred ~ 16.3 (SNP) liabili
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 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 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 Grit Beecken Head of Communications +49 (0)89 2880 28787 grit.beecken@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)89 2880
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