Debt Investor Update - Results Q1/24
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Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 2 |
Business Model & Strategy | pbb is a specialised CRE lender with a clear focus on |
senior lending and green transformation of the CRE | |
sector |
Core Business
Funding | CRE Lending | |
Progress on strategic initiatives | ||
- Strong capital market presence: benchmark | Specialized on-balance sheet | - Pfandbrief-eligible senior loans, |
issuances and private placements | lending … | complemented by limited non-senior loans |
- Resilient Pfandbrief as main funding | - Structuring expertise for complex/large | |
source complemented by unsecured | transactions | |
bonds | - ~ 150 deals per year | |
- pbb one of most active senior unsecured | … based on stable, well | - Ø deal size ~€ 50-70 mn |
Pre-taxGreenprofitBondissuersof € 32 million in-linediversifiedwithfundingfullbase-year guidance- Green Loans integral2023part of business | ||
- Strong ESG Ratings (e.g. MSCI AAA) | model: CRE transformation partner | |
- EUR and foreign currencies |
- Scalable retail deposit online-platform (pbb direkt)
- Call and term deposits (EUR, USD)
USP
- Leading specialized CRE bank with conservative lending standards and high-risk competence
- Strong franchise with long- standing client relationships
- Local presence in core Europe and the US
-
Resilient Pfandbrief
as main funding source - in addition, scalable retail deposit platform
New Business Lines
RE Invest. Mgmt. | pbb Debt | Green Consulting |
- Issuance of open-ended real | - Provide required formats to | - Advise on holistic solutions |
Release of management overlay keeps risk provisions low | ||
estate funds | institutional investors | within the green |
- Capital-efficient and scalable | (e.g. debt funds) | transformation of RE |
income source | - Leverage our extensive market | (e.g. green development |
access | loans, green capex facilities) |
Partners
Strategy Update
- Maintain a conservative risk profile and retain strict cost discipline
- Increase of profitability by growth and capital light strategic initiatives
- Sustainable finance as an important contributor for all growth initiatives
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 3 |
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 started
Portfolio remains solid with an avg. LTV of 54%1
100% senior lender, always first ranking
Selective new business with favourable risk/return profile - REF portfolio stable vs. year-end 2023 Slowing NPL dynamic through active NPL management
Already strong liquidity position of € >6 bn further improved
Resilient Pfandbrief market - recent Mortgage Pfandbrief Benchmark tapped by € 100 mn at manageable cost No need to issue Senior Unsecured benchmark in 2024
Retail deposit further increased by € 0.5 bn to € 7.1 bn in Q1/24
1. Based on performing investment loans only
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 4 |
OPERATING & FINANCIAL OVERVIEW | Selective new business at strong margins |
REF new business
€ bn (commitments, incl. extensions > 1 yr.)
~200 bp | ~245 bp |
Selective new business |
REF portfolio
€ bn (financing volume)
31.131.2
REF portfolio stable
1.0
0.7
volume with focus on |
risk/return profile |
Strong uplift of gross |
interest margin |
margin business
Improved gross portfolio margin
Q1/23Q1/24
12/2303/24
Funding - retail deposits
€ bn
+8%
6.67.1
12/2303/24
Note: Figures may not add up due to rounding
Non-Coreportfolio € bn (financing volume)
-6% | |||
12.4 | 11.6 | ||
Growth of retail deposits | | Optimisation of non-core | |
at favourable costs, well | portfolio ongoing | ||
ahead of plan | | Accelerated asset | |
Strong liquidity position | reduction at attractive | ||
further improved | price levels | ||
12/23 | 03/24 |
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 5 |
REF PORTFOLIO PERFORMING
Performing Portfolio
€ bn (EaD, Basel III)
30.1 | 31.5 | 31.3 |
03/2312/2303/24
Regions | Property types | ||||||
31/03/2024 (EaD, Basel III) | 31/03/2024 (EaD, Basel III) | ||||||
Mixed use/ | |||||||
Nordics | Other | Hotel other | |||||
Logistics | 3% | ||||||
5% 8% | |||||||
CEE | 2% | ||||||
9% | 17% | ||||||
Germany | |||||||
€ 31.3 bn | 44% | € 31.3 bn 51% Office | |||||
USA 15% | Retail 9% | ||||||
7% | 18% | ||||||
UK | 12% | Residential | |||||
France | |||||||
Note: Figures may not add up due to rounding | 1. performing investment loans, based on commitments | ||||||
2. On the part, where a revaluation was necessary |
Solid portfolio in still demanding market environment
- Portfolio quality remains solid - focus on senior lending only
- 100% of the portfolio reviewed/revalued in last 12 months - avg. value change of -10%2
- Strong senior lending profile with ~88% of loans collateralised at LTV ≤50%
- LTV-stress:
- Exposure at risk: ~1.3% of portfolio1
- Coverage ratio: ~47% via existing stage 1&2 LLPs of € 179 mn
Layered LTV - based on performing investment loans only (€ bn, commitments, Basel III)
25.7 25.3 Ø-LTV1
12/23: 53% | LTV-stress | |||||||||||
03/24: 54% | ||||||||||||
Exposure at risk: € ~380 mn | ||||||||||||
2.0 | 2.2 | 0.6 | 0.8 | 0.2 | 0.2 | 0.1 | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | |
≤50% | >50% | >60% | >70% | >80% | >90% | >100% | ||||||
12/23 | 03/24 |
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 6 |
REF PORTFOLIO NPL | Slowing dynamic in NPL portfolio |
NPL Portfolio
€ mn (EaD, Basel III)
1,535+168
3 loans
12/23Additions
Regions
31/03/2024 (EaD, Basel III)
France Other
CEE 5% 3%
4%
UK 21% € 1.6 bn 41% USA
27%
Germany
+35 | -91 | 1,647 |
2 loans
FX/EaD | Restructured/ | 03/24 |
Repaid |
Property types
31/03/2024 (EaD, Basel III)
Hotel Other & Guaranteed
Logistics
<1% 2% 10%
Retail 23% | € 1.6 bn | 53% Office |
12% | ||
Residential |
- Additions driven by two US office loans and one German development
- Only small increase of NPL portfolio, benefitting from active management of NPL portfolio
- 1 loan (€ 46 mn) restructured
- 1 loan (€ 46 mn) repaid
- both at internal valuation marks
- 100% of the portfolio reviewed/revalued in last 12 months - avg. value change of -32%2
- NPE1 ratio 3.3%
- NPL coverage ratio of ~27% via existing stage 3 LLPs of € 441 mn
Note: Figures may not add up due to rounding 1. Non-Performing Exposure ratio = Non-performing loans and bonds / total portfolio (EaD); NPL ratio (EBA definition) 03/24: 3.9% (NPL ratio = gross carrying amount of non-performing loans and advances (incl. loans in forbearance cure-period) / total gross carrying amount of loans and advances) 2 On the portfolio part, where a revaluation was necessary
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 7 |
FOCUS: USA PERFORMING | Continued pressure on valuations |
Performing Portfolio
€ bn (EaD, Basel III)
4.5 | 4.5 | 4.6 |
03/2312/2303/24
Property types | US Office - Regions |
31/03/2024: (EaD, Basel III) | 31/03/2024: (EaD, Basel III) |
Residential Others <1% | West Coast |
15% | 12% |
Logistics 4% | Chicago |
10% | |
€ 4.6 bn | € 3.8 bn |
81% | 78% |
Office | East Coast |
Note: Figures may not add up due to rounding | 1. performing investment loans, based on commitments |
2. On the portfolio part, where a revaluation was necessary
- Full focus on risk mitigation in existing portfolio
- 100% of the portfolio reviewed/revalued in last 12 months - avg. value change of -17%2
- LTV-stress:
- Exposure at risk: ~4.7% of portfolio1
- Coverage ratio: ~79% via existing stage 1&2 LLPs of € 128 mn
US Office - Layered LTV - based on performing investment loans only (€ mn, commitments, Basel III)
2,688 2,606 | Ø-LTV1 | |||||||||||
12/23: 64% | LTV-stress | |||||||||||
03/24: 68% | ||||||||||||
Exposure at risk: € ~163 mn | ||||||||||||
360 | 428 | 194 | 279 | 70 | 114 | |||||||
29 | 43 | 2 | 7 | 0 | 0 | |||||||
≤50% | >50% | >60% | >70% | >80% | >90% | >100% | ||||||
12/23 | 03/24 |
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 8 |
FOCUS: USA NPL
Non-Performing Portfolio
€ mn (EaD, Basel III)
Successful workout and restructuring limited NPL increase to € ~50 mn (before FX effects)
- Additions (office) mitigated by active NPL management
1 loan (€ 46 mn) restructured | |||||
+142 | +14 | -91 | 672 | 1 loan (€ 46 mn) repaid | |
607 | both at internal valuation marks | ||||
2 loans | |||||
2 loans | 100% of the portfolio reviewed/revalued in last 12 months - | ||||
avg. value change of -35%2 | |||||
US NPE1 ratio 13% | |||||
12/23 | Additions | FX/EaD | Restructured/ | 03/24 | NPL coverage ratio of ~21% via existing stage 3 LLPs of € 139 mn |
Repaid |
Property types | Office - Regions | Layered LTV - based on investment loans only | |||||||||||||
31/03/2024: (EaD, Basel III) | 31/03/2024: (EaD, Basel III) | (€ mn, commitments, Basel III) | |||||||||||||
West Coast | 373 391 | Ø-LTV1 | |||||||||||||
12/23: 87% | |||||||||||||||
30% | |||||||||||||||
East Coast | 03/24: 90% | ||||||||||||||
42% | |||||||||||||||
€ 0.7 bn | € 0.7 bn | ||||||||||||||
100% | 28% | 64 | 72 | 58 | 66 | 38 | 50 | 28 | 42 | 26 | 24 | 22 | |||
18 | |||||||||||||||
Office | Chicago | ≤50% | >50% | >60% | >70% | >80% | >90% | >100% | |||||||
Note: Figures may not add up due to rounding 1. Non-Performing Exposure ratio = Non-performing loans and bonds / total US portfolio (EaD) | 12/23 | 03/24 | |||||||||||||
2. On the portfolio part, where a revaluation was necessary |
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 9 |
FOCUS: DEVELOPMENT PORTFOLIO | Development portfolio further reduced |
Portfolio
€ bn (EaD, Basel III)
3.23.2
<0.1 0.4
3.12.8
03/23 12/23
Performing | Phase | ||
Non-performing | 31/03/2024 (commitments, Basel III) | ||
3.0 | 24 loans | 15 loans | 21 loans |
Ø-LTV 61% | Ø-LTV 60% | Ø-LTV 52% | |
0.4 | |||
39% | |||
34% | |||
27% | |||
2.5 | |||
03/24 | Land phase | Construction | Finishing phase |
phase | >80% completion |
- Portfolio reduced by € 0.2 bn in Q1/24 - significantly reduced since 2019 (12/19: € 4.7 bn, 03/24: € 3.0 bn)
- Senior lending only
- No exposure in unsecured/subordinated instruments
- Cooperation only with selective and well experienced large developers - 40 developers for 60 projects
- Focus on office, residential and logistics in major urban locations (very good locations) in Germany (only big 7) and Europe
- 2/3 in land and finishing phase
- Therefore, no or only little immediate construction risk
Regions | Property types | | ~75% of loans in construction and finishing phase already |
finished or to be finished in 2024 | |||
31/03/2024 (EaD, Basel III) | 31/03/2024 (EaD, Basel III) | ||
| Risk management focus on loans in construction phase |
Others | Others | ||
France | 4% | ||
16% | |||
14% | Retail <1% | ||
Logistics 9% | |||
€ 3.0 bn | € 3.0 bn 51% Office | ||
82% | 23% | ||
Residential | |||
Germany
Note: Figures may not add up due to rounding
- Development NPLs of € 418 mn with coverage ratio of ~15% via existing stage 3 LLPs of € 64 mn - 2024: 1 new case (€ 26 mn, land phase, no LLP)
- Only German loans
- Very good inner city locations
- 5 cases in land phase, no LLPs
- 2 cases in construction phase (1 residential/1 retail)
Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024 | 10 |
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Deutsche Pfandbriefbank AG published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 07:57:04 UTC.