pbb posts a good start into 2018, reports marked increase in net interest income

  • €48 million in consolidated profit before tax (consolidated, in accordance with IFRS)

  • Net interest income up strongly, from €97 million to €107 million – thanks to more favourable funding conditions and higher strategic portfolio volume

  • General and administrative expenses lowered to €44 million – no risk provisioning required

  • New business reduced in a challenging market environment – slightly higher gross margins on new Real Estate Finance business

Munich, 14 May 2018 – pbb Deutsche Pfandbriefbank generated consolidated profit before tax of €48 million in the first quarter of 2018, slightly outperforming the same quarter of the previous year, which benefited from non-recurring effects (Q1 2017: €47 million; consolidated, unaudited figures in accordance with IFRS). The good results were due in particular to higher net interest income, which was up €10 million year-on-year, to €107 million. General and administrative expenses declined slightly, to €44 million (Q1 2017: €45 million). pbb was able to release risk provisions of €4 million net (Q1 2017: no net provisions for loan losses). First-quarter results were burdened by the bank levy; in spite of lower total assets, pbb was required to pay €20 million (unchanged from the previous year), taking into account 15% cash collateral pledged.

New business (including extensions beyond one year) originated during the first quarter amounted to €1.8 billion (Q1 2017: €2.4 billion). Whilst volumes originated in commercial Real Estate Finance were on a solid level of €1.7 billion (Q1 2017: €2 billion), they declined in Public Investment Finance. Moreover, pbb raised its gross margin on new Real Estate Finance business to above 170 basis points (bp; FY2017: > 155 bp; Q1 2017: > 160 bp). Adhering to its risk-conservative approach to new business, against the background of unabated strong competition and the very mature state of the real estate cycle, pbb guided in March 2018 that full-year new business volume would be between €10 billion and €11 billion.

Andreas Arndt, CEO and CFO of pbb, said: "pbb had a good start into 2018. The results reflect the Bank's good operating stability. We are currently benefiting from low funding costs, which are not least a reflection of the market's improved assessment for pbb. Given that the credit and real estate markets remain challenging, we retain our risk-conservative stance as well as a cautious outlook."

pbb continues to make good progress in its strategic initiatives: the Bank's US business is expanding as planned, and CAPVERIANT, pbb's new platform for public-sector financings, is scheduled to go live in May. The Bank already rolled out a portal site for the efficient exchange of data and information with commercial Real Estate Finance clients in April.

Media Contacts:

Walter Allwicher, +49 89 2880 28787, walter.allwicher(at)pfandbriefbank.com
Nina Lux, +49 89 2880 11496, nina.lux(at)pfandbriefbank.com



1. New business

New commercial Real Estate Finance business (including extensions beyond one year) declined to €1.7 billion (Q1 2017: €2.0 billion). At €0.2 billion, the share of extensions was roughly on par with the previous year (Q1 2017: €0.3 billion). The average loan-to-value ratio of 62% was in line with the previous year's level. Average gross margin on new business rose to above 170 bp during the quarter under review, exceeding the first quarter of 2017 (Q1 2017: above 160 bp).

The distribution of new business across the regions was largely in line with the structure of the existing portfolio – except for the United Kingdom, which accounted for 8% of new business (and for 16% of the existing portfolio), and for the United States, which accounted for 15% of the new business (4% of the existing portfolio). These reflected pbb's conservative new business approach in the UK, as well as the expansion of US business since the Bank's market entry there in the second half of 2016.

New Public Investment Finance business totalled €0.1 billion during the period under review (Q1 2017: €0.4 billion). The gross margin on new business declined from > 90 bp in the first quarter of 2017, to around 60 bp during the quarter under review due to specific factors.

2. Funding

During the first quarter of 2018, pbb raised new long-term funding in the amount of €2.0 billion (Q1 2017: €2.7 billion). At €1.1 billion (Q1 2017: €1.4 billion), Pfandbriefe accounted for just over half of the total volume, with unsecured funding accounting for €0.9 billion (Q1 2017: €1.2 billion).

Issuing spreads over 3-month Euribor showed further marked decreases across all funding instruments: they stood at -4 bp for Mortgage Pfandbriefe (Q1 2017: 20 bp), flat for Public-Sector Pfandbriefe (Q1 2017: 11 bp), and 49 bp for unsecured issues (Q1 2017: 82 bp).