pbb's profit before taxes rises to €187 million after the first nine months of 2019 - pbb raises guidance for the 2019 financial year

  • Net interest income rises to €341 million 
  • Risk provisions of €10 million for the first nine months in line with the previous year’s levels
  • New real estate finance business rises to €6.9 billion - higher gross margins 
  • pbb now expects pre-tax profit of between €205 million and €215 million for the full year 2019, despite higher expenditure in the fourth quarter 

As reported on 7 November, following a strong third-quarter performance, with pre-tax profit of €70 million, pbb increased profit before taxes for the first nine months of the year to €187 million (Q3 2018: €49 million / 9m 2018: €171 million; (consolidated figures in accordance with IFRS, unaudited). Once again, net interest income had a positive impact: thanks to a larger strategic portfolio as well as lower funding costs, the figure for the first nine months showed a slight increase to €341 million (9m 2018: €334 million). Higher net income from realisations, amounting to €31 million (9m 2018: €23 million) and primarily due to considerably higher prepayment fees, added to the picture. As expected, higher income was accompanied by slightly higher general and administrative expenses of €141 million (9m 2018: €136 million), with the increase due in particular to regulatory projects driven by regulation. Risk provisioning for the first nine months (€10 million net; 9m 2018: €9 million net) reflected pbb's consistent policy of applying conservative valuations in connection with measurement changes related to shopping centres in the United Kingdom.

New business also developed favourably during the first nine months of the current financial year. In its core Commercial Real Estate Finance business, pbb boosted new business volume to €6.9 billion (9m 2018: €5.5 billion) – without compromising its selective origination approach. Gross margins also continued to improve during the third quarter: pbb achieved an average gross margin in excess of 150 basis points for the first nine months, a level that is in line with the full year 2018. Strong new business also impacted upon pbb's credit portfolio, which grew to €27.7 billion in Commercial Real Estate Finance (9m 2018: €26.8 billion).

pbb raised its guidance for the full year 2019 on 7 November 2019; the Bank now expects pre-tax profit of between €205 million and €215 million. Similar to the previous year, the guidance incorporates for the fourth quarter considerably higher expenditure, together with stable net interest income. Specifically, persistent economic uncertainty is likely to lead to risk parameters being adjusted as a precautionary measure, hence requiring additional risk provisioning. Moreover, general and administrative expenses will increase during the fourth quarter.

CEO Andreas Arndt commented: "pbb's core business remains stable, with good net interest income, strong new business and low funding costs. On the back of pbb’s operative strength, we are able to raise our guidance whilst further enhancing pbb's position, through conservative valuations and further investments in digital initiatives in the fourth quarter."

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