- Aggregate of net interest and commission income increased significantly, to €456 million
- Risk provisioning and general administrative expenses remained stable in the year under review
- New business amounted to €10.5 billion, of which €9.5 billion was generated in Commercial Real Estate Finance, with a stable average gross margin of approx. 155 bp
- Management and Supervisory Boards will propose a dividend of €1.00 per share to the Annual General Meeting – dividend yield of 11.4%
- pbb anticipates a good result for 2019, albeit retaining a cautious stance: profit before taxes is expected at between €170 million and €190 million, and new business in the REF segment at €8.5 billion to €9.5 billion
- Investments into US business and digitalisation to be financed internally, through centralisation of tasks and repositioning of the PIF business
Munich, 28 February 2019 – Deutsche Pfandbriefbank AG (pbb) has concluded the 2018 financial year with profit before taxes of €215 million, therefore exceeding the previous year’s figure by around 5% (2017: €204 million; consolidated figures in accordance with IFRS). In an environment that remained challenging throughout, the good result was driven by stable income in the lending business and lower funding expenses, as well as by continued low risk costs and a strict cost management regime. As a result, Management Board and Supervisory Board will propose to the Annual General Meeting the distribution of a dividend of €1.00 per share entitled to dividends, meaning that ordinary equity holders would receive approximately 81% of the consolidated profit after taxes of €167 million attributable to them. Based on the Xetra year-end closing price, this would imply a dividend yield of 11.4%.
In 2018, pbb increased its most important source of income, the aggregate of net interest and commission income, by 10% to €456 million (2017: €415 million) – driven by an expansion of the interest-bearing portfolio in Commercial Real Estate Finance (+8%, €26.8 billion) and stable average gross margins on new business of approximately 155 basis points (bps). Overall, pbb generated a new business volume of €10.5 billion (2017: new business of €11.6 billion, REF: including extensions of more than one year). On the liabilities side, reduced funding needs and new issues at improved funding conditions led to lower interest expenses, hence contributing to a significantly higher net interest income.
Net income from risk provisioning was largely stable, with net additions up by €4 million to €14 million, whilst general administrative expenses declined to €193 million (2017: €199 million).
CEO Andreas Arndt said: “By applying our stringent risk standards, we generated good volume of new business in a challenging market environment. Our funding activities were equally successful. At the same time, we were able to keep costs at a low level. Thanks to our operating strength, we once again managed to achieve a good result for our shareholders, whom we want to pay a dividend of €1.00 per share.”
Outlook 2019
pbb anticipates another good result in 2019. At the same time, the Bank will adhere to its cautious stance and conservative risk policy, given the challenging market and competitive environment in commercial real estate finance. Accordingly, the Bank thus endeavours new Commercial Real Estate Finance business between €8.5 billion and €9.5 billion (including extensions by more than one year), with the upper end of the guidance matching the volume of new business originated in 2018. pbb anticipates pre-tax profit in a range between €170 million and €190 million, expecting a slightly lower net interest and commission income.
Alongside the expansion of the US business, pbb will also focus on digitalisation in 2019. This includes the planned launch of a client portal, and the further expansion of the CAPVERIANT platform for municipal financing.
The Bank will offset expenses for investments to advance digitalisation, and to expand the US business by corresponding cost savings – by relocating tasks from satellite locations to the head office, in order to enhance efficiency, and rescaling the business in Public Investment Finance. Andreas Arndt said: “By continuing to focus, we will finance investments for pbb’s future, and thus also new tasks and new job positions.”
Media contact
Walter Allwicher, +49 89 2880-28787, walter.allwicher(at)pfandbriefbank.com