Deutsche Pfandbriefbank AG (pbb) continues its success story in 2021 and reports (in part, significantly) higher key figures, taking up the good results generated prior to the COVID-19 pandemic. As such, following a solid development, the Bank materially grew its pre-tax profit, to €186 million, in the first nine months of 2021 (9m2020: €104 million; Q3 2020: €74 million, Q3 2021: €72 million; IFRS, Group, unaudited).
Higher net interest and commission income, as well as higher prepayment fees, drove the solid result, as the burden on risk provisioning and net income from fair value measurement fell, not least due to an improved situation concerning the pandemic and the economy. Based on the positive performance generated in the first nine months of the year, pbb now anticipates a pre-tax result for 2021 at the upper end of or slightly above guidance, which was increased to a range of €180 million – €220 million at the end of July.
CEO Andreas Arndt said: “We are very satisfied with how pbb performed, exceeding the expectations we had at the beginning of the year and reaching the solid levels seen prior to the COVID-19 pandemic. We expect to achieve a good result for the 2021 financial year, which might even slightly exceed the guidance we raised in July. We are also confident that 2022 will turn out to be a good year. Our shareholders will decide on the distribution of a further dividend of €0.32 per share for the 2020 financial year in December, which would result in a total dividend of €0.58 per share for 2020, equalling a distribution ratio of 75 percent.”
Net interest and commission income for the first nine months of the financial year rose to €375 million, following €356 million in the previous year (Q3 2021: €124 million, Q3 2020: €126 million). Lower funding costs (reflecting the TLTRO III programme), a marginal increase in the average loan portfolio, and income from interest rate floors in the lending business were once again the main contributors. Net income from realisations surged from €20 million to €55 million thanks to prepayment fees. pbb made net additions of €17 million to risk provisions in the third quarter, i.e. €50 million in the first nine months, compared to additions of €84 million in the first nine months of 2020 (which had been burdened by the pandemic) and €14 million in the third quarter of 2020.
Additions to risk provisions comprise a management overlay for non-impaired exposures in the amount of €48 million, which among other things accounts for the economic consequences of the COVID-19 pandemic expected to occur with a time delay. Net income from fair value measurement improved, from €-12 million in the previous year period to €3 million in the first nine months of 2021.
Thanks to pbb’s strict cost management, general and administrative expenses remained largely stable in the third quarter and first nine months, at €49 million and €151 million respectively (Q3 2020: €48 million, 9m2020: €145 million). Higher non-personnel expenses, incurred especially for various digitalisation initiatives and other strategic projects, were the main cost drivers.
New business also continued its positive development, generating higher volumes at stable gross margins. The new Commercial Real Estate Finance business totalled €5.7 billion in the first nine months of the year, up from €4.3 billion in the same period of the previous year (each including extensions by more than one year). The real estate finance portfolio increased slightly compared to the first nine months of the previous year, to €27.0 billion (Q2 2021: €26.8 billion).
pbb Deutsche Pfandbriefbank (pbb) and Aareal Bank have jointly underwritten an investment facility, totalling £170 million to refinance a logistics portfolio located across the UK for EQT Exeter. pbb...