During the second quarter of 2017, Deutsche Pfand-briefbank (pbb) significantly increased pre-tax profit to EUR 56 million (Q2 2016: EUR 42 million; consolidated figures in accordance with IFRS). The bank also markedly exceeded the previous year’s figure on a half-year basis, with EUR 103 million (6m 2016: EUR 87 million).
This performance was driven by a positive development of net interest and commission income, which totalled EUR 105 million in the second quarter and EUR 211 million in the first half of the year (Q2 2016: EUR 94 million, 6m 2016: EUR 198 million). As in the prior year, no loan loss provisioning was required during the first half-year.
General and administrative expenses rose in line with expectations to EUR 52 million during the second quarter, reaching EUR 102 million for the first six months of the year (Q2 2016: EUR 49 million, 6m 2016: EUR 94 million). This development in particular reflects increasing costs in relation to regulatory demands as well as a technical effect in personnel expenses, which had benefited from the utilisation of provisions in 2016.
New business rose to EUR 5 billion at the end of the first half of the year, slightly exceeding the volume of the same period last year (6m 2016: EUR 4.7 billion; new business numbers including extension beyond one year). The bank’s strategic portfolio grew by EUR 0.5 billion to EUR 32 billion versus year-end 2016, while the non-strategic portfolio was reduced further – as planned – to EUR 14.6 billion (31 December 2016: EUR 15.8 billion).
Following good results in the first half of the year, pbb now expects pre-tax profit in the full-year of 2017 to be at the upper end or slightly above the guidance of EUR 150-170 million which the bank had stated at the beginning of the year. In terms of new business, pbb confirmed its guidance of a volume between EUR 10.5-12.5 billion. However, given pbb’s consistently risk-conservative approach to new business, an intensely competitive environment, and challenging credit markets, repayments were higher than expected during the first half of the year, whilst loan drawdowns fell short of expectations. Accordingly, the bank no longer expects its strategic financing volume to grow markedly, but now anticipates a moderate increase.
CEO Andreas Arndt said: “Relatively stable margins in our client business and reduced funding costs produced a positive performance for net interest and commission income in the first half of the year. Against this background, pbb is well on track. Material challenges that pbb – as with the industry as a whole – continues to face are the competitive situation and fiercer regulation, inciting higher costs and risk-weighted assets.”
In the latest European Living Sectors Investor Survey released by global property consultancy Knight Frank, it was revealed that investors in the Student Housing, Multifamily and Seniors Housing markets...