As announced on 2 November 2017, Deutsche Pfandbriefbank AG (pbb) showed continued good performance during the third quarter of 2017 and raised its full-year pre-tax profit guidance. pbb disclosed consolidated pre-tax profit of €51 million (IFRS, unaudited) for the third quarter, and €154 million for the first nine months of 2017. Therefore, pbb was clearly ahead of the adjusted figures of €27 million and €114 million respectively for the same periods of the previous year (Q3 2016: €159 million, reported; 9m 2016: €246 million, reported); in Q3 2016, €132 million in non-recurring income from the reversal of write-downs related to Heta Asset Resolution AG (Heta) was recognised. On 2 November 2017, pbb once again raised its guidance for the full year 2017, to achieve pre-tax profit of between €195 million and €200 million, given the anticipated stable development in the fourth quarter.
These good results for the first nine months of the year were driven by positive developments in net interest and commission income (9m 2017: €321 million; 9m 2016: €297 million), and by loan loss provisions remaining low (9m 2017: net addition of €2 million; 9m 2016: net release of €3 million), whilst general and administrative expenses increased slightly, in line with expectations to €155 million (9m 2016: €147 million).
New business rose to €7.4 billion during the first nine months of the financial year, distributed almost evenly amongst the quarters. New business slightly exceeded the volume of the same period of the previous year (9m 2016: €6.7 billion), and was in line with the expectations for the full year 2017 (€10.5 billion – €12.5 billion).
Andreas Arndt, CEO of pbb, said: “The good results for the first nine months of the financial year are all the more remarkable since the market environment continues to be highly competitive, and pbb has maintained its conservative approach to risk. Higher net interest income due to lower funding costs, and low loan loss provisions, were the key drivers of this development. We expect further stable development in the fourth quarter, and have therefore increased our guidance for the full year 2017 to pre-tax profit of between €195 million and €200 million at the beginning of November.”
Along with the third-quarter results, pbb also provided a first outlook for 2018. pbb expects the low interest rate environment and strong competitive pressure to continue in Europe, and commercial real estate markets to remain stable, albeit at elevated pricing levels. Against this background, pbb provides cautious earnings projections for 2018. “We presume that market conditions are set to remain challenging. The positive factors of 2017 cannot be taken as a given for 2018. Therefore, we will again make conservative projections for 2018, particularly in terms of risk costs,” said Mr Arndt.
pbb will provide its guidance for the full year 2018, along with the disclosure of results for the financial year 2017, at the beginning of March 2018, including its dividend proposal.