For Deutsche Pfandbriefbank AG (pbb), the 2025 financial year was dominated by its withdrawal from the US. According to preliminary figures (IFRS, Group, unaudited), pre-tax profit for 2025 was -€250 million (FY/2024: €104 million), which was within the most recent forecast range. In the fourth quarter, the Bank once again significantly increased its risk provisioning for project financing that had already been provided for.
For the 2026 financial year, pbb expects pre-tax profit of between €30 million and €40 million due to the ongoing costs of the significant risk transfer in the US and a portfolio volume that is stable at the current level. Due to the sluggish recovery in the real estate markets, the loss of income from US business can probably only be gradually compensated for as new business in Europe grows. The bank is sticking to its strategic ambitions but will, in all likelihood, achieve its key financial targets in 2028, one year later than originally planned.
“Due to the withdrawal from the US and the sluggish market recovery, the transformation of the Bank is taking more time than we originally expected. In the 2025 financial year, we significantly reduced the risks on our books and began to diversify our business model,” says Kay Wolf, CEO of pbb. “The Bank is now on the right track. However, the exit from the US is associated with costs that will take more time to offset. This year, profitability will therefore still fall short of our expectations. However, we are convinced that our focus on Europe will create long-term value for our shareholders.”
Return on tangible equity (RoTE), a key indicator of profitability, was around 8% for new business in the 2025 financial year, reaching the strategic target earlier than expected. With a volume of €6.3 billion, pbb exceeded the previous year’s new business volume by 23 percent (FY/2024: €5.1 billion; including renewals > 1 year in each case). The Bank thus exceeded its most recent guidance of €5.5 billion to €6 billion.
Operating income for the year as a whole amounted to €422 million (Q4/2025: €106 million). Interest income in particular remained stable in the fourth quarter. Despite investments and provisions for transformation, total costs for the year were reduced to €236 million (FY/2024: €245 million). The Bank remains very well capitalised at the end of 2025 with a CET 1 ratio of 14.9 percent (FY/2024: 14.4 percent). With total assets of €39.9 billion (FY/2024: €44.2 billion), liquidity stands at a comfortable €5 billion (FY/2024: > €6 billion). The conditions for servicing the AT1 instrument are currently in place, and a decision on servicing will be made in April of this year, as usual. However, in light of the annual results, pbb does not see any scope for a distribution to shareholders for the 2025 financial year.
Little tailwind expected from the market for 2026
The commercial property markets remain subdued in the new financial year. A significant increase in transaction volumes across the market as a whole is not expected. The Bank has largely shielded itself from the risks in the US and from project financing and has already significantly reduced some of these risks. In its core European markets, pbb expects further growth this year with normalised risk costs in the range of 25-30 bps.
For 2026, the Bank expects its new business volume to continue to rise to between €7.5 billion and €8.5 billion. The REF portfolio volume is expected to be between €27 billion and €28 billion. The Bank expects operating income of between €375 million and €425 million. The significant commission income from the initial consolidation of Deutsche Investment Group is offset by the reduction over time of liabilities related to the continued hedging costs from exiting the US market. Without stronger tailwinds from the market, the Bank is therefore unlikely to achieve its key strategic financial targets, including operating income in the region of €600 million and a RoTE of 8 percent for the Bank as a whole, before 2028.
Further details on the 2025 financial year and the outlook will be discussed in the regular capital market communication on 5 March 2026.
