During the first quarter of 2017, Deutsche Pfandbriefbank (pbb) slightly increased pre-tax profit to EUR 47 million (Q1 2016: EUR 45 million; consolidated figures in accordance with IFRS). The key drivers of pbb’s lending business remained consistent: the aggregate of net interest income and net commission income was stable, at EUR 106 million (Q1 2016: EUR 104 million), and loan loss provisions came in at EUR 2 million (Q1 2016: EUR nil). Operative net interest income – excluding prepayment fees and other non-recurring effects – rose from EUR 86 million during the same period of the previous year to EUR 95 million, driven mainly by lower funding expenses.
As expected, general and administrative expenses increased to EUR 50 million (Q12016: EUR 45 million), especially due to a further increase in the cost of regulatory requirements and projects, but also due to a technical effect, given that personnel expenses for the same quarter of the previous year had benefited from charge-offs of provisions. The bank levy – which is recognised for the full year during the first quarter, burdened first-quarter results by EUR 20 million. At the same time, pbb recognized EUR 7 million in net income, including proceeds from the disposal of assets from the non-strategic Value Portfolio.
New business volume amounted to EUR 2.4 billion, falling short of the result achieved during the same period of the previous year (Q1 2016: EUR 2.9 billion; all figures related to new business include extensions by more than one year), but exceeding the average first-quarter volume. At EUR 31.8 billion, the strategic portfolio was slightly higher than at the end of the previous year (December 2016: EUR 31.5 billion). The nonstrategic Value Portfolio was reduced further, to EUR 15.5 billion (December 2016: EUR15.8 billion)
The CET1 ratio rose to 19.2 percent as at 31 March 2017 (December 2016: 19.0 percent – both fully phased-in), remaining above the industry average – providing the bank with a comfortable capital buffer for further growth and increasing regulatory requirements.
For the full-year 2017, pbb is aiming for pre-tax profit of between EUR 150 million and EUR 170 million, as well as for a new business volume of between EUR 10.5 billion and EUR 12.5 billion. The results of the first quarter support this guidance.
Andreas Arndt, pbb’s CEO, said: “pbb is holding its course, in an environment that remains very difficult – notably, in terms of interest rates and tough competition. We have started 2017 with solid results and a good level of new business. We are embarking upon implementation of various initiatives designed to develop pbb further, and to strengthen its market position – as well as pushing innovation: the expansion of our business in the US, broadening our client base in existing markets through the introduction of new products and exploring new client groups, as well as the ongoing development of digital solutions.”
