Deutsche Pfandbriefbank (PBB) investor relations material

Executive summary

• Profit before tax for H1 2026 was €16 million, a significant improvement from a €249 million loss in H1 2025, mainly due to improved net income from risk provisioning, despite lower net interest income and negative fair value measurement effects.

• Strategic transformation and diversification efforts continued, with a focus on profitability and reducing U.S. non-performing loans by over 40% to €500 million.

• The first-time consolidation of Deutsche Investment Group contributed to higher net fee and commission income and increased general and administrative expenses.

• CET1 ratio improved to 14.6% in Q2 2026, reflecting regulatory adjustments and active portfolio management.

• Net income for H1 2026 was €15 million, compared to a €242 million loss in H1 2025.

Financial highlights

• Operating income for H1 2026 was €167 million, down from €206 million in H1 2025, but Q2 operating income rose to €90 million, up €13 million from Q1.

• Net interest income declined to €165 million (H1 2025: €211 million), impacted by SRT costs and a lower average CRE finance portfolio.

• Net fee and commission income rose to €12 million (H1 2025: €4 million), with €9 million from DI's asset and investment management.

• General and administrative expenses increased to €126 million (H1 2025: €115 million), mainly due to higher staff costs from DI acquisition; Q2 expenses were €69 million.

• Cost-income ratio increased to 82% in H1 2026, with a target of 70–75% by year-end.

Outlook and guidance

• The group maintains its forecast for key performance indicators published at the start of 2026, with pre-tax profit guidance for 2026 at €30–40 million and CIR expected at 70–75%.

• Strategic RoTE target of 8% confirmed but postponed to 2028, with operating income projected to reach ~€600 million by then.

• Risk provisioning expected to normalize at 25–30 bp by end of 2026 and 15–25 bp long-term.

• Expect total NPLs, including U.S., to fall below €2 billion by year-end, driven by continued reductions in both U.S. and European portfolios.

• Economic and geopolitical uncertainties, especially related to the Middle East conflict, continue to pose risks to growth and inflation.