Deutsche Pfandbriefbank (PBB) investor relations material

Executive summary

• 2025 marked a transformative year with a strategic exit from the U.S. market, significant de-risking of non-performing loans, and a €1.7bn SRT for performing U.S. risks, resulting in a pre-tax loss of €250 million.

• New business volume increased by 23% to €6.3 billion, exceeding guidance but still below original targets, with RoTE in new business at 8%.

• The acquisition of Deutsche Investment was completed, set to diversify income streams and generate notable commission income from 2026.

• Portfolio volume declined by €1.7 billion to €27.3 billion due to de-risking and selective new business.

• No dividend will be paid for 2025 due to the annual loss; future distributions will follow a 50% payout policy via dividends and buybacks.

Financial highlights

• Pre-tax loss of €250 million for 2025, in line with revised guidance, mainly from U.S. exit and development NPLs.

• Operating income declined to €422 million, affected by lower net interest and commission income and reduced portfolio volume.

• Loan loss provisions surged to €410 million, dominated by U.S. exit and development book de-risking.

• CET1 ratio at year-end 2025 was 14.9%, with liquidity coverage ratio at 379–380%.

• Cost income ratio rose to 61% in 2025, expected to rise to 70–75% in 2026 before normalizing by 2028.

Outlook and guidance

• 2026 pre-tax profit expected between €30–40 million, with continued negative impact from U.S. exit costs.

• New business volume targeted at €7.5–8.5 billion in 2026; portfolio volume expected between €27–28 billion.

• Operating income for 2026 guided at €357–425 million; cost income ratio to temporarily rise to 70–75%.

• Return on tangible equity for the whole bank targeted at 8% by 2028, with operating income of around €600 million.

• Risk costs in core European markets expected to normalize to 25–30 basis points in 2026.