Deutsche Pfandbriefbank (PBB) Q2 2024 earnings summary

Executive summary

• Pre-tax profit for H1 2024 was €47 million, down from €81 million in H1 2023, reflecting robust operating performance despite elevated risk provisioning in a challenging real estate market.

• Operating income rose to €278 million, supported by a 14% increase in net interest income and improved margins.

• Cost-income ratio improved to 45%, expected to rise to around 50% by year-end due to IT transition.

• Strategy update underway to diversify revenue and enhance sustainable profitability, with results to be presented in October.

• S&P downgraded the rating to BBB- with a negative outlook in February 2024, citing real estate market deterioration.

Financial highlights

• Pre-provision profit rose 47% year-over-year to €150 million, driven by higher net interest income and stable costs.

• Risk provisioning remained high at €103 million, mainly due to US office and German development loans.

• Operating income up 7% to €278 million compared to H1 2023.

• Net income for H1 2024 was €29 million, with EPS at €0.20.

• Total assets decreased to €46.0 billion from €50.9 billion at year-end 2023.

Outlook and guidance

• Full-year guidance confirmed, expecting around €6–7 billion in new business volume and REF portfolio of €30–31 billion.

• Pre-tax profit and RoE/ROCET1 after taxes expected to exceed 2023 levels.

• CIR targeted at ~50% for the full year.

• Anticipates further decline in risk provisioning in H2 2024.

• Expects commercial real estate transaction volumes to pick up and price declines to bottom out in H2.