Deutsche Pfandbriefbank (PBB) Q4 2025 earnings summary

Executive summary

• 2025 was a transformative year marked by a costly exit from the U.S. market, significant de-risking of legacy portfolios, and a focus on strategic transformation, resulting in a pre-tax loss of €250 million.

• New business volume increased by 23% to €6.3 billion, exceeding guidance but remaining below original targets.

• The acquisition of Deutsche Investment was completed, expected to diversify income streams and contribute notably from 2026.

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

Financial highlights

• Pre-tax loss of €250 million in 2025, mainly due to €366 million in restructuring and de-risking costs, with risk provisions surging to €410 million.

• Operating income declined to €422 million from €544 million in 2024, reflecting lower net interest income and reduced portfolio volume.

• Administrative expenses decreased to €236 million, with cost discipline offsetting inflation and strategic investments.

• CET1 ratio at year-end 2025 was 14.9%, with a leverage ratio close to 8% and liquidity coverage ratio at 379–380%.

• No dividend will be paid for 2025.

Outlook and guidance

• 2026 pre-tax earnings expected between €30–40 million, with operating income guidance of €375–425 million.

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

• Cost/income ratio projected to rise to 70–75% in 2026 due to integration and lower income.

• Risk provisioning expected to normalize to 25–30 bps in 2026 and 15–25 bps by 2028.

• Return on tangible equity target of 8% postponed to 2028.