Deutsche Pfandbriefbank (PBB) Q2 2024 earnings summary

Executive summary

• Pre-tax profit for H1 2024 was EUR 47 million, down from EUR 81 million in H1 2023, mainly due to higher risk provisioning in a challenging real estate market, but in line with full-year guidance.

• Net interest income increased to EUR 246 million, driven by higher average financing volume and improved margins.

• Cost-income ratio improved to 45% from 51.4% year-over-year, though 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 EUR 150 million, with operating income up to EUR 278 million.

• Net fee and commission income was EUR 3 million, stable year-over-year.

• Risk provisions remained high at EUR -103 million for H1, nearly 50% lower than H2 2023 but sharply up from H1 2023.

• General and administrative expenses decreased to EUR 115 million.

• Earnings per share were EUR 0.20, down from EUR 0.44 in H1 2023.

Outlook and guidance

• Full-year guidance confirmed, expecting around EUR 6 billion in new business volume.

• 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.

• Confident in maintaining CET1 ratio at or above 14% for the remainder of 2024.

• Management highlights ongoing risks and opportunities that could impact future results.