DEUTSCHE PFANDBRIEFBANK AG 
Although the new CEO Kay Wolf still expects office properties in the USA to lose value this year, the expected reduction in key interest rates should mean that these losses will be lower than in 2023. pbb devalued the properties it finances in major US cities by almost a fifth last year, and the bank has set aside provisions of €259 million for the corresponding loans. The bank does not intend to grant any new loans in the USA for the time being.
Overall, pbb has increased risk provisions almost fivefold to €212 million in 2023 (2022: €44 million). This pushed profit before taxes down to €90 (213) million. "It was not a good year," said Wolf, who joined from Deutsche Bank in February and replaced Andreas Arndt at the helm of the real estate financier from Garching near Munich just under a week ago. This year, profits should be significantly higher again if risk provisions fall accordingly. However, loan loss provisions would still be above average in 2024.
The dividend for 2023 will be canceled - but this is not a requirement of the regulators, Wolf emphasized. A year ago, pbb still paid 95 cents per share. The bank has sufficient funds for the coupon on an AT1 bond due in April.
The turbulence in the USA had fully affected pbb. The shares and AT1 bonds had plummeted after the bank was targeted by several short sellers who were betting on a fall in the share price. "The situation of pbb, with its solid capital and liquidity position, is much better than recent share price developments might suggest," said Wolf. "But we know that we have to regain confidence." He does not consider the loss of confidence to be homemade. The fact that pbb, of all companies, has been hit is due to the fact that it is probably the only European commercial real estate financier whose shares and bonds are freely tradable.
On Thursday, pbb shares rose by 4.7 percent to 4.36 euros. They have thus made up 19 percent since the low in mid-February, but have still lost more than half of their value within a year. According to its own assessment, pbb is hardly dependent on the favor of the markets this year: The bank would not have to issue any unsecured bonds after collecting almost seven billion euros in deposits from private clients. The secured financing requirements are largely covered, it said. Wolf evaded the question of a capital increase: He did not want to speculate on that, he said. However, the bank has one billion euros more capital than it needs to hold.
"We are very confident that we will get through this admittedly difficult market phase well," emphasized the new CEO. He expects prices for commercial real estate in the USA to fall again in the first half of the year, while the trend in Europe will be more moderate. "The provisions we have set aside already take into account further price declines," said CFO Marcus Schulte. pbb is putting the brakes on new business: in 2024, new financing with a volume of six to seven billion euros (2023: 7.2 billion euros) is to be added to the books, compared to nine billion euros two years ago.
(Report by Alexander Hübner, edited by Olaf Brenner. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).
