14. August 2012 
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pbb Deutsche Pfandbriefbank increases profit during the second quarter
During the second quarter of 2012, pbb Deutsche Pfandbriefbank increased pre-tax profit (in accordance with IFRS) to € 30 million, up from € 21 million in the first quarter. With a total pre-tax profit of € 51 million for the first half of 2012, pbb Deutsche Pfandbriefbank's performance is within expectations. The Management Board has affirmed its full-year target for pre-tax profit in a range of € 100 million to € 140 million.
New business remained subdued during the second quarter, with a volume of € 0.7 billion (Q1 2012: € 0.8 billion; both figures include extensions for more than one year). This development continued to reflect the bank's reduced origination activities at the end of 2011 and the beginning of 2012, in the wake of uncertain funding markets at the time. The Real Estate Finance division accounted for € 1.2 billion of the total € 1.5 billion new business during the first half-year; € 0.3 billion was originated in Public Investment Finance. Average gross margins generated on new business remained considerably higher than in 2011: during the first half of 2012, margins in Real Estate Finance rose to more than 240 basis points (bp); for the full year 2011 they were over 205 bp. Public Investment Finance generated average gross margins of more than 140 bp in the first half: the figure for the full year 2011 was over 105 bp.
Barring any major changes to the market environment, the specialist lender for Real Estate Finance and Public Investment Finance anticipates a marked increase in new business during the second half of the year. In July, the bank originated new business of € 0.6 billion (preliminary figure, including extensions for more than one year) with overall business activities significantly increasing. The bank affirmed its full-year guidance of € 8 billion in new business for 2012. Through its successful funding activities during the first half of the year, pbb Deutsche Pfandbriefbank has built the foundation for growing its new business. The bank raised a total of approximately € 3.7 billion in long-term funding during the first six months (excluding money market and ECB repo transactions), with Pfandbrief issues accounting for the lion's share. The average term of new funds raised exceeded six years.
Manuela Better, CEO of pbb Deutsche Pfandbriefbank AG, said: „The results for the first six months of the year are in line with our expectations. We aim to boost new business during the second half of the year. Thanks to our success on the funding markets during the first half of 2012, we have sufficient liquidity at our disposal to retain a comfortable liquidity position in the event of a marked increase in new business.“
Details of the consolidated income statement (in accordance with IFRS) for the second quarter were as follows:
• Operating revenues showed a marked increase, to € 120 million (Q1 2012: € 103 million). Net interest income of € 74 million (Q1 2012: € 76 million), which was again burdened by a conservative liquidity strategy, and the net commission income of € 3 million (Q1 2012: € 3 million) remained virtually stable. The improvement resulted from an increased net income from financial investments of € 9 million (Q1 2012: € -4 million) which was affected from gains resulting from the sale of assets as part of an adjustment of the liquidity buffer, as well as a reduction in portfolio based loan loss provisions. In addition to this, the balance of other operating income/expenses increased to € 37 million (Q1 2012: € 30 million).
• As in the previous quarter, new provisions for losses on loans and advances remained at a low level of € 5 million (Q1 2012: € 4 million), and were limited to just a few exposures that required provisioning.
• General administrative expenses rose to € 86 million (Q1 2012: € 78 million), particularly on account of expenditure for a project to harmonise the Group's IT infrastructure (scheduled for completion this year).
Consolidated total assets (in accordance with IFRS) rose slightly, to € 105 billion (31 March 2012: € 104 billion), despite the reduction of counter effects which occurred in relation to the transfer of assets to FMS Wertmanagement and the planned reduction of some portfolios. The reduction of counter effects from the transfer of assets was offset by the increased passing-through of excess liquidity from FMS Wertmanagement, placed with the central bank.
HRE Group and DEPFA sub-group
The HRE Group, which comprises pbb Deutsche Pfandbriefbank and its subsidiaries as well as the DEPFA sub-group, posted second-quarter profit before taxes (in accordance with IFRS) of € 69 million (Q1 2012: € 12 million). HRE Group's consolidated total assets (in accordance with IFRS) as at 30 June 2012 amounted to € 190 billion, after € 237 billion as at 31 December 2011. The DEPFA sub-group posted pre-tax profit (in accordance with IFRS) of € 41 million for the second quarter of 2012 (Q1 2012: € –8 million); the buy-back of debt instruments had a positive effect upon results.
New business remained subdued during the second quarter, with a volume of € 0.7 billion (Q1 2012: € 0.8 billion; both figures include extensions for more than one year). This development continued to reflect the bank's reduced origination activities at the end of 2011 and the beginning of 2012, in the wake of uncertain funding markets at the time. The Real Estate Finance division accounted for € 1.2 billion of the total € 1.5 billion new business during the first half-year; € 0.3 billion was originated in Public Investment Finance. Average gross margins generated on new business remained considerably higher than in 2011: during the first half of 2012, margins in Real Estate Finance rose to more than 240 basis points (bp); for the full year 2011 they were over 205 bp. Public Investment Finance generated average gross margins of more than 140 bp in the first half: the figure for the full year 2011 was over 105 bp.
Barring any major changes to the market environment, the specialist lender for Real Estate Finance and Public Investment Finance anticipates a marked increase in new business during the second half of the year. In July, the bank originated new business of € 0.6 billion (preliminary figure, including extensions for more than one year) with overall business activities significantly increasing. The bank affirmed its full-year guidance of € 8 billion in new business for 2012. Through its successful funding activities during the first half of the year, pbb Deutsche Pfandbriefbank has built the foundation for growing its new business. The bank raised a total of approximately € 3.7 billion in long-term funding during the first six months (excluding money market and ECB repo transactions), with Pfandbrief issues accounting for the lion's share. The average term of new funds raised exceeded six years.
Manuela Better, CEO of pbb Deutsche Pfandbriefbank AG, said: „The results for the first six months of the year are in line with our expectations. We aim to boost new business during the second half of the year. Thanks to our success on the funding markets during the first half of 2012, we have sufficient liquidity at our disposal to retain a comfortable liquidity position in the event of a marked increase in new business.“
Details of the consolidated income statement (in accordance with IFRS) for the second quarter were as follows:
• Operating revenues showed a marked increase, to € 120 million (Q1 2012: € 103 million). Net interest income of € 74 million (Q1 2012: € 76 million), which was again burdened by a conservative liquidity strategy, and the net commission income of € 3 million (Q1 2012: € 3 million) remained virtually stable. The improvement resulted from an increased net income from financial investments of € 9 million (Q1 2012: € -4 million) which was affected from gains resulting from the sale of assets as part of an adjustment of the liquidity buffer, as well as a reduction in portfolio based loan loss provisions. In addition to this, the balance of other operating income/expenses increased to € 37 million (Q1 2012: € 30 million).
• As in the previous quarter, new provisions for losses on loans and advances remained at a low level of € 5 million (Q1 2012: € 4 million), and were limited to just a few exposures that required provisioning.
• General administrative expenses rose to € 86 million (Q1 2012: € 78 million), particularly on account of expenditure for a project to harmonise the Group's IT infrastructure (scheduled for completion this year).
Consolidated total assets (in accordance with IFRS) rose slightly, to € 105 billion (31 March 2012: € 104 billion), despite the reduction of counter effects which occurred in relation to the transfer of assets to FMS Wertmanagement and the planned reduction of some portfolios. The reduction of counter effects from the transfer of assets was offset by the increased passing-through of excess liquidity from FMS Wertmanagement, placed with the central bank.
HRE Group and DEPFA sub-group
The HRE Group, which comprises pbb Deutsche Pfandbriefbank and its subsidiaries as well as the DEPFA sub-group, posted second-quarter profit before taxes (in accordance with IFRS) of € 69 million (Q1 2012: € 12 million). HRE Group's consolidated total assets (in accordance with IFRS) as at 30 June 2012 amounted to € 190 billion, after € 237 billion as at 31 December 2011. The DEPFA sub-group posted pre-tax profit (in accordance with IFRS) of € 41 million for the second quarter of 2012 (Q1 2012: € –8 million); the buy-back of debt instruments had a positive effect upon results.
