Deutsche Pfandbriefbank has revealed a 46% surge in new business in 2013 to €8.2bn (£6.8bn), of which the lion’s share comprises real estate lending.
The “good bank” borne out of Hypo Real Estate that specialises in real estate and public investment said the €8.2bn total included €7bn of real estate finance – up from €4.9bn in 2012.
The €1.2bn balance of new business, including extensions beyond one year, was originated in public investment finance.
Pbb also said that in 2014 it “expect[ed] another marked increase in new business volume, compared to 2013” as it sought to build up a profitable loan book ahead of a targeted re-privatisation this year and a final deadline at the end of 2015.
As in the previous year, pbb said Germany was the most important market in the real estate finance business in 2013, with its share rising from 32% to 53%.
The UK came second, with an unchanged share of 17% of new business, followed by central and eastern Europe (14%) in third place and France, which accounted for 9% of new business.
pbb noted a slight increase in the average loan-to-value ratio for new commitments from 56% to 61%, adding that the risk/return profile remained at an attractive level.
In its second business division, public investment finance, the bank posted even stronger growth in new business, which was up by more than 70% year-on-year.
In this segment, more than half of newly originated loans were granted in France, with around 40% in Germany and 10% in the Nordic region. ?pbb also updated on new long-term funding during the period under review, which rose to € 7.7bn from €6.5bn in 2012.
Of the aggregate amount, pbb issues – with an average maturity of 6.9 years – accounted for € 4.5bn, up from €4.2bn the previous year, with another €3.2bn placed in unsecured funding including promissory notes and bearer bonds with an average maturity of 5.2 years.
During the period pbb broadened its unsecured funding base by launching the online platform pbbdirekt.com, which offers overnight and term deposits to private investors. More than €1bn has been placed with pbb direkt since the platform’s launch in early March 2013, it said.
Looking at its financial performance, pbb posted a 33% increase in annual profits from €142m to €165m. It added that it expected pretax profits in excess of €140m in 2014.
Net interest income was up from €296m to €319m with new business a key driver of this increase as fresh lending “offset repayments, and the average margin earned on new business exceeded the figure for the existing portfolio”.
The bank took in €27m from early repayments and redemptions. However, it added that low interest rates resulted in lower income from its own funds and liquidity reserves.
Net commission income totalled €9m, down from €23m, while provisions for losses on loans and advances doubled to €8m.
pbb reduced its general administrative expenses by €29m to €312m after restructuring the business following Hypo Real Estate’s €102bn bailout in October 2008.
The balance of other operating income/expenses fell from €131m to €100m during 2013, mainly as a result of the termination of servicing for FMS Wertmanagement.
bridget.oconnell@estatesgazette.com
