pbb Deutsche Pfandbriefbank shrinks new lending

Munich-based lender pbb Deutsche Pfandbriefbank posted its first-half figures last week, and said it was raising its risk provisions by €36m to €70m based on weaker macroeconomic conditions. The bank had already withdrawn its full-year guidance at the beginning of May as the extent of the coronavirus crisis was unfolding.

The second quarter of 2020 saw big declines in the volume of new lending business written by the bank, while for the first half, the new lending volume fell from €4.4bn to €2.7bn compared with the same period last year - in each case including prolongations. CEO Andreas Arndt offered the small comfort that “margins are on the rise again”, and that “we are now more selective with new business.” However, he said he expects new business to pick up again in the second half. The bank’s loan book remained largely stable through the second quarter at €26.7bn.

Arndt commented: “Once again, the first half of 2020 was characterised by a healthy performance in our income and expense items. Good operating results have facilitated another increase in the risk shield for our port-folio in the second quarter, responding to the external shock caused by the impact of the COVID-19 pandemic. We anticipate solid results for 2020 as a whole – however, the actual figure will materially depend upon required risk provisioning, especially for potential defaults of individual exposures.”

The bank will continue to suspend dividend payments until January 2021, following the recommendation of the European Central Bank (ECB). Arndt made it clear that he was more in favour of "individual approaches" in this matter, but also expressed understanding for the attitude of the monetary authority. He said he would comment again on a possible resumption of dividend payments only in March next year at the earliest. "It cannot be ruled out that we will then make a double dividend payment."