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Germany’s Pfandbrief banks increased commercial-property lending by 14.3% to €30.3bn in the first half of 2026, while several of the country’s largest property financiers reported stable or rising new business. Yet the same reporting season brought a loss in Helaba’s property segment, sharply weaker property earnings at NordLB and continuing pressure from problem loans at pbb Deutsche Pfandbriefbank and Aareal Bank.
The apparent contradiction rests on assuming that greater lending volume means credit has become more widely available. The disclosures point instead to a selective recovery: banks remain willing to finance transactions that meet demanding requirements, while difficult developments, secondary assets and highly leveraged borrowers struggle to obtain debt.
Group profits provide a poor guide. DKB generated most of BayernLB’s first-half earnings, while stronger activities elsewhere at NordLB and LBBW obscured weaker property divisions. REFIRE has therefore separated the banks’ property operations, lending volumes and risk costs as far as their disclosures allow. The comparison remains imperfect: some banks include renewals and prolongations in new business, reporting segments differ, and portfolio movements can reflect repayments and disposals as well as lending. Nevertheless, the figures reveal a market becoming more active without becoming broadly more accommodating.
Banks return selectively to new business
The VdP Association of German Pfandbrief Banks’ 40 member institutions granted €30.3bn of new commercial-property loans during the first half, up from €26.5bn a year earlier. Offices accounted for €14.8bn, an increase of 9.6%, while hotel financing rose 9.1% to €2.4bn. Retail-property lending increased by 40.6% to €9bn.
The association cautions that lending remains low by longer-term standards. Even so, the increase is too broad to dismiss as an improvement at one or two banks. Individual results indicate where some of the additional credit is going.
Aareal Bank completed €4.7bn of structured-property new business and renewals, unchanged from the first half of 2025. Newly originated loans increased slightly to €2.9bn and were written almost exclusively in Europe, with an emphasis on hotels and cross-border portfolios. In the US, the bank confined itself to renewals.
The terms are as instructive as the volume. Aareal’s new lending carried an average loan-to-value ratio of 55%, down from 57% for 2025, and an average gross margin of 242 basis points, up from 234. The bank is not relying upon higher leverage or compressed pricing to generate business.
Deutsche Pfandbriefbank reported an 18% increase in new business in its Real Estate Finance Solutions segment to €3.1bn. That includes rollovers of more than one year, but 67% consisted of new commitments, compared with 23% a year earlier. Hotels, senior living, student housing and data centres—the sectors in which pbb intends to expand—accounted for 23% of second-quarter new business.
Its property-finance portfolio nevertheless remained unchanged from the first quarter at €26.8bn and was down from €28.2bn a year earlier, partly because pbb is reducing its remaining US exposure faster than planned. New commitments are replacing maturing or unwanted business rather than producing straightforward balance-sheet growth.
Helaba presents an even clearer version of the same strategy. It increased medium- and long- term property new business from €3bn to €3.9bn while deliberately reducing its real-estate finance portfolio by 2% to €32.4bn. The proportion of loans with an LTV no higher than 75% at maturity increased from 80% to 84%. This is active origination combined with portfolio contraction, not indiscriminate expansion.
DZ HYP held corporate-customer new business steady at €3.6bn while its total property-finance portfolio slipped from €57.6bn to €57.2bn. Berlin Hyp, through its owner LBBW, reported approximately €7bn of commercial-property new business, although LBBW provided less detail on how much represented fresh lending rather than extensions.
The banks are neither closed for business nor reopening their balance sheets across the market. The evidence points instead to competition for transactions with conservative leverage, established sponsors or exposure to property types selected for growth.
Property stress remains unevenly distributed
Higher origination has not brought the previous credit cycle to an end. The clearest evidence comes from Helaba, where the property segment moved from a €106m profit in the first half of 2025 to a €26m loss. Property risk provisions rose from €26m to €113m and operating income fell from €227m to €189m.
The segment primarily comprises commercial-property project and portfolio financing, but also includes related property activities, so the loss cannot be attributed entirely to the loan book. Planned restructuring and job cuts at OFB, Helaba’s project-development subsidiary, show that development activity also contributed.
Nevertheless, commercial-property finance was the principal reason group risk provisions increased by 53% to €198m. Helaba reduced its expected full-year pre-tax profit from between €600m and €700m to approximately €500m. Chief executive Thomas Groß said the commercial office downturn had proved “deeper and longer than we had anticipated”.
Helaba is the outlier in scale, but not the only lender reporting weaker property performance. NordLB increased group pre-tax profit by 40% to €370m, helped by revenue growth elsewhere, while profit from commercial real estate reportedly fell to around one-quarter of its previous level. The bank also identified property as one of the areas behind an increase in group risk provisions from €73m to €96m.
At LBBW, the combined property and infrastructure segment’s pre-tax profit fell from €190m to €171m despite Berlin Hyp’s substantial origination. The comparison is more benign than Helaba’s: segment loan-loss allowances declined from €96m to €74m. Group provisions nevertheless rose partly because of individual property and corporate exposures.
The lenders are not moving together
BayernLB offers a stronger counterexample. Its Real Estate Division more than doubled pre-tax profit from €43m to €102m, helped by higher interest and commission income, lower credit provisions and a decline in valuation losses on property loans from €53m to €15m.
BayernLB’s own gross commercial-property exposure increased from €32.8bn at the end of 2025 to €34bn. Its commercial-property NPL ratio remained appreciable at 5.2%, although this was down from 5.6%. The bank described the recovery in loan demand and origination as “modest” and “selective”.
DZ HYP provides a second counterexample. It increased pre-tax profit from €171m to €186m while corporate- customer new business remained stable at €3.6bn. Its slightly smaller property-finance portfolio nevertheless indicates steady earnings and active lending without broad balance-sheet growth.
For pbb, the return to a €16m pre-tax profit from a €249m loss is encouraging, but largely reflects the absence of the previous year’s exceptional charges for its US withdrawal. Operating income fell from €206m to €167m as net interest income declined and the smaller portfolio produced less revenue. Moody’s expects profitability to recover only gradually unless the economic environment improves.
Aareal carried €1.17bn of non-performing loans at the end of June, little changed from €1.15bn in December.
Approximately €600m relates to US offices. Its NPL ratio edged up from 3.2% to 3.3%, although the bank aims to reduce the stock below €1bn by year-end.
The results provide neither evidence of a general reopening of bank credit nor proof that Helaba’s difficulties mark the beginning of another systemic property-finance crisis. They show lenders with capacity to increase originations, but markedly different legacy risks and a narrower definition of what remains financeable.
That helps reconcile the accounts with the darker experience reported across the market. RICS’s net balance for German lending conditions fell from minus 42% in the first quarter to minus 70% in the second, its weakest German reading on record. The survey measures perceptions rather than commitments, but the divergence is informative: aggregate lending can rise while access deteriorates for much of the borrower population.
REFIRE: The distinction between rising lending volumes and wider credit availability is critical. Strong sponsors and assets capable of supporting conservative leverage can still attract bank finance, sometimes at margins attractive to lenders. Secondary offices, difficult developments and loans dependent upon recovering valuations face a much narrower field.
Germany’s property banks are lending more, but are also recognising further losses, reducing unwanted exposures and concentrating capital on transactions that satisfy demanding tests. The financing market is becoming busier, but not more forgiving.