14.05.2024 - Investor Update: pbb Deutsche Pfandbriefbank

Debt Investor Update - Results Q1/24

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Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	2

Business Model & Strategy	pbb is a specialised CRE lender with a clear focus on
	senior lending and green transformation of the CRE
	sector

Core Business

Funding		CRE Lending
Progress on strategic initiatives
- Strong capital market presence: benchmark	Specialized on-balance sheet	- Pfandbrief-eligible senior loans,
issuances and private placements	lending …	complemented by limited non-senior loans
- Resilient Pfandbrief as main funding		- Structuring expertise for complex/large
source complemented by unsecured		transactions
bonds		- ~ 150 deals per year
- pbb one of most active senior unsecured	… based on stable, well	- Ø deal size ~€ 50-70 mn
Pre-taxGreenprofitBondissuersof € 32 million in-linediversifiedwithfundingfullbase-year guidance- Green Loans integral2023part of business
- Strong ESG Ratings (e.g. MSCI AAA)		model: CRE transformation partner
- EUR and foreign currencies

- Scalable retail deposit online-platform (pbb direkt)

- Call and term deposits (EUR, USD)

USP

• Leading specialized CRE bank with conservative lending standards and high-risk competence
• Strong franchise with long- standing client relationships
• Local presence in core Europe and the US
• Resilient Pfandbrief
  as main funding source - in addition, scalable retail deposit platform

New Business Lines

RE Invest. Mgmt.	pbb Debt	Green Consulting
- Issuance of open-ended real	- Provide required formats to	- Advise on holistic solutions
Release of management overlay keeps risk provisions low
estate funds	institutional investors	within the green
- Capital-efficient and scalable	(e.g. debt funds)	transformation of RE
income source	- Leverage our extensive market	(e.g. green development
	access	loans, green capex facilities)

Partners

Strategy Update

• Maintain a conservative risk profile and retain strict cost discipline
• Increase of profitability by growth and capital light strategic initiatives
• Sustainable finance as an important contributor for all growth initiatives

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	3

KEY MESSAGES

Solid start into 2024

Pre-tax profit of € 34 mn, slightly higher than previous year (Q1/23: € 32 mn)

Pre-provision profit of € 81 mn, benefitting from strong NII and realisation income

Risk provisioning remains elevated in line with guidance

Strategic active balance sheet management started

Portfolio remains solid with an avg. LTV of 54%1

100% senior lender, always first ranking

Selective new business with favourable risk/return profile - REF portfolio stable vs. year-end 2023 Slowing NPL dynamic through active NPL management

Already strong liquidity position of € >6 bn further improved

Resilient Pfandbrief market - recent Mortgage Pfandbrief Benchmark tapped by € 100 mn at manageable cost No need to issue Senior Unsecured benchmark in 2024

Retail deposit further increased by € 0.5 bn to € 7.1 bn in Q1/24

1. Based on performing investment loans only

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	4

OPERATING & FINANCIAL OVERVIEW

Selective new business at strong margins

REF new business

€ bn (commitments, incl. extensions > 1 yr.)

~200 bp

~245 bp

 Selective new business

REF portfolio

€ bn (financing volume)

31.131.2

 REF portfolio stable

1.0

0.7

volume with focus on

risk/return profile

 Strong uplift of gross

interest margin

margin business

 Improved gross portfolio margin

Q1/23Q1/24

12/2303/24

Funding - retail deposits

€ bn

+8%

6.67.1

12/2303/24

Note: Figures may not add up due to rounding

Non-Coreportfolio € bn (financing volume)

	-6%
12.4	11.6
 Growth of retail deposits		Optimisation of non-core
at favourable costs, well			portfolio ongoing
ahead of plan			Accelerated asset
 Strong liquidity position			reduction at attractive
further improved			price levels
12/23	03/24

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	5

REF PORTFOLIO PERFORMING

Performing Portfolio

€ bn (EaD, Basel III)

30.1	31.5	31.3

03/2312/2303/24

Regions					Property types
31/03/2024 (EaD, Basel III)			31/03/2024 (EaD, Basel III)
							Mixed use/
Nordics	Other				Hotel other
			Logistics	3%
	5% 8%
CEE				2%
9%				17%
			Germany
		€ 31.3 bn	44%	€ 31.3 bn 51% Office
USA 15%			Retail 9%
	7%				18%
	UK	12%			Residential
	France
Note: Figures may not add up due to rounding	1. performing investment loans, based on commitments
2. On the part, where a revaluation was necessary

Solid portfolio in still demanding market environment

• Portfolio quality remains solid - focus on senior lending only
• 100% of the portfolio reviewed/revalued in last 12 months - avg. value change of -10%2
• Strong senior lending profile with ~88% of loans collateralised at LTV ≤50%
• LTV-stress:
• • Exposure at risk: ~1.3% of portfolio1
  • Coverage ratio: ~47% via existing stage 1&2 LLPs of € 179 mn

Layered LTV - based on performing investment loans only (€ bn, commitments, Basel III)

25.7 25.3 Ø-LTV1

		12/23: 53%					LTV-stress
		03/24: 54%
							Exposure at risk: € ~380 mn
	2.0	2.2	0.6	0.8	0.2	0.2	0.1	0.1	0.0	0.0	0.0	0.0
≤50%	>50%	>60%	>70%	>80%	>90%	>100%
12/23	03/24

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	6

REF PORTFOLIO NPL	Slowing dynamic in NPL portfolio

NPL Portfolio

€ mn (EaD, Basel III)

1,535+168

3 loans

12/23Additions

Regions

31/03/2024 (EaD, Basel III)

France Other

CEE 5% 3%

4%

UK 21% € 1.6 bn 41% USA

27%

Germany

+35	-91	1,647

2 loans

FX/EaD	Restructured/	03/24
	Repaid

Property types

31/03/2024 (EaD, Basel III)

Hotel Other & Guaranteed

Logistics

<1% 2% 10%

Retail 23%	€ 1.6 bn	53% Office
12%
Residential

• Additions driven by two US office loans and one German development
• Only small increase of NPL portfolio, benefitting from active management of NPL portfolio
• • 1 loan (€ 46 mn) restructured
  • 1 loan (€ 46 mn) repaid
  • both at internal valuation marks
• 100% of the portfolio reviewed/revalued in last 12 months - avg. value change of -32%2
• NPE1 ratio 3.3%
• NPL coverage ratio of ~27% via existing stage 3 LLPs of € 441 mn

Note: Figures may not add up due to rounding 1. Non-Performing Exposure ratio = Non-performing loans and bonds / total portfolio (EaD); NPL ratio (EBA definition) 03/24: 3.9% (NPL ratio = gross carrying amount of non-performing loans and advances (incl. loans in forbearance cure-period) / total gross carrying amount of loans and advances) 2 On the portfolio part, where a revaluation was necessary

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	7

FOCUS: USA PERFORMING	Continued pressure on valuations

Performing Portfolio

€ bn (EaD, Basel III)

4.5

4.5

4.6

03/2312/2303/24

Property types	US Office - Regions
31/03/2024: (EaD, Basel III)	31/03/2024: (EaD, Basel III)
Residential Others <1%	West Coast
15%	12%
Logistics 4%	Chicago
10%
€ 4.6 bn	€ 3.8 bn
81%	78%
Office	East Coast
Note: Figures may not add up due to rounding	1. performing investment loans, based on commitments

2. On the portfolio part, where a revaluation was necessary

• Full focus on risk mitigation in existing portfolio
• 100% of the portfolio reviewed/revalued in last 12 months - avg. value change of -17%2
• LTV-stress:
• • Exposure at risk: ~4.7% of portfolio1
  • Coverage ratio: ~79% via existing stage 1&2 LLPs of € 128 mn

US Office - Layered LTV - based on performing investment loans only (€ mn, commitments, Basel III)

2,688 2,606		Ø-LTV1
		12/23: 64%					LTV-stress
		03/24: 68%
							Exposure at risk: € ~163 mn
	360	428	194	279	70	114
			29	43	2	7	0	0
≤50%	>50%	>60%	>70%	>80%	>90%	>100%
12/23	03/24

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	8

FOCUS: USA NPL

Non-Performing Portfolio

€ mn (EaD, Basel III)

Successful workout and restructuring limited NPL increase to € ~50 mn (before FX effects)

• Additions (office) mitigated by active NPL management

					 1 loan (€ 46 mn) restructured
	+142	+14	-91	672	 1 loan (€ 46 mn) repaid
607		 both at internal valuation marks
	2 loans
	2 loans				 100% of the portfolio reviewed/revalued in last 12 months -
					avg. value change of -35%2
					 US NPE1 ratio 13%
12/23	Additions	FX/EaD	Restructured/	03/24	 NPL coverage ratio of ~21% via existing stage 3 LLPs of € 139 mn
			Repaid

Property types

Office - Regions

Layered LTV - based on investment loans only

31/03/2024: (EaD, Basel III)

31/03/2024: (EaD, Basel III)

(€ mn, commitments, Basel III)

West Coast

373 391

Ø-LTV1

12/23: 87%

30%

East Coast

03/24: 90%

42%

€ 0.7 bn

€ 0.7 bn

100%

28%

64

72

58

66

38

50

28

42

26

24

22

18

Office

Chicago

≤50%

>50%

>60%

>70%

>80%

>90%

>100%

Note: Figures may not add up due to rounding 1. Non-Performing Exposure ratio = Non-performing loans and bonds / total US portfolio (EaD)

12/23

03/24

2. On the portfolio part, where a revaluation was necessary

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	9

FOCUS: DEVELOPMENT PORTFOLIO	Development portfolio further reduced

Portfolio

€ bn (EaD, Basel III)

3.23.2

<0.1 0.4

3.12.8

03/23 12/23

Performing	Phase
Non-performing	31/03/2024 (commitments, Basel III)
3.0	24 loans	15 loans	21 loans
Ø-LTV 61%	Ø-LTV 60%	Ø-LTV 52%
0.4
		39%
		34%
	27%
2.5
03/24	Land phase	Construction	Finishing phase
		phase	>80% completion

• Portfolio reduced by € 0.2 bn in Q1/24 - significantly reduced since 2019 (12/19: € 4.7 bn, 03/24: € 3.0 bn)
• Senior lending only
• • No exposure in unsecured/subordinated instruments
  • Cooperation only with selective and well experienced large developers - 40 developers for 60 projects
  • Focus on office, residential and logistics in major urban locations (very good locations) in Germany (only big 7) and Europe
• 2/3 in land and finishing phase
• • Therefore, no or only little immediate construction risk

Regions	Property types		~75% of loans in construction and finishing phase already
	finished or to be finished in 2024
31/03/2024 (EaD, Basel III)	31/03/2024 (EaD, Basel III)
			Risk management focus on loans in construction phase

	Others	Others
France	4%
		16%
14%	Retail <1%
		Logistics 9%
	€ 3.0 bn		€ 3.0 bn 51% Office
	82%		23%
	Residential

Germany

Note: Figures may not add up due to rounding

• Development NPLs of € 418 mn with coverage ratio of ~15% via existing stage 3 LLPs of € 64 mn - 2024: 1 new case (€ 26 mn, land phase, no LLP)
• • Only German loans
  • Very good inner city locations
  • 5 cases in land phase, no LLPs
  • 2 cases in construction phase (1 residential/1 retail)

Results Q1/24 (IFRS, pbb Group, unaudited) 14 May 2024	10