pbb Deutsche Pfandbriefbank reported pre-tax profit more than halved in the first quarter to EUR 21 mln compared to the year-earlier period. In a statement, the Munich-based bank said the results were affected in particular by the costs for maintaining liquidity and a partial reduction of the public sector finance portfolio.

pbb Deutsche Pfandbriefbank reported pre-tax profit more than halved in the first quarter to EUR 21 mln compared to the year-earlier period. In a statement, the Munich-based bank said the results were affected in particular by the costs for maintaining liquidity and a partial reduction of the public sector finance portfolio.

However, the bank reiterated its forecast for the current financial year of a pre-tax profit of between EUR 100-140 mln and new business volume matching the EUR 8 bn chalked up in 2011 ‘based on the assumption of a reasonable market environment and barring any further distortions on the public sector finance markets’. In 2011, the bank booked a pre-tax profit of EUR 188 mln.

In the first three months of the year, pbb Deutsche Pfandbriefbank generated EUR 0.8 bn of new business including extensions beyond one year. The bank said it had entered into new business on a 'selective' basis due to the uncertain funding environment, but that it had realized markedly higher gross margins thanks to lower loan-to-value ratios for new loans.

Manuela Better, CEO of pbb Deutsche Pfandbriefbank said: 'The results for the first quarter are in line with our planning. In the current situation, we opted for a conservative liquidity strategy, which has led to lower net interest income and a more cautious approach to originating new business. As part of our risk-oriented portfolio management, we reduced our exposure to some of the countries in focus, and further enhanced the quality of our public-sector cover pool.'