Pbb posts 3rd profitable quarter in a row

Pbb Deutsche Pfandbriefbank, the core bank of Germany's HRE Group, has posted a pre-tax profit of EUR 52 mln in the first quarter of the year, marking the bank's third profitable quarter in a row, against a backdrop of restructuring that is largely completed.

The bank also generated EUR 2.2 bn in new lending business in the first quarter. Of the new business, EUR 1.6 bn was generated by real estate finance, with EUR 600 mln from public sector finance, totalling 35 transactions combined.

The transactions include some sizeable ones; last month (April), Deutsche Pfandbriefbank teamed up with UniCredit Bank Austria and the Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse (BAWAGPSK) to provide a EUR 308 mln facility to GLL's Accession Fund to refinance an office and logistics portfolio across Central and Eastern Europe. Last year, the bank generated EUR 4 bn in new business.

'We remain highly confident that we will achieve our objectives, and that pbb Deutsche Pfandbriefbank will post a profit for 2011 as a whole,' Deutsche Pfandbriefbank's CEO Manuela Better said in a statement.

It is a far cry from the same period last year, where the bank posted a loss of EUR 177 mln. Operating revenues in the first quarter of this year rose to EUR131mln, a rise of more than 8% y-o-y, even though the portfolio is smaller. In addition, EUR 2 mln in provisions for losses on loans and advances was reversed - compared to a net addition of EUR226mln in the same quarter last year. Net commission income increased to EUR 14 mln during the first quarter of 2011, up from a loss of EUR 7mln in the same quarter last year.

Consolidated total assets of HRE Group fell to EUR 267 bn, down EUR 61 bn, due to the transfer of positions, including assets to FMS-Wertmanagement, the 'bad bank' to which it has already transferred EUR 173 bn of toxic assets.

In a further sign that Deutsche Pfandbriefbank is starting to get its mojo back, Dr. Bernhard Scholz, member of the management board responsible for real estate finance and public sector finance, told PropertyEU last month that it hopes to do around EUR 8bn in new business this year, doubling last year’s loans originations in the process.

The bank was also restructured last year, splitting the existing portfolio into a strategic and anon-strategic arm, along with the subsequent transfer of the non-strategic portfolio to FMS-Wertmanagement. The HRE Group, which was bailed out by the German government in 2008, is expecting to be re-privatised. EU State Aid proceedings are still ongoing, a Deutsche Pfandbriefbank spokesman told PropertyEU.