Deutsche Pfandbriefbank (pbb) is on target to top its 2014 real estate lending volumes this year, although the bank’s CEO warned that competitive market conditions and margin pressure will persist beyond 2015.
The German bank’s new real estate lending, including loan extensions of more than one year, was €7.9 billion during the first nine months of the year, up from €6.1 billion during the same period in 2014 and on course to beat last year’s total of €9 billion.
The bulk of real estate lending, 45%, took place in its German home market, followed by 17% in the UK and 13% in the Nordic countries. During the course of the year, average loan-to-value ratios dropped by one percentage point, to 63%.
“Despite significant headwinds, we were able to stabilise our new business margins, whilst adhering to our conservative risk profile – which we will adhere to, further expanding our European market position,” said Andreas Arndt, pbb’s co-CEO and CFO. “However, intense competition will clearly prevail beyond 2015, with margins set to remain under significant pressure.”
Pre-tax profit for the period was up 30% to €165 million, close to pbb’s full-year expectation. The bank said that it has raised its expectations for this year and now anticipates a more pronounced positive trend compared to the reference value of €174 million.
The aggregate of net interest and net fee and commission income increased by 11% during the first nine months to €336 million. However, the third quarter figure, €98 million, was down from €108 million in Q3 2014, which pbb attributed in part to prepayments and early loan extensions.