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Pbb’s new lending up 9.5% despite tighter margins

The German bank records €6.9 billion in fresh business to the end of September.

Pbb Deutsche Pfandbriefbank has posted a 9.5 percent year-on-year increase in new business to the end of September 2017, totalling €6.9 billion of lending.

About half of pbb’s new lending was generated in Germany and one-third in other core markets, such as the UK, France, and central and eastern Europe. The US, where the German bank relaunched its business activity in Q3 2016, accounted for 10 percent of newly originated business.

The average gross new business margin in commercial real estate finance was above 160 basis points year-to-date, down from 170bps recorded for the same period a year ago. Lower margins were linked to the bank’s conservative country and product mix of the new business origination, pbb said.

“The market environment continues to be highly competitive, and pbb has maintained its conservative approach to risk,” said Andreas Arndt, CEO of pbb, adding that market conditions are expected to remain challenging.

The average loan-to-value ratio of 60 percent for new commitments declined slightly when compared with the same period last year, when the LTV ratio averaged 62 percent. Average maturity remained stable at 5.1 years.

Pbb posted a consolidated pre-tax profit of €51 million for Q3, which represents an 88.8 percent increase year-on-year. Pre-tax profit for the first nine months of 2017 was €154 million, which represents a 35 percent increase from the same time a year ago.

Higher profits were driven by positive developments in net interest and commission income, up by 8 percent to €321 million year-on-year, while loan-loss provisions remained low at €2 million, down by €1 million from the end of Q3 2016.

“The positive factors of 2017 cannot be taken as a given for 2018. Therefore, we will again make conservative projections for 2018, particularly in terms of risk costs,” Arndt said.