Deutsche Pfandbriefbank AG

For 2025, pbb reported a pretax loss of EUR 250 million and said total risk costs across income lines were EUR 366 million. Operating income fell EUR 122 million year over year, including EUR 57 million lower NII and EUR 65 million lower realization and other income. General and administrative expenses declined EUR 9 million to EUR 257 million, while loan loss provisions rose to minus EUR 410 million, including minus EUR 334 million for U.S. and development de-risking. The CET1 ratio was 14.9% at year-end 2025, with RWA at EUR 17.5 billion, and operating income in Q4 was EUR 106 million. Forward guidance: 2026 pretax earnings are expected at EUR 30 million to EUR 40 million; new business is guided to EUR 7.5 billion to EUR 8.5 billion; real estate finance portfolio volume to EUR 27 billion to EUR 28 billion; AUM in Real Estate Investment Solutions to EUR 3.3 billion to EUR 3.7 billion; operating income to EUR 357 million to EUR 425 million; and the cost/income ratio to 70% to 75%.

Kay Wolf framed 2025 as a landmark but difficult transition year, saying the bank made far-reaching decisions to build a more resilient, profitable, and diversified model. He emphasized that the U.S. exit and shielding of the development book are largely completed, and that pbb is sticking with a broader strategic shift toward European core markets and new business lines. His tone was candid and somewhat disappointed: he said the bank is not satisfied with 2025 or the 2026 outlook, but believes the transformation remains necessary and on track.

Marcus Schulte focused on the mechanics of the transition and the financial consequences. He said the REF portfolio declined EUR 1.7 billion to EUR 27.3 billion, noncore assets fell EUR 1.2 billion to EUR 8.5 billion, and the year was burdened by EUR 410 million of loan loss provisions, dominated by EUR 334 million for U.S. and development de-risking. He highlighted a solid liquidity position with an LCR of 379% and EUR 5 billion of liquidity at year-end, plus lower funding costs, and said the CET1 ratio remained 14.9% despite the SRT benefit being offset by the F-IRBA LGD change in Poland, Finland, and Austria. He also pointed to leverage ratio close to 8% and said the long-term minimum CET1 target is now 13% through-the-cycle.

Analysts focused heavily on the capital implications of the EBA’s U.S. LGD guidance, the newly disclosed 135 basis point pro forma CET1 hit if applied, and whether pbb could move back to standardized if volatility persists. Management said the EBA clarification is expected to be reflected in Q1, that any regime change would need ECB approval, and that the 13% CET1 floor reflects the reduced risk profile rather than the reporting regime. Questions also covered dividends, with management confirming the 50% distribution policy applies for 2026 and beyond, and the U.S. NPL rundown, which management said should be more than halved in 2026 and fully exited over the next 2 to 3 years, likely by 2028/2029. Analysts also asked how Deutsche Investment contributes; management said 2026 pretax earnings are expected at around EUR 4 million, or about EUR 3 million after PPA.