ROUNDUP: War eats into profits of Deutsche Pfandbriefbank – price slide

MUNICH (dpa-AFX) – Deutsche Pfandbriefbank (pbb) started the year with less profit due to higher risk provisions for impending loan defaults. The pre-tax profit fell compared to the same period last year by almost a fifth to 42 million euros, as the money house announced on Wednesday in Munich. Nevertheless, CEO Andreas Arndt sees the company on the right track to achieving a pre-tax profit of between 200 and 220 million euros this year, “even if the consequences of the Ukraine war are difficult to foresee”.

On the stock market, however, the news was acknowledged with a slide in prices. In the afternoon, the bank’s stock was down around five percent at EUR 11.22, making it one of the biggest losers in the SDAX small-cap index. Since the turn of the year, the paper has gained around six percent.

So far, the management has not seen any immediate effects of the war on the bank’s business. While the competitor Aareal Bank has to fear for a remaining loan for two office buildings in Moscow, the Deutsche Pfandbriefbank says it is not directly involved in Russia and the Ukraine.

From today’s perspective, the consequences are “minor and manageable,” the statement said. The indirect risks are also limited. However, according to bank leaders, there should be more problems in completing new buildings and construction costs are likely to increase due to higher material costs and problems in the supply chains.

In the first quarter, the institute increased its operating income by just EUR 3 million to EUR 149 million. Net interest income even fell slightly – while it rose significantly at Aareal Bank. The bank also set aside EUR 18 million for impending loan defaults. A year earlier, the risk provision had only been ten million euros.

Net profit fell by 14 percent to 36 million euros. However, the Pfandbriefbank only kept its new business stable at EUR 2.1 billion, while Aareal Bank achieved its highest level in this area since 2018./stw/mis/he