Deutsche Pfandbriefbank: Is the real estate crisis back? The Deutsche Pfandbriefbank, a German bank specializing in real estate financing, has recently caused concern among investors due to declining profits and the possibility of a return of the real estate crisis. The bank’s net profit for the first half of 2019 was down by 8.6% compared to the same period last year, and its share price has also been on a downward trend. This is partly due to the weakening economic situation in Germany, as well as the ongoing trade tensions and uncertainties in the global market. In addition, there are concerns about the bank’s exposure to the struggling German real estate market, which has seen a slowdown in demand and price growth. Some analysts are speculating that this could be a sign of a potential real estate crisis in Germany. However, the Deutsche Pfandbriefbank has reassured investors that they have a solid risk management strategy in place and that they are closely monitoring the market developments. The bank’s CEO, Andreas Arndt, has stated that they are well-prepared to handle any potential challenges and that they remain confident in their business model. Only time will tell if the real estate crisis will indeed make a comeback, but for now, the Deutsche Pfandbriefbank and its investors are keeping a close eye on the situation.

Last Updated: 9. Februar 2024By

Deutsche Pfandbriefbank: Is the real estate crisis back in the USA?

It seems that the real estate crisis has returned to the USA. As a result, individual banks are being downgraded or at least critically observed. Real estate loans are under fire because real estate values are being adjusted downwards and interest rates are rising. This makes refinancing expiring loans for real estate owners more difficult. But the biggest problem is commercial real estate: its value is decreasing.

Demand has collapsed due to weaker economic development, increased interest rates, and the policies implemented during the coronavirus pandemic. People are increasingly working from home and are not returning to the office. This reduces the need for office space. In Germany, the first signs can be seen at the Pfandbriefbank. Its stock price has now plummeted significantly. In my opinion, the market’s reaction so far has been exaggerated, as I will explain.

PBB with traces in the balance sheet The real estate crisis has already had significant effects on the PBB’s balance sheet. The reported profit has been reduced to 90 million euros before taxes. The bank has further increased its risk provisions, which in turn reduce profits.

The Pfandbriefbank itself stated that we are experiencing the largest real estate crisis since the financial crisis. With regard to the USA, this statement is explosive, as the PBB itself acts as a financier in the USA. Commercial real estate is no longer as lucrative as it was in the many years before.

The good news: The PBB has explained this in detail. The so-called liquidity coverage ratio (LCR) was 212% at the end of 2023. This is 112 points more than the supervisory authorities require. The bank stated that this ratio had even increased since the beginning of the year.

Refinancing needs largely covered for 2024 The bank also stated that it could operate for six months without „new unsecured funding.“ In addition, the refinancing needs for the current year are largely covered. In summary, I see this as a core insurance that the bank does not see itself in the fire. It has sufficient liquid funds.

This, in turn, creates a tactical picture for the stock markets. In my opinion, the bank has primarily been punished by sentiment on the stock markets – that is, it is overvalued. For the current year, the net result is expected to be higher again. It would not be right to make estimates immediately after such explanations, but: If the net profit doubles compared to the previous year (which had collapsed massively), the P/E ratio will settle at 6 or 7.

The dividend stock is currently leading a sad stock market existence – but with regards to the current situation, I would like to refer to the analysis company Warburg Research. It has maintained its „buy“ rating on the stock and confirmed the price target of 9.40 euros. However, the interim report (of the bank) did not put an end to the negative speculation in the banking sector. In the short term, the waves on the stock markets are therefore not yet smoothed out – this is also my assessment.

Pfandbriefbank: Speculation caused the stock price to collapse – WKN: 710000 – ISIN: DE0007100000 Source: