Under Kay Wolf, Deutsche Pfandbriefbank is aiming for a sustainable realignment by reducing the office share in the loan portfolio and concentrating on profitable segments.
The Deutsche Pfandbriefbank (pbb) is reacting drastically to the past year of crisis under its new boss Kay Wolf. By 2027, the share of offices in the loan portfolio is expected to fall significantly, while financing for data centers, hotels and residential complexes for seniors will be massively expanded. At the same time, the bank is curbing its loss-making US business and reducing its dependence on interest income, which means the previous medium-term profit target of its predecessor Andreas Arndt will be lost.
These strategic changes hit the stock market hard on Thursday morning: the pbb share temporarily lost almost seven percent and closed at 5.69 euros, which corresponds to a decline of around eight percent since the beginning of the year. In February the price had already fallen to under four euros, and today the share is only trading at half the price it was five years ago.
Kay Wolf announced at the Capital Markets Day that the pre-tax profit of 300 million euros should not be achieved by 2027, although his predecessor Arndt had already set this goal for 2026. Last year, the bank suffered significant loan defaults due to the collapse of the commercial real estate market, particularly in the United States.
In order to make Deutsche Pfandbriefbank safer and more profitable, the share of office financing will be reduced from over 50 to under 40 percent of the loan portfolio. Loans for apartment buildings should be less of a focus, while the focus remains on retail and logistics. Wolf relies more heavily on loans for data centers, residential complexes for seniors, assisted living and hotels, which are viewed as more profitable and faster growing. “We already have the necessary specialist knowledge in-house,” emphasized Wolf.
Another focus is on reducing US business from 15 to less than 10 percent of the loan volume, with a focus on the East Coast. Existing loans on the West Coast should be reduced in a value-preserving manner without the prospect of an emergency sale. The bank also wants to expand its commission business by managing real estate loans for investors. This should account for around ten percent of the bank’s total income by 2027.
CFO Marcus Schulte expects a pre-tax profit of over 200 million euros by 2027, but less than 300 million euros. At the same time, the return on tangible equity should increase from less than three to around eight percent. Cost reductions totaling 45 million euros and further savings in the double-digit million range should bring the cost-income ratio below 45 percent.
In addition, Deutsche Pfandbriefbank announced an increase in the dividend to 90 cents per share for 2024 and share buybacks of up to two billion euros for 2025. These measures are intended to provide shareholders with added value and ensure the bank’s financial stability.
