German lender Deutsche Pfandbriefbank said its pre-tax profit plunged to just €2 mln in the first quarter of the year as a result of the coronavirus pandemic.
Excluding the extraordinary pressure posed by the Covid-19 pandemic, pbb would have generated pre-tax profit of €47 mln in the first quarter.
The lender posted a pre-tax profit of €48 mln in the same period a year earlier.
At €1.6 bn, pbb’s new business volume in Commercial Real Estate Finance came in at the planned level, below the figure for the same quarter of the previous year (Q1 2019: €1.9 bn). At the same time, the average gross margin on new business rose to more than 170 basis points (bp), compared to an average of approximately 155 bp for the full year 2019.
Last week the lender withdrew its forecast for the full year 2020. ‘The development of risk provisioning and net income from fair value measurement cannot be reliably forecast, due to uncertainty concerning the macroeconomic environment and real estate market developments,’ the lender said in a statement.
Pbb anticipates an economic recovery commencing in the second half of 2020, with a gradual recovery of market values for most property types over subsequent years.
‘We are still confident of being able to achieve a good operating performance, but uncertainty caused by the volatile environment currently does not permit any reliable forecast for the year 2020. pbb is well capitalised and has the necessary liquidity to support clients with their transactions, and to exploit business opportunities in the market,’ said CEO Andreas Arndt.