Deutsche Pfandbriefbank (AO) | Reduce | Key points from the Q1 results call

Research evidence excerpt

Deutsche Pfandbriefbank (AO) | Reduce | Key points from the Q1 results call

Deutsche Pfandbriefbank Reduce | Target Price: EUR2.50

Company description Management

Deutsche Pfandbriefbank AG is a Germany-based bank specialising in real estate Kay Wolf

finance, with a legacy portfolio in public investment finance. Additionally, it Marcus Schulte

offers investment lending and investment management services. The company Thomas Köntgen

primarily operates in Germany but also across Europe. In 2025, it decided to exit

the US market, which it had entered in the early 2020s to improve the risk-reward Key shareholders

Free float 80.00%

profile. However, this attempt resulted in significant losses in the office segment.

Investment case Valuation methodology

The US de-risking maintains a burden in 2026. Further, we SOP model (Basel IV 14.0% CET1 ratio, a 12.5% cost of equity,

expect some revenue pressure from shifting from higher-margin and a 2% LT growth rate for the commercial real estate

US business to lower-margin European exposure. business). The fair value of EUR2.5 is equal to our target price of

In the short- to medium-term, we expect further pressure on the EUR2.5.

asset margin, liability margin, realisation results and risk costs - We apply a 15% tax rate (20-25% guidance). Using the

mainly from US exit costs and German developments. applicable (legal) tax rate of 27.7%, the fair value is c. EUR2.0 per

The unclear situation around future capital distribution makes share.

the stock relatively unattractive versus a sector that is providing Risks to our rating

attractive high-single-digit total yields. Valuation gains and structural shifts in the commercial real

Catalysts estate market.

(-) US exit - further losses from NPL PF likely.