Deutsche Pfandbriefbank’s board of directors has withdrawn its forecast for its 2020 fiscal year. It’s a reasonable move, considering that it was published at the same time as its 2019 annual report, before the COVID-19 pandemic transformed the global economic landscape. The bank found it impossible to predict how loan loss provisions would fare this year, nor how the real estate markets will be impacted by the health crisis. For the first quarter of 2020, Pbb has set aside €34m as loan provisions while there’s been an increase in credit spread of -€17m (up from €-5m in the last quarter of 2019). This reduced the bank’s first quarter profit to just €2m, a steep decline from the €19m result in 2019. Pbb anticipates the economy will recover in the second half of 2020, following a sharp slump during the first few months as the epidemic spread worldwide. But it warned that the economic situation could remain volatile for some time to come.
