13th August 2020
Investor Call – Interim Report H1/2020Gero Bergmann, Member of the Board
Statement of Profit and Loss
2
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❗
❗
Euro mn H1/2020 H1/2019 ∆ Difference
Interest / Commission income 178,5 163,8 14,7
Net interest income 167,8 155,4 12,4
Net commission income 10,7 8,4 2,3
Operating expenditure 86,8 86,1 0,8
Staff expenditure 35,1 45,9 -10,8
Other operating expenditure 39,6 37,0 2,6
of which expenditure for bank levy 13,4 12,0 1,4
Depreciation of tangible assets 12,1 3,2 8,9
Other operating earnings/expenditure 0,7 -2,4 3,1
Operating result before risk provisioning 92,4 75,3 17,1
Risk provisioning 65,4 -5,4 70,8
Operating result after risk provisioning 27,0 80,7 -53,7
Net income from financial investments -1,1 0,5 -1,6
Allocation to the fund for general banking risks 20,0 55,0 -35,0
Other taxes 0,1 0,0 0,1
Pre-tax profit 5,8 26,2 -20,4
Income tax 0,1 0,3 -0,2
Expenditure from profit transfer 5,7 25,9 -20,2
Net income 0,0 0,0 0,0
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Key Figures & Business Development
3
5.46.0
8.1
6.1
7.3
2.5
2015 2016 2017 2018 2019 HY1/2020
New lending in € bn, incl. extension
50.3
44.0
51.2
45.2
52.9
48,5
9.1
11.8
16.9 18.2
11.6
3.8
2015 2016 2017 2018 2019 HY1/2020
Profitability Cost-Income-Ratio (%)
Return on Equity (%)
18.3 18.520.5
23.125.5 25.5
7.6 7.99.1 9.2 9.9 10.2
2015 2016 2017 2018 2019 HY1/2020
Loan Portfolio Development, RWAin € bn
Loan Portfolio(incl. irrevocable loan commitments)
RWA
20 50 70 105 90 20
17,4 17,5 16,8
15,6
13,3 13,5 13,513,1
3,53,9 4 4,3 4,6
4,0
2015 2016 2017 2018 2019 HY1/2020
EquityAllocation to the fund for general banking risks (€ mn)
Total Capital Ratio (%)
CET 1 -Ratio (%)
Leverage Ratio (%)
New Business
4
%
%
46%
23%
14%
15%
2%
Geographical distribution
Germany - A Cities
Germany - B Cities
Germany - Rest
BeNeLux
Poland / CzechRepublic
64%
26%
10%
Investor types
Investors
Building contractors /Developers
Housing companies
30
26
14
10
20
Office
Residential
Retail
Logstics
Other
Type of use
97
3
0
Rating classes 1-7
Rating classes 8-12
Rating classes 13-18
Rating classes
0.1
0.8
2.6
96.5
without rating class
Rating Classes 13-18
Rating Classes 8-12
Rating Classes 1-7
%
Rating classes
71%
12%
8%
6% 2%
1%
Geographicaldistribution
Germany
BeNeLux
France
Poland / CzechRepublic
Others
UK
Loan Portfolio
• Current crisis has main impact on hotels & retail
properties
• Close monitoring and stress testing of loan portfolio
• Participation in the vdp moratorium on repayments
and bilateral agreements with clients
• Affected loan nominal: € ~326 Mio.
• Transfer of loans to restructuring department not
necessary yet
NPLs€ 166mn
0.66%
Ø LTV54.6% 5
10
5
16
25
44
Other
Logistics
Retail
Residential
Office
%Type of use
Commercial Real Estate Market – Germany HY1/2020 (I)
6
Source: RIWIS / bulwiengesa, Berlin Hyp Research, CBRE ab 2017, BNPPRE, RCA
1st half of 2020
• The current year started with a strong first quarter, which was
mainly characterised by company participations, such as
Aroundtown's investment in TLG
• The second quarter was marked by a sharp drop in
transactions as deals were postponed or cancelled due to the
corona virus
• Nevertheless, a 24% increase in transaction volume to a total
of EUR 41.8 billion was achieved in the first half of the year.
1215
17
2624
2832
40
12 13
8
910
18
13
1411
10
57
3
3
5
4
4
8 7
7
2
4
5
4
9
7
12
7 11
11
4
6
11
16
13
23
11
15
17
17
7
12
39.1
46.8
53.9
79.2
64.2
72.6
77.4
84.8
30.3
41.8
2012 2013 2014 2015 2016 2017* 2018* 2019* HY1/19* HY1/20*
Transaction Volume in Germany (in EUR bn)
Residential (<50 units)
Other (Hotel)
Logistics
Retail
Office
Source: CBRE
• Initial yields in all segments almost stable at previous
year's level
• Yields tending to rise
• Current widening of yield spreads due to declining 10-
year Bunds
• Price index for commercial real estate declines for the
first time since 2009, residential index continues to rise
• Corona pandemic amplifies structural change in the
retail sector and thus price decreases
7Source: Berlin Hyp Research, vdp
Source: Berlin Hyp Research, RIWIS/bulwiengesa, Macrobond
vdp-Property-Price-Index (2010=100)
-2
0
2
4
6
8
2008 2010 2012 2014 2016 2018 H1/2020
Logistics
Office
Retail
10y Bunds
95
105
115
125
135
145
155
165
175
Residential
Overall Index
Commercial
Ø Top Yields in German A-Cities (Initial Net Yields, weighted
average acc. to inhabitants, in %)
Commercial Real Estate Market – Germany HY1/2020 (II)
Mid-term market value expectations
Residential ± 0% Stable to slight decline due to less liquidity in
the market
Office - 10% Less liquidity in the market & larger supply.
Future drivers: space efficiency, hygienic
regulations and new working environments
Shopping –
Non Food-25%
Clear drop due to lockdown;
accelerated structural change (regional)
Shopping –
Food± 0% Stable. Rather positive effects by COVID-19
Logistics ± 0%Stable because mainly independent of COVID-
19, rather positive effects by lockdown and
digitization
Hotel -25% Sharp decline due to oversupply, ongoing travel
limitations, virtual meetings, etc.
Estimation of the short-/medium-term performance
8
Deviation of the Market Value from the Mortgage
Lending Value by Asset Class
• The charts on the left side show by what
percentage the market value of Berlin Hyp’s
domestic and international portfolio exceeds the
mortgage lending value (MLV)
• The MLV is a conservative value of a property that
can be expected to be realised at any point during
the term of the loan, irrespective of temporary
fluctuations in the property value
• According to the Pfandbrief Act, only 60% of the
MLV are eligible for the cover pool
9
20%
40%
60%
80%
Dec 16 Dec 17 Dec 18 Dec 19 Jun 20
Germany
Management
Office
Residential
Logistics
Retail
20%
40%
60%
80%
Dec 16 Dec 17 Dec 18 Dec 19 Jun 20
Abroad
Management
Retail
Office
Residential
Logistics
Berlin Hyp’s Ratings
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RatingOutlook/
WatchRating
Outlook/
Watch
Mortgage Pfandbrief Aaa Stable - -
Senior Preferred Aa2 Stable AA- Negative
Senior Non-Preferred A2 - A+ Negative
Short Term P-1 - F1+ Stable
Adj. BCA / Viability a3 - bbb Stable
Last rating actions
April 2020: Fitch upgrades Berlin Hyp‘s senior preferred rating by one notch and confirms the rating for senior-
non-preferred. The status under criteria observation (UCO) is removed.
March 2020: As a result of the world wide coronavirus disruption Fitch changes the outlook on Berlin Hyp‘s IDR
from stable to negative which impacts both, senior preffered and senior non-preferred ratings. The revision of
the outlook follows a similar rating action on Berlin Hyp‘s ultimate parent Sparkassen-Finanzgruppe to negative.
March 2020: On 4 March Fitch places the rating for Berlin Hyp‘s senior preferred bonds under criteria
observation (UCO) reflecting a possible upgrade under Fitch‘s revised rating methodology for banks.
January 2020: Fitch confirms Berlin Hyp‘s ratings and maintains the stable outlook.
Funding & Spread Development
11
9471.410
2.1151.938
1.248 1.121
520
1.239
607 515
126
1.200
50
3598 50
167
846
86 565
138
840
105
500
545
50
97
1.161
105
205 405
638
140
500
17
505
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 >2030
HyPfe Öpfe Senior Non-Preferred Senior Preferred
Maturity Profile
TLTRO participation
€ 458mn Privat Placements,
for the first time also in green
€ 303mn buy back of Pfandbriefe
0
50
100
150
200
250
Aug-18 Nov-18 Feb-19 May-19 Aug-19 Nov-19 Feb-20 May-20 Aug-20
iBoxxprBNKsnE7y10y
Berlin Hyp SNP Index (created out of iBoxx)
Berlin Hyp SP Index (created out of iBoxx)
I-Spreads Berlin Hyp vs. Comparables (bp); Quelle: Commerzbank, 3. August 2020
-20
0
20
40
60
80
100
120
140
Jan. 15 Jan. 16 Jan. 17 Jan. 18 Jan. 19 Jan. 20
iBoxx € France Covered iBoxx € UK Covered
iBoxx € Sweden Covered iBoxx € Hypothekenpfandbriefe
iBoxx € Spain Covered iBoxx € Italy Covered
BHH Benchmarks
Spreads Berlin Hyp vs. Covered Bonds (bp/mid swaps); Quelle: LBBW Credit Research, iBoxx, 4. August 2020
bp
bp
Covered Bond
Senior Unsecured
• Incentivising and financing of energy-efficiency related
refurbisments
New Sustainability Agenda
Commitment to the Paris Climate Agreement
and the German Climate Path
1/3 of Portfolio Green
until 2025
Portfolio Transparency until
2023
New Sustainability Product:
Transformation loan
• Sustainable development on an ecological, economic and social
level based on the objectives of the Paris Climate Agreement and
the Climate Path of the Federal Republic of Germany
• Goal: Climate neutral by 2050; including a 40% reduction in CO2
emissions between 2020 and 2030 ( Climate path)
• Even stronger consideration of energy efficiency in future
lending decisions
• Green new business continues to grow in importance
• Goal: 1/3 of all financing in Berlin Hyp's loan portfolio green by
2025
• Systematic determination of energy values, CO2 emissions and
climate risks
• Expansion of the data base at portfolio level by obtaining,
analysing and recording energy performance certificates for
all loans financed by us
• Goal: Achieving transparency across the entire portfolio
12
1.
3.
2.
4.
Outlook HY2/2020
13
Outlook 2020vs.
previsous
year
New Business
Interest income
Risk provisioning
Allocation to the fund for
general banking risks
Return on equity
CRE Market
• Due to the corona pandemic, a significant decrease in
transaction volume is expected for the coming half-year
• Continued focus on asset classes hotel and shopping
• Resilience and structural change in the office and shopping
segment as central themes
People value exchange and personal interaction. Real estate
offers space for that. Virtual channels increasingly offer
alternatives, but are no substitute for personal contact or the
"real experience"
Funding
Mortgage
Pfandbriefe
Senior
Unsecured
Currently no benchmark sized
needs
Privat
Placements
Your Contacts at Berlin Hyp
• Ratings• Green Bonds
• Framework• Reportings
• Financial Reportings• Base Prospectus / Final Terms• §28 Pfandbrief Act / HTT• Euro Commercial Paper Programme • Awards
Bodo WinklerHead ofFunding & Investor Relations
Tel.: +49 30 2599 [email protected]
Felix ZillmannFunding & Investor Relations
Tel.: +49 30 2599 [email protected]
You will find further information on Berlin Hypif you visit our website www.berlinhyp.de:
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Disclaimer
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The prior consent of Berlin Hyp is required for the copying of information or data, in particular for the use of texts, parts of text or picture
material. To the best of our knowledge, the facts and information contained in this presentation are correct at the time of production and
are subject to change in future. Neither Berlin Hyp nor members of its Board of Management, management staff, employees, advisors or
other persons furnish any warranty or guarantee, explicit or implied, in relation to the correctness or completeness of the information
contained in this presentation. All liability by Berlin Hyp, members of its Board of Management, management staff, employees, advisors
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connection therewith is excluded.
Every reasonable care has been taken to ensure that the facts contained in this presentation are correct at the time they were collected,
and that the views expressed are fair and reasonable. However, this document contains selected information and is merely an
introduction to and overview of the business activities of Berlin Hyp. Opinions expressed in this document can change at any time.
Neither Berlin Hyp nor any other person is obliged to correct, update or keep updated the information contained herein, or inform you
about this. A significant proportion of the information contained in this document, including market data and information about trends, is
based on estimates or expectations of Berlin Hyp and there is no guarantee that these estimates or expectations will be proved correct
in future.
This presentation may contain future-oriented statements which reflect our present view with regard to future developments. These
statements can be identified as such by words like “expectation” or “target” or “forecast” and similar expressions, or by their context.
These statements are made on the basis of current knowledge and current assumptions in each case at the time they are made. They
harbour risks and uncertainties including but not limited to changes in interest rates or exchange rates. If these risks or uncertainties
materialise, or if the knowledge or assumptions forming the basis of our future-oriented statements prove incorrect, actual future results,
performance or events in the future could differ from those described in these statements. There is no obligation to update future-
oriented statements or to inform you about this.
This document does not constitute an offer for the sale of securities. Securities of Berlin Hyp may not be offered or sold in the United
States if they are not registered there or are not exempt from the obligation of registration according to the U.S. Securities Act 1993 in its
current applicable version.
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