# German property bank PBB’s profit plunges as US office loans sour
Published: 2024-08-14
Category: News
Category URL: https://tradingherald.com/category/news/
Meta Title: Deutsche Pfandbriefbank profit plunges due to U.S. market...
Meta Description: PBB faces challenges in the U.S. market with 74% profit drop, increased bad loans, and credit rating cuts. Can the bank regain investor trust?
URL: https://tradingherald.com/german-property-bank-pbbs-profit-plunges-as-us-office-loans-sour/

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By Tom Sims and Alexander Hübner

FRANKFURT (Reuters) -Deutsche Pfandbriefbank (PBB), one of Germany’s top property financiers, reported on Wednesday a 74% plunge in second-quarter profit and set aside more money to cover potential bad [loans](https://tradingherald.com/u-s-mid-tier-lenders-shares-rise-in-frankfurt-after-svb-deal/) in a weak U.S. office market.

The move follows a wave of bad news this year for the bank, which dates back to the 1860s and was bailed out by the government in the 2009 financial crisis, as it navigates what it has called “the greatest real estate crisis” since then.

PBB in recent years bet heavily on the U.S. market by offering commercial real estate loans, which across the industry have succumbed to pressure from high office vacancies and falling property prices following rises in interest rates and a trend towards home-working since the pandemic.

PBB said it expected the commercial property market to “enter calmer waters” in the [second](https://tradingherald.com/electrolux-swings-to-operating-profit-in-q2/) half of 2024.

But loans likely to go unpaid in the United States – so-called non-performing loans – increased 13% in the second quarter from the first, which PBB attributed to four loans for offices mainly in Chicago and the U.S. West Coast.

The bank’s quarterly profit was 11 million euros ($12.1 million), compared with 42 million euros a year earlier, while provisions for loan losses rose to 56 million euros from 19 million last year.

The bank suffered cuts to its credit rating earlier this year, and its shares and bonds dropped sharply as fears of a widening [property](https://tradingherald.com/german-commercial-property-prices-post-biggest-ever-drop-data-shows/) crisis took hold.

The shares have recovered somewhat but are still down nearly 20% this year. They fell 3% in early Frankfurt trade.

PBB, which is under new management, has vowed to restore trust with investors.

It has halted new business in the United States and is seeking to reduce exposure there and in Britain.

($1 = 0.9098 [euros)](https://tradingherald.com/italian-hearing-aid-maker-amplifon-expects-higher-2023-earnings/)

(Reporting by Tom Sims and Alexander Huebner; Editing by Miranda Murray and Mark Potter)


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