Deutsche Bank Completes Offloading Its $1B CRE Loan Portfolio

Deutsche Bank AG DB has offloaded nearly $1 billion in loans tied to U.S. commercial real estate (CRE), as reported by Bloomberg. With this move, the company minimized its exposure to an asset class that adversely impacted its business.Rationale Behind DB’s Sale of CRE LoansDeutsche Bank’s exposure to CRE loans, especially inked to U.S. CRE and office properties, has been concerning investors. As of the end of third-quarter 2024, the bank’s CRE exposure stood at €15 billion, with almost 46% exposure in office properties. The commercial property market was hit hard by higher interest rates, which have raised borrowing costs and weighed on valuations. U.S. offices have been among the worst performers in the CRE sectors in the past few years.DB has been witnessing elevated provisions for commercial property for the past few years. The company’s provision for credit losses witnessed a CAGR of 23.4% over the last five years (ended 2023). In the first nine months of 2024, provision for credit losses related to CRE loans increased year over year. This indicates that the DB’s recent move to alleviate the strain on its holdings is well thought-off.For Deutsche Bank, this effort marks a chance to lower exposure to a historically risky asset class and to secure some capital relief.Other banks are also reducing their exposure to CRE loans. In June 2024, WaFd, Inc. WAFD completed the sale of $2.8 billion of multi-family CRE loans to Bank of America, which, in turn, is selling the loans to funds managed by Pacific Investment Management Company LLC. This sale of WAFD loans was executed at 92% of the principal balance. In May 2024, Canadian Imperial Bank of Commerce CM signed agreements with multiple buyers to divest the United States-based office loans worth $316 million at a discount. CM’s provisions have witnessed an increase in recent years due to its exposure to CRE.Deutsche Bank’s Zacks Rank & Price PerformanceOver the past year, DB shares have gained 30.8% on the NYSE compared with the industry’s growth of 20.5%. Image Source: Zacks Investment Research Currently, Deutsche Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis Report WaFd, Inc. (WAFD): Free Stock Analysis Report Canadian Imperial Bank of Commerce (CM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks