Deutsche Bank AG suffered a dent in its exposure to commercial real estate, highlighting how the asset class continues to be a problem for the lender.
First-quarter credit provisions in the investment bank surged 77% year over year to €290 million ($339 million), "driven by a single-name event" linked to commercial property, Germany's biggest lender said Wednesday. This reflected a "revaluation" of existing exposure, Chief Financial Officer Raja Akram added on a call with journalists.
The large portfolio of credit for commercial real estate has been a headache for Deutsche Bank ever since surging interest rates and falling office vacancy rates hit property valuations globally and especially in the US. The lender said in its earnings report on Wednesday that the asset class remains a key risk for it.
It added that it faces "refinancing challenges and the risk of fluctuation and uncertainty in collateral values, particularly in the U.S. West Coast office space."
Deutsche Bank had commercial property exposure of €23.9 billion at the end of the first quarter. The amount of exposure in the highest-risk bucket, known as stage 3, rose to €3.8 billion from €3.6 billion in the previous period.
"The main risks for the portfolio relate to refinancing and extension of maturing loans, which are negatively affected by the impact of higher interest rates on collateral values as well as debt service, as well as valuation decreases on legacy defaulted exposures," Deutsche Bank said in its quarterly report.
North Korean leader Kim Jong Un confirmed a policy that requires soldiers to commit suicide on the battlefield to avoid capture while fighting Russia's war against Ukraine.
Speaking at an event to inaugurate a memorial in Pyongyang for North Koreans who have died in action, Kim twice mentioned soldiers who had "self-blasted," according to a report by the official Korean Central News Agency.
"Heroes who unhesitatingly opted for self-blasting, suicide attack, in order to defend the great honor" were praised by Kim in the speech given to bereaved families and top Russian officials. "They did not expect any compensation, though they performed distinguished feats," he added. "They died a heroic death."
Kim signed a military pact with Russian President Vladimir Putin in 2024 that included a mutual defense provision. South Korean and Western intelligence agencies have since estimated Pyongyang has sent at least 10,000 soldiers and tens of thousands of containers of weapons to help Russia fight Ukraine. The North is believed to have suffered heavy casualties, with thousands killed in action.
The disclosure by Kim this week follows reports that North Korean troops captured by Ukraine were required to kill themselves to avoid becoming a prisoner of war. Those accounts cited both Ukrainian intelligence and a captured North Korean soldier.
North Korea has also ramped up weapons tests this year, including of shorter-range ballistic missiles, and test-fired its new sea-to-surface weapons system. That comes amid growing concerns over the country's army gaining real combat experience from fighting alongside Russia.
Earlier this month, Pyongyang said it has tested multiple Hwasong-11 missiles -- a short-range missile type also known as KN-23 or KN-24 -- which Ukraine has said Pyongyang supplied to Moscow for use in its war against Kyiv.