DGAP-News: Aareal Bank AG / Key word(s): Preliminary Results
Aareal Bank Group exceeds target operating profit for the 2013
financial year - dividend proposal of EUR 0.75 per share (news with
additional features)
20.02.2014 / 07:00
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Aareal Bank Group exceeds target operating profit for the 2013 financial
year - dividend proposal of EUR 0.75 per share
- Consolidated operating profit of EUR198 million came in above the
forecast that was already raised during the year - consolidated net
income for 2013: EUR93 million
- Dividend proposal of EUR0.75 per share
- RoE before taxes rises to 8.0 per cent - medium-term RoE target of
around 12 per cent before taxes is confirmed
- At EUR10.5 billion, new business in the segment Structured Property
Financing clearly exceeded projections
- The positive trend in the operating business is expected to continue
for the 2014 financial year - a non-recurring effect from the
acquisition of Corealcredit Bank AG to further improve earnings
- CEO Dr Wolf Schumacher: 'We outperformed our original targets in our
90th anniversary year, and we are in an excellent position to maintain
this positive development into the future.'
Wiesbaden, 20 February 2014 - Aareal Bank Group posted very good results
for the 2013 financial year, in a market and competitive environment that
remained challenging. According to preliminary, unaudited figures,
consolidated operating profit increased to EUR198 million, up 12 per cent
year-on-year (2012: EUR176 million), thus exceeding the very good result
achieved in 2011 (EUR185 million). It was therefore also higher than the
earnings forecast that had already been raised during the year under
review. Consolidated operating profit before taxes of EUR58 million was
achieved in the fourth quarter of 2013, making the final quarter the
strongest quarter of the year under review. Consolidated net income climbed
to EUR93 million for the year as a whole (2012: EUR85 million), of which
EUR27 million was attributable to the fourth quarter.
The positive development was supported in particular by a significant
increase in net interest income, which rose considerably in the year as a
whole to EUR527 million (previous year: EUR486 million) and in the fourth
quarter to EUR147 million (Q4/2012: EUR116 million). Especially the good
margins achieved in the lending business, low funding costs, and effects
from repayments that were higher than expected had a positive impact.
Allowance for credit losses was recognised at EUR113 million (2012: EUR106
million) and was therefore at the lower end of the communicated range of
EUR110 million to EUR150 million.
At EUR10.5 billion (2012: EUR6.3 billion), the volume of new business
reached its highest level since 2007. It was therefore significantly higher
than the forecast, which had already been raised to more than EUR8 billion
the previous autumn. This was against a background of a more active
transaction environment, characterised by higher liquidity than originally
expected. On the one hand, this offered greater new business opportunities
to be exploited, from the start of the year onwards. On the other hand, it
was associated with higher loan repayments.
As already announced following the Supervisory Board meeting on 19 February
2014, the Management Board and the Supervisory Board will propose to the
Annual General Meeting of Aareal Bank AG on 21 May 2014 to distribute a
dividend of EUR0.75 per share. In addition, Aareal Bank announces a
dividend policy according to which approximately 50 per cent of the
consolidated profit determined in accordance with IFRS shall be distributed
per financial year so far as this is consistent with a long-term and
sustained business development. The proposed dividend payment will raise
the net expense for SoFFin's remaining silent participation by EUR4 million
for the year under review, to EUR24 million.
The return on equity (RoE) of Aareal Bank improved markedly: RoE before
taxes rose to 8.0 per cent in the 2013 financial year (2012: 7.2 per cent).
The Chairman of the Management Board, Dr Wolf Schumacher, commented on the
success of the 2013 financial year: 'We performed better in our 90th
anniversary than we had originally anticipated, given the still persistent
uncertainties and intensified competition. This once again confirms the
strength and resilience of our business model. We are thus in an excellent
position to maintain this positive development into the future.'
Financial year 2013: significant increase in results
Net interest income amounted to EUR527 million in the 2013 financial year
after EUR486 million in the previous year. The increase over the previous
year was therefore higher than originally forecast by Aareal Bank. Good
margins achieved in the lending business, low funding costs, and effects
from repayments that were higher than expected had a positive impact on net
interest income. It was burdened on the other hand by a lack of attractive
investment opportunities for the liquidity reserves, due to the persistent
low interest rate environment.
Allowance for credit losses amounted to EUR113 million in the 2013
financial year (2012: EUR106 million), and was therefore slightly higher
than the previous year's level and at the lower end of the forecast range
of EUR110 million to EUR150 million for the full financial year.
Net commission income of EUR165 million was only slightly lower than the
previous year's figure (EUR169 million) and points accordingly to a stable
development in accordance with original expectations.
Net trading income/expenses and the net result on hedge accounting of
EUR12 million (2012: EUR-14 million) were primarily attributable to the
measurement of derivatives used to hedge interest rate and currency risk,
and to realised and unrealised changes in value from the sale of hedges for
selected EU countries. The results from non-trading assets amounted to
EUR-8 million (2012: EUR1 million). This was largely due to the sale of
securities as part of an active portfolio management.
Administrative expenses of EUR375 million (2012: EUR358 million) were
slightly higher than the EUR360 million to EUR370 million range projected
for the financial year. This was due for one to measurement effects in
conjunction with share-based variable remuneration components (under the
Long-Term Incentive Programme - 'LTIP'), as defined by the German
Regulation on Remuneration in Financial Institutions
(Instituts-Vergütungsverordnung) owing to the positive performance of the
Aareal Bank share. Other reasons included the acquisition of the Swedish
Incit Group as at 1 July 2013, as well as higher expenses for projects
compared with the previous year.
After deduction of net other operating income/expenses of EUR-10 million
(2012: EUR-7 million), consolidated operating profit for the 2013 financial
year amounted to EUR198 million (2012: EUR176 million). Taking into
consideration income taxes of EUR62 million and non-controlling interest
income of EUR19 million, net income attributable to shareholders of Aareal
Bank amounted to EUR117 million (2012: EUR105 million). After deduction of
the EUR24 million net interest payable on the SoFFin silent participation,
consolidated net income stood at EUR93 million (2012: EUR85 million).
Aareal Bank will service all of its subordinated refinancing vehicles for
the 2013 financial year.
Aareal Bank continued to pursue its successful business policy, strictly
focusing on quality, in its Structured Property Financing segment.
New business originated amounted to EUR10.5 billion (2012: EUR6.3 billion)
and therefore exceeded the original target of EUR6.0 to 7.0 billion, which
itself was already raised to over EUR8 billion during the year. The share
of newly-originated loans in total new business exceeded 61.6% in the year
under review (2012: 47.2%).
Segment net interest income was EUR519 million (2012: EUR463 million). The
increase over the previous year was therefore higher than originally
expected. Good lending margins and low funding costs had a positive effect
on net interest income. It was burdened, however, by a lack of attractive
investment opportunities for the liquidity reserves, due to the persistent
low interest rate environment.
At EUR201 million, administrative expenses were higher than the previous
year's level (EUR191 million). This was due for one to measurement effects
in conjunction with share-based variable remuneration components (under the
Long-Term Incentive Programme - 'LTIP'), as defined by the German
Regulation on Remuneration in Financial Institutions
(Instituts-Vergütungsverordnung) owing to the positive performance of the
Aareal Bank share. This also resulted in higher expenses for projects
compared with the previous year.
Operating profit in the Structured Property Financing segment totalled
EUR209 million (previous year: EUR170 million). Taking into consideration
income taxes of EUR65 million and non-controlling interest income of
EUR16 million, the segment result attributable to shareholders of Aareal
Bank amounted to EUR128 million (2012: EUR102 million).
Sales revenues in the Consulting/Services segment amounted to EUR187
million in the 2013 financial year (2012: EUR194 million). The decline
resulted mainly from the low interest rate environment, which impacted
heavily on the margins generated from the deposit-taking business that are
reported under sales revenues.
Yet the importance of the deposit-taking business in the
Consulting/Services segment goes far beyond the interest margin generated
from the deposits - which is under pressure in the current interest rate
environment. For Aareal Bank, deposits from the institutional housing
industry are a strategically important additional source of funding for the
lending business, and one that is largely independent of capital markets
developments. In addition to the German Pfandbrief and unsecured bank
bonds, they represent an important pillar in the Bank's long-term funding
mix. Especially in relation to the changing regulatory framework, Aareal
Bank sees this business as offering a particular competitive advantage.
Despite continued intense competition, the volume of deposits from the
institutional housing industry rose significantly to an average of EUR7.2
billion in the 2013 financial year (2012: EUR5.6 billion).
Aareon AG recorded positive business development in 2013 in its key
business segments - ERP Products, Integrated Services and International
Business. Overall, sales revenues were raised from EUR165 million to EUR173
million. Despite considerable investments, EBIT of EUR27 million was
slightly above the previous year's level of EUR26 million.
On balance, the Consulting/Services segment generated operating profit of
EUR-11 million (2012: EUR6 million). After taxes of EUR-3 million and EUR3
million in results attributable to non-controlling interests, the segment
result amounted to EUR-11 million (2012: EUR3 million). Successful funding
activities - the capital position remains solid
Aareal Bank Group successfully carried out its funding activities as
planned during the 2013 financial year. Owing to the strong demand for
Pfandbriefe and unsecured issues from solid issuers, the Bank was able to
implement the measures as planned.
During the period under review, Aareal Bank succeeded in raising a total of
EUR4.1 billion in medium- and long-term funds on the capital market. The
issue volume of our unsecured funds amounted to EUR1.0 billion;
subordinated bonds accounted for EUR0.1 billion and Mortgage Pfandbriefe
made up EUR3.0 billion of the total volume. This highlights how very
important the Pfandbrief remains to Aareal Bank's funding mix.
Aareal Bank remains very solidly financed. According to preliminary
figures, the Bank's comfortable Tier 1 ratio in accordance with the German
Commercial Code (HGB) amounted to 18.5 per cent as at 31 December 2013 (up
from 16.7 per cent as at year-end 2012). The core tier 1 ratio was 12.9 per
cent (2012: 11.6 per cent).
Notes on the preliminary Income Statement for the fourth quarter of 2013
At EUR58 million, Aareal Bank Group's consolidated operating profit for the
fourth quarter of 2013 was up significantly year-on-year (Q4 2012: EUR46
million).
According to preliminary figures, net interest income in the final quarter
of 2013 stood at EUR147 million (Q4 2012: EUR116 million), and therefore
exceeded the previous quarter's figure (EUR133 million) by EUR14 million.
This was predominantly due to effects resulting from repayments that were
higher than expected.
EUR39 million in allowance for credit losses was recognised during the
fourth quarter (Q4 2012: EUR39 million).
Net commission income of EUR48 million was slightly lower than in the
corresponding quarter of the previous year (EUR50 million), and EUR8
million higher than the previous quarter (EUR40 million), due to the fact
that Aareon traditionally enjoys a strong fourth quarter of the year.
Net trading income/expenses and the net result on hedge accounting was
slightly positive overall during the fourth quarter (Q4/2013: EUR1 million;
Q4/2012: EUR10 million).
Administrative expenses amounted to EUR99 million during the fourth quarter
(Q4 2012: EUR88 million).
Aareal Bank Group generated consolidated operating profit for the fourth
quarter of EUR58 million (Q4 2012: EUR46 million). After deduction of
income taxes of EUR18 million and EUR4 million in non-controlling interest
income, net income attributable to shareholders of Aareal Bank amounted to
EUR36 million. After deduction of the net interest payable on the SoFFin
silent participation, consolidated net income stood at EUR27 million (Q4
2012: EUR18 million).
Outlook for 2014: consolidated operating profit expected to rise strongly
Aareal Bank expects a slight global recovery in 2014. Against the
background of liquidity support provided by central banks in Europe and the
US, the financial and capital markets continued to ease noticeably in the
year under review. The key issue that will drive developments during the
current year will be the markets' response - including those outside Europe
and the US - to a normalisation of money supply. This holds risks for
global economic developments. Considering the anticipated low inflationary
pressure in the euro zone, Aareal Bank believes that the European Central
Bank will keep its key interest rates at a low level - consequently,
short-term interest rates in the euro zone are likely to remain low.
Aareal Bank Group's positive development is thus expected to persist during
the current year. The forecasts for the 2014 financial year include
expected figures for Corealcredit Bank AG for the first time, assuming a
closing as at 31 March 2014. The exact contribution of Corealcredit Bank
depends on the closing date for the transaction, which is still expected to
be in the course of the first half-year. Aareal Bank communicated the
acquisition of Corealcredit Bank on 22 December 2013.
Aareal Bank expects net interest income in the 2014 financial year to rise
to between EUR610 million and 640 million. Net interest income is set to
benefit from good margins from the previous years' lending business, low
funding costs, and the acquisition of Corealcredit Bank. The low interest
rate environment continues to have negative implications for net interest
income, both in relation to the deposit-taking business and because of the
lack of attractive investment opportunities for the liquidity reserves.
Despite a higher loan portfolio, Aareal Bank forecasts allowance for credit
losses in a range of EUR100 million to EUR150 million, which is a slightly
more optimistic range than in the previous year. As in the previous years,
the Bank cannot rule out additional allowance for unexpected credit losses
that may be incurred during 2014.
Net commission income is projected to increase slightly, to between EUR170
million and EUR180 million.
Administrative expenses are expected in the region of EUR430 to 450
million. A material reason for the projected increase over the previous
year is the acquisition of Corealcredit Bank.
All in all, Aareal Bank sees good opportunities, including a non-recurring
effect from the acquisition of Corealcredit Bank (negative goodwill), to
achieve consolidated operating profit of between EUR370 and 390 million for
the current year. Adjusted for this non-recurring effect, Aareal Bank
expects consolidated operating profit of EUR220 million to EUR240 million.
RoE before taxes, excluding the aforementioned non-recurring effect, is
likely to be in the region of 9 per cent; Aareal Bank's medium-term target
RoE of approximately 12 per cent before tax remains unchanged.
New business of between EUR8 billion and EUR9 billion is expected for the
Structured Property Financing segment in 2014.
In the Consulting/Services segment, Aareal Bank anticipates a slightly
higher result before taxes over the previous year for its IT subsidiary
Aareon, at around EUR28 million.
Contact:
Aareal Bank AG
Corporate Communications
Sven Korndörffer
Tel.: +49 611 348 2306
sven.korndoerffer@aareal-bank.com
Christian Feldbrügge
Tel.: +49 611 348 2280
christian.feldbruegge@aareal-bank.com
Heinrich Frömsdorf
Tel.: +49 611 348 2061
heinrich.froemsdorf@aareal-bank.com
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Aareal Bank AG,
Registered Office: Wiesbaden
Commercial Register: Amtsgericht Wiesbaden HRB 13184
Chairman of the Supervisory Board: Marija G. Korsch
Management Board: Dr. Wolf Schumacher (Chairman),
Dagmar Knopek, Hermann J. Merkens,
Thomas Ortmanns
End of Corporate News
+++++
Additional features:
Document: http://n.equitystory.com/c/fncls.ssp?u=WPATAJTGTL
Document title: 2014_02_20_PM_Preliminary Figures 2013.pdf
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20.02.2014 Dissemination of a Corporate News, transmitted by DGAP - a
company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
DGAP's Distribution Services include Regulatory Announcements,
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Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: Aareal Bank AG
Paulinenstr.15
65189 Wiesbaden
Germany
Phone: +49 (0)611 348 - 0
Fax: +49 (0)611 348 - 2332
E-mail: aareal@aareal-bank.com
Internet: www.aareal-bank.com
ISIN: DE0005408116
WKN: 540811
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Stockholm
End of News DGAP News-Service
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253423 20.02.2014
DGAP-News: Aareal Bank Group exceeds target operating profit for the 2013 financial year - dividend proposal of EUR 0.75 per share (news with additional features)
| Source: EQS Group AG