DGAP-News: Aareal Bank AG / Key word(s): Half Year Results/Quarter
Results
Aareal Bank Group continues its successful development during the
second quarter of 2014 (news with additional features)
12.08.2014 / 07:01
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Aareal Bank Group continues its successful development during the second
quarter of 2014
- Consolidated operating profit of EUR 65 million
- Consolidated net interest income rises to EUR 169 million; increase
reflects higher lending volume in particular
- Forecast for 2014 consolidated operating profit raised slightly, to
between EUR 380 million and EUR 400 million
Wiesbaden, 12 August 2014 - Aareal Bank Group successfully concluded the
second quarter of the 2014 financial year, in a still challenging market
environment characterised by further intensified competition. At EUR 65
million, consolidated operating profit was markedly higher - as expected -
than in the same period of the previous year (Q2 2013: EUR 45 million). The
results for the first quarter of 2014, which totalled EUR 217 million, can
only be comparable to a limited extent - due to factors including the
non-recurring negative goodwill of EUR 152 million (after measurement
adjustments) from the acquisition of COREALCREDIT BANK AG ("Corealcredit").
Aareal Bank Group's consolidated profit rose to EUR 34 million in the
second quarter (Q2 2013: EUR 21 million).
Since the start of the second quarter, the figures from the operating
business of Corealcredit, which was acquired as at 31 March 2014, have been
included in consolidated income. These impact mainly on net interest
income, and administrative expenses. In addition to the larger credit
portfolio, Aareal Bank's second-quarter net interest income also benefited
from the effects of early loan repayments. Overall, consolidated net
interest income in the second quarter of 2014 rose markedly, to EUR 169
million (Q2 2013: EUR 126 million).
At EUR 32 million, Aareal Bank's consolidated allowance for credit losses
during the second quarter was lower than in the preceding quarter (EUR 37
million), and thus remained within the pro-rata forecast range of EUR 100
million to EUR 150 million for the full financial year.
New business originated in the Structured Property Financing segment during
the second quarter was EUR 2.6 billion, thus clearly exceeding the figure
for the first quarter (Q1 2014: EUR 1.6 billion). As at the beginning of
the year, the volume of loans set for renewal was lower during the second
quarter, too: accordingly, the share of newly-originated loans remained at
a high level of 63.6 per cent.
"The year-to-date business development shows that Aareal Bank Group has
been holding a steady course - despite the still subdued economic
development, increasing geopolitical imponderabilities, the persistent
low-interest rate environment and intensified competition in commercial
property financing. Our business model is robust and provides a viable
foundation for our ongoing success", said Dr Wolf Schumacher, Chairman of
the Management Board of Aareal Bank.
Structured Property Financing segment: higher lending volume, increased net
interest income
Operating profit in the Structured Property Financing segment was EUR 71
million in the second quarter of 2014, clearly exceeding the previous
year's figure of EUR 50 million. The expected cost increase was offset by
clearly higher net interest income.
Segment net interest income in the period under review was EUR 168 million,
after EUR 124 million in the same period of the previous year. The rise in
net interest income was primarily attributable to the higher lending
volume, resulting from, among other things, the acquisition of
Corealcredit. Net interest income for the second quarter of the year
included EUR 8 million in non-recurring effects from early loan repayments.
Allowance for credit losses was EUR 32 million in the second quarter of
2014, compared with EUR 28 million in Q2 2013. Allowance for credit losses
during the first half of the year totalled EUR69 million (H1 2013: EUR 45
million) and thus remained within the pro-rata forecast range of EUR 100
million to EUR 150 million for the full financial year.
The volume of new business originated in the second quarter amounted to EUR
2.6 billion (Q2 2013: EUR 2.4 billion): a total of EUR 4.2 billion has now
been originated during the first half of 2014 (H1 2013: EUR 4.4 billion).
At EUR 2.7 billion, the volume of new loans originated during the first
half of 2014 was up slightly year-on-year (H1 2013: EUR 2.5 billion). The
second quarter showed a similar development, with newly-originated loans
totalling EUR 1.6 billion (Q2 2013: EUR 1.4 billion). Renewals declined,
however, reflecting a lower volume of portfolio loans set for renewal.
Accordingly, the share of newly-originated loans rose to 63.6% in the first
half of the year (H1 2013: 57.0%).
Consulting/Services segment: volume of deposits remains on a high level
At -EUR 6 million, operating profit in the Consulting/Services segment
during the quarter under review was in line with the level of the first
quarter of 2014, and also virtually unchanged from the previous year (Q2
2013: -EUR 5 million).
The business activities of the Aareon AG subsidiary were stable during the
second quarter: operating profit amounted to EUR 6 million, unchanged
year-on-year. Aareon's positive business trend in international business
continued through the second quarter. New customers were acquired and
products were rolled out successfully.
Results generated from the deposit-taking business were burdened by
persistently low interest rate levels. However, the importance of this
business goes way beyond the interest margin generated from the deposits,
which is under pressure in the current market environment. This is because
the deposits from the housing industry represent a strategically important
additional source of funding for Aareal Bank.
Against this background, deposit volumes from housing industry clients
continued to develop favourably during the second quarter. The volume of
deposits remained high, averaging EUR 8.5 billion during the quarter under
review (Q1 2014: EUR 8.1 billion). This is clear evidence of the strong
level of trust which the Bank enjoys as the long-standing lead bank to the
German housing industry.
Successful funding activities and strong capitalisation
Aareal Bank Group continued to successfully conduct its funding activities
in the second quarter of 2014, thereby securing its very solid liquidity
situation. The Group raised EUR 400 million in long-term funds on the
capital market during the quarter under review. This sum comprised Mortgage
Pfandbriefe in the amount of EUR 100 million, unsecured refinancing of EUR
200 million, as well as subordinated liabilities of EUR 100 million.
The total volume of long-term funding raised in the first half of 2014
amounted to EUR 2.1 billion, with Mortgage Pfandbriefe accounting for EUR
0.8 billion. Unsecured refinancing amounted to EUR 0.8 billion. In
addition, EUR 0.5 billion in subordinated bonds were placed with investors.
Aareal Bank therefore continues to be very solidly financed. Compared to 31
March 2014, the Tier 1 ratio as at 30 June 2014 rose to 16.3 per cent,
which is also comfortable on an international level, whilst the Common
Equity Tier 1 (CET1) ratio, excluding SoFFin's contribution, was 12.5 per
cent on the reporting date. Aareal Bank thus already complies today with
the capital and liquidity requirements under the CRD IV, which will be
gradually implemented between now and the end of 2018.
Notes to Group financial performance
Consolidated net interest income of EUR 169 million in the second quarter
was EUR 43 million higher than for the same period of the previous year
(EUR 126 million). The increase was particularly due to the higher lending
volume, also in conjunction with the acquisition of Corealcredit. Net
interest income totalled EUR313 million for the first six months of the
financial year (H1 2013: EUR 247 million).
Net commission income of EUR 39 million for the quarter under review was
unchanged year-on-year. Net commission income totalled EUR 79 million for
the first half of the year (H1 2013: EUR 77 million).
The aggregate of net trading income/expenses, the net result on hedge
accounting, and the result from non-trading assets, was EUR 3 million in
the second quarter (Q2 2013: EUR 0 million); the relevant aggregate figure
for the first six months of 2014 was EUR 7 million (H1 2013: EUR 2
million).
Consolidated administrative expenses totalled EUR 114 million for the
second quarter (Q2 2013: EUR 90 million) and EUR 216 million for the first
half of the year (H1 2013: EUR 182 million). The rise is due, among other
things, to the running costs for Corealcredit that have been included in
expenditure since the second quarter. Furthermore, higher project costs
were incurred during the reporting period, including those in conjunction
with the acquisition of Corealcredit, and regulatory measures such as the
Asset Quality Review.
On balance, consolidated operating profit for the second quarter amounted
to EUR 65 million (Q2 2013: EUR 45 million). Taking into consideration
income taxes of EUR 21 million and EUR 5 million in income attributable to
non-controlling interests, net income after non-controlling interest income
amounted to EUR 39 million. After deduction of net interest payable on the
SoFFin silent participation, consolidated profit stood at EUR 34 million
for the second quarter (Q2 2013: EUR 21 million).
Aareal Bank Group's consolidated operating profit for the first six months
of the financial year totalled EUR 282 million. Adjusted for the day-one
profit from the initial consolidation of Corealcredit (EUR 152 million),
operating profit was EUR 130 million and thus markedly higher year-on-year
(H1 2013: EUR 92 million). Taking into consideration income taxes of EUR 41
million and non-controlling interest income of EUR 10 million, net income
attributable to shareholders of Aareal Bank AG amounted to EUR 231 million.
After deduction of net interest payable on the SoFFin silent participation,
consolidated profit stood at EUR 221 million.
Outlook: consolidated operating profit forecast raised slightly
Aareal Bank continues to expect a slight global economic recovery during
the remainder of the 2014 financial year, even though the persistent
low-interest rate environment presents a growing macro-economic challenge.
Notwithstanding this demanding environment, against the background of the
good business development in the first two quarters, Aareal Bank envisages
a continuation of its positive business performance during the remainder of
the year.
Aareal Bank is slightly increasing its original profit forecast of between
EUR 370 million and EUR 390 million for the 2014 financial year. Thanks to
the good business development during the first two quarters of the year,
the Bank now believes there is a good chance to generate consolidated
operating profit at the upper end of a range between EUR 380 million and
EUR 400 million, including negative goodwill from the acquisition of
Corealcredit. Adjusted for the non-recurring effect from the Corealcredit
transaction, Aareal Bank expects consolidated operating profit of EUR 230
million to EUR 250 million. Excluding said non-recurring effect, return on
equity (RoE) before taxes is projected to be around 9 %.
Aareal Bank expects net interest income to be at the upper end of the
forecasted EUR 610 million to EUR 640 million range. Allowance for credit
losses is expected to remain in the upper half of a range between EUR 100
million and EUR 150 million. As in previous years, the Bank cannot rule out
additional allowance for unexpected credit losses that may be incurred
during 2014.
Net commission income is expected to remain in a range between EUR 170
million and EUR 180 million. Administrative expenses are expected in the
region of EUR 430 million to EUR 450 million. A material reason for the
projected increase over the previous year is the acquisition of
Corealcredit.
In the Structured Property Financing segment, the Bank now projects new
business for the full year 2014 at the upper end of the forecast range
between EUR 8 billion and EUR 9 billion.
In the Consulting/Services segment, Aareal Bank anticipates a slightly
higher profit before taxes over the previous year for its Aareon
subsidiary, at around EUR 28 million.
Note to editors: The full interim report for the second quarter of 2014 is
available on
http://www.aareal-bank.com/en/investor-relations/financial-reports/.
Aareal Bank
Aareal Bank AG, whose shares are traded in Deutsche Börse's MDAX segment,
is a leading international property specialist. The Bank concentrates its
business activities on the Structured Property Financing and the
Consulting/Services segments. The Structured Property Financing segment
encompasses all of Aareal Bank's property financing and funding activities.
In this segment, the Bank facilitates property investment projects for its
domestic and international clients, within the framework of a
three-continent strategy covering Europe, North America and Asia. In the
Consulting/Services segment, Aareal Bank offers the housing industry and
the commercial property sector services and products for managing
residential property portfolios and processing payment flows.
www.aareal-bank.com
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
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Additional features:
Document: http://n.equitystory.com/c/fncls.ssp?u=FOINRPKSFI
Document title: Aareal Bank AG: 20140812_PM_Q2_2014_en
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12.08.2014 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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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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281827 12.08.2014
DGAP-News: Aareal Bank Group continues its successful development during the second quarter of 2014 (news with additional features)
| Source: EQS Group AG