DGAP-News: Aareal Bank AG / Key word(s): Quarter Results
Aareal Bank Group posts a good start into the 2015 financial year
(news with additional features)
07.05.2015 / 07:00
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Aareal Bank Group posts a good start into the 2015 financial year
- First-quarter consolidated operating profit of EUR 67 million slightly
exceeds the previous year's figure of EUR 65 million (adjusted for
negative goodwill from the Corealcredit acquisition)
- Net interest income of EUR 178 million markedly higher year-on-year
(Q1 2014: EUR 144 million)
- Full-year outlook for 2015 affirmed: Aareal Bank anticipates
consolidated operating profit of between EUR 400 million and EUR 430
million, including a positive non-recurring effect from the acquisition
of WestImmo
Wiesbaden, 7 May 2015 - Aareal Bank Group enjoyed a good start into the
2015 financial year. It generated consolidated operating profit of EUR 67
million, a slight year-on-year increase on the previous year's figure of
EUR 65 million, adjusted for the one-off negative goodwill of EUR 154
million from the acquisition of COREALCREDIT BANK AG ("Corealcredit"),
which was closed in the spring of 2014. Net interest income increased and
allowance for credit losses declined year-on-year. On the other hand, there
were higher expenses for the integration of Corealcredit and the expected
costs of the European bank levy, which were already recognised for the full
year during the period under review.
After deduction of the imputed net interest payable on the Additional Tier
1 (AT1) bond of EUR 4 million, consolidated net income attributable to
ordinary shareholders amounted to EUR 36 million (Q1 2014: EUR 35 million,
excluding the one-off effect due to Corealcredit).
Net interest income rose strongly, to EUR 178 million (Q1 2014: EUR 144
million), reflecting the higher lending volume - especially due to the
acquisition of Corealcredit; the continued satisfactory average lending
margins, combined with a high level of early loan repayments and low
funding costs, also had a positive effect. The net figure continued to be
burdened, however, by a lack of attractive investment opportunities for
liquidity reserves, due to the persistent low interest rate environment.
Allowance for credit losses amounted to EUR 18 million in the first quarter
(Q1 2014: EUR 37 million), thus remaining within expectations. Aareal Bank
Group is exposed to securities issued by HETA Asset Resolution AG ("HETA")
to a very limited extent only: impairments were limited to EUR 7 million,
shown in the result from non-trading assets. Of this amount, EUR 4 million
(before taxes) were already recognised in the revaluation surplus as at the
year-end 2014. This means that equity was burdened by only EUR 3 million
(before taxes) in the first quarter of 2015.
On 22 February 2015, Aareal Bank Group announced the acquisition of
Westdeutsche Immobilienbank ("WestImmo"). The transaction is still expected
to be completed during the first half of 2015. The integration of
Corealcredit into Aareal Bank Group is also making good progress. In terms
of corporate law, Aareal Bank intends to transfer Corealcredit's operating
activities to Aareal Bank, also during the first half of 2015, as announced
on 15 April 2015.
CEO Dr Wolf Schumacher stated: "Aareal Bank Group's positive business
performance continued into the first quarter of the current year. Once
again, it is evident in the current environment that we enjoy an excellent
position, thanks to our business model - and that we have taken the right
strategic decisions for continuing along this path of success in the
future."
Structured Property Financing: a marked increase in net interest income
Operating profit in the Structured Property Financing segment amounted to
EUR 74 million in the first quarter of 2015, an increase compared to the
same period of the previous year (EUR 71 million, adjusted for the negative
goodwill from the acquisition of Corealcredit). The increase was largely
attributable to higher net interest income: at EUR 178 million in the
first quarter of 2015, it clearly exceeded the figure for the same quarter
of the previous year (Q1 2014: EUR 143 million).
New business originated in the segment during the period under review
amounted to EUR 1.8 billion (Q1 2014: EUR 1.6 billion), of which
newly-originated loans accounted for 47 per cent. Aareal Bank pursues a
selective policy regarding new business, especially in view of increasing
margin pressure, due to intensified competition, and the acquisition of
WestImmo, which will lead to non-organic growth in interest-bearing lending
volume.
Consulting/Services segment: volume of deposits remains stable, on a high
level
Operating profit in the Consulting/Services segment totalled -EUR 7 million
during the first quarter of 2015 (Q1 2014: -EUR 6 million). The business
activities of the Aareon AG subsidiary developed in line with projections:
its EUR 5 million profit contribution was unchanged from the previous year.
The volume of deposits in the segment's banking business remained high,
averaging EUR 9.3 billion during the quarter under review (Q4 2014: EUR 9.1
billion). The persistently low interest rate environment burdened income
generated from the deposit-taking business, and therefore the segment
result. Nonetheless, the importance of this business goes way beyond the
interest margin - which is under pressure in the current market environment
- generated from the deposits. Deposits from the housing industry are a
strategically important additional source of funding for Aareal Bank.
Comfortable funding situation and strong capitalisation
Aareal Bank maintained its long-term funding inventory at a high level. It
raised a total of EUR 0.9 billion in long-term funds on the capital markets
during the first quarter, including EUR 0.7 billion in Mortgage Pfandbriefe
as well as unsecured refinancing of EUR 0.2 billion.
Aareal Bank continues to be very solidly capitalised. As at 31 March 2015,
the Bank's Tier 1 ratio was 16,7 per cent, which is comfortable on an
international level. Assuming full implementation of Basel III, the Bank's
pro-forma Common Equity Tier 1 (CET1) ratio would be 12,6 per cent.
Notes to Group financial performance
Net interest income amounted to EUR 178 million during the quarter under
review, up significantly year-on-year (Q1 2014: EUR 144 million). Net
commission income totalled EUR 41 million (Q1 2014: EUR 40 million). The
aggregate of net trading income/expenses, the net result on hedge
accounting, and net result from non-trading assets totalled EUR 1 million
during the quarter under review.
At EUR 132 million (Q1 2014: EUR 102 million), administrative expenses were
higher than in the previous year, as expected. The increase was largely due
to the running costs for Corealcredit, included in expenditure since the
second quarter of 2014, as well as EUR 12 million in expenses for its
integration. Moreover, the Bank recognised the expected full-year European
bank levy, in the amount of EUR 9 million, during the first quarter of
2015.
Aareal Bank Group's consolidated operating profit stood at EUR 67 million
in the first quarter, an increase over the same period of the previous year
(EUR 65 million, adjusted for negative goodwill resulting from the
acquisition of Corealcredit). Taking tax deductions of EUR 22 million into
account, consolidated net income was EUR 45 million. After deduction of EUR
5 million in non-controlling interest income, and the imputed net interest
payable on the Additional Tier 1 (AT1) bond of EUR 4 million, consolidated
net income attributable to ordinary shareholders of Aareal Bank AG amounted
to EUR 36 million (Q1 2014: EUR 35 million, excluding the one-off effect
due to Corealcredit).
Outlook for 2015 affirmed
For the current financial year 2015, Aareal Bank does not expect any
dynamic momentum, given subdued growth. The presence of a variety of risks
means that global economic development remains susceptible to disruptions.
Sentiment is characterised by numerous uncertainty factors, such as the
crisis in the Ukraine, the risk of deflation in Europe, as well as
imponderabilities concerning the development of the European sovereign debt
crisis - especially concerning Greece. For commercial property markets, it
is fair to assume that competition in Europe, North America and Asia will
remain intense during the course of this year.
In spite of substantial uncertainties and numerous risk factors, Aareal
Bank remains generally confident for the 2015 financial year and affirms
its full-year guidance, as announced in February, according to which net
interest income is expected in a range between EUR 720 million and EUR 760
million. Despite a larger loan portfolio, Aareal Bank continues to forecast
allowance for credit losses in a range of EUR 100 million to EUR 150
million. As in the previous years, the Bank cannot rule out additional
allowance for unexpected credit losses that may be incurred during the
current year.
Net commission income for 2015 is projected to be in a range between EUR
170 million and EUR 180 million. Administrative expenses, including one-off
effects related to the takeover of WestImmo and the integration of
Corealcredit, are expected in the region of EUR 520 million to EUR 550
million.
All in all, Aareal Bank sees good opportunities, including negative
goodwill from the acquisition of WestImmo, to achieve consolidated
operating profit of between EUR 400 million and EUR 430 million for the
current year. Negative goodwill from the acquisition of WestImmo is
expected to amount to some EUR 150 million. The Bank expects RoE before
taxes to be around 16 per cent, and earnings per share between EUR 4.80 and
EUR 5.20, based on an assumed full-year tax ratio of 31.4 per cent.
Adjusted for the non-recurring income from the acquisition of WestImmo,
Aareal Bank expects RoE before taxes of around 10 per cent, with EPS in a
range between EUR 2.30 and EUR 2.70.
Aareal Bank's medium-term target RoE of approximately 12 per cent before
taxes remains unchanged.
New business of between EUR 6 billion and EUR 7 billion is anticipated for
the Structured Property Financing segment during the current financial
year.
In the Consulting/Services segment, Aareal Bank expects its IT subsidiary
Aareon to contribute approximately EUR 27 million to results before taxes.
Note to editors: The full interim report for the first quarter of 2015 is
available on
http://www.aareal-bank.com/en/investor-relations/financial-reports/.
Contact:
Aareal Bank AG
Corporate Communications
Sven Korndörffer
Phone: +49 611 348 2306
sven.korndoerffer@aareal-bank.com
Christian Feldbrügge
Phone: +49 611 348 2280
christian.feldbruegge@aareal-bank.com
Jorge Person
Phone: +49 611 348 3217
jorge.person@aareal-bank.com
Alessandro Schwarz
Phone: +49 611 348 2923
alessandro.schwarz@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), Hermann J. Merkens
(Deputy Chairman), Dagmar Knopek, Thomas Ortmanns
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Additional features:
Document: http://n.equitystory.com/c/fncls.ssp?u=JTMSXDIHMX
Document title: 20150507_Press Release.pdf
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07.05.2015 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
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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: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich,
Stuttgart; Stockholm
End of News DGAP News-Service
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354203 07.05.2015
DGAP-News: Aareal Bank Group posts a good start into the 2015 financial year (news with additional features)
| Source: EQS Group AG