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 --------------------------------------------------------------------- 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 ------------------------------------ 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 +++++ Additional features: Document: http://n.equitystory.com/c/fncls.ssp?u=JTMSXDIHMX Document title: 20150507_Press Release.pdf --------------------------------------------------------------------- 07.05.2015 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. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- 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 --------------------------------------------------------------------- 354203 07.05.2015
DGAP-News: Aareal Bank Group posts a good start into the 2015 financial year (news with additional features)
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