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    ARL   DE0005408116

AAREAL BANK AG

(ARL)
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PRESS RELEASE: Aareal Bank Group posts clearly positive consolidated operating profit in the first quarter, forecast affirmed for full year 2021

05/11/2021 | 01:08am EDT
DGAP-News: Aareal Bank AG / Key word(s): Quarter Results 
Aareal Bank Group posts clearly positive consolidated operating profit in the first quarter, forecast affirmed for full 
year 2021 
2021-05-11 / 07:06 
The issuer is solely responsible for the content of this announcement. 
=---------------------------------------------------------------------------------------------------------------------- 
Aareal Bank Group posts clearly positive consolidated operating profit in the first quarter, forecast affirmed for full 
year 2021 
- Return to profitability: first-quarter consolidated operating profit of EUR32 million 
- Loss allowance down to only EUR7 million at the start of the year, following comprehensive allowance recognised in the 
2020 financial statements 
- New business in the Structured Property Financing segment is solid despite the ongoing pandemic; margins remain 
attractive and loan-to-value ratios on a good level; well-stocked deal pipeline, portfolio volume climbs to EUR 28.2 
billion 
- Net interest income increased significantly by 12 per cent, primarily thanks to the expansion of the credit portfolio 
- Net commission income increased further: positive development in the Banking & Digital Solutions segment, as well as 
at IT subsidiary Aareon 
- Higher annual contributions to the bank levy and the deposit guarantee scheme already recognised in first-quarter 
administrative expenses 
- Annual guidance confirmed: consolidated operating profit of between EUR 100 million and EUR 175 million expected 
- Chief Financial Officer Marc Hess: "The strong start to the year shows that we have set the right strategic 
priorities." 
Wiesbaden, 11 May 2021 - As expected, Aareal Bank Group has returned to profitability in the first quarter of the 
current financial year. At EUR 32 million, it increased its consolidated operating profit almost three-fold over the same 
period of the previous year (EUR 11 million). This was mainly due to significantly higher net interest income, the 
continued increase in net commission income, as well as sharply lower loss allowance following the comprehensive 
allowance recognised at the end of 2020. Higher annual contributions to the bank levy and the deposit guarantee scheme 
for the full year were already recognised in administrative expenses for the first quarter. All in all, consolidated 
net income for the first three months of 2021 came to EUR 21 million, compared to EUR 7 million in the same period of the 
previous year, of which EUR 16 million is attributable to shareholders of Aareal Bank AG (Q1 2020: EUR 2 million). 
Following the successful start to the year, Aareal Bank affirms its forecast for the full year: consolidated operating 
profit in a range of EUR 100 million to EUR 175 million is expected for 2021, after minus EUR 75 million in the previous 
year. Aareal Bank moreover affirms its target to generate consolidated operating profit in the range of EUR 300 million - 
excluding any potential acquisitions, and provided the risk situation returns to normal once the pandemic has been 
overcome - as early as 2023. 
Chief Financial Officer Marc Hess commented on Aareal Bank's first-quarter results: "The strong start to the year is 
clear evidence that we have set the right strategic priorities, and that the path of controlled growth taken in all 
parts of the Group has paid off. We deliver on our promises, using the opportunities available to us - even in the 
changed environment that was brought about by the pandemic - consistently, and yet prudently and in a risk-aware 
manner." 
Aareal Bank also confirmed its intention to distribute dividends totalling EUR 1.50 per share in 2021 for the 2020 
financial year, in two stages, starting with a dividend of EUR 0.40 per share as already proposed to the Annual General 
Meeting that will take place on 18 May 2021. Depending on further economic developments, regulatory requirements, the 
Bank's capital position and its risk situation, a subsequent extraordinary Annual General Meeting, which could possibly 
take place during the fourth quarter of 2021 as already communicated, could then resolve on the intended remaining 
payout of EUR 1.10 per share. 
Growth across all parts of the Group 
In the first quarter, Aareal Bank continued with the controlled expansion - which had already started in the second 
half of 2020 - of its credit portfolio in the Structured Property Financing segment. This is a key element of the 
sharpening of the "Aareal Next Level" strategic framework that was presented at the beginning of the year. At the end 
of March, the credit volume of EUR 28.2 billion exceeded the threshold of EUR 28 billion for the first time in four years. 
The portfolio is expected to grow to approximately EUR 29 billion by the end of this year, and to around EUR 30 billion by 
the end of the next year. Aareal Bank is on track to reach its volume targets for new business after the first quarter: 
at EUR 1.1 billion, new business was down only slightly on the same period of the previous year, the first two months of 
which were not yet impacted by Covid-19. Furthermore, the current well-filled deal pipeline is promising. New business 
continued to yield attractive gross margins averaging around 250 basis points, and average loan-to-value ratios at a 
good level of 61 per cent. Besides the risk-conscious and profit-oriented growth of the credit portfolio, the focus is 
especially on its orientation towards sustainability criteria. For this purpose, Aareal Bank has introduced a Green 
Finance Framework certified by a third-party, as the basis for future 'green' lending offers. 
The positive effect of the expansion of interest-bearing assets was already evident in income: net interest income rose 
by 12 per cent in the first quarter, to EUR 138 million (Q1 2020: EUR 123 million). The participation in the European 
Central Bank's TLTRO programme also contributed EUR 5 million. Aareal Bank expects the positive trend in net interest 
income to continue throughout the remainder of the year. 
The expansion of the credit portfolio in line with the Bank's strategy is accompanied by significantly lower loss 
allowance, following the comprehensive allowance recognised in the 2020 financial statements. Loss allowance fell to 
only EUR 7 million. This compares with EUR 58 million in the first quarter of 2020, which was affected by the spreading 
pandemic, and EUR 177 million recognised in the fourth quarter of 2020 within the framework of a comprehensive 
risk-provisioning exercise. However, the first-quarter figure cannot be projected for the year as a whole. The NPL 
ratio of 6.0 per cent remained virtually stable (31 December 2020: 6.1 per cent). 
The positive development in the other two segments continued as well, so that net commission income in the Group rose 
further to EUR 59 million (Q1 2020: EUR 57 million) in line with the strategic objectives. The Banking & Digital Solutions 
segment, in which the Bank's equity-light business is combined and whose net commission income is set to increase 
significantly in the coming years, made a contribution of EUR 7 million in the first quarter (Q1 2020: EUR 5 million). At EUR 
11.6 billion, the segment's volume of deposits from the housing industry, which represents a crisis-resistant source of 
funding for the Group, remained high at the end of the quarter. The expansion of the business with digital products 
also developed positively within the segment. With PayPal and selected credit card providers, the range of payment 
providers integrated in the Aareal Exchange & Payment Platform, launched in 2020, was expanded further. The roll-out of 
Aareal Meter, the digital solution for mobile meter reading for the energy and the housing industries, is also on 
schedule. These both underline the ongoing product development within the segment to open up new business 
opportunities. 
Sales revenue at IT subsidiary Aareon rose to EUR 66 million (Q1 2020: EUR 64 million) despite the burdens posed by 
Covid-19, with particularly high momentum among the digital products in the first few months of the current year. 
Despite current investments for the future, Aareon's adjusted EBITDA of EUR 15 million was in line with the previous year 
(Q1 2020: EUR 15 million). Both were in line with expectations, whereby Aareon was hardly burdened by Covid-19 in the 
first quarter of 2020. At the same time, the expansion of digital solutions forges ahead in this segment, too. The 
market response to the new ERP product generation Wodis Yuneo, for which marketing started at the end of 2020, has been 
very positive up to now, with more than 320 customers already having decided in favour of the new system. Following the 
successful launch of the AI-based virtual assistant Neela in Germany, marketing commenced in the UK, the Nordic 
countries and the Netherlands. France followed suit at the beginning of the year. 
Notes to Group financial performance 
Net interest income of EUR 138 million in the first quarter of 2021 was considerably higher than the previous year's 
figure (Q1 2020: EUR 123 million). This was due in particular to the year-on-year increase in the credit portfolio, and 
the interest benefit from the Targeted Longer-Term Refinancing Operations (TLTRO 3) programme. 
Following the comprehensive recognition of loss allowances at the end of the year, loss allowance amounted to EUR 7 
million and was clearly down on the previous year's figure (Q1 2020: EUR 58 million), which was impacted by the 
Covid-19-pandemic. 
Net commission income increased to EUR 59 million (Q1 2020: EUR 57 million), as planned, mainly due to higher commission 
income generated by the Banking & Digital Solutions segment. Despite the burdens posed by Covid-19, Aareon increased 
its sales revenue to EUR 66 million compared with EUR 64 million in the same quarter of the previous year, which had hardly 
been affected by Covid-19. Aareon's adjusted EBITDA amounted to EUR 15 million (Q1 2020: EUR 15 million). 
The net derecognition gain showed a break-even figure (Q1 2020: EUR 7 million): positive market-driven effects from early 

(MORE TO FOLLOW) Dow Jones Newswires

May 11, 2021 01:07 ET (05:07 GMT)

Stocks mentioned in the article
ChangeLast1st jan.
AAREAL BANK AG 0.00% 20.6 Delayed Quote.5.37%
DJ INDUSTRIAL -0.25% 34393.75 Delayed Quote.12.65%
PAYPAL HOLDINGS, INC. 1.28% 274.93 Delayed Quote.17.39%
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Financials
Sales 2021 825 M 1 000 M 1 000 M
Net income 2021 72,5 M 87,9 M 87,9 M
Net Debt 2021 - - -
P/E ratio 2021 16,3x
Yield 2021 5,13%
Capitalization 1 233 M 1 495 M 1 495 M
Capi. / Sales 2021 1,49x
Capi. / Sales 2022 1,41x
Nbr of Employees 3 010
Free-Float 100,0%
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Managers and Directors
NameTitle
Hermann Josef Merkens Chairman-Management Board
Marc Oliver He▀ CFO, Head-Treasury, Finance & Controlling
Marija G. Korsch Chairman-Supervisory Board
Holger Spielberg Group Technology Officer
Richard Peters Vice Chairman-Supervisory Board
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