Aareal Bank Group posts a successful start to the 2013 financial year

Wiesbaden (ots) -
- First-quarter consolidated operating profit of EUR 47 million
- Strong capitalisation - very solid liquidity situation
- Forecasts affirmed for the full year 2013

Aareal Bank Group had a successful start into the 2013 financial
year, performing very well in a slightly improved - yet still
challenging - market environment. At EUR 47 million, consolidated
operating profit generated in the first quarter exceeded the
corresponding figure for the same period of the previous year (EUR 43
million), as well as the fourth quarter of 2012 (EUR 46 million).
Consolidated net income was EUR 22 million, compared to EUR 18
million in the last quarter of 2012, and to EUR 21 million in the
first quarter of the previous year.

"The trend towards some easing on financial and capital markets
persisted during the first quarter of 2013, despite the crisis in
Cyprus. However, our business environment has remained challenging,
especially given the sluggish economy in many markets and due to
changes in the regulatory framework. Against this background, we once
again did really well during the first quarter of the year", said CEO
Dr Wolf Schumacher.

For the first time in four quarters, Aareal Bank was able to
report an increase in consolidated net interest income, as new
business originated in this segment during recent months starts to
pay off. Nonetheless, the bank's cautious investment strategy - and
the low interest rate environment - continued to burden net interest
income: in the first quarter it amounted to EUR 121 million, after
EUR 129 million in the same period of the previous year and EUR 116
million in the previous quarter. Allowance for credit losses of EUR
17 million (Q1 2012: EUR 12 million) evidences the unchanged high
quality of Aareal Bank's credit portfolio.

At EUR 2.0 billion (Q1 2012: EUR 0.5 billion), new business
originated in the Structured Property Financing segment during the
first quarter performed strongly. Nonetheless, Aareal Bank affirms
its communicated new business target of EUR 6 billion to EUR 7
billion for the full year, since competition in commercial property
financing has intensified again on the most important markets. Aareal
Bank was very successful in its funding activities, thereby
preserving its good liquidity situation.

"Our most important success factors are our profound market
knowledge, our long-term client relationships, our extremely sound
business policy, and a very robust financial position. These factors
have enabled us to further expand our good market position during the
first quarter of 2013", said Dr Wolf Schumacher, Chairman of the
Management Board of Aareal Bank Group.

Structured Property Financing segment: good segment results, with
high volume of new business

Operating profit in the Structured Property Financing segment was
EUR 51 million in the first quarter of 2013, exceeding the figure for
the same period of the previous year (EUR 40 million).

Segment net interest income in the first quarter was EUR 118
million after EUR 121 million in the same period of the previous
year. Net interest income continued to be burdened by the bank's
cautious investment strategy and the low interest rate levels; in
contrast, high-margin new business originated during recent months
had a positive effect.

Allowance for credit losses during the quarter under review
amounted to EUR 17 million (Q1 2012: EUR 12 million). It was
therefore lower than the pro-rata forecast range of EUR 110 million
to EUR 150 million for the financial year, but within the expected
range.

At EUR 2.0 billion (Q1 2012: EUR 0.5 billion), the volume of new
business originated was high compared to the first quarters of
previous years. The factors contributing to this increase included
several large early renewals.

Consulting/Services: deposit volumes continued to grow / segment
results burdened by the interest rate environment

Segment results were burdened by the low interest rate levels -
which are relevant for income from the deposit-taking business in the
Consulting/Services segment. Operating profit in the
Consulting/Services segment totalled EUR -4 million for the quarter
under review (Q1 2012: EUR 3 million).

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
market 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, deposits from the institutional housing
industry represent an important pillar in the bank's long-term
funding mix.

Against this background, positive development of deposit volumes
from institutional housing industry clients was recorded: rising
again, to average EUR 6.7 billion during the quarter under review (Q4
2012: EUR 6.2 billion).

The business activities of the Aareon AG subsidiary were on
schedule during the first quarter. Operating profit amounted to EUR 5
million. After numerous property management companies signed
contracts for Wodis Sigma shortly before the 2012 year-end, a further
five contracts were signed in the first quarter of 2013. During the
first months of the year, Wodis Sigma was rolled out for 75,000
rental units managed by 13 companies.

Successful funding activities - strong capitalisation

Aareal Bank Group continued to successfully conduct its funding
activities in the first quarter of 2013, thereby securing a very
solid liquidity situation. A total of EUR 1.4 billion of long-term
funds were raised on the capital market during the first quarter.
This comprised Mortgage Pfandbriefe in the amount of EUR 1.1 billion
as well as unsecured refinancing of EUR 300 million. Aareal Bank has
therefore maintained its long-term funding at a high level.

Of the public and private issues placed in the first quarter, the
five-year, EUR 625 million Mortgage Pfandbrief issued in January is
worth mentioning.

Aareal Bank therefore continues to be very solidly financed. As at
31 March 2013 the Tier 1 ratio was 17.1 per cent, which is
comfortable on an international level. The core tier 1 ratio was 11.7
per cent. Aareal Bank thus already complies today with the capital
and liquidity requirements under Basel III, which will be gradually
implemented between now and the end of 2018.

Notes to Group financial performance

Consolidated net interest income of EUR 121 million in the first
quarter was lower than for the same period of the previous year (Q1
2012: EUR 129 million), burdened by the bank's cautious investment
strategy, and low interest rate levels.

At EUR 38 million, net commission income was slightly below the
previous year's figure of EUR 40 million. Aareon's sales revenue -
shown in net commission income - was stable compared with the
previous year.

The aggregate of net trading income/expenses and the net result on
hedge accounting of EUR 3 million (Q1 2012: EUR -26 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 sovereign
countries.

At EUR 92 million (Q1 2012: EUR 91 million), administrative
expenses were only slightly higher than the previous year and
therefore in line with Aareal Bank's planning.

Consolidated operating profit for the first three months of 2013
thus totalled EUR 47 million (Q1 2012: EUR 43 million). Taking into
consideration taxes of EUR 15 million and non-controlling interest
income of EUR 5 million, net income attributable to shareholders of
Aareal Bank AG amounted to EUR 27 million. After deduction of the net
return on the SoFFin silent participation, consolidated net income
stood at EUR 22 million.

Outlook: full-year targets confirmed

Despite the challenges that still exist - especially the
recessionary trend in some European countries and prevailing
uncertainty surrounding future regulatory measures - the Management
Board forecasts a slight overall improvement in Aareal Bank's
business environment during the remainder of the year. After a good
start to the year, the Management Board thus affirms the full-year
targets for 2013 communicated in February.

Net interest income/loss reflects the good margins achieved in the
lending business. However, the persistently low interest rate
environment coupled with the cautious investment strategy continues
to represent a burden, so that net interest income/loss for 2013 is
expected to be only slightly higher than the previous year. Aareal
Bank expects allowance for credit losses to fluctuate in a slightly
adjusted range - compared with the previous year - of EUR 110 million
to EUR 150 million, particularly in view of the recessionary trends
in Italy, Spain and the Netherlands, as well as a growing loan
portfolio. As in the previous years, the bank cannot rule out
additional allowance for unexpected credit losses that may be
incurred during 2013.

Thanks to the measures implemented in 2012 to optimise Aareal
Bank's structures and processes, administrative expenses are also
expected to rise only slightly compared with 2012, to between EUR 360
million and EUR 370 million.

Aareal Bank remains confident that it will reach its published new
business target for the full year 2013 of between EUR 6 billion and
EUR 7 billion in the Structured Property Financing segment. In the
Consulting/Services segment, the bank anticipates a stable result
before taxes compared with the previous year, despite rising
investments, of around EUR 27 million in 2013.

Notwithstanding a still-challenging environment, Aareal Bank
continues to believe there is a good chance the bank's consolidated
operating profit will match that of 2012; there is even potential to
reach the very good results achieved in 2011.

"Aareal Bank celebrates its 90th anniversary this year. The bank
is in best shape, and has had a good start to our jubilee year. We
have demonstrated that our business is geared for sustainable success
- and that we are able to rise to new challenges. Characterised by
higher capital requirements, stricter liquidity rules - and hence,
lower expected returns - the 'new normality' for banks is such a
challenge. We are in an excellent position and look ahead with
optimism", Schumacher added.

Note to editors: The full interim report for the first quarter of
2013 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 and which celebrates its 90th anniversary this year, 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 institutional housing industry services and products
for managing residential property portfolios and processing payment
flows.

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

Investor Relations

Jürgen Junginger
phone: +49 611 348 2636
juergen.junginger@aareal-bank.com