Aareal Bank Group posts solid results for the 2009 financial year

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- Profit before taxes of EUR 86 million for the full year 2009 -
23 million for the fourth quarter
- Allowance for credit losses of EUR 150 million, in line with
projections
- Tier 1 ratio of 11.0% pursuant to the Credit Risk Standard Approach
(CRSA)
- Initial partial redemption of SoFFin contribution planned by early
2011
- CEO Dr Wolf Schumacher: "We have performed very well during the
crisis. From today's perspective, we see good potential for
increasing operating profit in 2010, even though the market
environment is still fraught with uncertainty."

Aareal Bank Group concluded the financial year 2009 with a solid
result, in a challenging market environment. According to the
preliminary, unaudited figures, consolidated operating profit
amounted to EUR 86 million, after EUR 110 million the year before.
Operating profit of EUR 23 million was generated in the fourth
quarter of 2009, equating to an increase of EUR 13 million over the
final quarter of 2008.

The comparative figures for the 2008 financial year and the fourth
quarter of 2008, as well as those posted for the first three quarters
of 2009, show a slight divergence from the figures released
previously. This marks the successful conclusion of an IFRS
accounting project Aareal Bank has conducted over several years: the
related accounting change required minor adjustments to prior
periods.

Against the background of a sound performance to date throughout
the crisis affecting financial markets and the economy, and the
bank's solid capitalisation, the Management Board aims to start
repayment of the silent participation provided by the German
Financial Markets Stabilisation Fund ("SoFFin"). The bank intends to
repay the first tranche - the volume of which will be agreed upon in
due course - already until the beginning of 2011. Aareal Bank has
various options for funding the repayment; the specifics have yet to
be decided upon. In any case, the high Tier 1 ratio of 11.0% (in
accordance with the CRSA) offers some room for manoeuvre, when
compared to the medium-term target of 10%. Aareal Bank assumes that
in view of its solid refinancing situation, it will not need to draw
on the remaining EUR 2 billion SoFFin guarantee facility for
unsecured issues during the current year.

Dr Wolf Schumacher, Chairman of Aareal Bank's Management Board,
explained: "We have weathered the crisis affecting financial markets
and the economy satisfactorily up to now. On the basis of our
business model comprising two pillars, we have performed well during
the challenging 2009 financial year. We have achieved the targets we
forecasted for the period. Furthermore, the positive results mean
that Aareal Bank will service all of its subordinated refinancing
vehicles for the 2009 financial year. This includes the silent
participation by SoFFin. From today's perspective, we see good
potential for increasing operating profit in 2010, even though the
market environment is still fraught with uncertainty. Although the
persistently fragile market environment calls for a careful stance,
the anticipated business development in 2010 should offer us the
opportunity to further strengthen our competitive position."

2009 financial year: on track in a difficult market environment

Consolidated net interest income totalled EUR 459 million for 2009
(2008: EUR 495 million). Higher margins in the lending business were
offset by lower returns on the very comfortable level of liquidity
reserves maintained. The unfavourable interest rate environment also
burdened results in the deposit-taking business with the
institutional housing industry. The figure for the previous year was
characterised by an extraordinarily strong net interest income for
the fourth quarter, reflecting the favourable interest rate
environment at the time.

Allowance for credit losses was recognised in an amount of EUR 150
million (2008: EUR 80 million), in line with projections. Additional
allowance for credit losses in an amount of EUR 34 million recognised
in 2008, on account of the difficult market environment, was not
utilised in the financial year under review; in fact, it was
increased by an additional EUR 14 million, bringing the total
additional allowance to EUR 48 million.

Net commission income of EUR 133 million (previous year: EUR 149
million) reflected - amongst other things - EUR 17 million in running
costs for the guarantee facility extended by SoFFin.

Net trading income/expenses of EUR 44 million (2008: EUR -31
million) was mainly accounted for by the measurement of financial
instruments in the trading portfolio. This figure was due primarily
to a recovery in the value of credit derivatives.

Restructuring the securities portfolio - conducted at the
beginning of 2009 within the scope of the conservative risk policy
adopted - was a main influencing factor upon the result from
non-trading assets of EUR -22 million (2008: EUR -101 million). No
further material burdens to non-trading assets were recognised during
the remainder of 2009.

Administrative expenses of EUR 361 million were virtually
unchanged year-on-year (2008: EUR 364 million). This reflects the
strict cost discipline pursued within the Group.

Taking into account net other operating income and expenses of EUR
-14 million (2008: EUR 34 million), consolidated operating profit for
the 2009 financial year totalled EUR 86 million, after EUR 110
million in 2008. Taking into consideration taxes of EUR 19 million
and minority interest income of EUR 18 million, net income
attributable to shareholders of Aareal Bank AG amounted to EUR 49
million (unchanged from the previous year). After deduction of the
net EUR 26 million cost of the SoFFin silent participation (taking
into account the related tax effects), consolidated net income stood
at EUR 23 million.

Both of the business segments contributed to Aareal Bank Group's
satisfactory results for 2009 in the face of difficult market
conditions.

Aareal Bank continued to pursue its conservative policy, with a
strict focus on quality, in the Structured Property Financing
segment, and achieved a positive result, despite the impact of the
crisis affecting financial markets and the economy.

The focus in originating new business was on the existing client
base, and on extending loan terms for existing financing projects. At
EUR 3.8 billion, the volume of new business, including renewals,
exceeded the target corridor of EUR 2 to 3 billion announced
originally.

Net interest income posted by the segment for the financial year
under review amounted to EUR 409 million (2008: EUR 426 million).
Higher margins in the lending business were offset by lower returns
on the very comfortable level of liquidity reserves maintained.
Aareal Bank has built up a liquidity cushion, within the framework of
its conservative liquidity management policy in a market environment
defined by uncertainty. Low short-term interest rates meant that this
liquidity cushion could only be invested at low yields, which had a
negative effect on net interest income.

Overall, operating profit for the Structured Property Financing
segment was EUR 66 million, unchanged from the previous year's figure
(EUR 66 million). Taking into consideration tax expenses of EUR 12
million and EUR 16 million in minority interest income, the segment
result was EUR 38 million (2008: EUR 21 million).

The Consulting/Services segment also highlighted its importance as
Aareal Bank Group's second pillar in the difficult environment during
2009. The volume of deposits from the institutional housing industry
remained virtually stable and averaged at around EUR 4.0 billion in
the 2009 financial year. This reflects the high level of confidence
that institutional housing industry clients in Germany place in
Aareal Bank as their reliable banking partner. This relationship of
trust built up over many decades is bearing fruit, especially in an
uncertain market environment.

Sales revenue amounted to EUR 209 million in the 2009 financial
year (2008: EUR 229 million). The decline was largely due to the low
interest rate environment, which impacted unfavourably on
profitability of the deposit-taking business with the institutional
housing industry. Revenue generated by our subsidiary group Aareon AG
remained stable, despite the general economic weakness, which led to
a lower volume of project tenders in the market - especially in the
first half of the year. This reflected the successful continuation of
Aareon's multi-product strategy. The new Wodis Sigma product, which
was launched in the second quarter, was met with great interest.

On balance, operating profit for the Consulting / Services segment
was EUR 20 million (2008: EUR 44 million). The year-on-year decline
was due on the one hand to the effects of the historically low
interest rate environment, which significantly impacted on the
results generated in the deposit-taking business. On the other hand,
non-recurring expenses for capacity adjustments at Aareon, as well as
expenditure for the suspension of non-core activities, also affected
results. Taking into account these non-recurring effects, which
amounted to an aggregate EUR 6 million, the segment's operating
profit was within the communicated range of EUR 25-30 million.

After deduction of EUR 7 million in taxes and EUR 2 million in
minority interest income, the segment result stood at EUR 11 million
(2008: EUR 28 million).

Solid refinancing situation and good capitalisation

Aareal Bank continued to adhere to its forward-looking refinancing
policy during the year under review. Several private placements as
well as public issues were successfully distributed to a broad
investor base over the course of the year. Pfandbriefe totalling EUR
2.3 billion were issued within the scope of the bank's refinancing
activities in the 2009 financial year. Aareal Bank benefited from an
easing of market sentiment that was evident from mid-year onwards, to
increase its placements of unsecured bonds and promissory note loans.
The issuing volume for the year as a whole amounted to EUR 1.1
billion, plus a EUR 2 billion unsecured bond issue guaranteed by
SoFFin.

As at 31 December 2009, Aareal Bank's Tier 1 ratio - measured in
accordance with the Credit Risk Standard Approach (CRSA) - was 11.0
%, which is high by international standards. The Tier 1 ratio is thus
clearly above the medium-term target ratio of 10%, as defined by the
Management Board. Good capitalisation provides Aareal Bank with the
necessary scope to continue to act as a reliable financing partner
for its existing clients, and also to increasingly exploit the market
opportunities presented to it.

Notes on the preliminary Income Statement for the fourth quarter
of 2009

Aareal Bank Group also posted a profit in the fourth quarter of
2009. Consolidated net income after minority interests and the net
interest cost on the SoFFin silent participation amounted to EUR 6
million, after EUR 3 million in the same quarter of the previous
year.

According to preliminary figures, net interest income in the final
quarter of 2009 stood at EUR 115 million (Q4 2008: EUR 140 million),
up EUR 3 million from the third quarter of 2009. Allowance for credit
losses for the period amounted to EUR 35 million (Q4 2008: EUR 20
million). Net commission income for the fourth quarter was EUR 39
million in the fourth quarter (Q4 2008: EUR 48 million).

Net trading income/expenses in the final quarter of 2009 was EUR 3
million, compared with EUR -25 million in the same quarter of the
previous year. Results from non-trading assets in the fourth quarter
were EUR -3 million (Q4 2008: EUR - 61 million).

Administrative expenses amounted to EUR 83 million in the fourth
quarter (Q4 2008: EUR 90 million), also below the third quarter of
2009 (EUR 92 million).

On balance, operating profit for the fourth quarter was EUR 23
million (Q4 2008: EUR 10 million). After deduction of EUR 4 million
in income taxes and EUR 5 million in income attributable to minority
interests, consolidated net income after minority interests amounted
to EUR 14 million (Q4 2008: EUR 3 million). After deduction of EUR 8
million in net interest payable on the SoFFin silent participation,
consolidated net income stood at EUR 6 million.

Outlook: rising net interest income expected for 2010, allowance
for credit losses will remain manageable

Aareal Bank Group anticipates a slight overall improvement in
business development for the current financial year - even though the
environment for commercial property finance is expected to be equally
as challenging as in 2009.

Against the background of a slight to moderate increase in
interest rates, the Management Board expects net interest income to
grow to a range of EUR 460-480 million. This projection is based on
higher lending margins, together with a lower burden from liquidity
reserves.

Aareal Bank expects allowance for credit losses to remain at
manageable levels during the 2010 financial year. Allowance for
credit losses recognised in income is expected to range between EUR
117 million to EUR 165 million: the actual level will depend in
particular on the extent to which the additional allowance for credit
losses of EUR 48 million will, in fact, be utilised. As in the
previous year, the bank cannot rule out additional allowances for
credit losses that may be incurred during 2010.

Aareal Bank Group expects a moderate year-on-year rise in net
commission income.

Although Aareal Bank does not engage in proprietary trading in the
conventional sense, it is impossible to forecast net trading
income/expenses owing to market-related fluctuations, the measurement
of hedges within the scope of refinancing the bank's core business,
as well as the measurement of financial instruments held in our
trading portfolio.

Administrative expenses continue to be defined by the continued
strict cost discipline, and the figure for 2010 is expected to be
roughly in line with last year.

From today's perspective, Aareal Bank sees good potential for
increasing operating profit in 2010, even though the market
environment continues to be fraught with uncertainty.

New business generated in the Structured Property Financing
segment is currently expected to range between EUR 4 billion and EUR
5 billion in 2010. Aareal Bank will continue to concentrate on the
funding requirements of its existing client base. The increase in the
volume of new business will reduce the share of loan term extensions
relative to new business.

The Management Board believes the challenging interest rate
environment will continue to impact on the segment result for
Consulting/Services: profit before taxes are expected to slightly
above the adjusted operating profit of the previous financial year.

Aareal Bank

Aareal Bank AG is one of the leading international specialist
property banks. The Aareal Bank share is included in Deutsche Börse's
mid-cap MDAX index. Aareal Bank operates on three continents:
leveraging its successful European business model, the bank has
established similar platforms in North America and in the
Asia-Pacific region. It provides property financing solutions in more
than 25 countries.

Originaltext: Aareal Bank
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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