DGAP-News: Aareal Bank Group raises operating profit forecast after successful third-quarter results (news with additional features)
(firmenpresse) - DGAP-News: Aareal Bank AG / Key word(s): Quarter Results/Interim
Report
Aareal Bank Group raises operating profit forecast after successful
third-quarter results (news with additional features)
12.11.2013 / 06:59
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Aareal Bank Group raises operating profit forecast after successful
third-quarter results
- Third-quarter consolidated operating profit rises to EUR 48 million -
consolidated operating profit for the current financial year now
expected to be on a level comparable to the very good results posted in
2011 (FY 2011: EUR 185 million)
- EUR 2.3 billion in new business generated by the Structured Property
Financing segment during the third quarter - aggregate new business
volume for the full year now forecasted to be in excess of EUR 8
billion
- CEO Dr Wolf Schumacher: 'Our very robust liquidity base and
capitalisation allow us to continue exploiting attractive market
opportunities thoroughly and consistently.'
Wiesbaden, 12 Nov 2013 - During the third quarter of the 2013 financial
year, Aareal Bank Group maintained its successful business performance, in
a market and competitive environment that remained challenging, achieving
its best consolidated operating profit since the beginning of the financial
crisis. At EUR 48 million, consolidated operating profit exceeded both the
previous year's figure (Q3 2012: EUR 42 million) as well as the good result
achieved in the previous quarter (Q2 2013: EUR 45 million). Third-quarter
consolidated net income of EUR 23 million also exceeded the respective
comparative figures (Q3 2012: EUR 22 million; Q2 2013: EUR 21 million).
The strong performance was mainly driven by the continued positive trend in
net interest income. Whilst Aareal Bank benefited from good lending margins
and low funding costs, net interest income was burdened by a lack of
attractive investment opportunities for the Bank's liquidity reserves, on
account of the prevailing low interest rate levels. Still, net interest
income of EUR 133 million clearly exceeded the previous year's figure (Q3
2012: EUR 119 million) as well as the net figure for the previous quarter
(Q2 2013: EUR 126 million).
The Structured Property Financing segment also maintained the positive
development of new business origination during the third quarter: new
business totalled EUR 2.3 billion and was thus once again up significantly
year-on-year (Q3 2012: EUR 1.3 billion). Aggregate new business for the
first nine months of the year thus already amounted to EUR 6.7 billion (9m
2012: EUR 3.0 billion).
'Even though as expected, competition grew even more intense in those
markets that are particularly attractive, we further strengthened our
position as one of the leading providers of commercial property finance
during the third quarter, posting strong results. In our view, this once
again confirms the strength and robustness of our business model, which
will continue to provide the basis of our success in the future', said CEO
Dr Schumacher.
Structured Property Financing segment: new business clearly above the
previous year's levels
At EUR 52 million, operating profit generated in the Structured Property
Financing segment during the third quarter was up EUR 10 million over the
corresponding period of the previous year (Q3 2012: EUR 42 million).
Segment net interest income in the period under review was EUR 131 million,
after EUR 114 million in the comparable period of the previous year. The
positive effects of high-margin new business and low funding costs
outweighed the impact of the persistent low interest rate levels on
investing the Bank's liquidity reserve.
Allowance for credit losses was recognised in the amount of EUR 29 million
in the third quarter of 2013, compared with EUR 30 million in Q3 2012.
Allowance for credit losses thus amounted to EUR 74 million for the first
nine months of the year, and 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.
New business in the third quarter of 2013 totalled EUR 2.3 billion (Q3
2012: EUR 1.3 billion), bringing the figure for the first nine months of
the financial year to EUR 6.7 billion (9m 2012: EUR 3.0 billion). In
contrast to the previous year, benefiting from a transaction environment
that was more active - and defined by a higher level of liquidity - Aareal
Bank exploited opportunities for new business from the very beginning of
2013. New business thus clearly exceeded the previous year's figures in all
three quarters of 2013. The share of newly-originated loans was 52% in the
third quarter and 55% for the first nine months of 2013.
Consulting/Services segment: volume of deposits remains on a high level
Operating profit in the Consulting/Services segment totalled EUR -4 million
for the quarter under review (Q3 2012: EUR 0 million).
The business activities of the Aareon AG subsidiary developed in line with
expectations: Aareon's operating profit amounted to EUR 4 million during
the third quarter of 2013 (Q3 2012: EUR 5 million). Aareon succeeded in
winning new corporate clients for its Wodis Sigma product line, which sets
the benchmark for institutional housing software, thanks in particular to
its interface with state-of-the-art cloud computing.
The results generated from the deposit-taking business were burdened by
persistently low interest rate levels. However, the importance of this
business goes way beyond the interest margin generated from the deposits,
which is under pressure in the current market environment. This is because
the deposits from the institutional housing industry represent a
strategically important additional source of funding for Aareal Bank.
Against this background, deposit volumes from institutional housing
industry clients continued to develop favourably during the third quarter:
averaging EUR 7.1 billion during the quarter under review, the figure was
roughly at the level of the previous quarter (Q2 2013: EUR 7.2 billion),
thus remaining high.
Successful funding activities and strong capitalisation
The Bank raised more than EUR 500 million in long-term funds on the capital
market during the third quarter. This sum comprised Mortgage Pfandbriefe in
the amount of EUR 200 million, unsecured refinancing of EUR 300 million, as
well as subordinated liabilities of just under EUR 50 million. Aareal Bank
has therefore maintained its long-term funding at a high level.
The total volume of long-term funding raised up to 30 September 2013
amounted to EUR 3.1 billion, with Mortgage Pfandbriefe accounting for EUR
2.3 billion. Unsecured refinancing amounted to EUR 700 million, and the
remainder of almost EUR 100 million was accounted for by subordinated
liabilities.
Aareal Bank therefore remains very solidly financed. The tier 1 ratio rose
to 18.2 per cent as at 30 September 2013, which is comfortable on an
international level. At the same time, the core tier 1 ratio increased to
12.5 per cent on the reporting date. 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
The positive development in net interest income continued throughout the
third quarter. Whilst Aareal Bank benefited from good lending margins and
low funding costs, net interest income was burdened by a lack of attractive
investment opportunities for the Bank's liquidity reserves, on account of
the prevailing low interest rate levels. Still, net interest income of EUR
133 million clearly exceeded the previous year's figure of EUR 119 million.
It totalled EUR 380 million (9m 2012: EUR 370 million) for the first nine
months of the financial year.
Net commission income of EUR 40 million for the quarter under review was
slightly higher than the figure of EUR 39 million for the same period of
the previous year, bringing the total figure for the first nine months of
2013 to EUR 117 million (9m 2012: EUR 119 million).
The aggregate of net trading income/expenses, the net result on hedge
accounting, and the result from non-trading assets, was EUR 1 million in
the third quarter (Q3 2012: EUR 3 million); the relevant aggregate figure
for the first nine months of 2013 was EUR 3 million.
Consolidated administrative expenses amounted to EUR 94 million during the
third quarter (Q3 2012: EUR 90 million). The slight increase was due to (i)
measurement effects related to share-based remuneration (under the
Long-Term Incentive Programme - 'LTIP'), as defined by the German Ordinance
on Remuneration in Financial Institutions (Instituts-Vergütungsverordnung -
'InstVergV'), due to the positive performance of the Aareal Bank share;
(ii) expenses for regulatory projects; and (iii) the takeover of Sweden's
Incit AB with effect from 1 July 2013. Administrative expenses for the
first nine months of the year totalled EUR 276 million (9m 2012: EUR 270
million).
On balance, consolidated operating profit for the third quarter amounted to
EUR 48 million (Q3 2012: EUR 42 million). Taking into consideration income
taxes of EUR 15 million and EUR 5 million in income attributable to
non-controlling interests, net income after non-controlling interest income
amounted to EUR 28 million. After deduction of the net interest payable on
the SoFFin silent participation, consolidated net income stood at EUR 23
million (Q3 2012: EUR 22 million).
Aareal Bank Group's consolidated operating profit for the first nine months
of the financial year totalled EUR 140 million (9m 2012: EUR 130 million).
Taking into consideration income taxes of EUR 44 million and
non-controlling interest income of EUR 15 million, net income attributable
to shareholders of Aareal Bank AG amounted to EUR 81 million. After
deduction of the net interest payable on the SoFFin silent participation,
consolidated net income stood at EUR 66 million (9m 2012: EUR 67 million).
Outlook: consolidated operating profit forecast raised
Looking ahead to the remainder of the 2013 financial year, in spite of
signs for a stabilisation of the global upturn, Aareal Bank anticipates
economic momentum in key markets to pick up only at a low level, and a very
slow pace. Moreover, there still is significant uncertainty - for instance
in view of the European sovereign debt crisis, for which a sustainable
solution still has to be found. Aareal Bank expects competition in the
commercial real estate financing business to intensify further,
particularly in regard to first-class properties with low loan-to-value
ratios in numerous markets in Western and Northern Europe, but also in the
US, and in key Asian markets.
Net interest income benefits from good margins in the lending business and
funding costs that were lower than anticipated at the beginning of the
year. Although the persistent low interest rate environment continues to
burden net interest income, both in the deposit-taking business as well as
due to a lack of attractive investment opportunities for the Bank's
liquidity reserves, Aareal Bank now expects net interest income to exceed
EUR 500 million in the 2013 financial year. From today's perspective,
allowance for credit losses is likely to be at the lower end of the EUR 110
million to EUR 150 million range communicated. As in the previous years,
the Bank cannot rule out additional allowance for unexpected credit losses.
Aareal Bank expects a stabletrend for full-year net commission income in
2013, between EUR 165 million and EUR 175 million. Administrative expenses
are expected in the region of EUR 375 million. The slight increase compared
to the previous projection of EUR 360 million to EUR 370 million is due to
(i) measurement effects related to share-based remuneration (under the
Long-Term Incentive Programme - 'LTIP'), as defined by the German Ordinance
on Remuneration in Financial Institutions (Instituts-Vergütungsverordnung -
'InstVergV'), due to the positive performance of the Aareal Bank share;
(ii) expenses for regulatory projects; and (iii) the takeover of Sweden's
Incit AB with effect from 1 July 2013.
Aareal Bank's new business target in the Structured Property Financing
segment was originally EUR 6 billion to EUR 7 billion for the year 2013.
Thanks to the positive business development, Aareal Bank currently
anticipates aggregate new business volume for this year to exceed EUR 8
billion.
In the Consulting/Services segment the Bank continues to expect Aareon
Group to generate operating profit at the level of the previous year.
Based on the positive earnings performance in the first three quarters,
Aareal Bank has raised its forecast for consolidated operating profit in
the 2013 financial year. From today's perspective, the Bank now expects
that it will be able to generate consolidated operating profit for the
current financial year on a level comparable to the very good results
posted in 2011, thereby exceeding 2012's figures.
'The fact that we have raised our profit forecast shows that we are
well-positioned to master the current and future challenges confronting us.
We have aligned our business to the 'new normal' for banks, adjusting our
short- to medium-term planning accordingly. We will continue to carefully
plan our business, managing it sustainably and delivering reliably. Key
factors in this respect are our very robust liquidity base and
capitalisation. These allow us to exploit attractive market opportunities
wherever they arise - thoroughly and consistently', said CEO Dr Schumacher.
Note to editors: The full interim report for the third 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
Tel.: +49 611 348 2306
sven.korndoerffer(at)aareal-bank.com
Christian Feldbrügge
Tel.: +49 611 348 2280
christian.feldbruegge(at)aareal-bank.com
Heinrich Frömsdorf
Tel.: +49 611 348 2061
heinrich.froemsdorf(at)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),
Dagmar Knopek, Hermann J. Merkens,
Thomas Ortmanns
End of Corporate News
+++++
Additional features:
Document: http://n.equitystory.com/c/fncls.ssp?u=UFANWVCMSC
Document title: 2013_11_12_PM_Q3_ 2013_en
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12.11.2013 Dissemination of a Corporate News, transmitted by DGAP - a
company of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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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(at)aareal-bank.com
Internet: www.aareal-bank.com
ISIN: DE0005408116
WKN: 540811
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Stockholm
End of News DGAP News-Service
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Datum: 12.11.2013 - 06:59 Uhr
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