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EQS-News: Aareal Bank AG / Key word(s): Quarter Results
Aareal Bank posts a very good start to the 2024 financial year
2024-05-15 / 06:59 CET/CEST
The issuer is solely responsible for the content of this announcement.
Aareal Bank posts a very good start to the 2024 financial year
. Consolidated operating profit rises to EUR 103 million in the first quarter, reaching the highest level
since 2018
. Strong earnings power: net interest income of EUR 254 million, net commission income grows to EUR 86 million

. Risk provisions of EUR 83 million, including a EUR 56 million management overlay, remain at an elevated
level, reflecting challenges on the US office property market
. NPL reduction in excess of EUR 500 million successfully implemented
. Common Equity Tier 1 ratio rises to 19.7 per cent
. Aareon's adjusted EBITDA more than doubled to EUR 40 million
. CEO Jochen Klösges: "The good start to the year demonstrates once again the extent to which Aareal Bank
Group has been able to increase its earnings power in recent years. This is especially important in times like
these. Thanks to our high operational resilience, we are well prepared for the current challenges."
Wiesbaden, 15 May 2024 - Aareal Bank Group achieved very good results for the first quarter of 2024: consolidated
operating profit of EUR 103 million was up by 66 per cent year-on-year (Q1 2023: EUR 62 million), reaching the highest
level since 2018. The Bank accounted for around EUR 92 million of consolidated operating profit. Higher income and lower
costs clearly offset risk provisions of EUR 83 million, which remain at an elevated level but within the framework of
full-year planning. Aareal Bank was able to reduce more than EUR 500 million in non-performing loans (NPLs) during the
first quarter, as announced. Software subsidiary Aareon has also developed favourably, with sales revenue increasing by
31 per cent and adjusted EBITDA by 115 per cent. Aareon also successfully continued its M&A activities, making further
acquisitions.
Chief Executive Officer Jochen Klösges said: "The good start to the year demonstrates once again the extent to which
Aareal Bank Group has been able to increase its earnings power in recent years. This is especially important in times
like these. Thanks to our high operational resilience, we are well prepared for the current challenges."
Net interest income rose by 14 per cent in the first quarter, to EUR 254 million (Q1 2023: EUR 222 million). The higher
portfolio volume compared to the same quarter of the previous year and the good margins on new business originated in
previous quarters had a positive impact here, whilst the deposit-taking business continued to benefit from normalised
interest rate levels.
Net commission income also continued to increase, rising 19 per cent compared to the same quarter of the previous year,
to reach EUR 86 million (Q1 2023: EUR 72 million), driven by Aareon's strong sales revenue growth in particular.
As expected, risk provisions of EUR 83 million remained at an elevated level in the first quarter (Q1 2023: EUR 32
million). This includes a management overlay of EUR 56 million, to reflect the persistent challenges in the US office
property market at an early stage and as comprehensively as possible. Together with risk provisions booked as valuation
adjustments in net gain or loss from financial instruments (fvpl), total risk provisions amounted to EUR 86 million in
the first quarter (Q1 2023: EUR 35 million).
Administrative expenses amounted to EUR 147 million, significantly lower than in the same quarter of the previous year
(Q1 2023: EUR 199 million). Besides continued cost discipline, lower expenses for the bank levy and deposit protection
contributions, which are regularly posted for the full year during the first quarter, also contributed to the lower
figure. Furthermore, the previous year's quarter was influenced by significant investments made by Aareon. The Bank's
cost/income ratio remained at a very good level of 32 per cent for the first quarter of 2024 (Q1 2023: 35 per cent).
Considering taxes of EUR 30 million, consolidated net income was EUR 73 million (Q1 2023: EUR 42 million).
Capital position remained very solid during in the first quarter. Despite the challenging situation on the US office
property market, Aareal Bank managed to increase its Common Equity Tier 1 ratio (Basel IV phase-in ratio) to a very
comfortable 19.7 per cent (31 Dec 2023: 19.4 per cent). The Total Capital Ratio stood at 23.7 per cent (31 December
2023: 23.5 per cent).
One focal aspect of funding activities was the continued expansion of retail deposits: the volume of fixed-interest
retail deposits sourced through platforms rose to EUR 3 billion (31 Dec 2023: EUR 2.6 billion). Whilst deposits were
sourced from Germany to date, the Bank extended deposit-taking activity to the Netherlands and Austria in order to
further diversify the deposits base and plans further geographic expansion for the future. The Bank also issued a
benchmark Pfandbrief of EUR 500 million.
Chief Financial Officer Marc Hess said: "Capital markets were characterised by strong volatility during the first
quarter. Thanks to our very successful broadening of the funding mix, only a small amount of capital markets funding
was required in this environment. Deposits from private investors are now an integral part of our funding, which we
want to further diversify in the future. Our liquidity indicators also remain at a very good level."
Developments by business segment
As announced at the annual press conference in February, as planned, Aareal Bank reduced its portfolio of
non-performing loans (NPLs) for US office properties in the Structured Property Financing segment, during the first
quarter. No further risk provisions were required for that reduction, and only one new NPL case occurred. As of the end
of March, the NPL portfolio was down to EUR 1.1 billion (31 Dec 2023: EUR 1.6 billion); the NPE ratio fell correspondingly
to 2.9 per cent (31 Dec 2023: 3.4 per cent).
In view of volatile markets and low transaction volumes, Aareal Bank originated new business on a selective basis,
totalling EUR 0.9 billion in the first three months of the current financial year (Q1 2023: EUR 1.1 billion), including
EUR 0.7 billion in newly-originated loans. Margins on new business remained good, and loan-to-value ratios low.
Portfolio volume at the end of the first quarter totalled EUR 32.1 billion, slightly lower than at the end of 2023 (31
Mar 2023: EUR 30.7 billion; 31 Dec 2023: EUR 32.9 billion). Average loan-to-value ratios in the existing portfolio of
only 56 per cent reflect the high quality of financings in the Bank's credit portfolio.
Aareal Bank also extended its largest "green" loan to date in the Asia/Pacific region in the first quarter: it financed
a hotel portfolio of five properties in Australia for Pro-Invest Group. The total volume of green financings in Aareal
Bank's credit portfolio rose to EUR 5.5 billion at the end of March.
In the Banking & Digital Solutions segment, net interest income rose to EUR 65 million in the first quarter (Q1 2023:
EUR 52 million), reflecting normalised interest rate levels in conjunction with the continued high volume of client
deposits from the housing and energy industries. At EUR 13.9 billion, the average volume in the first quarter remained
well above the targeted level of around EUR 13 billion.
The first quarter also saw the establishment of a joint venture, First Financial Software GmbH, expanding the
foundations for long-term cooperation between Aareal Bank and Aareon and further strengthening the Group's banking and
software businesses.
Software subsidiary Aareon saw its sales revenues rise by 31 per cent to EUR 108 million in the first quarter, up 31 per
cent (Q1 2023: EUR 83 million). The share of recurring revenue compared to total sales revenues increased to 83 per cent
(Q1 2023: 75 per cent). Adjusted EBITDA more than doubled to EUR 40 million in the first quarter (Q1 2023: EUR 18 million).
Aareon is thus on track to achieve its sales revenue and profit targets for 2024.
Aareon also continued its M&A activities: in January, it acquired Blue-Mountain Group B.V., a Dutch provider of
business intelligence solutions for housing associations, healthcare and education institutions. Aareon announced a
strategic investment in Stonal, a French proptech, at the beginning of May. Stonal is one of the leading data
management platforms for property owners and investors in Europe. Its collaborative, AI-driven platform supports
decision-making, facilitating ESG reporting and investment planning alongside other functions. With both investments,
Aareon is thus strengthening its portfolio within the Group, offering its clients added value in the area of data
management.
Outlook
After the successful start into the year, Aareal Bank Group is well on track to achieve its communicated goals.

Contacts for the media:
Margarita Thiel
Phone: +49 611 348 2306
Mobile: +49 171 2069740
margarita.thiel@aareal-bank.com
Christian Feldbrügge
Phone: +49 611 348 2280
Mobile: +49 171 8667919
christian.feldbruegge@aareal-bank.com
Contact for investors:
Aareal Bank AG - Investor Relations
Phone: +49 611 348 3009
ir@aareal-bank.com
About Aareal Bank Group
Aareal Bank Group, headquartered in Wiesbaden, is a leading international property specialist. The Bank uses its
expertise to identify trends, challenges and opportunities at an early stage, and to exploit them for the benefit of
its stakeholders. Aareal Bank Group provides smart financings, software products, and digital solutions for the
property sector and related industries, and is present across three continents, Europe, North America and the Asia/
Pacific region. Aareal Bank Group's business strategy focuses on sustainable business success, with environmental,
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