Aareal Bank AG

Investor Presentation • Nov 9, 2023

Conference Call 9M 2023 results

November 09, 2023 Jochen Klösges (CEO) Marc Hess (CFO)

Agenda

▪ Recent Financial Performance

• Loan Book & Asset Quality
• Liquidity & Funding
• Capital
• Outlook
• Appendix

Recent Financial Performance - Highlights

Strong operating performance continued

Stable results both for 9M figures (€ 155 mn vs. 9M/22: € 157 mn) as well as for quarterly results (€ 68 mn vs. € 66 mn in Q3/22)

Strong income development compensating elevated LLP due to headwinds from US office markets and significant investments by Aareon

Successful funding activities, deposit volume above plan, comfortable liquidity position

CET1 ratio stable at 19.4% despite portfolio growth and macro economic headwinds

Recent Financial Performance - Group Profit & Loss

Strong income development compensating elevated LLP and significant investments into Aareon

Profit & loss (€ mn)	Q3 '22	Q1 '23	Q2 '23	Q3 '23	9M '22	9M '23	∆ 9M '23/'22
Net interest income (NII)	184	222	240	248	514	710	+38%
Net commission income (NCI)	67	72	77	76	199	225	+13%
Admin expenses	128	199	143	144	423	486	+15%
Other op. income / expenses1)	6	-1	-21	-10	37	-32	./.
Pre-provision profit	129	94	153	170	327	417	+28%
Loan loss provision (LLP)	63	32	128	102	170	262	+54%
Operating profit (EBT)	66	62	25	68	157	155	./.
Profit after tax	39	42	16	46	100	104	+4%

9M pre-provision profit increase of 28% despite significant investments into Aareon demonstrating high operating resilience

• NII substantially improved, up by 38%
• NCI 13% above previous year's figures
• Costs under control
  • Increase compared to last year mainly driven by significant investments into Aareon (€ ~70 mn)
  • Costs in the banking business largely stable (CIR Bank2): 31%)
• LLP reflects ongoing headwinds from US office market and provisions for swift NPL reduction

1) Includes Net derecognition gain or loss, Net gain or loss from financial instruments (fvpl), Net gain or loss from hedge accounting, Net gain or loss from investments accounted for using the equity method, Net other operating income/expenses

2) Segment SPF & BDS, excl. bank levy/deposit guaranty scheme

Recent Financial Performance – NII & NCI

Strong income development

Both segments contributed to increase

• SPF
  • NII increased to € 564 mn (9M/22: € 475 mn) supported by portfolio growth, good margins and diversified funding mix
  • ~80% of TLTRO repaid in Q4/22
• BDS
  • NII increased to € 170 mn (9M/22: € 49 mn)
  • Positive effects from normalised interest rate environment
  • Deposits from housing industry above targeted level

Aareon and BDS continue to grow successfully

• Aareon
  • NCI increased to € 207 mn (9M/22: € 180 mn) based on strong growth, incl. SaaS, in recurring revenues (+21%)
  • Recurring revenue now represents 78%1) of total revenues (9M/22: 74%1))
• BDS
  • NCI further increased to € 24 mn (9M/22: € 23 mn)

Recent Financial Performance - Admin expenses / LLP

Admin: increase reflects strategic investments into Aareon LLP: elevated due to headwinds from US office market

Dominated by significant investments into Aareon Bank1)

• Stable at € 248 mn (9M/22: € 254 mn, incl. PTO related one-off € 12 mn)
• 9M/23 CIR2) Bank at 31% (9M/22: 39%)

Aareon

• Expenses increased to € 250 mn (9M/22: € 178 mn) of which € ~70 mn for investments, incl. costs of replacing "hunting line" formerly provided by Aareal with external credit facility
• Investment in efficiency measures have started to pay off

9M LLP mainly driven by provisions for a swift NPL reduction and headwinds from US office market

• 9M: € 262 mn (9M/22: € 170 mn) Total LLP of € 316 mn incl. € 54 mn FVPL
• Provisions for a swift NPL reduction increased to € ~100 mn, thereof € 36 mn for sale of Russian exposure
• Further NPLs prepared for resolution in Q4

1) Segment SPF & BDS

2) Excl. bank levy/deposit guarantee scheme

Recent Financial Performance – Segment SPF

Selective new business, good LTVs, above plan margins

1) Newly acquired business

2) Governed by "Green Finance Framework"

Recent Financial Performance - Segment BDS

Normalised interest rate environment supporting increase in NII

NII increase driven by normalised rate environment

• Deposit volume above targeted level of € ~13 bn
• Granular deposit structure from more than 3,700 housing industry clients managing ~8 mn rental units
• Sticky rental deposits continuously growing
• Continuous shift from sight into term deposits

NCI further increased

• High share of recurring revenues (banking and software fees)
• New products and services providing growth potential

Recent Financial Performance - Segment Aareon

Strong growth in recurring revenue and adjusted EBITDA margin, entry into Spanish market, long-term flexible financing established

Note: Numbers not adding up refer to rounding 1) Last Twelve Months

• Overall, sales revenue increased by € 30 mn (+13%)
  • Recurring revenue (incl. SaaS) grew by 21%
  • Recurring revenue (LTM1)) now represents 78% of total revenues (09/22: 74%)
• Adj. EBITDA increased by € 17 mn to € 64 mn (+37%), adj. EBITDA margin increased to 26% (9M/2022: 21%), operating cash flow further improved (adj. EBITDAC)
• Major activities in Q3/23:
  • Acquisition / Signing of Spanish IESA, software provider for residential real estate
  • Further increase in Aareon Connect partners and customers. First partners in the UK
  • Replacement of M&A credit line formerly provided by Aareal with flexible long-term Unitranche facility. Group NII impact of low double-digit million per year
  • Further improvement in operational liquidity by replacing and increasing revolving credit facility (RCF)
  • Efficiency measures: Optimisation of offices / locations; completing workforce transformation
  • Positive effects from efficiency measures of € ~20 mn expected annually (first effects in 2023 of € ~10 mn)

Agenda

• Recent Financial Performance
• Loan Book & Asset Quality
• Liquidity & Funding
• Capital
• Outlook
• Appendix

Portfolio volume increased by selective new business

YoD further improved, headwinds from US office market reflected in slightly higher portfolio LTV

LTV1) by property type

%	12 '19	12 '20	12 '21	12 '22	09 '23
Hotel	55	62	60	56	54
Logistics	54	56	55	52	53
Office	57	58	58	57	60
Retail	61	61	59	56	57

1) Performing CREF-portfolio only (exposure)

YoD1) by property type

%	12 '19	12 '20	12 '21	12 '22	09 '23
Hotel	9.6	3.0	5.0	9.0	10.9
Logistics	8.5	9.2	8.7	9.0	9.6
Office	7.7	8.1	7.6	6.9	7.3
Retail	9.6	8.8	9.1	9.8	11.0

Loan Book & Asset Quality US portfolio broadly diversified

US office portfolio: Update

€ 3.6 bn1)

0 - 50%: 61%

Stressed LTV < 80%: 91%

• All values reviewed in 2023, thereof 56% externally
• External appraisals leading to
  • NPL: value decrease of 20 44%
  • PL: value decrease of ~18%
  • ➔ Extrapolation to 100% of PL portfolio implies a pro-forma average LTV of 75%
• Average LTV at 68%, up from 62% by end of 2022

Portfolio as at 30.09. stressed with additional 20%

• Average LTV up to 85% (from ~68% as at 30.09.2023)
• (Layered) LTV above 100%: 1% (< € 60 mn)
• (Layered) LTV 80%-100%: 8% (< € 300 mn)
• ➔ Sound headroom even under stress assumptions

1) Performing CREF-portfolio only (exposure)

50 - 60%: 12%

60 - 70%: 10%

European office portfolio well positioned

• France (Paris only) with high share of planned refurbishments into green assets (~1/3 of total French office portfolio)
• UK deals mainly in London city
• Rest of portfolio largely spread across Europe with LTVs mainly below average for European office portfolio

European office LTV1) by region

Note: others incl. countries with a portfolio below € 100 mn 1) Performing CREF-portfolio only (exposure)

Stable NPL ratio as further reductions of legacy NPLs offset new US office NPLs

• Provision for a swift NPL reduction of € ~100 mn, thereof € 36 mn for sale of Russian exposure
• More than € 300 mn NPL exits with expected resolution in Q4 in preparation
• No hotel NPLs
• Ratios acc. to EBA methodology1):
  • NPL: 3.3% (06/23: 3.2%)
  • NPE: 2.9% (06/23: 2.8%)

Agenda

• Recent Financial Performance
• Loan Book & Asset Quality
• Liquidity & Funding
• Capital
• Outlook
• Appendix

Liquidity & Funding Comfortable liquidity position

Conservative liquidity management throughout the cycle

• On average long-term funds have longer maturities than CRE finance portfolio
• Substantial buffer in regulatory liquidity ratios (LCR / NSFR) despite strong growth in portfolio and difficult economic and capital markets environment
  • NSFR: 116%, (12/22: 119%)
  • LCR: 206%, (12/22: 210%)
• Liquid treasury portfolio with ~75% public sector
• TLTRO ~80% repaid in Q4/22

1) Other assets includes € 0.2 bn private client portfolio and WIB's € 0.2 bn public sector loans

Liquidity & Funding Well diversified funding mix

• Hypothekenpfandbriefe
• Senior Unsecured (SP)
• Senior Unsecured (SNP)
• Retail Deposits (Raisin)
• Public-sector Pfandbriefe
• Subordonated Capital

Successful 9M funding activities

• Pfandbrief and Senior totaling € 2.4 bn incl.
  • 2 Pfandbrief Benchmarks (€ 1.5 bn) in H1
  • 1 Pfandbrief Benchmark (€ 500 mn) in H2
• Deposits from housing industry at avg. of € 13.5 bn above targeted level of € ~13 bn
  • Granular deposit structure from more than ~3,700 housing industry clients managing ~8 mn rental units
  • Sticky rental deposits continuously growing
• Retail (term) deposits by cooperating with Raisin / Weltsparen significantly increased to € 2.1 bn (12/22: € 0.6 bn)
• Commercial Paper Program enables offering ECP in EUR, GBP & USD as well as in Green format
• Senior non-preferred benchmarks as additional instrument to support credit ratings (e.g. Moody's via LGF)
• Having further diversified and optimised funding mix, less senior preferred capital market funding planned
• ➢ At the end of October, Fitch affirmed Aareal's senior preferred rating at A- (neg. outlook)

Agenda

• Recent Financial Performance
• Loan Book & Asset Quality
• Liquidity & Funding
• Capital
• Outlook
• Appendix

Capital Solid capital position

• Stable CET1 ratio
• CET1 increase from dividend/profit retention and RWA reduction from external refinancing of Aareon hunting line formerly provided by Aareal compensate RWA increase from loan portfolio growth and macro economic headwinds
• B4 fully phased ratio at 13.4%
• T1-Leverage ratio at 6.3%

1) Based on draft version of the European implementation of Basel IV by the European Commission dated 27 October 2021 (CRR III)

Agenda

• Recent Financial Performance
• Loan Book & Asset Quality
• Liquidity & Funding
• Capital
• Outlook
• Appendix

Outlook 2023 Operating profit targets confirmed

	METRIC	Previous OUTLOOK 2023	Current OUTLOOK 2023
p u o Gr	▪ Net interest income ▪ Net commission income ▪ LLP1) ▪ Admin expenses	€ 730 - 770 mn € 315 - 335 mn € 170 - 210 mn incl. € 60 mn budget for a swift NPL reduction € 590 - 630 mn incl. € 35 mn budget for Aareon efficiency measures	Above upper end of range unchanged Above upper end of range € 630 - 650 mn incl. € ~80 mn Aareon investments
	▪ Operating profit (adjusted) ▪ Operating profit ▪ Earnings per share (EPS)	€ ~350 mn € 240 - 280 mn 2.802) € 2.40 -	Lower end Lower end

Due to the existing uncertainties, additional burdens cannot be ruled out under adverse conditions

		METRIC	2022	Current OUTLOOK 2023
s nt e m g e S	Structured Property Financing	▪ REF Portfolio ▪ New business	€ 30.9 bn € 8.9 bn	33 bn3) € 32 - € 9 - 10 bn
	Banking & Digital Solutions	▪ Deposit volume ▪ NCI	€ 13.4 bn € 31 mn	€ ~13 bn ~13% CAGR (2020-2023)
	Aareon	▪ Revenues ▪ Adj. EBITDA	€ 308 mn € 75 mn	€ 325 - 345 mn € 90 - 100 mn

1) Incl. value adjustments from NPL fvpl

2) Based on expected FY-tax ratio of ~33%

3) Subject to FX development

Key takeaways

Well positioned in the current challenging environment

Thanks to our increased earnings power and resilience, we are able to absorb substantial extraordinary burdens

In view of the current uncertainties, we are actively managing our loan portfolio

We are sticking to our medium and long-term goals, further increasing efficiency and consistently implementing our strategy

Appendix Segment: Aareon

Segment: Aareon 9M 2023 P&L and other KPIs

P&L Aareon segment - Industry format1) € mn	9M'22	9M'23	∆ 9M '23/'22
Sales revenue ▪ Thereof recurring revenues ▪ Thereof other revenues	221 161 60	251 203 48	13% 21% -9%
Costs2) ▪ Thereof material	-190 -41	-247 -44	30% 12%
EBITDA	32	4	-87%
Adjustments3)	-15	-60	> 100%
Adj. EBITDA	47	64	37%
EBITDA	32	4	-87%
D&A / Financial result	-37	-69	88%
EBT / Operating profit	-5	-65	> 100%

R&D and Adjusted EBITDAC4)
R&D spend as % of software revenue – YTD (%)	21
YTD Operating Cash Flow (€ mn)	48

• R&D spend at 21%, 4% lower then in PY driven by product portfolio review last year in order to deliver the most value for our customers
• Adjusted EBITDAC at € 48 mn (Q3'22: € 25 mn) includes positive impact of efficiency measures

1) Calculation refers to unrounded numbers

• 2) Costs also include other operating income and capitalized software
• 3) Incl. New product, M&A, VCP, Venture, other one-offs (legal cases, restructuring)

25 4) KPI measuring the Adjusted Cash performance (Adjusted EBITDA excl. capitalized software,

IFRS 16 impact and other non-cash valuation effects)

Appendix ESG

ESG in our daily business

Putting sustainability at the core of our decisions since Q2 2021

ESG in our lending business ESG in our funding activity

Aareal Bank "Green Finance Framework – Lending" put into place

• Aareal Bank's Green Finance Framework Lending confirmed through a Second Party Opinion (SPO) by Sustainalytics
• Ambition to extend ESG assessment in our day-to-day lending activities
• Explicit customer demand for Aareal Bank's green lending approach identified internationally and interest is high for the new product

• Green lending within a regularly updated framework provided

• Aareal Bank "Green Finance Framework – Liabilities" forms basis for Green Bonds

• In addition to the lending framework, Aareal Bank has implemented an accompanying and regularly updated liability-side / use-of-proceeds framework - confirmed through SPO by Sustainalytics - that allows issuance of green financing instruments
• "Green Finance Framework Liabilities" is intended to not only reflect our sustainable lending activities but also our strategic approach towards sustainability
• Bond issuances under this framework invite open discussion and engagement with investors on the progress we have made and, on the path, forward

Continue to enlarge climate transparency in the portfolio

• Portfolio transparency and data accumulation significantly improved for both existing and new lending and to be continued
• Aareal Bank involved in international initiatives to calculate financed emissions (PCAF)

Aareal's demanding Green Finance Framework

Aareal Green Finance Framework (GFF) in place
Green Property Financing: Requirements to qualify as green property ▪ Meets EU Taxonomy criteria and / or ▪ Certified with an above-average ratings and / or ▪ Classified as nearly zero-energy building (nZEB) / thresholds as defined in Aareal GFF		+	Green Loan Rider: Customer agrees to Maintaining "Aareal Green Finance Framework" requirements during the term of the loan			Green Loan: Combination of ▪ Green property1) and ▪ Agreement
Eligibility category Eligibility criteria (alternatives)
Green Buildings	1. EU taxonomy compliant: Buildings meet the EU Taxonomy criteria according to the EU Commission Delegated Regulation, Chapter 7.7 "Acquisition and ownership of existing buildings"	2. Green building certification: ▪ BREEAM: "Very Good" and above ▪ LEED: "Gold" and above ▪ DGNB: "Gold" and above ▪ Green Star: "5 Stars" and above ▪ NABERS: "4.5 Stars" and above ▪ HQE: "Excellent" and above ▪ Energy Star. "80" or above			3. Energy efficiency: Classified as a nearly zero-energy building (nZEB) and / or property falls below the maximum energy reference values 75 kWh/m² p.a. Residential 140 kWh/m² p.a. Office, Hotel, Retail 65 kWh/m² p.a. Logistics
Energy efficiency upgrades	1. EU taxonomy compliant: Modernisation measures meet the EU Taxonomy criteria acc. EU Commission Delegated Regulation3)	2. Upgrade to Green Building: Completion of the measure brings the property up to the green building standard defined above.			at least 30%.	3. Energy efficiency improvement: Completion of the measure results in an energy efficiency improvement of

1) All buildings within a financing have to qualify as green buildings according to Aareal GFF

2) Partnership for Carbon Accounting Financials

3) Chapter 7.2 "Renovation of existing buildings"

26% of CREF portfolio classified as Green Property Financings

€ 8.4 bn1) (26%) of total CREF portfolio fulfilling Aareal's Green Finance Framework and are classified as "Green Property Financings", thereof

• € 5.4 bn included in green asset pool for underlying of Green bond issues
• € 3.0 bn green property financings mainly for technical reasons not (yet) included

1) CREF excl. business not directly collateralized by properties Portfolio data as at 30.06.2023 – ESG Data as at 30.06.2023

2) Valid certificate is documented

ESG@Aareal

Phase 1: Mission accomplished

	We have laid the foundation…	…achieved our 2022 goals…	… and will continue to follow our path
	Green expansion of financing business € 2 bn by 2024 additional green loan volume	Achieved	On track for 2024
ct a p m	Optimisation of funding mix € 1 bn in 2022 - new allocation of green funding	€ 1 bn long-term funding + € 0.5 bn green CPs	+ € 0.5 bn green long-term funding in '23
ur i o g n	Providing transparency for global CREF portfolio 20% by 2022 – Verified green properties	> 21% screening almost completed	Grow share of verified green properties PCAF report on financed emissions by '24
wi o Gr	Limiting our own Greenhouse Gas emissions Carbon-neutralised own business operations worldwide by 2023	Achieved	On track for 2023
	Expansion of innovative solutions with ESG impact Growth targets by 2025 – Identification of enabler products by 2022	Achieved	On track for 2025
e n o p e t o e t h g t h at t n etti S	ESG governance with enhanced Board's oversight CEO responsibility – Regular Board engagement	Achieved	Achieved and continuing
	ESG integration in business, credit, investment, risk and refinancing strategies and decision making process Targeting of ESG initiatives in individual / group targets	15% ESG component in Management Boards variable remuneration	Increased to 25% of our Management Board's variable remuneration in 2023

Additional Highlights

• Green Finance Frameworks Lending & Liabilities established and signed off by second party opinion (SPO)
• Strengthened investability for green investors through consistently positive ESG rating results
• Strong performance in ECB climate stress test, which assessed our portfolio for its vulnerability to physical and transitory risks

On the "Road to Paris" we are supporting our clients

On-going transparency initiatives to reach and surpass to highest market standards

Consistently positive rating results

Rewarding Aareal's ESG performance

Note: Results and Benchmarks as of 25/10/2023

Appendix Asset Quality

CREF portfolio by country

€ 32.4 bn well diversified

CREF portfolio by property types

€ 32.4 bn well diversified

Appendix Liquidity & Funding / Capital

Treasury portfolio of € 6.8 bn ensures comfortable liquidity buffer

As of 30.09.2023 – all numbers refer to nominal amounts 1) Composite Rating

Diversified funding sources and distribution channels

Strong Mortgage Cover Pool and Aaa Rating for Pfandbriefe

Pfandbriefe funding cornerstone of wholesale issuance

• Cover pool of € 15.7 bn incl. € 0.7 bn substitute assets diversified over 20 countries
• High quality assets: first-class mortgage loans (mortgage-lending-value 55.3%)
• Mortgage-lending-value with high discount from market-value
• Avg. LTV of the mortgage cover pool 32.7%
• Moody´s has calculated a 'Aaa' supporting overcollateralisation ratio of 16.5% on a PV basis
• Over-collateralisation on a PV basis as of 30.09.2023 19.9%
• High diversification within property types

MREL ratios well above regulatory requirements

Senior Preferred have significant protection from subordinated liabilities and own funds

• Ample buffer to MREL requirements
• Senior Preferred remains the predominant senior product, though Senior Non-Preferred remains a key element of the funding strategy
• The rundown remains manageable with a number of long-term liabilities providing significant levels of subordination

• 8% TLOF is the bank's upcoming binding MREL requirement, to be met with 100% subordinated liabilities

• 1) 8% TLOF with 100% subordinated debt (i.e. Own Funds and SNP). MREL requirements are only updated once a year

• 2) MREL-eligible Senior Non-Preferred Debt >1Y according to contractual maturities
• 3) Considering regulatory adjustments

40

• 4) CET1 assumed to be constant over time
• 5) Senior Preferred, excluding structured unsecured issuances

Liquidity & Funding Rating profile

Financial ratings
Fitch Ratings		Moody's
Issuer default rating1)	BBB+	Issuer rating1)	A3
Short-term issuer rating	F2	Short-term issuer rating	P-2
Deposit rating	A	Senior preferred
Senior preferred	A	Senior non preferred	Baa2
Senior non preferred	BBB+	Bank deposit rating	A3
Viability rating	BBB+	BCA	Baa3
Subordinated debt	BBB	Mortgage Pfandbriefe	Aaa
Additional Tier 1	BB

Sustainability ratings
MSCI		AA
ISS-ESG		prime (C+)
Sustainalytics		Low (20-10)
CDP		Awareness Level B

Financial ratings

• Ratings reflect strong credit profile based on solid capital und liquidity position
• Preservation of Fitch senior preferred rating at Asupported by new owners

Sustanability ratings

Aareal's ESG performance has been rewarded by the rating agencies:

• MSCI: Aareal is in the best 35% of 63 diversified financials
• ISS ESG: Prime Status confirms ESG performance above sector-specific Prime threshold
• Sustainalytics: Still "Low" risk classification", Rank 178 of 987 in Sector Banks, 16 of 99 in Thrifts and Mortgages
• MOODY's ESG Solutions: Above sector average results in Environment, Social and Governance

1) Outlook negative

Liquidity & Funding Aareal Bank`s outstanding Benchmark Transactions

Pfandbriefe, Senior Unsecured and AT1
Product	Ratings2)	Currency	Volume	Maturity 	Coupon	ISIN
Pfandbriefe	Aaa	USD	750,000,000	02/14/25	0.625%	XS2297684842
Pfandbriefe	Aaa	GBP	500,000,000	04/29/25	SONIA + 100bps	XS2337339977
Pfandbriefe	Aaa	EUR	750,000,000	02/01/24	0.125%	DE000AAR0249
Pfandbriefe	Aaa	EUR	500,000,000	07/30/24	0.375%	DE000AAR0207
Pfandbriefe	Aaa	EUR	500,000,000	07/15/25	0.375%	DE000AAR0215
Pfandbriefe2)	Aaa	EUR	750,000,000	02/13/26	3,125%	DE000AAR0389
Pfandbriefe2)	Aaa	EUR	500,000,000	05/18/26	3,875%	DE000AAR0397
Pfandbriefe	Aaa	EUR	500,000,000	08/03/26	0.010%	DE000AAR0272
Pfandbriefe	Aaa	EUR	500,000,000	02/01/27	2.250%	DE000AAR0348
Pfandbriefe	Aaa	EUR	500,000,000	07/08/27	0.010%	DE000AAR0256
Pfandbriefe2)	Aaa	EUR	750,000,000	10/11/27	3.000%	DE000AAR0371
Pfandbriefe	Aaa	EUR	500,000,000	02/01/28	0.010%	DE000AAR0280
Pfandbriefe	Aaa	EUR	500,000,000	09/15/28	0.010%	DE000AAR0306
Pfandbriefe	Aaa	EUR	750,000,000	02/01/29	1.375%	DE000AAR0330
Pfandbriefe	Aaa	EUR	625,000,000	09/14/29	2.375	DE000AAR0363
Pfandbriefe	Aaa	EUR	750,000,000	02/01/30	0.125%	DE000AAR0314
Senior Preferred	A- / A3	EUR	500,000,000	04/10/24	0.375%	DE000A2E4CQ2
Senior Preferred green	A- / A3	EUR	500,000,000	07/25/25	4.500%	DE000AAR0355
Senior Preferred	A- / A3	EUR	500,000,000	09/02/26	0.050%	DE000AAR0298
Senior Preferred	A- / A3	EUR	500,000,000	04/07/27	0.050%	DE000AAR0264
Senior Preferred	A- / A3	EUR	750,000,000	11/23/27	0.250%	DE000A289LU4
Senior Preferred green	A- / A3	EUR	500,000,000	04/18/28	0.750%	DE000AAR0322
Additional Tier 1	BB	EUR	300,000,000	PERP_NC_5-1	10.897%	DE000A1TNDK2

1) Pfandbriefe are rated by Moody´s, AT1 by Fitch Ratings and Senior Unsecured by Fitch Ratings and Moody´s

2) Issued in 2023

Capital SREP (CET 1) requirements

• P2R relief by using possibility of partially fulfilling requirements with AT1 and T2 capital
• Total capital requirement (Overall Capital Requirement (OCR)) amounts to 14.1% compared to 23.6% total capital ratio

Pillar 1 Requirement Pillar 2 Requirement Capital Conservation Buffer Countercyclical / Systemic Risk Buffer

(in %)

Capital

operating resilience

Stressed CET1 ratios (adverse scenario)

Good stress test results demonstrating healthy risk profile and

German CRE-lender	Sample	Min. CET1 ratio	Min. Leverage ratio
Bank A	SSM	CET1R ≥ 14%	LR ≥ 6%
Aareal Bank	SSM	11% ≤ CET1R< 14%	4% ≤ LR< 5%
Bank B	SSM	8% ≤ CET1R < 11%	4% ≤ LR< 5%
Bank C	EBA	8% ≤ CET1R < 11%	LR < 4%
Bank D	EBA	8% ≤ CET1R < 11%	LR < 4%
Bank E	EBA	8% ≤ CET1R < 11%	LR < 4%
Bank F	EBA	8% ≤ CET1R < 11%	LR < 4%
Bank G	EBA	CET1R < 8%	LR < 4%
Bank H	EBA	CET1R < 8%	LR < 4%

Risk driver stress test 2023

• Intensification of geopolitical tensions, partial de-globalisation
• Gas supply cuts, higher commodity prices and wage increases via large second round effects leading to persistently high inflation
• Higher current and expected inflation leading to higher interest rates, further exacerbating the contraction in output
• Significant and abrupt price adjustment in the real estate market (approx. 30% discount) given a severe tightening in financing conditions and a weak economic outlook
• Tighter financing conditions, deteriorated economic activity and high levels of government debt raising sovereign debt sustainability concerns

Aareal Bank's Results

• Stressed CET1 ratio comfortably within 11-14% range above EBA / ECB (SSM) average (10.4%) and well above regulatory requirements
• Stressed leverage ratio above 4%
• ➢ Good stress test results demonstrating healthy risk profile and operating resilience of Aareal Bank

Appendix ADI of Aareal Bank

Interest payments and ADI of Aareal Bank AG

Available Distributable Items (as of end of the relevant year)

	31.12. 2016	31.12. 2017	31.12. 2018	31.12. 2019	31.12. 2020	31.12. 2021	31.12. 2022
€ mn
Net Retained Profit ▪ Net income ▪ Profit carried forward from previous year ▪ Net income attribution to revenue reserves	122 122 0 -	150 147 3 -	126 126 - -	120 120 - -	90 90 - -	96 30 66 -	61 61 - -
+ Other revenue reserves after net income attribution	720	720	720	720	840	840	936
Total dividend potential before amount blocked1) =	842	870	846	840	930	936	997
./. Dividend amount blocked under section 268 (8) of the German Commercial Code ./. Dividend amount blocked under section 253 (6)	235	283	268	314	320	386	466
of the German Commercial Code	28	35	42	40	43	36	24
= Available Distributable Items1)	580	552	536	486	566	515	507
+ Increase by aggregated amount of interest expenses relating to Distributions on Tier 1 Instruments1)	46	32	25	23	21	20	21
= Amount referred to in the relevant paragraphs of the terms and conditions of the respective Notes as being available to cover Interest Payments on the Notes and Distributions on other Tier 1 Instruments1)	626	584	560	509	588	535	529

Appendix Group Results

Aareal Bank Group

Results 9M 2023

	01.01.- 30.09.2023	01.01.- 30.09.2022	Change
	€ mn	€ mn
Profit and loss account
Net interest income	710	514	38%
Loss allowance	262	170	54%
Net commission income	225	199	13%
Net derecognition gain or loss	1 8	2 4	-25%
Net gain or loss from financial instruments (fvpl)	-58	2 2
Net gain or loss on hedge accounting	-2	-6	-67%
Net gain or loss from investments accounted for using the equity method	2	-2
Administrative expenses	486	423	15%
Net other operating income / expenses	8	-1
Operating Profit	155	157	-1%
Income taxes	5 1	5 7	-11%
Consolidated net income	104	100	4 %
Consolidated net income attributable to non-controlling interests	-13	0
Consolidated net income attributable to shareholders of Aareal Bank AG	117	100	17%
Earnings per share (EpS)
Consolidated net income attributable to shareholders of Aareal Bank AG1)	117	100	17%
of which: allocated to ordinary shareholders	9 6	8 9	8 %
of which: allocated to AT1 investors	2 1	1 1	91%
Earnings per ordinary share (in €)2)	1.61	1.49	8 %
Earnings per ordinary AT1 unit (in €)3)	0.21	0.11	91%

1) The allocation of earnings is based on the assumption that net interest payable on the AT1 bond is recognised on an accrual basis.

2) Earnings per ordinary share are determined by dividing the earnings allocated to ordinary shareholders of Aareal Bank AG by the weighted average of ordinary shares outstanding during the financial year (59,857,221 shares). Basic earnings per ordinary share correspond to diluted earnings per ordinary share.

3) Earnings per AT1 unit (based on 100,000,000 AT1 units with a notional amount of 3 € each) are determined by dividing the earnings allocated to AT1 investors by the weighted average of AT1 units outstanding during the financial year. Earnings per AT1 unit (basic) correspond to (diluted) earnings per AT1 unit.

Aareal Bank Group

Results 9M 2023 by segments

	Structured Property Financing			Banking & Digital Solutions	A a Aareon r e			Consolidation/ Reconciliation	Aareal Bank Group
	01.01.- 30.09. 2023	01.01.- 30.09. 2022	01.01.- 30.09. 2023	01.01.- 30.09. 2022	01.01.- 30.09. 2023	01.01.- 30.09. 2022	01.01.- 30.09. 2023	01.01.- 30.09. 2022	01.01.- 30.09. 2023	01.01.- 30.09. 2022
€ mn
Net interest income	564	475	170	4 9	-24	-10	0	0	710	514
Loss allowance	262	170	0	0	0	0			262	170
Net commission income	6	5	2 4	2 3	207	180	-12	-9	225	199
Net derecognition gain or loss	1 8	2 4							1 8	2 4
Net gain or loss from financial instruments (fvpl)	-58	2 2	0	0	0	0			-58	2 2
Net gain or loss on hedge accounting	-2	-6							-2	-6
Net gain or loss from investments accounted for using the equity method		0	2	-1		-1			2	-2
Administrative expenses	173	200	7 5	5 4	250	178	-12	-9	486	423
Net other operating income / expenses	7	-4	-1	-1	2	4	0	0	8	-1
Operating profit	100	146	120	1 6	-65	-5	0	0	155	157
Income taxes	2 8	5 2	3 8	6	-15	-1			5 1	5 7
Consolidated net income	7 2	9 4	8 2	1 0	-50	-4	0	0	104	100
Allocation of results
Cons. net income attributable to non-controlling interests	0	0	0	0	-13	0			-13	0
Cons. net income attributable to shareholders of Aareal Bank AG	7 2	9 4	8 2	1 0	-37	-4	0	0	117	100

Aareal Bank Group

Preliminary results – quarter by quarter

	Structured Property Financing					Banking & Digital Solutions				Aareon						Consolidation / Reconciliation					Aareal Bank Group
	Q3	Q2 2023	Q1	Q4 2022	Q3	Q3	Q2 2023	Q1	Q4 2022	Q3	Q3	Q2 2023	Q1	Q4 2022	Q3	Q3	Q2 2023	Q1	Q4 2022	Q3	Q3	Q2 2023	Q1	Q4 2022	Q3
€ mn
Net interest income	199	189	176	152	162	59	59	52	43	26	-10	- 8	- 6	- 7	- 4	0	0	0	0	0	248	240	222	188	184
Loss allow ance	102	128	32	22	63	0	0	0	0	0	0	0	0	0	0						102	128	32	22	63
Net commission income	5	1	0	1	1	8	8	8	8	8	70	70	67	72	61	- 7	- 2	- 3	- 3	- 3	76	77	72	78	67
Net derecognition gain or loss	6	12	0	-23	2																6	12	0	-23	2
Net gain / loss from fin. instruments (fvpl)	-17	-35	- 6	4	4	0	0	0	0	0		0	0	0							-17	-35	- 6	4	4
Net gain or loss on hedge accounting	- 2	- 4	4	4	1																- 2	- 4	4	4	1
Net gain / loss from investments acc. for using the equity method				0		2								0	0						2			0	0
Administrative expenses	53	46	74	60	54	23	20	32	25	17	75	79	96	66	60	- 7	- 2	- 3	- 3	- 3	144	143	199	148	128
Net other operating income / expenses	0	7	0	- 2	- 2	0	- 1	0	0	0	1	0	1		1	0	0	0	0	0	1	6	1	1	- 1
Operating profit	36	- 4	68	54	51	46	46	28	26	17	-14	-17	-34	2	- 2	0	0	0	0	0	68	25	62	82	66
Income taxes	3	10	15	18	18	15	14	9	8	6	4	-15	- 4	3	0						22	9	20	29	24
Consolidated net income	33	-14	53	36	33	31	32	19	18	11	-18	- 2	-30	- 1	- 2	0	0	0	0	0	46	16	42	53	42
Cons. net income attributable to non controlling interests	0	0	0	0	0	0	0	0	0	0	- 4	0	- 9	0	- 1						- 4	0	- 9	0	- 1
Cons. net income attributable to ARL shareholders	33	-14	53	36	33	31	32	19	18	11	-14	- 2	-21	- 1	- 1	0	0	0	0	0	50	16	51	53	43

Appendix Definitions and contacts

Definitions

New Business	=	New business = Newly acquired business + renewals
Common Equity Tier 1 ratio	=	CET 1 Risk weighted assets
NPL ratio	=	NPL-exposure acc. CRR (excl. exposure in cure period) Total REF Portfolio
CIR	=	Admin expenses (excl. bank levy, et al.) Net income
Net income	=	Net interest income + Net commission income + Net derecognition gain or loss + Net gain or loss from financial instruments (fvpl) + Net gain or loss on hedge accounting + Net gain or loss from investments accounted for using the equity method + Net other operating income / expense
Net stable funding ratio	=	Available stable funding Required stable funding
Liquidity coverage ratio	=	Total stock of high quality liquid assets Net cash outflows under stress
Earnings per share	=	operating profit ./. income taxes ./. income/loss attributable to non controlling interests ./. AT1 coupon Number of ordinary shares
Yield on Debt	=	NOI x 100 (Net operating income, 12-months forward looking) (without developments) Outstanding incl. prior/pari-passu loans
CREF-portfolio	=	Commercial real estate finance portfolio excl. private client business and WIB's public sector loans
REF-portfolio	=	Real estate finance portfolio incl. private client business and WIB's public sector loans
Exposure (performing)	=	Maximum [actual commitment (performing) or Outstanding (performing)]

Contacts Disclaimer

Jürgen Junginger

Head of Investor Relations Managing Director Phone: +49 611 348 2636 juergen.junginger@aareal-bank.com

Sebastian Götzken

Director Investor Relations Phone: +49 611 348 3337 sebastian.goetzken@aareal-bank.com

Carsten Schäfer

Director Investor Relations Phone: +49 611 348 3616 carsten.schaefer@aareal-bank.com

Frank Finger

Head of Treasury Managing Director Phone: +49 611 348 3001 frank.finger@aareal-bank.com

Christopher Linnert

Head of Funding Director Treasury Phone: +49 611 348 3889 christopher.linnert@aareal-bank.com

Sandro Wieandt

Assistant Vice President Treasury Phone: +49 611 348 3883 sandro.wieandt@aareal-bank.com

Disclaimer Disclaimer

© 2023 Aareal Bank AG. All rights reserved.

This document has been prepared by Aareal Bank AG, exclusively for the purposes of a corporate presentation by Aareal Bank AG.

This presentation may contain forward-looking statements. Forward looking statements are statements that are not historical facts; they include statements about Aareal Bank AG's beliefs and expectations and the assumptions underlying them; and they are subject to known and unknown risks and uncertainties, most of them being difficult to predict and generally beyond Aareal Bank AG's control. This could lead to material differences between the actual future results, performance and/or events and those expressed or implied by such statements.

Aareal Bank AG assumes no obligation to update any forward-looking statement or any other information contained herein.

This presentation is provided for general information purposes only. It does not constitute an offer to enter into a contract on the provision of advisory services or an offer to purchase securities.

As far as this presentation contains information from third parties, this information has merely been compiled without having been verified. Therefore, Aareal Bank AG does not give any warranty, and makes no representation as to the completeness or correctness of any such information or opinion contained herein. Aareal Bank AG accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this presentation.

The securities of Aareal Bank AG are not registered in the United States of America and may not be offered or sold except under an exemption from, or pursuant to, registration under the United States Securities Act of 1933, as amended.

Disclaimer Thank you.