Aareal Bank AG

Investor Presentation • Aug 10, 2022

Analyst Conference Call Q2 2022 results

August 10, 2022 Jochen Klösges (CEO) Marc Hess (CFO)

Agenda

▪ Highlights

• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Highlights

Aareal Bank reports a good Q2 despite challenging market environment

Growth in all three segments

Very solid capital position maintained enabling continued portfolio growth with improving KPIs; Funding mix further diversified, well ahead of 2022 funding plan 3

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2

2

Aareal Bank confirms 2022 operating profit outlook. Developments in the macroeconomic environment remain uncertain

84% of Aareal Bank shares tendered in June in response to Atlantic BidCo's public tender offer

Highlights

84% of Aareal Bank shares tendered in June in response to Atlantic BidCo's public tender offer

• Atlantic BidCo is highly supportive of "Aareal Next Level" strategy and existing Aareal Bank Group composition. Management and supervisory board have supported the public tender offer at a fair and adequate cash consideration
• Investors' sector expertise in financial services, payment services and software and their market access will support Aareal Bank Group's accelerated growth ambitions
• Advent International, Centerbridge Partners and CPP Investments1) are highly regarded investors managing a multi billion USD portfolio globally
• Closing of the transaction is subject to finalisation of regulatory clearances by Atlantic BidCo. Closing is expected in Q4/22 or Q1/23

Envisaged structure following closing4)

• 1) CPP Investment Board Europe S.àr.l, a wholly owned subsidiary of Canada Pension Plan Investment Board ("CPP Investments")
• 2) Indirect holding of participation in Atlantic BidCo GmbH
• 3) Minority representation in governance structure

3

4) Closing based on tendered shares of ~84% is subject to finalisation of regulatory clearances by Atlantic BidCo GmbH Note: All Q2 figures preliminary and unaudited

Highlights Growth in all three segments

Structured Property Financing

• Strong new business generation of € 5.2 bn in H1 focusing on attractive return profiles while strictly adhering to risk standards with portfolio of green loans continuing to grow
• Continued portfolio growth to € 31.3 bn (12/2021: € 30.0 bn) supporting NII
• Margins above plan mitigating temporarily elevated funding spread levels
• Retail deposits as additional funding source, second issue rating from Moody's (A3)
• Well ahead of 2022 funding plan

Banking & Digital Solutions

• NCI increased to € 15 mn in H1 (€ 13 mn in H1 2021)
• Deposit volume increased
• Deposit business will benefit from rising interest rates with positive effects on segment and group results from 2023 onwards

Aareon

• Sales revenue further increased by 10% in H1 predominantly from M&A
• Shift from license to SaaS/Subscription making further progress SaaS shows strong growth of 20% yoy, supported by strong organic performance
• Acquisition of Swedish market leading SaaS company "Momentum", therefore now #1 in the Nordics
• ➢ Aareon now has a leading market position in all its regions

Agenda

• Highlights
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Group Results Good quarterly results

€ mn	Q2 '21	Q3 '21	Q4 '21	Q1 '22	Q2 '22	6M '21	6M '22	Comments
Net interest income	142	155	162	159	171	280	330	Significant increase driven by further portfolio growth
Loss allowance	33	39	54	49	58	40	107	Q2 includes impact of adjusted risk parameters / worsened macroeconomic outlook
Net commission income	59	56	71	64	68	118	132	Increase in Aareon's sales revenue, reflecting M&A activities
Derecognition result	8	7	8	9	13	8	22	Includes positive effects of elevated
FV- / hedge-result	-2	-5	-24	2	9	-7	11	market volatility
Admin expenses	118	125	135	153	142	268	295	Reflecting Aareon growth and PTO-related one-offs
Others	-15	1	4	-2	0	-18	-2
Operating profit (EBT)	41	50	32	30	61	73	91	Good quarterly results
Income taxes	29	27	20	11	22	40	33	FY tax ratio of ~36% expected
Minorities	1	0	-1	1	0	2	1
AT1	3	3	4	3	4	7	7
Consolidated net income allocated to ord. shareholders	8	20	9	15	35	24	50
Earnings per share (€)	0.13	0.33	0,16	0.25	0.59	0.40	0.84

Net interest income (NII) / Net commission income (NCI)

Income significantly increased

Significant increase driven by portfolio growth

• NII increase in Q2 of 20% (yoy)
• Strong new business generation with margins above plan focusing on attractive return profiles while strictly adhering to risk standards

Increase from Aareon and BDS

• Aareon
  • Increase by € 7 mn in Q2 (yoy), thereof € 4 mn organic and € 3 mn M&A driven
  • Increase by € 12 mn (+11%) in H1 (yoy)
  • Shift from license to SaaS/Subscription making further progress - SaaS shows strong growth of 20% in H1 (yoy), supported by strong organic performance
• BDS
  • NCI increased by € 2 mn to € 8 mn in Q2 (yoy)

Admin expenses / Loan loss provisions (LLP)

Reflecting Aareon growth and PTO-related one-offs, LLP includes impact of adjusted risk parameters

Admin expenses Reflecting Aareon growth and PTO-related one-offs Bank:

• Largely stable, considering PTO-related one-offs (€ ~12 mn)
  • Q2 (yoy): € 77 mn (vs. € 64 mn)
  • H1 (yoy): € 177 mn (vs. € 164 mn)

Aareon:

• Q2 (yoy) increase of € 11 mn including M&A effects (€ ~4 mn) and one-offs (€ ~5 mn)
  • Q2 (yoy): € 65 mn (vs. € 54 mn)
  • H1 (yoy): € 118 mn (vs. € 104 mn)
• Q2 includes € 24 mn impact of adjusted risk parameters / worsened macroeconomic outlook
• Additional € 22 mn due to adjusted risk parameters for remaining Russian exposure
• Total H1-LLP of € 107 mn include € 83 mn LLP for remaining Russian exposure (€ ~200 mn) thereof € 61 mn provisioned in Q1

Non performing loans (NPL) NPL volume decreasing

• Total NPL down by € ~180 mn vs. Q1 2022
• Reduction in USA, France and Italy, relief predominantly in the hotel segment
• No new NPLs in Q2
• Underlying portfolio ex Russia significantly reduced, down by € ~340 mn in H1 witnessing recovery of Covid-19 effects

Agenda

• Highlights
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Strong new business generation focusing on attractive return profiles while strictly adhering to risk standards

1) Pre FX

2) Governed by "Green Finance Framework"

Portfolio volume in Q2 further increased partly by FX effects

• Sticking to overall country and asset diversification with increasing importance of logistics financings, as well as portfolio-transactions with risk reducing cross collateralisation
• Green property financing portfolio increased to € 6.4 bn or 21% of total CREF portfolio from 17% at YE 2021

KPIs continue to improve with the Covid-19 pandemic subsiding, overall portfolio-LTV back on pre-crisis level

Overall LTVs are declining on improvements in the hotel and retail segment

• Hotels stable at 59% vs. 03/22 (62% at 12/20)
• Retail stable at 58% vs. 03/22 (61% at 12/20)

Overall YoDs are increasing on improvements in the hotel and retail segment

• Hotel YoD improved to 7.0% from 5.9% at 03/22 (3.0% at 12/20)
• Retail YoD improved to 9.7% from 9.5% at 03/22 (8.8% at 12/20)

1) Performing CREF-portfolio only (exposure)

Segment: Banking & Digital Solutions

Deposit volume further strengthened

NCI with positive development as planned

• Acquisition of CollectAI already positively supporting growth by expanding range of products and services
• Exploring new markets and client groups

Deposit volume increased above target level of € ~12 bn supporting CREF portfolio growth

• Particularly sticky deposit types increasing steadily
• Since August 2022 depositors' fees no longer applied
• Deposit business will benefit from rising interest rates with positive effects on segment and group results from 2023 onwards
• Limited outflow due to ESF1) reform is expected in 2023

1) ESF: Deposit Protection Fund of the Association of German Banks (Einlagensicherungsfonds des Bundesverbandes deutscher Banken e.V.)

Segment: Aareon

Ongoing revenue growth (+10%) despite shift to SaaS/Subscription, successful acquisition in Sweden, new Aareon management

2) 95% as at 30.06.2022

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• Switch of revenue model from license to SaaS/ Subscription provides foundation for healthy recurring revenue share run-rate (>70%) going forward
• Shift from license to SaaS/Subscription making further progress - SaaS shows strong growth of 20% yoy, supported by strong organic performance
• Sales revenue increased by € 14 mn to € 147 mn (+10% yoy); PS1) ongoing challenging
  • Digital revenues ex PS up 23% yoy (incl. PS up 20%)
  • ERP revenues ex PS up 9% yoy (incl. PS up 7%)
• Adj. EBITDA increased by € 3 mn to € 32 mn (+10% yoy) and Adj. EBITDA margin stable yoy despite of the switch of revenue model
• Acquisition2) of Swedish Momentum Software Group AB enables Aareon to become leading SaaS company in the Nordics; further cross selling opportunities and synergies
• Two new Management Board members since 1 July:
  • Dr. Ernesto Marinelli, Chief People Officer (former SAP) – newly created board function addresses top priority topic employee recruitment & development
  • Rumyana Trencheva, (Chief Market Officer) (former SAP) – her extensive international sales experience helps driving Aareon´s growth

Note: All Q2 2022 figures preliminary and unaudited

Segment: Aareon

Aareon is now the clear leader in Europe – with expansion potential and a total addressable market > € 2 bn

Growth of units3) from ~10 mn (2019) to more than 13 mn (H1/2022)

• 1) Acquisition of Momentum Software Group AB as of 27 June 2022
• 2) Combining Private SMB and Social Housing markets

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3) Unit growth taken into account on a pro rata temporis basis; Additionally, Aareon has also expanded other related business models

Note: Market positions are based on Aareon's estimates; All Q2 2022 figures preliminary and unaudited

Agenda

• Highlights
• Group results
• Segments
• Capital, funding & liquidity
• Outlook
• Appendix

Capital

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Strong increase in capital ratios from retained profits and further positive OCI effect from pension liabilities

• Very solid capital ratios throughout Covid-19 crisis and despite ongoing portfolio growth
• Strong increase in CET1 ratio (B4 phase-in) in H1 mainly due to increase from
  • Retention of originally announced dividend payout (1.60 € per share)
  • Retained profits for the current year
  • Further positive OCI effect from pension liabilities
• Increase in RWA from portfolio growth compensated by further improved portfolio quality
• Solid T1-Leverage ratio at 5.8% despite portfolio growth
• Remaining regulatory uncertainties (models, ICAAP, ILAAP, B4, etc.)

1) Underlying RWA estimate on the basis of revised CRSA phase-in output floor as a result of a "higher-of" comparison with an RWA estimate on the basis of the current CRR plus revised AIRBA requirements for commercial property lending, based on the European Commission's draft for the European implementation of Basel IV dated 27 October 2021. The calculation of the AIRBA figure, which was reported at 03/22 and 12/21 as a result of the "higher-of" comparison, also includes a buffer (maintaining the scaling factor of 1.06 for AIRBA risk weights, and the 370 % risk weight for the IRBA equity exposure class), to account for the uncertainty surrounding the future final wording of CRR III as well as the implementation of further regulatory requirements such as

Funding & Liquidity

Funding mix further diversified, well ahead of 2022 funding plan

Further diversified funding mix

• Second issue rating from Moody's (A3) launched in Q2 2022 broadening investor base
• Cooperation with Raisin and Deutsche Bank started, efficient access to retail deposits as additional funding source

Successful funding activities

• Transactions of € ~3.9 bn in H1 2022 includes
  • € 750 mn Pfandbrief Benchmark (8Y)
  • € 750 mn Pfandbrief Benchmark (7Y)
  • € 500 mn Pfandbrief Benchmark (5Y)
• Green funding
  • € 500 mn Senior Pref. Inaugural Green Benchmark (6Y)
  • 07/22: € 500 mn Senior Pref. Green Benchmark (3Y)
  • € ~350 mn Green ECPs
• Continuous demand for conventional ECPs in EUR, USD and GBP with a total size of € ~450 mn
• Demand for private placements up due to higher interest environment (with intermediate to long term maturities):
  • € 275 mn senior unsecured and
  • € 340 mn mortgage backed (Hypothekenpfandbriefe)

Agenda

• Highlights
• Group results
• Segments
• Capital, Funding & Liquidity
• Outlook
• Appendix

Outlook 2022 Confirming operating profit guidance

	METRIC	2021	OUTLOOK 2022
p u o Gr	▪ Net interest income ▪ Net commission income LLP1) ▪ ▪ Admin expenses	€ 597 mn € 245 mn € 169 mn € 528 mn	€ 610 - 640 mn (€ 600 - 630 mn) € 270 - 290 mn € 140 - 180 mn (incl. € ~83 mn Russia) € 550 - 580 mn (€ 540 - 570 mn)
	▪ Operating profit Net income2) ▪ ▪ Earnings per share (EPS)	€ 155 mn € 53 mn € 0.89	€ 210 - 250 mn (lower end) € 120 - 150 mn3) (lower end) 2.503) (lower end) € 2.00 -

Outlook 2022: Developments in the macroeconomic environment remain uncertain

		METRIC	2021	OUTLOOK 2022
s	Structured Property Financing	▪ REF Portfolio ▪ New business	€ 30.0 bn € 8.5 bn	32 bn4) € 31 - (€ ~31 bn) € 7.5 - 8.5 bn (€ 7 - 8 bn)
nt e m g e S	Banking & Digital Solutions	▪ Deposit volume ▪ NCI	€ 12.4 bn € 28 mn	€ >12 bn (€ ~12 bn) ~13% CAGR (2020-2023)
	Aareon	▪ Revenues ▪ Adj. EBITDA	€ 269 mn € 67 mn	€ 305 - 325 mn € 73 - 78 mn

1) Incl. value adjustments from NPL fvpl

2) Net income attributable to ordinary shareholder

3) Based on expected FY-tax ratio of ~36%

4) Subject to FX development

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Note: All Q2 2022 figures preliminary and unaudited

Key takeaways

Aareal Bank Group reports a good operating performance in the second quarter despite the challenging market environment

We are consistently pushing our growth initiatives and growing in all three segments according to plan. We will continue our growth while remaining adhering to risk standards

Thanks to our strong capital, our risk management capabilities and our earning power we are well prepared for the upcoming challenging times

We confirm our operating profit guidance for 2022, with the necessary caveat that it is difficult to predict what the future will bring in view of the current geopolitical and economic developments

Group Results

Aareal Bank Group Results Q2 2022

	01.04.- 30.06.2022	01.04.- 30.06.2021	Change
	€ mn	€ mn
Profit and loss account
Net interest income	171	142	20%
Loss allowance	5 8	3 3	76%
Net commission income	6 8	5 9	15%
Net derecognition gain or loss	1 3	8	63%
Net gain or loss from financial instruments (fvpl)	1 2	-3	-500%
Net gain or loss on hedge accounting	-3	1	-400%
Net gain or loss from investments accounted for using the equity method	-2	-1	100%
Administrative expenses	142	118	20%
Net other operating income / expenses	2	-14	-114%
Operating Profit	6 1	4 1	49%
Income taxes	2 2	2 9	-24%
Consolidated net income	3 9	1 2	225%
Consolidated net income attributable to non-controlling interests	0	1	-100%
Consolidated net income attributable to shareholders of Aareal Bank AG	3 9	1 1	255%
Earnings per share (EpS)
Consolidated net income attributable to shareholders of Aareal Bank AG1)	3 9	1 1	255%
of which: allocated to ordinary shareholders	3 5	8	338%
of which: allocated to AT1 investors	4	3	33%
Earnings per ordinary share (in €)2)	0.59	0.13	354%
Earnings per ordinary AT1 unit (in €)3)	0.04	0.03	33%

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.

Note: All Q2 2022 figures preliminary and unaudited

Results Q2 2022 by segments

	A Structured Banking & Consolidation/ a Property Digital Aareon Reconciliation r Financing Solutions e			Aareal Bank Group
	01.04.- 30.06. 2022	01.04.- 30.06. 2021	01.04.- 30.06. 2022	01.04.- 30.06. 2021	01.04.- 30.06. 2022	01.04.- 30.06. 2021	01.04.- 30.06. 2022	01.04.- 30.06. 2021	01.04.- 30.06. 2022	01.04.- 30.06. 2021
€ mn
Net interest income	163	133	1 1	1 1	-3	-2	0	0	171	142
Loss allowance	5 8	3 3			0	0			5 8	3 3
Net commission income	2	2	8	6	6 1	5 4	-3	-3	6 8	5 9
Net derecognition gain or loss	1 3	8							1 3	8
Net gain or loss from financial instruments (fvpl)	1 2	-3	0		0				1 2	-3
Net gain or loss on hedge accounting	-3	1							-3	1
Net gain or loss from investments accounted for using the equity method			-1	-1	-1	0			-2	-1
Administrative expenses	6 1	5 0	1 9	1 7	6 5	5 4	-3	-3	142	118
Net other operating income / expenses	1	-15	-1	0	2	1	0	0	2	-14
Operating profit	6 9	4 3	-2	-1	-6	-1	0	0	6 1	4 1
Income taxes	2 4	3 0	0	-1	-2	0			2 2	2 9
Consolidated net income	4 5	1 3	-2	0	-4	-1	0	0	3 9	1 2
Allocation of results
Cons. net income attributable to non-controlling interests	0	0	0	0	0	1			0	1
Cons. net income attributable to shareholders of Aareal Bank AG	4 5	1 3	-2	0	-4	-2	0	0	3 9	1 1

Results H1 2022

	01.01.- 30.06.2022	01.01.- 30.06.2021	Change
	€ mn	€ mn
Profit and loss account
Net interest income	330	280	18%
Loss allowance	107	4 0	168%
Net commission income	132	118	12%
Net derecognition gain or loss	2 2	8	175%
Net gain or loss from financial instruments (fvpl)	1 8	-4	-550%
Net gain or loss on hedge accounting	-7	-2	250%
Net gain or loss from investments accounted for using the equity method	-2	-1	100%
Administrative expenses	295	268	10%
Net other operating income / expenses	0	-18	-100%
Operating Profit	9 1	7 3	25%
Income taxes	3 3	4 0	-18%
Consolidated net income	5 8	3 3	76%
Consolidated net income attributable to non-controlling interests	1	5 2	-80%
Consolidated net income attributable to shareholders of Aareal Bank AG	5 7	3 1	84%
Earnings per share (EpS)
Consolidated net income attributable to shareholders of Aareal Bank AG1)	5 7	3 1	84%
of which: allocated to ordinary shareholders	5 0	2 4	108%
of which: allocated to AT1 investors	7	7	0 %
Earnings per ordinary share (in €)2)	0.84	0.40	110%
Earnings per ordinary AT1 unit (in €)3)	0.07	0.07	0 %

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.

Note: All Q2 2022 figures preliminary and unaudited

Results H1 2022 by segments

	Structured Property Financing		Solutions	Banking & Digital	A a Aareon r e			Consolidation/ Reconciliation	Aareal Bank Group
	01.01.- 30.06. 2022	01.01.- 30.06. 2021	01.01.- 30.06. 2022	01.01.- 30.06. 2021	01.01.- 30.06. 2022	01.01.- 30.06. 2021	01.01.- 30.06. 2022	01.01.- 30.06. 2021	01.01.- 30.06. 2022	01.01.- 30.06. 2021
€ mn
Net interest income	313	260	2 3	2 2	-6	-2	0	0	330	280
Loss allowance	107	4 0	0		0	0			107	4 0
Net commission income	4	4	1 5	1 3	119	107	-6	-6	132	118
Net derecognition gain or loss	2 2	8							2 2	8
Net gain or loss from financial instruments (fvpl)	1 8	-4	0		0				1 8	-4
Net gain or loss on hedge accounting	-7	-2							-7	-2
Net gain or loss from investments accounted for using the equity method	0		-1	-1	-1	0			-2	-1
Administrative expenses	146	134	3 7	3 6	118	104	-6	-6	295	268
Net other operating income / expenses	-2	-20	-1	0	3	2	0	0	0	-18
Operating profit	9 5	7 2	-1	-2	-3	3	0	0	9 1	7 3
Income taxes	3 4	4 0	0	-1	-1	1			3 3	4 0
Consolidated net income	6 1	3 2	-1	-1	-2	2	0	0	5 8	3 3
Allocation of results
Cons. net income attributable to non-controlling interests	0	0	0	0	1	2			1	2
Cons. net income attributable to shareholders of Aareal Bank AG	6 1	1 3	-1	-1	-3	0	0	0	5 7	3 1

Preliminary results – quarter by quarter

	Structured Property Banking & Digital Financing Solutions				Aareon				Consolidation / Reconciliation				Aareal Bank Group
	Q2 2022	Q1	Q4	Q3 2021	Q2	Q2 2022	Q1	Q4	Q3 2021	Q2	Q2 2022	Q1	Q4	Q3 2021	Q2	Q2	Q1 2022	Q4	Q3 2021	Q2	Q2 2022	Q1	Q4	Q3 2021	Q2
€ mn
Net interest income	163	150	154	146	133	11	12	10	11	11	- 3	- 3	- 2	- 2	- 2	0	0	0	0	0	171	159	162	155	142
Loss allow ance	58	49	54	39	33		0				0	0	0	0	0						58	49	54	39	33
Net commission income	2	2	2	2	2	8	7	8	7	6	61	58	64	50	54	- 3	- 3	- 3	- 3	- 3	68	64	71	56	59
Net derecognition gain or loss	13	9	8	7	8																13	9	8	7	8
Net gain / loss from fin. instruments (fvpl)	12	6	-23	- 3	- 3	0		0			0										12	6	-23	- 3	- 3
Net gain or loss on hedge accounting	- 3	- 4	- 1	- 2	1																- 3	- 4	- 1	- 2	1
Net gain / loss from investments acc. for using the equity method			0			- 1	0	0		- 1	- 1	0	- 1	0	0						- 2	0	- 1	0	- 1
Administrative expenses	61	85	63	59	50	19	18	20	17	17	65	53	55	52	54	- 3	- 3	- 3	- 3	- 3	142	153	135	125	118
Net other operating income / expenses	1	- 3	8	- 1	-15	- 1	0	- 1	0	0	2	1	- 2	2	1	0	0	0	0	0	2	- 2	5	1	-14
Operating profit	69	26	31	51	43	- 2	1	- 3	1	- 1	- 6	3	4	- 2	- 1	0	0	0	0	0	61	30	32	50	41
Income taxes	24	10	14	28	30	0	0	0	0	- 1	- 2	1	6	- 1	0						22	11	20	27	29
Consolidated net income	45	16	17	23	13	- 2	1	- 3	1	- 1	- 4	2	- 2	- 1	- 1	0	0	0	0	0	39	19	12	23	12
Cons. net income attributable to non controlling interests	0	0	0	0	0	0	0	0	0	0	0	1	- 1	0	1						0	1	- 1	0	1
Cons. net income attributable to ARL shareholders	45	16	17	23	13	- 2	1	- 3	1	0	- 4	1	- 1	- 1	- 2	0	0	0	0	0	39	18	13	23	11

Asset quality

CREF portfolio by country

€ 30.8 bn highly diversified

Note: All Q2 2022 figures preliminary and unaudited

CREF portfolio by property types

€ 30.8 bn highly diversified

Non performing loans (NPL)

Deep dive

• NPL classification depends on a variety of triggers (e.g. arrears, NOI, DSCR, LTVs, yields, prices, marketability, …)
• NPL classification might be triggered even if no nominal loss will be made but contractual payments are or potentially will not be received in line with the agreement (timing / amounts)
• Current NPL portfolio:
  • 39% of NPL portfolio with LTV <100%
  • 48% of NPL portfolio with DSCR >100%1)
  • ➔ Only 22% of NPL portfolio with LTV >100% and DSCR <100%

➔ Meaningful share of NPLs with decent risk parameters

Spotlight: Inflation impact on real estate markets

General

• Various protection mechanisms installed between bank and client as well as between client and tenant
• Various mitigating factors depending on property type (eg. Structural changes, Corona recovery, Higher construction costs / material shortage supporting existing properties)
• Cap Rates: stable so far, still high spreads compared to alternative investments

Protection mechanism
Property type	Relationship Bank – Client (loan contract)	Relationship Client – Tenant
Office	+ Generally DSCR/ICR covenants	+ Rents in many cases index-linked + Mix of various tenants + Rental agreements with different maturities
Retail	+ NOI 12M forward looking + Interest: Hedged rate (eg contractually agreed cap) or fixed rate	+ Rent includes sales revenue based component → inflation caused sales revenue increase supporting rent + Mix of various tenants + Rental agreements with different maturities
Logistic	+ Cash sweep in case of covenants breach	+ In many cases portfolio transactions → mix of various tenants + Tenants regularly with group support + Rents in many cases index-linked
Hotel	+ Various covenants (eg DSCR/ICR, YoD, LTV) NOI 12M retrospectively1) + + Interest: Hedged rate or fixed rate + Cash sweep in case of covenants breach	+ Rent per room changeable short-term
Well protected against "normal" inflation. Stagflation could trigger challenges

1) For risk assessment also considering forward looking NOI

Implications of the Russian war against Ukraine

New Russian NPL ~40% provisioned; No exposure in Ukraine

Russian operations

• Rep office with 2 employees in Moscow
• Russia defined as non-core market about a decade ago
• Last newly acquired business in 2012
• From more than € 1 bn in 2010 portfolio significantly reduced to a net exposure of around € ~200 mn (YE 2021)

Russian exposure

• Two financings with a net exposure of € 208 mn as of 30.06.2022, EURO denominated; one financing almost written off
• The second financing has been classified as NPL in Q1 as loan due in Q4 2022 and as of today on-time payback is uncertain
• In H1 2022 € 83 mn LLP booked (Stage 3); remaining net exposure of € 125 mn
• Remaining net exposure equals ~45% of 10/2021 market value
• Property characteristics:
  • Office complex in Moscow
  • Nearly fully let to international and Russian tenants
  • Client able and willing to pay (DSCR >> 100%)
  • Currently Russian sanctions hinder cash transfer out of Russia

As of today impacts from geopolitical and macroeconomic environment are not predictable. However the markdown reflects volatility seen in other crisis in the past.

Segments

Segment: Aareon Q2 2022 P&L and other KPIs

P&L Aareon segment - Industry format1) € mn	Q2'21	H1'21	Q2'22	H1'22	∆ Q2 '22/'21	∆ H1 '22/'21
Sales revenue ▪ Thereof ERP ▪ Thereof Digital	67 50 17	133 100 33	75 54 21	147 107 40	11% 6% 26%	10% 7% 20%
Costs2) ▪ Thereof material	-60 -13	-115 -26	-67 -13	-126 -27	12% 1%	6% 9%
EBITDA	7	18	7	21	3%	17%
Adjustments2)	-7	-11	-8	-11	24%	-1%
Adj. EBITDA	14	29	16	32	13%	10%
EBITDA	7	18	7	21	3%	17%
D&A / Financial result	-8	-15	-13	-23	-50%	-55%
EBT / Operating profit	-1	3	-5	-3	<-100%	<-100%

R&D, RPU and operating cashflow
Revenue per unit (RPU) – LTM (€)	21
R&D spend as % of software revenue – YTD	26%
YTD Operating Cash Flow (€ mn)	11

• RPU (last 12 months) at 21 €. With cross-selling opportunities to be harvested
• R&D spend slightly above 25%, but expected to stay in line with communicated pattern of 25% threshold
• Operating Cash Flow at € 11 mn (H1/21: € 15 mn) lower, mainly due to shifts in working capital composition

1) Calculation refers to unrounded numbers

2) Incl. New product, VCP, Ventures, M&A and one-offs

ESG in our daily business

Putting sustainability at the core of our decisions

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 incorporate an ESG assessment into our day-to-day lending activities
• Explicit customer demand in Aareal Bank's green lending approach internationally identified and interest is high for the new product
• First green lending within the new framework provided since Q2 2021

ESG in our lending business ESG in our financing activity

Aareal Bank "Green Finance Framework – Liabilities" to form basis for inaugural Green Bond

• In addition to the lending framework, Aareal Bank has implemented an accompanying liability-side/use-ofproceeds framework that allows issuance of green financing instruments (GFF - Liabilities)
• The 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 in 2021 and improvement of transparency for both the existing and the new lending to be continued
• Aareal Bank involved in international initiatives to calculate financed emissions (PCAF)
• Additional disclosure will be made available following the issuance of a green financing instrument as Aareal Bank intends to issue an allocation and impact report in connection to outstanding green financing instruments

More than 20% of the portfolio fulfills Aareal's demanding Green Finance Framework

Aareal Green Finance Framework (GFF) in place
Green Property Financing: ▪ Meets EU Taxonomy criteria and / or ▪ and / or ▪ defined in Aareal GFF	Requirements to qualify as green property Certified with an above-average ratings Classified as nearly zero-energy building (nZEB) / thresholds as	+	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 Stars" and above HQE: "Excellent" and 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.	3. Energy efficiency improvement: Completion of the measure results in an energy efficiency improvement of at least 30%.

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"

Major Milestones in Sustainable Finance Strategy achieved

Green loans for green properties refinanced by green funding instruments

Significant progress1) in ESG transparency and performance:

Verified2) ESG-Transparency for

~45%

of our portfolio through documentation of proof in IT systems

Total Green Loan Volume of € ~1.5 bn, thereof in 2022: € ~1.1 bn

▪ € ~ 350 mn newly acquired business

▪ € ~ 700 mn renewals and conversions3)

Green Property Financings2)

21% 17% YE 2021

Since implementation of Green Finance Framework – Funding

> € 1.3 bn

has been issued via Senior Preferred Green Bonds as well as via the green Commercial Paper Program of CREF portfolio

with more potential subject to ongoing validation

1) Portfolio data as at 30.06.2022 – ESG Data as at 30.06.2022

2) Verified by documented certificate

3) Conversions: Existing loans converted into green loans

Note: All Q2 2022 figures preliminary and unaudited

21% of total CREF portfolio classified as Green Property Financings

€ 6.4 bn1) (21%) of total CREF portfolio fulfilling Aareal Banks Green Finance Framework and are classified as "Green Property Financings", thereof

• € 4.1 bn included in green asset pool for underlying of Green bond emissions
• € 2.3 bn green property financings mainly for technical reasons not (yet) included

2) Verified by documented certificate

Consistently positive rating results

Rewarding Aareal's ESG performance

Real Estate is transitioning to a more sustainable, digitised and connected future

Fostering this transition

ESG1) is (and has always been) fundamental to our business	▪ Lasting value of our properties is in our own interest ▪ No financing of controversial industry sites / projects ▪ Environmental quality is a major consideration in business origination and quality deficiencies will have an impact on the structuring of the loan or may reject the transaction
Integration of ESG in decision making initiated group-wide	▪ 2011: Introduction of corporate ESG compliance ▪ 2017: Focus on developing sustainability performance of core business ▪ September 2020: ESG@Aareal initiative initiated - "ESG Integration" throughout the group embedding ESG strongly into the business and decision-making processes
Strategic sustainability management based on five criteria	▪ Measurable contribution to sustainability transformation [AMBITION] ▪ Investable on the asset and liability side [INVEST] ▪ Retain existing customers and attract new ones [CLIENT] ▪ Manage relevant ESG risks [RISK] ▪ Comply with regulatory requirements [REGULATION]
We have impact!	▪ Contributing to the transition to a low carbon economy with every green financing ▪ Enabling customers to improve their sustainability performance with every smart digital solution connecting multiple parties and equipment

1) Environmental, Social, Governance

B/S, Treasury Portfolio, Funding & Liquidity

B/S structure according to IFRS

Well balanced B/S structure, Liquidity requirements significantly overfulfilled

1) Other assets includes € 0.2 bn private client portfolio and WIB's € 0.3 bn public sector loans

Treasury portfolio

€ 6.5 bn of high rating quality and highly liquid assets operates as collateral or additional liquidity

As at 30.06.2022 – all figures are nominal amounts 1) Composite Rating

Funding & Liquidity

Diversified funding sources and distribution channels

47 Note: All Q2 2022 figures preliminary and unaudited

Funding & Liquidity

Very successful Senior Preferred Inaugural Green benchmark transaction

Successful announcement of Green Financing Framework and receiving of Second Party Opinion from Sustainalytics supported strong entry into Green debt markets with highly successful Green ECP & Green SP Benchmark transactions:

• € 500 mn Senior Preferred Inaugural Green Benchmark Transaction with maturity of 6 years
• 88% of allocation to ESG related investors
• ECPs € 405 mn Green & \$ 76 mn Green till 12/2021
• Broader investor base

"Based on the above, Sustainalytics is confident that Aareal is well-positioned to finance green loans and issue green bonds

and that the Aareal Bank Green Finance Framework - Liabilities is robust, transparent, and in alignment with the four core components of the Green Bond Principles 2021 and Green Loan Principles 2021."

Regulation

Capital - SREP (CET 1) requirements

Demonstrating conservative and sustainable business model

• P2R increase in 2022 (2.75%; 2021: 2.25%) due to Corona impacting especially commercial real estate markets
• P2R relief by using possibility of partially fulfilling requirements with AT1 and T2 capital
• Total capital requirement 2021 (Overall Capital Requirement (OCR)) amounts to 12.8% compared to 28.4% total capital ratio
• All ratios already include TRIM effects as well as prudential provisioning

Pillar 1 Requirement Pillar 2 Requirement Capital Conservation Buffer Countercyclical Buffer

AT1: ADI of Aareal Bank AG

Interest payments and ADI of Aareal Bank AG

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

	31.12.	31.12.	31.12.	31.12.	31.12.	31.12.
	2016	2017	2018	2019	2020	2021
€ mn
Net Retained Profit	122	147	126	120	90	30
▪ Net income ▪ Profit carried forward from previous year	122 -	147 -	126 -	120 -	90 -	90 66
▪ Net income attribution to revenue reserves	-	-	-	-	-	-
+ Other revenue reserves after net income attribution	720	720	720	720	840	840
Total dividend potential before amount blocked1) =	842	870	846	840	930	936
./. Dividend amount blocked under section 268 (8) of the German Commercial Code	235	283	268	314	320	386
./. Dividend amount blocked under section 253 (6) of the German Commercial Code	28	35	42	40	43	36
= Available Distributable Items1)	579	552	536	486	566	515
+ Increase by aggregated amount of interest expenses relating to Distributions on Tier 1 Instruments1)	46	32	24	23	21	20
= 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)	625	584	560	509	587	535

1) Unaudited figures for information purposes only

Definitions and contacts

Definitions

= New Business	New business = Newly acquired business + renewals
=	CET 1
Common Equity Tier 1 ratio	Risk weighted assets
=	Operating profit/income ./. loss attributable to non-controlling interests ./. AT1 coupon
Pre tax RoE	Average IFRS equity excl. non-controlling interests, AT1 and dividends
=	Admin expenses (excl. bank levy, et al.)
CIR	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
=	Available stable funding
Net stable funding ratio	Required stable funding
=	Total stock of high quality liquid assets
Liquidity coverage ratio	Net cash outflows under stress
=	operating profit ./. income taxes ./. income/loss attributable to non controlling interests ./. net AT1 coupon
Earnings per share	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
NPL-ratio	NPL-exposure acc. CRR (excl. exposure in cure period)
=	Total REF Portfolio

Contacts

Jürgen Junginger

Managing Director Investor Relations 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

Karin Desczka

Manager Investor Relations Phone: +49 611 348 3009 karin.desczka@aareal-bank.com

Julia Taeschner

Group Sustainability Officer Director Investor Relations Phone: +49 611 348 3424 julia.taeschner@aareal-bank.com

Daniela Thyssen

Manager Sustainability Management Phone: +49 611 348 3554 daniela.thyssen@aareal-bank.com

Leonie Eichhorn

Sustainability Management Phone: +49 611 348 3433 leonie.eichhorn@aareal-bank.com

Robin Weyrich

Sustainability Management Phone: +49 611 348 2335 robin.weyrich@aareal-bank.com

Disclaimer

© 2022 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.

This presentation refers to the voluntary public takeover offer published by Atlantic BidCo GmbH on 26 April 2022. These references are provided for general information purposes only and do not constitute an offer to enter into a contract for the provision of advisory services or an offer to purchase securities. Any decision by investors to sell their Aareal Bank shares should be based on the public tender offer documentation published by Atlantic BidCo GmbH.

Information from Atlantic BidCo GmbH or other third parties is considered to be reliable but has merely been compiled without having been verified. Therefore, Aareal Bank AG does not assume any responsibility for the accuracy of the third-party data.

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. Therefore, Aareal Bank AG does not give any warranty, and makes no representation as to the completeness or correctness of any 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.

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

Thank you.