Earnings Release • Nov 12, 2020
Earnings Release
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November 12, 2020 Marc Hess, CFO – Christof Winkelmann, CMO
Managing Covid-19 challenges and pursue strategic initiatives consistently
| Robust and resilient | ▪ ▪ ▪ ▪ |
Conservative risk profile Strong capital base Solid liquidity position Well-diversified business |
|
|---|---|---|---|
| Staying on course | ▪ ▪ ▪ ▪ |
As a reliable partner we are in close contact with our clients to find solutions and to support where necessary Precautionary model based risk provisioning and value adjustments Pursue strategic initiatives consistently De-risking |
|
| What we expected: Q1/20 | What we expected: Q2/20 | What we expect: Q3/20 | |
| Continuous normalisation from mid 2020 onwards, followed by a significant recovery ("swoosh" shaped) in 2021 |
Sticking to "swoosh scenario" with more pronounced dip considering slightly slower recovery |
Stick to updated "swoosh"- shaped scenario. Due to overall deteriorated market forecast we expect a somewhat more pronounced decline in economic activity and a six months delayed recovery |
| Solid Group Financials |
▪ Positive Q3 operating profit of € 11 mn, Covid-19 effects manageable ▪ Capital gain of ~ € 180 mn from Aareon minority sale locked in ▪ Strong capital, funding and liquidity position |
|
|---|---|---|
| Resilient Segment Performance |
▪ SPF: - Resilient CREF portfolio - New business with low LTVs and significantly above planned margins - Portfolio increase to upper end of guided range expected - Increasing NII in line with planned portfolio development |
|
| Aareal Bank |
▪ C/S Bank: - As expected, housing industry deposits proven stable - Ytd Commission income increased - FY operating profit target increased further |
|
| Group | ▪ Aareon: - Sale of minority stake in Aareon to Advent successfully closed - Growth in digital continues - Continued Covid-19 resiliency, limited impact on adj. EBITDA confirmed |
|
| Strategic review initiated |
360° review of 'Aareal Next Level' in the context of Covid-19 started |
|
| Outlook1) | In view of the deteriorating macroeconomic forecasts and market outlook, as at today the Bank expects an significant positive operating profit in the mid double-digit euro million range |
|
| 1) Please refer to page |
36: 'Outlook 2020' |
1) On a 100% basis
Actively managing Covid-19 implications, precautionary model based risks provisioning (management overlays)
| ▪ Pre-crisis: Sound portfolio quality with low LTVs and strong cash flows |
|
|---|---|
| -- | ------------------------------------------------------------------------------ |
Uncertainties continue and further LTV changes are possible, however they are expected to stay below the level of ~70% at the onset of the WFC in 2008
2) Performing CREF-portfolio only (exposure). Due to lockdown in H1 2020 only limited number of external appraisals available as at 30.09.2020
3) Acc. to our market value development expectations
10
Experienced team, solid portfolio
History ▪ 20 years of dedicated Hotel financing ▪ Team members recruited from hotel related industries (i.e. Operators, Managers, Valuers and hotel equity investments) ▪ Gradual increase in hotel lending since 2000, decreasing leverage levels over time with growing differentiation via USPs and recognition in the industry with increasing client base globally (initiative started in 2000; by 12/2008 € 3.7 bn loan book with an average LTV of 68%; by 12/2019: € 8.6 bn loan book with LTV an average LTV of 56%) ▪ 06/2001: Securitisation of an European and American Hotel portfolio ("Global Hotel One") € 1.1 bn, maturity 5 years, no defaults, despite 9/11 in NYC ▪ Successfully accompanied our hotel finance portfolio through the GFC
Key facts
| Total portfolio exposure | EUR 8.6 bn |
|---|---|
| ▪ Portfolio deals |
45% |
| ▪ Single asset deals |
55% |
| Number of countries | 19 |
| Number of hotels | 236 hotels |
| Average exposure per hotel |
EUR 36 mn |
| Number of loans |
94 |
| Average exposure per loan |
EUR 90 mn |
| Total number of hotel rooms |
58,241 rooms |
| Exposure per hotel room |
EUR 150,000 |
Key findings
▪ Well diversified by 236 hotels in 19 countries
Conservatively leveraged with sufficient buffer for value decreases caused by the current crisis
Of the top 15 loans (all are loans above € 150 mn, of which 12 are portfolio financings), only 6 were provided with additional liquidity since March. Overall, 35% (~ € 3 bn) of our hotel exposure has received liquidity support since the beginning of the year.
3) Acc. to STR classification
| ▪ "Travel" industry is one of the largest industries / employers globally |
|
|---|---|
| ▪ 10 years of booming economies allowed hotel owners to build up substantial reserves and buffers, which they are willing to re-invest |
|
| ▪ Cost of carry is significantly lower than in 2008, where the average 3M Euribor was approximately ~ 4.5%, compared to the 2020 YtD avg. 3M Euribor of ~ -0.4% |
|
| ▪ Limited transaction volumes in markets for hotel assets, indicating |
|
| ▫ No overwhelming distress of owners / banks |
|
| Markets | ▫ No markable increase in NPL transactions to date |
| ▫ Current loan parameters are on a more conservative level than at the onset of the GFC |
|
| ▫ Borrowers for the largest part are looking through the cycle and are seeing positive equity value in their assets |
|
| ▫ Measures taken by governments globally further increase market liquidity |
|
| ▫ No foreseeable increase of interest rates (quite the contrary: Central Banks signaled willingness to further lower interest rates, if needed) |
16
Expectations and examples
| ▪ Catch up effect for business related travel expected to be significant, as is pent up demand for personal travel |
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|---|---|---|---|---|---|---|---|---|
| ▪ In the interim, people will learn to live and travel with Covid-19 and not against it |
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| Expectations | ▪ Final resolution with accepted treatment / vaccine |
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| ▪ Currently, Resort Hotels and drive to destinations fare better, while China is a possible projection on how hotels will fare, as Covid-19 is under control |
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| ▪ With our profound know-how and well-established network in hospitality industry, we are expecting to apply our expertise and USPs to generate attractive risk / return through the cycle |
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| A picture is worth a thousand words… |
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| € mn | Q3 '19 | Q4 '19 | Q1 '20 | Q2 '20 | Q3 '20 |
|---|---|---|---|---|---|
| Net interest income | -4 | -5 | 10 | 10 | 9 |
| Net commission income | 7 | 6 | 5 | 7 | 6 |
| Admin expenses | 20 | 16 | 18 | 17 | 15 |
| Net other operating income | 0 | 1 | 0 | 0 | 0 |
| Operating profit | -17 | -14 | -3 | 0 | 0 |
| P&L Aareon segment - Industry format1) € mn |
Q3'19 | 9M'19 | Q1'20 | Q2'20 | Q3'20 | 9M'20 | ∆ Q3 '20/'19 |
∆ 9M '20/'19 |
|---|---|---|---|---|---|---|---|---|
| Sales revenue ▪ Thereof ERP ▪ Thereof Digital |
60 48 12 |
182 146 35 |
64 49 15 |
61 47 15 |
63 49 14 |
188 144 44 |
5% 1% 20% |
4% -1% 25% |
| Costs2) ▪ Thereof material |
-47 -11 |
-140 -32 |
-50 -11 |
-51 -12 |
-50 -10 |
-152 -34 |
7% -2% |
8% 7% |
| EBITDA | 13 | 41 | 14 | 10 | 13 | 36 | -1% | -12% |
| New products / Inorganic3) |
-1 | -1 | -1 | -2 | -2 | -4 | >100% | >100% |
| One offs | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Adj. EBITDA | 14 | 42 | 15 | 12 | 14 | 41 | 6% | -3% |
| EBITDA | 13 | 41 | 14 | 10 | 13 | 36 | -1% | -12% |
| D&A / Financial result | -6 | -17 | -7 | -7 | -6 | -20 | 9% | 12% |
| EBT / Operating profit | 7 | 24 | 7 | 3 | 6 | 17 | -9% | -29% |
▪ Outlook 2025:
Development of value creation plan with goal to become a "Rule of 40" company
and M&A activities, include investments in new product developments
Q3: Share of recurring revenue (LTM)2)
1) Represents growth rate from 9M '19 to 9M '20 (based on unrounded numbers)
2) LTM: Last twelve months
Positive operating profit despite Covid-19 impacts, growing NII & NCI
| € mn | Q3 '19 | Q4 '19 | Q1 '20 | Q2 '20 | Q3 '20 | Q3 2020-Comments |
|---|---|---|---|---|---|---|
| Net interest income | 134 | 130 | 123 | 122 | 128 | Positive impacts from TLTRO participation and increased portfolio |
| Derecognition result | 15 | 22 | 7 | 9 | 3 | Effects from early repayments |
| Loss allowance | 27 | 35 | 58 | 48 | 61 | Above last years' level due to Covid-19 impact |
| Net commission income | 54 | 65 | 57 | 54 | 57 | Above last years' level driven by Aareon's growth |
| FV- / hedge-result |
2 | -4 | 11 | -16 | -2 | |
| Admin expenses | 114 | 118 | 129 | 109 | 114 | Flat despite Aareon growth |
| Others | 0 | 2 | 0 | -10 | 0 | |
| Operating profit (EBT) | 64 | 62 | 11 | 2 | 11 | Positive operating profit despite Covid-19 impacts, growing NII & NCI |
| Income taxes | 24 | 20 | 4 | -7 | 10 | FY tax ratio above 50% expected due to expenses non effective for tax purposes |
| Minorities | 1 | 0 | 1 | 0 | 1 | |
| Consolidated net income allocated to shareholders |
39 | 42 | 6 | 9 | 0 | Additional € ~180 mn from Aareon minority sale will be shown in Q4 directly in equity position under IFRS consolidated financial statements (unlike in HGB financial statements) |
| Earnings per share1) (€) |
0.60 | 0.62 | 0.04 | 0.07 | -0.05 |
1) After AT1 accrual
Positive impacts from TLTRO participation and increased portfolio
9M LLP amounts to € 167 mn, thereof
Defaulted exposure Defaulted exposure / Total CREF portfolio
Defaulted exposure by country (€ mn)
Remaining regulatory uncertainties (models, ICAAP, ILAAP, B4 etc.): modelled RWA's may further inflate
1) Underlying RWA estimate, given a 72.5 % output floor based on the final Basel Committee framework dated 7 December 2017, calculation subject to outstanding EU implementation as well as the implementation of further regulatory requirements
31
3) When calculating own funds as at 30 Sep. 2020, interim profits were taken into account, deducting the pro-rata dividend in line with the dividend policy, and incorporating the pro-rata accrual of net interest payable on the AT1 bond. Moreover, the expected relevant impact of the TRIM exercise on commercial property financings, and of the SREP recommendations concerning the NPL inventory as well as the ECB's NPL guidelines for exposures newly classified as NPLs, were taken into account for determining regulatory indicators.
As at 30.09.2020: € 44.5 bn (31.12.2019: € 41.1 bn)
We had qualified our annual forecast published in the 2019 Annual Report, noting that the impact of the Covid-19 pandemic cannot be reliably estimated and that it is thus impossible to anticipate the consequences for business and earnings development.
In the remaining course of the year and in addition to our strategic initiatives as part of "Aareal Next Level" we focus to overcome the challenges and impacts from the Covid-19 pandemic together with our clients.
| Crucial Question: | When will the economic recovery kick-in? With what momentum? |
|---|---|
| Our assumption: | Aareal Bank Group continues to forecast an updated "swoosh"-shaped course of the crisis and recovery. The market forecast has deteriorated overall, compared to June 30th 2020. Hence, for 2020 we now expect a somewhat more pronounced decline in economic activity in most of the regions where we are active, and a recovery that will be delayed by about six months. We continue to anticipate a marked recovery in 2021 and 2022 |
| Our Outlook1): | In view of the deteriorating macroeconomic forecasts and market outlook, as at today the Bank expects an significant positive operating profit in the mid double-digit euro million range |
1) Naturally, in the current environment, this forecast is subject to significant uncertainty, especially with regard to the assumed duration and intensity of the crisis, the pace of recovery and the associated effects on our clients, as well as prevailing unclear regulatory and accounting provisions, and the possibility that individual loan defaults cannot be reliably predicted. Further effects from potential derisking measures are also not included. We continuously assess the pandemic development, the actions taken, and the resulting economic impact. Should the current trend continue, our forecast might need to be further adjusted
| Keep structured property financing on track | ||
|---|---|---|
| Structured property financing |
ACTIVATE! | - Leverage on expanded origination, structuring and exit opportunities - flexibly "play the matrix" (countries, asset classes, structures) Expand servicing and digitisation opportunities ٠ De-risk balance sheet and flexibility where appropriate - Protect the group's backbone and retain "best in class position" Contribute to mega-trend ESG by focusing on high-quality, long lasting value ٠ property financing |
| Leverage and grow our housing and adjacent industries business | ||
| Housing & adjacent industries |
ELEVATE! | Elevate product range by utilising deep understanding of customer processes and infrastructure by further expanding product suite with a focus on fee income - Take opportunities of joint business model developments with customers and other market players (e.g. "objego"; joint-venture with ista) - Support affordable housing through our cost-efficient payment solutions |
| As an integral part of our strategy strengthen Aareon's position as the leading software company for the European real estate industry over time and become a company with a strong independent value proposition |
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| Aareon | ACCELERATE! | - Continue execution of already announced organic growth strategy to double EBITDA in the mid-term particularly by expanding our digital solutions portfolio organically • On top: accelerate through additional M&A activities – if and when opportunities arise - Further invest in digital ecosystems relating sectors to meet today's challenges (e.g. virtual assistance, digitalized maintenance, mobile services) |
| Priorities | Potential impact |
Time horizon |
|---|---|---|
| Capital (allocation) efficiency | ||
| Review and optimise ▪ Regulatory capital effectiveness from a normative (BIII and BIV) and economic perspective (CREF business, TR book, etc.) ▪ Capital deployment and –profitability / new business allocation Total capital structure (incl. AT1 and Tier 2)1) ▪ ▪ Size of on- and off balance sheet business |
high | short- to mid term |
| Invest in capital light business – organically and via M&A ▪ Value Creation Plan for Aareon to achieve "Rule of 40" ▪ Explore opportunities to grow/invest in capital light banking business on top |
high | mid-term |
| Opportunity driven M&A track record to be continued | high | If possibilities arise |
| Corporate setup effectiveness | ||
| ▪ Aareal Bank new way of working (incl. remote working, workfloor concept, etc.) ▪ Benchmarking of setup, processes and IT infrastructure |
mid | mid- to long term |
| Strengthening ESG as an integral part of our DNA | ||
| ▪ Transparency assessment of our portfolio ongoing (80% completed) ▪ Approx. 50% with green building certificates, Energy performance certificates or both are in place, share to be increased going forward |
mid / high | mid- to long term |
| Key focus: - Create sustainable shareholder value in a new normal after Covid-19 mid-term2) with the aim of earning our CoE payer1) - Resume our track record as a reliable dividend 1) Subject to ECB approval |
2) Based on optimised regulatory capital structure
| Ongoing resilient performance |
Aareal Group stays positive on operating profit despite significant Covid-19 related burdens, thanks to its strong business performance and diversified Group set-up |
|
|---|---|---|
| All good | Risks manageable |
Covid-19 related risks remain under control; precautionary model based risk provisioning resulting in substantial management overlays, while asset quality continuously proves to be high |
| reasons to reiterate: Robust business in |
Strong financial position |
Aareal Group is financially well-equipped given considerable buffers in capital position (even without capital gain from Aareon minority sale) and solid funding position |
| tough times | Outlook 2020 specified |
Due to Covid-19 uncertainties Aareal Group slightly adjusted its guidance for FY-2020, while still expecting a significant positive operating profit in the mid double-digit euro million range |
| Maintaining strategic flexibility |
Strategic milestones within "Aareal Next Level" achieved, regardless of high attention to manage through the crisis – strategic review started in light of recent environmental changes |
1) Incl. Student housing (UK & Australia only)
Successful de-risking led to further significant NPL reduction
1) Incl. Student housing (UK & Australia only)
| LTV | ||||||||
|---|---|---|---|---|---|---|---|---|
| Exposure | 70% bis 75% 75% bis 80% 80% bis 85% 85% bis 90% 90% bis 95% 95% bis 100% über 100% | |||||||
| 100% | 250 | 132 | 71 | |||||
| 95% | ||||||||
| Probability | 90% | |||||||
| 85% | ||||||||
| 80% | ||||||||
| 75% | ||||||||
| 70% | ||||||||
| 60% | ||||||||
| 40% | ||||||||
| 20% |
Current average LTV of 57%
Layered LTVs:
70% LTV exposure: € 250 mn
80% LTV exposure: € 132 mn
90% LTV exposure: € 71 mn
High portfolio concentration at 57% LTV
1) Performing CREF-portfolio only, LTV / YoD pre Covid-19, exposure (excl. commitments) as at 31.03.2020
1) Thereof € 350 mn NPL (in FY 2019, of which € 310 mn in H2 2019), € 350 mn single borrower risk, € 410 mn BTPs, € 80 mn NPL provisioned for future reduction
Dimension of (theoretical) Stage migration effects have benefit from successful de-risking executed in 2019 and Covid-19 related provisions already considered in Q1/20 LLP
| Progress on the development of products, markets and M&A activities / other cooperations | |
|---|---|
| Products/Markets | ▪ Launch of Wodis Yuneo – user centric approach and based on newest technology (intelligent tools and analytics components. Routine tasks, for example, can be automated and errors avoided using certain algorithms, optimized user interface, high flexibility due to web-based technology). First customers decided for Wodis Yuneo ▪ Neela AI based Virtual Assistant: Start of roll-out ▪ Venture OFI Group with platform Ophigo used by first customers. Two other ventures (ecaria and Refurbio) created and start to build-up the business model ▪ Online event Aareon Live "Pioneering Spirit" with about 1,600 registered participants. First presentation of the new ERP product generation Wodis Yuneo in Germany, prominent key notes, further product information as well as online exhibition |
| M&A activities / other cooperations |
▪ CalCon integration project on track – product integrated in Aareon Smart World and sales synchronized as well as internal process set up; communications intensified. ▪ M&A activity to expand inorganically and drive digital product capabilities according to communicated growth case – extensive market screening for potential targets and numerous opportunities have been identified which are systematically pursued and modelled within a value creation plan ▪ Success will lead to upside potential |
solutions across 3 continents: Europe, North American and Asia/Pacific
Integrated payment transaction system for the housing industry (market-leading) and the utility sector
Mission-critical ERP and broad set of modular Digital Solutions built on a cloud-enabled PaaS platform
Sustainable and resilient business model with strong downside protection delivers decades of consistent profitable growth
Experienced leadership team combining deep software expertise and longstanding real estate experience with a strong M&A roll-up track-record
60
Accelerated M&A add-on strategy with support of Advent Track record of successful M&A execution and integration Ideally positioned to drive industry consolidation Great home for businesses Customer and market footprint Ability to unlock further synergies Considerable M&A fire power + 2015 2017 2013 2012 2010 2008 2000 2006 2007 2020 (1) System Team Housing AIPG real estate Businesses Track record "We have done it before" Scale and footprint "We are the natural consolidator" Unique ability to unlock synergies "We can make these deals work" Supportive shareholders "We have the resources" + +
The transaction takes advantage of the very favourable market environment for resilient software-centric businesses
"Rule of 40": Sum of Aareon's annual revenue growth and EBITDA margin will at least reach 40 per cent
Aareon is ideally positioned to help its clients with the challenges and opportunities that come with the rapid digitisation of the real estate industry – Covid-19 seen as a catalyst for digitisation
Continued R&D investment will allow Aareon to underpin its role as a digital pioneer in the real estate industry by expanding its suite of innovative products and digital solutions for our clients
As the natural consolidator and a great home for acquired businesses, Aareon will bring the best products and solutions in the ecosystem to our clients
As Aareal Bank will remain the majority shareholder committed to Aareon's long-term performance, the existing synergies between the parent and subsidiary will be preserved – in the interests of both institutions' clients
| Value crystallisation today | ▪ Crystallise Aareon's current value in a very favourable market environment for resilient software-centric businesses for Aareal Bank ▪ Realise an attractive capital gain as of closing, hence… ▪ …significant increase of our regulatory capital |
|---|---|
| Upsides for the future | ▪ Achieve higher value contribution to our shareholders in a partnership by… ▪ further accelerating Aareon's EBITDA and revenue growth beyond promised 2025 levels ▪ multiple re-rating of Aareon as a "Rule of 40" company ▪ Minor EPS effect on Aareal Bank Group level to be compensated over time by significantly raised Aareon ambition level |
| Use of proceeds | ▪ Unlock additional growth potential as promised in "Aareal Next Level": ▪ Pursue value-enhancing sustainable opportunities in both segments See of the Bank's business next page ▪ Further support Aareon's M&A roadmap with strong new partner ▪ Enhance flexibility regarding capital management actions |
…leading to
Increased optionality regarding value-enhancing opportunities, if and when they arise
Advanced flexibility regarding potential capital management actions
By doing so create sustainable value for Aareal Bank and hence our shareholders…
Pillar 1 Requirement Pillar 2 Requirement Capital Conservation Buffer Countercyclical Buffer
Action areas key to securing the Company's long-term success – as identified in regularly updated materiality analysis
Strengthening ESG as an integral part of our DNA by refining our strategy and setting ambitious goals and targets
| Ongoing | By next year | By 2022 & Beyond | ||
|---|---|---|---|---|
| Strategy Development & Implementation |
Define sustainability targets for management compensation schemes |
Quantitative sustainability measures and targets for long-term compensation schemes in place |
||
| s) | Ongoing | |||
| e ur s a e M + |
Attractive Employer | ▪ Frequent employee surveys and disclosure ▪ External recognition of human capital management |
[Fair Pay Certification, Logib-D (08/2020), Top Employer (13th, 2019)] | Employee satis faction score |
| s a Are n o |
By next year | |||
| Acti ( |
Green Offering | ▪ ESG product offering e.g. lending, funding |
No. of products |
|
| s e pl |
Establish | Expand | ||
| m xa E d e |
By 2022 | |||
| ct e el S |
73 Transparency |
▪ Transparency at portfolio level on selected ESG aspects [80%] ▪ For more than 50% of our portfolio Green Building Certificates1) Energy Performance Certificates or both are in place |
, | Full ESG transparency |
1) DGNB, BREEAM, HQE, LEED
Base Dividend
+
▪ Attractive dividend policy and significant book value growth creating sustainable value for Aareal and hence our shareholders
1
Additional management buffers determined by the institutions
Risks that may cause economic
Regulatory capital ratios: Future treatment appears to be more generous, although decisions will be taken on a case by case basis
▪ P2R could be partly covered by AT1 (and/or T2)
Economic ICAAP: Future requirements will be tightened
1) Different risk categories regarding regulatory capital ratios and economic ICAAP
Available Distributable Items (as of end of the relevant year)
| € mn | 31.12. 2015 |
31.12. 2016 |
31.12. 2017 |
31.12. 2018 |
31.12. 2019 |
|---|---|---|---|---|---|
| Net Retained Profit ▪ Net income ▪ Profit carried forward from previous year ▪ Net income attribution to revenue reserves |
99 99 - - |
122 122 - - |
147 147 - - |
126 126 - - |
120 120 - - |
| + Other revenue reserves after net income attribution |
720 | 720 | 720 | 720 | 720 |
| = Total dividend potential before amount blocked1) |
819 | 842 | 870 | 846 | 840 |
| ./. Dividend amount blocked under section 268 (8) of the German Commercial Code ./. Dividend amount blocked under section 253 (6) of the German Commercial Code |
287 - |
235 28 |
283 35 |
268 42 |
314 40 |
| = Available Distributable Items1) | 532 | 579 | 552 | 536 | 486 |
| + Increase by aggregated amount of interest expenses relating to Distributions on Tier 1 Instruments1) |
46 | 46 | 32 | 24 | 23 |
| = 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) |
578 | 625 | 584 | 560 | 509 |
1) Unaudited figures for information purposes only
| 01.07.- 30.09.2020 |
01.07.- 30.09.2019 |
Change | |
|---|---|---|---|
| € mn | € mn | ||
| Profit and loss account | |||
| Net interest income | 128 | 134 | -4% |
| Loss allowance | 6 1 |
2 7 |
126% |
| Net commission income | 5 7 |
5 4 |
6 % |
| Net derecognition gain or loss | 3 | 1 5 |
-80% |
| Net gain or loss from financial instruments (fvpl) | -4 | 5 | -180% |
| Net gain or loss on hedge accounting | 2 | -3 | -167% |
| Net gain or loss from investments accounted for using the equity method | 0 | 0 | 0 % |
| Administrative expenses | 114 | 114 | 0 % |
| Net other operating income / expenses | 0 | 0 | 0 % |
| Operating Profit | 1 1 |
6 4 |
-83% |
| Income taxes | 1 0 |
2 4 |
-58% |
| Consolidated net income | 1 | 4 0 |
-98% |
| Consolidated net income attributable to non-controlling interests | 1 | 1 | 0 % |
| Consolidated net income attributable to shareholders of Aareal Bank AG | 0 | 3 9 |
-100% |
| Earnings per share (EpS) | |||
| Consolidated net income attributable to shareholders of Aareal Bank AG1) | 0 | 3 9 |
-100% |
| of which: allocated to ordinary shareholders | -4 | 3 5 |
-111% |
| of which: allocated to AT1 investors | 4 | 4 | |
| Earnings per ordinary share (in €)2) | -0.05 | 0.60 | -108% |
| Earnings per ordinary AT1 unit (in €)3) | 0.04 | 0.04 |
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.
81 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.
| Structured Property Financing |
Consulting / Services Bank |
A a Aareon r e |
Consolidation/ Reconciliation |
Aareal Bank Group |
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|---|---|---|---|---|---|---|---|---|---|---|---|
| 01.07.- 30.09. 2020 |
01.07.- 30.09. 2019 |
01.07.- 30.09. 2020 |
01.07.- 30.09. 2019 |
01.07.- 30.09. 2020 |
01.07.- 30.09. 2019 |
01.07.- 30.09. 2020 |
01.07.- 30.09. 2019 |
01.07.- 30.09. 2020 |
01.07.- 30.09. 2019 |
||
| € mn | |||||||||||
| Net interest income | 119 | 138 | 9 | -4 | 0 | 0 | 0 | 0 | 128 | 134 | |
| Loss allowance | 6 1 |
2 7 |
0 | 0 | 6 1 |
2 7 |
|||||
| Net commission income | 1 | 2 | 6 | 7 | 5 3 |
4 9 |
-3 | -4 | 5 7 |
5 4 |
|
| Net derecognition gain or loss | 3 | 1 5 |
3 | 1 5 |
|||||||
| Net gain or loss from financial instruments (fvpl) | -4 | 5 | 0 | -4 | 5 | ||||||
| Net gain or loss on hedge accounting | 2 | -3 | 2 | -3 | |||||||
| Net gain or loss from investments | 0 | 0 | 0 | 0 | |||||||
| accounted for using the equity method | |||||||||||
| Administrative expenses | 5 6 |
5 5 |
1 5 |
2 0 |
4 6 |
4 3 |
-3 | -4 | 114 | 114 | |
| Net other operating income / expenses | 0 | -1 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | |
| Operating profit | 4 | 7 4 |
0 | -17 | 7 | 7 | 0 | 0 | 1 1 |
6 4 |
|
| Income taxes | 9 | 2 7 |
-1 | -6 | 2 | 3 | 1 0 |
2 4 |
|||
| Consolidated net income | -5 | 4 7 |
1 | -11 | 5 | 4 | 0 | 0 | 1 | 4 0 |
|
| Allocation of results | |||||||||||
| Cons. net income attributable to non-controlling interests |
0 | 0 | 0 | 0 | 1 | 1 | 1 | 1 | |||
| Cons. net income attributable to shareholders of Aareal Bank AG |
-5 | 4 7 |
1 | -11 | 4 | 3 | 0 | 0 | 0 | 3 9 |
Results 9M 2020
| 01.01.- 30.09.2020 |
01.01.- 30.09.2019 |
Change | |
|---|---|---|---|
| € mn | € mn | ||
| Profit and loss account | |||
| Net interest income | 373 | 403 | -7% |
| Loss allowance | 167 | 5 5 |
204% |
| Net commission income | 168 | 164 | 2 % |
| Net derecognition gain or loss | 1 9 |
4 2 |
-55% |
| Net gain or loss from financial instruments (fvpl) | -11 | 5 | -320% |
| Net gain or loss on hedge accounting | 4 | -4 | -200% |
| Net gain or loss from investments accounted for using the equity method | 0 | 0 | 0 % |
| Administrative expenses | 352 | 370 | -5% |
| Net other operating income / expenses | -10 | 1 | |
| Operating Profit | 2 4 |
186 | -87% |
| Income taxes | 7 | 6 5 |
-89% |
| Consolidated net income | 1 7 |
121 | -86% |
| Consolidated net income attributable to non-controlling interests | 2 | 2 | 0 % |
| Consolidated net income attributable to shareholders of Aareal Bank AG | 1 5 |
119 | -87% |
| Earnings per share (EpS) | |||
| Consolidated net income attributable to shareholders of Aareal Bank AG1) | 1 5 |
119 | -87% |
| of which: allocated to ordinary shareholders | 3 | 107 | -97% |
| of which: allocated to AT1 investors | 1 2 |
1 2 |
|
| Earnings per ordinary share (in €)2) | 0.06 | 1.80 | -97% |
| Earnings per ordinary AT1 unit (in €)3) | 0.12 | 0.12 |
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.
83 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.
| Structured Property Financing |
Services Bank | Consulting / | A a Aareon r e |
Consolidation/ Reconciliation |
Aareal Bank Group |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| 01.01.- 30.09. 2020 |
01.01- 30.09. 2019 |
01.01.- 30.09. 2020 |
01.01- 30.09. 2019 |
01.01.- 30.09. 2020 |
01.01- 30.09. 2019 |
01.01.- 30.09. 2020 |
01.01- 30.09. 2019 |
01.01.- 30.09. 2020 |
01.01- 30.09. 2019 |
|
| € mn | ||||||||||
| Net interest income | 345 | 414 | 2 9 |
-10 | -1 | -1 | 0 | 0 | 373 | 403 |
| Loss allowance | 167 | 5 5 |
0 | 0 | 167 | 5 5 |
||||
| Net commission income | 4 | 6 | 1 8 |
1 7 |
155 | 150 | -9 | -9 | 168 | 164 |
| Net derecognition gain or loss | 1 9 |
4 2 |
1 9 |
4 2 |
||||||
| Net gain or loss from financial instruments (fvpl) | -11 | 5 | 0 | 0 | -11 | 5 | ||||
| Net gain or loss on hedge accounting | 4 | -4 | 4 | -4 | ||||||
| Net gain or loss from investments accounted for using the equity method |
0 | 0 | 0 | 0 | ||||||
| Administrative expenses | 173 | 195 | 5 0 |
5 7 |
138 | 127 | -9 | -9 | 352 | 370 |
| Net other operating income / expenses | -11 | 0 | 0 | -1 | 1 | 2 | 0 | 0 | -10 | 1 |
| Operating profit | 1 0 |
213 | -3 | -51 | 1 7 |
2 4 |
0 | 0 | 2 4 |
186 |
| Income taxes | 4 | 7 4 |
-2 | -17 | 5 | 8 | 7 | 6 5 |
||
| Consolidated net income | 6 | 139 | -1 | -34 | 1 2 |
1 6 |
0 | 0 | 1 7 |
121 |
| Allocation of results | ||||||||||
| Cons. net income attributable to non-controlling interests |
0 | 0 | 0 | 0 | 2 | 2 | 2 | 2 | ||
| Cons. net income attributable to shareholders of Aareal Bank AG |
6 | 139 | -1 | -34 | 1 0 |
1 4 |
0 | 0 | 1 5 |
119 |
| Structured Property Financing |
Consulting / Services Bank |
Aareon | Consolidation / Reconciliation |
Aareal Bank Group | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q3 | Q2 2020 |
Q1 | Q4 2019 |
Q3 | Q3 | Q2 2020 |
Q1 | Q4 2019 |
Q3 | Q3 | Q2 2020 |
Q1 | Q4 2019 |
Q3 | Q3 | Q2 2020 |
Q1 | Q4 2019 |
Q3 | Q3 | Q2 2020 |
Q1 | Q4 2019 |
Q3 | |
| € mn | |||||||||||||||||||||||||
| Net interest income | 119 | 113 | 113 | 135 | 138 | 9 | 10 | 10 | - 5 |
- 4 |
0 | - 1 |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 128 | 122 | 123 | 130 | 134 |
| Loss allow ance |
61 | 48 | 58 | 35 | 27 | 0 | 0 | 0 | 0 | 0 | 0 | 61 | 48 | 58 | 35 | 27 | |||||||||
| Net commission income | 1 | 1 | 2 | 4 | 2 | 6 | 7 | 5 | 6 | 7 | 53 | 49 | 53 | 58 | 49 | - 3 |
- 3 |
- 3 |
- 3 |
- 4 |
57 | 54 | 57 | 65 | 54 |
| Net derecognition gain or loss |
3 | 9 | 7 | 22 | 15 | 3 | 9 | 7 | 22 | 15 | |||||||||||||||
| Net gain / loss from fin. instruments (fvpl) |
- 4 |
-17 | 10 | - 4 |
5 | 0 | 0 | 0 | 0 | 0 | - 4 |
-17 | 10 | - 4 |
5 | ||||||||||
| Net gain or loss on hedge accounting |
2 | 1 | 1 | 0 | - 3 |
2 | 1 | 1 | 0 | - 3 |
|||||||||||||||
| Net gain / loss from investments acc. for using the equity method |
1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | ||||||||||||||
| Administrative expenses |
56 | 49 | 68 | 59 | 55 | 15 | 17 | 18 | 16 | 20 | 46 | 46 | 46 | 46 | 43 | - 3 |
- 3 |
- 3 |
- 3 |
- 4 |
114 | 109 | 129 | 118 | 114 |
| Net other operating income / expenses |
0 | -11 | 0 | - 1 |
- 1 |
0 | 0 | 0 | 1 | 0 | 0 | 1 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | 0 | 0 | -10 | 0 | 1 | 0 |
| Operating profit | 4 | - 1 |
7 | 63 | 74 | 0 | 0 | - 3 |
-14 | -17 | 7 | 3 | 7 | 13 | 7 | 0 | 0 | 0 | 0 | 0 | 11 | 2 | 11 | 62 | 64 |
| Income taxes | 9 | - 8 |
3 | 21 | 27 | - 1 |
0 | - 1 |
- 4 |
- 6 |
2 | 1 | 2 | 3 | 3 | 10 | - 7 |
4 | 20 | 24 | |||||
| Consolidated net income |
- 5 |
7 | 4 | 42 | 47 | 1 | 0 | - 2 |
-10 | -11 | 5 | 2 | 5 | 10 | 4 | 0 | 0 | 0 | 0 | 0 | 1 | 9 | 7 | 42 | 40 |
| Cons. net income attributable to non controlling interests |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | 0 | 1 | 1 | 0 | 1 | 0 | 1 | |||||
| Cons. net income attributable to ARL shareholders |
- 5 |
7 | 4 | 42 | 47 | 1 | 0 | - 2 |
-10 | -11 | 4 | 2 | 4 | 10 | 3 | 0 | 0 | 0 | 0 | 0 | 0 | 9 | 6 | 42 | 39 |
| = New Business |
Newly acquired business + renewals |
|---|---|
| Common Equity = Tier 1 ratio |
CET 1 Risk weighted assets |
| = Pre tax RoE |
Operating profit/income ./. loss attributable to non-controlling interests ./. AT1 coupon Average IFRS equity excl. non-controlling interests, AT1 and dividends |
| = CIR |
Admin expenses Net income |
| = Net income |
net interest income + net commission income + net result on hedge accounting + net trading income + results from non-trading assets + results from investments accounted for at equity + results from investment properties + net other operating income |
| 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 ./. net AT1 coupon Number of ordinary shares |
| = Yield on Debt |
NOI x 100 (Net operating income, based on 12-months forward looking estimate) Outstanding incl. prior/pari-passu loans (without developments) |
| = 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 |
Managing Director Investor Relations Phone: +49 611 348 2636 [email protected]
Director Investor Relations Phone: +49 611 348 3337 [email protected]
Director Investor Relations Phone: +49 611 348 3616 [email protected]
Manager Investor Relations Phone: +49 611 348 3009 [email protected]
Group Sustainability Officer Director Investor Relations Phone: +49 611 348 3424 [email protected]
Manager Sustainability Management Phone: +49 611 348 3554 [email protected]
Sustainability Management Phone: +49 611 348 3433 [email protected]
This document has been prepared by Aareal Bank AG, exclusively for the purposes of a corporate presentation by Aareal Bank AG. The presentation is intended for professional and institutional customers only.
It must not be modified or disclosed to third parties without the explicit permission of Aareal Bank AG. Any persons who may come into possession of this information and these documents must inform themselves of the relevant legal provisions applicable to the receipt and disclosure of such information, and must comply with such provisions. This presentation may not be distributed in or into any jurisdiction where such distribution would be restricted by law.
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. Aareal Bank AG has merely compiled the information on which this document is based from sources considered to be reliable – without, however, having verified it. 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. 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.
This presentation may contain forward-looking statements of future expectations and other forward-looking statements or trend information that are based on current plans, views and/or assumptions and 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.
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