Stop parsing PDFs. Get the API. Request Access

AI Terminal

MODULE: AI_ANALYST
Interactive Q&A, Risk Assessment, Summarization
MODULE: DATA_EXTRACT
Excel Export, XBRL Parsing, Table Digitization
MODULE: PEER_COMP
Sector Benchmarking, Sentiment Analysis
SYSTEM ACCESS LOCKED
Authenticate / Register Log In

Aareal Bank AG

Investor Presentation • Nov 11, 2014

11_ip_2014-11-11_488575fa-cd3e-43ed-b657-44409cc60d52.pdf

Investor Presentation

Open in Viewer

Opens in native device viewer

November 11, 2014Dr. Wolf Schumacher, CEO – Hermann J. Merkens, CFO

Highlights Q3 2014Aareal Bank successfully on track

Highlights

  • Q3 Group Operating Profit further improved to € 66 mnmain driver: significant increase of Net Interest Income to € 181 mn
  • -FY 2014 guidance increased after strong Q3
    • If strong business trend materialises further: Range for Group Operating Profit of € 420 – 430 mn achievable
    • translates in € 72 mn - € 82 mn Q4 EBT
  • New business target increased to approx. € 10 bn
  • ECB reviews confirmed Aareal Bank's capital and financial strength
  • Aareal Bank repaid SoFFin silent participation in full

Agenda

  • Environment Q3 2014
  • Q3 2014 results at a glance
  • Segment performance
  • B/S structure, capital & funding position
  • Group figures Q3 2014
  • Asset quality
  • Outlook 2014
  • Appendix
  • Definitions and Contacts

Environment Q3 2014

General environment

  • In Q3 capital markets - especially in Europe - turned more cloudy
  • Existing geo-political risks are not yet fully reflected in the markets
  • Ongoing quantitative easing: very low short-term / negative interest rates expected to challenge further –fighting deflation but risking asset bubbles. Growing downside potential therefore
  • The slight world economic recovery continued in Q3 but slowed down and is expected to continue throughout the year, but with different speed of recovery in Europe, North American and Asia
  • Regulatory environment more predictable (But still possible challenges, e.g. additional capital requirements resulting from RWA-floors, TLAC1), etc.)
  • Published AQR and stress test results brought more transparency to the European banking sector

Main takeaways

Increasing competition in our lending buckets - as a consequence margin compression earlier than originally expected and early repayments of high margin loans will continue.

Partially offset by lower funding costs and -structure

We see moderately increasing property values and stable to slightly increasing rents in the majority of European countries but further NPL inflow mainly from our southern European portfolio

While Aareon is expected to be on track deposit business will suffer on segment reporting level – deposit volume supports funding and cheapens funding costs on group level

1) Total Loss Absorbing Capacity

Q3 2014 results at a glance

Q3 2014 results at a glance

Positive development continued

Q
3
2
0
1
4		 Q
2
2
0
1
4		 Q
1
2
0
1
4		 Q
4
2
0
1
3		 Q
3
2
0
1
3		 C
t
o
m
m
e
n
s
€
m
n
N
i
i
t
t
t
e
n
e
r
e
s
n
c
o
m
e		 1
8
1		 1
6
9		 1
4
4		 1
4
7		 1
3
3		 S
N
I
I
d
l
d
t
t
t
r
o
n
g
e
v
e
o
p
m
e
n
u
e
o
P
f
l
i
h
€
b
i
Q
'1
5
7
3
3
t
t
o
r
o
o
g
r
o
w
:
n
s
n
c
e

h
f
C
l
d
i
€
b
3
t
t
e
r
e
o
o
r
e
a
c
r
e
n
)
1
E
l
f
f
(
i
€
)
t
t

a
r
y
r
e
p
a
y
m
e
n
e
e
c
s
n
m
n
:
Q
/
Q
/
Q
/
Q
3
1
3
2
8
1
4
4
1
0
:
:
:
:
/
L
f
d
i
A
L
M
t
o
e
r
n
n
g
c
o
s
s
m
e
a
s
r
e
s

w
u
u
N
l
l
i
i
t
e
o
a
n
o
s
s
p
r
o
v
s
o
n
s		 3
6		 3
2		 3
7		 3
9		 2
9		 Q
3-
L
L
P
i
l
i
i
h
i
d
t
n
n
e
w
g
u
a
n
c
e

Q
L
L
P
f
€
d
d
j
1-
3
7
t
t
t
o
m
n
u
e
o
a
u
s
m
e
n

i
L
I
P
f
1
t
t
t
o
m
o
r
e
c
o
n
s
e
r
v
a
v
e
a
c
o
r
:
€
i
f
i
l
l
6
m
n
s
p
e
c
c
a
o
w
a
n
c
e
s

€
3
1
f
l
i
l
l
t
m
n
p
o
r
o
o
a
o
a
n
c
e
s,

w
N
i
i
i
t
e
c
o
m
m
s
s
o
n
n
c
o
m
e		 3
7		 3
9		 4
0		 4
8		 4
0		 Q
f
f
4
i
h
l
l
t
t
r
e
g
a
r
s
e
a
s
o
n
a
e
e
c
s

w
u
A
d
i
m
n
e
x
p
e
n
s
e
s		 1
0
9		 1
1
4		 1
0
2		 9
9		 9
4		 B
d
d
b
l
j
d
t
t
u
r
e
n
e
y
r
e
g
u
a
o
r
y
p
r
o
e
c
s
a
n

f
f
i
i
f
C
l
d
i
t
t
t
t
o
n
e-
o
n
e
g
r
a
o
n
c
o
s
s
o
o
r
e
a
c
r
e
N
i
d
i
l
l
t
e
g
a
v
e
g
o
o
w		 )
2
1
5
2		 G
f
i
i
i
i
l
l
i
d
i
t
t
a
n
r
o
m
n
a
c
o
n
s
o
a
o
n
O
i
f
i
t
t
p
e
r
a
n
g
p
r
o		 6
6		 6
5		 )
2
2
1
7		 5
8		 4
8		 P
i
i
d
l
i
d
t
t
t
o
s
e
e
e
o
p
m
e
n
c
o
n
n
e

v
v
u

1) Additional effects exceeding originally planned repayments

2) Adjusted

Structured property financing

Outperforming new business guidance

3) Additional effects exceeding originally planned repayments

Consulting / Services

Solid in IT & volumes – weak in deposit margins

P
&
L
C
/
S
S
t
e
g
m
e
n		 Q
3
'1
4		 Q
2
'1
4		 Q
1
'1
4		 Q
4
'1
3		 Q
3
'1
3
€
m
n
S
l
a
e
s
r
e
v
e
n
u
e		 4
2		 4
5		 4
6		 5
3		 4
6
O
k
i
l
i
d
t
w
n
w
o
r
c
a
p
a
s
e		 2 1 1 1 1
C
h
i
i
t
a
n
g
e
s
n
n
v
e
n
o
r
y		 0 0 0 0 0
O
h
i
i
t
t
e
r
o
p
e
r
a
n
g
n
c
o
m
e		 2 2 1 4 1
C
f
i
l
h
d
t
t
o
s
o
m
a
e
r
a
p
r
c
a
s
e
u		 6 5 6 6 6
S
f
f
t
a
e
x
p
e
n
s
e
s		 3
2		 3
2		 3
2		 3
4		 3
0
D
A
i
i
l
t
m
p
a
r
m
e
n
o
s
s
e
s
,
,		 4 3 4 3 4
R
l
i
i
t
t
t
t
e
s
u
s
a
e
q
u
y
a
c
c.
n
v
e
s
m		 - - - 0 -
O
h
i
t
t
e
r
o
p
e
r
a
n
g
e
x
p
e
n
s
e
s		 1
2		 1
4		 1
2		 1
3		 1
2
R
l
f
i
t
t
t
e
s
u
s
r
o
m
n
e
r
e
s
d
i
i
l
a
n
s
m
a
r		 0 0 0 0 0
O
i
f
i
t
t
p
e
r
a
n
g
p
r
o		 -8 -6 -6 2 -4

Unchanged low interest rate environment continues to burden segment results

  • Deposit volume of the housing industry has increased to
  • -€ 8.7 bn Ø in Q3 2014
  • € 8.5 bn Ø in Q2 2014
  • The strategic importance of the housing industry deposits as an additional source of funding exceeds the importance of the margins reflected in the segment performance

Consulting / Services

Deposit taking business burdens segment performance

B/S structure, capital & funding position

Strong capital ratios & stable capital structure(IFRS, CRR as at 30.09.2014)

  • Bail-in capital ratio (acc. to our definition): above 8%
  • Strong capital ratios enable us to take new business on board
  • Strong capital ratios in line with business model, company size and capital market expectations
  • Remaining SoFFin silent participation fully repaid without capital increase
  • AT 1 to be raised depending on market conditions
  • Leverage ratio as at 30.09.2014
  • -3.9% (CET 1 excl. SoFFin)
  • -4.4% (CET 1 incl. SoFFin)

Regulatory requirements of future capital structurePossible CRR capital composition

  • According CRR minimum TCR of 8% (as from 2019):
  • min. 4.5% CET1
  • up to 1.5% AT1
  • up to 2.0% T2
  • Additional combined CET1 buffer1):
  • -2.5% capital conservation buffer
  • -1.0% other estimated buffers
  • Restrictions:

Upon breach of 11.5% (TCR incl. buffer) restrictions will be placed on all discretionary distributions (e.g. dividends)

  • For an optimised capital structure AT1 and T2 to replace CET1 for the fulfilment of the required 11.5%
  • -T2 already issued

  • -AT1 targeted depending on market conditions

  • 1) Other possible Buffers are: Up to 5% targeted systemic risk buffer (set by member state)Up to 2.5% institution specific countercyclical buffer

  • Higher of G-SII / O-SII/systemic risk buffer buffer

14

=> We assume that a 1% O-SII risk buffer will apply to Aareal

Expected development of capital ratios1) IFRS & CRR as at 30.09.2014

Stress TestResults of simulation

Based on current capital structure

Aareal Bank's CET1 above the respective threshold and the envisaged trigger for a potential AT1 issue

Even after

  • Repayment of the SoFFin capital of € 300 mn
  • Under Basel III fully phased

  • Dividend payments

  • Pro forma fully phased figures as at 30.09.2014

  • Excluding SoFFin
  • Including Corealcredit portfolio

We tried to replicate the ECB test with our Corealcredit portfolio to the best of our knowledge but we can not rule out that the stress test results would vary if the Corealcredit portfolio would have been part of the original stress test.

Asset- / Liability structure according to IFRSAs at 30.09.2014: € 49.9 bn (30.06.2014: € 48.6 bn)

€ bn

2) Liquidity position clearly exceeds 15% of the total balance sheet. This includes unencumbered

ECB-eligible assets, available excess cash at other banks as well as highly liquid government securities

3) Interbank includes reverse repos of € 1.6 bn17

Asset- / Liability structure according to IFRSAs at 30.09.'14: € 49.9 bn (31.12.'13: € 43.0 bn - excl. Coreal)

  • Conservative balance sheet with structural over borrowed position
  • Average maturity of long term funding > average maturity of RSF loans

1) CB: Central banks

2) Liquidity position clearly exceeds 15% of the total balance sheet. This includes unencumbered

ECB-eligible assets, available excess cash at otherbanks as well as highly liquid government securities

3) Interbank includes reverse repos of € 1.6 bn18

Net stable funding- / Liquidity coverage ratio Fulfilling CRR requirements

  • Aareal Bank already fulfils future requirements
  • -NSFR > 1.0
  • LCR >> 1.0
  • Basel III and CRR require specific liquidity ratios starting end 2018
  • Positive effect in 2014 due to changed weighting factors

Refinancing situation 9M 2014Successful funding activities

Total funding of € 3.0 bn in 9M 2014

  • Pfandbriefe: € 1.6 bn
  • Senior unsecured: € 0.9 bn
  • Subordinated debt (Tier 2): € 0.5 bn
  • Backbone of capital market funding is a loyal, granular, domestic private placement investor base
  • -Hold-to-maturity investors: over 600
  • -Average ticket size: € 10 mn

Refinancing situation

Diversified funding sources and distribution channels

  • Aareal Bank has clearly reduced its dependency on wholesale funding
  • 2002 long term wholesale funding accounted for 47% of overall funding volumes –by 30.09.2014, this share has fallen to ~30% (or even below 10% without Pfandbriefe)

As at 30.09.2014

Net interest incomeStrong development

  • NII effect from early repayments
  • NII Structured Property Financing
  • NII Consulting / Services
  • 1) Consolidated since Q2 2014

  • 2) Additional effects exceeding originally planned repayments

  • Portfolio growth of € 5.7 bn since Q3 2013 (thereof € 3.0 bn Corealcredit1)) and still stable margins from the CRE business

  • Q3 includes additional ~€ 13 mnfrom early repayments2) (Q2: ~€ 8 mn, Q1: ~€ 4 mn, Q4 '13: ~€ 10 mn)
  • Continued decreasing funding costs
  • Former central bank liquidity now used for strategic ALM measures according to our long term plan, residual amounts switched to reverse repos
  • NII Consulting / Services further burdened by interest rate environment
  • Aareal Bank already fulfils future NSFR / LCR requirements

Loan loss provisionsQ3-LLP in line with guidance

Q3-LLP on track

  • Q1-LLP of € 37 mn includes one-off due to more conservative LIP factor 1
  • -€ 6 mn specific allowances
  • -€ 31 mn portfolio allowances,
  • 2013 full year LLP of €113 mn translates to 47 bp risk costs
  • Original guidance of € 100 mn to € 150 mnequals to 36 bp to 54 bp risk costs (on originally planned weighted average portfolio)

FY guidance

Net commission incomeIn line with expectations

Strong Aareon revenue regularly pushing Q4

Admin expensesConfirming guidance

  • Additional burden by
  • -Integration of Corealcredit
  • -Regulatory projects
  • Admin expenses will stabilise on a higher level due to acquisition of Corealcredit

Total property finance portfolio

High diversification and sound asset quality

Total property finance portfolio Continuing conservative approach

N
P
L-
d
L
L
P
d
l
t
a
n
e
e
o
p
m
e
n
v
€
m
n		 N
P
L
1)
E
p
o
s
r
e
x
u		 S
i
f
i
p
e
c
c
1)
A
l
l
o
a
n
c
e
s
w		 P
f
l
i
t
o
r
o
o
2)
A
l
l
o
a
n
c
e
s
w
A
l
B
k
G
3
0.
0
6.
2
0
1
4
t
a
r
e
a
a
n
r
o
u
p
a
s
a		 9
3
1		 1
1
6
G
Q
A
l
B
k
i
l
i
i
i
3
'1
4
t
t
a
r
e
a
a
n
r
o
p
s
a
o
n
n
u
u		 -2
1		 0
A
l
B
k
G
d
d
i
i
i
Q
'1
3
4
t
a
r
e
a
a
n
r
o
u
p
a
o
n
n		 5
3		 3
A
l
B
k
G
3
0.
0
9.
2
0
1
4
t
a
r
e
a
a
n
r
o
p
a
s
a
u		 9
6
3		 3
3
4		 1
1
9
C
i
i
f
i
l
l
t
o
v
e
r
a
g
e
r
a
o
s
p
e
c
c
a
o
w
a
n
c
e
s		 3 4,
%
7
3
3
4		 1
1
9
A
l
B
k
G
3
0.
0
9.
2
0
1
4
t
a
r
e
a
a
n
r
o
u
p
a
s
a		 9
6
3
4
5
3
C
i
t
o
v
e
r
a
g
e
r
a
o
i
l.
f
l
i
l
l
t
n
c
p
o
r
o
o
a
o
w
a
n
c
e
s		 4
0
%
7,

1) Incl. property finance portfolio still on DEPFA's balance sheet

2) Portfolio allowances mainly reflect expected losses which are calculated on the bases of specific loans in most cases

Total property finance portfolio

€ 29.6 bn of high quality real estate assets

i
N
l
o
m
n
a
(
in
€
)
m
n		 A
L
T
V
v
e
r
a
g
e		 N
P
L
(
in
€
)
m
n
G
r
e
e
c
e		 - - -
I
l
d
r
e
a
n		 - - -
I
l
t
a
y		 3,
1
3
3		 2.
1
%
7		 0
0
5
P
l
t
o
r
g
a
u		 - - -
S
i
p
a
n		 1,
0
6
7		 8
8.
0
%		 9
7

NPL and NPL-ratio (since 12.2004)

30

Western Europe (ex Germany) credit portfolio Total volume outstanding as at 30.09.2014: € 9.2 bn

German credit portfolio

Total volume outstanding as at 30.09.2014: € 6.6 bn

Southern Europe credit portfolio

Total volume outstanding as at 30.09.2014: € 4.2 bn

Eastern Europe credit portfolio

Total volume outstanding as at 30.09.2014: € 2.6 bn

Northern Europe credit portfolio

Total volume outstanding as at 30.09.2014: € 2.2 bn

North America credit portfolio

Total volume outstanding as at 30.09.2014: € 4.4 bn

Asia credit portfolio

Total volume outstanding as at 30.09.2014: € 0.4 bn

Total treasury portfolio

€ 11.5 bn of high quality and highly liquid assets

Outlook 2014

Operating profit target raised again

2
0
1
4
N
i
i
t
t
t
e
n
e
r
e
s
n
c
o
m
e		 1
)
I
d
€
6
0
€
6
8
0
t
5
n
c
r
e
a
s
e
o
m
n
m
n

-
2
)
(
)
f
€
6
1
0
€
6
4
0
r
o
m
m
n
m
n
-
) -
3
U
h
d
€
€
d
i
f
l
i
h
1
0
0
1
5
0
t
t
t
t
n
c
a
n
g
e
a
m
n
m
n
e
s
p
e
p
o
r
o
o
g
r
o
w

-
N
l
l
i
i
t
e
o
a
n
o
s
s
p
r
o
s
o
n
s
v		 f
f
U
h
l
i
d
d
d
j
t
t
t
t
t
p
p
e
r
a
o
g
e
n
r
a
n
g
e
e
p
e
c
e
e
o
a
s
m
e
n
o
m
o
r
e

v
x
u
u
i
L
I
P
f
1
t
t
c
o
n
s
e
r
a
e
a
c
o
r
v
v
N
i
i
i
t
e
c
o
m
m
s
s
o
n
n
c
o
m
e		 S
l
i
h
l
l
i
€
€
1
6
0
1
7
0
t
t
t
g
y
o
w
e
r
e
x
p
e
c
a
o
n
s
:
m
n

-
(
f
€
€
)
1
7
0
1
8
0
r
o
m
m
n
m
n
-
A
d
i
m
n
e
x
p
e
n
s
e
s		 U
h
d
€
€
4
3
0
4
5
0
t
n
c
a
n
g
e
a
m
n
m
n

-
f
f
f
C
i
l.
l
d
i
i
i
l
d
i
t
t
t
t
n
c
o
n
e-
o
s
r
e
a
e
o
a
c
q
u
s
o
n
o
o
r
e
a
c
r
e
N
i
d
i
l
l
t
e
g
a
e
g
o
o
v
w		 )
4
€
1
5
2
m
n

~
I
f
b
i
d
i
l
i
f
h
t
t
t
t
s
r
o
n
g
s
n
e
s
s
r
e
n
m
a
e
r
a
s
e
s
r
e
r
u
u
:
5
)
i
f
i
O
t
t
p
e
r
a
n
g
p
r
o		 €
€
h
i
b
l
4
2
0
4
3
0
m
n
m
n
a
c
e
a
e
v

-
Q
4
€
2
€
8
2
7
m
n
m
n
: ~
→
-
~
P
R
E
t
r
e-
a
x
o		 (
f
)
N
1
0
%
l.
i
d
i
l
l
9
%
t
o
e
c
n
e
g
a
e
g
o
o
r
o
m

w
x
v
w
~
~
N
b
i
i
i
i
t
e
w
u
s
n
e
s
s
o
r
g
n
a
o
n		 (
f
)
T
i
d
€
1
0
b
€
8
b
€
9
b
t
a
r
g
e
r
a
s
e
n
r
o
m
n
n

: ~
-
O
i
f
i
A
t
t
p
e
r
a
n
g
p
r
o
a
r
e
o
n		 €
2
6
m
n

~

1) No recognition of interest payments for AT1

2) Including recognition of interest payments for AT1 in the course of H2 2014

3) As in 2013, the bank cannot rule out additional allowances for credit losses

404) Adjusted

5) Incl. negative goodwill of € 152 mn

Aareal Bank's action planKey RoE drivers (as published February 2014)

Aareal Bank's action planMeasures (as published February 2013)

1.Funding strategy:

Improve deposit ratio and covered bond (CB) ratio further avoiding capital market dependency

2.CRE new business:

Focus on markets with LTV ratios of 60-70%, resulting in stable RWA and LtVs, higher CB-funding share, lower risk costs(but development in Southern Europe uncertain)Strengthen client relationships by leveraging new business through stronger cooperation via club deals and syndication

3.Aareon:

Enhance profit contribution

4.Cost base:

Continue cost discipline, but temporarily effected by project costs etc.

5.Capital structure:

Optimise capital structure once regulatory guidelines are in place and markets are pricing instruments adequately

Aareal Bank'saction plan

Aareal Bank's action plan1)

Measures in detail (1/2)

1
F
d
i
n
n
g
u
t
t
s
r
a
e
g
y		 I
d
i
f
h
i
i
i
l
h
i
i
d
f
€
b
6
t
t
t
t
t
t

n
c
r
e
a
s
e
e
p
o
s
s
r
o
m
e
n
s
u
o
n
a
o
u
s
n
g
n
u
s
r
y
r
o
m
n
~
i
€
b
i
l
2
0
1
2
7
2
0
1
5
t
t
n
o
n
u
n
>
C
B
f
d
i
h
f
b
i
i
l
l
i
i
l
i
i
d
t
t
t
u
n
n
g
s
a
r
e
o
n
e
w
u
s
n
e
s
s
w
n
c
r
e
a
s
e
o
v
e
r
m
e
m
e
o

-
,
/
0
%
l
l
i
5
t
t
t
t
m
a
x.
c
o
v
e
r
p
o
o
o
a
a
s
s
e
s
r
a
o
S
i
d
h
l
l
f
d
i
/
l
i
i
l
l
i
l
t
t
t
t
t
e
n
o
r
u
n
s
e
c
u
r
e
w
o
e
s
a
e
u
n
n
g
o
a
a
s
s
e
s
r
a
o
w
e
m
p
o
r
a
r
y
g
o

f
(
)
d
h
d
i
l
l
b
l
1
0
%
3
1.
1
2
2
0
1
2
6
%
t
t
o
w
n
u
r
e
r
a
n
w
s
a
y
e
o
w
: ~
2
C
R
E
n
e
w
b
i
s
n
e
s
s
u		 K
i
i
i
b
i
i
h
L
T
V
6
0
%
7
0
%
t
t
e
e
p
o
r
g
n
a
n
g
n
e
s
n
e
s
s
m
a

w
u
w
x.
-
T
b
i
i
h
L
T
V
d
b
i
6
5
%
2
0
0
t
t
a
r
g
e
a
e
r
a
g
e
n
e
s
n
e
s
s
a
n
p
s
g
r
o
s
s
m
a
r
g
n

v
w
u
w
~
f
F
X
t
t
a
e
r
c
o
s
s
T
h
i
h,
f
k
i
h
h
d
l
t
t
t
t
t-
t
r
e
e
c
o
n
n
e
n
a
p
p
r
o
a
c
o
c
s
o
n
m
a
r
e
s
s
o
r
e
r
m
e
o
r
o

u
w
w
i
i
h
h
h
f
i
i
l
i
i
d
l
b
l
i
d
t
t
t
t
t
t
t
t
n
e
g
a
v
e
s
w
n
g
s
r
o
u
g
o
u
e
n
a
n
c
a
c
r
s
s
a
n
a
e
a
s
a
s
a
e
m
e
r
m
l
k
l
i
i
l
R
W
A
i
t
t
t
o
u
o
o
r
e
s
u
n
g
n
o
w
c
o
n
s
u
m
p
o
n
L
d
f
f
l
i
i
h
h
i
h
L
T
V
i
l
k
i
l
l
t
t
t
t
t
o
n
g
e
r
m
r
u
n-
o
w
n
o
p
o
r
o
o
s
w
g
e
r
s
o
r
n
e
g
a
v
e
o
u
o
o
w

/
f
l
i
d
i
R
W
A
i
d
i
l
l
i
t
t
t
r
e
s
u
n
a
e
c
r
e
a
s
n
g
e
x
p
o
s
u
r
e
r
a
o
a
n
w
r
e
e
u
p
e
q
u
y
S
h
l
i
l
i
h
i
b
l
i
b
i
h
h
t
t
t
t
t
r
e
n
g
e
n
c
e
n
r
e
a
o
n
s
p
s
y
e
v
e
r
a
g
n
g
n
e
w
u
s
n
e
s
s
r
o
u
g

i
i
l
b
d
l
d
d
i
i
d
h
i
h
t
t
t
t
s
r
o
n
g
e
r
c
o
o
p
e
r
a
o
n
a
c
e
a
s
a
n
s
n
c
a
o
n
o
p
r
o
c
e
a
g
e
r
v
u
y
u
i
i
i
i
f
l
i
t
t
t
o
r
g
n
a
o
n
c
a
p
a
c
o
r
o
r
c
e
n
s
y
u
1)
As
blis
he
d F
eb
pu		 20
13
rua
ry

Aareal Bank's action plan1) Measures plan in detail (2/2)

3
A
a
r
e
o
n		 C
l
k
i
f
h
i
i
t
t
t
t
o
s
e
r
a
c
n
g
o
e
r
a
n
s
o

i
h
l
d
l
i
t
n-
o
u
s
e
o
r
c
o
u
s
o
u
o
n
O
i
i
i
t
t
n
g
o
n
g
n
e
s
m
e
n
s
n
n
e

v
w
d
h
d
f
l
i
t
t
t
e
x
p
a
n
e
p
r
o
u
c
p
o
r
o
o
o
E
l
f
h
b
i
t
p
o
r
e
r
e
r
s
n
e
s
s
o
p
p
o

x
u
u
I
E
B
I
T
d
E
B
I
T
m
p
r
o
e
a
n
m
a
r
g

v		 G
S
S
f
E
W
d
i
i
t
n
r
o
m
o
o
s
g
m
a
a
s
a
n
i
i
b
d
k
d
t
t
t
o
r
e
s
n
g
p
r
o
c
s
o
e
e
p
a
n
x
y
u
l
h
l
l
l
t
t
t
n
a
e
s
e
c
n
o
o
g
y
e
v
e
i
i
t
t
r
n
e
s
u
i
n
4
C
b
t
o
s
a
s
e		 C
l
k
i
f
h
t
t
t
o
s
e
r
a
c
n
g
o
e
r
a
n
s

i
h
l
d
l
i
t
n-
o
s
e
o
r
c
o
s
o
o
n
u
u
u
C
h
O
l
l
h
d
h
h
h
i
i
i
i
t
t
t
a
e
n
g
n
o
g
e
n
s
g
a
n
e
e
a
s
m
e
r
o
n
u
s
g
n
n
e
g


v
d
f
l
i
l
t
t
t
t
p
r
o
c
p
o
r
o
o
o
n
a
e
s
u
K
h
i
b
l
b
t
t
e
e
p
e
c
o
s
s
n
a
a
n
c
e
u

,
f
E
l
h
b
i
t
p
o
r
e
r
e
r
s
n
e
s
s
o

x
u
u
T
C
I
R
f
S
P
F
t
t

a
r
g
e
o
r
s
e
g
m
e
n
I
E
B
I
T
d
E
B
I
T
m
p
r
o
v
e
a
n
m
 i
i
f
G
E
S
W
d
i
S
i
t
t
o
n
r
o
m
o
o
s
g
m
a
a
s
a
n
h
l
i
i
b
d
k
d
d
h
t
t
t
t
t
t
e
o
r
r
r
e
e
g
u
s
a
n
o
g
r
y
c
p
o
r
s
o
s
c
s
o
e
e
p
a
n
e
p
a
n
e
w
x
y
u
x
h
l
l
l
t
e
c
n
o
o
g
e
e
y
v
i
l
f
f
d
b
j
t
t
t
t
t
t
e
m
p
o
r
a
r
y
e
e
c
e
y
p
r
o
e
c
c
o
s
s
e
c.
i
i
t
t
p
p
o
r
n
e
s
u
l
i
4
0
%
2
0
1
5
t
c
o
s
e
o
n
i
a
r
g
n
5
C
i
l
t
a
p
a
t
t
s
r
c
r
e
u
u		 O
i
i
i
l
t
t
t
t
p
m
s
e
c
a
p
a
s
r
u
c
u
r
e
o
n
c

d
l
l
i
t
t
t
t
a
x
a
n
e
g
a
r
e
a
m
e
n
a
r
e
n
k
i
i
i
t
t
m
a
r
e
s
a
r
e
p
r
c
n
g
n
s
r
m
e
n
u		 h
i
l
l
i
d
l
i
t
t
e
e
c
n
c
a
r
e
g
u
a
o
r
y
g
u
e
n
e
s,
l
d
p
a
c
e
a
n
d
l
t
t
s
a
e
q
a
e
u
y
1)
As
blis
he
d F
eb
pu		 20
13
rua
ry

Outlook 2014 & Midterm OutlookSummary and Prerequisites

2
0
1
4		 /
2
0
1
5
2
0
1
6
T
i
1
i
t
e
r
r
a
o
S
C
I
F
R
&
R
R
f
l
l
h
d
u
y
p
a
s
e		 1
4
0
1
0
%
5
-
(
d
t
a
s
r
e
p
o
r
e
,
i
l.
t.
n
c
m
g
m
b
f
f
)
u
e
r		 L
t
o
n
g
e
r
m
t
t
a
r
g
e
:
1
2
2
%
5
>
(
f
b
t.
e
o
r
e
m
g
m
b
f
f
)
u
e
r
C
I
R		 4
0
%
~
S
(
P
F
)		 4
0
%
~
S
(
P
F
)
E
B
I
T
i
m
a
r
g
n		 1
4
%
~
(
A
)
a
r
e
o
n		 1
7
5
%
>
(
A
)
a
r
e
o
n
P
R
O
E
t
r
e-
a
x		 1
0
%
~		 1
2
%
~
C
f
i
t
t
o
s
o
e
q
u
y
(
)
t
n
e		 9
1
0
%
-

1) Total Loss Absorbing Capacity

Prerequisites

  • No Eurozone break up
  • Normalised asset valuations
  • Healthy world GDP growth beside some European peripherals
  • Regulation will be introduced according to today's timeline and framework
  • Regulatory environment more predictable, but still possible challengese.g. additional capital requirements like RWA-floors, TLAC1), etc.
  • No additional burdens
  • Due to little inflation pressure, we expect ECB to keep key interest rates low and to start alternative measures - therefore short-term Euro interest rates will likely stay low as well

Aareal Bank GroupKey figures Q3 2014

Qu
te
3
ar
r		 Q
te
3
ua
r
r		 C
ha
ng
e
2
0
1
4		 2
0
1
4
€
m
n		 €
m
n
Pr
f
i
d
lo
t a
t
o
n
ss
a
cc
ou
n
Ne
in
inc
t
te
t
re
s
om
e		 1
8
1		 1
3
3		 3
6
%
A
l
low
fo
d
i
los
t
an
ce
r c
re
se
s		 3
6		 2
9		 2
4
%
Ne
in
in
f
l
lo
fo
d
i
lo
t
te
t
te
t
re
s
co
m
e
a
r a
w
an
ce
r c
re
ss
es		 1
4
5		 1
0
4		 3
9
%
Ne
iss
ion
inc
t c
om
m
om
e		 3
7		 4
0		 8
%
-
Ne
l
he
dg
ing
t r
t o
t
es
n
e
ac
co
un
u		 0 0 -
Ne
d
ing
inc
/ e
t
tra
om
e
xp
en
se
s		 -5 3 -
Re
l
fro
d
ing
ts
-tr
ts
su
m
n
on
a
a
ss
e		 0 2
-		 -
Re
l
fro
inv
d
fo
i
ts
tm
ts
te
t e
ty
su
m
es
en
a
cc
ou
n
r a
q
u		 0 -
A
dm
in
is
ive
tra
t
e
xp
en
se
s		 1
0
9		 9
4		 1
6
%
Ne
he
ing
inc
/ e
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 -2 3
-		 3
3
%
-
Ne
ive
dw
i
l
l
t
g
a
g
oo		 -
Op
in
Pr
f
i
t
t
er
a
g
o		 6
6		 4
8		 3
8
%
Inc
ta
om
e
xe
s		 2
1		 1
5		 4
0
%
in
/
Ne
t
lo
co
m
e
ss		 4
5		 3
3		 3
6
%
f r
A
l
lo
io
l
t
ts
ca
n
o
es
u
Ne
inc
/
los
i
bu
b
le
l
l
ing
in
t
t
tr
ta
to
tro
te
ts
om
e
s
a
n
on
-c
on
re
s		 4 5 -
Ne
inc
/
los
i
bu
b
le
ha
ho
l
de
f
Aa
l
Ba
k
A
G
t
t
tr
ta
to
om
e
s
a
s
re
rs
o
re
a
n		 4
1		 2
8		 4
6
%
Ap
ia
io
f p
f
i
t
ts
p
ro
p
r
n
o
ro
S
So
i
len
h
ip
i
bu
ion
by
F
F
in
t p
tn
tr
t
ar
er
s
co
n		 5 5 0
%
Co
i
in
f
i
/ a
l
da
te
d
ta
d
t
la
te
d
lo
ns
o
re
e
p
ro
cc
um
u
ss		 3
6		 2
3		 5
7
%

Aareal Bank GroupKey figures Q3 2014 by operating units

S
tru
c
Pr
op
F
in
an		 d
tu
re
ty
er
in
c
g		 Co
ns
u
Se
rv		 l
in
/
t
g
ice
s		 Co
l
i
ns
o
Re
co
nc		 da
io
/
t
n
i
l
ia
io
t
n		 Aa
re
a
Gr		 l
Ba
k
n
ou
p
0
1.
0
7.
-		 0
1.
0
7.
-		 0
1.
0
7.
-		 0
1.
0
7.
-		 0
1.
0
7.
-		 0
1.
0
7.
-		 0
1.
0
7.
-		 0
1.
0
7.
-
3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.
2
0
1
4		 2
0
1
3		 2
0
1
4		 2
0
1
3		 2
0
1
4		 2
0
1
3		 2
0
1
4		 2
0
1
3
€
m
n
Ne
in
inc
t
te
t
res
om
e		 1
8
2		 1
3
1		 0 0 1
-		 2 1
8
1		 1
3
3
A
l
low
fo
d
i
los
t
an
ce
r c
re
se
s		 3
6		 2
9		 3
6		 2
9
Ne
in
in
f
l
lo
fo
d
i
lo
t
te
t
te
t
re
s
co
m
e
a
r a
an
ce
r c
re
ss
es
w		 1
4
6		 1
0
2		 0 0 1
-		 2 1
4
5		 1
0
4
Ne
iss
ion
inc
t c
om
m
om
e		 1 2 3
6		 4
0		 0 2
-		 3
7		 4
0
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e
ac
co
un		 0 0 0 0
Ne
d
ing
inc
/ e
t
tra
om
e
xp
en
se
s		 -5 3 -5 3
fro
Re
l
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 0 2
-		 0 2
-
Re
l
fro
inv
d
fo
i
ts
tm
ts
te
t e
ty
su
m
es
en
a
cc
ou
n
r a
q
u		 0 0
A
dm
in
is
ive
tra
t
e
xp
en
se
s		 6
4		 5
0		 4
6		 4
4		 1
-		 0 1
0
9		 9
4
Ne
he
ing
inc
/ e
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 4
-		 3
-		 2 0 0 0 2
-		 3
-
Ne
ive
dw
i
l
l
t
g
a
g
oo
Op
in
f
i
t
t
er
a
g
p
ro		 7
4		 5
2		 8
-		 4
-		 0 0 6
6		 4
8
Inc
ta
om
e
xe
s		 2
3		 1
6		 2
-		 1
-		 2
1		 1
5
/
Ne
in
lo
t
co
m
e
ss		 5
1		 3
6		 6
-		 3
-		 0 0 4
5		 3
3
A
l
lo
io
f r
l
t
ts
ca
n
o
es
u
/
Ne
inc
los
i
bu
b
le
l
l
ing
in
t
t
tr
ta
to
tro
te
ts
om
e
s
a
n
on
-c
on
res		 4 4 0 1 4 5
Ne
inc
/
los
i
bu
b
le
ha
ho
l
de
f
Aa
l
Ba
k
A
G
t
t
tr
ta
to
om
e
s
a
s
re
rs
o
rea
n		 4
7		 3
2		 6
-		 4
-		 0 0 4
1		 2
8

Aareal Bank GroupKey figures 9M 2014

0
1.
0
1.
-
3
0.
0
9.
2
0
1
4		 0
1.
0
1.
-
3
0.
0
9.
2
0
1
3		 C
ha
ng
e
€
m
n		 €
m
n
f
i
Pr
d
lo
t a
t
o
n
ss
a
cc
ou
n
Ne
in
inc
t
te
t
re
s
om
e		 4
9
4		 3
8
0		 3
0
%
fo
A
l
low
d
i
los
t
an
ce
r c
re
se
s		 1
0
5		 4
7		 4
2
%
Ne
in
in
f
l
lo
fo
d
i
lo
t
te
t
te
t
re
s
co
m
e
a
r a
w
an
ce
r c
re
ss
es		 3
8
9		 3
0
6		 2
7
%
Ne
iss
ion
inc
t c
om
m
om
e		 1
1
6		 1
1
7		 1
%
-
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e
ac
co
un		 3 3
-		 -
Ne
d
ing
inc
/ e
t
tra
om
e
xp
en
se
s		 -1 1
4		 -
Re
l
fro
d
ing
ts
-tr
ts
su
m
n
on
a
a
ss
e		 0 8
-		 -
Re
l
fro
inv
d
fo
i
ts
tm
ts
te
t e
ty
su
m
es
en
a
cc
ou
n
r a
q
u		 0 -
A
dm
in
is
ive
tra
t
e
xp
en
se
s		 3
2
5		 2
6
7		 1
8
%
Ne
he
ing
inc
/ e
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 1
4		 1
0
-		 -
Ne
ive
dw
i
l
l
t
g
a
g
oo		 1
5
2		 -
Op
in
Pr
f
i
t
t
er
a
g
o		 3
4
8		 1
4
0		 1
4
9
%
Inc
ta
om
e
xe
s		 6
2		 4
4		 4
1
%
/
Ne
in
lo
t
co
m
e
ss		 2
8
6		 9
6		 1
9
8
%
A
l
lo
io
f r
l
t
ts
ca
n
o
es
u
/
Ne
inc
los
i
bu
b
le
l
l
ing
in
t
t
tr
ta
to
tro
te
ts
om
e
s
a
n
on
-c
on
re
s		 1
4		 1
5		 %
7
-
/
f
G
Ne
inc
los
i
bu
b
le
ha
ho
l
de
Aa
l
Ba
k
A
t
t
tr
ta
to
om
e
s
a
s
re
rs
o
re
a
n		 2
7
2		 8
1		 2
3
6
%
Ap
ia
io
f p
f
i
t
ts
p
ro
p
r
n
o
ro
S
i
len
h
ip
i
bu
ion
by
So
F
F
in
t p
tn
tr
t
ar
er
s
co
n		 1
5		 1
5		 0
%
Co
/ a
l
i
da
d
in
d
f
i
la
d
lo
te
ta
t
te
ns
o
re
e
p
ro
cc
um
ss
u		 2
5
7		 6
6		 2
8
9
%

Aareal Bank GroupKey figures 9M 2014 by operating units

S
tru
c
Pr
op
F
in
an		 tu
d
re
ty
er
in
c
g		 Co
ns
u
Se
rv		 l
in
/
t
g
ice
s		 Co
l
i
ns
o
Re
co
nc		 da
io
/
t
n
i
l
ia
io
t
n		 Aa
re
a
Gr		 l
Ba
k
n
ou
p
0
1.
0
1.-		 0
1.
0
1.-		 0
1.
0
1.-		 0
1.
0
1.-		 0
1.
0
1.-		 0
1.
0
1.-		 0
1.
0
1.-		 0
1.
0
1.-
3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.		 3
0.
0
9.
2
0
1
4		 2
0
1
3		 2
0
1
4		 2
0
1
3		 2
0
1
4		 2
0
1
3		 2
0
1
4		 2
0
1
3
€
m
n
Ne
in
inc
t
te
t
res
om
e		 4
9
3		 3
3
7		 0 0 1 7 4
9
4		 3
8
0
fo
A
l
low
d
i
los
t
an
ce
r c
re
se
s		 1
0
5		 7
4		 1
0
5		 7
4
Ne
in
in
f
l
lo
fo
d
i
lo
t
te
t
te
t
re
s
co
m
e
a
r a
w
an
ce
r c
re
ss
es		 3
8
8		 2
9
9		 0 0 1 7 3
8
9		 3
0
6
Ne
iss
ion
inc
t c
om
m
om
e		 3 7 1
1
6		 1
1
8		 3
-		 8
-		 1
1
6		 1
1
7
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e
ac
co
un		 3 3
-		 3 3
-
/ e
Ne
d
ing
inc
t
tra
om
e
xp
en
se
s		 -1 1
4		 -1 1
4
Re
l
fro
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 0 8
-		 0 8
-
Re
l
fro
inv
d
fo
i
ts
tm
ts
te
t e
ty
su
m
es
en
a
cc
ou
n
r a
q
u		 0 0
A
dm
in
is
ive
tra
t
e
xp
en
se
s		 1
8
8		 1
4
7		 1
3
9		 1
3
0		 2
-		 1
-		 3
2
5		 2
7
6
Ne
he
ing
inc
/ e
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 1
1		 9
-		 3 1
-		 0 0 1
4		 1
0
-
Ne
ive
dw
i
l
l
t
g
a
g
oo		 1
5
2		 1
5
2
f
Op
in
i
t
t
er
a
g
p
ro		 3
6
8		 1
5
3		 2
0
-		 1
3
-		 0 0 3
4
8		 1
4
0
Inc
ta
om
e
xe
s		 6
8		 4
7		 6
-		 3
-		 6
2		 4
4
Ne
in
/
lo
t
co
m
e
ss		 3
0
0		 1
0
6		 1
4
-		 1
0
-		 0 0 2
8
6		 9
6
f r
A
l
lo
io
l
t
ts
ca
n
o
es
u
/
Ne
inc
los
i
bu
b
le
l
l
ing
in
t
t
tr
ta
to
tro
te
ts
om
e
s
a
n
on
-c
on
res		 1
2		 1
3		 2 2 1
4		 1
5
Ne
inc
/
los
i
bu
b
le
ha
ho
l
de
f
Aa
l
Ba
k
A
G
t
t
tr
ta
to
om
e
s
a
s
re
rs
o
rea
n		 2
8
8		 9
3		 1
6
-		 1
2
-		 0 0 2
2
7		 8
1

Aareal Bank GroupKey figures – quarter by quarter

ruc ed
P
an		 ert
y
g		 Co
/
Se
ult
ing
rvi
ns
ce
s		 Co
oli
da
tio
n /
ns
Re
ilia
tio
co
nc		 Aa
l B
k G
rea
an
rou
p
Q
3		 Q
2		 Q
1		 Q
4		 Q
3		 Q
3		 Q
2		 Q
1		 Q
4		 Q
3		 Q
3		 Q
2		 Q
1		 Q
4		 Q
3		 Q
3		 Q
2		 Q
1		 Q
4		 Q
3
20
14		 20
14		 20
14		 20
13		 20
13		 20
14		 20
14		 20
14		 20
13		 20
13		 20
14		 20
14		 20
14		 20
13		 20
13		 20
14		 20
14		 20
14		 20
13		 20
13
182 168 143 146 13
1		 0 0 0 0 0 1
-		 1 1 1 2 18
1		 169 144 147 133
36 32 37 39 29 36 32 37 39 29
10
4
1 1 1 3 2 36 40 40 47 40 0 2
-		 1
-		 2
-		 2
-		 37 39 40 48 40
0 1 2 3
-		 0 0 1 2 3
-		 0
5
-		 2 2 4 3 -5 2 2 4 3
-2
64 68 56 54 50 46 47 46 47 44 1
-		 1
-		 0 2
-		 0 109 114 102 99 94
3
-
1)
152		 1)
152
74 71 1)
22
3		 56 52 8
-		 6
-		 6
-		 2 4
-		 0 0 0 0 0 66 1)
21
7		 58 48
23 23 22 18 16 2
-		 2
-		 2
-		 0 1
-		 21 21 20 18 15
51 48 1)
20
1		 38 36 6
-		 4
-		 4
-		 2 3
-		 0 0 0 0 0 45 1)
19
7		 40 33
5
- - - - 28
14
6
0
0
-4
4
47		 St
13
6
0
1
-
4
44		 tur
Fin
10
6
0
16
4
1)
197		 rop
cin
10
7
0
0
1
-
3
35		 10
2
-2
3
-
4
32		 0
2
0
6		 0
1
1
5		 0
0
1
5		 0
2
1
1		 0
0
1
4		 1
-
0
0		 1
0
0		 1
0
0		 n
1
1
-
0		 2
0
0		 14
5
0
0
2
-
4
41		 13
7
0
0
65
44
5
39		 10
7
0
16
5
1)
192		 10
8
0
0
0
4
36

SoFFin: full repayment of silent participationSupport to Aareal Bank has come to an end

O
b
j
i
f
S
F
F
i
t
t
e
c
e
o
r
o
n
s
p
p
o
r
v
u		 G
f
i
l
i
t
t
t
o
e
r
n
m
e
n
g
a
r
a
n
e
e
a
c
v
u
y
A
h
h
h
i
h
f
h
f
i
i
l
i
i
i
l
t
t
t
t
t
t
e
a
e
e
g
o
e
n
a
n
c
a
c
r
s
s
n
e
a
r
y

A
l
h
d
d
i
l
b
l
2
0
0
9
t
a
r
e
a
a
r
a
w
n
o
n
s
u
p
p
o
r
a
v
a
a
e
i
h
i
h
f
k
t
t
t
t
w
n
e
s
c
o
p
e
o
a
g
o
v
e
r
n
m
e
n
p
a
c
a
g
e
o
b
i
l
i
h
f
i
i
l
i
t
t
t
s
a
s
e
e
n
a
n
c
a
s
e
r
c
e
s
s
e
c
o
r.
v
T
h
b
j
i
h
A
l
's
t
t
t
t
t
e
o
e
c
v
e
w
a
s
o
p
r
o
e
c
e
a
r
e
a

i
b
l
f
i
b
l
b
i
i
h
t
t
t
s
s
a
n
a
p
r
o
a
e
s
n
e
s
s
n
a
a
s
a
u
y
u
w
w
d
i
f
f
i
l
k
i
h
i
t
t
t
t
t
t
e
r
c
m
a
r
e
e
n
r
o
n
m
e
n
a
e
m
e
v
y
u
v
A
l
i
d
l
f
i
l
€
2
3
7
t
t
t
t
a
r
e
a
p
a
a
o
a
o
a
p
p
r
o
x
m
a
e
y
m
n
o

S
d
i
i
d
f
F
F
i
t
t
t
t
t
a
e
n
n
e
r
e
s
a
n
g
a
r
a
n
e
e
e
e
s
o
o
n.
u		 V
l
€
4
b
o
u
m
e
n

:
F
i
b
d
t
r
s
o
n

:
f
/
€
2
b
l
l
l
d
i
0
3
2
0
0
9
n
p
a
c
e
n
u
y
,
/
€
8
0
0
i
l
l
d
d
i
0
7
2
0
1
1
t
t
m
n
p
a
r
a
y
e
n
e
r
e
n
€
b
d
/
1.
2
0
3
2
0
1
2
t
n
m
a
u
r
e
S
d
b
d
e
c
o
n
o
n

:
€
b
b
k
/
2
0
7
2
0
1
0
t
n
o
n
o
o
w
n
o
o
l
d
i
/
0
4
2
0
1
1
t
e
a
r
y
r
e
e
m
p
o
n
(
i
i
l
l
i
)
0
5
0
6
2
0
1
3
t
o
r
g
n
a
y
m
a
u
r
n
g
S
i
l
t
e
n
p
a
r		 i
i
i
t
t
c
p
a
o
n
O
i
i
l
l
€
2
5
5
r
g
n
a
o
m
e
m
n

v
u
:
C
(
d
d
i
b
l
)
9
%
t
t
o
p
o
n
a
e
c
e

u
:
x
u
G
d
f
h
d
C
E
T
i
l
i
l
d
f
1
2
0
1
7
t
t
t
r
a
n
a
e
r
e
a
s
c
a
p
a
u
n
e
n
o

N
d
i
i
d
d
d
i
2
0
0
9
d
2
0
1
0
t
o
v
e
n
p
a
y
m
e
n
s
u
r
n
g
a
n

f
d
i
o
r
p
r
e
c
e
n
g
e
a
r
s
y		 €
m
n
6
0
0
5
0
0
-1
5
0
5
5
2
4
0
0
-7
5
3
7
5
3
0
0
3
0
0
-3
0
0
  • Additional remuneration: coupon increases on a pro rata basis by 0.5 pp for each ~0.18 € DpS1)
  • Repaid in three trances 2010, 2011 and 10/2014

53

1) Adjusted relative to the capital increase

Comprehensive assessment1) AQR and Stress Test

Definitions

  • "The comprehensive assessment is a financial health check of 130 banks in the euro area (including Lithuania), covering approximately 85% of total bank assets. It is being carried out by theECB together with the national supervisors. The exercise started in November 2013..."
  • The comprehensive assessment comprises two main pillars:
  • an Asset Quality Review (AQR) – to enhance the transparency of bank exposures, including the adequacy of asset and collateral valuation and related provisions
  • aStress Test to examine the resilience of banks' balance sheets to stress scenarios, performed in close cooperation with the European Banking Authority (EBA)
  • Join-up: The quality-assured stress test results have been integrated with the AQR results in a process known as the "join-up". The join-up is what sets the comprehensive assessment apart from any other previous European exercise. It connects and reinforces the point-in-time AQR and the forward-looking stress test, strengthening the overall exercise. Full AQR results are incorporated into stress test results for all banks by adjusting the starting balance sheet positions.

Source: ECB webpage

1) As published October 27, 2014

Results of the AQR and the Stress Test1)

Capital ratios significantly above thresholds

Results

AQR

  • -Confirms Aareal Bank's asset quality
  • Marginal adjustments (10 bp) mainly due to haircuts; not considering possible reversal of allowances identified in the course of the review
  • No reclassifications from performing loans into non-performing loans

Join-up

No Join-up effect incorporation of the AQR results into the stress test leads to no adjustments

Stress test

  • -In all the years under review Aareal Bank generates positive results
  • In all the years under review Aareal Bank will be able to pay dividends
    • CET1 declines by ~28% or 453 bp from 16.29% to 11.76% (which includes 63 bp from dividends to be distributed)

In all stress scenarios capital ratios are significantly above the respective thresholds

1) As published October 27, 2014

Simulation / Extrapolation of Stress Test results1) Three scenarios

Pro forma assumptions / parameters of the model

  • The original stress test is calculated on 31.12.2013 / 1.1.2014 basis
  • The next slide is presenting results of an exercise run by Aareal and therefore is neither authorized nor checked by the ECB in order to translate the stress test results in the following scenarios
  • Pro forma fully phased figures as of 31.12.2013/01.01.2014 excluding SoFFin(capital - € 300 mn) based on the original stress test 1
  • Pro forma fully phased figures as of 30.06.2014 excluding SoFFin but including Corealcredit portfolio. We tried to replicate the ECB test with our Corealcredit portfolio to the best of our knowledge but we can not rule out that the stress test results would vary if the Corealcredit portfolio would have been part of the original stress test.2
  • Pro forma fully phased midterm target figures excluding SoFFin based on internal assumptions about midterm capital, RWA and portfolio development. Hence those figures include management assumptions about the future development of the company and are not based an a static balance sheet used in the ECB stress test. 3

Explanation of the bp deduction variance1)

Pro forma assumptions / parameters of the model

  • The original ECB Stress Test led to a CET deduction of 453 bp. This reduction is driven by an RWA increase of 33% and a CET decrease of 3.8% at the same time. CET decrease during stress horizon is caused by phase outs, unrealised losses in the AfS portfolio and AIRB shortfall of credit risk adjustments to expected losses. The calculation of the percentage change in CET capital is: 1-((1:1.33)*(1-0.038)) = 28% and 28% * 16.29% = 453 bp
  • Original starting RWA and original RWA increase (33%) is used. CET is reduced by € 300 mn SoFFin participation. In addition we calculated on a fully phased basis: the starting CET ratio is already fully phased. All other items remain the same. Same mathematics with an CET decrease of 3.0%, which is below 3.8% because no phase outs have to be calculated: 27% CET decrease or 359 bp reduction. 1
  • Pro forma fully phased numbers as of 30.06.2014 excluding SoFFin but including Corealcredit portfolio. We tried to replicate the ECB test with our Corealcredit portfolio to the best of our knowledge but we can not rule out that the stress test results would vary if the Corealcredit portfolio would have been part of the original stress test. Lower RWA increase mainly driven by the fact that Corealcredit still applies the standard approach: 25% CET decrease leads to a 294 bp reduction. 2

Explanation of the bp deduction variance1)

Pro forma assumptions / parameters of the model

Pro forma fully phased midterm target figures excluding SoFFin based on internal assumptions about midterm capital, RWA and portfolio development. Hence those figures:

(a) include management assumptions about the future development of the company and (b) are not based an a static balance sheet used in the ECB stress test.

We tried to replicate the ECB test with a portfolio end 2016 to the best of our knowledge but we can not rule out that the results of a stress test with that portfolio as an input would lead to other results than the 24% CET decreaseleading to a 259 bp reduction.

In general, the nominal bp reduction is mainly driven by the ingoing CET ratio whereby a lower ratio leads to a lower nominal bp reduction even if the percentage result is the same. The percentage change of the CET ratio as the stress test result is the better indicator than the nominal bp deduction.

3

Results of the simulation / extrapolation1)

Conclusion1)

Based on current and future capital structure

Aareal Bank's CET1 will be above all the respective thresholds and the envisaged trigger for a potential AT1 issue

Even after

  • Repayment of the € 300 mn SoFFin silent participation
  • Under Basel III fully phased
  • After potential future capital optimization

Strategic rationale for acquisition of Corealcredit1) Value enhancing transaction in line with current strategy

The transaction represents an attractive opportunity for Aareal Bank Group to pursue inorganic growth as it is creating shareholder value and EpS accretive from day one

Aareal Bank Group acquires Coreal, which has been successfully realigned and refocused on its core business by its previous owner, in a favourable market environment at a conservative price

Coreal is a well digestible addition to Aareal Bank Group. Legacy risks have been conservatively evaluated and comprehensively ring-fenced

Our mid-term targets and our goal to resume an active dividend policy remain unchanged

With the acquisition of Coreal, Aareal Bank Group further strengthens its position as a leading commercial real estate lender

The acquisition of Coreal from existing excess capital demonstrates the strength and strategic capacity of Aareal Bank Group

1) As published December 2013

Acquisition of Corealcredit1)

Impact on P&L, B/S, Capital ratios, EpS, and RoE

P&L and balance sheet:

  • Initial consolidation at 31.03.2014: all balance sheet items are inclusive of Corealcredit
  • The negative goodwill (gain from initial consolidation) reflected in Q1 P&L
  • Operating results of Corealcredit will be included in Q2 P&L and onwards

Capital ratios:

  • All cash transaction: RWA increase on group level compensated via negative goodwill and allocation of excess capital
  • Target range of Tier 1 (11.5-12%)2) before mgmt. buffer and total capital (19%-20%)2) unaffected
  • Bail in capital ratio expected above target (> 8%)

EpS:

  • Transaction is EpS accretive from day one
  • Present value of cumulative EPS for the next three years > € 33)
  • Capital currently absorbed by acquired RWA to free up until 2016 for alternative utilisation (allocation or alignment)

RoE:

Transaction in line with mid-term RoE target: midterm pre-tax RoE target confirmed at ~12%

62

1) As published December 2013

2) Fully phased incl. IFRS and CRD IV

3) Negative goodwill and additional net income until 2016 including ppa amortisation

Corealcredit purchase price determinationClosing date 31.03.2014

Revaluation surplus

Change mainly driven by asset spreads

Development property finance portfolioDiversification continuously strengthened (in € mn)

From asset to risk weighted asset (RWA) Essential factors affecting volume of RWA

1) Excl. market risk

2) Exposure to Retail amounts to € 18 mn

3) Exposure to Sovereigns amounts to € 15 mn

664) Exposure to investment shares amounts to € 4 mn

Definitions andcontacts

Definitions

  • Structured Property Financing Portfolio
  • Paid-out financings on balance sheet
  • New Business = Newly acquired business incl. renewals + Contract is signed by customer + Fixed loan value and margin
  • Core Tier I Ratio = Tier 1 capital ./. hybrids ./. SoFFin silent participation
  • Risk weighted assets
  • Pre tax RoE = Operating profit ./. Net income/loss attributable to non-controlling interests

Allocated (average) equity

Allocated Equity

Average of:

    • Equity (excluding minorities and revaluation surplus but including silent participation by SoFFin) start of period less dividends and
  • Equity (excluding minorities and revaluation surplus but including silent participation by SoFFin) end of period less expected 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 = ≥ 100%Available stable fundingRequired stable funding
  • Liquidity coverage ratio = ≥ 100%Total stock of high quality liquid assetsNet cash outflows under stress
  • Bail-in capital ratio = Equity + subordinated capital(Long + short term funding) – (Equity + subordinated capital)

Contacts

  • Jürgen Junginger Managing Director Investor Relations Phone: +49 611 348 [email protected]
  • Sebastian GötzkenSenior Manager Investor RelationsPhone: +49 611 348 [email protected]

Karin Desczka

Investor RelationsPhone: +49 611 348 [email protected]

Disclaimer

© 2014 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. 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 notbe 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 anyinformation 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.

More from Aareal Bank AG

Regulatory Filings 2025
Dec 11
Report Publication Announcement 2025
Dec 2
Report Publication Announcement 2025
Dec 2
Report Publication Announcement 2025
Dec 2
Report Publication Announcement 2025
Dec 2
Report Publication Announcement 2025
Dec 2
Report Publication Announcement 2025
Dec 2
Capital/Financing Update 2025
Nov 18
Earnings Release 2025
Nov 13
Regulatory Filings 2025
Nov 13
View all filings →

Talk to a Data Expert

Have a question? We'll get back to you promptly.