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Aareal Bank AG

Investor Presentation • Feb 20, 2014

11_ip_2014-02-20_7397c0f0-9003-4c99-a629-0df47da88338.pdf

Investor Presentation

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February 20, 2014Dr. Wolf Schumacher, CEO – Hermann J. Merkens, CFO

LOCAL EXPERTISE

Agenda

  • Environment 2013
  • Preliminary 2013 results at a glance
  • Segment performance
  • B/S structure, capital & funding position
  • Preliminary group figures 2013
  • Asset quality
  • Acquisition of Corealcredit Bank, Outlook 2014 & Midterm Outlook
  • Appendix
  • Definitions and Contacts

Environment 2013 Our assumptions were proven

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Preliminary 2013 results at a glance

2013 at a glance

Profit target overachieved – dividend proposal 0.75€

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5

2013 results at a glance Strong Q4 operating profit

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New business target overachieved

1) Incl. renewals

Structured property financing

New business origination compensating high repayments

1) Incl. renewals

Consulting / Services

Solid in IT & volumes – weak in deposit taking business

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  • Aareon sales revenues € 173 mn (+5%) EBIT margin stable (~16%)
  • Housing industry deposits generate a stable funding base, crisis-proof
  • Low interest environment burdens segment results

Consulting / Services

Deposit taking business burdens segment performance

Consulting / Services

Solid in IT & volumes – weak in deposit margins

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Performance of Aareon within guidance

  • Unchanged low interest rate environment continues to burden segment results
  • Deposit volume of the housing industry has increased to
    • € 7.2 bn on average in '13 (Ø € 5.6 bn in 2012)
  • € 7.7 bn on average Q4 '13 (Ø € 6.2 bn in Q4 2012)
  • The strategic importance of the housing industry deposits as an additional source of funding exceeds the importance of the margins shown in the segment

B/S structure, capital & funding position

Strong capital ratios & stable capital structure(IFRS, CRD IV pro forma as at 01.01.2014, stand alone)

  • 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
  • Full repayment of remaining SoFFinsilent participation possible without capital increase
  • AT 1 to be raised depending on market conditions and requirements
  • Leverage ratio as at 01.01.2014
  • -4.0% (CET 1 excl. SoFFin)
  • -4.6% (CET 1 incl. SoFFin)
  • Bail-in capital ratio (acc. to our definition) expected above 8%

Expected development of capital ratios1) (IFRS & CRD IV pro forma as at 01.01.2014)

1) Actual figures may vary significantly from estimates

2) TCR: total capital position

Asset- / Liability structure according to IFRSAs at 31.12.2013: € 43.0 bn (31.12.2012: € 45.7 bn)

ECB-eligible assets, available excess cash at other banks as well as highly liquid government securities3) Interbank incl. € 1.5 bn (€ 0.0 bn) invested in ECB's fine-tuning operations ("absorbing tender")

Note: All 2013 figures preliminary and unaudited

Asset- / Liability structure according to IFRSAs at 31.12.2013: € 43.0 bn (30.09.2013: € 43.4 bn)

Net stable funding- / Liquidity coverage ratio Fulfilling Basel III requirements

  • Aareal Bank already fulfils future requirements
  • -NSFR > 1.0
  • LCR >> 1.0
  • Basel III and CRD IV require specific liquidity ratios starting end 2018
  • High NSFR surplus used to purchase Corealcredit Bank's balance sheet

Refinancing situation 2013Successful funding activities

Total funding of € 4.1 bn in 2013

  • Pfandbriefe: € 3.0 bn
  • thereof two benchmark mortgage Pfandbriefe: € 625 mn and € 500 mn
  • thereof one £ 200 mn mortgage Pfandbrief
  • Senior unsecured: € 1.0 bn
  • Additional subordinated debt (LT2): € 0.1 bn
  • Backbone of capital market funding is a loyal, granular, domestic private placement investor base
  • over 600 hold-to-maturity investors
  • -€ 10 mn average ticket size in 2013

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 31.12.2013, this share has fallen to ~29% (or even below 10% without Pfandbriefe)

As at 31.12.2013

Net interest incomeNII picking up over the year

  • NII Structured Property Financing

  • NII Consulting / Services

  • Strong Q4 includes effects (~€ 10 mn) from higher than expected repayments

  • Sound margins from the CRE business and lower funding costs pushing the NII development throughout the year, overcompensating the burden from the low interest rate environment
  • Due to very limited investment opportunities a considerable part of liquidity stock is still parked with central banks
  • -Ø Q4 2013: € 3.9 bn
  • -Ø Q4 2012: € 4.1 bn
  • -Ø 2013: € 4.3 bn
  • NII Consulting / Services further burdened by interest rate environment
  • Aareal Bank already fulfils future NSFR / LCR requirements

Loan loss provisionsFull 2013-LLP at lower end of guided range

FY guidance

  • Full year result of € 113 mn at the lower end of the guided range of € 110 mn to € 150 mnproves high portfolio quality
    • (€ 12 mn) general allowances allocated to specific loans "switched" to specific allowances (P/L neutral)
  • -+ € 124 mn new specific allowances
  • -- € 11 mn general allowances (released)
  • Close monitoring of the loan portfolio and successful restructuring efforts resulted in 47 bp risk costs on average loan book in 2013
  • Originally wider FY-range due to expected portfolio growth and recessive economies: € 110 mn - € 150 mn

Net commission incomeWithin expectation

  • Aareon on track
  • Strong Aareon revenue regularly pushing Q4

Net result: trading/non trading/hedge accounting2013 results reflect stabilising markets

  • Financial markets have stabilised in 2013, largely due to central-bank policies
  • Decreasing market volatility reflected in net result from trading, non-trading and hedge accounting

Admin expensesSlightly higher than expected

  • Provisions for long-term incentive plan reflecting the share price development
  • Projects burden admin expenses

Total property finance portfolio

High diversification and sound asset quality

Total property finance portfolio

Continuing conservative approach

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Note: All 2013 figures preliminary and unaudited

Total property finance portfolio

€ 24.7 bn of high quality real estate assets

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Treasury portfolio

€ 10.8 bn of high quality and highly liquid assets

Treasury portfolio€ 8.9 bn Public Sector Debtors

1) Incl. exposure of € 50 mn which is additionally guaranteed by the Sovereign

2) Incl. securities of the AfS- and the LaR-category after tax

3) Incl. securities of the LaR-category after tax32

Treasury portfolio€ 1.7 bn Covered Bonds / Financials

1) Incl. securities of the AfS- and the LaR-category after tax

2) Incl. securities of the HtM- and the LaR-category after tax

Acquisition of Coreal,Outlook 2014 & Midterm Outlook

Strategic rationale for acquisition of CorealValue enhancing transaction in line with current strateg

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

Corealcredit Bank AG 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 Corealcredit Bank AG, Aareal Bank Group further strengthens its position as a leading commercial real estate lender

35

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

y

Acquisition of Coreal

Impact on capital ratios, EpS, and RoE

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%)1) and total capital (19%-20%)1) 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 > € 32)
  • Capital currently absorbed by acquired RWA to free up until 2016 for alternative utilisation:
  • -Allocation
  • -Alignment

RoE:

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

2) Negative goodwill and additional net income until 2016

Note: All 2013 figures preliminary and unaudited

Environment 2014

General environment, challenges still ahead

  • Capital markets will continue to ease - backed by central bank measures in Europe and the US, but uncertainty about reaction to normalisation of money supply (e.g. tapering)
  • 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
  • Generally, we expect a slight world economic recovery during 2014, but different speed of economical recovery in Europe, North American will recover faster, Asian economies will continue to grow but further development still uncertain
  • Regulatory environment more predictable, AQR may cause some uncertainty

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 continueThe above will be partially offset by lower than expected funding costs

We see largely stable property values and rents for most European countries but further NPL inflow mainly from our southern European portfolio

37

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

Aareal Bank's CRE market expectations

Expected value changes1) in 20142)

1) Here shown average market value changes across all property types and regions

2) The individual market value of a single property may vary, change end 2013 to end 2014

Outlook 2014

Driven by operating performance and Coreal take-over1)

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1) Closing as at 31.03.2014 assumed and recognition of interest payments for AT1 in H2 2014

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

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39

Aareal Bank's action planKey RoE drivers

  • Optimisation funding structure / liquidity portfolio
  • Slight loan portfolio growth but margin compression
  • Stable RWA & LTVsLower risk costs (but development in Southern Europe uncertain)
  • Increase in Aareon EBIT
  • Keep cost base under control, lower project and one-off costs – as well as other items
  • Optimisation of regulatory capital structureAlignment or allocation of underlying capital (e.g. Coreal)

Aareal Bank's action planMeasures

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 plan

Measures in detail (1/2)

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y

Outlook 2014 & Midterm Outlook

Summary and Prerequisites

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

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
  • No additional burdens
  • Interest rate environment starts to reflect the recovery with moderate increase

Aareal Bank GroupKey figures 2013

0
1.
0
1.
-
3
1.
1
2.
2
0
1
3		 0
1.
0
1.
-
3
1.
1
2.
2
0
1
2		 C
ha
ng
e
€
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		 2
5
7		 4
8
6		 8
%
fo
A
l
low
d
i
los
t
an
ce
r c
re
se
s		 1
1
3		 1
0
6		 7
%
in
in
f
fo
i
Ne
t
te
t
te
l
lo
d
t
lo
re
s
co
m
e
a
r a
w
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ce
r c
re
ss
es		 4
1
4		 3
8
0		 9
%
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iss
ion
inc
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om
m
om
e		 1
6
5		 1
6
9		 2
%
-
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l
he
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ing
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t o
t
es
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ac
co
un		 -6 4
-		 -
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ing
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om
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xp
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se
s		 1
8		 1
0
-		 -
Re
l
fro
d
ing
ts
-tr
ts
su
m
n
on
a
a
ss
e		 -8 1 -
fro
fo
Re
l
ies
d
i
ts
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t e
ty
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om
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Re
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ies
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A
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in
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7
5		 3
5
8		 5
%
Ne
he
ing
inc
/ e
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 -1
0		 7
-		 -
Im
irm
f g
dw
i
l
l
t o
p
a
en
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Op
in
Pr
f
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t
t
er
a
g
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9
8		 1
6
7		 1
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%
Inc
ta
om
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xe
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2		 5
2		 1
9
%
in
/
Ne
t
lo
co
m
e
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3
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%
A
l
lo
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l
t
ts
ca
n
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/
Ne
inc
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b
le
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ing
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t
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tro
te
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om
e
s
a
n
on
-c
on
re
s		 1
9		 1
9		 -
Ne
inc
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los
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bu
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le
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de
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Aa
l
Ba
k
A
G
t
t
tr
ta
to
om
e
s
a
s
re
rs
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re
a
n		 1
1
7		 1
0
5		 1
1
%
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		 2
4		 2
0		 2
0
%
Co
l
i
da
d
in
d
f
i
/ a
la
d
lo
te
ta
t
te
ns
o
re
e
p
ro
cc
um
u
ss		 9
3		 8
5		 9
%

Note: All 2013 figures preliminary and unaudited

Aareal Bank GroupKey figures 2013 by operating units

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

Aareal Bank GroupKey figures Q4 2013

Qu
4
te
ar
r		 Q
4
te
ua
r
r		 C
ha
ng
e
2
0
1
3
€
m
n		 2
0
1
2
€
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
4
7		 1
1
6		 2
7
%
A
l
low
fo
d
i
los
t
an
ce
r c
re
se
s		 3
9		 3
9		 0
%
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
0
8		 7
7		 4
0
%
Ne
iss
ion
inc
t c
om
m
om
e		 4
8		 5
0		 4
%
-
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e
ac
co
un		 -3 3 -
/ e
Ne
d
ing
inc
t
tra
om
e
xp
en
se
s		 4 7 -
fro
Re
l
d
ing
ts
-tr
ts
su
m
n
on
a
a
ss
e		 0 3 -
Re
l
fro
ies
d
fo
i
ts
te
t e
ty
su
m
c
om
p
an
a
cc
ou
n
r a
q
u		 0 0 -
Re
l
fro
inv
ies
ts
tm
t p
t
su
m
es
en
ro
p
er		 0 0 -
A
dm
in
is
ive
tra
t
e
xp
en
se
s		 9
9		 8
8		 1
3
%
Ne
he
ing
inc
/ e
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 - -6 -
Im
irm
f g
dw
i
l
l
t o
p
a
en
oo		 0 - -
f
Op
in
Pr
i
t
t
er
a
g
o		 5
8		 4
6		 2
6
%
Inc
ta
om
e
xe
s		 1
8		 1
9		 5
%
-
Ne
in
/
lo
t
co
m
e
ss		 4
0		 2
7		 4
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		 4 4 0
%
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		 3
6		 2
3		 %
5
7
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		 9 5 8
0
%
Co
l
i
da
d
in
d
f
i
/ a
la
d
lo
te
ta
t
te
ns
o
re
e
p
ro
cc
um
u
ss		 2
7		 1
8		 5
0
%

Note: All 2013 figures preliminary and unaudited

Aareal Bank GroupKey figures Q4 2013 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
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Ba
k
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a
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Gr
ou
p
0
1.
1
0.
-		 0
1.
1
0.
-		 0
1.
1
0.
-		 0
1.
1
0.
-		 0
1.
1
0.
-		 0
1.
1
0.
-		 0
1.
1
0.
-		 0
1.
1
0.
-
3
1.
1
2.		 3
1.
1
2.		 3
1.
1
2.		 3
1.
1
2.		 3
1.
1
2.		 3
1.
1
2.		 3
1.
1
2.		 3
1.
1
2.
2
0
1
3		 2
0
1
2		 2
0
1
3		 2
0
1
2		 2
0
1
3		 2
0
1
2		 2
0
1
3		 2
0
1
2
€
m
n
Ne
in
inc
t
te
t
res
om
e		 1
4
6		 1
1
3		 0 0 1 3 1
4
7		 1
1
6
fo
A
l
low
d
i
los
t
an
ce
r c
re
se
s		 3
9		 3
9		 3
9		 3
9
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
0
7		 7
4		 0 0 1 3 1
0
8		 7
7
Ne
iss
ion
inc
t c
om
m
om
e		 3 5 4
7		 4
9		 2
-		 4
-		 4
8		 5
0
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		 4 7 4 7
Re
l
fro
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 0 3 0 3
Re
l
fro
ies
d
fo
i
ts
te
t e
ty
su
m
co
m
p
an
a
cc
ou
n
r a
q
u		 0 0 0 0
Re
l
fro
inv
ies
ts
tm
t p
t
su
m
es
en
ro
p
er		 0 0 0 0
A
dm
in
is
ive
tra
t
e
xp
en
se
s		 4
5		 4
4		 4
7		 4
5		 2
-		 1
-		 9
9		 8
8
/ e
Ne
he
ing
inc
t o
t
t
r o
p
er
a
om
e
xp
en
se
s		 1
-		 4
-		 2 2
-		 1
-		 0 0 6
-
Im
irm
f g
dw
i
l
l
t o
p
a
en
oo		 0 0
Op
in
f
i
t
t
er
a
g
p
ro		 5
6		 4
4		 2 2 0 0 5
8		 4
6
Inc
ta
om
e
xe
s		 1
8		 1
9		 0 0 1
8		 1
9
Ne
in
/
lo
t
co
m
e
ss		 3
8		 2
5		 2 2 0 0 4
0		 2
7
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		 3 4 0 0 4 4
/
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
rea
n		 3
5		 2
1		 2 2 0 0 3
6		 2
3

Aareal Bank GroupKey figures – quarter by quarter

St
ed
P
tur
ert
ruc
rop
y
Fin
cin
an
g		 Co
ult
ing
/
Se
rvi
ns
ce
s		 Co
oli
da
tio
n /
ns
ilia
tio
Re
co
nc
n		 Aa
l B
k G
rea
an
rou
p
Q
4		 Q
3		 Q
2		 Q
1		 Q
4		 Q
4		 Q
3		 Q
2		 Q
1		 Q
4		 Q
4		 Q
3		 Q
2		 Q
1		 Q
4		 Q
4		 Q
3		 Q
2		 Q
1		 Q
4
20
13		 20
13		 20
13		 20
13		 20
12		 20
13		 20
13		 20
13		 20
13		 20
12		 20
13		 20
13		 20
13		 20
13		 20
12		 20
13		 20
13		 20
13		 20
13		 20
12
Eu
ro
mn
Ne
t in
t in
ter
es
co
me		 146 13
1		 124 118 113 0 0 0 0 0 1 2 2 3 3 147 133 126 12
1		 116
All
fo
red
it l
ow
an
ce
r c
os
se
s		 39 29 28 17 39 39 29 28 17 39
t in
t in
af
Ne
ter
ter
es
co
me		 10
7		 10
2		 96 10
1		 74 0 0 0 0 0 1 2 2 3 3 10
8		 10
4		 98 10
4
all
fo
red
it l
ow
an
ce
r c
os
se
s		 77
Ne
mi
ion
in
t c
om
ss
co
me		 3 2 3 2 5 47 40 39 39 49 2
-		 2
-		 3
-		 3
-		 4
-		 48 40 39 38 50
Ne
t re
lt o
n h
ed
nti
su
g
e a
cc
ou
ng		 3
-		 0 0 3
-		 3 -3 0 0 3
-		 3
Ne
ad
ing
in
/ e
t tr
co
me
xp
en
se
s		 4 3 5 6 7 4 3 5 6 7
Re
lts
fro
rad
ing
n-t
ts
su
m
no
as
se		 0 -2 -5 -1 3 0 -2 -5 -1 3
Re
lts
fro
ies
su
m
co
mp
an		 0 0
ted
fo
ity
t e
ac
co
un
r a
qu		 0 0
Re
lts
fro
inv
tm
t
su
m
es
en		 0 0 0 0 0 0 0 0
rtie
pro
pe
s		 0 0
Ad
mi
nis
tive
tra
ex
pe
ns
es		 54 50 47 50 44 47 44 44 42 45 2
-		 0 1
-		 0 1
-		 99 94 90 92 88
/
Ne
t o
the
rat
ing
in
r o
pe
co
me
ex
pe
ns
es		 -1 3
-		 2
-		 4
-		 4
-		 2 0 0 1
-		 2
-		 1
-		 0 0 0 0 0 3
-		 2
-		 5
-		 6
-
Im
irm
f g
dw
ill
t o
pa
en
oo		 0 0 0 0 0 0 0 0
Op
tin
rof
it
era
g
p		 56 52 50 51 44 2 4
-		 5
-		 4
-		 2 0 0 0 0 0 58 48 45 47 46
Inc
e t
om
ax
es		 18 16 15 16 19 0 1
-		 1
-		 1
-		 0 18 15 14 15 19
Ne
t in
/ l
co
me
os
s		 38 36 35 35 25 2 3
-		 4
-		 3
-		 2 0 0 0 0 0 40 33 31 32 27
Al
loc
ati
of
lts
on
re
su
/ l
Ne
t in
ttri
bu
tab
le
to
co
me
os
s a
llin
int
tro
sts
no
n-c
on
g
ere		 3 4 5 4 4 1 1 0 1 0 4 5 5 5 4
Ne
t in
/ l
ttri
bu
tab
le
to
co
me
os
s a
of
G
sh
ho
lde
Aa
l B
k A
are
rs
rea
an		 35 32 30 31 21 1 4
-		 4
-		 4
-		 2 0 0 0 0 0 36 28 26 27 23

Development property finance portfolioDiversification continuously strengthened (in € mn)

Property finance under management

Western Europe (ex Germany) credit portfolio Total volume outstanding as at 31.12.2013: € 7.5 bn

Southern Europe credit portfolio

Total volume outstanding as at 31.12.2013: € 4.2 bn

German Europe credit portfolio

Total volume outstanding as at 31.12.2013: € 3.9 bn1)

Eastern Europe credit portfolio

Total volume outstanding as at 31.12.2013: € 2.8 bn

Northern Europe credit portfolio

Total volume outstanding as at 31.12.2013: € 2.4 bn

North America credit portfolio

Total volume outstanding as at 31.12.2013: € 3.8 bn

Asia credit portfolio

Total volume outstanding as at 31.12.2013: € 0.2 bn

Forbearance ReportingBackground

Status quo

  • EBA consultation paper on supervisory reporting on forbearance and non-performing exposures
  • -Final draft paper published 22.10.2013
  • -Implementation deadline: 30.09.2014
  • ECB already requests declaration of forborne assets according to EBA final draft in the AQR
  • EBA draft definition of forbearance: "forborne exposures are debt contracts in respect of which forbearance measures have been executed. Forbearance measures consist of concessions towards a debtor facing or about to face difficulties in meeting its financial commitments ("financial difficulties")"
  • Forborne assets are therefore naturally to be found in the badly rated part of the portfolio

Outlook

We plan to publish forborne asset volumes in the 2013 annual report and going forward

Forborne assets1)

Total volume outstanding as at 31.12.2013: € 0.3 bn

Revaluation surplus

Change mainly driven by asset spreads

Note: All 2013 figures preliminary and unaudited

Coreal acquisition: Purchase price determinationAssumed closing date 31.03.2014

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

2) Exposure to Retail amounts to € 15 mn

633) Exposure to Sovereigns amounts to € 19 mn4) Exposure to investment shares amounts to € 16 mnNote: All 2013 figures preliminary and unaudited

Definitions andcontacts

Definitions

  • Structured Property Financing Portfolio
  • -Paid-out financings on balance sheet
  • Incl. remaining property loans on DEPFA books
  • 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 interestsAllocated (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

Contacts

Jürgen Junginger Managing Director Investor Relations Phone: +49 611 348 [email protected]

Alexandra Beust

Director Investor RelationsPhone: +49 611 348 [email protected]

Sebastian Götzken

Senior 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 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 compiledthe information on which this document is based from sources considered to be reliable – without, however, havingverified it. 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.
  • 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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