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Aareal Bank AG

Investor Presentation • Nov 12, 2013

11_ip_2013-11-12_5f86b4fd-8f86-4bb0-87fe-7e7be774e544.pdf

Investor Presentation

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November 12, 2013Dr. Wolf Schumacher, CEO – Hermann J. Merkens, CFO

Agenda

  • Environment Q3 2013
  • Q3 2013 results at a glance
  • Segment performance
  • B/S structure, capital & funding position
  • Group figures Q3 2013
  • Asset quality
  • Outlook 2013
  • Midterm outlook
  • Appendix
  • Definitions and Contacts

Environment Q3 2013

Growth momentum: fundamental or liquidity driven?

Environment Q3 2013

  • Different speed of recovery in Europe
  • North American economic recovery faster than in Europe but substantial resolution of financial policy issues are still missing (e.g. tapering)
  • Asian economies keep growing, China's economy accelerated slightly. However, further development still uncertain
  • Sovereign crisis will only occasionally affect markets
  • Central Banks still lender of last resort / monetary policy still expansive
  • Start of European Supervisory Authorities (ESA) will strengthen the banking system
  • Continued very low interest rate levels will help to stabilise sovereign crisis and European economies but burdens the net interest income

As CRE-lending business is "the" remaining segment for high margins, competition is increasing in core markets

Institutional housing industry remains stable

Q3 2013 results at a glance

Q3 2013 results at a glance Good development in 2013

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Segment performance

Structured property financing New business origination compensating high repayments

1) Incl. renewals

Consulting / ServicesSolid in IT & volumes – weak in deposit margins

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  • Aareon on track
  • Interest rate environment burdens segment results
  • Under a group perspective the housing industry deposits have a strategic importance as additional source of funding for the lending business
  • Stable deposit volume of the housing industry:
  • -Ø Q3 '13: € 7.1 bn
  • -Ø Q2 '13: € 7.2 bn
  • -Ø Q3 '12: € 5.8 bn

Consulting / Services

Deposit taking business burdens segment performance

B/S structure, capital & funding position

Strong capital ratios & stable capital structure

  • 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 further capital increase
  • Leverage ratio acc. to QIS (30.06.2013)
  • -3.9% (CT 1 excl. SoFFin)
  • -4.6% (CT 1 incl. SoFFin)
  • Bail-in capital ratio of 9%(acc. to our definition)
  • Total capital position incl. § 340f (HGB1)) reserve recognised as Tier II helping to absorb potential intra-year adverse market development of GIIPS countries.

Core Tier 1 under Basel III fully loaded1) Target Tier 1 as at 01.01.2016: 11.5%

Asset- / Liability structure according to IFRSAs at 30.09.2013: € 43.4 bn (31.12.2012: € 45.7 bn)

3) Interbank incl. € 1.5 bn (€ 0.0 bn) invested in ECB's fine-tuning operations ("absorbing tender")

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
  • NSFR (net stable funding ratio) reflects long term funding situation
  • LCR (liquidity coverage ratio) reflects short term liquidity
  • High NSFR ratio reflects successful funding activities

Refinancing situation 2013Successful funding activities

Total funding of € 3.1 bn in 9M 2013

  • Pfandbriefe: € 2.3 bn
  • thereof two benchmark mortgage Pfandbriefe:€ 625 mn and € 500 mn
  • thereof one foreign currency mortgage Pfandbrief:£ 200 mn
  • Senior unsecured: € 0.7 bn
  • Additional subordinated debt (LT2): € 0.1 bn

Current trends

Continuous demand for all types of products

Refinancing situationDiversified 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 30.09.2013, this share has fallen below 28% (or even below 10% without Pfandbriefe)

As at 30.09.2013

Group figures Q3 2013

Net interest incomeNII picking up further

  • Sound margins from the CRE business and lower funding costs pushing the NII, 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 Q3: € 4.4 bn)
  • NII Consulting / Services further burdened by interest rate environment
  • Aareal Bank already fulfils future NSFR / LCR requirements

NII Consulting / ServicesNII Structured Property Financing

Loan loss provisionsWithin normal quarterly variation

  • Close monitoring of the loan portfolio and successful restructuring efforts resulted in only 44 bp risk costs on average loan book in 2012
  • Q3-LLP of € 29 mn
    • (€ 11 mn) general allowances allocated to specific loans "switched" to specific allowances (P/L neutral)
  • -+ € 34 mn new specific allowances
      • € 5 mn general allowances(released)
  • Originally wider FY-range due to expected portfolio growth and recessive economies: € 110 mn - € 150 mn
  • As of today: lower end expected

FY guidance

Net commission incomeWithin expectation

  • Aareon on track
  • Strong Aareon revenue regularly pushing Q4

19

Net result: trading/non trading/hedge accountingResult reflects volatile markets

High market volatility reflected in net result from trading, non-trading and hedge accounting

Admin expensesSlightly higher than expected

  • Positive effects from efficiency measures (carried out in the previous years)
  • Provisions for long-term incentive plan reflecting the share price development
  • Regulatory projects
  • Acquisition of Incit AB

Asset quality

Total property finance portfolio High diversification and sound asset quality

Total property finance portfolio Continuing conservative approach

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24

Western Europe (ex Ger) credit portfolioTotal volume outstanding as at 30.09.2013: € 7.2 bn

Southern Europe credit portfolioTotal volume outstanding as at 30.09.2013: € 4.2 bn

German credit portfolio

Total volume outstanding as at 30.09.2013: € 3.7 bn1)

Eastern Europe credit portfolio Total volume outstanding as at 30.09.2013: € 2.9 bn

Northern Europe credit portfolio Total volume outstanding as at 30.09.2013: € 2.4 bn

North America credit portfolio Total volume outstanding as at 30.09.2013: € 3.2 bn

Asia credit portfolioTotal volume outstanding as at 30.09.2013: € 0.3 bn

Total property finance portfolio€ 23.9 bn of high quality real estate assets

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NPL and NPL-ratio (since 12.2004)0%2%4%6%8%10%12%01.0002.0003.0004.0002004 2005 2006 2007 2008 2009 2010 2011 2012 Sep13North AmericaEurope EastEurope NorthEurope SouthEurope WestGermanyNPL/Total Portfolio€ mn NPL share10.7%8.5%2.8%1.5% 1.9% 3.2% 3.4% 3.7% 3.5% 3.1%1,0002,000 3,0004,000

Treasury portfolio€ 10.9 bn of high quality and highly liquid assets

As at 30.09.2013 – all figures are nominal amounts1) Composite Rating

Treasury portfolio€ 8.8 bn Public Sector Debtors

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

343) Incl. securities of the LaR-category after tax

Treasury portfolio€ 1.8 bn Covered Bonds / Financials

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

Outlook 2013

Outlook 2013Operating profit in the range of 2011

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v

1) As in 2012, the bank cannot rule out additional allowances for unexpected credit losses

Midterm outlook

Key RoEdrivers from Aareal's action plan

39

Perspective until 2015 / 2016

1. Funding strategy: 1.

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

2. CRE new business: 2.

Focus on markets with LTV ratios of 60-70%, resulting in lower RWA consumption and higher CB-funding share

3. Origination capacity: 3.

Strengthen client relationships by leveraging new business through stronger cooperation via club deals and syndication

4. Aareon: 4.

Enhance profit contribution

5. Cost base:5.

Continue cost discipline

6. Capital structure: 6.

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

7. Dividends: 7.

Plan to start active dividend policy in 2014 (for FY 2013, depending on market conditions)

8. RoE:8.

Pre-tax RoE target of approx.12% in 2015 / 2016

Aareal Bank´sactionplan

Aareal Bank´s action plan in detail (1/3)

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Summary and PrerequisitsAs published Feb. 2013

2
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(
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t
n
e		 1
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1
1
%
–

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

Appendix

Aareal Bank GroupKey figures Q3 2013

Qu
3
te
ar
r
2
0
1
3		 Qu
3
te
ar
r
2
0
1
2		 C
ha
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mn		 Eu
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Pr
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in
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e		 1
3
3		 1
1
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%
for
A
l
low
d
i
los
t
an
ce
c
re
se
s		 2
9		 3
0		 3
%
-
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
0
4		 8
9		 1
%
7
Ne
iss
ion
inc
t c
om
m
om
e		 4
0		 3
9		 3
%
Ne
l
he
dg
ing
t r
t o
t
es
n
e a
cc
ou
n
u		 0 2
-		 -
Ne
d
ing
inc
/ e
t
tra
om
e
xp
en
se
s		 3 6 5
0
%
-
Re
l
fro
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 -2 1 -
fro
for
Re
l
ies
d
i
ts
te
t e
ty
su
m
co
mp
an
a
cc
ou
n
a
q
u		 - -
Re
l
fro
inv
ies
ts
tm
t p
t
su
m
es
en
rop
er		 0 0 0
%
A
dm
in
is
ive
tra
t
ex
p
en
se
s		 9
4		 9
0		 4
%
Ne
he
ing
inc
/ e
t o
t
t
r o
p
era
om
e
xp
en
se
s		 -3 1
-		 -
Im
irm
f g
dw
i
l
l
t o
p
a
en
oo		 0 - -
Op
in
Pr
f
i
t
t
er
a
g
o		 4
8		 4
2		 1
4
%
Inc
tax
om
e
es		 1
5		 1
0		 5
0
%
Ne
in
/
lo
t
co
m
e
ss		 3
3		 3
2		 3
%
io
f r
A
l
lo
t
l
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
no
n-c
on
res		 5 5 0
%
/
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		 2
8		 2
7		 4
%
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
ers
co
n		 5 5 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
3		 2
2		 5
%

Aareal Bank Group: Segment Reporting Key figures Q3 2013 by operating units

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

Aareal Bank GroupKey figures 9M 2013

0
1.
0
1.-
3
0.
0
9.
2
0
1
3		 0
1.
0
1.-
3
0.
0
9.
2
0
1
2		 C
ha
ng
e
Eu
ro
mn		 Eu
ro
mn
Pr
f
i
d
lo
t a
t
o
n
ss
a
cc
ou
n
Ne
in
inc
t
te
t
res
om
e		 3
8
0		 3
7
0		 3
%
for
A
l
low
d
i
los
t
an
ce
c
re
se
s		 4
7		 6
7		 1
0
%
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		 3
0
6		 3
0
3		 1
%
Ne
iss
ion
inc
t c
om
m
om
e		 1
1
7		 1
1
9		 2
%
-
Ne
l
he
dg
ing
t r
t o
t
es
n
e a
cc
ou
n
u		 -3 7
-		 -
Ne
d
ing
inc
/ e
t
tra
om
e
xp
en
se
s		 1
4		 1
7
-		 -
Re
l
fro
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 -8 2
-		 -
fro
for
Re
l
ies
d
i
ts
te
t e
ty
su
m
co
mp
an
a
cc
ou
n
a
q
u		 - -
Re
l
fro
inv
ies
ts
tm
t p
t
su
m
es
en
rop
er		 0 5 1
0
0
%
-
A
dm
in
is
ive
tra
t
ex
p
en
se
s		 2
7
6		 2
7
0		 2
%
Ne
he
ing
inc
/ e
t o
t
t
r o
p
era
om
e
xp
en
se
s		 -1
0		 1
-		 -
Im
irm
f g
dw
i
l
l
t o
p
a
en
oo		 0 0 -
Op
in
Pr
f
i
t
t
er
a
g
o		 1
4
0		 1
3
0		 8
%
Inc
tax
om
e
es		 4
4		 3
3		 3
3
%
Ne
in
/
lo
t
co
m
e
ss		 9
6		 9
7		 -1
%
io
f r
A
l
lo
t
l
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
no
n-c
on
res		 1
5		 1
5		 0
%
/
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		 8
1		 8
2		 1
%
-
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
ers
co
n		 1
5		 1
5		 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		 6
6		 6
7		 -1
%

Aareal Bank Group: Segment Reporting Key figures 9M 2013 by operating units

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

Aareal Bank Group: Segment Reporting Key figures - quarter by quarter

Str
ed
Pr
tur
ert
uc
op
y
Fin
cin
an
g		 Co
ltin
/ S
ice
nsu
g
erv
s		 Co
lid
ati
/
nso
on
ilia
tio
Re
co
nc
n		 Aa
l B
k G
rea
an
rou
p
Q3 Q2 Q1 Q4 Q3 Q3 Q2 Q1 Q4 Q3 Q3 Q2 Q1 Q4 Q3 Q3 Q2 Q1 Q4 Q3
20
13		 20
13		 20
13		 20
12		 20
12		 20
13		 20
13		 20
13		 20
12		 20
12		 20
13		 20
13		 20
13		 20
12		 20
12		 20
13		 20
13		 20
13		 20
12		 20
12
Eu
ro
mn
Ne
t in
in
ter
est
com
e		 131 124 118 113 114 0 0 0 0 0 2 2 3 3 5 133 126 121 116 119
All
e fo
red
it lo
ow
anc
r c
sse
s		 29 28 17 39 30 29 28 17 39 30
Ne
t in
in
af
ter
est
ter
co
me		 102 96 101 74 84 0 0 0 0 0 2 2 3 3 5 104 98 104 77
all
fo
red
it l
ow
an
ce
r c
oss
es		 89
Ne
mis
sio
n in
t c
om
com
e		 2 3 2 5 6 40 39 39 49 39 2
-		 3
-		 3
-		 4
-		 6
-		 40 39 38 50 39
Ne
lt o
n h
edg
ing
t re
unt
su
e a
cco		 0 0 3
-		 3 2
-		 0 0 3
-		 3 2
-
Ne
adi
inc
e /
t tr
ng
om
ex
pen
ses		 3 5 6 7 6 3 5 6 7 6
Re
lts
fro
din
-tra
ts
su
m
non
g a
sse		 -2 -5 -1 3 1 -2 -5 -1 3 1
Re
lts
fro
ani
su
m
co
mp
es
ted
fo
r at
uity
acc
oun
eq		 0 0
Re
lts
fro
inv
est
nt
su
m
me		 0 0 0 0 0 0 0 0
rtie
pro
pe
s		 0 0
Ad
min
istr
ativ
e e
xpe
nse
s		 50 47 50 44 51 44 44 42 45 40 0 1
-		 0 1
-		 1
-		 94 90 92 88 90
e /
Ne
t o
the
atin
inc
r o
per
g
om		 -3 2 4 4 2 0 0 1 2 1 0 0
0		 0 0 3 2 5 6 1
exp
ens
es		 - - - - - - - - - - -
Imp
airm
of
dw
ill
ent
goo		 0 0 0 0 0 0
Op
tin
rof
it
era
g p		 52 50 51 44 42 4
-		 5
-		 4
-		 2 0 0 0 0 0 0 48 45 47 46 42
Inc
e t
om
axe
s		 16 15 16 19 10 1
-		 1
-		 1
-		 0 0 15 14 15 19 10
t in
/ l
Ne
co
me
oss		 36 35 35 25 32 3
-		 4
-		 3
-		 2 0 0 0 0 0 0 33 31 32 27 32
All
ati
of
lts
oc
on
re
su
e /
Ne
t in
los
ttri
but
abl
e t
com
s a
o
olli
inte
ntr
ts
non
-co
ng
res		 4 5 4 4 5 1 0 1 0 0 5 5 5 4 5
Ne
t in
e /
los
ttri
but
abl
e t
com
s a
o		 32 30 31 21 27 4 4 4 2 0 0 0 0 0 0 28 26 27 23
sha
reh
old
of
Aa
l B
ank
AG
ers
rea		 - - - 27

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
  • EBA draft definition of forbearance:

"Debts with forbearance measures are contracts the terms of which the debtor is considered unable to comply with due to its financial difficulties so that the institution decides either to modify the terms and conditions of the contract to enable the debtor to service the debt or to refinance, totally or partially, the contract. Refinancing refers to the use of contracts to ensure the total or partial payment of other contracts the current terms of which the debtor is unable to comply with. (…) "

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 30.06.2013: € 0.3 bn

52

Development property finance portfolioDiversification continuously strengthened (in € mn)

Property finance under management

Revaluation surplusChange mainly driven by asset spreads

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

1) Excl. market risk

2) Exposure to Retail amounts to € 17 mn

3) Exposure to Sovereigns amounts to € 17 mn

554) Exposure to investment shares amounts to € 15 mn

Definitions and contacts

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 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

\n- Net stable funding ratio =
$$
\frac{\text{Available stable funding}}{\text{Required stable funding}} \geq 100\%
$$
\n
\nTotal stock of high quality liquid asset

Liquidity coverage ratio = ≥ 100%Total stock of high quality liquid assetsNet cash outflows under stress

Contacts

Sebastian Götzken

Senior Manager Investor RelationsPhone: +49 611 348 [email protected]

Karin Desczka

Investor RelationsPhone: +49 611 348 [email protected]

Disclaimer

© 2013 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.
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  • 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. 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.
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