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Aareal Bank AG

Investor Presentation • Aug 13, 2013

11_ip_2013-08-13_20d26be1-b935-4e8b-9214-57e9dec7568e.pdf

Investor Presentation

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August 13, 2013Dr. Wolf Schumacher, CEO – Hermann J. Merkens, CFO

Agenda

  • Environment Q2 2013
  • Q2 2013 results at a glance
  • Segment performance
  • B/S structure, capital & funding position
  • Group figures Q2 2013
  • Asset quality
  • Outlook 2013
  • Midterm outlook
  • Appendix
  • Definitions and Contacts

Environment Q2 2013 Expectations unchanged

Environment Q2 2013

  • Different speed of recovery in Europe
  • Southern European economies are still struggling watch out for the Netherlands / France
  • North American economic recovery faster than in Europe: fundamental or driven by FED's liquidity?
  • Asian economies keep growing, China's development more uncertain
  • Sovereign crisis will only occasionally affect markets
  • Central Banks still lender of last resort
  • Continued very low interest rate levels will help to stabilise sovereign crisis and European economies but burdening deposit margins

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

Institutional housing industry remains stable

Q2 2013 results at a glance

Q2 2013 results at a glance Solid development in 2013

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Segment performance

Structured property financing New business origination compensating high repayments

Consulting / Services

Solid in IT & volumes – weak in deposit margins

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  • Performance of Aareonwithin guidance
  • Interest rate environment burdens segment results
  • Deposit volume of the housing industry further increased:
  • -Ø Q2 '13: € 7.2 bn
  • -Ø Q1 '13: € 6.7 bn
  • -Ø Q2 '12: € 5.5 bn
  • The strategic importance of the housing industry deposits as an additional source of funding exceeds the importance of the margins shown in the segment

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
  • 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%

Simulation: estimated Basel III effects per 30.06.20132)

3) Estimated impact of Basel III implementation due to capital deductions and counterparty credit risk

Asset- / Liability structure according to IFRSAs at 30.06.2013: € 44.3 bn (31.12.2012: € 45.7 bn)

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

12

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 € 2.6 bn in H1 2013

  • Pfandbriefe: € 2.1 bn
  • thereof two benchmark mortgage Pfandbriefe:€ 625 mn and € 500 mn
  • thereof one foreign currency mortgage Pfandbrief:£ 200 mn
  • Senior unsecured: € 0.5 bn
  • Additional subordinated debt (LT2): € 45 mn

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 30.06.2013, this share has fallen below 28% (or even below 10% without Pfandbriefe)

As at 30.06.2013

Group figures Q2 2013

Net interest incomeNII picking up further

  • NII turnaround due to higher margins from the CRE business overcompensating the burden from the low interest rate environment
  • Due to market volatility and only very limited investment opportunities a considerable part of liquidity is still parked with central banks (Ø Q2: € 4.5 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
  • € 28 mn LLP in Q2 2013 proves high portfolio quality
  • Wider FY-range due to expected portfolio growth and recessive economies: € 110 mn - € 150 mn

FY guidance

Net commission incomeWithin normal quarterly variation

Strong Aareon revenue regularly pushing Q4

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 expensesWithin guided range

  • Forecasted slightly rising admin expenses reflect
    • Positive effects from efficiency measures (carried out in the previous years) keeping admin expenses on a constant level
  • -Regulatory projects
  • -Inflation

Asset quality

Total property finance portfolio High diversification and sound asset quality

Total property finance portfolio Continuing conservative approach

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are calculated on the bases of specific loans in most cases

24

Western Europe (ex Ger) credit portfolioTotal volume outstanding as at 30.06.2013: € 6.9 bn

Southern Europe credit portfolioTotal volume outstanding as at 30.06.2013: € 4.2 bn

German credit portfolio

Total volume outstanding as at 30.06.2013: € 3.6 bn1)

Eastern Europe credit portfolio Total volume outstanding as at 30.06.2013: € 2.9 bn

Northern Europe credit portfolio Total volume outstanding as at 30.06.2013: € 2.4 bn

North America credit portfolio Total volume outstanding as at 30.06.2013: € 3.2 bn

Asia credit portfolioTotal volume outstanding as at 30.06.2013: € 0.5 bn

Total property finance portfolio€ 23.7 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 Jun 13North AmericaEurope EastEurope NorthEurope SouthEurope WestGermanyNPL/Total Portfolio€ mn NPL share10.7%8.5%2.8%1.5% 1.9% 3.2% 3.4% 3.5% 3.7% 2.8%1,0002,0003,0004,000

Treasury portfolio€ 11.3 bn of high quality and highly liquid assets

As at 30.06.2013 – all figures are nominal amounts1) Composite Rating

Treasury portfolio€ 9.2 bn Public Sector Debtors

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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

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

Treasury portfolio€ 1.9 bn Financials

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

35

Outlook

Outlook 2013Chances to achieve operating profit on 2011 level

2
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r
y
a
a
p
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o
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e
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o
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m
a
N
b
i
i
i
i
t
e
w
u
s
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e
s
s
o
r
g
n
a
o
n		 €
b
i
b
l
(
F
Y-
€
b
)
7
8
6
7
t
t
n
p
o
s
s
e
a
r
g
e
r
a
n
g
e
:
n

-
-
O
i
f
i
A
t
t
p
e
r
a
n
g
p
r
o
a
r
e
o
n		 O
2
0
1
2
l
l
n
e
e

v

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

Key RoEdrivers from Aareal's action plan

Appendix

Aareal Bank GroupKey figures Q2 2013

Qu
te
2
ar
r
2
0
1
3		 Qu
te
2
ar
r
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		 1
2
6		 1
2
2		 3
%
A
l
low
for
d
i
los
t
an
ce
c
re
se
s		 2
8		 2
5		 1
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		 9
8		 9
7		 1
%
Ne
iss
ion
inc
t c
om
m
om
e		 3
9		 4
0		 3
%
-
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e a
cc
ou
n		 0 5 -
/ e
Ne
d
ing
inc
t
tra
om
e
xp
en
se
s		 5 7
-		 -
fro
Re
l
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 -5 3
-		 -
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 2 1
0
0
%
-
A
dm
in
is
ive
tra
t
ex
p
en
se
s		 9
0		 8
9		 1
%
/ e
Ne
he
ing
inc
t o
t
t
r o
p
era
om
e
xp
en
se
s		 -2 0 -
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		 4
5		 4
5		 0
%
Inc
tax
om
e
es		 1
4		 1
1		 2
%
7
Ne
in
/
lo
t
co
m
e
ss		 3
1		 3
4		 -9
%
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		 5 5 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
rea
n		 2
6		 2
9		 1
0
%
-
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
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
1		 2
4		 -1
3
%

Aareal Bank Group: Segment Reporting Key figures Q2 2013 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
ns
o
Re
co
nc		 /
i
da
io
t
n
i
l
ia
io
t
n		 Aa
re
a
Gr		 l
Ba
k
n
ou
p
0
1.
0
4.-
3
0.
0
6.
2
0
1
3		 0
1.
0
4.-
3
0.
0
6.
2
0
1
2		 0
1.
0
4.-
3
0.
0
6.
2
0
1
3		 0
1.
0
4.-
3
0.
0
6.
2
0
1
2		 0
1.
0
4.-
3
0.
0
6.
2
0
1
3		 0
1.
0
4.-
3
0.
0
6.
2
0
1
2		 0
1.
0
4.-
3
0.
0
6.
2
0
1
3		 0
1.
0
4.-
3
0.
0
6.
2
0
1
2
Eu
ro
mn
Ne
in
inc
t
te
t
res
om
e		 1
2
4		 1
1
5		 0 0 2 7 1
2
6		 1
2
2
A
l
low
for
d
i
los
t
an
ce
c
re
se
s		 2
8		 2
5		 2
8		 2
5
Ne
in
in
f
l
low
fo
d
i
lo
t
te
t
te
t
re
s
co
me
a
r a
an
ce
r c
re
ss
es		 9
6		 9
0		 0 0 2 7 9
8		 9
7
Ne
iss
ion
inc
t c
om
m
om
e		 3 6 3
9		 4
1		 3
-		 7
-		 3
9		 4
0
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e a
cc
ou
n		 0 5 0 5
Ne
d
ing
inc
/ e
t
tra
om
e
xp
en
se
s		 5 7
-		 5 7
-
Re
l
fro
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 -5 3
-		 -5 3
-
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 2 0 2
A
dm
in
is
ive
tra
t
ex
p
en
se
s		 4
7		 4
7		 4
4		 4
2		 1
-		 0 9
0		 8
9
Ne
he
ing
inc
/ e
t o
t
t
r o
p
era
om
e
xp
en
se
s		 2
-		 2
-		 0 2 0 0 2
-		 0
Im
irm
f g
dw
i
l
l
t o
p
a
en
oo		 0 0 0 0
Op
in
f
i
t
t
er
a
g
p
ro		 5
0		 4
4		 5
-		 1 0 0 4
5		 4
5
Inc
tax
om
e
es		 1
5		 1
1		 1
-		 0 1
4		 1
1
in
/
Ne
t
lo
co
me
ss		 3
5		 3
3		 4
-		 1 0 0 3
1		 3
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
no
n-c
on
res		 5 4 0 1 5 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		 3
0		 2
9		 4
-		 0 0 0 2
6		 2
9

Aareal Bank GroupKey figures H1 2013

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

Aareal Bank Group: Segment Reporting Key figures H1 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
6.
2
0
1
3		 0
1.
0
1.-
3
0.
0
6.
2
0
1
2		 0
1.
0
1.-
3
0.
0
6.
2
0
1
3		 0
1.
0
1.-
3
0.
0
6.
2
0
1
2		 0
1.
0
1.-
3
0.
0
6.
2
0
1
3		 0
1.
0
1.-
3
0.
0
6.
2
0
1
2		 0
1.
0
1.-
3
0.
0
6.
2
0
1
3		 0
1.
0
1.-
3
0.
0
6.
2
0
1
2
Eu
ro
mn
Ne
in
inc
t
te
t
res
om
e		 2
4
2		 2
3
6		 0 0 5 1
5		 2
4
7		 2
1
5
for
A
l
low
d
i
los
t
an
ce
c
re
se
s		 4
5		 3
7		 4
5		 3
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		 1
9
7		 1
9
9		 0 0 5 1
5		 2
0
2		 2
1
4
Ne
iss
ion
inc
t c
om
m
om
e		 5 1
0		 7
8		 8
5		 6
-		 1
5
-		 7
7		 8
0
Ne
l
he
dg
ing
t r
t o
t
es
u
n
e a
cc
ou
n		 -3 5
-		 -3 5
-
/ e
Ne
d
ing
inc
t
tra
om
e
xp
en
se
s		 1
1		 2
3
-		 1
1		 2
3
-
Re
l
fro
d
ing
ts
tra
ts
su
m
no
n-
a
ss
e		 -6 3
-		 -6 3
-
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		 9
7		 9
6		 8
6		 8
4		 1
-		 0 1
8
2		 1
8
0
/ e
Ne
he
ing
inc
t o
t
t
r o
p
era
om
e
xp
en
se
s		 6
-		 3
-		 1
-		 3 0 0 7
-		 0
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
0
1		 8
4		 9
-		 4 0 0 9
2		 8
8
Inc
tax
om
e
es		 3
1		 2
2		 2
-		 1 2
9		 2
3
Ne
in
/
lo
t
co
me
ss		 7
0		 6
2		 7
-		 3 0 0 6
3		 6
5
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		 9 8 1 2 1
0		 1
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		 6
1		 5
4		 8
-		 1 0 0 5
3		 5
5

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

Str
tur
uc
Fin		 ed
Pr
cin
an		 ert
op
y
g		 Co
ltin
/ S
ice
nsu
g
erv
s		 Co
/
lid
ati
nso
on
Re
ilia
tio
co
nc
n		 Aa
l B
k G
rea
an
rou
p
Q2 Q1 Q4 Q3 Q2 Q2 Q1 Q4 Q3 Q2 Q2 Q1 Q4 Q3 Q2 Q2 Q1 Q4 Q3 Q2
20
13		 20
13		 20
12		 20
12		 20
12		 20
13		 20
13		 20
12		 20
12		 20
12		 20
13		 20
13		 20
12		 20
12		 20
12		 20
13		 20
13		 20
12		 20
12		 20
12
Eu
ro
mn
Ne
t in
in
ter
est
com
e		 124 118 113 114 115 0 0 0 0 0 2 3 3 5 7 126 121 116 119 122
e fo
All
red
it lo
ow
anc
r c
sse
s		 28 17 39 30 25 28 17 39 30 25
Ne
t in
in
af
ter
est
ter
co
me		 96 101 74 84 90 0 0 0 0 0 2 3 3 5 7 98 104 77 89
fo
it l
all
red
ow
an
ce
r c
oss
es		 97
Ne
mis
sio
n in
t c
om
com
e		 3 2 5 6 6 39 39 49 39 41 3
-		 3
-		 4
-		 6
-		 7
-		 39 38 50 39 40
Ne
t re
lt o
n h
edg
unt
ing
su
e a
cco		 0 3
-		 3 2
-		 5 0 3
-		 3 2
-		 5
e /
Ne
t tr
adi
inc
ng
om
ex
pen
ses		 5 6 7 6 7
-		 5 6 7 6 7
-
Re
lts
fro
din
-tra
ts
su
m
non
g a
sse		 -5 -1 3 1 -3 -5 -1 3 1 -3
Re
lts
fro
ani
su
m
co
mp
es
ted
fo
uity
r at
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		 2 2
Ad
min
istr
ativ
e e
xpe
nse
s		 47 50 44 51 47 44 42 45 40 42 1
-		 0 1
-		 1
-		 0 90 92 88 90 89
Ne
the
atin
inc
e /
t o
r o
per
g
om		 -2 4 4 2 2 0 1 2 1 2 0 0 0 0 0 2 5 6 1 0
exp
ens
es		 - - - - - - - - - -
of
Imp
airm
ent
dw
ill
goo		 0 0 0 0 0 0
Op
tin
rof
it
era
g p		 50 51 44 42 44 5
-		 4
-		 2 0 1 0 0 0 0 0 45 47 46 42 45
Inc
e t
om
axe
s		 15 16 19 10 11 1
-		 1
-		 0 0 0 14 15 19 10 11
Ne
t in
/ l
co
me
oss		 35 35 25 32 33 4
-		 3
-		 2 0 1 0 0 0 0 0 31 32 27 32 34
All
ati
of
lts
oc
on
re
su
Ne
t in
e /
los
ttri
but
abl
e t
com
s a
o
olli
inte
ntr
ts
non
-co
res		 5 4 4 5 4 0 1 0 0 1 5 5 4 5 5
ng
e /
Ne
t in
los
ttri
but
abl
e t
com
s a
o
sha
reh
old
of
Aa
l B
ank
AG
ers
rea		 30 31 21 27 29 4
-		 4
-		 2 0 0 0 0 0 0 0 26 27 23 27 29

Net interest income-snapshotCRE margin overcompensate EURIBOR/ECB rate decline

  • Relatively low exposure to interest rate changes
  • Hence predominant part of our assets are EURIBOR based
  • Deposit margins are at their bottom
  • Spreads between deposit rate and EURIBOR / ECB rate turned negative
  • Additionally lower returns on investments of residual non interest bearing liabilities

Higher CRE margins overcompensate these effects so that net interest income 2013 will be "slightly above 2012 level"

Loan loss provisions-snapshot (1)Expected market value changes1) to be reflected in portfolio allowances in 20132)

  • 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 2012 to end 2013

Loan loss provisions-snapshot (2)Staying with previous cautious guidance, due to portfoliogrowth and recessive economies: € 110 mn - € 150 mn

LLP guidance 2013 Average risk costs guidance 2013

Admin expenses-snapshot€ 360 mn - € 370 mn

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Perspective until 2015 / 2016Report of achievements

1. Funding strategy: 1.

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2. CRE new business: 2.

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3. Origination capacity: 3.

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4. Aareon: 4.

Enhance profit contribution

5. Cost base:5.

Continue cost discipline

6. Capital structure: 6.

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7. Dividends: 7.

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8. RoE:8.

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Aareal Bank´sactionplan

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Summary and Prerequisits

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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

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. of market risk

57

2) Exposure to Retail amounts to € 21 mn

3) Exposure to Sovereigns amounts to € 17 mn

4) Exposure to investment shares amounts to € 14 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.
  • It must not be modified or disclosed to third parties without the explicit permission of Aareal Bank AG. Any persons who may come into possession of this information and these documents must inform themselves of the relevant legal provisions applicable to the receipt and disclosure of such information, and must comply with such provisions. This presentation may not be distributed in or into any jurisdiction where such distribution would be restricted by law.
  • This presentation is provided for general information purposes only. It does not constitute an offer to enter into a contract on the provision of advisory services or an offer to purchase securities. Aareal Bank AG has merely compiled the information on which this document is based from sources considered to be reliable – without, however, having verified it. 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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