51 million consolidated net income, after taxes and minority interests. Robust earnings trend confirms outlook for the year as a whole

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1 Press Release Contacts: Jörg Müller Phone: Jürgen Junginger Phone: Aareal Bank Group publishes results for the first half of 51 million consolidated net income, after taxes and minority interests New commitments rise to 4.3 billion during the first six months Robust earnings trend confirms outlook for the year as a whole Wiesbaden, 14. August - Aareal Bank Group consolidated net income after minority interests was 51 million for the first six months of. This corresponds to an increase of 6 million or 13% - over the same period of the previous year. The results for the first half of are characterised by a strong pickup in new business generated, thanks to the targeted strengthening of sales units in our core markets, Dr. Wolf Schumacher, Chairman of the Management Board of Aareal Bank, commented when presenting the six-month figures. He added that having generated profits for three quarters now, Aareal Bank Group is well on its way to restore its ability to pay dividends for the full year. New commitments of 4.3 billion in the first half of the year with international business accounting for an 80% share, or 3.4 billion exceeded the very good result achieved in the corresponding period of the previous year by 1.4 billion, or around 50%. New business in Germany was remarkable, at just under 1 billion. On a pro-rata basis, total new business generated is already above the projected total for as a whole. The Consulting/Services segment was also profitable during the first six months: its result after taxes and minority interest income improved to 3 million. The conceptional redesign of the subsidiaries Aareon AG, Aareal First Financial Solutions AG, and the bank's Institutional Housing Business which was initiated at the beginning of the year has meanwhile been completed. Implementation is showing initial signs of success, as highlighted by Schumacher: The overall target for the Institutional Housing Business is to generate a significant contribution of around 40 to 50 million to the Group s pretax result by Page 1 of 7

2 Overview of the results: Aareal Bank Group consolidated net income after minority interests was 51 million for the first six months of, up 6 million or 13 % - from the same period of (H1 : 45 million). This positive earnings trend confirms the outlook for the year as a whole. Net interest income was 102 million during the second quarter of, slightly higher than in the first quarter ( 98 million). The aggregate figure for the first six months of the current year was 200 billion. Net loan loss provisions of 44 million for the first six months are in line with the 80 to 90 million range projected for the year as a whole. Net interest income after loan loss provisions thus amounted to 156 million for the first six months. At 80 million, net commission income for the period under review was 2 million higher than in the same period of the previous year. In this context, it is worth noting that the previous year s figure included roughly 10 million commission income generated by Aareal Hypotheken-Management GmbH and Aareal Hypotheken Vermittlung GmbH subsidiaries; following their disposal, this was compensated by higher income from the bank's core business. Administrative expenses fell to 183 million, down 7.6% from the same period of the previous year. In addition to the sale of former subsidiaries, Aareal Hypotheken Vermittlungs GmbH and Aareal Hypotheken-Management GmbH, strict cost management also contributed to the decline. Despite higher costs incurred as a result of the realignment, however, this overall reduction also evidences initial successes. Profit before taxes amounted to 79 million, up 3 million or approx. 4%, on the first half of the previous year (H1 : 76 million). Consolidated net income after 18 million in income taxes, and 10 million in minority interest income, was 51 million, equivalent to a 9.9 % return on equity (after taxes and minority interests). Page 2 of 7

3 Overview of results for the business segments: Structured Property Financing The segment result after taxes and minority interest income of 45 million equates to a net return on equity after taxes of 12.6%. As a result of the disposal of non-target business, net interest income dropped to 177 million, whilst net loan loss provisions of 44 million were below the 60 million figure for the same period of the previous year. Net commission income almost doubled to 11 million; administrative expenses were down 7.8%, to 95 million. Consulting/Services The segment result after taxes and minority interest income improved to 3 million, having turned around the 4 million loss recorded for the first half of. Although the disposal of the Aareal Hypotheken-Management and Aareal Hypotheken Vermittlung subsidiaries diminished net commission income by 10 million, administrative expenditure was also reduced considerably. Besides income from our Institutional Housing Business, a figure of 3 million in dividends distributed by Immobilien Scout GmbH was also recognised within this segment. Property Asset Management Overall, the result after taxes and minority interest income improved from the 1 million loss for the first half of the previous year, to a 3 million profit. In addition to current fund management fees charged and purchasing/selling fees, the segment result also includes approx. 8 million in commissions earned through advisory services. Refinancing Aareal Bank successfully expanded its scope for refinancing on the capital markets, having expanded its investor base, both nationally and internationally. Aareal Bank raised more than 2.5 billion in long-term funds during the first half of (including Aareal Bank s debut 1 billion Jumbo-Pfandbrief). The majority of private placements (more than 1.3 million) were issued in the form of registered securities such as promissory note loans and registered mortgage bonds. Additionally, bearer bonds exceeding 200 million were placed on the capital markets. More than half of new issues placed during the first half of were Pfandbriefe. Outlook Page 3 of 7

4 Aareal Bank s target for aggregate new business in is approx. 7 billion. Aareal Bank plans to continue reducing its NPL portfolio, to approx. 1 billion - thanks to the extended scope for action, following the resolution passed by the Annual General Meeting, the bank is now in a better position to achieve this objective during the current year. Given the bank s projection of risk provisioning at a normalised level of between 80 and 90 million, operating profit before taxes is anticipated to range between 130 and 150 million. Achieving these targets will restore Aareal Bank s ability to distribute dividends. Page 4 of 7

5 Aareal Bank Gruppe: Results for the second quarter of (figures in accordance with IFRS): Q2 Q2 Change mn. mn. % Net interest income Provision for loan losses Net interest income after loan loss provisions Net commission income Results from hedge accounting Net trading income Results from non-trading assets Results from investments accounted for at equity Results from investment properties Administrative expenses Net other operating income/expenses Amortisation of goodwill Operating profit Income taxes Consolidated net income/loss Allocation of results mn mn % Consolidated net income/loss attributable to minority interests Consolidated net income/losses attributable to shareholders of Aareal Bank AG Page 5 of 7

6 Aareal Bank Gruppe: Key figures from the interim report as at e (figures in accordance with IFRS): H1 H1 Change mn mn % Net interest income Provision for loan losses Net interest income after loan loss provisions Net commission income Results from hedge accounting Net trading income Results from non-trading assets Results from investments accounted for at equity Results from investment properties Administrative expenses Net other operating income/expenses Amortisation of goodwill Operating profit Income taxes Consolidated net income/loss Allocation of results mn mn % Consolidated net income/loss attributable to minority interests Consolidated net income/losses attributable to shareholders of Aareal Bank AG Dec Portfolio data mn mn Property finance 21,255 22,025 of which international 13,161 13,033 Property finance under management 23,629 24,698 of which international 13,161 13,033 Shareholders' equity 1,289 1,241 Total assets 37,441 39,186 1 Apr- 1 Apr- Key financial indicators Cost/income ratio (%) Earnings per share ( ) RoE after taxes (%) Page 6 of 7

7 Segment reporting by operating units as at Structured Property Financing Consulting / Services Property Asset Management Consolidation / Reconciliation/ Other Aareal Bank Group mn mn mn mn mn Net interest income Net loan loss provisions Net interest income after net LLP Net commission income Results from hedge accounting Net trading income / expenses Results from non-trading assets Results from companies accounted for at equity Results from investment properties Administrative expenses Net other operating income Amortisation of goodwill Operating Profit Income taxes Consolidated net income / loss Allocation of results Consolidated net income / loss attributable to minority interest Consolidated net income / loss attributable to shareholders of Aareal Bank AG Allocated equity , Cost / income ratio (%) RoE after taxes (%) Page 7 of 7