Aareal Bank Group posts a good start into the 2010 financial year

Wiesbaden (ots) -

- Querverweis: Ein Dokument liegt in der digitalen
Pressemappe zum Download vor und ist unter
http://www.presseportal.de/dokumente abrufbar -

- First-quarter consolidated operating profit rises to EUR 30
million (Q1 2009: EUR 24 million)
- Allowance for credit losses of EUR 32 million remains at a
manageable level
- New Structured Property Financing business increased to EUR 1.3
billion
- Consulting / Services segment continues to show robust business
development - deposit volumes from the Institutional Housing
Unit remain stable
- Outlook for the full year 2010 affirmed

Aareal Bank Group posted a marked increase in results for the
first quarter of the 2010 financial year, in spite of the continued
challenging market environment for the global property sector.
Consolidated operating profit of EUR 30 million exceeded the results
of both the previous quarter (EUR 23 million) and of the first
quarter of 2009 (EUR 24 million). Aareal Bank thus achieved a
positive and satisfactory result, despite the difficult market
conditions. Once again, both of the Group's segments contributed to
this result.

Dr Wolf Schumacher, Chairman of Management Board, commented on
Aareal Bank's first-quarter results: "We have made a successful start
into the 2010 financial year, in line with our projections. We
continue to keep our risk exposure firmly under control, prudently
exploiting opportunities for attractive new business. We benefit from
having weathered the crisis well so far, and from our flexibility to
act - both strategically and in operative terms. Despite remaining
cautious, in view of all the challenges the current market
environment still presents to property banks, in principle we are
optimistic for the remainder of the year."

Structured Property Financing segment: slight increase in net
interest income

Aareal Bank Group believes that its approach of pursuing a
sustainable and prudent business policy in the Structured Property
Financing segment over the course of the first quarter has once again
been confirmed. During the period, Aareal Bank continued to
concentrate its business in this segment on the funding requirements
of its existing client base; in addition, the bank financed selected
new investment projects for target clients. The bank increased its
new business in the first quarter to EUR 1.3 billion compared with
EUR 0.5 billion for the first quarter of the previous year.

At EUR 106 million, net interest income was higher than in the
previous quarter, and also higher than in the same period of the
previous year (EUR 103 million and EUR 105 million, respectively).
Lower income, as a consequence of the decline in the property
financing portfolio (compared with the same period of the previous
year) was more than compensated for by higher margins from the
lending business and a reduction in the - still comfortable -
liquidity reserve.

Allowance for credit losses for the first quarter of 2010 of EUR
32 million (Q1 2009: EUR 37 million) remained manageable and within a
normal fluctuation range.

At EUR 24 million, the segment's operating profit was slightly
higher than in the same quarter of the previous year (EUR 23
million).

Consulting/Services segment: robust business development

Despite the unfavourable interest rate environment, which
continued to burden Aareal Bank's deposit-taking business, the
Consulting / Services segment showed robust development during the
first quarter of 2010. Consolidated operating profit amounted to EUR
6 million, compared to EUR 1 million in the previous year. The volume
of deposits from the Institutional Housing Unit remained stable,
averaging EUR 3.9 billion during the period under review. This once
again reflects the high level of confidence that German institutional
housing industry clients place in Aareal Bank as their reliable
banking partner.

The business activities of the IT subsidiary Aareon corresponded
to seasonal expectations: business levels were thus within the target
corridor. The new Wodis Sigma product line developed particularly
well during the new financial year to date. In the first quarter
alone, 35 contracts for the new product generation were signed.

Capitalisation and funding: solid and stable overall

Aareal Bank Group continues to have a solid funding base and
remains well-capitalised. As at 31 March 2010, the Tier 1 ratio
measured in accordance with the Credit Risk Standard Approach (CRSA)
was 11.2 %, which is high by international standards.

Aareal Bank Group also successfully carried out its funding
activities as planned during the first quarter of this year. It
raised a total of nearly EUR 1.2 billion in long-term funds on the
capital market via private and public transactions. This included
mortgage bonds with a total volume of nearly EUR 800 million as well
as unsecured funding totalling just under EUR 400 million.
Particularly notable was the successful public placement of a EUR 500
million 5-year mortgage bond in January of this year.

Notes to Group financial performance

With net interest income of EUR 117 million for the first three
months of the financial year, Aareal Bank Group is back in line with
the first quarter of 2009 (EUR 117 million) after slight declines in
the preceding quarters. Lower income as a consequence of the decline
in the property financing portfolio was more than compensated for by
higher margins from the lending business and a reduction in the -
still comfortable - liquidity reserve. The margin from the
deposit-taking business in the Institutional Housing Unit is down
slightly compared with the same quarter of the previous year, due to
the prevailing low interest rate levels.

Considering the allowance for credit losses of EUR 32 million, net
interest income after allowance for credit losses amounted to EUR 85
million (Q1 2009: EUR 80 million).

In contrast to the previous year, net commission income of EUR 30
million (Q1 2009: EUR 36 million) reflected EUR 5 million in running
costs for the guarantee facility extended by SoFFin. Adjusted for
this effect, net commission income was virtually unchanged
year-on-year.

The net trading income/expenses figure of EUR 6 million (Q1 2009:
EUR 18 million) was largely attributable to the valuation of
derivatives used to hedge interest rate and currency risk. There were
no charges from the net results from investment securities (Q1 2009:
EUR -17 million).

At EUR 91 million, administrative expenses were down from last
year's level (Q1 2009: EUR 94 million).

Net other operating income and expenses amounted to EUR -2 million
(Q1 2009: EUR 0).

Consolidated operating profit for the first three months of 2010
totalled EUR 30 million (Q1 2009: EUR 24 million). Taking into
consideration taxes of EUR 9 million and non-controlling interest
income of EUR 5 million, net income attributable to shareholders of
Aareal Bank AG amounted to EUR 16 million (Q1 2009: EUR 12 million).
After deduction of the net interest payable on the SoFFin silent
participation, consolidated net income stood at EUR 8 million (Q1
2009: EUR 12 million).

Outlook: 2010 remains challenging - Aareal Bank is well-positioned
to sustainably strengthen its market position

2010 will not be any less challenging for the financial services
industry than 2009 was. Nonetheless, from today's perspective, Aareal
Bank sees strong potential to increase its consolidated operating
profit this year. Thus far, the bank affirms its communicated outlook
for 2010, with a projected increased net interest income of EUR 460
million to EUR 480 million. Allowance for credit losses recognised in
income is expected to range between EUR 117 million to EUR 165
million: the actual level will depend in particular on the extent to
which the additional allowance for credit losses (which was increased
from EUR 34 million to EUR 48 million in the 2009 financial year)
will, in fact, be utilised. As in the previous year, the bank cannot
rule out additional allowances for credit losses that may be incurred
during 2010.

Consolidated administrative expenses are expected to remain in
line with the previous year, reflecting the Group's continued strict
cost discipline. New business generated in the Structured Property
Financing segment is currently expected to range between EUR 4
billion and EUR 5 billion in 2010, with a lower share of renewals.
Operating profit in the Consulting/Services segment is expected to
increase slightly over the adjusted figure for 2009.

Aareal Bank expects the market environment to gradually normalise
this year, and especially over the course of next year. The
Management Board assumes that markets will return to normal again as
of 2012. Against this background, Aareal Bank is convinced about the
future potential for commercial property financing. This view is
supported by the long-term increase in demand for property and
property financings, as well as post-crisis changes in the
competitive environment and client behaviour.

"We aim to consistently take advantage of the available
opportunities for growth, pursuing them from the basis of our lending
policy rooted in solidity and stability, our pronounced proximity to
clients and the market, our flexibility as a medium-sized company, as
well as our forward-looking funding policies and our sound balance
sheet structure. Our coherent and viable business model has
positioned us favourably, not only to overcome the current challenges
confronting us, but also to sustainably further expand our market
position and to continue to establish the bank as a leader in our
business", said Dr Schumacher.

Note to editors: Aareal Bank's full interim report for the first
quarter of 2010 is available for download from
http://www.aareal-bank.com/en/investor-relations/financial-reports/ .

Aareal Bank

Aareal Bank AG is one of the leading international specialist
property banks. The Aareal Bank share is included in Deutsche Börse's
mid-cap MDAX index. Aareal Bank operates on three continents:
leveraging its successful European business model, the bank has
established similar platforms in North America and in the
Asia-Pacific region. It provides property financing solutions in more
than 25 countries.

Originaltext: Aareal Bank
digital press kits: http://www.presseportal.de/pm/74392
press kits via RSS: http://www.presseportal.de/rss/pm_74392.rss2

Contact:
Aareal Bank AG
Corporate Communications

Sven Korndörffer
phone: +49 611 348 2306
sven.korndoerffer@aareal-bank.com

Christian Feldbrügge
phone: +49 611 348 2280
christian.feldbruegge@aareal-bank.com

Investor Relations

Jürgen Junginger
phone: +49 611 348 2636
juergen.junginger@aareal-bank.com