Aareal Bank Group remains on course in the second quarter of 2010

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- Second-quarter consolidated operating profit rises to EUR 31
million (Q2 2009: EUR 19 million)
- Allowance for credit losses of EUR 33 million remains at a
manageable level
- New Structured Property Financing business expanded to EUR 1.6
billion
- Consulting/Services segment: Aareon performs well, and on
schedule - interest rate environment remains unfavourable for
deposit-taking
- Outlook for the full year 2010 affirmed

Aareal Bank Group continues to develop on schedule during the
current financial year, posting very satisfactory results for the
second quarter of 2010, in a challenging market environment. At EUR
31 million, consolidated operating profit clearly exceeded the
results of the same quarter of the previous year (EUR 19 million).
Half-year consolidated operating profit of EUR 61 million was also
markedly higher year-on-year (H1 2009: EUR 43 million). Both of the
bank's business segments continued to contribute to this positive
development.

Dr Wolf Schumacher, Chairman of the Management Board, commented on
Aareal Bank's second-quarter results: "We continue to perform well
during the 2010 financial year. Our good results for the second
quarter - which was once again characterised by uncertainty and
turbulence on the capital markets - is further evidence that our
business model is viable and sustainable."

Against the background of a sound operating performance and the
bank's solid capitalisation, Aareal Bank announced at the end of the
second quarter that it would repay a first tranche of the silent
participation by the German Financial Markets Stabilisation Fund
(SoFFin). The EUR 150 million tranche was repaid on 16 July, making
Aareal Bank the first bank to start repaying capital support provided
by SoFFin.

"We have achieved solid consolidated results in a demanding market
environment. We also markedly accelerated repayment of SoFFin funds -
these are clear signs of Aareal Bank Group's strong operating
performance, and the good shape the bank is in. We continue to have
our risk exposure well under control; the bank has a very solid
capitalisation and is well-positioned for the future", said Dr
Schumacher.

Structured Property Financing segment: marked increases in
operating profit and new business

Operating in a commercial property market environment that remains
challenging - regardless of some early signs of improvement - Aareal
Bank's Structured Property Financing segment once again performed
well. The bank consistently pursued its sustainable, prudent and
conservative business policy during the second quarter, increasingly
exploiting opportunities for attractive new business which emerged.
Overall, the bank increased the volume of new business originated
during the second quarter to EUR 1.6 billion, whereby the share of
renewals declined. This brings the aggregate new business figure for
the first half of the year to EUR 2.9 billion - a level that is
appropriate, considering the state of the sector.

At EUR 25 million, operating profit in the Structured Property
Financing segment was significantly up year-on-year (Q2 2009: EUR 12
million). At EUR 111 million, net interest income in the segment was
higher than in the previous quarter, and also higher than in the same
period of the previous year (EUR 106 million and EUR 103 million,
respectively). The increase was largely due to the higher margins
achieved in the lending business. The net figure also includes a EUR
2 million payment received from Deutsche Interhotel Holding GmbH &
Co. KG.

At EUR 33 million, allowance for credit losses has remained at a
clearly manageable level (Q2 2009: EUR 42 million); in spite of
turbulence on some key markets, the figure was virtually unchanged
from the previous quarter and remained within the normal fluctuation
range - once again, evidence to the high quality of Aareal Bank's
property financing portfolio.

Consulting/Services segment: Aareon performs well, and on schedule
- interest rate environment remains unfavourable

Aareon's positive performance has been on schedule: the
subsidiary's business activities continue to develop within the
defined target range. Around 250 businesses of all sizes have signed
up for Wodis Sigma since this product generation was launched in
2009. Aareon acquired twelve additional Wodis Sigma accounts during
the second quarter of this year alone.

The interest rate environment remained unfavourable for the
profitability of the deposit-taking business during the second
quarter of 2010. Nonetheless, the Consulting/Services segment once
again showed a robust performance, generating operating profit of EUR
6 million (Q2 2009: EUR 7 million). Despite ongoing predatory
competition for customer deposits in terms of pricing during the
second quarter, the volume of deposits taken from the institutional
housing industry averaged EUR 4.1 billion, up slightly compared to
the previous quarter (Q1 2009: EUR 3.9 billion). This reflects the
high level of confidence that institutional housing industry clients
in Germany continue to place in Aareal Bank as their reliable banking
partner.

Successful funding activities - capitalisation remains solid

Aareal Bank's refinancing remains solid after the first six months
of the current financial year. The bank was successful in its
refinancing activities carried out during the year to date: raising
some EUR 1.3 billion in long-term funding via private and public
placements on the capital market during the second quarter; this
included around EUR 1 billion in Pfandbrief issues and approximately
EUR 300 million in unsecured issues. Overall, the bank placed EUR 700
million in unsecured issues during the first half of the year, and
placed EUR 1.8 billion in Pfandbriefe.

To retain its ability to respond quickly and flexibly at all times
to possible market distortions over the medium term, Aareal Bank took
the decision during the second quarter to draw on the remaining EUR 2
billion tranche of the SoFFin guarantee facility for a shelf bond
issue, which the bank has taken onto its own books. This utilisation
of the framework guarantee is purely precautionary in nature, and
there are no plans at present to place it on the market.

Aareal Bank continues to demonstrate solid capitalisation as at 30
June 2010: the Tier 1 ratio measured in accordance with the Credit
Risk Standard Approach (CRSA) was 10.2 per cent, which continues to
be high by international standards. The figure reported includes the
partial repayment of the SoFFin silent participation, which was
effected after the reporting date.

Notes to Group financial performance

Net interest income for the second quarter of 2010 was EUR 122
million (Q2 2009: EUR 116 million), thus amounting to EUR 239 million
for the first six months of the financial year (H1 2009: EUR 233
million). Net interest income after allowance for credit losses for
the first half of the year totalled EUR 174 million (H1 2009: EUR 154
million).

Net commission income was EUR 32 million in the second quarter (Q2
2009: EUR 30 million), bringing the total figure for the first half
of the year to EUR 62 million (H1 2009: EUR 66 million). This item
reflects EUR 11 million in running costs for the guarantee facility
extended by SoFFin at the end of March 2009, for the period from
January to June 2010 (H1 2009: EUR 6 million). Taking into account
this effect, net commission income was in line with the figure posted
for the same period of the previous year.

Net trading income/expenses for the second quarter was EUR -13
million (Q2 2009: EUR 5 million) and EUR -7 million for the first
half of the year (H1 2009: EUR 23 million). The net result was
largely attributable to the valuation of trading derivatives used to
hedge interest rate and currency risk, and to realised and unrealised
changes in value recognised on the sale of protection on selected EU
government bonds.

Sales of fixed-income securities executed during the second
quarter resulted in a positive result from non-trading assets of EUR
14 million (Q2 2009: EUR 1 million). As in the previous quarter, the
measurement of non-trading assets did not result in any burdens on
income during the second quarter; the figure for the first six months
was also positive, at EUR 14 million (H1 2009: EUR -16 million).

Administrative expenses in the Group amounted to EUR 92 million in
the second quarter (unchanged year-on-year), and EUR 183 million in
the first half-year, down EUR 3 million (H1 2009: EUR 186 million).
This continues to reflect pursuance of the Group's strict cost
discipline.

Net other operating income and expenses in the second quarter
amounted to EUR -6 million (Q2 2009: EUR 1 million), bringing the
total figure for the first half of the year to EUR -8 million (H1
2009: EUR 1 million). The net figure includes project costs and
provisions recognised for subsidiaries.

The payment by Deutsche Interhotel Holding GmbH & Co KG was
recognised in the result of investments accounted for using the
equity method, in an amount of EUR 5 million for the second quarter;
this was also the figure for the first half of the year (H1 2009:
nil).

On balance, consolidated operating profit for the second quarter
amounted to EUR 31 million (Q2 2009: EUR 19 million). After deduction
of EUR 9 million in income taxes and EUR 4 million in income
attributable to non-controlling interests, net income after minority
interests amounted to EUR 18 million. After deduction of the net
interest payable on the SoFFin silent participation, consolidated net
income stood at EUR 9 million (Q2 2009: EUR 3 million).

Aareal Bank Group's consolidated operating profit for the first
six months of 2010 totalled EUR 61 million (H1 2009: EUR 43 million).
Taking into consideration taxes of EUR 18 million and non-controlling
interest income of EUR 9 million, net income attributable to
shareholders of Aareal Bank AG amounted to EUR 34 million. After
deduction of the net interest payable on the SoFFin silent
participation, consolidated net income stood at EUR 17 million (H1
2009: EUR 15 million).

Outlook: forecasts affirmed in an environment that continues to be
challenging

Notwithstanding the indications of a slight improvement on
property markets, at the mid-year point Aareal Bank continues to
expect the 2010 financial year to remain as challenging as 2009.

However, the bank adheres to its cautiously optimistic outlook for
business performance during the remainder of the year, and affirms
its forecasts communicated to date, with net interest income
projected to increase to EUR 460 million to EUR 480 million.
Allowance for credit losses recognised in income is expected to range
between EUR 117 million and 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
unexpected credit losses that may be incurred during the 2010
financial year.

Consolidated administrative expenses are expected to remain in
line with the previous year, reflecting the Group's continued strict
cost discipline.

The measures resolved during the second quarter - the utilisation
of the remaining SoFFin guarantee facility, and the early partial
repayment of the silent participation - impact on net commission
income and on the appropriation of profits. The additional fees
payable for the utilisation of the remaining framework guarantee
burden operating profit. In contrast, the relief on income due to the
early partial repayment of the silent participation (which virtually
offsets the higher fees) is not reported in operating profit, but in
the appropriation of profits. Despite this effect which burdens
operating profit, from today's perspective Aareal Bank continues to
anticipate potential for increasing consolidated operating profit for
the full 2010 financial year, even though the market environment
continues to be fraught with uncertainty.

New business generated in the Structured Property Financing
segment is currently expected at the upper end of the range between
EUR 4 billion and EUR 5 billion in 2010, with a lower share of
renewals. In the Consulting / Services segment, Aareon continues to
develop on schedule, whereas the ongoing low interest rate
environment burdens profitability in the deposit-taking business.

"We will continue to adhere to our conservative business and risk
policies, which have paid off for the bank, during the remaining
months of 2010," said CEO Dr Schumacher, adding: "At the same time,
we will increasingly exploit opportunities for attractive new
business with appropriate risk/return ratios, which are emerging on a
broader scale now. Leveraging our sustainable business model that is
based on two strong segments, and a business policy rooted in
solidity and stability, Aareal Bank will be better placed than its
sector peers to capitalise on the impending market recovery. Our
close proximity to clients and markets, our forward-looking funding
policy, and our flexibility as a medium-sized company - these are the
prerequisites for further expanding our leading market position
during the years to come", Schumacher explained.

Note to editors: Aareal Bank's full interim report for the second
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
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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