Aareal Bank Group reports a marked increase in third-quarter profits

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- Nine-month operating profit already exceeds full-year 2009
results - Aareal Bank has thus achieved a key objective for the
current financial year
- Full-year forecasts raised for key financial indicators
- Consolidated operating profit of EUR 33 million, up from EUR 21
million in Q3 2009
- Allowance for credit losses of EUR 32 million for the third
quarter remains at a manageable level

Wiesbaden, 9 November 2010 - Aareal Bank Group continued to
perform well during the current financial year, posting consolidated
operating profit of EUR 33 million for the third quarter - in a
business environment that continues to be challenging. The bank's
operative result thus not only exceeded the very satisfactory result
posted for the previous quarter (EUR 31 million) but also the figure
for the same period of the previous year (EUR 21 million). Once
again, both of the Group's segments contributed to the strong results
achieved in the third quarter. Aareal Bank Group's consolidated
operating profit for the first nine months of the year thus amounts
to EUR 94 million, up by close to 47 per cent year-on-year (9m 2009:
EUR 64 million). At EUR 32 million, allowance for credit losses
recognised from July to September was slightly below the previous
quarter (Q2 2010: EUR 33 million), and clearly below the previous
year's figure (Q3 2009: EUR 36 million).

Dr Wolf Schumacher, Chairman of Aareal Bank's Management Board,
commented on the figures: "Thanks to the strength and soundness of
our business model, we once again performed very well in a market
environment that continues to be truly challenging for the property
sector. We continue to consistently exploit the market opportunities
available, whilst maintaining a tight rein on our risk exposure. Our
consolidated operating profit already exceeds the full-year results
for 2009 - this means that we have already achieved a key objective
for the current financial year after only three quarters in 2010."

Structured Property Financing segment: operating profit increases
markedly

Aareal Bank once again boosted operating profit in the Structured
Property Financing segment during the third quarter. At EUR 28
million, it not only clearly exceeded the EUR 15 million reported in
the same quarter of the previous year, but also improved on the good
results posted in the second quarter of 2010 (EUR 25 million). Net
interest income in the period under review was EUR 121 million after
EUR 99 million in the comparable period of the previous year. The
increase was largely due to higher margins achieved in the lending
business.

Allowance for credit losses totalled EUR 32 million in the third
quarter (Q3 2009: EUR 36 million), thus remaining within the normal
fluctuation range, and so on a clearly manageable level, despite the
persistently challenging environment. This fact once again highlights
the high quality of Aareal Bank's property financing portfolio.

Even though the environment for the property sector has remained
challenging throughout the year to date, Aareal Bank was able to
leverage its strong capital and liquidity base to exploit several
opportunities to generate attractive new business during the third
quarter. As in the past, the bank did so selectively, with a strategy
centred around quality and prudence. New business in the third
quarter was EUR 1.2 billion and thus significantly higher than in the
same quarter of the previous year (Q3 2009: EUR 0.7 billion). Aareal
Bank therefore raised its new business to EUR 4.1 billion in the
first nine months of the year, an increase of EUR 1.7 billion over
the same period of the previous year. The share of loan renewals
continued to decline.

Consulting/Services: interest rate environment remains
unfavourable - Aareon continues to develop positively, in line with
projections

At EUR 5 million, operating profit generated by the Consulting /
Services segment was slightly lower compared with the corresponding
quarter of the previous year (Q3 2009: EUR 6 million). Results were
negatively impacted by a sustained low interest rate environment,
which has persisted for longer than anticipated, and which in turn
has adversely affected the profitability of the deposit business.
Despite continued intense competition for client deposits, the volume
of deposits from the institutional housing industry remained stable
during the third quarter of 2010, averaging EUR 4.2 billion.

Aareon AG's business activities developed according to plan, and
were once again shaped by its successful Wodis Sigma product line.
Introduced in 2009, this product generation has met with an
exceptionally positive response from Aareon's clients. Since its
introduction, more than 260 companies of all sizes, managing around a
million housing units between them, have opted for Wodis Sigma. This
includes many new clients.

Refinancing: successful issuance activities

Aareal Bank remains solidly financed. The bank continued its
successful funding activities - as planned - during the third quarter
of this year. Overall, the bank placed EUR 1.1 billion in unsecured
issues during the first nine months of the year - EUR 400 million of
which was during the third quarter - and placed EUR 2 billion in
covered bonds (Pfandbriefe), of which EUR 300 million was during the
period under review. The bank's enduringly solid and conservative
refinancing and liquidity policy provides the basis for its robust
operating business, and the secure foundation of its successful
business model.

Aareal Bank's capitalisation remained very sound in the third
quarter: as at 30 September 2010, the bank's Tier 1 ratio - measured
in accordance with the Credit Risk Standard Approach (CRSA) - was
10.4 per cent, which is high by international standards.

Notes to Group financial performance

Net interest income in the third quarter of 2010 was EUR 131
million (Q3 2009: EUR 112 million), bringing the figure for the first
nine months of the financial year to EUR 370 million (9m 2009: EUR
345 million). Net interest income including allowance for credit
losses amounted to EUR 273 million for the first nine months (9m
2009: EUR 230 million).

Net commission income for the third quarter was EUR 24 million (Q3
2009: EUR 28 million), bringing the total figure for the first nine
months to EUR 86 million (9m 2009: EUR 94 million). This item
reflects EUR 20 million in running costs for the guarantee facility
extended by SoFFin at the end of March 2009, for the period from
January to September 2010 (9m 2009: EUR 11 million). It includes
additional expenditure - incurred in the third quarter for the first
time - for the precautionary utilisation of the remaining SoFFin
guarantee facility. Taking this effect into account, net commission
income was up slightly year-on-year.

Net trading income/expenses for the third quarter was EUR 2
million (Q3 2009: EUR 18 million), and EUR -5 million for the first
nine months (9m 2009: EUR 41 million). The net result was largely
attributable to the valuation of trading derivatives used to hedge
interest rate and currency risks, and to realised and unrealised
changes in value from sold hedging instruments on selected EU
sovereign countries.

Results from non-trading assets amounted to EUR -3 million in the
third quarter (Q3 2009: EUR -3 million). The corresponding figure for
the first nine months of the financial year was positive, at EUR 11
million, compared to a net deficit of EUR 19 million for the first
nine months of 2009.

Third-quarter administrative expenses were EUR 88 million (Q3
2009: EUR 92 million). The EUR 271 million figure for the first nine
months was EUR 7 million lower year-on-year (9m 2009: EUR 278
million). This continues to reflect pursuance of the Group's strict
cost discipline.

Net other operating income and expenses totalled EUR 1 million for
the third quarter (Q3 2009: EUR -3 million), and EUR -7 million for
the first nine months (9m 2009: EUR -2 million). The net figure
included project costs and provisions recognised for subsidiaries.

Consolidated operating profit for the third quarter thus totalled
EUR 33 million (Q3 2009: EUR 21 million). Taking into consideration
income taxes of EUR 11 million and minority interest income of EUR 5
million, consolidated net income after non-controlling interest
income amounted to EUR 17 million. After deduction of the net
interest payable on the SoFFin silent participation, consolidated
income stood at EUR 10 million (Q3 2009: EUR 3 million).

Consolidated operating profit for the first nine months of the
current year totalled EUR 94 million (9m 2009: EUR 64 million).
Taking into consideration taxes of EUR 29 million and minority
interest income of EUR 14 million, net income attributable to
shareholders of Aareal Bank AG amounted to EUR 51 million. After
deduction of the net interest payable on the SoFFin silent
participation, consolidated income stood at EUR 27 million.

Outlook: full-year forecasts raised for key financial indicators

Aareal Bank Group's business has outperformed expectations during
the course of 2010 to date. Especially given the background of the
positive results posted for the third quarter, the bank thus raised
its forecasts for key financial indicators.

New business generated in the Structured Property Financing
segment is currently projected to exceed the previously forecasted
range of between EUR 4 billion and EUR 5 billion in 2010, with the
share of renewals expected to decline further.

Owing to the positive developments in the course of the year to
date, Aareal Bank now believes that the communicated target corridor
for net interest income of between EUR 460 and EUR 480 million will
also be exceeded. Although prevailing low interest rates will
continue to depress margins generated on deposits from the
institutional housing industry, this development will be offset
especially by higher margins generated in the lending business.

The commercial property financing business environment remains
challenging. After the first nine months of the year, Aareal Bank
expects allowance for credit losses to be in the lower half of the
forecast range between EUR 117 million and EUR 165 million. The exact
figure depends especially on the utilisation of the additional
allowance for credit losses, which was increased from EUR 34 million
to EUR 48 million in the 2009 financial year. It is, however, still
impossible to exclude additional impairments from unexpected losses.
However, from today's perspective, Aareal Bank views this as a rather
unlikely scenario.

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

In the Consulting / Services segment, Aareon continues to develop
on schedule, whilst the ongoing low interest rate environment burdens
profitability in the deposit-taking business.

Aareal Bank has already achieved its objective for 2010 full-year
operating profit to exceed the previous year's figure after nine
months. Although the market environment remains subject to
uncertainty, the international property specialist is confident of
its ability to post a solid profit again in the fourth quarter, and
therefore to increase the operating profit even further at year-end.

"The positive overall performance we have seen over the last
months has clearly affirmed our view that commercial property
financing can look forward to a bright future", said CEO Dr Wolf
Schumacher. "We continue to expect the market environment to
normalise gradually during the current year, and especially in 2011.
Our assumption is that markets will return to normal again as of
2012. Leveraging our sustainable business model that is based on two
strong segments, and a business policy rooted in solidity and
sustainability, Aareal Bank is best placed to capitalise on the
impending market recovery. This will enable us to further expand our
position as one of the leading providers in the markets we cover",
Schumacher added.

Note to editors: The full interim report for the third quarter of
2010 is available on
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