Aareal Bank Group remains successfully on track during the third quarter of 2011

Wiesbaden (ots) -

- Third-quarter consolidated operating profit up 42 per cent
year-on-year, to EUR 47 million
- At EUR 138 million, nine-month consolidated operating profit
already exceeds the full-year figure for 2010
- Tier 1 ratio at 16.6 per cent - core Tier 1 ratio at 11.5 as at
30 September 2011

Aareal Bank Group maintained its positive business development
throughout the third quarter of 2011, in a challenging market
environment. Consolidated operating profit of EUR 47 million exceeded
the figure posted for the same period of the previous year by some 42
per cent (Q3 2010: EUR 33 million) and was also higher than in the
previous quarter (Q2 2011: EUR 44 million). At EUR 138 million,
Aareal Bank Group's nine-month consolidated operating profit has
already exceeded the full-year figure for 2010 (EUR 134 million).

"During the third quarter, we were again able to exploit
opportunities for high-margin new business, and to further strengthen
our market position", said CEO Dr Wolf Schumacher." The moderate
level of allowance for credit losses, which is expected to remain at
the lower end of our projected range for the full year, affirms the
prudent business policy which we have been pursuing over recent
years. Looking back on the first nine months of the year, we are thus
confident that we will be able to maintain our positive business
performance."

Aareal Bank's capitalisation remains solid. The bank's comfortable
Tier 1 ratio of 16.6 per cent (up from 15.8 per cent at the mid-year
point) is also good by international standards. Aareal Bank was thus
able to maintain the ratio at a high level, whilst having grown its
new business volume as planned. The core Tier 1 ratio - defined as
the Tier 1 ratio excluding hybrid capital and the remaining SoFFin
silent participation - stood at 11.5 per cent. Furthermore, despite
persistent uncertainty on the capital markets, Aareal Bank
successfully carried out its funding activities as planned during the
third quarter, fulfilling its full-year funding requirements ahead of
schedule.

Aareal Bank is not exposed to Greek government bonds, and is thus
not affected by the Greek debt reduction agreed upon at the special
summit in Brussels at the end of October. "Thanks to its good
business development during the year to date, Aareal Bank is in a
position to take adequate measures, if required, to respond to any
renewed escalation of the market situation within the framework of
its active portfolio management - and thus to strictly contain the
impact of the European sovereign debt crisis on the bank", Dr
Schumacher explained.

Structured Property Financing: operating profit once again
significantly exceeds the previous year's figure

Aareal Bank once again boosted operating profit in the Structured
Property Financing segment year-on-year: at EUR 42 million for the
third quarter of 2011, operating profit was up by 50 per cent from
the previous year's figure of EUR 28 million, also exceeding the
level posted in the previous quarter (Q2 2011: EUR 41 million) -
despite the non-recurring burden from the partial repurchase of the
remaining SoFFin-guaranteed notes maturing in March 2012. Allowance
for credit losses was EUR 36 million in the third quarter, and was
therefore consistent with the quarterly volatility expected by the
bank.

Nine-month operating profit in the Structured Property Financing
segment was up by more than 60 per cent to EUR 126 million. The
increase was largely due to a marked increase in net interest income,
and also to a lower allowance for credit losses. Aggregate allowance
for credit losses after three quarters is EUR 78 million and is
therefore at the lower end of the pro rata forecast range of EUR 110
to EUR 140 million for the full year.

During the course of 2011 to date the property sector has largely
been stable, even improving slightly relative to the previous year,
reflecting the still-robust performance of the economy as a whole.
This statement also applies to the third quarter, even though the
momentum of the recovery on the property markets has eased recently.
However, in an economic environment that has slowed down slightly,
the business framework for the commercial property markets was stable
to slightly positive.

Aareal Bank remains well positioned in the current economic
environment to take advantage of attractive opportunities for
high-margin new business - whilst maintaining its risk-sensitive
lending policy. New business totalled EUR 3.0 billion from July to
September, thus exceeding the figures for both the previous quarter
(EUR 1.8 billion) and for Q3 2010 (EUR 1.2 billion). During the first
nine months of 2011, the volume of new business originated by Aareal
Bank amounted to EUR 6.2 billion, which equates to growth of more
than 50 per cent over the first three quarters of the previous year
(EUR 4.1 billion). The share of initial loan issues relative to the
volume of new business increased significantly.

Consulting / Services: volume of deposits remaining on a high
level

Operating profit in the Consulting / Services segment for the
third quarter of 2011 amounted to EUR 5 million, matching the figure
for the same period of the previous year.

Averaging EUR 4.8 billion, the volume of deposits from clients
from the institutional housing industry remained at a high level
during the third quarter of 2011. Aareal Bank's clients make strong
use of the bank's combined offer of cash investment schemes,
specialist services for automated mass electronic payments
processing, and the optimisation of downstream processes (together
with related advice). This enables the bank to maintain a strong
position in the market, despite high competitive pressure.

The performance of the IT subsidiary Aareon AG was also on
schedule during the third quarter. In particular, Aareon's enterprise
resource planning software Wodis Sigma continued to develop
positively; with 35 clients signing new contracts this year, a total
of 356 clients have now opted for Wodis Sigma. Most of the existing
Wodis Sigma clients previously used the Aareon ERP products Wodis and
WohnData. To do justice to the strong market demand, Aareon invested
further in expanding its advisory and support capacities.

Funding activities successfully executed

Aareal Bank Group continued to successfully carry out its funding
activities as planned during the third quarter of 2011. It raised a
total of EUR 0.9 billion in long-term funds on the capital market
between July and September 2011. Mortgage Pfandbriefe accounted for
just under EUR 0.6 billion of new issuance, and unsecured refinancing
for EUR 0.3 billion. Despite the still-challenging situation on the
capital and financial markets, Aareal Bank was thus able to execute
all of its funding activities planned year-to-date and during the
third quarter, and already achieved its funding targets for the year
as a whole.

The bank raised a total of EUR 3.7 billion in long-term funds on
the capital market through private and public transactions during the
first nine months of the 2011 financial year, comprising EUR 2.2
billion in Mortgage Pfandbriefe, EUR 100 million in Public Sector
Pfandbriefe, and EUR 1.4 billion in unsecured refinancing. The bank
has therefore maintained its long-term funding inventory at a high
level. The comfortable liquidity situation is also highlighted by the
early partial redemption of the remaining SoFFin-guaranteed notes
maturing in March 2012.

Notes to Group financial performance

Net interest income for the third quarter of 2011 was EUR 133
million (Q3 2010: EUR 131 million). For the first nine months of the
2011 financial year, net interest income thus totalled EUR 401
million (9m 2010: EUR 370 million), an 8 per cent increase. Net
interest income after allowance for credit losses amounted to EUR 323
million (9m 2010: EUR 273 million).

Net commission income for the third quarter was EUR 38 million (Q3
2010: EUR 24 million). The year-on-year increase was largely due to
lower cost for SoFFin-guaranteed notes and to commission income
generated by SG | automatisering bv, Aareon AG's Dutch subsidiary
acquired in the fourth quarter of 2010. Nine-month net commission
income of EUR 99 million was also up year-on-year (9m 2010: EUR 86
million). The net figure includes costs of EUR 18 million (9m 2010:
EUR 20 million) incurred for bonds guaranteed by SoFFin.

Burdens in the result from non-trading assets were fully
compensated by the positive net trading income/expenses figure, and
by the positive net result from hedge accounting. Net trading
income/expenses amounted to EUR 20 million for the third quarter (Q3
2010: EUR 2 million), totalling EUR 14 million for the first nine
months of 2011 (9m 2010: EUR -5 million). Both the quarterly and the
nine-month figure were primarily attributable to the measurement of
derivatives used to hedge interest rate and currency risks, as well
as from unrealised changes in value from the sale of hedging
instruments on selected EU sovereign countries.

Results from non-trading assets amounted to EUR -22 million in the
third quarter (Q3 2010: EUR -3 million); the figure for the first
nine months of the year was EUR -18 million (9m 2010: EUR 11
million). These results were largely attributable to sales of
fixed-income securities.

Consolidated administrative expenses totalled EUR 93 million for
the third quarter (Q3 2010: EUR 88 million) and EUR 280 million for
the first nine months of the year; the figure for the second quarter
was EUR 96 million. This development highlights the Group's continued
strict cost discipline.

Net other operating income and expenses in the third quarter
amounted to EUR 2 million (Q3 2010: EUR 1 million), and EUR -10
million for the first nine months of the year (9m 2010: EUR -7
million), reflecting in particular expenses incurred with one
individual property.

Consolidated operating profit for the third quarter thus totalled
EUR 47 million (Q3 2010: EUR 33 million). Taking into consideration
EUR 13 million in income taxes and EUR 5 million in income
attributable to non-controlling interests, consolidated net income
after non-controlling interests for the quarter stood at EUR 29
million. After deduction of the net interest payable on the SoFFin
silent participation, consolidated income stood at EUR 24 million (Q3
2010: EUR 10 million).

Consolidated operating profit for the first nine months of the
current financial year thus totalled EUR 138 million (9m 2009: EUR 94
million). Taking into consideration taxes of EUR 39 million and
non-controlling interest income of EUR 14 million, net income
attributable to shareholders of Aareal Bank AG amounted to EUR 85
million. After deduction of the net interest payable on the SoFFin
silent participation, consolidated net income stood at EUR 69 million
(9m 2010: EUR 27 million).

Outlook: year-to-date results already exceed the full-year figures
for 2010

The European sovereign debt crisis is likely to remain at the top
of the agenda on the financial and capital markets during the
remainder of the 2011 financial year. It is thus fair to expect that
market volatility will remain high for the time being, and that the
resulting risks in the financial system will persist.

Given the good year-to-date performance and its solid capital and
liquidity base, Aareal Bank Group believes that it is in a good
position to act accordingly on anticipated changes in the market
environment. This applies both to the active management of the
securities portfolio and to the internal organisation, which is
subject to a continuous review regarding potential efficiency
enhancements in all areas.

Aareal Bank continues to expect net interest income for the full
2011 financial year to exceed the previous year's level. New business
for the year as a whole is expected within the upper half of the
forecast range of between EUR 7 billion and EUR 8 billion. Regarding
allowance for credit losses, the bank maintains its forecast range of
between EUR 110 million and EUR 140 million for the year as a whole.
Based on developments during the first nine months, however,
allowance for credit losses is expected to be at the lower end of the
range. As in previous years, the bank cannot rule out additional
allowances for unexpected credit losses in 2011.

A marked year-on-year increase in net commission income for 2011
is expected, thanks predominantly to the relief arising from lower
guarantee fees through the redemption of a large proportion of the
SoFFin-guaranteed notes. Administrative expenses continue to be
defined by the bank's unchanged cost discipline, and the figure for
the current year is expected to be marginally higher than in the
previous year, including the burden associated with the special bank
levy (Bankenabgabe).

Looking ahead, economic risks and future developments on financial
markets are difficult to assess for the coming months. Generally,
Aareal Bank remains in a position to further exceed consolidated
operating profit of the 2010 financial year during the current year -
having matched the previous year's results after nine months already.

Moreover, Aareal Bank continues to believe that it is able to
match its target return on equity before taxes of between 12 per cent
and 13 per cent, in normalised markets.

"Aareal Bank Group continues to perform strongly in its operative
business. Moreover, its medium-sized business structure also means
that it has the necessary flexibility to hold its own, time and
again, in a rapidly-changing market environment. After all, as a
premium provider, our goal is to always offer our clients the best
solutions in both our segments. In this way, we will secure the
bank's successful development in the future", Schumacher summarised.

Note to editors: The full interim report for the third quarter of
2011 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 20 countries.

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