Aareal Bank Group consolidated net profit after minority interest was â¬ 19 million for the first three months of 2005. The mortgage and public sector Pfandbriefe issued by Aareal Hyp retained the best possible rating of AAA from Fitch Ratings, thus confirming the high quality of their assets in the collateral pools.
Commenting on the first quarter figures, Dr. Wolf Schumacher, who assumed the post of new Chairman on 01 April, stated: âWe are pleased with the results achieved in our most important earnings components. Nonetheless, we also face new challenges in the future. We plan to step up our expansion of Aareal Bank Group as a leading international property bank with clearly-defined target clients even further. The 41% growth in new business to â¬ 1,413 million confirms that we are on the right track to further enhance our successful business model.â
Group net income after taxes was â¬ 24 million, including â¬ 5 million in income attributable to minority shareholders. The figure was therefore â¬ 19 million after taxes and minority interest income.
Aareal Bank Group will continue to reinforce its efforts further in expanding its successful business model. In doing so, it will benefit in particular from the following strengths:
- its profitable core business â" internationally and in Germany;
- its capital market activities â" leveraging its market standing for refinancing as well as the placement of credit risks; and
- its mid-sized and flexible structure, which benefits the expansion of a modern corporate culture.
Overview of the results:
Net interest income
Aareal Bank Groupâs most important mainstay of earnings, amounted to â¬ 119 million in the first quarter. This corresponds to an increase of 3.5% over what was already a good result achieved in the same period of last year. Provision for loan losses was â¬ 30 million.
Net commission income for the first quarter - up 5.9% on the corresponding period of the previous year, to â¬ 36 million â" was affected by seasonal effects, as well as by a temporary revenue slowdown in Aareon AGâs consulting business.
Net trading income of â¬ -12 million was determined partly by expenditure arising from our synthetic securitisation transactions and partly from the measurement of derivatives, especially from foreign exchange hedges.
The expenditure incurred in this context is offset by corresponding interest income.
Results from non-trading assets of â¬ 7 million were largely attributable to the disposal of fixed income securities from the available-for-sale portfolio.
Administrative expenses rose by â¬ 9 million compared to the first quarter of 2004, to â¬ 94 million. This reflects ongoing investments in new products and in expanding our target activities, where IT investments and the improvement of internal processes are core actions. Despite such substantial investment, administrative expenditure was reduced by â¬ 3 million against the fourth quarter of 2004.
After taking into account net other operating income and expense of â¬ 6 million, profit before taxes amounted to â¬ 32 million. Income taxes were â¬ 8 million. Consolidated net income after taxes thus amounted to a total of â¬ 24 million, including â¬ 5 million in income attributable to minority shareholders.
Overview of the business segments:
Structured Property Financing
The segment result after taxes of â¬ 27 million in the first quarter equates to a net return on equity before minority interest of 15.3%. Net interest income grew by 6.8%, compared to the same period in 2004, to â¬ 110 million.
Provision for loan losses of â¬ 30 million was in line with the corresponding period of the previous year. Net commission income climbed â¬ 2 million to â¬ 4 million. Administrative expense, which was up â¬ 6 million from the same period of the previous year, to â¬ 49 million, was burdened by the aforementioned investments and salary increases agreed under a collective pay agreement.
New business within the Aareal Bank Group expanded stro