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 31 million, consolidated operating profit clearly exceeded the results of the same quarter of the previous year (19 million). Half-year consolidated operating profit of 61 million was also markedly higher year-on-year (H1 2009: 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 characterized 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 capitalization, 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 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 capitalization 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 1.6 billion, whereby the share of renewals declined. This brings the aggregate new business figure for the first half of the year to 2.9 billion - a level that is appropriate, considering the state of the sector.
At 25 million, operating profit in the Structured Property Financing segment was significantly up year-on-year (Q2 2009: 12 million). At 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 (106 million and 103 million, respectively). The increase was largely due to the higher margins achieved in the lending business. The net figure also includes a 2 million payment received from Deutsche Interhotel Holding GmbH & Co. KG.
At 33 million, allowance for credit losses has remained at a clearly manageable level (Q2 2009: 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 unfavorable
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 12 additional Wodis Sigma accounts during the second quarter of this year alone.
The interest rate environment remained unfavorable for the profitability of the deposit-taking business during the second quarter of 2010. Nonetheless, the Consult