Aareal Bank Group successfully held its course during the first quarter of 2009, in a market environment that continued to be challenging. In spite of the ongoing crisis affecting financial markets and the economy, the international property specialist continued to be profitable during the first three months of the year once again, this applies to both the Structured Property Financing and the Consulting/Services segments. The Group posted a profit before taxes of 17 million, compared to 27 million in the first quarter and 11 million in the fourth quarter of 2008. Aareal Bank Group is therefore one of the few banks, both in Germany and abroad, to have achieved a positive result in all quarters since the outbreak of the financial markets crisis in summer of 2007.
- Profit before taxes of 17 million for the first quarter of 2009, despite the financial markets and economic crisis
- Both segments of Aareal Bank Group remain profitable
- Outlook regarding key financial indicators for 2009 affirmed
- Dr Wolf Schumacher, Chairman of the Management Board: "We are in a good position to perform well throughout 2009."
Bearing in mind the difficult market environment, the positive quarterly result can be attributed to two aspects: on the one hand, Aareal Bank Group operates a sustainable business model that is based on the two strong segments of Structured Property Financing and Consulting/Services. On the other hand, Aareal Bank pursues a conservative business policy that is built on an appropriate ratio of risks and returns and is focused on sustainability.
"Having seen the performance during the first quarter, we remain convinced that Aareal Bank Group is well-positioned to deal with the challenges presented by the market environment", said Dr Wolf Schumacher, Chairman of the Management Board of Aareal Bank. "We are in a good position to perform well in the current financial year. Aareal Bank is fundamentally healthy and operates a coherent, sustainable business model", Schumacher commented on the quarterly results. "Aareal Bank is well positioned to deal with the challenges ahead not least thanks to the agreement with the German Financial Markets Stabilisation Fund (SoFFin) on strengthening our capital base plus a guarantee facility for uncovered issues, which was finalised in March. At the same time, this will provide a good starting point for the post-crisis period", Schumacher added.
Structured Property Financing: net interest income increases
During the first quarter of 2009, Aareal Bank Group adhered to its policy in generating new business in the Structured Property Financing segment, where it imposed strict requirements in terms of quality and return. It also concentrated on transactions with attractive risk/return profiles. Aareal Bank concentrated predominately on its existing client base and on loan extensions for active financing projects. New business amounted to 510 million and is therefore in line with the target figure of 2 billion to 3 billion for the year 2009 as a whole.
Despite the ongoing turbulence on financial markets, Aareal Bank succeeded in increasing net interest income, from 92 million in the first quarter of 2008, to 102 million. The increase of approx. 11% over the previous year is largely attributable to a better interest rate environment and higher margins.
Aareal Bank increased its allowance for credit losses to 37 million in the first quarter of 2009 (Q1 2008: 20 million), as the bank adjusted its projection for the full year towards the upper end of its forecast range of 90-150 million, to reflect economic development. Nonetheless, at current levels, the allowance for credit losses is manageable for Aareal Bank.
Consulting/Services: robust development despite difficult market environment
The Consulting/Services segment performance continued to be robust overall, without being directly affected by the financial markets crisis. Deposits taken from the bank's institutional housing clients remained largely stable, averaging just under 4 billion i