Aareal Bank Group closed the first nine months of 2006 with a significantly stronger position, reporting net income after taxes and minority interest of €73 million. The bank thus sustained the earnings improvement recorded in the preceding quarters. Profit before taxes increased to €122 million, compared with a €117 million loss in the corresponding period of the previous year.
Accordingly, Aareal Bank raised its earnings forecast for 2006 as a whole to exceed €150 million.
Commenting on the figures, Dr. Wolf Schumacher, Chairman of the Management Board of Aareal Bank, said that the good performance had confirmed the Board's high expectations: "Overall we are confident that we will maintain this successful development. Therefore, we have raised our target for pre-tax profit to above €150 million."
Aareal Bank's new business grew by 47.5%, or €2.4 billion, compared to the same period of the previous year: with a nine-month total of €7.3 billion, the bank has already outperformed its original target for 2006 after nine months. With €1.4 billion in new business generated in Germany, Aareal Bank has also managed to clearly exceed its communicated target range between €800 million and €1 billion. International new business totalled €1.7 million; the portfolio thus grew by 39.7% to €5.9 billion. International business thus accounted for around 81% of total new loan commitments, with the remaining 19% generated in Germany. The bank accordingly raised its target for new business to exceed 8 billion for the full year.
Aareal Bank sold its fourth, and to date, the largest portfolio of non-performing loans (NPLs) with an aggregate size of approx. €1.4 billion, including interest and fees to Shinsei Bank Ltd on 21 September 2006. With this transaction, the bank reduced its residual NPL portfolio to less than €0.7 billion, outperforming its full-year target of a reduction to €1 billion ahead of time.
Schumacher added: "We have managed to reduce our non-performing loan portfolio faster, and to a larger extent, than anticipated. This allows us to focus our strengths even more on the continued expansion of our highly profitable Structured Property Financing core business."
Source: Aareal Bank