Press Information
Aareal Bank publishes results for 2006: solid foundation for profitable growth
Wiesbaden, 26 March 2007 – Aareal Bank Group enjoyed a very successful financial year in 2006. The operative implementation of the strategic realignment, as set out in a six-point programme, was concluded successfully ahead of schedule: major achievements included a 40% increase in new business, to € 9.9 billion, the sustained reduction of the NPL portfolio within a single year, from € 2,085 million to € 643 million at the end of 2006, and a strict focus on the bank’s core areas of expertise.
Aareal Bank confirmed the preliminary figures published in February 2007. The results clearly show a significant improvement in the bank’s financial situation, having built a sound basis for profitable growth in its two business segments, Structured Property Financing and Consulting/Services. Net income after minority interest amounted to € 107 million, which translated into earnings of € 2.49 per share and a return on equity (RoE) of 10.1%. The Management Board and Supervisory Board will propose a dividend distribution of € 0.50 per share to this year’s Annual General Meeting. The core capital ratio (tier 1 ratio) according to BIS rules rose to 7.3%, after 7.2% in the previous year.
“We have clearly demonstrated the bank’s ability to turn around its performance – smoothly, efficiently, and ahead of schedule", said Dr. Wolf Schumacher, Chairman of the Management Board of Aareal Bank, praising the “strong team effort" of the bank’s management and all of its staff: “We can now look ahead with confidence, committing all of our strengths to FUTURE 2009, our newly-designed growth programme.”
Aareal Bank’s strategy for the future is geared towards exploiting market opportunities and generating growth. It is key to achieving a target return on equity after taxes in the region of 13% by 2009. For this purpose, the bank will once again be subject to the discipline of clearly-defined objectives and milestones, as defined in FUTURE 2009. Dr. Wolf Schumacher and Christof Schörnig will outline today the details of this growth programme during the press conference on Aareal Bank’s financial statements in Frankfurt.
The sale of Aareal Bank’s asset management business in December 2006 demonstrated that the bank will henceforth concentrate on two business segments. Structured Property Financing brings together all German and international property financing activities, and the Treasury.
The Consulting/Services segment comprises the bank’s activities in the Institutional Housing business. Aareal Bank’s clear commitment to this business not only reflects the scope for generating sustainable additional income, but also helps to diversify risks and sources of income, as the bank’s ‘second pillar’ reduces its dependency on cyclical trends in the property markets. With a projected € 40-50 million contribution to profit before taxes by the end of 2008, the Consulting/Services segment will provide a stable, additional income stream.
Aareal Bank projects € 260-275 million in profit before taxes for the current financial year 2007. This would represent an increase of more than 60% compared to the previous year’s result of € 160 million. The target volume of new business, which already exceeded projections with a very respectable € 9.9 billion in 2006, has been set to grow further, to approx. € 10 to € 11 billion. Overall, Aareal Bank Group envisages a minimum return on equity after taxes of 13% for the 2007 financial year.