- 21 per cent increase in first-half adjusted operating profit to €223 million
- No discernible impact from recent market volatility
- New business activity higher than last year
- Impact of lower interest rates in line with expectations
- Loan impairment charges down a third to €116 million
- Administrative expenses reduced by 8 per cent, ‘best in class’ cost/income ratio
- Strong growth in BDS deposit volumes to €14.0 billion in Q2
- Very robust capital and liquidity ratios
- Adjusted return on equity increased from 8.0 per cent to 9.1 per cent
- Aareal Ambition strategy actively being implemented
Wiesbaden, 7 August 2025 – Aareal Bank strongly increased its adjusted operating profit in the first half of 2025 in a volatile and challenging market environment: it was up 21 per cent year on year, to €223 million (H1 2024: €185 million), of which €116 million was generated in the second quarter (Q2 2024: €93 million). Including non-recurring costs, operating profit rose to €208 million (H1 2024: €181 million), with €108 million generated in the period from April to June (Q2 2024: €90 million).
Aareal Bank’s CEO Dr Christian Ricken said: “Our excellent figures show that Aareal Bank is going from strength to strength, with a strong performance by its entire team. We are well on the way to achieving our ambitious full-year targets.” Commenting on the Bank’s strategic development, Ricken said: “We started implementing our Aareal Ambition strategy very quickly at the start of the year. Specifically, this included gaining exposure to data centres as a new asset class and establishing a centralised unit for IT and Operations. We are making even faster progress than expected in bringing about our planned cost reductions.”
Due to the lower interest rate environment and the Bank’s increased funding activities, net interest income declined as expected – from €530 million in the first half of 2024 to €473 million – albeit remaining on a solid level thanks to healthy margins and year-on-year growth in the average lending volume. Net interest income in the second quarter totalled €224 million (Q2 2024: €262 million). Aareal Bank is confident that net interest income per quarter will remain at current levels through the rest of the year.
Loan impairment charges were down both year on year and quarter on quarter. While loan impairment charges decreased by 34 per cent to €116 million in the first half of the year (H1 2024: €176 million), the figure for the second quarter was €61 million (Q2 2024: €90 million). Aareal Bank continues to apply a conservative risk policy particularly during this period of heightened geopolitical and macroeconomic uncertainty.
Consistent with its long-term strategy the Bank continues to proactively manage its non-performing loans (NPL) which were €1.4 billion at 30 June 2025 (31 December 2024: €1.4 billion).
Adjusted administrative expenses were reduced by 8 per cent to €162 million (H1 2024: €176 million) on the back of strong cost discipline and positive effects from efficiency measures. €74 million of these expenses were incurred in the second quarter (Q2 2024: €92 million). Non-recurring costs totalled €15 million in the first half of the year (H1 2024: €4 million). At 32 per cent (excluding non-recurring effects), the Bank’s cost/income ratio was very healthy even by international standards.
Net profit after tax deductions and interest payable on the AT1 bond increased significantly to €133 million in the first half of the year (H1 2024: €112 million) and to €73 million in the second quarter (Q2 2024: €54 million). At the same time, adjusted return on equity after taxes rose to 9.1 per cent (H1 2024: 8.0 per cent).
Capitalisation remained at a very solid level. The Basel IV CET1 ratio (fully-phased) rose to 15.5 per cent from 15.2 per cent at the end of the previous year. The Basel IV CET1 ratio (phase-in) stood at 21.8 per cent at the end of the first six months (31 Dec 2024: 20.2 per cent). The Total Capital Ratio (Basel IV phase-in) was 29.9 per cent (31 Dec 2024: 26.6 per cent). Aareal Bank successfully replaced its existing AT1 bond (issued in 2013) with a new AT1 bond during the first half of the year.
The Bank carried out extensive funding activities in the period under review, placing bonds and Pfandbriefe totalling €2.1 billion on the capital markets. With that, Aareal Bank has already largely executed its funding plan for 2025. Liquidity ratios were on a very healthy level, with LCR amounting to 262 per cent and NSFR to 121 per cent.
Developments by business segment
In the Structured Property Financing segment, the new business performance was very favourable during the first half of the year. Following a strong start to the year, new business continued to perform well in the second quarter. The volume of renewals and newly originated loans amounted to €4.7 billion, significantly exceeding the previous year’s level of €3.1 billion. This means that Aareal Bank is well on track to achieve its new business target of €9 billion to €10 billion for the full year. Newly originated loans accounted for €2.8 billion, with healthy margins and low loan-to-value ratios. The average gross margin totalled 251 basis points (H1 2024: 259 basis points) while average loan-to-value ratios were at a conservative 55 per cent (H1 2024: 46 per cent).
Portfolio volume amounted to €32.4 billion as at 30 June 2025, falling slightly below the year-end figure 2024 (31 Dec 2024: €33.5 billion) as a result of the weaker US dollar. At constant foreign exchange rates, the Bank continues to expect a portfolio volume of between €34 billion and €35 billion as at year-end 2025. Portfolio indicators remained on a cautious risk level – the average loan-to-value ratio in the portfolio amounted to 56 per cent (31 Dec 2024: 57 per cent), with average yield on debt at 9.9 per cent (31 Dec 2024: 9.6 per cent).
Aareal Bank has added data centres as a new asset class in its financing portfolio. The first financing of €160 million is for a data centre near Frankfurt.
The volume of client deposits from the housing and energy industries in the Banking & Digital Solutions segment (BDS) averaged €13.7 billion over the first half of the year and thus remained at a high level. Average deposit volumes grew to €14.0 billion in the second quarter. Deposits from this client segment, which comprises around 4,000 enterprises managing more than nine million residential units between them, are a key component of Aareal Bank’s funding mix. Due to the generally lower interest rate levels, segment net interest income totalled €120 million in the first half of the year (H1 2024: €135 million).
Finally, the BDS segment has also launched a new product for the German market – the time value accounts – and continued to internationalise its business activities, as announced with the Aareal Ambition strategy. Aareal Bank is set to enter the Dutch market in this segment in the second half of 2025.
Outlook
Aareal Bank has had a good start to the year and is reconfirming its full-year guidance.
Contacts for the media:
Christian Feldbrügge
Phone: +49 611 348 2280
Mobile: +49 171 866 7919
christian.feldbruegge(at)aareal-bank.com
Thomas Rutzki
Phone: +49 611 348 2947
Mobile: +49 170 543 1458
thomas.rutzki(at)aareal-bank.com
Contact for investors:
Aareal Bank AG – Investor Relations
Phone: +49 611 348 3009
ir(at)aareal-bank.com
