Analysts` Call on the 2008 Q1 figures

THE INTERNATIONAL
PROPERTY SPECIALIST
Analyst Conference Call
Results Q1 2008
May 14, 2008
Group Performance
1
Performance
Profit before tax and special effects by quarter
€ mn
240
n
221
Pre tax one-off effects Q1 2008:
ú
220
n
ABS marked-to-market effect: € -16 mn
Pre tax one-off effects Q4 2007:
200
ú
Bond marked-to-market effect: € -16 mn
180
ú
Goodwill impairment BauGrund: € -2 mn
n
160
140
120
100
79
80
60
40
20
n
53
27
38
31
42
40
32
45
27
43
n
0
-20
ú
Proceeds from Interhotel transaction: € 63 mn
ú
Proceeds from Immoscout transaction: € 153 mn
ú
Bond marked-to-market effect: € -15 mn
ú
Special expenses (compensation payments, preparation
of legacy portfolio sale): € -12 mn
Pre tax one-off effects Q2 2007:
ú
Further proceeds from sale of Asset Management
activities: € 6 mn
ú
First proceeds from Interhotel transaction: € 2 mn
ú
ImmoScout dividend: € 5 mn
Pre tax one-off effects Q1 2007
ú
Q4
Q1
Q2
2006 2007 2007
Q3
Q4
Q1
2007 2007 2008
Operating profit without one-offs
2
Pre tax one-off effects Q3 2007:
One-off effects
n
Compensation payment from DEPFA for a tax refund
arising from a tax audit of Interhotel: € 37 mn
Pre tax one-off effects Q4 2006
ú
Book gain from sale of Asset Mgnt activities: € 20 mn
ú
Write-down foreclosed assets: € 13 mn
Performance
Stable administrative expenses
€ mn
140
120
100
88
89
91
93
Q4
2006
Q1
2007
Q2
2007
Q3
2007
88
88
Q4
2007
Q1
2008
80
60
40
20
0
Admin expenses
3
Performance
Development revaluation surplus
€ mn
120
80
40
0
-40
-80
4
30
.04
.20
08
20
07
20
06
20
05
31
.03
.20
08
Revaluation surplus
20
04
20
03
20
02
-120
Structured Property Financing
5
New business development
year on year
Diversification by region
€ bn
3
BeNeLux
Scandinavia
2,205
- 51,0%
Asia/Pacific
6%
4%
7%
Italy
26%
2
Germany
10%
1,991
1,083
12%
1
UK
0,971
0
6
16%
North America
0,214
0,112
Q1 2007
Q1 2008
German
19%
International
CEE
Total credit portfolio as at 31.03.2008
Total volume outstanding : € 23.7 bn
by region
Asia/Pacific
North America
7% 3%
Europe East
Germany
Logistics
Hotel
13%
Europe South
Other / Mixed
11%
28%
10%
Europe
North
by object type
21%
18%
Europe
West (ex Ger)
by product type
Developments
10%
Other
2%
27%
8%
Office
14%
17%
23%
Residential
Shopping Centre
by LTV ranges 1)
> 80%
60-80%
12%
4%
84%
88%
7
1) Mortgage
Investment
finance
collateralised business only;
value does not take into account any collateral other than mortgages
< 60%
Exposure to special asset classes as at 31.03.2008
8
Asset Class
Exposure Aareal Bank
US Subprime and US RMBS
None
CDOs
None
ABCPs / SIVs
None
Exposure insured by Monoliners
None
ABS portfolio
- of which AAA rated
- of which US CMBS
~ € 650 mn
> 90%
< € 50 mn
Additional ABS limit opened up to a further
€ 500 mn to use current market opportunities, limited to:
- RMBS (AAA-rated, ECB-eligible, maturities < 9M) and
- CMBS (= A-rated, focus on AAA-rated, alternative to and treated
like credit business)
Limit utilisation 14.05.2008: ---
Capital and
Refinancing Position
9
Development Tier I ratio
7,8%
n Stable Tier I ratio according
to old BIS rules
n New ratio according to
7,6%
7.7%
7,4%
7,2%
7.3%
7.3%
Old BIS
31.12.07
Old BIS
31.03.08
7,0%
6,8%
10
Standard
Approach
(KSA)
31.03.08
Basel II regulations (KSA)
up by 40 bps
Aareal funding position
Asset/Liability structure
Loan portfolio (without Depfa book)
Total volume 30.04.2008: € 22.4 bn
Cover pool
eligible
Loan portfolio funding
Total volume 30.04.2008: € 24.6 bn
Deposits
(housing industry)
11%
18%
Pfandbrief
cover pool
25%
21%
64%
61%
Mortgage
Pfandbriefe
Not cover
pool eligible
11
Senior and
subordinated
(unsecured)
Aareal funding position
Customer deposits: development by volume
€ mn
12000
€ mn
12000
10000
10000
Insurance Companies
Corporates
Funds
No Banks
8000
6000
8000
6000
Overnight money/ deposits
Institutional Clients
4000
4000
2000
Term deposits
Housing Industry
2000
Sight deposits
12
H2 07
H1 07
H2 06
H1 06
H2 05
H1 05
H2 04
H1 04
H2 03
H1 03
H2 02
H1 02
H2 01
H1 01
H2 00
H1 00
H2 99
H1 99
H2 98
0
H1 98
0
Maturity profiles
Loan portfolio vs. long term liabilities (as at 30.04.2008)
4000
€ mn
Strong liquidity situation:
3500
n The loan portfolio
3000
maturities exceed the long
term funding maturities
2500
n Long term funding
2000
average maturity: 5.1
years
1500
1000
n Loan portfolio average
maturity: 3.5 years
500
0
2008
2009
2010
Contractual repayments of the loan portfolio
Long term funding volume to mature
Surplus (cumulative)
13
Aareal funding position
Volumes issued (as at 30.04.2008)
€ mn
4000
3500
3000
2500
2000
1500
1000
500
0
2004
2005
2006
Senior unsecured issues
Mortgage Pfandbrief Issues
14
2007
4M 2008
Summary capital and financing position
n Solid capital basis
n Total average maturity:
ú Long term funding (excl. public sector Pfandbriefe): 5.1 years
ú Property loan portfolio: 3.5 years
n Annual redemptions of long term funds about € 3 bn
n Highly stable deposits from housing industry can be used for
long term refinancing
Ø In any case, Aareal will not be forced to issue any senior
unsecured funds this year
15
Consulting/Services
16
Performance
Consulting / Services segment - operating profit by quarter
157
€ mn
20
n
Pre tax one-off effects Q4 2007:
ú Goodwill impairment BauGrund:
€ -2 mn
15
n
12
12
ú Paco sale: € -3 mn
7
n
7
5
11
7
4
Pre tax one-off effects Q2 2007:
ú ImmoScout dividend: € 5 mn
5
7
7
9
n
Pre tax one-off effects Q3 2006
ú Book gain Techem deal: € 11 mn
ú Book gain from sale of BauGrund
Stadtentwicklung: € 3 mn
5
ú Aareon social plan costs: € -6 mn
0
Q3
2006
Q4
2006
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
-5
Operating profit without one-offs
17
ú Proceeds from Immoscout
transaction: € 153 mn
11
10
Pre tax one-off effects Q3 2007:
One-off effects
Institutional housing sector:
Breakdown of performance targets
IT-Services business
Integrated Payment Solutions
Aareon Group 1)
Institutional Housing department / AFFS 2)
2007
€ mn
2008p
€ mn
2009p
€ mn
2010p
€ mn
2007
€ mn
2008p
€ mn
2009p
€ mn
2010p
€ mn
Revenues
164
170 180
175 185
195210
Revenues
59
60-65
60-70
70-80
Expenses
147
140 145
140 145
150160
Direct
Expenses
36
35-40
35-40
40-45
EBIT
17
30-40
35-40
45-50
Gross
result 3)
10
10-20
15-20
20-25
1) Sub-group financial statements acc. to IFRS
18
2) Internal profit centre calculation
3) after bank overheads
Targets
19
Financial targets 2010 – operating performance *)
Group net RoE
20
%
30
15
€ bn
20
10
~ 13%
5
€ 27-28 bn
10
€ 21 bn
8%
0
0
2007
operative
2010 (p)
C/I Ratio Property Financing Segment
70
Growth average RWA
2007
2010 (p)
EBT Consulting/Services Segment
€ mn
80
%
60
60
50
40
30
20
< 50 %
< 40 %
20
€ 30 mn
10
0
0
2007
20
€ 65-75 mn
40
2010 (p)
2007
*) Subject to the condition that financial markets come
back to normality in 2009
2010 (p)
Facts and Figures
21
P&L Q1 2008
Q1
2008
€ mn
Net interest income
Net loan loss provisions
Net interest income after net loan loss provisions
Net commission income
Net result on hedge accounting
Net trading income
Results from non-trading assets
Results from companies accounted for at equity
Results from investment properties
Administrative expenses
Net other operating income
Impairment of goodwill
Operating Profit
Income taxes
Consolidated net income / loss
Allocation of results
Consolidated net income / loss attributable to minority
interests
Consolidated net income / loss attributable to
shareholders of Aareal Bank AG
22
Q1
2007
€ mn
Change
%
107
20
87
33
2
-22
9
0
0
88
6
98
22
76
37
2
2
12
27
9
18
79
23
56
9,2%
-9,1%
14,5%
-10,8%
0,0%
-25,0%
-1,1%
-84,6%
-65,8%
-60,9%
-67,9%
5
5
0,0%
13
51
-74,5%
0
89
39
Segment reporting Q1 2008
Structured Property
Financing
€ mn
Quarter 1
2008
Consolidation/
Reconciliation/
Other
Consulting/
Services
€ mn
Aareal Bank Group
€ mn
€ mn
Quarter 1
2007
Quarter 1
2008
Quarter 1
2007
Quarter 1
2008
Quarter 1
2007
Quarter 1
2008
Quarter 1
2007
0
0
15
14
107
98
20
22
Net interest income
92
84
Provision for loan losses
20
22
Net interest income
after net loan loss provisions
72
62
0
0
15
14
87
76
46
44
-16
-15
33
37
2
2
Net commission income
3
8
Net result on hedge accounting
2
2
Net trading income / expenses
-22
2
Results from non-trading assets
9
12
Results from companies accounted for at equity
0
Results from investment properties
Administrative expenses
Net other operating income / expenses
0
0
-22
2
9
12
0
0
0
0
0
52
54
37
36
-1
-1
88
89
4
40
2
-1
0
0
6
39
16
72
11
7
0
0
27
79
6
21
3
2
9
23
10
51
8
5
18
56
4
4
1
1
5
5
6
47
7
4
0
0
13
51
269
189
Impairment of goodwill
Operating profit
Income taxes
Consolidated net income / loss
0
0
Allocation of results
Consolidated net income / loss
attributable to minority interests
Consolidated net income / loss
attributable to shareholders of Aareal Bank AG
Allocated equity
965
770
71
87
1.305
1.046
Cost/income ratio in %
61,4
38,5
78,1
84,4
67,0
48,9
2,5
24,2
38,2
18,1
3,9
19,3
RoE after taxes in %
23
Definitions and Contacts
24
Definitions
n
Property Financing Portfolio
ú Paid-out financings on balance sheet
ú Incl. remaining property loans on DEPFA books
n
New Business
ú Newly acquired business incl. renewals (excl. interest rate prolongations)
ú Contract is signed by costumer
ú Fixed loan value and margin
Group net income after minorities
Allocated (average) equity
n
Net RoE =
n
Allocated Equity
Average of:
ú Equity minus minorities and revaluation surplus (start of period less dividends) and
ú Equity minus minorities and revaluation surplus (end of period less expected dividends)
Admin expenses + other operating expenses
Net income
n
CIR =
n
Net Income
ú net interest income +net commission income + net result from hedge accounting + net trading
income + results from non-trading assets + results from investments accounted for at equity +
results from investment properties + other operating income
25
Contact
n
Jürgen Junginger
Managing Director Investor Relations
Phone: +49 611 348 2636
[email protected]
n
Alexandra Beust
Senior Manager Investor Relations
Phone: +49 611 348 3053
[email protected]
n
Nicole Schüttforth
Investor Relations
Phone: +49 611 348 3044
[email protected]
26
Disclaimer
© 2008 Aareal Bank AG. All rights reserved.
n This document has been prepared by Aareal Bank AG, exclusively for the purposes of a corporate
presentation by Aareal Bank AG. The presentation is intended for professional and institutional customers
only.
n It must not be modified or disclosed to third parties without the explicit permission of Aareal Bank AG. Any
persons who may come into possession of this information and these documents must inform themselves
of the relevant legal provisions applicable to the receipt and disclosure of such information, and must
comply with such provisions. This presentation may not be distributed in or into any jurisdiction where such
distribution would be restricted by law.
n This presentation is provided for general information purposes only. It does not constitute an offer to enter
into a contract on the provision of advisory services or an offer to purchase securities. Aareal Bank AG has
merely compiled the information on which this document is based from sources considered to be reliable –
without, however, having verified it. Therefore, Aareal Bank AG does not give any warranty, and makes no
representation as to the completeness or correctness of any information or opinion contained herein. Aareal
Bank AG accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of,
or in any way connected with, the use of all or any part of this presentation.
n This presentation may contain forward-looking statements of future expectations and other forward-looking
statements or trend information that are based on current plans, views and/or assumptions and subject to
known and unknown risks and uncertainties, most of them being difficult to predict and generally beyond
Aareal Bank AG´s control. This could lead to material differences between the actual future results,
performance and/or events and those expressed or implied by such statements.
n Aareal Bank AG assumes no obligation to update any forward-looking statement or any other information
contained herein.
27