Aareal Bank Reports Strong Start to 2024 Financial Year

Aareal Bank AG announced a significant increase in its financial results for the first quarter of 2024. The bank reported a consolidated operating profit of €103 million, marking a 66% increase compared to the same period last year and achieving the highest level since 2018. Net interest income increased to €254 million, up from €222 million in Q1 2023, and net commission income grew to €86 million, a rise of 19% year-over-year.

Despite challenges in the US office property market, Aareal Bank demonstrated operational resilience, managing to reduce its non-performing loans by over €500 million. The bank’s Common Equity Tier 1 ratio also improved to 19.7%. Aareon, Aareal Bank’s software subsidiary, significantly contributed to these robust results, doubling its adjusted EBITDA to €40 million.

Risk provisions totaled €83 million due to a €56 million management overlay, reflecting a proactive approach to the ongoing challenges in the US commercial real estate sector. Administrative expenses were significantly lower at €147 million, compared to €199 million in the first quarter of 2023. This was attributed to ongoing cost control measures and lower bank levy expenses.

CFO Marc Hess highlighted the volatile capital markets and the bank’s strategic moves in diversifying funding and improving liquidity positions as key drivers behind Aareal’s strong performance. Furthermore, the bank continued its expansion by entering new markets such as the Netherlands and Austria besides its existing German operations.