Aareal Bank Group (AAALF.PK) reported that its consolidated net income allocated toordinary shareholders for the first-quarter 2016 increased by more than 40 per cent, to 51 million euros from last year's 36 million euros. Consolidated operating profit rose by just under 30 percent to 87 million euros from 67 million euros in the prior year. Factors contributing to the increase in consolidated operating profit included net commission income, as well as by the very low level of allowance for credit losses. Net interest income increased slightly year-on-year, to 180 million euros from 178 million euros in the prior year. Whilst the higher lending volume - due to the acquisition of Westdeutsche ImmobilienBank - had a positive effect, this was offset by the planned reduction of portfolios no longer in line with the Bank's strategy. "Aareal Bank Group has enjoyed a positive start into the current financial year", said Hermann J. Merkens, Chairman of the Management Board. "The marked increase in results for the first quarter shows that our two business segments are performing very well, even in a challenging competitive environment. We are thus in the best position to successfully implement our 'Aareal 2020' programme, through which we want to explore new, attractive growth opportunities - even beyond the interest-bearing business." In spite of existing uncertainty and challenges, Aareal Bank remains generally confident for the 2016 financial year and affirms its full-year guidance, according to which net interest income is expected to decline to a range between 700 million euros and 740 million euros. Aareal Bank anticipates allowance for credit losses to fall to a range between 80 million euros and 120 million euros. As in the previous years,the Bank cannot rule out additional allowance for unexpected credit lossesthat may be incurred during the current year. Net commission income is projected to be in a range between 190 million euros and 200 million euros - a marked increase over the previous year, mainly driven by the expected positive developments at Aareon. Administrative expenses are expected to decline to a range between 520 million euros and 550 million euros, in spite of high one-off effects of investments as well as project and integration costs. All in all, Aareal Bank sees good opportunities to achieve consolidated operating profit of between 300 million euros and 330 million euros for the current year. The upper end of this range slightly exceeds the record level of the past year, as adjusted for negative goodwill from the acquisition of WestImmo. The Bank expects RoE before taxes of around 11 per cent for the current financial year, with earnings per share between 2.85 euros and 3.19 euros, based on an expected tax ratio of around 31 per cent. Aareal Bank's medium-term target RoE of 12 per cent before taxes remains unchanged. New business of between 7 billion euros and 8 billion euros is targeted for the Structured Property Financing segment during 2016. For comments and feedback contact: editorial@rttnews.com Business News
Aareal Bank - 1Q16 profit up €51m ($58m), up 40% YoY, due to a very low level of allowance for credit loss despite a challenging environment.