Analyst Conference Call

THE INTERNATIONAL
PROPERTY SPECIALIST
Analyst Conference Call
Results Q2 2008
August 12, 2008
Group Performance
1
Performance
Profit before tax and special effects by quarter
€ mn
240
Proceeds from Interhotel transaction : € 10 mn
221
220
Pre tax one-off effects Q2 2008:
200
Pre tax one-off effects Q1 2008:
ABS marked-to-market effect: € -16 mn
180
Pre tax one-off effects Q4 2007:
160
Bond marked-to-market effect: € -16 mn
140
Goodwill impairment BauGrund: € -2 mn
120
Proceeds from Interhotel transaction: € 63 mn
100
Proceeds from Immoscout transaction: € 153
mn
80
60
53
27
27
48
45
43
38
Bond marked-to-market effect: € -15 mn
Special expenses (compensation payments,
preparation of legacy portfolio sale): € -12 mn
40
20
40
32
0
-20
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Operating profit without one-offs
2
Pre tax one-off effects Q3 2007:
One-off effects
Q2
2008
Pre tax one-off effects Q2 2007:
Further proceeds from sale of Asset
Management activities: € 6 mn
Proceeds from Interhotel transaction: € 2 mn
ImmoScout dividend: € 5 mn
Performance
Stable administrative expenses
€ mn
120
100
94
93
88
89
91
93
88
88
89
80
60
40
20
0
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2006 2006 2006 2007 2007 2007 2007 2008 2008
Admin expenses
3
Structured Property Financing
4
Development new business vs. average risk weighted assets
Average risk weighted assets (BIS)
€ bn
8
+ 11.7%
30
23.8
21.3
New business development yoy
€ bn
- 50.4%
5.902
6
20
2.925
4
10
2
0
0
2007
H1 2008
H1 2007
German
New business development qoq
International
New business by region H1 2008
Europe East
€ bn
2,5
+ 70.1%
2,0
1,5
H1 2008
1.842
8%
Europe
South
26%
15%
Europe
West
1.083
1,0
Europe
North
0,5
0,0
Q1 2008
German
5
International
Q2 2008
15%
19%
North America
17%
Asia/Pacific
Total credit portfolio as at 30.06.2008
Total volume outstanding : € 24.2 bn
by region
North America
8%
Europe East
by property type
Asia/Pacific
Other / Mixed
4%
22%
Germany
11%
Logistics
8%
10%
6%
Europe
North
12%
21%
Europe South
Private
clients
(sold)
Europe
West (ex Ger)
17%
by product type
Developments
11%
Other
2%
Hotel
Office
28%
14%
6%
18%
15%
Shopping Centre
Private
clients
(sold)
Residential
by LTV ranges 1)
> 80%
60-80%
12%
4%
84%
87%
6
1) Mortgage
Investment
finance
collateralised business only;
value does not take into account any collateral other than mortgages
< 60%
Spain credit portfolio as at 30.06.2008
Total volume outstanding : € 1.1 bn
by property type
Residential
by LTV ranges 1)
Others
Office
Logistics
1%
1%
3%
4%
Hotel
15%
> 80%
60-80%
6% 0%
76%
94%
Retail /
Shopping
Centre
7
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
< 60%
UK credit portfolio as at 30.06.2008
Total volume outstanding : € 1.4 bn
by property type
Residential
> 80%
Others
0%7%
Logistics
by LTV ranges 1)
60-80%
Office
11%
2%
18%
40%
16%
Retail /
Shopping
Centre
80%
26%
< 60%
Hotel
8
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
US portfolio as at 30.06.2008
Total volume outstanding : € 1.4 bn
by property type
by LTV ranges 1)
> 80%
Others
Residential
portfolios
2%
13%
60-80%
Retail /
Shopping
Centre
8% 0%
36%
Hotel 20%
29%
Office
9
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
92%
< 60%
Exposure to special asset classes as at 30.06.2008
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
~ € 620 mn
> 90%
< € 50 mn
10
Consulting/Services
11
Performance
Consulting / Services segment - operating profit by quarter
20
157
€ mn
15
12
12
11
11
11
11
Q1
2008
Q2
2008
7
10
7
5
5
9
4
7
7
7
Q1
2007
Q2
2007
Q3
2007
5
0
Q3
2006
-5
12
Q4
2006
Operating profit without one-offs
Q4
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
Revenues
164
170 180
175 185
195210
Expenses
147
140 145
140 145
EBIT
17
30-40
35-40
2007
€ mn
2008p
€ mn
2009p
€ mn
2010p
€ mn
Revenues
59
60-65
60-70
70-80
150160
Direct
Expenses
36
35-40
35-40
40-45
45-50
Gross
result 3)
10
10-20
15-20
20-25
1) Sub-group financial statements acc. to IFRS
2) Internal profit centre calculation
3) after bank overheads
13
Capital and
Refinancing Position
14
Development Tier I ratio
9,0%
Tier I ratio up 10 bp
according to old BIS rules
8,5%
Further relief in new ratio
8,0%
8.3%
7,5%
7,0%
6,5%
6,0%
7.3%
7.4%
Old BIS
31.12.07
Old BIS
30.06.08
5,5%
5,0%
15
Standard
Approach
(KSA)
30.06.08
according to Basel II
regulations (KSA)
Maturity profiles
Loan portfolio vs. long term liabilities (as at 30.06.2008)
€ mn
4000
Strong liquidity situation:
3500
The loan portfolio
3000
maturities exceed the long
term funding maturities
2500
Long term funding
2000
average maturity: 5.2
years
1500
1000
Loan portfolio average
500
maturity: 3.6 years
0
2008
2009
2010
Contractual repayments of the loan portfolio
Long term funding volume to mature
Of which: Mortgage Pfandbriefe
Surplus (cumulative)
16
Aareal funding position
Volumes issued (as at 30.06.2008)
€ mn
4000
3500
3000
2500
2000
1500
1000
500
0
2004
2005
2006
Senior unsecured issues
Mortgage Pfandbrief Issues
17
2007
H1 2008
Aareal funding position
Customer deposits: development by volume
7.000
€ mn
6.000
5.000
Corporate Clients
Insurance Companies
Corporates
Funds
No Banks
4.000
3.000
2.000
Term deposits
1.000
H1 08
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
H1 98
0
€ mn
6.000
5.000
4.000
3.000
2.000
1.000
Term deposits
Housing Industry
Sight deposits
Housing Industry
18
H1 08
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
H1 98
0
Summary capital and financing position
Solid capital basis
Total average maturity:
Long term funding (excl. public sector Pfandbriefe): 5.2 years
Property loan portfolio: 3.6 years
Annual redemptions of long term funds about € 3 bn
Highly stable deposits from housing industry can be used for
long term refinancing
In any case, Aareal will not be forced to issue any senior
unsecured funds this year
19
Targets
20
Financial targets 2010 – operating performance *)
Growth average RWA (BIS)
Group net RoE
20
%
30
15
20
10
~ 13%
5
€ 27-28 bn
10
€ 21 bn
8%
0
0
2007
operative
2010 (p)
C/I Ratio Property Financing Segment
70
€ bn
2007
2010 (p)
EBT Consulting/Services Segment
€ mn
80
%
60
50
40
30
60
< 50 %
< 40 %
20
20
€ 30 mn
10
0
0
2007
21
€ 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
22
Group P&L Q2 2008
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
23
Q2
2008
Q2
2007
Change
€ mn
€ mn
%
114
20
94
35
89
16
104
22
82
36
3
5
14
5
1
91
-2
48
16
32
53
11
42
9,6%
-9,1%
14,6%
-2,8%
-100,0%
-40,0%
-100,0%
-2,2%
-9,4%
45,5%
-23,8%
4
4
0,0%
28
38
-26,3%
-3
-8
3
Segment reporting Q2 2008
Structured Property
Financing
Consolidation/
Reconciliation/
Other
Consulting/
Services
€ mn
€ mn
Aareal Bank Group
€ mn
€ mn
Quarter 2
2008
Quarter 2
2007
Quarter 2
2008
Quarter 2
2007
Quarter 2
2008
Quarter 2
2007
Quarter 2
2008
Quarter 2
2007
Net interest income
95
89
0
0
19
15
114
104
20
22
Provision for loan losses
20
22
Net interest income
after net loan loss provisions
75
67
0
0
19
15
94
82
Net commission income
6
8
48
43
-19
-15
35
36
Net result on hedge accounting
0
3
0
3
Net trading income / expenses
-3
5
Results from non-trading assets
-8
13
0
Results from companies accounted for at equity
3
Results from investment properties
0
1
Administrative expenses
52
55
38
Net other operating income / expenses
16
-1
Operating profit
37
Income taxes
Consolidated net income / loss
1
5
-3
5
-8
14
3
5
0
0
0
1
36
-1
0
89
91
1
-1
-1
0
16
-2
41
11
12
0
0
48
53
12
8
4
3
16
11
25
33
7
9
32
42
Consolidated net income / loss
attributable to minority interests
4
4
0
0
4
4
Consolidated net income / loss
attributable to shareholders of Aareal Bank AG
21
29
7
9
0
0
28
38
322
179
Impairment of goodwill
0
0
Allocation of results
Allocated equity
920
804
72
76
1.314
1.059
Cost/income ratio in %
48,9
52,1
78,6
77,3
57,8
59,3
RoE after taxes in %
9,3
14,8
36,8
46,7
8,5
14,5
24
Performance
Development revaluation surplus
€ mn
120
80
40
0
-40
-80
25
08
30
.0
6.
20
08
20
07
20
06
20
05
3.
20
31
.0
Revaluation surplus
20
04
20
03
20
02
-120
German credit portfolio as at 30.06.2008
Total volume outstanding : € 6.6 bn
by region
by property type
Shopping
Center
Berlin
22%
53%
East
Residential
5%
Hotel
Logistics
Other
8%
6%
42%
6%
West
10%
25%
Office
Private client
portfolio (sold)
23%
by LTV ranges 1)
by product type
Developments
1%
7%
> 80%
Other
60-80%
10%
14%
76%
92%
Investment
finance
26
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
< 60%
Western Europe (without Germany) credit portfolio as at
30.06.2008 Total volume outstanding : € 5.0 bn
by region
Switzerland/
Austria
by property type
Retail /
Shopping
Center
10%
France
33%
Other
8%
11%
45%
28%
Office
17%
Logistics
BeNeLux
19%
29%
UK
by product type
Other
Developments
Hotel
by LTV ranges 1)
> 80%
60-80%
2%
2%
11%
13%
87%
Investment
finance
27
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
85%
< 60%
Southern Europe credit portfolio as at 30.06.2008
Total volume outstanding : € 4.2 bn
by region
by property type
Logistics & Other
Spain
13%
Residential
portfolios
26%
Italy
Hotel
7%
by product type
Other
36%
by LTV ranges 1)
60-80%
4%
Developments
Office
9%
Retail /
Shopping
Center
74%
35%
> 80%
8% 1%
23%
73%
Investment
finance
28
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
91%
< 60%
Northern Europe credit portfolio as at 30.06.2008
Total volume outstanding : € 3.0 bn
by region
by property type
Norway
4%
Denmark
Residential
portfolios
18%
54%
Finland
Other
Hotel
Sweden
Logistics
8%
7%
35%
7%
14%
Retail /
Shopping
Center
24%
29%
by product type
by LTV ranges 1)
Other
Developments
5%
5%
14%
89%
Investment
finance
29
1) Mortgage
> 80%
60-80%
6%
Office
collateralised business only;
value does not take into account any collateral other than mortgages
81%
< 60%
Eastern Europe credit portfolio as at 30.06.2008
Total volume outstanding : € 2.5 bn
by region
by property type
Estonia
Czech
Republic
Russia
Logistics
1%
Poland
22%
26%
Retail /
Shopping
Center
Other
0%
6%
23%
40%
Office
25%
26%
Turkey
by product type
Developments
Hotel
31%
by LTV ranges 1)
> 80%
60-80%
10% 1%
3%
97%
Investment
finance
30
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
89%
< 60%
North America credit portfolio as at 30.06.2008
Total volume outstanding : € 1.9 bn
by region
by property type
Other
Resid. portfolios
Mexico
7%
11% 2%
Canada
19%
34%
USA
Retail /
Shopping
Center
Hotel
26%
74%
27%
by product type
Other
Developments
Office
by LTV ranges 1)
60-80%
> 80%
9%
6%
1%
18%
76%
Investment
finance
31
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
90%
< 60%
Asia/Pacific credit portfolio as at 30.06.2008
Total volume outstanding : € 1.0 bn
by region
Maldives
Singapur
8%
Japan
by property type
Logistics/Mixed
4%
9%
Hotel
12%
9%
China &
Macau
Retail /
Shopping
Center
Office
15%
64%
79%
by LTV ranges 1)
by product type
Developments
> 80%
5%
60-80%
14%
95%
Investment
finance
32
1) Mortgage
collateralised business only;
value does not take into account any collateral other than mortgages
6%
80%
< 60%
Definitions and Contacts
33
Definitions
Property Financing Portfolio
Paid-out financings on balance sheet
Incl. remaining property loans on DEPFA books
New Business
Newly acquired business incl. renewals (excl. interest rate prolongations)
Contract is signed by costumer
Fixed loan value and margin
Group net income after minorities
Allocated (average) equity
Net RoE =
Allocated Equity
Average of:
Equity minus minorities and revaluation surplus (start of period less dividends) and
Equity minus minorities and revaluation surplus (end of period less expected dividends)
Admin expenses + other operating expenses
Net income
CIR =
Net Income
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
34
Contact
Jürgen Junginger
Managing Director Investor Relations
Phone: +49 611 348 2636
juergen.junginger@aareal-bank.com
Alexandra Beust
Director Investor Relations
Phone: +49 611 348 3053
alexandra.beust@aareal-bank.com
Nicole Schüttforth
Investor Relations
Phone: +49 611 348 3044
nicole.schuettforth@aareal-bank.com
35
Disclaimer
© 2008 Aareal Bank AG. All rights reserved.
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.
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.
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.
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.
Aareal Bank AG assumes no obligation to update any forward-looking statement or any other information
contained herein.
36