Aareal Bank Group (ARLN) Q2 2024 earnings summary

Executive summary

• Entered agreement to sell Aareon to TPG and CDPQ at €3.9 billion enterprise value, with Aareal's equity position valued at €2.1 billion; closing expected H2 2024, generating a net gain of around €2 billion.

• Group earnings for 2024 now expected at approximately €2.2 billion, mainly due to the gain on Aareon sale; bank operating profit guidance of €250–300 million confirmed.

• Operating profit from continuing operations rose to €181 million in H1 2024, up 31% year-over-year, driven by higher net interest income.

• Aareon is now reported as a discontinued operation; consolidated net income from discontinued operation was -€136 million after transaction costs.

• The First Financial joint venture will maintain collaboration between the bank and Aareon post-sale.

Financial highlights

• Net interest income increased 11% year-over-year to €530 million in H1 2024.

• Cost/income ratio stood at 34% in H1 2024, reflecting high efficiency.

• Risk provisions totaled €176 million, down 10% year-over-year, mainly due to US office market challenges.

• CET1 ratio at 20.1% (Basel IV phase-in), leverage ratio at 6.9%.

• Consolidated net income from continuing operations was €128 million, up 42% year-over-year.

Outlook and guidance

• Full-year operating profit guidance confirmed at €250–300 million; group net income expected at approximately €2.2 billion, including the Aareon sale gain.

• Structured property financing portfolio targeted at €33–34 billion; new business expected at €8–9 billion.

• Deposit volume forecasted at over €13 billion.

• Plans to reduce NPLs by €300 million in Q3 2024.

• CET1 ratio expected to remain well above 15%, even excluding the Aareon sale gain.