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Frankfurt (Reuters) – Aareal Bank, which specializes in real estate loans, sees itself on track after a jump in profits at the start of the year.
“Our business has developed solidly and we can therefore confirm our outlook,” said CFO Marc He on Tuesday. The operating result tripled from January to March to 32 million euros. The main reasons for this were higher earnings and lower risk provisioning. Analysts had expected an even higher profit. The shares listed in the SDax plummeted by more than five percent.
“We have ironed out the dent from last year and managed to return to profitability immediately,” said He. The economic outlook would have brightened. For this year, the bank is aiming for a result of 100 to 175 million euros after a loss of 75 million euros in 2020. The bank is focused on financing for offices, shopping centers and hotels – areas that are in some cases severely affected by the corona pandemic have been drawn.
As a result of a growing loan portfolio in the core business of structured real estate financing, the net interest income increased by twelve percent to 138 million euros in the first three months. The commission result increased by 3.5 percent to 59 million euros. At the same time, risk provisions for bad loans fell by 88 percent to seven million euros. The earnings expectations were missed, but the margins in new business are high and the capital position is solid, which will have a positive impact on future credit growth, said the analysts at Citi.
CONFLICT WITH LARGE INVESTOR
The volume of real estate financing reached 28.2 billion euros, the highest level in four years, as Aareal announced. At the end of the year, the portfolio is expected to increase to around 29 billion euros and to 30 billion euros by the end of 2022. The institute also recorded growth at the IT subsidiary Aareon, which is at the center of a conflict with the major shareholder Petrus Advisers. The hedge fund demands a complete sale of the subsidiary. Since last year, 30 percent have belonged to the financial investor Advent.
At the Annual General Meeting on Tuesday, Petrus Advisers is also campaigning for a new member to be appointed to the Supervisory Board, including Chairwoman Marija Korsch. It is unclear whether he will be successful with the advance.