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–As announced by the real estate financier listed in the MDAX, the dividend should decrease to 2.00 from 2.10 euros. In the current year, Wiesbadener Bank expects the key performance indicators to remain stable.
In the fourth quarter, operating profit fell by almost half to EUR 62 million. In the prior-year period, the bank had benefited from a positive one-time effect from the takeover of DHB. In the reporting period, as announced in January, expenses for the accelerated risk reduction program put an additional 15 million euros on profits. On the other hand, the bank generated a one-off income from the adjustment of its treasury portfolio of EUR 10 million. The bottom line was that the bank earned 38 million euros in the fourth quarter, 58 percent less than in the same period last year.
For the year as a whole, operating profit fell to EUR 248 million from EUR 316 million in the previous year. Analysts had forecast 244 million in the Vara consensus, with the bank itself in mid-January confirming its forecast of 240 million, which was lowered during the year. Net income fell 30 percent to EUR 145 million, and earnings per share were EUR 2.42.
The Aareal leadership looks at 2020 with mixed feelings. Aareal Bank anticipates a stable operating result in the current year. Loan loss provisions should fall slightly below the previous year’s figure of EUR 90 million. A possible continuation of the accelerated risk reduction is not yet included here. The net profit should be stable at the previous year’s level. Stagnation is also forecast for net interest and commission income, with the contribution of IT subsidiary Aareon increasing.
“It is not foreseeable that the interest rate environment will change,” said Merkens. The bank was unable to increase its net interest income last year. With the virus epidemic, further uncertainties are added.
It is “logically difficult” to predict how the epidemic will affect the economy and especially the real estate loan business, the manager said. However, Aareal Bank mainly financed existing properties and hardly any new construction projects where the work could come to a standstill as a result of the epidemic.
The board of directors is fortunate that the bank in Italy, where the virus is currently paralyzing parts of the economy, has already lined up bad loans in 2019. Although that depressed profits, the institute is rid of the risks. In such cases, the bank usually sells the claim to a processor. The latter assumes the credit risk, but only transfers part of the outstanding loan amount to the bank.
Aareal Bank is planning a series of acquisitions for subsidiary Aareon
Aareon offers services for companies in the real estate industry, which, with the support of the data service provider, can more easily manage their buildings and technical systems. Merkens did not want to quantify how expensive the individual takeover targets could be. However, the company could spend significantly more on acquisitions than in the past.
The manager again refused to sell Aareon, as requested in part by the Aareal shareholders. He thinks it is conceivable to bring a minority shareholder in with the daughter. But this must bring strategic advantages for Aareon. “A purely financial transaction doesn’t really make much sense to us?” Said Merkens.
In a negative stock market environment, the Aareal Bank share was up 0.32 percent in early XETRA trading at EUR 28.34. In the course of the course, the price turned so that the paper in the afternoon is 3.43 percent cheaper for 27.28 euros.
FRANKFURT (Dow Jones / dpa-AFX)
Image sources: Aareal Bank
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