Aareal Preview: Can It Match DePfa's NPL Trend?

Aareal Bank (AARB: Baa1/BBB+) results are due 15-May. Bonds have traded up in the last month and DePfa’s results today were a solid prelude.

• Results last time (29-Feb) missed consensus on a big uptick on loan losses, well ahead of guidance given three months prior. The bank had been downgraded by Fitch on 14-Feb, so the market had a good idea of what was coming, we feel.
• DePfa results today saw it as one of the best performing €IG banks (in spread terms) with the rate of NPL growth halving again on the prior quarter. Deutsche’s results were rather more mixed, but Aareal really is at the sharper end of German and US CRE lending.
• Aareal’s index constituent bonds are up 0.82pts in the last month but are only marginally better today – at least relative to DePfa’s big moves.
• Now Aareal is (c.95%) privately owned, there’s no good consensus expectations in equity world. The squeeze-out was approved at the AGM on 3-May.

Results are due at 0600 (London time) with conf call at 1000 at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=rIkiYRNZ