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Aareal Results: Big US Office Provisions But Little New News

FINANCIALS

Aareal Bank (ARLN GR) posted weak results this morning, including a big provision for US office NPLs (not a total surprise). This is unhelpful but was largely a known event.


  • Key credit metrics: the bank posted EUR510m of credit losses in FY23 (c.100m higher than guidance given at 3Q23 stage), of which EUR360m was against US offices. Non-performers are 3.4% of loans (from similar leve at Jun-23) but this is net of some big new provisioning.
  • Revenues actually look marginally better than expected but a big spike in loan losses meant operating profit was 35% below consensus and net income around half of consensus. .
  • The bank was downgraded a notch (to BBB) by Fitch on 14-Feb (puns welcome) so the asset quality issues are well publicised. Now Aareal is privately-owned (by two US private equity firms) there’s no future guidance in here.
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