Aareal Bank has made a €60 mln provision against two Moscow office buildings, cutting Q1 2022 operating profit from €90 mln to €30 mln.
The German real estate bank said the loans on the buildings were its only remaining exposure to Russia and its business there ‘is in the process of being wound down'.
Aareal’s exposure in the country is now €200 mln compared to about €1 bn at its peak.
Chief executive officer Jochen Klösges explained: 'Despite the additional loss allowance for Russia, we can report a positive quarterly result thanks to a very strong earnings performance. We remain committed to consistently implementing our strategy without losing sight of the geopolitical risks.'
Net income from lending was up 15% year on year to €159 mln driven by expansion of the portfolio volume from €30 bn (December 2021) to €30.8 bn, and strong gross lending margins during recent quarters of 220 basis points (against a 57% average LTV).
By comparison, pbb Deutsche Pfandbriefbank reported a squeeze in margins in Q1 2022 from 170 bps to 150 bps.
Among Aareal’s €3.3 bn of new lending in Q1 - its highest level since 2018 - was a logistics portfolio for asset manager Mirastar in the UK in the amount of €298 mln and a pan-European logistics portfolio for global investment manager GLP via a €586 mln syndicated loan.
Aareal is currently in the midst of a potential public takeover by Atlantic BidCo.
