Aareal cautious on 2012 after 38% rise in profits

Aareal Bank Group saw consolidated operating profit rise 38% to EUR 185 mln in 2011 compared to the previous year after a 17% increase in fourth-quarter operating profit. Full-year net income doubled to EUR 93 mln.

The Wiesbaden-based bank also boosted the volume of new business by almost 20% to EUR 8 bn, at the upper end of the projected range of EUR 7-8 bn. CEO Wolf Schumacher attributed the ‘excellent result - considering the challenging market environment’ to a significant increase in net interest income, which benefited from the previous year's high-margin new business.

'We delivered on our promises again in the financial year under review, despite the escalating turbulences on financial markets in the second half of the year,' he said in a press release. 'Our very good results show that Aareal Bank Group is well-positioned to master the challenges presented by the economic downturn, the uncertain political framework and the cumulative regulatory changes that are forthcoming.'

For the coming year, Aareal said it expects a considerable decline in net interest income which is expected to more than offset the positive effect of higher margins on new business originated last year. Given the scope of the sovereign debt crisis - that is still unresolved - and ongoing volatility in financial markets, the bank will continue to pursue a very cautious liquidity and investment strategy.

All in all, though, the management board sees good potential for achieving consolidated net income that is only slightly below last year’s very good result, Schumacher said. 'We are cautious business people who have to take into account the deterioration of the economic framework during the current year. Nevertheless, our great flexibility allows us to react at all times to changes in the environment and to take advantages of available opportunities.'