Aareal Bank AG First Half Results: Adjusted Operating Profit Up 21%, Loan Impairment Charges Down 33%.

Aareal Bank AG reported a 21% increase in first-half adjusted operating profit to €223 million, with loan impairment charges down a third to €116 million. The bank also experienced strong growth in BDS deposit volumes, reaching €14.0 billion in Q2. The adjusted return on equity was 6.9%, up from 6.4% in the same period last year.

Aareal Bank AG (ETR:ARLG) reported a robust first-half performance for 2025, with adjusted operating profit increasing by 21% year-over-year to €223 million, despite challenging market conditions. The bank's resilience is particularly notable given the decline in the European short-term interest rate (ESTR) from 3.9% in H1 2024 to 2.4% in H1 2025 [1].

Key drivers of Aareal Bank's strong performance include a significant reduction in loan impairment charges, which decreased by 34% from €176 million in H1 2024 to €116 million in H1 2025. This reduction, combined with an 8% decrease in administrative expenses to €162 million, more than offset the decline in net interest income by 11% year-over-year to €473 million [1].

The bank's adjusted return on equity (ROE) increased from 8.0% to 9.1%, reflecting enhanced profitability despite market challenges. The bank's structured property financing segment showed resilience, with net interest income declining by 11% to €353 million, but the gross loan margin remained stable. The bank's new business activity remained strong, with a diversified approach across property types and regions [1].

Aareal Bank's Banking & Digital Solutions (BDS) division also reported strong deposit volume growth, reaching €14.0 billion in Q2 2025. This growth demonstrates the bank's ability to maintain and expand its client relationships, with deposits coming from approximately 4,000 clients managing more than 9 million housing units [1].

The bank's "Aareal AMBITION" strategy, focusing on strengthening the core business, expanding beyond traditional offerings, enhancing efficiency, and maintaining discipline in risk management and capital allocation, is on track. Key milestones achieved in H1 2025 include the expansion of the green loan portfolio and growth in deposit volumes [1].

Aareal Bank maintains a strong funding and liquidity position, with a Net Stable Funding Ratio (NSFR) of 121% and a Liquidity Coverage Ratio (LCR) of 262%. The bank's treasury portfolio stands at €9.2 billion as of June 2025, with approximately 67% allocated to public sector debtors and 33% to covered bonds and financials. Capital ratios remain robust, with the CET1 ratio increasing to 15.5% from 15.2% at the end of 2024 [1].

Looking ahead, Aareal Bank has reconfirmed its full-year outlook for 2025, targeting an operating profit of €375-425 million and a return on equity of 7-8%. The bank expects its real estate financing portfolio to reach €34-35 billion by year-end, with new business volumes of €9-10 billion [1].

References:
[1] https://www.investing.com/news/company-news/aareal-bank-h1-2025-presentation-adjusted-profit-jumps-21-despite-rate-headwinds-93CH-4175499
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3TW1D2:0-uk-s-travis-perkins-posts-24-drop-in-first-half-adjusted-operating-profit/
[3] https://www.ainvest.com/news/ring-energy-q2-2024-earnings-blueprint-energy-sector-creation-2508/