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Aareal Bank
Germany/Banks Analyser
Aareal Bank (Hold)
Hold
Recommendation unchanged
Share price: EUR
closing price as of 07/05/2012
Target price: EUR
Target Price unchanged
Reuters/Bloomberg
13.68
18.00
ARLG.DE/ARL GY
Market capitalisation (EURm) 819
Current N° of shares (m) 60
Free float 71%
Daily avg. no. trad. sh. 12 mth 587,976
Daily avg. trad. vol. 12 mth (m) 10
Price high 12 mth (EUR) 24.52
Price low 12 mth (EUR) 9.48
Abs. perf. 1 mth -1.55%
Abs. perf. 3 mth -26.05%
Abs. perf. 12 mth -36.19%
Key financials (EUR) 12/11p 12/12e 12/13e
Total Revenue (m) 708 650 676
Pre-Provision Profit (PPP) (m) 326 295 314
Operating profit (OP) 214 175 194
Earnings Before Tax (m) 185 175 204
Net Profit (adj.) (m) 93 86 105
Shareholders Equity (m) 2,210 2,296 2,402
Tangible BV (m) 2,191 2,277 2,383
RWA (m) 15,300 17,259 17,777
ROE (adj.) 5.7% 4.5% 5.2%
Tier1 Ratio 16.3% 15.0% 15.1%
Cost/Income 54.0% 54.6% 53.5%
P/PPP 2.3 2.8 2.6
P/E (adj.) 8.2 9.5 7.8
P/BV 0.4 0.4 0.4
P/NAV 0.4 0.4 0.4
Dividend Yield 0.0% 0.0% 1.8%
PPPPS 6.00 4.93 5.25
EPS (adj.) 1.71 1.44 1.76
BVPS 31.91 33.35 35.11
NAVPS 31.59 33.03 34.80
DPS 0.00 0.00 0.25
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18
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12
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8
Apr 11 Mai 11 Jun 11 Jul 11 Aug 11 Sep 11 Okt 11 Nov 11 Dez 11 Jan 12 Feb 12 Mrz 12 Apr 12 Mai 12
Source: Factset
AAREAL BANK Stoxx Banks (Rebased)
Shareholders: Verwaltungsgesellschaft 29%;
Analyst(s):
Philipp Häßler, CFA, Equinet Bank
philipp.haessler@equinet-ag.de
+49 69 58997 414
Slightly weaker Q1 results ahead (10.5.2012)
The facts: We expect Aareal Bank to report slightly weaker Q1 results next
Thursday (10.5.2012) due to a lower net interest income and a lower trading profit.
New business should have amounted to EUR 1.1bn in Q1 and ARL‟s CT ratio
should have increased by 20 basis points qoq to 11.5%. We do not expect Aareal
to have become more positive since its Q4 analyst meeting, i.e. the 2012 profit
target should remain cautious.
Our analysis: Due to the increased ECB deposits net interest income should
have declined by 3% yoy (-11% qoq) to EUR 130m. At the same time commission
income should have increased by 27% yoy (-16% qoq) to EUR 38m due to lower
SoFFin fees. We forecast a trading profit of EUR -20m due to negative effects
from Aareal Bank‟s cross-currency swaps – the MtM effect of the spread
narrowing, seen in Q1, should have been negative. Risk provisions should have
increased by 11% yoy (-41% qoq) to EUR 20m, still a very low level. We forecast
costs of EUR 90m (-1% yoy, -12% qoq) for Q1. This should have resulted in a
pretax profit of EUR 41m (-13% yoy/qoq) and a net profit of EUR 19m (-22%
yoy/qoq).
Aareal Bank - Q1 2012
P&L Figures (EUR m) Q1 2012e Q4 2011 equinet qoq yoy Consensus
Net interest income 130 146 130 -11.0% -3.0% 137
Commission Income 38 45 38 -15.6% 26.7% 37
Trading profit -20 -11 -20 81.8% 150% na
Other operating profit 0 -4 0 -100.0% -100% na
Costs 90 102 90 -11.8% -1.1% 91
Risk provisions 20 34 20 -41.2% 11.1% 22
Other revenues 3 7 3 -57.1% -150.0% na
Pretax Profit 41 47 41 -12.8% -12.8% 42
Net Profit 19 24 19 -22.1% -22.1% 22
Total revenues 151 183 151 -17.5% -11.4% na
Pre-Provision Profit 61 81 61 -24.7% -9.0% na
CIR 59.6% 55.7% 59.6% nm na
Conclusion & Action: For the time being we do not see any share price triggers
for Aareal Bank and hence stick to our Hold rating with a TP of EUR 18.00 despite
the low valuation (2013e P/NAV: 0.4x).
Page 38 of 80 European Securities Network
Please refer to important disclaimer on the last page
Source: equinet, Aareal Bank