Aareal Bank AG

For 2025, net interest income was EUR 934 million, down 12% year over year; loan impairment charges were EUR 322 million, down 19%; and adjusted administrative expenses were EUR 317 million, down 8%, producing a 33% cost-income ratio. Adjusted operating profit was EUR 381 million before the EUR 55 million U.S. repositioning charge and EUR 326 million after it. The adjusted post-tax ROE was 7.5% excluding the extra U.S. loan impairment and tax charges; CET1 fully phased was 15.5% versus 15.2% a year earlier. BDS adjusted operating profit was EUR 152 million, down 7%, with BDS net interest income down 9% to EUR 246 million; SPF adjusted operating profit was EUR 174 million, with new business of EUR 12.4 billion, newly acquired business of EUR 8.1 billion, average LTV of 57%, and average gross margins of 234 basis points. For 2026, management targets adjusted operating profit approaching EUR 400 million, adjusted post-tax ROE approaching 8%, BDS deposits averaging around EUR 17.5 billion, an SPF portfolio around EUR 34 billion, and NPLs below EUR 1 billion in the first half of the year.

Christian Ricken framed 2025 as evidence that the bank is executing well across both businesses, especially as interest rates normalize and the U.S. office portfolio is deliberately reduced. He said the bank is “well on track” with Aareal Ambition and reiterated the 2027 adjusted post-tax ROE target of around 13%. His tone was cautious on geopolitics and the commercial property backdrop, but confident that the mix shift toward Europe, hospitality, and Banking & Digital Solutions supports the plan.

Andrew Halford emphasized that lower rates drove the 12% decline in net interest income to EUR 934 million, while efficiency measures helped cut adjusted administrative expenses 8% to EUR 317 million. He highlighted that loan impairment charges fell 19% to EUR 322 million despite a EUR 55 million charge tied to U.S. repositioning, and said the CET1 ratio rose to 15.5% partly aided by the first SRT, which added about 0.5 percentage points of CET1 benefit. He also cited solid funding and liquidity, including an NSFR of 113%, an average LCR of 209%, and capital markets activity that included a new USD 425 million AT1, EUR 100 million of Tier 2, EUR 2 billion of benchmark Pfandbriefe, SEK 1.85 billion of private placements, and the first SRT transaction on a EUR 2 billion European CRE portfolio.

Analysts focused on three issues: margin development versus new business and renewals, why the SRT did not visibly lift CET1 more, and what the EUR 55 million U.S. repositioning charge actually represents. Management said prolongations and new business pricing are generally within plus/minus 10 basis points of the published average, explained that the SRT added about 0.5 percentage points to CET1 but higher loan-book RWAs offset part of that benefit, and clarified that the EUR 55 million was an overlay to support future U.S. repositioning rather than a specific charge against a particular NPL. Nina Babic said the charge gives management “leeway” to stay cautious and continue reducing U.S. office risk.