Aareal Bank AG

Reported 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 excluding the EUR 55 million U.S. repositioning charge, or EUR 326 million including it; adjusted post-tax ROE was 7.5% excluding the extra U.S. repositioning tax impact. CET1 fully phased ended 2025 at 15.5%, up from 15.2% a year earlier. New business in Structured Property Financing was a record EUR 12.4 billion, with average gross margins of 234 basis points and a portfolio of EUR 34.3 billion. Banking & Digital Solutions contributed EUR 152 million of adjusted operating profit, and Q4 average deposits, including retail, were EUR 17.8 billion. For 2026, the company targets adjusted operating profit approaching EUR 400 million, adjusted post-tax ROE approaching 8%, BDS deposits around EUR 17.5 billion on average, SPF loan portfolio around EUR 34 billion, and NPLs below EUR 1 billion in the first half of 2026.

Christian Ricken framed 2025 as a year of strong delivery and said Aareal is moving into 2026 with confidence despite geopolitical uncertainty. He emphasized that the bank is reducing U.S. office exposure, seeing some improvement in commercial real estate sentiment, and staying focused on two growth engines: Banking & Digital Solutions and Structured Property Financing. He reiterated that Aareal Ambition is on track and reaffirmed the 2027 target of around 13% adjusted post-tax ROE.

Andrew Halford highlighted the key financial drivers: net interest income down 12% to EUR 934 million due mainly to lower rates, loan impairment charges down 19% to EUR 322 million, and adjusted administrative expenses down 8% to EUR 317 million. He noted the EUR 55 million U.S. repositioning charge, the EUR 20 million positive one-off from a legacy NPL restructuring, and the impact of a higher 40% tax rate; adjusted post-tax ROE was 7.5% excluding the extra U.S. charges. He also pointed to a stronger balance sheet, with CET1 at 15.5%, leverage ratio at 7.2%, NSFR at 113%, LCR at 209%, and capital-market execution including a new USD 425 million AT1, EUR 100 million Tier 2, EUR 2 billion of benchmark Pfandbriefe, SEK 1.85 billion of private placements, and the first SRT on a EUR 2 billion CRE portfolio.

Analysts focused on three issues: margin development, the SRT’s effect on capital, and the EUR 55 million U.S. repositioning charge. Management said new business and prolongations are roughly plus/minus 10 basis points around the average margin, and that the SRT added about 0.5 percentage points to CET1, with the remaining movement explained mainly by a larger loan book and higher RWAs, with nothing abnormal in Q4. On the repositioning charge, Nina Babic said it is an overlay to support the U.S. repositioning going forward, not a direct allocation to specific NPLs, and is meant to keep the bank cautious as it reduces U.S. office exposure.