Aareal Bank AG (ARL), the German lender that provides property financing in more than 25 countries in Europe, Asia and North America, said full-year profit climbed 50 percent after gains in commission and interest income.
Net income rose to 114 million euros ($151 million) from 76 million euros a year earlier, the Wiesbaden, Germany-based lender said in a statement today. Fourth-quarter profit was 29 million euros, Aareal said, without providing a year-earlier figure. Net commission income rose 17 percent while net interest income climbed 7.5 percent.
Aareal expects a “considerable decline” in net interest income this year as it counters uncertainties stemming from Europe’s sovereign debt crisis with “a very cautious liquidity and investment strategy.” While the lender forecasts loan-loss provisions of 110 million euros to 140 million euros this year, Aareal said it can’t “rule out additional allowances for unexpected credit losses.”
“Within the scope of the sovereign debt crisis that is still unresolved, the management board believes financial markets will remain volatile during the current year and therefore expects the risks in the financial system to persist,” Aareal said in the statement. “The risks in relation to economic development have also increased in recent months.”
Aareal had a Tier 1 capital ratio of 16.3 percent at the end of last year and a core Tier 1 ratio, a measure of financial strength, of 11.3 percent, the German lender said.
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