Aareal Bank AG wants to pay its first dividend in five years as markets rally and the German commercial-property lender sets aside less money for risky loans.
The payout for 2013 depends on wider market conditions, the Wiesbaden, Germany-based company said today in a statement. Operating profit this year may match the 176 million euros ($236.4 million) reported in 2012 or the 185 million euros in 2011, Aareal said.
The European Central Bank sparked a rally last year by pledging to save the euro with sovereign bond purchases if countries sign up to reforms. Aareal, which last paid a cash dividend in 2008, said that while Europe hasn’t solved its debt crisis, recent developments on capital markets suggest investors “believe the worst is overcome.”
The bank said it expects to set aside provisions for risky loans at the lower end of a 110 million euros to 150 million euros range this year. Provisions fell to 106 million euros in 2012 from 112 million euros the previous year, Aareal said.
Net income declined to 105 million euros in 2012 from 114 million euros a year earlier, according to the statement. Aareal said it’s targeting a pretax return on equity of 12 percent by 2016 and may attain that goal a year earlier.
Aareal said it will repay 1 billion euros in three-year emergency loans from the ECB on Feb. 28 after raising 4.5 billion euros of medium- and long-term funds on the capital market in 2012.