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Aareal Bank AG - 2017 EU-wide Transparency Exercise Summary

Core Content Overview

The document provides a detailed summary of Aareal Bank AG's financial and risk-related data as part of the 2017 EU-wide Transparency Exercise. It includes information on capital structure, leverage ratios, risk exposure amounts, and profit and loss (P&L) performance, as well as market and credit risk calculations under the Standardised Approach.

Capital Structure

• Own Funds (Transitional period):

  • As of 31/12/2016: 3,994 mln EUR
  • As of 30/08/2017: 3,683 mln EUR

• CET1 Capital (Transitional period):

  • As of 31/12/2016: 2,351 mln EUR

  • As of 30/08/2017: 2,261 mln EUR

  • CET1 Capital Elements:

    • A.1.1: Capital instruments eligible as CET1 Capital (including share premium and net own capital instruments): 899 mln EUR (31/12/2016) to 900 mln EUR (30/08/2017)
    • A.1.2: Retained earnings: 1,563 mln EUR (31/12/2016) to 1,555 mln EUR (30/08/2017)
    • A.1.3: Accumulated other comprehensive income: -72 mln EUR (31/12/2016) to -103 mln EUR (30/08/2017)
    • A.1.7: Adjustments to CET1 due to prudential filters: -29 mln EUR (31/12/2016) to -9 mln EUR (30/08/2017)
    • A.1.19: Additional deductions of CET1 Capital due to Article 3 CRR: -23 mln EUR (31/12/2016) to -21 mln EUR (30/08/2017)
    • A.1.21.3: Other transitional adjustments to CET1 Capital: 50 mln EUR (31/12/2016) to 41 mln EUR (30/08/2017)

• Tier 1 Capital (Transitional period):

  • As of 31/12/2016: 2,896 mln EUR
  • As of 30/08/2017: 2,633 mln EUR

• Tier 2 Capital (Transitional period):

  • As of 31/12/2016: 1,097 mln EUR
  • As of 30/08/2017: 1,050 mln EUR

• Capital Ratios (Transitional period):

  • Common Equity Tier 1 (CET1) Ratio: 16.17% (31/12/2016) to 16.94% (30/08/2017)
  • Tier 1 Ratio: 19.92% (31/12/2016) to 19.73% (30/08/2017)
  • Total Capital Ratio: 27.47% (31/12/2016) to 27.60% (30/08/2017)

• CET1 Capital Fully loaded:

  • As of 31/12/2016: 2,302 mln EUR
  • As of 30/08/2017: 2,220 mln EUR

• CET1 Capital Ratio (Fully loaded):

  • As of 31/12/2016: 15.83%
  • As of 30/08/2017: 16.64%

Leverage Ratio

• Tier 1 Capital - Transitional definition:

  • As of 31/12/2016: 2,896 mln EUR
  • As of 30/06/2017: 2,633 mln EUR

• Tier 1 Capital - Fully phased-in definition:

  • As of 31/12/2016: 2,586 mln EUR
  • As of 30/06/2017: 2,515 mln EUR

• Leverage Ratio:

  • Using transitional definition: 6.4% (31/12/2016) to 6.3% (30/06/2017)
  • Using fully phased-in definition: 5.7% (31/12/2016) to 6.0% (30/06/2017)

Risk Exposure Amounts

• Total Risk Exposure Amount:

  • As of 31/12/2016: 14,540 mln EUR
  • As of 30/06/2017: 13,345 mln EUR

• Credit Risk:

  • As of 31/12/2016: 12,394 mln EUR
  • As of 30/06/2017: 11,499 mln EUR

• Market Risk:

  • Foreign exchange risk: 122 mln EUR (31/12/2016) to 224 mln EUR (30/06/2017)

Profit and Loss (P&L)

• Total Operating Income, Net:

  • As of 31/12/2016: 815 mln EUR
  • As of 30/06/2017: 320 mln EUR

• Profit or (Loss) Before Tax from Continuing Operations:

  • As of 31/12/2016: 356 mln EUR
  • As of 30/06/2017: 169 mln EUR

• Profit or (Loss) After Tax from Continuing Operations:

  • As of 31/12/2016: 227 mln EUR
  • As of 30/06/2017: 104 mln EUR

• Profit or (Loss) for the Year:

  • As of 31/12/2016: 227 mln EUR
  • As of 30/06/2017: 104 mln EUR

Credit Risk - Standardised Approach

• Standardised Total (Credit Risk):

  • As of 31/12/2016: 17,261 mln EUR
  • As of 30/06/2017: 16,978 mln EUR

• Country Breakdown (Germany):

  • Central governments or central banks: 2,269 mln EUR (31/12/2016) to 1,341 mln EUR (30/06/2017)
  • Regional governments or local authorities: 4,289 mln EUR (31/12/2016) to 4,031 mln EUR (30/06/2017)
  • Public sector entities: 1,578 mln EUR (31/12/2016) to 1,529 mln EUR (30/06/2017)
  • Corporates: 424 mln EUR (31/12/2016) to 347 mln EUR (30/06/2017)
  • Secured by mortgages on immovable property: 1,560 mln EUR (31/12/2016) to 1,371 mln EUR (30/06/2017)
  • Exposures in default: 30 mln EUR (31/12/2016) to 27 mln EUR (30/06/2017)

• United States:

  • Standardised Total: 0 mln EUR (31/12/2016) to 0 mln EUR (30/06/2017)

• United Kingdom:

  • Standardised Total: 0 mln EUR (31/12/2016) to 0 mln EUR (30/06/2017)

Key Information and Regulations

• Capital calculations are based on the Capital Requirements Regulation (CRR) and its Delegated Regulations.
• Transitional adjustments are applied to CET1 and Tier 2 capital to align with regulatory changes.
• Risk exposure amounts include credit, market, and operational risk, with specific breakdowns by asset classes.
• Leverage ratios are calculated using different definitions of Tier 1 capital.
• P&L includes interest income, expenses, and other operating income/expense items, with a focus on net income and provisions.

Main Points

• Aareal Bank AG experienced a decline in own funds and CET1 capital during the transitional period.
• The bank's capital ratios showed a slight improvement in CET1 ratio but a decrease in Tier 1 and Total capital ratios.
• Leverage ratios decreased slightly from the end of 2016 to mid-2017.
• Credit risk exposure decreased from 12,394 mln EUR to 11,499 mln EUR.
• Market risk exposure, primarily from foreign exchange, increased from 122 mln EUR to 224 mln EUR.
• P&L decreased significantly, indicating a decline in operating performance.
• Standardised credit risk calculations showed a reduction in exposure across most categories, with no exposure reported in the US and UK.