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Aareal Bank To Report Operating Loss In FY20; To Resume Dividend; Sees Profit Ahead

Aareal Bank (AAALF.PK) Sunday said it expects consolidated operating loss in a double-digit million euro amount for the 2020 financial year.

In its statement, the German banking company said the forecast for operating loss reflects an increase in loss allowance, compared to original expectations.

The company noted that the net gain of approximately 180 million euros from the sale of the minority stake in Aareon has not been recognised in income but directly in equity.

In the year 2019, the bank's operating profit was 248 million euros.

Aareal Bank will publish its full preliminary figures for the 2020 financial year on February 24.

The company also announced its intention to resume dividend payments, and targets a total dividend payout of 1.50 euros per share in 2021 for the financial year 2020, subject to the applicable supervisory and regulatory requirements.

The payout would need to be made in two steps. The initial payment would be between approximately 0.35 euro and 0.40 euro per share. The Bank will be able to pay out the remaining amount of between approximately 1.10 euros and 1.15 euros per share in the fourth quarter of 2021.

Aareal Bank will take the intended payout totaling approximately 90 million euros into account as a deduction from regulatory capital as at December 31, 2020.

Chief Financial Officer Marc Hess said, "We are leaving the pandemic year 2020 firmly behind with comprehensive allowance for risks related to Covid-19. Moreover, our strong capital base allows us to resume dividend payments. We now also have scope to consistently pursue the opportunities arising in a changed environment."

Looking ahead, the Bank said it continues to anticipate a marked economic recovery to occur in the current year, as soon as global vaccination campaigns start to take effect: on this basis, Aareal Bank anticipates a clearly positive operating profit for 2021.

Further, Aareal Bank envisages achieving consolidated operating profit in an amount of approximately 300 million euros in 2023, excluding any potential acquisitions, and subject to the Covid-19 crisis being fully overcome by then.

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