German lender Aareal hikes provisions as property stress drags on, CFO to leave (updated)

Aareal Bank AG

15/05/2024 07:20

(Updates with quarterly profit in paragraphs 2 and 8)
       FRANKFURT, May 15 (Reuters) - The property lender Aareal
earmarked an increase in risk provisions for soured loans in the
first quarter as troubles in the U.S. commercial real estate
market continue.
    The bank, which nevertheless posted an increase in quarterly
profit, also announced that its finance chief would leave, news
that comes weeks after a new chief executive was appointed. 
    Aareal, based in Germany but operating globally has a
quarter of its business in the United States from New York to
San Francisco.
    Aareal is one of the biggest property lenders in Germany,
Europe's largest economy, and together the nation's banks are
among the continent's heaviest lenders for the stricken
commercial property sector.
     Risk provisions were 86 million euros in the first quarter,
up from 35 million a year earlier.
    It said provisions remained at an "elevated level" and 
reflect "challenges on the US office property market".
    Last year, Aareal earmarked 441 million euros in provisions
for soured loans in 2023, the most in at least a generation and
surpassing a recent peak at the height of the pandemic.
    Net profit in the quarter rose to 73 million euros, up from
42 million a year earlier, helped by a 14% increase in net
interest income and lower costs.
    Aareal said that the supervisory board and finance chief
Marc Hess jointly agreed on him leaving at the end of his
contract later this year.
    The bank said the board would decide on a successor "in due
course".

 (Reporting by Tom Sims, editing by Thomas Seythal)
 ((Tom.Sims@thomsonreuters.com; +49 30 220 133 645;))