Aareal Bank Group (ARLN) investor relations material

Executive summary

• Adjusted operating profit rose 13% year-over-year to €121 million in Q1 2026, marking one of the best underlying quarters on record.

• Net profit increased 27% to €76 million, with consolidated net income up 16% to €85 million compared to Q1 2025.

• Cost/income ratio remained low at 30%, reflecting strong cost discipline and efficiency measures.

• The business model remains resilient amid geopolitical uncertainty, with no direct exposure to Russia or the Middle East and limited impact from U.S.-Iran tensions.

• 2026 outlook confirmed, with ambitious 2027 targets including ~13% ROE and <3% NPL ratio.

Financial highlights

• Net interest income declined 5% year-over-year to €237 million, mainly due to lower interest rates, partially offset by a larger loan portfolio and higher deposits.

• Adjusted administrative expenses fell 14% to €76 million, reflecting cost discipline and project phasing.

• Adjusted return on equity after taxes improved to 9.8% from 8.2% in Q1 2025.

• Cost/income ratio improved to 29.7% from 35.0% year-over-year.

• Loan impairment charges remained stable at €58 million, mainly related to U.S. office properties.

Outlook and guidance

• Full-year 2026 adjusted operating profit is targeted to approach €400 million, with an adjusted post-tax ROE near 8%.

• 2027 targets reaffirmed: adjusted post-tax ROE around 13%, CET1 ratio at least 13.5%, cost/income ratio around 30%, and NPL ratio under 3%.

• Average annual deposits expected to remain at €17.5 billion; loan portfolio to stay near €34 billion; NPLs targeted below €1 billion.

• Positive Q1 performance aligns with full-year targets; continued close monitoring of geopolitical events.