Aareal turns first profit in two years

26 March 2007

Aareal Bank of Germany has announced pre-tax profits of $212 million for 2006.

The improved performance for the bank, which comes after two successive years of losses, enabled it to propose a dividend of $0.67 per share – the first time it has been delivered a dividend since 2003.

Property lender Aareal, which has recently been dogged by bad debts from non-performing loans, also outlined projected profits of $345-364 million for 2007.

Dr Wolf Schumacher, chairman of Aareal, said: "We have clearly demonstrated the bank’s ability to turn around its performance – smoothly, efficiently, and ahead of schedule. We can now look ahead with confidence, committing all of our strengths to FUTURE 2009, our newly-designed growth programme."

Last week the bank announced it had sold a portfolio of subprime loans of undisclosed value to a division of Merrill Lynch, as it continues to offload bad debts.

Since 2005, the bank has got rid of $3.2 billion of defaulted loans and in so doing has brought its non-performing loan portfolio to $665 million. Prior to the sales, Aareal had accrued $4 billion of debts in the sector.

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