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Aareal Bank Q2 profit remains flat YOY

Aareal Bank AG reported second-quarter consolidated net income attributable to shareholders of the bank of €41 million under International Financial Reporting Standards, unchanged from the same period in 2018.

Earnings per ordinary share was 61 cents for the quarter, compared to 62 cents a year earlier.

Operating profit dipped year over year to €61 million from €62 million, which the German lender noted remained in line with its projections despite a "challenging market and competitive environment."

Net interest income fell on a yearly basis to €134 million from €136 million, while net fee and commission income rose to €57 million from €51 million, mainly due to double-digit revenue growth at the bank's IT unit Aareon AG. Net derecognition gain was €11 million, compared to €5 million a year earlier.

Loss allowance amounted to €23 million, up from €19 million in the second quarter of 2018. Net loss from financial instruments came in at €6 million, compared to the year-ago €4 million.

For the first half, the German lender's attributable consolidated net income declined year over year to €80 million from €84 million. Earnings per ordinary share for the period was €1.20, down from €1.27 in the first half of 2018.

After-tax return on equity stood at 5.6% in the first half, compared to 6.1% a year earlier.

First-half operating profit came in at €122 million, down from the year-ago €129 million. Aareal Bank said it continues to expect consolidated operating profit of between €240 million and €280 million for 2019, following its "robust business performance" in the first half.

"Not only are we on track to achieve our ambitious goals for 2019, but we are also committed to building on Aareal Bank Group's continued success over the medium to long term," CEO Hermann Merkens said.

The bank's common equity Tier 1 ratio stood at 17.3% as of June 30, compared to 17.2% at the end of 2018. The Basel IV estimated CET1 ratio was 13.1% at June-end, compared to 13.2% as of Dec. 31, 2018.