German Aareal Bank on track to restart paying dividends

MUNICH Tue Oct 8, 2013 8:10am EDT

MUNICH (Reuters) - German mortgage bank Aareal (ARLG.DE) is confident of paying a dividend for this year for the first time since the financial crisis, helped by strong operating profit that may even match a record set in 2011, it said on Tuesday.

"We plan to return to an active dividend policy for 2013 and the following years," Chief Executive Wolf Schumacher told Reuters at the Expo Real property conference.

The company's last dividend was the 0.50 euros per share it paid for 2007, before the sub-prime crisis engulfed the financial markets.

Schumacher, who had already raised the prospect of resuming dividend payments earlier this year, said developments over the first nine months increased his confidence of achieving that goal.

"We are fully on track," he said.

"The chances remain good that we will achieve group earnings on the order of those in 2012 and it may even be possible to match the record result of 2011," he said.

Aareal, a specialist property lender, posted record operating profit of 185 million euros in 2011 and slipped back to 176 million euros last year.

Analysts on average expect the lender to post operating profit of 192 million euros this year and pay a dividend of 0.44 euros per share for 2013, data from Thomson Reuters I/B/E/S show.

New business is seen at around 7-8 billion euros this year, after 6 billion last year, with demand strong, Schumacher said.

Aareal Bank received 525 million euros in a form of debt-equity hybrid called a "silent participation" from the state at the height of the crisis, of which 300 million euros have yet to be repaid.

Schumacher aims to repay the remaining silent participations once he can replace them with hybrid capital instruments, but the regulatory environment for the moment is too uncertain.

(Reporting by Kathrin Jones; Writing by Jonathan Gould; Editing by Peter Dinkloh and Jane Merriman)

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