BayernLB s operating business remains on track at the end of the first nine months

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1 17 November 2014 BayernLB s operating business remains on track at the end of the first nine months Pre-tax profit of EUR 561 million stems almost entirely from customer-driven core business (EUR 502 million) Net interest income stable, net commission income up 10 percent Administrative expenses cut by 6 percent despite higher regulatory costs Key legacy assets shed with the sale of Hungarian subsidiary MKB and ABS portfolio Bank stress test passed convincingly, CET 1 capital ratio very solid at 14.0 percent as at 30 September Munich - BayernLB ended the first nine months of 2014 with a solid profit before taxes of EUR 561 million despite challenging market conditions. Adjusted for the gain on the sale of GBW in 2013, profit before taxes was on a par with the good figure for the year-before period. The core business with corporates, real estate customers, savings banks and retail customers at subsidiary DKB performed soundly once again, posting profit before taxes of EUR 502 million. Dr Johannes-Jörg Riegler, CEO of BayernLB, commented, We achieved a lot at BayernLB in the first nine months of Our customer business remains stable despite low interest rates and subdued capital spending by many companies. At the same time, we were able to shed two major legacy assets with the sale of MKB in September and the ABS portfolio in October. With regard to the negative impact on earnings from the deconsolidation of MKB and resulting loss expected for the full year announced in the first half results, Riegler added: Financial year 2014 is a year of transition. We are strong enough to absorb the disposal of the legacy assets. We have made very good progress this year towards our goal of

2 becoming a bank focused solely on customer-driven business. In addition, our core business figures show that we are well on track in our operating business. page 2 of 6 Selected results 1 BayernLB's net interest income remained stable, rising slightly by approximately 1 percent in the first nine months of 2014 to EUR 1,251 million despite ongoing targeted reductions in business volume (9m 2013: EUR 1,244 million). Net commission income rose by nearly 10 percent (9.8 percent) to EUR 168 million, driven by higher commission in the credit business. Risk provisions in the credit business benefited from good portfolio quality and net releases at LBLux to come in lower than the previous-year period at EUR -84 million (9m 2013: EUR -115 million). Risk provisions at DKB remained below the previous-year period at EUR -97 million (9m 2013: EUR -107 million). Following net releases in the previous-year period, BayernLB's risk provisions amounted to a moderate EUR -54 million. Gains or losses on fair value measurement amounted to EUR 186 million (9m 2013: EUR 233 million), EUR 74 million of which stemmed from customer business (9m 2013: EUR 100 million). The EUR 374 million drop in gains or losses on financial investments to EUR -140 million was largely due to the deconsolidation gain of EUR 351 million recognised in the previous year on the sale of the stake in GBW. Administrative expenses shrank 6.0 percent to EUR 825 million, although expenses for audit and consultancy services, especially in relation to the ECB's comprehensive assessment, were higher. Due to the sale of MKB completed at the end of September, profit after taxes was EUR -561 million. As announced with the results for the first half of the year, this was caused by deconsolidation charges of EUR 1.1 billion from the sale of MKB. 1 In accordance with IFRS 5, MKB is to be classified as a discontinued operation and reported in the "gains or losses on discontinued operations" item in profit after taxes and other measurement effects. At the same time, MKB's income and expenses are no longer included in the individual items of the consolidated income statement relating to continuing operations and the figures for the first nine months of 2013 have been adjusted accordingly.

3 Sound customer-driven business and further reduction in non-core business page 3 of 6 The Corporates, Mittelstand & Financial Institutions segment closed the first nine months of financial year 2014 with profit before taxes of EUR 210 million (9m 2013: EUR 235 million). Net interest income was on par with the year-before period despite subdued demand for lending and competitive pressure. Net commission income rose significantly due to higher commission in the credit business. Total income was thus stable overall in spite of low volatility in the markets which led to lower earnings from demand for interest rate and currency hedging instruments. Risk provisions in line with expectations but higher than the previous year, which was boosted by releases, were reflected in the lower profit before taxes. Profit before taxes in the Real Estate & Savings Banks/Association segment amounted to EUR 198 million, well above the figure for the first nine months of the previous year (9m 2013: EUR 157 million). The largest contribution came from the Real Estate division, which posted profit before taxes of EUR 127 million (9m 2013: EUR 71 million). The increase resulted from higher net interest income, better net commission income from new business and risk provisions marked by releases. Business with savings banks (the "Savings banks & Association" division) contributed EUR 24 million before taxes, unchanged from the year before (9m 2013: EUR 24 million). Thanks to constructive and close collaboration with the savings banks and public sector, interest income, primarily from the capital market business was significantly higher. One example of this was the sale of Schuldschein note loans to savings banks. BayernLabo, which serves as an instrument of subsidised housing loans, posted lower profit before taxes year-on-year of EUR 42 million (9m 2013: EUR 58 million). Low interest rates and higher administrative expenses resulting from extraordinary expenses for launching new IT software weighed on earnings. Profit before taxes in the DKB segment was EUR 114 million (9m 2013: EUR 122 million). Despite low interest rates, total income was in line with the good results of the year-before period. Considering the current economic situation, customer business continued to perform well. Loan volume rose to EUR 57.5 billion. Customer deposits rose by 8.6 percent to EUR 47.4 billion. DKB further expanded its position as "Your bank on the web" as the total number of customers rose to more than 3 million. The Markets segment closed the reporting period with earnings in the red of EUR -63 million (9m 2013: EUR 18 million). Although Markets once again successfully structured and supported a number of large corporate bonds and Schuldschein note loan transactions, the demand for financial instruments was generally weak due to low volatility. Other key reasons for the year-on-year decrease in segment earnings were the creation of credit value adjustments of EUR -77 million for counterparties in the derivatives business and high one-off items in the same period in Profit before taxes of EUR 33 million in the Non-Core Unit was significantly below the EUR 348 million in the previous-year period, which was boosted by a

4 EUR 351 million deconsolidation gain from the sale of GBW. Following MKB's classification as a discontinued operation, it was no longer included in the NCU from 30 June onwards. The volume of the assets pooled in the Restructuring Unit was cut by a further EUR 3.5 billion in the first nine months of the year, despite the transfer of LBLux's EUR 2 billion corporate banking portfolio to the division on 1 July The total volume of all non-core portfolios amounted to EUR 21 billion as at 30 September 2014; this was reduced by an additional EUR 6.5 billion with the sale of the remaining ABS portfolio at the end of October. LBLux's business activities in the first nine months of 2014 were mainly marked by ongoing closure activities and the resulting non-recurring items. Profit before taxes was EUR 108 million (9m 2013: EUR 16 million), largely driven by the reversal of a EUR 70 million portfolio impairment in relation to the sale of the corporate portfolio planned at the time. page 4 of 6 Strong capital ratios BayernLB's capital base is very good, both in absolute terms and compared to its peers. This was recently confirmed by the EBA in its bank stress test. BayernLB's capital ratios were well above the minimum requirement in both scenarios. In the stress test, BayernLB's core capital ratio (CET 1) in the baseline scenario was 12.4 percent (minimum: 8 percent). In the adverse scenario, in which an economic and asset price-based shock and its impact on banks was simulated, BayernLB's CET 1 ratio was 9.4 percent and was thus far above the minimum ratio of 5.5 percent. If BayernLB had not been required to include its subsidiary MKB, which has recently been sold, in the asset quality review ahead of the stress test, the outcome would have been even better. As at the reporting date 30 September 2014, the CET 1 core capital ratio was a very solid 14.0 percent.

5 Outlook for full-year 2014 page 5 of 6 Low interest rates, stiff competition and major geopolitical risks are keeping earnings in the German banking market under pressure. Nevertheless, BayernLB expects its core business to continue performing well. As already reported, however, the BayernLB Group expects to report a loss for its full-year consolidated net income due to the charges incurred for the deconsolidation of MKB, although the Bank's capital base will remain very sound. With the sale of the ABS portfolio, completed at the end of October, the guarantee agreement with the Free State of Bavaria (Umbrella) in place since the end of 2008 was ended and the clawback of over EUR 1 billion required by the European Commission ruling for assuming the liability was repaid to the Free State of Bavaria ahead of schedule. This brings the total amount of state aid repaid to the Free State of Bavaria to nearly EUR 2 billion (EUR 1,960 million). The related expenses will result in a loss for the year in BayernLB's stand-alone accounts prepared under German accounting standards (HGB). Additional details about the BayernLB Group's financial figures in the first nine months of 2014 can be found in the Investor Relations presentation and in the Group financial report as at 30 September Both documents can be seen in the Press section of the BayernLB website at:

6 Business performance as at 30 September 2014 Results of operations page 6 of 6 EUR million 1 Jan - 30 Sep Jan - 30 Sep Change in % Net interest income 1,251 1, Risk provisions in the credit business Net interest income after risk provisions 1,167 1, Net commission income Gains or losses on fair value measurement Gains or losses on hedge accounting Gains or losses on financial investments Income from interests in companies measured at equity Administrative expenses Expenses for bank levies Other income and expenses Gains or losses on restructuring Profit before taxes Income taxes Gains or losses on continuing operations Gains or losses on discontinued operations -1, >100.0 Profit after taxes Profit attributable to non-controlling interests Consolidated profit Rounding differences may occur in the tables. ¹Adjusted as per IFRS 5. Balance sheet (IFRS) EUR million 30 Sep Dec 2013 Change in % Total assets 244, , Credit volume 186, , Equity and subordinated capital 19,150 19, Employees 30 Sep Dec 2013 Change in % Number of employees 5,629 8,