EUR 174 million in the first half of 2012

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27. August 2012 BayernLB posts earnings before taxes of EUR 174 million in the first half of 2012 Core business continues to perform well One-off pension provisions of EUR -133 million established

proceedings Positive earnings before taxes are still expected in the core business for FY 2012 Munich The BayernLB Group recorded earnings before taxes of EUR 174 million in the first half of 2012 in

1 27. August 2012 BayernLB posts earnings before taxes of EUR 174 million in the first half of 2012 Core business continues to perform well One-off pension provisions of EUR -133 million established following a ruling by the Federal Employment Court on retirement benefits The Bank's realignment, initiated in 2009, is driven forward in response to the EU Commission's decision in state aid proceedings Positive earnings before taxes are still expected in the core business for FY 2012 Munich The BayernLB Group recorded earnings before taxes of EUR 174 million in the first half of 2012 in a market environment plagued by the debt crisis. Business with customers performed well. The "Corporates, Mittelstand & Retail Customers" segment made a much greater contribution to earnings before taxes than in the year-before period with EUR 306 million. And earnings in the Real Estate & Savings Banks/Association segment of EUR 100 million, while lower year-on-year, were still in line with expectations after adjusting for extraordinary items. The Bank generated its half year earnings almost exclusively from its core activities, which include in particular business with corporate, retail and real estate customers, the public sector and the savings banks in Bavaria and Germany. "BayernLB achieved respectable earnings in the first half of Business strictly with and on behalf of customers was significantly better than in the year-before period and thus could be considered as good. The Bank has taken

2 another big step to becoming a sustainably profitable and competitive corporate and real estate financier focused on Bavaria and Germany as well as a strong partner for the savings banks. This shows we are moving in the right direction. Unfortunately extraordinary items, measurement effects and charges from non-core business once again overshadowed BayernLB's earnings, which is almost unavoidable for banks undergoing a process of change," said Gerd Haeusler, CEO of BayernLB. page 2 of 10 The previously announced increase in pension provisions, which had to be implemented in Q2 in response to the ruling by the German Federal Employment Court on the BayernLB's retirement plan, weighed heavily on BayernLB's interim earnings to the tune of EUR -133 million. Without this one-time charge, BayernLB would have exceeded by far its earnings before taxes of EUR 244 million in the first half of Mark-to-market valuations in accordance with IFRS, which arose at the end of the first quarter, continued to have a negative impact as at 30 June These relate mainly to cross-currency swaps, own credit spreads and the strategic liquidity reserve established as a precautionary measure and resulted in an expense item totalling EUR -203 million (31 March 2012: EUR -232 million). The impact weighed heavily on the earnings of the Markets segment, which conducts the Bank's capital market operations, and which reported a loss of EUR -200 million despite positive earnings from transactions for customers. The situation at the Hungarian subsidiary MKB, which is not part of the core business, remained difficult. Due to the disproportionately high banking levy in Hungary (EUR -46 million) and the drop in business volume resulting from the Hungarian law allowing the conversion of mortgage loans denominated in foreign currencies to Forint, MKB's loss in the first half of 2012 was more than eight percent higher than in the year-before period, rising to EUR -66 million.

3 Further good progress was made in the reduction of non-core business that was initiated in The lending and securities portfolios pooled in the internal Restructuring Unit shrank further. The nominal value of exposures dropped sharply by over EUR five billion compared to year-end 2011 to just under EUR 22 billion. After selling off the last of its remaining Greek government bonds at the beginning of January, BayernLB further scaled back its exposures to other EMU countries particularly affected by the debt crisis. Further disposals from BayernLB's investment portfolio also took place. In the first quarter, Deutsche Kreditbank AG (DKB) sold off its DKB Immobilien AG subsidiary, while MKB signed an agreement in April to sell its Romanian subsidiary Nextebank. BayernLB has thus disposed of its shareholdings in 32 subsidiaries or companies since the beginning of The Group's total assets fell slightly from year-end 2011 to EUR 307 billion. The core capital ratio is 12.0 percent, up from 11.4 percent at the end of The core tier 1 ratio as defined by the European Banking Authority (EBA) correspondingly rose by 0.5 percentage points to 10.3 percent. page 3 of 10 Income statement items Net interest income of EUR 858 million in the first half of 2012 was in line with forecasts. The drop from the year-before period figure of EUR 976 million can be attributed in part to lower earnings from operations at MKB. In addition charges arose which correspond to positive entries in gains or losses on fair value measurement. Risk provisions in the credit business were EUR -204 million. The low figure of EUR -112 million in the previous year period was due to the positive impact of net releases at BayernLB. Net commission income rose by EUR 15 million to EUR 140 million. Commission earnings remained stable, while commission expenses declined consid-

4 erably after the bond guaranteed by the German Financial Market Stabilisation Fund (SoFFin) matured in January page 4 of 10 fair value measurement (including gains or losses on hedge accounting) were EUR 308 million and thus significantly higher than the figure of EUR 197 million in the previous year period. It must be noted that this figure is directly offset by corresponding negative items in the net interest income, gains or losses on financial investments and other income and expenses items totalling EUR -310 million. The gains or losses on fair value measurement item also includes charges from the measurement of cross-currency swaps (EUR -93 million) and own credit spreads (EUR -74 million) as well as expenses for the strategic liquidity reserve of EUR -36 million. financial investments (including income from interests in companies measured at equity) were EUR -34 million. Included in this figure is a EUR -80 million decrease in the value of the Umbrella guarantee agreement with the Free State of Bavaria, which shields BayernLB from losses in its ABS portfolio. Administrative expenses amounted to EUR -850 million and include a one-off addition to pension provisions of EUR -133 million. Adjusted for this one-off item, administrative expenses would have been around 2 percent lower than the previous year's figure of EUR -733 million. Other income and expenses, which includes the activities of the Group s real estate subsidiaries, was EUR 24 million (H1 2011: EUR -8 million). Expenses for bank levies were EUR -53 million (H1 2011: EUR -88 million). Of this amount, EUR -46 million related to MKB, EUR -4 million to DKB and EUR -3 million to BayernLB.

5 Outlook page 5 of 10 After the close of the first half of the year, the European Commission completed its state aid proceedings against BayernLB on 25 July 2012 and approved, with conditions, the support provided by the Free State of Bavaria in the wake of the financial crisis. The Commission's decision was based on the Bank's business forecast and business model which already incorporates BayernLB's commitments under the decision and enables the Bank to prudently grow its core business. The Commission thereby offers official testimony to the viability of BayernLB and affords the Bank the planning certainty it needs to proceed forward with confidence. One of the main conditions imposed by the EU Commission is the repayment of EUR 5 billion in core tier 1 capital to Free State of Bavaria. In order to fulfil this condition, BayernLB will have to shrink further over the next seven years by following the restructuring path it began in Furthermore, the remaining non-core activities are being wound down and non-strategic holdings are being divested in order to free up more capital. For instance, the spin-off of LBS Bayern by the end of 2012 is already set and the holding in GBW AG is to be sold in a non-discriminatory tender process by the end of Next year's capital increase agreed to by the Bavarian savings banks is another key element in fulfilling the capital repayment condition set by the EU Commission. Gerd Haeusler, "Over the coming months and years, BayernLB will have to energetically continue its transformation into a smaller, lower-risk Landesbank. In the process, all activities will be measured in terms of whether and to what degree they consume the scarce resource of capital in order to comply with the conditions set by the EU Commission to repay EUR 5 billion to the Free State of Bavaria. Moreover, it is indispensable that the Bank become more profitable so that it can both raise and pay back capital from its own resources. For this reason, the business forecast calls for tight cost discipline

6 to stabilise and increase earnings. Administrative expenses must shrink in step with the smaller business volume. At the same time, business processes will be continuously reviewed to identify further cost savings. This is an area the Bank must and will work on even more intensively in the future." page 6 of 10 As the business environment enters a cyclical downturn, the BayernLB Group expects to further wind down non-core activities and see moderate business growth in its defined core businesses as the year goes on. Despite negative one-off items, the Bank expects earnings to stabilise in This trend is expected to continue and strengthen going into For financial year 2012 the BayernLB Group continues to forecast that earnings before taxes in its core activities will be in the black. Events of special significance that could have an impact on the financial performance and financial position continue to be the unresolved sovereign debt crisis in the euro area and the risks this poses for the financial sector and real economy. Because the German economy is deeply integrated into the global economy, short and medium-term developments in the eurozone will play a major role in BayernLB's business with customers. A continuation of the historic low-interest phase in the northern part of the eurozone is taking its toll on almost all the financial services providers located in these countries. The BayernLB Group Financial Report as at 30 June 2012 can be downloaded from as a PDF file in German and English.

7 Income statement (IFRS) H and H page 7 of 10 1 Jan - 30 Jun 2012 EUR million 1 Jan - 30 Jun 2011 EUR million Change in % Net interest income Risk provisions in the credit business Net commission income fair value measurement hedge accounting financial investments Income from interests in companies measured at equity Administrative expenses Expenses for bank levies Other income and expenses restructuring >100.0 Earnings before taxes Rounding differences may occur in the tables.

8 Income statement (IFRS) Q and Q page 8 of 10 Q EUR million Q EUR million Change in % Net interest income Risk provisions in the credit business >100.0 Net commission income fair value measurement hedge accounting financial investments Income from interests in companies measured at equity > > >100.0 Administrative expenses Expenses for bank levies 1-54 >100.0 Other income and expenses restructuring >100.0 Earnings before taxes >100.0 Rounding differences may occur in the tables.

9 Segments H page 9 of 10 EUR million Corporates, Mittelstand & Retail Customers Real Estate & Savings Banks/Association Markets Eastern Europe Restructuring Unit Central Areas & Others Consolidation Group Net interest income Risk provisions in the credit business Net commission income fair value measurement hedge accounting financial investments Income from interests in companies measured at equity Administrative expenses Expenses for bank levies Other income and expenses restructuring Earnings before taxes Rounding differences may occur in the tables.

10 Selected balance sheet figures (IFRS) page 10 of Jun 2012 EUR billion 31 Dec 2011 EUR billion Change in % Total assets Credit volume Equity Key figures 30 Jun Dec 2011 Change in %/pp * Core capital (EUR billion) Core capital ratio (%) pp Core tier I ratio (%) pp Risk positions (EUR billion) * Percentage points Employees 30 Jun Dec 2011 Change in % Number of employees 10,613 10,

BayernLB Group Q results

BayernLB Group Q results BayernLB Group Q3 2013 results Good performance in core business and solid capital base Stephan Winkelmeier, CFO 13 November 2013 Agenda 1 Core statements and key figures 3 Page 2 Financial performance