bayernlb group investor presentation
TRANSCRIPT
BayernLB Group Investor Presentation
Munich, January 2021
2
The German banking system stands on 3 pillars
Private banks Public banks Co-operative banks
› DZ Bank (central institution)
› Credit co-operatives (878)
› Building and loan associations (1)
› Mortgage banks (2)
› Landesbanks (6) including BayernLB
› DekaBank
› Savings banks (386)
› Building and loan associations (8)
› Mortgage banks (2)
› Big banks (4)
› Deutsche Bank› DB Privat- und
Firmenkundenbank› Commerzbank› UniCredit Bank
› Regional and other banks (159)
› Branches of foreign banks (119)
› Building and loan associations (11)
› Mortgage banks (7)
Source: Bundesbank, Statistische Beihefte Bankenstatistik, p. 104; f igures as of 2018 adjusted by BayernLB Research excluding development banks
3
Strong owners
1 A body established under public law w hich is a legally dependent part of BayernLB
BAYERNLB HOLDING AG
~ 25% ~ 75 %
100%
Free State of Bavaria
1
100%
Institution established under public law
100% state
guarantee from the Free
State of Bavaria
Association of Bavarian Savings Banks
4
Free State of Bavaria compares well to its European neighbours
Sources: BayernLB Research, Eurostat, German federal and state statistics off ices, Datastream
2019 gross domestic product by country
EUR bn
AAATop ratings
The Free State of Bavaria has the
highest ratings from Standard & Poor's
and Moody's – AAA/Aaa
EUR 633 bnGross domestic product
Bavaria accounted for 18.4% of
Germany's nominal gross domestic
product in 2019.
DAX 30Bavaria – a state with a strong economy
Around 25% of all DAX 30 corporations
are in Bavaria. Bayern has one of the
strongest economies of all the German
states and is home to a large number of
Mittelstand companies.
812633 628
529 475 473 399 359 347 311 240 212 188
2,523
2,419
1,245
1,788
3,436
Bavaria
5
Savings banks – major customers and sales partners
Savings banks are the top financial
services providers throughout Bavaria
› 64 savings banks
› EUR 222.7 bn in total assets
› EUR 142.3 bn credit volume
› EUR 175.0 bn in customer deposits
› 36,621 employees and trainees
› 2,748 branches (incl. self service)
› 14.9 m savings, current and securities
accounts
As at: 31 December 2019
1. As a streamlined, specialised bank we are the reliable innovation
partner for companies in high-growth business sectors of the
future in particular in Bavaria and Germany, and support our
corporate customers sustainably and for the long term with in-depth
expertise
2. In real estate financing, we use our specialist knowledge and
network to support our customers throughout the entire value chain
in Germany and other selected markets
3. We are the central bank for the Bavarian savings banks and the
main bank for the Free State of Bavaria
4. As a tech bank, DKB provides its customers with an excellent client
experience and outstanding digital solutions
5. Our asset management companies Real I.S. and BayernInvest
enable our customers to choose from a wide variety of sustainable
investments
Our value proposition as the BayernLB bank of the future:
6
Our structure:three strong segments
Corporates & Markets DKBReal Estate /
Savings Banks & FI
› Special lender with in-depth
expertise in sectors of the
future
› Advanced structuring
expertise in financing:
structured asset finance and
debt capital markets (DCM)
› Streamlined offering of
Financial Markets’ risk
management products
› Reliable real estate lender with
special consulting expertise
in Germany and selected
foreign markets
› Central bank of the Bavarian
savings banks and a strong
partner to the public sector and
financial institutions
› Innovative tech bank,
which inspires its customers as
a digital companion and
sustainable partner
(#geldverbesserer)
› Strong earnings growth
through its target to double
customer numbers to 8 million
7
Support for your international activities thanks to around
1,100 correspondent banks in 100 countries
We are there for youat home in Bavaria and abroad
Representative office
Moscow
German Centres
Shanghai
Taicang
Germany
Munich
Nuremberg
Stuttgart
Frankfurt
Dusseldorf
Hamburg
Berlin
Leipzig
Foreign
branches:
London
Milan
Paris
New York
8
Munich head office
9
DKB –retail pillar of the BayernLB Group
DKB – Das kann Bank
Our products and services lead the market and are renowned
for their fair prices.
We provide an intelligent banking experience based on the
latest technology. Our retail customers carry out their daily
banking transactions conveniently and securely online. Our
business customers are served personally on location by our
sector experts.
› Approx. 4.5 m retail customers
› Germany’s second largest online bank
› The most sustainable of Germany’s top 20 banks (e.g. social
bond for retail customers, sustainability funds and the crowd
investing platform DKB-Crowd)
› In business with corporate and infrastructure customers, the
focus is on sectors with long-term growth potential in
Germany
› Financing partner for more than 4,000 municipalities,
administrative districts and municipal associations
DKB Group IFRS financial statements 30 June 2020
Total assets EUR 97.7 bn
Equity EUR 3.7 bn
Liabilities to customers EUR 65.4 bn
Net interest income EUR 477.6 m
Profit/loss before taxes EUR 118.0 m
RoE 7.4%
Convenient and secure –
DKB’s internet banking
DKB business customers –
personal service
10
BayernLabo –development bank of the BayernLB Group
Subsidised housing and municipal lending for Bavaria
BayernLabo has the legal mandate to promote social housing
and municipal construction in Bavaria. In addition, BayernLabo
issues government and municipal loans in Bavaria.
› The Free State of Bavaria is liable for all the liabilities assumed
by BayernLabo
› BayernLabo has a Aaa rating from Moody’s
› Solva 0 status
› LCR status level 1
› No bail-in risk
31 December 2019
Total assets EUR 18.0 bn
Own funds EUR 2.8 bn
CIR 48%
Employees 219 FTE
AaaBayernLabo’s rating
from Moody’s
BayernLabo –
a sustainably good company
› Stable operating performance: net interest income on par with year-
before period, net commission income higher
› Risk provisions raised to EUR 175 m to cover potential risks from the
coronavirus pandemic
› Strategic investments, particularly in IT infrastructure, cause rise in
administrative expenses
› Transformation continues on schedule despite operational challenges
from the coronavirus pandemic
› Solid capital base: CET1 ratio at 15.6%
BayernLB posts earnings before taxes of EUR 276 m
HIGHLIGHTS
11
12
Operating profit was stable
433
276
9M 2019 9M 2020
Profit/loss before taxesEUR m
Consolidated profit/lossEUR m
CIRIn %
RoEIn %
394
179
9M 2019 9M 2020
65.3
9M 2019 9M 2020
65.4 6.0
3.7
9M 2019 9M 2020
13
Capital base still sound
Total assetsEUR bn
RWAsEUR bn
CET1 capital EUR bn
CET1 capital ratio in %
Dec 2019 Sep 2020
226.0265.6
Dec 2019 Sep 2020
64.6 65.0
Dec 2019 Sep 2020
10.110.1 15.6
Dec 2019 Sep 2020
15.6
14
Net interest and net commission income up slightly on 9M 2019 at approx. EUR 1.5 bn
› Net interest income unchanged on the year-before
period despite the difficult climate
› Increase of approx. 9% on 9M 2019, due in
particular to new business
Net interest incomeEUR m
Net commission incomeEUR m
1,292
9M 2019 9M 2020
1,324 205 224
9M 2019 9M 2020
15
Risk provisions for expected charges from the coronavirus pandemic
› Earnings higher, boosted mainly by precious metals
business
Gains or losses on fair value measurementEUR m
(29)
73
9M 2019 9M 2020
› Risk provisions increased, in particular to cover
potential risks from the coronavirus pandemic
(post model adjustment)
› Year-before period buoyed by high releases and
recoveries on written down receivables
› Average NPL ratio remains low: 0.6%
Risk provisionsEUR m
(8) (175)
9M 2019 9M 2020
16
Increased administrative expenses due to investment, higher contribution to bank levy and deposit guarantee scheme
› Strategic investment, especially in modernisation of
IT at BayernLB and DKB
› Initial reductions in operating costs, mainly at
BayernLB core Bank
Administrative expensesEUR m
(1,135)(1,078)
9M 2019 9M 2020
› Expenses for the bank levy EUR 67 m
(9M 2019: EUR 56 m)
› Expenses for the deposit guarantee scheme
approx. EUR 83 m (9M 2019: EUR 68 m), mainly
due to higher secured deposits at DKB
Expenses for the bank levy and deposit guarantee schemeEUR m
(123) (150)
9M 20209M 2019
17
Segment results marked by positive earnings trend and risk provisions
DKB
241 234
› Expected drop in earnings at DKB resulting from
strategic investments in sales and digitalisation was
moderate, as it was softened by net positive risk
provisions and gains on measurement of equity
investments.
› Earnings in Central Areas & Others impacted
considerably by low one-off income, additional costs
to resolve the last legacy issues and higher
contributions to the bank levy and deposit guarantee
scheme.
› Increase in earnings in Real Estate & Savings
Banks/FI due to pleasing new business performance
in real estate and very good business with precious
metals. Earnings in the previous year were favoured
by releases of risk provisions.
› Positive earnings trend and savings in administrative
expenses in Corporates & Markets overshadowed by
risk provisions to cover potential risks arising from
the coronavirus pandemic.
Real Estate & Savings
Banks/Financial Institutions
19 (70)
Corporates &
Markets
165140
Central Areas &
Others
10 (28)
Profit before taxes by segmentEUR m
Note: the previous year’s figures in all segments apart from DKB have been changed following the BayernLB Group’s strategic realignment
9M 20209M 2019
18
CET1 ratio well above SREP minimum ratios
15,6
4,5
2,0
2,5
9,5
Sep 2020
CET1 ratio
0,5
2020
CET1 SREP requirement
› CET1 ratio of 15.6% on 30 September 2020 was
well above the SREP minimum ratio for 2020 of
9.5%
› The minimum CET1 ratio set by the CRR (Pillar 1
requirement) is 4.5%
› On top of that is an individual premium (Pillar 2
requirement) of 2.0% for 2020
› Additional capital buffers:
Capital conservation buffer: 2.5%: may be
temporarily undershot due to the corona crisis
Buffer for national, systemically important
institutions: 0.5%1
Buffer for national systemic relevance
Pillar 2 requirement
Pillar 1 requirement
Capital conservation buffer
1 Reduction of 0.5 percentage pointsfrom 1 December 2020
19
MREL requirement is significantly exceeded
MREL holdingsIn % of RWAs
› MREL holdings as at 30 Sep 2020 take account of
changes resulting from the banking package (e.g.
senior preferred and other MREL are no longer
eligible)
› Supervisory authority’s MREL requirement is 7.75%
of TLOF (equates to 25.34% of RWAs)
› MREL holdings as at 30 Sep 2020 stood at 14.38%
of TLOF (equates to 56.72% of RWAs), which far
exceeds the supervisory authorities’ requirements
› Large portfolio of subordinated eligible liabilities
(senior non-preferred) not only effectively protects
the superior senior preferred category from losses,
but also offers broad protection within the senior
non-preferred category
MREL holdings
30 Sep 2020
38.78
17.93
56.72
Senior non-preferred
Regulatory capital
Transformation process and outlook
Outlook
As it currently stands, BayernLB expects profit before taxes to be positive for
financial year 2020 – nevertheless the coronavirus pandemic and the related
challenges are the source of exceptionally high uncertainty. The negative
impact on global economic output will be considerable and will be greater the
longer the pandemic continues.
20
Progress with the transformation
Despite operational challenges posed by the coronavirus pandemic, the
BayernLB Group is forging ahead as planned with its extensive, multi-year
transformation programme Fokus 2024 launched in January 2020. BayernLB
has achieved key project milestones in the past few months and, for example,
launched various IT modernisation projects in the core Bank and DKB. In
addition, it has taken initial measures to improve earnings and profitability in
the Group’s business areas and implemented the first efficiency initiatives in all
units of the Bank, including, for example, redesigning the credit process and
optimising trading and transaction processes. The core Bank is on schedule
with reducing its operating costs.
21
We will continue to be a reliable
partner to our customers in
Bavaria and Germany.
We will remain the principal bank
to the Free State of Bavaria and
strong partner to the public
sector.
We will still be the central bank of
the Bavarian savings banks, firmly
rooted in the S-Finanzgruppe.
We will invest in infrastructure
and IT at the core Bank and DKB
and will set ourselves up as
modern and secure.
At the same time we will
considerably reduce our cost
base, especially in the core Bank.
We will increase the efficiency of
the platform in Munich and thereby
also support the ongoing growth of
our subsidiary, DKB.
We will further expand our position
in real estate finance and
structured asset finance.
We will focus on profitable and
future-oriented sectors in our
corporates and capital market
business.
We will double our customer base
in DKB’s retail business.
We will focus our business more
closely on sustainability.
How we will achieve sustainable success on our own terms in future
We are focusing on our
STRENGTHS
We are improving our
EFFICIENCY
We are a strong
PARTNER
Our capital base: strongcornerstone of the BayernLB bank of the future
2019
~ 35.5
0.3
~ 68.0
~ 32.0
~0.5
2024
64.6
24.7
39.6
RWAs
EUR bn
15.6 >14CET1 ratio
in %
Focus
› Maintain volume of RWAs on
par with today in the target
vision
› Include investment and
restructuring costs in capital
planning
› Grow capital base, mainly via
retention of earnings
› Finance growth at DKB from the
Bank’s own resources
› Ensure ongoing ability to pay a
dividend
DKB
Other subsidiaries
BayernLB core Bank
6.7 ~ 8RoE
in %
22
Major investment in the future...
› Core Bank: Invest in further increasing sector expertise in
business with corporate, real estate and special
customers; in addition, invest a triple-digit million
sum in infrastructure and IT to significantly
increase the efficiency of the platform in Munich
› DKB: Invest EUR 400 m in growth and in the future over
the next five years, both to modernise and
upgrade the IT systems and to achieve
considerable growth in retail and business
customers
Considerably reduce costs in the core Bank by 2024
› Streamline activities in the capital market and
corporate lending business, incl. reducing the range
of products and complexity in the trading and credit
processes
› Generate savings in the central areas and in IT costs
by significantly simplifying the IT landscape
› In addition to the 400 job cuts agreed at the end of
2019, further socially responsible job cuts of a similar
scope are planned. However, the Bank has ruled out
redundancies until autumn 2022.
INVESTMENT COSTS
…and efficiency improvements
23
Rating agencies commend BayernLB‘s performance
Moody´s 2009 2011 2014 2016 2017 2018 2019 2020
Issuer Rating A1 Baa1 A3 A2 A1 Aa3 Aa3 Aa3
Preferred Senior Unsecured Aa3 Aa3 Aa3
Non Preferred Senior Unsecured A2 A2 A2
Baseline Credit Assessment ba3 ba3 ba2 ba1 baa3 baa3 baa2 baa2
Fitch 2009 2011 2014 2015 2016 2018 2019 2020
Issuer Rating A+ A+ A+ A- A- A- A- A-
Preferred Senior Unsecured A- A- A
Non Preferred Senior Unsecured A- A- A-
Viability Rating bb+ bb+ bb+ bbb bbb+ bbb+ bbb
24
25
Excellent asset quality
280 307
Dec 2019 Jun 2020
Gross credit volume
EUR bn
Credit portfolio
› Growth in lending in part due to participation in
the ECB tender (TLTRO III)
› Portfolio quality very high
› Impact of coronavirus pandemic still low
NPL ratio
In %
Dec 2019 Jun 2020
0.70.6
Rising quality
› NPL ratio and NPL portfolio shrank slightly in the
first half of the year and remain low
› Slight drop to 0.6% is the result of reducing
individual exposures
› Cover ratio stable at 42% without collateral
26
Well diversified credit portfolio
Gross credit volume by region
In %
› Germany EUR +26.7 bn
› Western Europe EUR +0.7 bn
81%11%
5%
Eastern Europe
Western Europe
Germany
North America 1%
Middle East
(EUR 1.5 bn, <1%)
Latin America/Caribbean
(EUR 0.6 bn, <1%)
Asia/Australia/Oceania
(EUR 1.7 bn, <1%)
Supranational orgs
(EUR 2.7 bn, <1%)
CIS
(EUR 1.0 bn, <1%)
Africa
(EUR 0.2 bn, <1%)
24%
18%
19%
11%
28%
Retail/Other
Corporates
Financial Institutions
Commercial Real Estate
Countries/Public Sector/
Non-Profit Orgs.
Gross credit volume by sub-portfolio
In %
› Countries/Pub. Sec.
/Non-Prof. Org.1 EUR +20.6 bn
› Financial Institutions EUR +3.2 bn
› Commercial Real Estate EUR +2.2 bn1 Growth in part due to participation in the ECB tender (TLTRO III)
27
Very high investment grade share
Gross credit volume by rating category
EUR bn / %
MR 0 - 7 MR 12-14MR 8-11
178.3
MR 15-18
201.2
MR 19-21 MR 22-24
7.0
65.2
1.3
68.9
25.8 26.47.6 1.4 2.0 1.9
Dec 2019: Total EUR 279.7 bn
Jun 2020: Total EUR 307.3 bn
87.9%investment grade
Investment grade Non-investment grade Default categories
28
Highly granular
Net credit volume
EUR bn / %
EUR 1 bn to
EUR 2.5 bn
3.2
> EUR 2.5 bn EUR 250 m to
EUR 500 m
57.5
EUR 50 m to
EUR 100 m
EUR 500 m
to EUR 1 bn
EUR 100 m to
EUR 250 m
EUR 5 m to
EUR 50 m
Up to EUR 5 m
37.2
19.1
38.2
16.3
3.3
17.220.8
26.9
36.0
24.8 21.7
54.4
35.3 35.4
Jun 2020: Total EUR 235.2 bn
Dec 2019: Total EUR 212.2 bn
76% up to EUR 500 m
› Considerable growth posted in the “> EUR 2.5 bn” size category, as balances held with central banks
were increased at Deutsche Bundesbank
› The portfolio remains highly granular and a very high volume of EUR 151 bn still falls under the size
categories up to EUR 0.25 bn
29
Diversified corporate customer portfolio which maintains a high investment grade share
Corporates by sector
EUR bn
› Business volume grew by EUR 760 m
› Investment grade share remains very high at 74.9% and is only down slightly due to the coronavirus
pandemic
Chemicals,
pharmaceuticals & healthcare
Raw
materials, oil & gas
8.5
Utilities Consumer
goods, tourism,
wholesale & retail
Logistics
& aviation
Mechanical
engineering, aerospace
& defence
Telecoms,
media & technology
Automotive Construction
23.7 24.2
8.4 7.9 8.2 7.5 7.4 6.7 5.55.46.5 5.6 5.7 5.3 5.23.5 3.8
Dec 2019: Total EUR 74.1 bn
Jun 2020: Total EUR 74.9 bn
30
Commercial real estate finance
Gross credit volume by asset class/unit
EUR bn/Jan 2020
Highlights
› Portfolio was expanded as planned by EUR 5.2 bn
to EUR 55.5 bn
› Granular portfolio with 88% share in Germany
› Residential asset category includes around EUR
21.5 bn (previous year: EUR 19.0 bn) of low-risk
business due to local authority/government
ownership or guarantees and housing associations
› 85% investment grade share
› 70% of the cash flow generating gross exposure
(GEX) has a debt service capacity of > 8% p.a.
› Expected loss at 5 bp; stable trend
› Low average NPL ratio of 0.4%
Outlook
› Pursue a clearly defined, well considered growth path
in Germany and abroad with increasing risk
diversification within the real estate portfolio
› Realise growth in foreign business by using existing
infrastructure via foreign branches and local networks
while maintaining the current portfolio and risk profile
› Breakdown of asset classes in the target portfolio will
remain almost unchanged
6.4
Residential
25.4
Office
2.5
RetailManaged
real estate
34.4
6.5
9.7
2.9
3.54.4
BayernLB BayernLaboDKB
31
Private residential construction term loans
Gross credit volume by unit
EUR bn/Dec 2019
Distribution in Germany
Granular portfolio with focus on Bavaria, mainly due
to BayernLabo
Outlook for DKB
Credit volume will increase from 2020. New business
will be managed in a targeted manner to improve
efficiency through higher loan amounts per
application
2018
0.4
20192017
14.0
0.3
14.7
0.2
13.7
3.5
10.8
3.3
10.4
3.2
10.3
BayernLB DKB BayernLabo
Highlights of the DKB portfolio
› Average ticket size (entire portfolio): EUR 144 k
› Average ticket size (new business): EUR 223 k
0.3
1.5
0.7
0.40.5
0.5
0.70.7
0.90.8
Volume (EUR bn)
0.5
1.04.8
0.1
0.1
32
Comfortable liquidity levels
Capital market funding
EUR bn/BayernLB core Bank not incl. BayernLabo
Funding strategy
› Lower funding needs in 2020 are the result of the
streamlining of BayernLB core Bank and the
related reduction in requirements
› Slight uptick in funding volumes in 2021 due to
planned new business
› Focus on unsecured funding at BayernLB level
using diversified sources of funding, especially
via the savings banks, institutional investors,
retail and the international DIP scheme
› Maintain capital market presence by regularly
issuing secured benchmark bonds
› EUR 27bn participation in TLTRO III ECB tender
(BayernLB and DKB)
› Liquidity coverage ratio (LCR): 233% as at Sep
2020
Issued Planned
2018
6.14.2
5.14.0
0.0
3.5
2019
4.5
2020
3.8
2.3
2021e
8.2 8.6
4.5
Secured Unsecured
33
Investor-friendly structure on the liabilities side
Liabilities structure
EUR bn/Jun 2020
71.6
1.7
112.1
43.3
17.7 11.6
balance
sheet total
258.0
Securitised liabilities
Liabilities to customers
Liabilties to banks Other liabilities
Subordinated capital
Equity
Of which
Pfandbriefs
Of which
unsecured debt
instruments under Section
46 f KWG
4.6
Of which
structured debt
instruments under Section
46 f KWG
29.430.2
Funding via Pfandbriefs
› BayernLB uses a total of four funding
programmes based on the German Pfandbrief
Act (PfandBG) as a low-cost, long-term source of
funding, two each at BayernLB and DKB AG
Broad base of unsecured liabilities
› BayernLB has an investor-friendly structure on
the liabilities side with sufficient unsecured bonds
in relation to total assets. The Bank actively
monitors and plans the proportion of unsecured
bonds in accordance with Moody’s Loss Given
Failure-Analysis
34
BayernLB Pfandbriefs
Public Pfandbriefs
The majority of the cover (>90%) consists of German
municipal finance and receivables guaranteed by
German states with a focus on Bavaria. Tap issues
and jumbolinos are issued on a regular basis to
maintain a liquid Pfandbrief curve.
Mortgage Pfandbriefs
Cover mainly includes commercial real estate,
primarily residential, office and retail with a focus on
Germany. The high overcollateralization provides
freedom to launch issues across all maturity bands.
Key figures for Q3 2020
Outstanding volume EUR 3.9 bn
Moody’s rating Aaa
Excess cover 140.6%
Cover pool Germany EUR 6.1 bn
Cover pool abroad EUR 3.0 bn
Key figures for Q3 2020
Outstanding volume EUR 17.9 bn
Moody’s/Fitch rating Aaa/AAA
Excess cover 28.3%
Cover pool Germany EUR 21.2 bn
Cover pool abroad EUR 1.3 bn
A Group with a strong sustainability background
35
Legally dependent institution
established under public law w ithin
BayernLB
~ 25 % ~ 75 %
Free State of Bavaria
100 %
Institution established under public law
100 % state
guarantee from the Free
State of Bavaria
Association of Bavarian Savings Banks
Focus areas of the
Bavarian Sustainability
Strategy
› Climate change
› Sustainable energy
› Natural resources
› Sustainable mobility
› Social cohesion
› Education and research
› Sustainable economy
and consumption
› Nutrition, health, care
› State and administration
› Sustainable financial
policy
› Global responsibility
BayernLB has a mandate geared towards sustainability based on the approach of the Free State of Bavaria and the
EU Taxonomy. To this end, all issuing entities have established a green and/or social framework
36
› BayernLB has been actively engaged in the promotion of sustainability for
25 years, achieving numerous milestones along the way
› Signing UNEP-Finance Initiative ("Environmental Banks") in 1995,
commitment to World Bank standards in 2004, regular and detailed
sustainability reporting since 2007, signing of UN Principles for
Responsible Investment (PRI) by BayernInvest in 2011, first DKB
Green Bond in 2016, BayernLabo Social Bond in 2017, first DKB
Social Bond in 2019 and BayernLB Sustainable Finance Framework
in 2020 (formerly “Green Bond Framework”) with subsequent Green
Bond issues for retail customers
› In 2019 the bank cemented sustainability as a core building block of its
new strategy, further strengthening its commitment to a sustainable future
› The bank is already one of the largest financiers of renewable energies in
Germany and has extensive expertise and market knowledge in European
and non-European markets
› The leading ESG rating agencies confirm BayernLB's commitment to
sustainable development, which is well above the industry average
› BayernLB’s subsidiary DKB also shows top performance. It has been rated
separately since 2015 and is currently rated "B-", the best rating in its
industry and thus the "Industry Leader". The development bank
BayernLabo also receives a separate rating and qualifies for prime status
Position of BayernLBPromoting sustainability
BayernLB, DKB and BayernLabo
are ranked among the leading,
sustainable banks in their sectors
Industry Leader
Awarded by ISS ESG (formerly
ISS Oekom) and held by
BayernLB since 2006 (first
sustainability rating in 2000)
Prime Status
D- D D+ C- C B-C+
Prime
37
Overview Details
Assessment and selection of
projects lead by Sustainability
Working Group
Sustainable Loan Pool
(currently 2.45 EURbn)
Annual impact and
allocation reporting
Plain/structured
bonds/Schuldschein
loans
Commercial paper
BayernLB’s Sustainable Financing Framework
Use of Proceeds
› In the first phase, only renewable energy projects are included in
the Sustainable Loan Pool. In the second phase, mass public
transportation as well as green real estate will be added
› All assets in the pool contribute significantly to the UN Sustainable
Development Goals
Process for Project Evaluation and Selection
› Assets are assessed in a two-step process with credit departments
proposing a project/loan and the Sustainability Working Group
deciding on its merit
Management of Proceeds
› Proceeds from sustainable issuances are managed by Group
Treasury within the general liquidity pool while ensuring that the
sustainable asset pool surpasses all outstanding sustainable
funding in volume (i.e. portfolio approach)
Reporting
› BayernLB will publish an annual impact and allocation reporting
containing details of the asset pool (volume, geographical/
technological split, capacity installed, CO2 avoided) and details of
the issued sustainable securities
Significant contribution!
Framew ork and second party opinion are available on our Investor-Relations-Homepage
38
Overall Sustainable Loan Portfolio Technological split (in EURm)
Geographical split
Renewable Energy Portfolio
6%
31%
18%
27%
18%Germany
Italy
UnitedStatesUK
Others
11%
20%
22%19%
22%
6% Germany
United States
Turkey
UK
Canada
Others
Solar Wind
97%
3%
Photovoltaik
87%
13%
On-Shore
Off-Shore
› The renewable energies portfolio of
BayernLB (without DKB) comprises 1.6
EURbn in wind energy projects as well
as 860 EURm in solar power plants
› Clear focus on Western and Northern
Europe but also significant exposure in
the United States and Canada
Comments
1,610 EURm
860 EURm
Solar Wind
Information based on data provided for the second party opinion.
39
Sustainability Ratings of the Group
ISS ESG Sustainalytics imug MSCI ISS ESG imug ISS ESG
Rating C+ 68 Points 48,69 % AA B- 43,61% C+
Ranking /
Investment Status
„Prime“
(Rank 7 out of 252
Banks)
77 out of 340
Unsecured
bonds "neutral" (CCC)
Public Pfandbriefs
"positive" (BBB) Mortgage
Pfandbriefs "positive" (BB)
Above
industryaverage
„Prime“
Public
Pfandbriefs „very
positive" (A) Mortgage
Pfandbriefs "positive"
(BBB)
„Prime“
Industry
averageD 60 Points 50,99 % A D 21,45% n/a
Range A+ to D- 0 - 100 Points 0% - 100 % AAA to CCC A+ to D--100 % -
100 %A+ to D-
Benchmark
252
„Financials/ Public &
Regional Banks"
340 „Banks“24 „Savings
Banks“
MSCI ACWI
Index constituents,
Banks, n=200
281
„Financials/ Public &
Regional Banks"
57 Banks
„Financials/
Mortgage & Public Sector
Finance"
Date 01 / 2020 06 / 2019 03 / 2020 10 / 2020 01 / 2020 03 / 2019 12 / 2019
› Projects and all related goods and services for mining or extracting nuclear fuels and constructing new nuclear
power plants are excluded from financing, while companies that generate their sales exclusively from products
and services employed in the excluded areas are excluded from general corporate financing
40
Selected BayernLB policies for critical sectorsN
ucle
ar
Weapons
Fossil
Fuels
Food
› Excluded from financing in particular are projects that are harmful to the climate or the environment. For
example, financing is not provided for the construction of new coal-fired power plants or to extract natural gas
or crude oil through fracking or extraction from tar sands. Companies that generate their sales exclusively from
products and services employed in areas excluded from financing by the financing guidelines are excluded
from corporate financing
› BayernLB Group does not engage in speculative transactions in staple foods. In this vein the Group does not
invest directly in staple foods, nor indirectly in derivatives which replicate or speculate on the price performance
and/or shortages of staple foods. Furthermore, the bank does not offer any investment products which replicate
or speculate on the price performance and/or shortages of staple foods
› BayernLB recognizes the right of a state to defend itself. On this basis, offering services to arms companies or
individual financial transactions for weapons and armaments is in principle possible within the framework of
existing laws. We require that the financing is approved following an mandatory case-specific examination
› With BayernLB’s new strategic focus defense ceased to be a focus sector at the end of 2019 and will be
scaled down over the long term
BayernLB observes the World Bank’s environmental and social standards in all relevant financing transactions. These
are based on the performance standards of the World Bank Group’s International Finance Corporation (IFC) and the
World Bank's Environmental, Health, and Safety (EHS) Guidelines.
More details are available in our 2019 Annual Report (link to f inancial reports)
Disclaimer
42
The information in this presentation constitutes neither an offer nor an invitation to subscribe to or purchase securities or a
recommendation to buy. It is solely intended for informational purposes and does not serve as a basis for any kind of obligat ion,
contractual or otherwise.
Rounding differences may occur in the presentation.
