Background Information on L-Bank, the State of Baden- Württemberg and Germany :

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Hilary Dulcie Moody
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1 Background Information on L-Bank, the State of Baden- Württemberg and Germany Bloomberg: LBANK<GOVT><GO> :

2 Top rating agency views on Germany Standard & Poor s (AAA, stable outlook)*: We think Germany s highly diversified and competitive economy will continue to sustain ist current growth momentum, backed by strong domestic demand and resilient exports against an increasingly challenging international backdrop. Moody s (Aaa, stable outlook)**: Germany s very high economic strength, supported by robust, if unspectacular, economic growth, sustained productivity growth and moderate increases in labour costs contained through wage moderation, which have supported the country s competitiveness. Source: *Rating Report as of 16 December 2016; **Rating Report as of 24 Feb Bloomberg: LBANK<GOVT><GO> : Germany

3 EUR EUR in bn in bn Stable economic outlook 3500 Quaterly German GDP in EUR in EUR bn bn Annual German GDP in in EUR EUR bn bn I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III Source: Federal Statistical Office: March Germany

4 12/00 05/01 10/01 03/02 08/02 01/03 06/03 11/03 04/04 09/04 02/05 07/05 12/05 05/06 10/06 03/07 08/07 01/08 06/08 11/08 04/09 09/09 02/10 07/10 12/10 05/11 10/11 03/12 08/12 01/13 06/13 11/13 04/14 09/14 02/15 07/15 12/15 05/16 10/16 03/17 08/17 IFO IFO (German (German Business Business Climate Climate Indicator Indicator) unenployed in millionn Reliable economic environment 120 Unemployed in in million IFO (German Business Climate Indicator) ,5 4 3,5 3 2,5 2 1,5 1 0,5 Unemployed in million 75 0 Source: Federal Labor Agency (Unemployed), Deutsche Bundesbank (IFO), March w.e.f new methodology for unemployed figures 3 Germany

5 1/00 5/00 9/00 1/01 5/01 9/01 1/02 5/02 9/02 1/03 5/03 9/03 1/04 5/04 9/04 1/05 5/05 9/05 1/06 5/06 9/06 1/07 5/07 9/07 1/08 5/08 9/08 1/09 5/09 9/09 1/10 5/10 9/10 1/11 5/11 9/11 1/12 5/12 9/12 1/13 5/13 9/13 1/14 5/14 9/14 1/15 5/15 9/15 1/16 5/16 9/16 01/17 05/17 % Industrial production and manufacturing orders 40 Industrial Production Manufacturing Orders Source: Deutsche Bundesbank; Change of production relative to previous year 4 Germany

6 Registered patents by company BW BY BW US BY NS BY BY BW US JP NS BY KR BY BW BW BY BW US BY NS BY BY Bosch Schaeffler Daimler Ford BMW VW Audi Siemens ZF GM Toyota Continental Infineon Hyundai BSH Porsche Bosch Schäffler Daimler Ford BMW VW Audi Siemens ZF GM Toyota Continental Infineon Hyundei BSH Porsche Source: German Patent Office 2017 BW US JP NS BY KR BY BW 5 Germany

7 01/01 05/01 09/01 01/02 05/02 09/02 01/03 05/03 09/03 01/04 05/04 09/04 01/05 05/05 09/05 01/06 05/06 09/06 01/07 05/07 09/07 01/08 05/08 09/08 01/09 05/09 09/09 01/10 05/10 09/10 01/11 05/11 09/11 01/12 05/12 09/12 01/13 05/13 09/13 01/14 05/14 09/14 01/15 05/15 09/15 01/16 05/16 09/16 01/17 05/17 09/17 % % Germany s stable consumption and high saving rate 8 Average Savings Rates Rate per per annum annum Retail Sail Source: Deutsche Bundesbank Retail sales at constant 2003 prices, change relative to previous year 6 Germany

Diversified German banking market State development agencies Absolut number: 20 Cooperative banks Absolut number: 995 13,84% 9,56% 25,83% Savingbanks and

8 Diversified German banking market State development agencies Absolut number: 20 Cooperative banks Absolut number: ,84% 9,56% 25,83% Savingbanks and Landesbanks Absolut number: ,77% Source: Share by total assets as at Nov. 2016: Deutsche Bundesbank and own calculations Commercial Banks Absolut number: Germany

9 Top ratings for Baden-Wuerttemberg Standard & Poor s (AAA, stable outlook)*: S&P Global Ratingss stable outlook on German development bank Landeskreditbank- Foerderbank (L-Bank) reflects the outlook on the bank s 100% owner, the State of Baden- Württemberg. All other things being equal, any rating action on Baden-Wuerttemberg would be reflected in a similar ration action on L-Bank. Moody s (Aaa, stable outlook)**: We assign long-term debt and deposit ratings of Aaa and P-1 short term deposit ratings to L-Bank, the German Federal State of Baden-Wuerttemberg s (Aaa stable-) development bank. The ratings are based on the State s guarantee framework, which explicitly and unconditionally guarantees the bank s liabilities: As such, L-Bank s ratings qualify for a credit substitution approach based on a full risk transfer to the quarantor. Source: *Rating Report as of 17 Feb 2017 **Rating Report as of 14 Dec Bloomberg: LBANK<GOVT><GO> : Germany

10 % Baden-Württemberg s export focus 25 Export Retail GDP Germany GDP Baden-Württemberg I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III I III Source: State Statictical Office. Change in exports relative to previous year using price-adjusted data Baden-Württemberg

11 total mn in Euro total mn in Euro mn in Euro Export destinations of Baden-Württemberg France Netherlands Italy Austria UK Swizerland USA China Total France Netherlands Italy Austria UK Swizerland USA China Total mn in Euro Source: Federal Statistical Office Baden-Württemberg(2016); total exports 10 Baden-Württemberg

12 Real GDP (seasonally adjustes values Real GDP in % ifo change in % GDP growth and economic sentiment 12,0 Real GDP (seasonally adjusted values) values) IFO (German Business Climate Indicator) 30 10,0 8,0 6,0 4,0 2,0 0,0-2,0-4,0-6,0-8,0-10,0-12,0-14,0 I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV I II IIIIV Ifo (German Business Climate Indicator) Source: Federal Statistical Office Baden-Württemberg, ifo Konjunkturtest(Baden-Württemberg) 11 Baden-Württemberg

13 6 month 6 month forecast for economic development ifo business activity clock* for Baden-Württemberg Correlation between development and economic outlock Upswing Upswing Jan 2010 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Boom Boom Jan 2011 Jan 2012 Jan 2007 Jan 2017 Jan Jan Recession Recession evaluation of evaluation current economic of current activity economic activity Downswing Downswing Source: ifo Konjunkturtest, Baden-Württemberg; * Manufactoring industry incl. food and tobacco. Balances, seasonally adjusted Bloomberg: LBANK<GOVT><GO> : Baden-Württemberg

14 % High household saving rates Household saving rates in % of disposable household income * 2017* 2018* Baden-Württenberg** Baden-Württemberg** Germany USA Japan Australia Source: OECD and State Statistical Office (2016) ; * OECD outlook; **Federal Statistical Office Baden-Württemberg, outlook for Bloomberg: LBANK<GOVT><GO> : Baden-Württemberg

15 Manufacturing still of utmost importance Manufactoring Service Industry Agriculture/Forestry/Fishing Employee Rate Baden-Württemberg Baden-Württemberg 0,4 39,9 59,7 76,7 Germany Germany 0,5 30, ,8 Austria Austria 1, ,7 71,1 EU-28 EU-28 1,6 24,3 64,9 74,1 Belgium Belgium 0,6 21,9 61,9 77,4 Netherlands Netherlands 1,7 20,6 73,1 77,8 Source: Bloomberg 14 Baden-Württemberg

16 Research and Development by industry in 2013 Others Pharmaceutical products Information 9,4% 10,8% 6,6% 13,9% Electrical engineering 16.3 bn 11,1% Mechanical engineering 48,2% Motor vehicles and motor vehicle parts Source: State Statistical Office Baden-Württemberg

State budget: Revenues and Expenses 2016 Revenues Expenses Payments by the Bund and Communities and other revenues 10.784,90 mn New Debt 0.00 0,0% Financal Mangement 17.

17 State budget: Revenues and Expenses 2016 Revenues Expenses Payments by the Bund and Communities and other revenues ,90 mn New Debt ,0% Financal Mangement ,9 mn Research, Education, Culture ,5 mn 24,4% 39,0% 35,1% 5,7% 69,9% 11,9% 14,1% State Taxes 2.510,00 mn Shared Taxes ,00 mn Other Ministries 5.252,7 mn General Services 6.226,1 mn Source: Ministry of Finance of the Federal State of Baden-Württemberg, Budget 2016; Total Revenus and Total Expenses: mn 16 Baden-Württemberg

State budget: Revenues and Expenses 2017 Revenues Expenses Payments by the Bund and Communities and other revenues 11.322,90 mn New Debt 0,00 M 0,0% Financial Management 16.

18 State budget: Revenues and Expenses 2017 Revenues Expenses Payments by the Bund and Communities and other revenues ,90 mn New Debt 0,00 M 0,0% Financial Management ,7 mn Research, Education, Culture ,7 mn 23,7% 38,3% 34,2% 6,1% 70,2% 13,3% 14,1% State Taxes 2.891,0 mn Shared Taxes ,9 mn Other Ministries 6.480,0 mn General Services 6.226,1 mn Source: Ministry of Finance of the Federal State of Baden-Württemberg, Budget 2017; Total Revenus and Total Expenses: mn 17 Baden-Württemberg

19 Broad L-Bank presence in indices Name EUR USD Citigoup EuroBIG Govt/Govt Sponsored USBIG Govt/Govt Sponsored Barclays Euro-Aggregate (Local Authority) USD Aggregate (Local Authority) iboxx iboxx EUR Sub-Sovereign Index iboxx USD Sub-Sovereign Index MorganStanley Euro Credit Index Investment Grade Credit Index Bloomberg: LBANK<GOVT><GO> : L-Bank in the Capital Markets

20 EUR in bn EUR in mn L-Bank large fixed income bonds in EUR EUR-Bond I I 0,075% due % 2017/12/12 due 2017/12/12 EUR-Bond II II 1,00% 1,000 due % 2018/11/19 due 2018/11/ IV IV EUR-Bond III 0,250 % due 2019/11/25 EUR Bond III 0,250% due 2019/11/25 EUR-Bond IV 0,125 % due 2020/11/05 EUR Bond IV 0,125% due 2020/11/ EUR-Bond V 0,005 % due 2021/11/09 EUR Bond V 0,005% due 2021/11/09 I II III V EUR-Bond VI VI 0,375% due % 2026/04/13 due 2026/04/ L-Bank in the Capital Markets

21 Diversified investor allocations by region (EUR) EUR Benchmark IV 0.125% due 2020 EUR Benchmark V 0.05% due 2021 EUR Benchmark VI 0.375% due 2026 Americas Germany Middle East 3% Germany UK 5% 10% UK 6% Asia 21% 34% 13% 69% 39% Americas UK Asia 3% 11% 7% 15% Other Europe 64% Other Europe Other Europe Germany 20 L-Bank in the Capital Markets

22 EUR benchmark performance (due 2020) 21 L-Bank in the Capital Markets

23 EUR benchmark performance (due 2021) 22 L-Bank in the Capital Markets

24 EUR benchmark performance (due 2026) 23 L-Bank in the Capital Markets

25 USD in mn L-Bank s large fixed income bonds in USD USD-Bond VI I 1,000% 1,375 due % due 2018/04/23 07/21/ I III USD-Bond V II 1,625% due % due 2019/01/02 02/01/2019 USD-Bond V III 1,375% 1,625 due % due 2021/07/21 02/01/ II L-Bank in the Capital Markets

26 Diversified investor allocations by region (USD) USD Eurobond Benchmark IV 1.0% due 2018 USD Eurobond Benchmark V 1.625% due 2019 USD Eurobond Benchmark VI 1.375% due 2021 Asia Asia Asia Americas 33% 12% 9% 46% Americas 46% 22% 32% Americas 62% 17% 21% EEMA Other Europe EEMA 25 L-Bank in the Capital Markets

27 USD benchmark performance (due 2018) 26 L-Bank in the Capital Markets

28 USD benchmark performance (due 2019) 27 L-Bank in the Capital Markets

29 USD benchmark performance (due 2021) 28 L-Bank in the Capital Markets

30 Diversified long-term funding split 2016 Number of trades* in % per currency Volume** in % per currency GBP 1,96% NZD 1,96% USD 11,76% AUD 7,84% CNY 7,84% AUD 3,03% CNY 5,59% USD 53,87% EUR 34,52% EUR 68,63% NZD 1,00% GBP 2,00% Long-term funding trades* in 2016: 51; long-term funding volume** in 2016: 12.5 bn 29 L-Bank in the Capital Markets

31 Diversified short-term funding split 2016 Number of trades* in % per currency AUD 12,44% CAD 1,00% EUR 1,24% GBP 2,74% NZD 4,48% Volume** in % per currency AUD 5,12% CAD 0,10% EUR 2,80% GBP 0,72% NZD 2,88% USD 78,11% USD 88,39% Short-term funding trades* in 2016: 402; short-term funding volume** in 2016: 42.6 bn 30 L-Bank in the Capital Markets

32 Diversified long-term funding split 1st half year 2017 GBP 6,52% Number of trades* in % per currency CNY 2,17% USD 6,52% HKD 6,52% NZD 2,17% AUD 4,35% Volume** in % per currency USD 36,92% CNY 4,22% NZD AUD 1,27% 2,64% EUR 23,84% EUR 71,74% HKD 14,77% GBP 16,35% Long-term funding trades* in 1st half year 2017: 29; long-term funding volume** in 1st year 2017: 3.83 bn 31 L-Bank in the Capital Markets

33 Diversified short-term funding split 1st half year 2017 Number of trades* in % per currency AUD 12,44% CAD 1,00% EUR 1,24% GBP 2,74% NZD 4,48% Volume** in % per currency AUD 4,40% CAD 0,03% GBP 5,99% NZD 1,92% USD 78,11% USD 87,66% Short-term funding trades* in 1st half of year: 177; short-term funding volume** in 1st half of year 2017: 18.9 bn 32 L-Bank in the Capital Markets

34 Issuance structures (selection) Products Currency Calls CMS-Linked Collar Digital Equity-Linked (without knock-out option) Flip-Flop Inflation-Linked (EURCPI) Multitranche Plain Vanilla (Fixed Rate / Floating Rate) PRDC (Power Reveres Dual Currency) Range Accrual Reverse Floater Snowball / Snowblade Step-up- / Step-down Coupon TARN ( Targeted Redemption Note) Zero AUD BRL CAD CHF CNH CZK DKK EUR GBP HKD IDR JPY MXN MYR NOK NZD PLN RUB SEK TRY USD ZAR Bullet (max. 30 years) Single Call Multi Call Callable (max. 40 years) Bloomberg: LBANK<GOVT><GO> : L-Bank in the Capital Markets

35 EUR in bn EUR in bn Cost-Income-Ratio in % Figures on L-Bank Total assets Certificated Liabilities (in (in EURbn) Cost-Income-Ratio (in (in %) %) Cost-Income Ratio in % L-Bank s Balance Sheet

36 SME lending: Supporting the Housebank SME support using the Housebank-principle with double recourse for L-Bank Housebank: The traditional or closest supplier of banking products and services Bloomberg: LBANK<GOVT><GO> : L-Bank s Balance Sheet

37 Residential housing lending: Supporting families Residential housing with direct exposure to L-Bank Bloomberg: LBANK<GOVT><GO> : L-Bank s Balance Sheet

Loans to credit institutions and corporates www.l-bank.

38 Loan portfolio by customer type as of December 31, 2016 Loans to municipalities Covered by mortgages 8,09% 40,25% 51,66% Loans to credit institutions and corporates Bloomberg: LBANK<GOVT><GO> : L-Bank s Balance Sheet

39 Rated Rated Distrtibution Distribution in % in % Business Volume in bn Loan portfolio by rating AAA to to AA- AA- A+ to to A A A- to BBB+ BBB+ to BBB- > >BB+ n.c. Business Volume Business Volume in bn L-Bank s Balance Sheet

40 % Default ratio by customer type 0,60 Social housing default ratio ratio SME default ratio L-Bank overall default ratio ratio 0,50 0,40 0,30 0,20 0,10 0, L-Bank s Balance Sheet

41 Capital ratios Date Tier I Capital Tier II Capital Capital Deduction Dedcution Equity Capital Risk weighted wighted Assets Assets Equity Ratio Tier Tier I Ratio EUR bn EUR bn EUR bn EUR bn EUR bn 14.74% 8.13% EUR bn EUR bn EUR bn EUR bn EUR bn 12.95% 7.15% EUR bn EUR bn EUR bn EUR bn EUR bn 12.56% 6.99% EUR bn EUR bn EUR bn EUR bn EUR bn 9.96% 5.66% EUR bn EUR bn EUR bn EUR bn EUR bn 12.56% 7.07% EUR bn EUR bn EUR bn EUR bn EUR bn 12.94% 7.35% EUR bn EUR bn EUR bn EUR bn EUR bn 12.93% 7.84% EUR bn EUR bn EUR bn EUR bn EUR bn 13.47% 7.84% EUR bn EUR bn EUR bn EUR bn EUR bn 13.45% 8.20% EUR bn EUR bn EUR bn EUR bn EUR bn 14.01% 8.59% EUR bn EUR bn EUR bn EUR 3.199bn EUR bn 14.51% 8.85% EUR bn EUR bn EUR bn EUR 3.155bn EUR bn 15.79% 9.71% EUR bn EUR bn EUR bn EUR bn EUR bn 19.14% 13.58% EUR bn EUR bn EUR bn EUR bn EUR bn 19.07% 14.15% EUR bn EUR bn EUR bn EUR bn EUR bn 19.68% 15.47% (BIS II) EUR bn EUR bn EUR 0.101bn EUR bn EUR bn 20.28% 15.68% (BIS III) EUR bn EUR bn EUR bn EUR bn EUR bn 16.94% 13.99% (BIS III) EUR bn EUR bn EUR bn EUR bn EUR bn 16.87% 14.17% (BIS III) EUR bn EUR bn EUR bn EUR bn EUR bn 17.09% 14.77% (BIS III) EUR bn EUR bn EUR bn EUR bn EUR bn 19.00% 16.38% (BIS III) EUR bn EUR bn EUR bn EUR bn EUR bn 19.21% 16.88% (BIS III) EUR bn EUR bn EUR bn EUR bn EUR bn 20.29% 18.00% (BIS III) EUR bn EUR bn EUR -0,006 bn EUR bn EUR bn 20.26% 18.14% 40 L-Bank s Balance Sheet

42 Support mechanisms in comparision EIB KfW L-Bank Rentenbank BNG Rating AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa Ownership 100% by the Member States of the European Union 80% Federal Republic of Germany 100% Federal State of Baden- Württemberg 20% Federal States Ministry of Agriculture of the Federal Republic of Germany 50% Kingdom of the Netherlands 50% municipal and Provincial authorities Guarantee Structure No guarantee Explicit Guarantee of the Federal Republic of Germany Explicit Guarantee of The Federal State Explicit Guarantee of the Federal of Baden- Republic of Germany Württemberg No guarantee Risk Weighting under Basle II+III To be individually confirmed by the investor Funding Volume p.a EUR 60 bn EUR bn EUR 5-8 bn EUR 12 bn EUR 17 bn USD Issue Size USD min 3 bn USD min 2 bn USD 1 bn USD 1 bn USD 1 bn EUR Issue Size EUR min 3 bn EUR min 3 bn EUR 1 bn EUR 1 bn EUR 1 bn 41 L-Bank s Balance Sheet

43 L-Bank Funding Team International Funding Officer: Sven Lautenschläger Head of Funding: Peter Kießling How to find us? Bloomberg: L-Bank<GO> Reuters: LBANK01 Bloomberg: LBANK<GOVT><GO> : L-Bank s Balance Sheet

Cover Pool ( mn.) 15, , , , , ,932.0 of which derivatives ( mn.)

Cover Pool ( mn.) 15, , , , , ,932.0 of which derivatives ( mn.) Landesbank Baden-Wuerttemberg Am Hauptbahnhof 2 D-70173 Stuttgart, Germany Phone: +49 711 127-0 Fax: +49 711 127-43544 e-m: kontakt@lbbw.de Internet: www.lbbw.de Publication according to section 28 para.