Annual Report 2011 (separate financial statements)

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Outlook
These forecasts of BayernLB’s performance in 2012 and 2013 may deviate substantially from the
actual outcome if any of the uncertainties described below or other uncertainties occur or the
assumptions underlying our forecasts prove to be false. BayernLB is under no obligation to
update its forecasts in light of new information or future events taking place in the forecast
period.
economic environment
In 2012 the economic upturn will lose steam in Germany and the rest of the world. Although
growth rates will dip only slightly in emerging markets, notably Asia and Latin America, the
slowdown will be more pronounced in Germany and in the eurozone in particular, where the
sovereign debt crisis is casting a long shadow. As it is still unclear how the crisis will end, anxious
companies and private individuals are putting their spending plans on the back burner. Demand
in France, Italy and Spain has tailed off noticeably as governments rush to consolidate budgets.
The biggest threat to the economy and financial markets in 2012 will be the still-unresolved sovereign
debt crisis.
In Germany, a robust labour market coupled with rising salaries will help boost private consumption,
partially offsetting the slowdown in exports and capital spending. It is therefore unlikely
the country will slide into recession in 2012. Inflation will be lower than in 2011, when a jump in
commodities prices, especially energy, significantly pushed up the cost of living. The dispute
triggered by Iran’s nuclear power programme will pose risks to the oil price.
Yields will rise moderately on the financial markets once the sting is drawn from the sovereign
debt crisis. There is little potential left in the German stock market given the rapid recovery in
the first two months of the year.
As the sovereign debt crisis gradually eases in the eurozone, the euro should moderately
appreciate against the dollar.
BayernLB’s future performance
BayernLB’s strategic realignment, which is now well-advanced, is still subject to an official decision
by the European Commission. With the EU state aid proceedings not yet concluded, there
are of course still uncertainties. But a common understanding on the principles of BayernLB’s new
business model was agreed with the European Commission in 2011. BayernLB and its owners are
holding in-depth discussions with the European Commission to conclude the process as quickly
and satisfactorily as possible. All the statements made in this outlook are based on the assumption
that the provisional agreements reached so far with the European Commission will become
definitive and the Bank will be able to continue to “normalise” its business operations. One of the
main areas of agreement that still needs to be reached is on the possibility of proportionately
repaying the aid received.
BayernLB . 2011 Annual Report and Accounts