Ecological ESG Pfandbrief Roadshow Presentation

October 2018

Münchener Hypothekenbank eG Contents

Introducing MünchenerHyp 3 Sustainability 10 Ecological ESG Pfandbrief 18 Appendix 28

Contents 2 “Royal Bank of Bavaria”

 founded in 1896

 strongly enabled and supported by the former Bavarian royal family

 122 years successful within the mortgage business Crown of the Kings of Bavaria  independent from any corporate group but member of the cooperative FinanzGruppe

 headquarters in Munich

 benefit from a strong foothold in Bavaria

MünchenerHyp’s Headquarters

Introducing MünchenerHyp 3 Key Facts at a Glance

 systemic important bank under direct ECB supervision: - 39.4 bn Euro total assets - around 500 employees - broad based ownership; no predominant owner - Moody’s issuer rating: Aa3 senior unsecured, A2 junior senior unsecured (03/08/2018)

 favourable funding by Pfandbrief privilege: - Pfandbrief licence: continuous issuing of benchmark bonds and private placements - second biggest volume of outstanding mortgage Pfandbriefe in Germany - Moody’s Pfandbrief rating: Aaa both public sector and mortgage

 deep roots within the Cooperative Financial Network (“FinanzGruppe”): - partner of Volksbanken and Raiffeisenbanken in the mortgage lending business - Volksbanken and Raiffeisenbanken as most important business partners and biggest owner group - excellent access to liquidity via the cooperative institutions - strong protection scheme with guarantee fund and guarantee network in the worldwide oldest exclusively private financed protection scheme for banks  sustainable business model: - long-term and risk conservative business model - focus on co-operative mission, no profit maximisation - sustainability as integral part of our business activities Date of information: 30/06/2018

Introducing MünchenerHyp 4 Ownership

 membership: Equity Components 30/06/2018 - 68,090 members in € million Common Equity Tier 1 1,336.5 - 14.453 million co-operative shares Paid-up capital 1,011.7 - 70 Euro nominal value, no trading Reserves 304.5 - 1,011.7 million Euro total amount of non- Special items for general banking risk 35.0 terminated co-operative shares Deductible items -14.7 - “one man, one vote” Additional Equity Tier 1 - - declaration to terminate membership Tier 2 Capital 77.4 Total Equity 1,413.9  impact on strategy and business: Ownership structure - long-term profitability and business 31/12/2012 30/06/2018 sustainability EUR 160.8 mn EUR 1,011.7 mn - conservative risk policy 36.5% 21.6% - no major shareholder - stable and continuous dividend payments 4.7% 61.8% 1.7% 73.7%

Co-operative primary banks Other FinanzGruppe companies Customers and other members

Date of information: 30/06/2018

Introducing MünchenerHyp 5 Business Performance

30/06/2018 30/06/2017

net interest income (mn EUR) 138.1 124.8

growth new property loans 5.9% 7.8%

mortgage portfolio (bn EUR) 30.3 28.6 loan businessloan

LCR 144.5% 154.7%

NSFR 100.2% 105.2%

leverage ratio 3.43% 3.44% regulation

SREP minimum ratio 7.88% 7.25%

common equity tier 1 capital ratio 23.0% 23.7%

tier 1 capital ratio 23.0% 23.7% capital total capital ratio 24.3% 25.2%

Introducing MünchenerHyp 6 Financial Figures

2011 2012 2013 2014 2015 2016 2017 30/06/2018 e2018

Net interest income 117.9 129.0 143.6 170.6 221.5 233.4 256.6 138.1 270.5

Commission income -38.3 -50.6 -49.3 -60.1 -66.8 -74.2 -74.5 -35.3 -71.8

Total administrative expenses -63.5 -65.5 -73.5 -81.5 -88.9 -92.2 -99.6 -53.4 -106.3

Operating profit before risk provisions 10.7 10.6 22.4 27.0 61.4 63.5 78.7 44.2 85.4

Operating profit after risk provisions 6.5 9.8 21.2 26.8 56.3 67.3 85.1 35.6 71.4

Payment to fund for general banking risks -1.7 -2.5 -5.0 -5.4 -8.4 -7.0 -5.0 0.0 -11.0

Net Income 4.9 5.4 6.7 16.1 22.2 31.9 46.3 22.7 32.8

Cost-Income-Ratio 62.0 62.3 60.7 60.5 52.0 55.9 54.7 51.9 53.5

ROE (Return on equity before tax) 4.2% 5.0% 6.3% 5.1% 6.7% 6.1% 6.5% 5.3% 5.3%

CET 1 Ratio 12.5% 17.3% 22.9% 23.8% 23.0% 21.6%

Tier 1 Ratio 8.9% 9.1% 11.7% 14.2% 19.5% 22.9% 23.8% 23.0% 21.6%

Total assets 37,348.0 36,642.9 34,898.5 36,340.1 38,098.8 38,509.0 38,905.0 39,350.8 40,000.0

2011 2012 2013 2014 2015 2016 2017 30/06/2018 e2018

New mortgage loan commitments 3,390.8 3,620.4 3,618.3 4,436.1 4,849.5 4,929.9 5,053.9 2,186.1 5,300.0 - of which residential mortgage loans 2,807.9 2,958.7 2,879.0 3,677.6 3,834.8 3,958.2 3,882.9 1,542.7 3,250.0 - of which commercial mortgage loans 582.9 661.7 739.3 758.5 1,014.7 971.7 1,171.0 643.4 2,050.0

New public-sector and municipal loan commitments 1,449.0 662.9 552.2 861.4 670.9 109.0 25.0 0.0 0.0

Figures in EUR millions

Introducing MünchenerHyp 7 Ratings

Date of information: 30/09/2018

Introducing MünchenerHyp 8 Asset Quality

Total mortgage loan portfolio  mortgage loan portfolio: L.-t.-sust.-value ratio *) EUR millions % % cumulative - 30.3 bn Euro Up to 60% 13,560 44.68% 44.68% - 198,073 individual loans Over 60 to 70% 6,131 20.20% 64.88% - volume: Over 70 to 80% 6,500 21.42% 86.30% 84.9% residential mortgage loans Over 80 to 90% 2,280 7.51% 93.82% Over 90 to 100% 1,057 3.48% 97.30% 15.1% commercial mortgage loans Over 100% 813 2.68% 99.98% - average size: Without 7 0.02% 100.00% about 131,000 Euro residential mortgage loans Total 30,348 100.00% *)The terms of the German Pfandbrief Act (PfandBG) define the about 3,700,000 Euro commercial mortgage loans sustainable value of property as, being generally 10-15% below the open market value of the property. - average loan-to-value ratio: 45 400 59.7% residential mortgage loans 35 74.0% commercial mortgage loans Date of information: 31/12/2017 300 - geographic split: 25

46.2% Bavaria, Baden-Württemberg, Hesse 15 200 and North Rhine-Westphalia 28.1% other German States 5 100 5.0% Berlin -5

20.7% non-domestic (mainly Switzerland) -15 2011 2012 2013 2014 2015 2016 2017 0 - NPL-Ratio at 0.31% Net loan provisions and direct write-downs in EUR millions (LS) Number of loans (RS) Date of information: 30/06/2018

Introducing MünchenerHyp 9 Sustainability within MünchenerHyp

 sustainable business modell: - sustainability as integral part of our business activities

 exclusion of business activities to certain critical sectors:  Gambling  Tobacco  Pornography  Alcohol  Military Weapons  Uranium Mining

 2014 issuance of the first ESG Pfandbrief: - pioneer in the market segment for sustainable Pfandbriefe

 integration of sustainable loan products into our core business: - November 2015 MünchenerHyp Green Loan - January 2018 MünchenerHyp Family Loan

 MünchenerHyp‘s investment into sustainability via own products: - reduced interest rates as incentive for customers

 Membership in EeMAP (Energy efficient Mortgage Aktion Plan): - founding member and pilot bank

Sustainability 10 Sustainability Timeline

Sustainability 11 Integration of Sustainability

sustainability management of MünchenerHyp

sustainable funding through sustainable mortgage lending ESG Pfandbriefe

Sustainability 12 Sustainability Ratings

Sustainability 13 Sustainability within Core Business

basis: holistic sustainability approach all assets are originated and managed according to sustainability principles

ecological criteria social criteria cover pool MünchenerHyp Commercial loans MünchenerHyp loans to housing green loan with sustainability family loan cooperatives (retail customers) certificate (retail customers)

regular issuance of ecological and social ESG Pfandbriefe

Sustainability 14 MünchenerHyp Green Loan

 green loan for retail customers: - strict energy standards for sustainable financing - MünchenerHyp is granting the full loan on a discounted interest rate to incentivise customers - available for new construction, purchase, modernisation or restructuring - loans are certified by ISS-oekom

 loans represent the top 10% in energy efficiency performance in the German housing market: - annual primary energy consumption not more than 70 kWh/m² - current median in German residential housing is about 140 kWh/m² per year1

 positive climate impact: - energy saved is approx. 330 tons of CO2 emission per year  sustainable strategy: - currently every 9th loan granted was already green - permanently growing cover pool for future ESG Pfandbriefe 1source: energy values according to dena Gebäudereport 2015

Sustainability 15 Certified Commercial Mortgage Lending

 financing commercial assets with sustainability certificates

 evaluation on the basis of the four most important certification systems

 minimum criteria subject to eligibilty of the sustainability rating agency ISS-oekom:

- DGNB (min. Gold or Platinum)

- BREEAM (min. Very good, Excellent or Outstanding)

- LEED (min. Gold or Platinum)

- HQE (min. Excellent or Exceptional)

Sustainability 16 Alignment with the SDGs

Use of Proceeds Alignment with the UN Sustainable Development Goals (SDGs)

Goals Targets

7.3: Double the global rate of improvement in energy efficiency Primary alignment Green Loans / Certified Environmental Loans

11.6: Reduce the adverse per capita environmental impact of cities

13.2: Integrate climate change measure into national policies, corporate strategies and planning Secondarycontribution

Sustainability 17 Reasons for an ESG Pfandbrief

Reasons for the issuer Reasons for the investor sustainability as integral part of MünchenerHyp investment in sustainable products (sustainable values and corporate governance)

investing in the future, the society and climate contribution to climate protection and protection commitment for the society

protection of competitive advantages realisation and performance of sustainable mandates extension of the product range, integral supply optimisation of the ecological footprint

reputation complying with regulatory requirements

broadening of the investor base good secondary market utilisation of assets

Ecological ESG Pfandbrief 18 Sustainable Funding

MünchenerHyp Green Bond Framework developing and issuing green bonds

„MünchenerHyp Ecological ESG Pfandbrief“ → financing of green retail and commercial mortgage loans

in line with ICMA Green Bond Principles (GBP) 2018 1) Use of Proceeds 2) Process for Project Evaluation and Selection 3) Management of Proceeds 4) Reporting 5) External Review

Ecological ESG Pfandbrief 19 1. Use of Proceeds

 Use of Proceeds:  poceeds raised of the ecological ESG Pfandbrief will be allocated to new or existing green or certified environmental loans

 loan categories:  green Loans for retail mortgage lending in Germany  Residential buildings with a maximum annual energy demand of 70 kWh/sqm  Residential buildings with a minimum energy performance certificate of B  certified environmental loans for commercial lending  DGNB (min. Gold or Platin)  BREEAM (min. Very Good, Excellent, or Outstanding)  LEED (min. Gold or Platinum)  HQE (min. Excellent or Expeptional) or  Top 15% of national building stock by energy performance

Ecological ESG Pfandbrief 20 1. Use of Proceeds

 MünchenerHyp Green Loan:  commercial loans with sustainability certificates:  retail mortgage lending  commercial mortgage lending  volume EUR 280.9 mn  volume EUR 310.8 mn  more than 1,600 loans  14 loans  only Germany  Germany  UK  Austria  The Netherlands

UK 37.2%

Germany Germany 100% 39.1% Austria 13.2%

The Netherlands 10.5%

Ecological ESG Pfandbrief 21 2. Process for Project Evaluation & Selection

 green bond working group within the sustainability committee:  consisting of members of  controlling/risk management  sustainability management  treasury department

 evaluation of green and certified environmental loans in the cover pool:  own product group for green loans for retail mortgage lending  review of the maximum energy demand and/or energy performance certificate  coordination with loan back office regarding missings information  verification of certified environmental loans  monitoring of certificates for commercial buildings

 proposal and planning of an ecological ESG Pfandbrief:  subject to agreement with the treasury liquidity demand

 yearly check and possible amendment of the framework

Ecolgical ESG Pfandbrief 22 3. Management of Proceeds

Lending business Deposit business Real estate financing Refinancing by Pfandbrief

loans interest, Investors Mortgage loans Issuance of repayment interest, (residential property, Mortgage Pfandbriefe repayment Issuing proceeds commercial property) (covered und secured) Borrower real security

Mortgage lending value calculation Pool of Coverage Security for Pfandbrief investors . Strict legal standards on coverage capital . Insolvency law for creditors: settlement of creditor’s . Very careful, conservative appraisal claims from pool of coverage prior to all other creditors . Constant review Additional coverage . Secured by a land charge

Property value Max. 60% of mortgage Market value lending value in pool of coverage Mortgage lending value Loan to value up to 60%

time Trustee verifies covered capital BaFin monitors complete mortgage bank (KWG, Pfandbrief act, Beleihungswertverordnung)

Ecological ESG Pfandbrief 23 3. Management of Proceeds

 volume of the ecological portfolio:  EUR 280.9 mn energy-efficient residential building in the cover pool  EUR 310.8 mn certified environmental commercial buildings in the cover pool  EUR 538.9 mn granted, partly or fully payed out green loans outside the cover pool  EUR 1,129.6 mn total  very granular portfolio: - more than 1,600 energy-efficient loans in the cover pool  average term of the energy-efficient loans - 20.3 years for green residential loans - 8.5 years for certified environmental commercial loans

 permanent business cycle for energy-efficient loans:  green loans and certified environmental loans are constantly offered and contracted

 measures for a shortfall in the green loan cover pool section:  appropriate investments in sustainable assets will be made until volume of green loans will be sufficient again  investments following the sustainable investment policy

Ecological ESG Pfandbrief 24 4. Reporting

 The Pfandbrief Act does not permit a separation of green loans outside the legal cover pool

 quarterly reporting with §28 Pfandbrief Act for green loans: - information on a portfolio basis within the cover pool - loan-to-value ratios - maturity of cover assets - energy-efficient mortgage loans by volume - energy-efficient mortgage loans by region - payments in arrears

 yearly Impact Reporting: - comparison energy performance of retail buildings versus the German Benchmark - analysis of energy savings for commercial buildings versus the corresponding national benchmark for energy consumption

- disclosure of CO2 savings on a portfolio basis within the cover pool

 Reporting will be available on the website of MünchenerHyp

Ecological ESG Pfandbrief 25 5. External Review

 Second Party Opinion provided by ISS-oekom:

Ecological ESG Pfandbrief 26 MünchenerHyp’s Ecological ESG Pfandbrief

Issuer Münchener Hypothekenbank eG Rating Mortgage Pfandbriefe: Aaa (Moody’s) Product Ecological ESG Pfandbrief Type Mortgage Pfandbrief Qualified assets Loans for energy-efficient real estate Expected size EUR 500 million Interest Fixed-rate Expected issue October/November 2018 Maturity Long 5 years Denomination 1,000 Euro Listing Munich Stock Exchange Target investors SRI/Green Investors Lead Managers ABN Amro, DZ BANK, HSBC Second opinion ISS-oekom

Ecological ESG Pfandbrief 27 Contact Information

Münchener Hypothekenbank eG Karl-Scharnagl-Ring 10 D-80539 München

Telephone: +49-89-5387-0 Telefax: +49-89-5387-243 Reuters: MHB01 Internet: http://www.muenchenerhyp.de

Treasury – Debt Investor Relations Rafael Scholz [email protected] Tel. +49-89-5387-106 Claudia Bärdges-Koch [email protected] Tel. +49-89-5387-110

Sustainability Dr. Johanna Dichtl [email protected] Tel. +49-89-5387-577

Appendix 28 Notes

Appendix 29 Disclaimer

This MATERIAL IS PROVIDED SOLELY FOR INFORMATIONAL PURPOSES AND is not an offer for sale of, or an invitation for the subscription or purchase, of securities offered by THE BANK in the United States or in any other jurisdiction.

Such securities may not be offered, sold or delivered in the United States or to, or for the account or benefit of, US persons (as such terms are defined in Regulations S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)) unless registered under the Securities Act or pursuant to an exemption from such registration. Such securities have not been and will not be registered under the Securities Act. Any offer of such Securities in the United States will only be made by means of an offering circular that will contain detailed information about the Bank and its management, as well as financial statements.

Zukunftsbezogene Aussagen Die Präsentation enthält zukunftsbezogene Aussagen. Diese zukunftsbezogenen Aussagen basieren auf den derzeitigen Erwartungen und Prognosen der Bank im Hinblick auf zukünftige Ergebnisse und sind mit Risiken, Unsicherheiten und Vermutungen verbunden, die die Bank und ihr Geschäftsfeld betreffen.

Risiken, Unsicherheiten und Annahmen können dazu führen, dass die tatsächlichen Ergebnisse, Leistungen und erreichten Ziele der Bank wesentlich von den durch solche zukunftsbezogenen Aussagen ausdrücklich oder implizit umschriebenen zukünftigen Ergebnisse, Leistungen oder Zielen abweichen können. Darüber hinaus sollten potentielle Investoren beachten, dass Aussagen über in der Vergangenheit liegende Trends und Ereignisse keine Garantie dafür bedeuten, dass sich diese Trends und Ereignisse auch zukünftig fortsetzen werden. Die Bank übernimmt keinerlei Verpflichtung, zukunftsgerichtete Aussagen aufgrund von neuen Informationen, zukünftigen Ereignissen oder aus anderen Gründen öffentlich zu aktualisieren oder zu revidieren.

Appendix 30