2013 Annual Report Raiffeisenverband Salzburg

Transcription

1 213 Annual Report Raiffeisenverband Salzburg

2 213 Annual Report 2 KEY FIGURES OF THE GROUP

3 KEY FIGURES OF THE GROUP in TEUR Change Total assets 7,976,156 7,67,669 6,714,78-892, % Loans and advances to customers 3,284,571 3,259,456 3,238,287-21, % Liabilities to customers (excl. Repo) 2,443,481 2,516,927 2,482,481-34, % Original own funds (after deduction) 399, , ,248 25,13 5.9% Original own funds ratio (after deduction) 8.8% 9.5% 1.4%.9% Total own funds 579, ,97 652,883 37, % Total own funds ratio (total risk) 12.8% 13.7% 15.% 1.3% Operating result 53,955 53,927 57,598 3, % Profit on ordinary activities 29,35 29,867 4,112 1, % Cost-Income-Ratio (adjusted for warehousing segment) 63.3% 62.4% 61.6% -.8% Return on Equity (RoE. before tax) 7.5% 7.3% 9.1% 1.8% 3 Raiffeisenverband Salzburg

4 213 Annual Report 4 CONSOLIDATED FIGURES 213

5 CONSOLIDATED BALANCE SHEET ASSETS (TEUR) Cash in hand. balances with central banks and post office banks 21,259 22, Treasury bills and other bills eligible for refinancing with central banks a) Treasury bills and similar securities b) Other bills eligible for refinancing at central banks 3. Loans and advances to credit institutions a) Repayable on demand b) Other loans and advances 586,2 586,2 1,986, ,856 1,4,78 58,181 58,181 1,74, ,71 92, Loans and advances to customers 3,259,456 3,238, Debt securities including fixed-income securities a) Issued by public bodies b) Issued by other borrowers showing separately: Own debt securities 1,54,938 1,176 1,44,762 () 513,7 1,176 52,831 () 6. Shares and other variable-yield securities 13,926 2, Participating interests showing separately: Participating interests in credit institutions 8. Shares in affiliated undertakings showing separately: Shares in credit institutions 9. Intangible fixed assets showing separately: Goodwill 1. Tangible assets showing separately: Land and buildings occupied by a credit institution for its own activities 11. Own shares as well as shares in a controlling company or in a company holding a majority of shares showing separately: Nominal value 126,749 (5,119) 26,74 () 2,874 () 172,429 (154,11) () 129,182 (4,147) 259,963 () 1,518 () 172,587 (154,529) () 12. Other assets 121,226 87, Subscribed capital called but not paid Prepayments and accrued income 1,451 2,63 Total assets 7,67,669 6,714,78 5 Raiffeisenverband Salzburg

6 CONSOLIDATED BALANCE SHEET LIABILITIES (TEUR) Liabilities to credit institutions a) Repayable on demand b) With agreed maturity dates or periods of notice 2. Liabilities to customers (non-banks) a) Saving deposits showing separately: aa) Repayable on demand bb) With agreed maturity dates or periods of notice b) Other liabilities showing separately: aa) Repayable on demand bb) With agreed maturity dates or periods of notice 3. Securitised liabilities a) Debt securities issued b) Other securitised liabilities 3,25,651 1,755,375 1,45,276 2,781, ,18 (117,16) (675,858) 1,988,99 (1,174,783) (814,126) 979, ,897 2,423,226 1,47,26 1,15,966 2,482, ,164 (141,777) (656,387) 1,684,317 (1,268,987) (415,33) 1,142,422 1,142, Other liabilities 78,513 73, Accruals and deferred income 3,436 4, Provisions a) Provision for severance payments b) Provision for pensions c) Provision for taxation d) Other provisions 7,35 22,295 21,61 4,232 22,717 7,342 22,662 21,66 2,398 23, A Fund for general banking risks 16,756 16, Subordinated liabilities 48,75 48,75 8. Supplementary capital 1, 1, 9. Subscribed capital 54,222 54, Capital reserves a) Committed b) Uncommitted 11. Retained earnings a) Legal reserve b) Statutory reserve c) Adjustment item for capital consolidation d) Other reserves 1,344 1,344 28,311 64, ,8 1,344 1,344 31,877 66,34 244, Liability reserve pursuant to Article 23 para. 6 BWG 72,58 72, Minority Interests 14. Consolidated net profit for the year 4,5 4,5 Total liabilities 7,67,669 6,714, Annual Report 6

7 AS OF 31 DECEMBER 213 OFF-BALANCE-SHEET-ITEMS (TEUR) ASSETS 1. Foreign assets 1,134,4 1,75,777 LIABILITIES 1. Contingent liabilities showing separately: a) Acceptances and endorsements b) Guarantees and assets pledged as collateral security 536,36 528, , ,27 2. Commitments showing separately: Commitments arising from repurchase transactions 75,217 () 776,838 () 3. Commitments arising from agency services 73,416 57, Eligible capital pursuant to Article 23 para. 14 showing separately: Own funds pursuant to Article 23 para. 14 no Capital requirement pursuant to Article 22 para. 1 showing separately: Capital requirement pursuant to Article 22 para. 1 nos. 1 and 4 614,97 359, , , , ,56 6. Foreign liabilities 1,155,767 78, Hybrid capital pursuant to Article 24 para. 2 nos. 5 and 6 1, 1, 8. Trust assets liabilities; managed fund assets 1,449,97 7 Raiffeisenverband Salzburg

8 CONSOLIDATED PROFIT AND LOSS TEUR Interest receivable and similar income showing separately: From fixed-income securities 152,478 49, ,692 39, Interest payable and similar expenses -94,565-65,881 I. NET INTEREST INCOME 57,913 58, Income from securities and participating interests a) Income from shares and other variable-yield securities b) Income from participating interests c) Income from shares in affiliated undertakings d) Income from shares in companies stated as associates e) Income from other participating interests 11, ,647 3,972 16,731 1,631 9,272 5, Commissions receivable 66,482 48,45 5. Commissions payable -24,76-8, Net profit on financial operations 3,946 3,26 7. Other operating income 94,287 94,95 II. OPERATING INCOME 29, , General administrative expenses a) Staff costs showing separately: aa) Wages and salaries bb) Expenses for statutory social contributions and compulsory contributions related to wages and salaries cc) Other social expenses dd) Expenses for pensions and assistance ee) Allocations to provision for pensions ff) Expenses for severance payments and contributions to severance and retirement funds b) Other administrative expenses -143,763-12,543-72,656-19,357-1,169-2,864-2,263-4,234-41,219-14,91-99,578-72,822-19,67-1,142-2, ,395-41, Value adjustments in respect of asset items 9 and 1-1,726-1, Other operating expenses ,981 III. OPERATING EXPENSES -155, ,637 IV. OPERATING RESULT 53,927 57, Annual Report 8

9 ACCOUNT AS OF 31 DECEMBER 213 TEUR Value adjustments and re-adjustments in respect of loans and advances and provisions for contingent liabilities and for commitments -16,427-3, Value adjustments and re-adjustments in respect of transferable securities held as financial fixed assets. participating interests and shares in affiliated undertakings showing separately: From companies stated as associates -7,633 12,697 V. PROFIT ON ORDINARY ACTIVITIES 29,867 4, Extraordinary income showing separately: Withdrawals from the fund for general banking risks 16. Extraordinary expenses showing separately: Allocations to the fund for general banking risks 17. Extraordinary result (subtotal of items 15 and 16) 18. Tax on profit or loss -1,24-1, Other taxes not reported under item 18-4,296-4,212 VI. PROFIT FOR THE YEAR AFTER TAX 24,367 34,99 2. Minority interests Changes in reserves showing separately: Allocation (-) / Reversal (+) liability reserve -19,867-28,779 VII. CONSOLIDATED NET INCOME FOR THE YEAR 4,5 4,5 22. Profit or loss brought forward VIII. CONSOLIDATED NET PROFIT FOR THE YEAR 4,5 4,5 9 Raiffeisenverband Salzburg

10 213 Annual Report 1 NOTES TO THE CONSOLIDATED ACCOUNTS

11 NOTES TO THE CONSOLIDATED ACCOUNTS According to 265 UGB (Austrian Commercial Code) the consolidated balance sheet as well as the consolidated profit and loss account and the methods of accounting and valuation applied herein have to be commented. The notes were drawn up in due consideration of the provisions of the Austrian Commercial Code (UGB) and of the special provisions of the Austrian Banking Act (BWG). The consolidated financial statements were prepared pursuant to annex 2 to 43 BWG, BGBl 532/1993, relevant version. A. GENERAL NOTES The annual financial statements were drawn up in line with the principles of orderly accounting and in accordance with the generally accepted standard practice of providing a true and fair view of the net assets and financial conditions of the company. The requirements of the relevant versions of the Austrian Commercial Code and of the provisions of the Austrian Banking Act were applied. The annual financial statements comply with the consistency principle. B. CONSOLIDATION PRINCIPLES AND METHODS a) Full consolidation Capital consolidation was conducted in accordance with 254(1) (1) UGB (book value method), with the acquisition costs for the investments in subsidiaries charged against the respective proportionate equity at the acquisition date or the time of initial inclusion. The initial consolidation took place on the effective date of 1st January 1995, or upon initial inclusion in the consolidated financial statements for companies subject to consolidation after this date. Receivables and liabilities existing between the consolidated subsidiaries were eliminated as part of debt consolidation. Equally, intra-group revenues and expenses were set off by means of consolidation of revenues and expenses. 256(2)(2) UGB was applied for inter-company profits and losses, which does not require an elimination of inter-company profits and losses provided that these are, pursuant to Para.1, of only minor importance in providing a true and fair view of the Group s net assets and financial conditions. b) Equity consolidation Equity consolidation was conducted in accordance with 264(1)(1) UGB (book value method). The date of the subsidiary s initial inclusion in the consolidated financial statements was chosen as the significant date for determining the difference between the book value of the respective investment and the respective proportionate equity. The initial consolidation took place on the effective date of 1 January 1995, or upon initial inclusion in the consolidated financial statements for companies included according to the equity method after this date. Consolidation according to the equity method occurred based on the last available financial statements. Any variations in valuation methods to the parent company were not adjusted. 256(1) UGB does not require an elimination of inter-company profits and losses. 11 Raiffeisenverband Salzburg

12 NOTES TO THE CONSOLIDATED ACCOUNTS C. SCOPE OF CONSOLIDATION 1. Disclosures on investments a) Fully consolidated companies Name and registered office direct Share of capital in % indirect Salzburg München Bank AG, Munich 1.% b) Companies consolidated at equity Name and registered office direct Share of capital in % indirect Financial statements dated Heimat Österreich, Salzburg 25.% c) Other companies Members of the Banking Group not included in the consolidated financial statements due to their status of having only minor importance in providing a true and fair view of the Group s financial conditions. In relation to the materiality evaluation, the operating result instead of the net profit or loss will be used starting Change of the scope of consolidation In 213, 75% of the shares in Raiffeisen Salzburg Invest Kapitalanlage GmbH were sold and therefore excluded from the group of companies included in the consolidation. The Salzburg München Vermögensmanagement AG, located in München, was merged with the Value-Holdings Vermögensmanangement GmbH. In December 213, all shares in Salzburg München Bank AG were sold to the Airbus Group. The transaction is subject to approval from the bank supervision, the deposit protection and the German Federal Cartel Office (BKartA). The deconsolidation will be carried out following the approvals from the public authorities. D. ACCOUNTING AND VALUATION PRINCIPLES General principles The consolidated financial statements were prepared under consideration of the principle of balance sheet continuity. Personnel expenses, other administrative expenses and depreciation from companies where a profit and loss agreement exists were in previous year reported on a net basis in the profit and loss statement. In 213 the presentation was converted to a gross form. In order to ensure comparability, the previous year figures have been 213 Annual Report 12

13 adjusted accordingly. The valuation of assets and liabilities was based on the principle of individual evaluation assuming the company s ability as a going concern. In accordance with prudent commercial practices only realised gains as well as all identifiable risks and anticipated losses were taken into the profit and loss account at closing date. Foreign currency translation Foreign currencies were converted at the reference rate, published by the European Central Bank according to the provisions of 58(1) BWG. In cases where no reference rate was available, foreign currencies were converted at the middle rate of reference banks. the Austrian business law. Current Assets Marketable securities were evaluated according to 27 UGB. Base for the valuation procedures are the historical acquisition costs. Trading Positions Securities held for trading and listed at a recognised stock exchange pursuant to 2(32) BWG were valued at their market price. A market price, determined under liquid market conditions at the respective valuation date, is used as the valuation rate. All other trading securities were valued according to 27(1) UGB. Securities Fixed Assets Regarding long-term fixed-income securities admitted to listing on a recognised stock exchange according to 2 line 32 BWG, the option of writeups and write-downs according to 56(2-3) BWG was applied. Regarding long-term fixed-income securities not listed on a recognised stock exchange according to 2 line 32 BWG, the positive difference between the acquisition costs and the amount repayable at maturity was recognised as expense immediately, 56(2) BWG. Securities used as cover funds for ward money were valued according to the strict lower of cost method pursuant to 2(3) Mündelsicherheitsverordnung (Austrian Trustees Securities Directive). All other securities reported under fixed assets were recognised according to 56(1) BWG in compliance with the rules for the valuation of fixed assets, stipulated in Own issues for own account Own issues reported on the asset side of the balance sheet amounted to TEUR 3,1 (PY TEUR 1,75) and are recognized at their nominal value. Risk provisions Value adjustments and provisions were made for recognisable risks in the case of loans and advances to credit institutions and loans and advances to customers. Participating interests Participation interests and shares in affiliated undertakings were carried at acquisition costs less extraordinary depreciation, where appropriate. Extraordinary depreciation is made in the case of value impairments which are likely to be of permanent nature, due to sustained losses, a reduction in equity and/or a reduced earnings capacity level. 13 Raiffeisenverband Salzburg

14 NOTES TO THE CONSOLIDATED ACCOUNTS Tangible Assets Property and equipment were recognised at cost less scheduled depreciation. Assets are depreciated on a straight-line basis. Depreciation on property and plant ranges between 1.84% and 2.% and between 5.% and 33.3% on equipment. Extraordinary depreciation is made in the case of value impairments which are likely to be of a permanent nature. The low-value assets were fully written-off in the year of acquisition according to 226(3) UGB. Capital expenses Premiums and discounts (Agios/Disagios) were distributed over the term of debt. Other capital expenses were recognised in the income statement of the year of issuance. Goods on stock Stock was valued in accordance with the strict lower of cost or market principle. Relating to agricultural machinery the identity pricing method was applied and the FIFO-method for other inventory. Care was taken to ensure a loss-free valuation. Liabilities Liabilities were recognised at their nominal value or at their higher redemption amount. Provisions Pension obligations The inclusion in the balance sheet is determined according to the provisions of 198 and 211 UGB and the recommendations of the expert report no. 8 of the Examination Committee at the Austrian Chamber of Accountants and Tax Consultants (KFS/RL3). The provisions to cover pension obligations were calculated according to the partial value method. In this case total expenditure of a commitment is calculated and reversed over the entire period of financing. For beneficiaries comprising persons entitled in expectancy and benefit recipients as well as for persons entitled to benefits that already reached the assumed retirement age the provisions are recognised at present value. The calculations were made in accordance with current mortality tables AVÖ 28 P Rechnungsgrundlagen für die Pensionsversicherung Pagler & Pagler, using the variant for salaried employees. Our calculations were based on an assumed retirement age of 65 for two men and 62 for all other active employees. The pension obligations are individually customised and partly adjusted in compliance with the applicable consumer price index. An actuarial interest rate of 3.% was applied, unchanged from previous year. Anniversary Bonuses The provisions for obligations to pay anniversary bonuses were calculated based upon an actuarial valuation and by applying a fluctuation discount as well as an unchanged interest rate of 3%, considering life expectancy according to the Austrian General Mortality Table. Severance Obligations The calculations were made in accordance with the current mortality tables AVÖ 28 P Rechnungsgrundlagen für die Pensionsversicherung Pagler & Pagler, using the variant for salaried 213 Annual Report 14

15 employees. In accordance with the expert report (KFS/RL 2) and the amendments of the Institute for Business Economics, Tax Law, and Organization of the Austrian Chamber of Public Accountants and Tax Advisers calculations are based on an assumed retirement age of 6 for women and 65 years for men. Actuarial interest rate applied remained unchanged at 3.%. Additionally, a fluctuation discount was applied. Derivative financial instruments For derivative financial instruments the fair value is calculated. The fair value is the amount at which the financial instruments can be sold or purchased on the balance sheet date at fair market conditions. Market values were applied in the assessment, if available. Internal assessment methods with current market parameters, particularly the present value technique and the option pricing model, were used for financial instruments without a market value. Generally, interest rate options (Caps, Floors) and currency rate options are arbitrage activities. Products for purchase and for disposal are equal in their terms. The differences between the value received and the value cleared are listed as revenue and expense in the profit and loss statement. If in individual cases open positions occur, they are valued subject to imparity. All swap contracts have been concluded for hedging reasons. Interest rate swaps used to hedge the fixed interest rate risks: own issues (micro hedge) nostro securities (micro hedge) loans (micro- and portfolio hedge) fixed saving deposits (portfolio hedge) time deposits (portfoli hedge) No macro hedges and cash flow hedges were used The hedge is carried out in accordance with the maturity of the underlying transaction, or the maturity of the portfolio. These hedges form a valuation unit with a particular underlying transaction as the particular future payment flows will even out. The effectiveness of the portfolio hedges is controlled by special effectiveness tests. During the fiscal year, the hedging relationship is tested by means of prospective effectiveness test. Based on a present value simulation, and planning horizon of one year, an interest rate change of +/- 1 basis points is assumed. Thereby, the capital payment flow from the underlying business, as well as the hedging products (interest rate swap) are analysed separately. These two present value results are set in relation to each other and may lie between.8 and 1.25 pursuant to AFRAC. At the end of the financial year a unique retrospective effectiveness test is carried out. In this connection, the changes in the present value of the underlying business and the hedging products (interest rate swap) are analysed on the basis of a modern historical simulation. The relations between the present values are allowed to range between.8 and 1.25 according to AFRAC. Interest rate swap that are not used for hedging purposes were valued based on the imparity principle. Exchange rate risks are hedged with: currency swaps forward exchange transactions 15 Raiffeisenverband Salzburg

16 NOTES TO THE CONSOLIDATED ACCOUNTS E. NOTES TO THE CONSOLIDATED BALANCE SHEET 1. Maturity breakdown Receivables from banks and non-banks, not available on demand, and payables to banks and non-banks, not available on demand are classified according to the remaining time to maturity: Receivables from banks, not available on demand TEUR TEUR (PY) up to 3 months 394,47 364,371 more than 3 months to 1 year 257, ,959 more than 1 to 5 years 266,62 241,296 more than 5 years 2,765 25,154 Receivables from non-banks, not available on demand TEUR TEUR (PY) up to 3 months 273,4 296,751 more than 3 months to 1 year 298, ,26 more than 1 to 5 years 817, ,298 more than 5 years 966, ,427 Payables to banks, not available on demand TEUR TEUR (PY) up to 3 months 314,39 5,78 more than 3 months to 1 year 426,69 722,52 more than 1 to 5 years 261, ,354 more than 5 years 14,424 14,621 Payables to non-banks incl, savings deposits, not available on demand TEUR TEUR (PY) up to 3 months 53, ,86 more than 3 months to 1 year 466,629 61,78 more than 1 to 5 years 99,64 59,237 more than 5 years 1, Annual Report 16

17 2. Securities The book value (including accrued interest) of the debt securities including fixed-income securities admitted to exchange listing amounts to TEUR 513,7 (PY TEUR 1,54,938). Thereof securities with a nominal value of TEUR 53,17 (PY TEUR 1,15,96) were recognised as fixed assets. The allocation to the fixed assets was accomplished by intention of the Management Board. Securities trading book managed, consists of the following positions: TEUR TEUR (PY) Bonds, convertible bonds 2,466 36,474 Investment certificates / Certificates 183 4,799 Cap purchase 1 1 Interest rate futures sales -8,192-1,973 Currency options purchase 6 Currency options sales - -6 Classification of book value/fair value pursuant to 237a(1)(2) UGB in TEUR: Balance sheet item Market value 213 Book value 213 Market value 212 Book value 212 Treasury bills 8,343 8,563 Loans and advances to banks Loans and advances to customers Debt securities / fixed-income securities 55,618 57,684 73,574 75,977 Total 55,618 57,684 81,917 84,54 The bonds and securities in the books are from first-class issuers. Therefore, a full repayment according to schedule is anticipated. 17 Raiffeisenverband Salzburg

18 NOTES TO THE CONSOLIDATED ACCOUNTS Subordinated liabilities pursuant 64 (1) 5 BWG The securitised subordinated liabilities which amounted to more than 1% of all subordinated liabilities on the are: Subordinated to the liabilities which appear on the liability item 1 to 4: Salzburger Nachranganleihe 8-218/17, TEUR 3, (PY TEUR 3,), due on , fixed interest rate 4,75% until , an interest rate of 125 basis points above 3-month- EURIBOR will follow, settlement option at rate 1 on Callable variable Salzburger Nachranganleihe 9-219/5, TEUR 7,4 (PY TEUR 7,4), becomes due on , interest rate of 125 basis points above 3-month-EURIBOR, settlement option at rate 1, quarterly starting from Callable variable Salzburger Nachranganleihe /19, TEUR 6,25 (PY TEUR 6,25), due on , interest rate 1st year: 3,5% fixed, interest rate years 2 to 5: 12 basis points above 3-month-EURIBOR, interest rate years 6 to 1: 15 basis points above 3-month-EURI- BOR, settlement option at rate 1, quarterly starting from Subordinated to the liabilities which appear on the liability item 1 to 4 and 8: Subordinated hybrid capital bond 29 may not be paid retroactively TEUR 1, (PY 1,), without a fixed contract period, interest rate 5% p.a., early settlement option is excluded. In addition, there are two securitised subordinated bonds with an issuing volume of total TEUR 5,1 (due on 221 or 222), which do not exceed 1% of the sum of all subordinated liabilities. These bonds are subordinated to the liabilities of the liability item 1 to 4. The expenses for subordinated liabilities amounted to TEUR 2,279 (PY TEUR 2,497) over the reporting year. Ward Money The ward money at the reporting date amounted to TEUR 4,694 (PY TEUR 3,962). Gilt-edged securities with a total nominal value of TEUR 6, were attributed to backing. 3. Investments and related party transactions Profit and loss transfer agreements exist for the following affiliated companies: Raiffeisen Realitäten reg. GenmbH Raiffeisen Salzburg Vorsorge GmbH LGH Obertrum reg. GenmbH BVG Liegenschaftsverwaltung GmbH 4. Fixed assets The land value of all developed properties is TEUR 76,983 (PY 76,951). 5. Other assets Classification and illustration of other assets according to the most significant individual amounts, as far as these amounts are material for the assessment of the financial statements. 213 Annual Report 18

19 TEUR TEUR (PY) Receivable from goods business 18,423 48,419 Goods in stock 27,643 29,673 Accruals for swaps 1,111 14,318 Other receivables 12,48 17,77 The Company has chosen the option not to capitalize deferred taxes on temporary differences between the statutory and the tax result. The value which would have been possible to capitalize according to 198 (1) UGB was TEUR 4,494 (PY TEUR 4,98). 6. Equity and equity-related liabilities The untaxed reserves of the parent company totalling EUR 6,481,664.6 (PY TEUR 6,75) were allocated in the Consolidated Balance Sheet in full to retained earnings. 7. Disclosures concerning various items in the balance sheet a) Bonds with a nominal value of TEUR 5 are deposited in an account at OeKB to secure membership on the Vienna Stock Exchange (Arrangement deposit). Further trust deposits: Trust deposit for Euroclear Nom. value TEUR 1,5 Trust deposit for SMB Nom. value TEUR 9, Trust deposit for options Commerzbank Fft. Nom. value TEUR 5, Trust deposit for retirement provisions Nom. value TEUR 1,175 Trust deposit for OeKB/CBF Nom. value TEUR 1,5 Trust deposit for OeNB Nom. value TEUR 977,345 Trust deposit for repo-transactions Nom. value TEUR 1,5 Trust deposit for Deutsche Bundesbank Nom. value TEUR 12,5 19 Raiffeisenverband Salzburg

20 NOTES TO THE CONSOLIDATED ACCOUNTS Assets assigned as security: Reason of assignment TEUR TEUR (PY) assigned to Subsidised export loans 39,582 41,636 Austrian Kontrollbank Global loans 3,957 33,48 European Investment Bank German state-aided loans 963 1,1 KFW Banking Group Bavarian subsidised loans 16,953 11,471 LFA Bavarian Subsidies Bank Monetary Policy Operations / OeNB 261, ,373 Austrian National Bank Total amount of assets and liabilities in foreign currency: TEUR TEUR (PY) Foreign currency assets 59, 711, Foreign currency liabilities 228, 281, 8. Off-Balance-Sheet Items Raiffeisenverband Salzburg egen is a member of the association Raiffeisen-Kundengarantiegemeinschaft Salzburg. The members of this association have undertaken a contractual obligation to guarantee jointly and severally the fulfilment of the entirety of an insolvent association member s commitments arising from liabilities towards customers (Position 2. liability side of the balance sheet), from liabilities towards banks (Position 1. liability side of the balance sheet) and from own financial issues up to the limit of the sum of the individual capacities of the remaining association members. The individual capacity of an association member is measured on the basis of its freely available reserves subject to the pertinent requirements of BWG. The disclosure can be found on consolidated basis at (Impressum Offenlegung). 213 Annual Report 2

21 F. NOTES TO THE CONSOLIDATED INCOME STATEMENT 1. Other operating income consists of the following significant individual items: Total amount thereof net earnings from goods operations thereof income from the IT centre TEUR 94,95 45,992 19,469 TEUR (PY) 94,287 46,526 18,712 There is no disclosure of other operating expenses due to immateriality. 2. The total amount of income from administrative and agency services are TEUR 9,158 (PY TEUR 9,398). 3. The expenses for the auditor of Raiffeisenverband Salzburg egen amount to EUR 364,982.9 (PY TEUR 355). Breakdown of the auditors fees are as follows: TEUR TEUR (PY) Audit of financial statements Tax consultancy 2 Other confirmation services 2 2 Other services The expenses for the auditor of Salzburg München Bank Aktiengesellschaft add up to EUR 327,32.35 (PY TEUR 262). Breakdown of the auditors fees are as follows: TEUR TEUR (PY) Audit of financial statements Tax consultancy 61 2 Other confirmation services Other services Raiffeisenverband Salzburg

22 NOTES TO THE CONSOLIDATED ACCOUNTS 4. Losses realized on the disposal of fixed assets amounted to TEUR 242 (PY TEUR 12). 5. A tax on revenue and profit amounting to TEUR 1,81 (PY TEUR 1,24) was charged against profit on ordinary activities. G. OTHER INFORMATION 1. In the 213 financial year the average number of staff employed was 1,764 (PY 1,774). Thereof, 1,494 (PY 1,495) were employees and 27 (PY 279) workers. Included in these figures is an average of 74 (PY 86) persons employed at subsidiaries with profit and loss transfer agreements. Thereof, 7 (PY 82) were employees and 4 (VJ 4) workers. Staff costs of subsidiaries with profit and loss transfer agreements are reported under personnel expenses and identified separately. 2. Loans to members of the Supervisory Board amounted to TEUR 397 (PY TEUR 462) as at 31 December 213. Repayments to these loans totalling TEUR 65 (PY TEUR 47) were made during the 213 financial year. 3. Expenses for severance payments and pensions in the reporting year for directors and senior managers amounted to TEUR (PY TEUR 4,42) and TEUR 3,427 (PY TEUR 4,87) for other employees. 4. There were no material or off-market transactions with related parties pursuant to 266(2b) UGB. 213 Annual Report 22

23 AUDITOR S REPORT The audit of the attached consolidated financial statements as of 31 December 213 and the management report for the group was performed by Österreichischer Raiffeisenverband. The audit of the consolidated financial statements and the management report for the group did not give rise to any objections. The consolidated financial statements and the accounting system are in accordance with legal requirements. The consolidated financial statements present fairly, in all respects, the financial position, the results of its operations and cash flow in accordance with Austrian generally accepted accounting principles. The management report for the group corresponds with the consolidated financial statements. The consolidated financial statements in its full length can be looked up in the commercial register at the Regional Court of Salzburg. The Statements will be published in the Raiffeisen Zeitung. 23 Raiffeisenverband Salzburg

24 MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS FOR 213, Raiffeisenverband Salzburg egen BUSINESS PERFORMANCE AND ECONOMIC ENVIRONMENT The financial year just ended was a successful one for all segments and went largely according to plan. Business performance was very satisfying, associated with a risk situation in line with the general economic environment. The result for the year 213 showed a continuation of the positive development of the past years. The development at Raiffeisenverband Salzburg played a major role in this trend, as it clearly dominated the consolidated financial statements in its position as the parent company. consolidated financial statements with measurement according to the equity method were reported at the carrying amount from the individual financial statements. The Group sold 75% of its shares in Raiffeisen Salzburg Invest KAG on 7 June 213, with retroactive effect from 1 January 213, and was therefore not included in the scope of consolidation. The remaining shares in Raiffeisen Salzburg Invest KAG are held as a strategic investment. Due to changes in the capital requirements regulation, as of 1 January 214, eight financial holding companies and one provider of ancillary services will be included in the scope of consolidation. All of the nine companies will be fully consolidated in the Group financial statements. NOTES TO THE FINANCIAL AND EARNINGS POSITIONS Group structure The Raiffeisenverband Group comprises the parent company Raiffeisenverband Salzburg egen and the credit institution Salzburg München Bank AG domiciled in Munich. Salzburg München Bank AG was fully consolidated in the Group financial statements. The investment in the non-profit housing association Heimat Österreich was accounted for using the equity method. 16 financial institutions and investment firms belonging to the Raiffeisenverband Salzburg Banking Group were not included in the scope of consolidation due to their minor cumulative importance. Investments and shares in affiliated companies that are neither fully consolidated nor included in the Balance sheet development As of 31 December 213 Raiffeisenverband Salzburg s consolidated total assets amounted to EUR 6.7 billion. The Group s total assets are EUR million larger than the total assets of the Group s parent individual financial statements. Due to the structure of the companies required to be included the differences between the consolidated and the individual financial statements are almost entirely attributable to the consolidation of Salzburg München Bank AG. Cash in hand increased by EUR 1.4 million to EUR 22.6 million. The item treasury bills and other bills amounted to EUR 58.2 million at year-end 213 and decreased insignificantly, or by almost EUR 5.8 million. Loans and advances to banks decreased by EUR 282. million to EUR 1,74.7 million. Loans and advances to customers decreased by 213 Annual Report 24

25 .6%, from EUR 3,259.5 million to EUR 3,238.3 million. Debt securities, including fixed-income securities, decreased according to plan by 51.4% and amounted to EUR 513. million. The item shares and other variable-yield securities reduced according to plan by EUR 1.9 million to EUR 3. million. Participating interests and shares in affiliated undertakings amounted to EUR million. In total this is an increase of the portfolio of EUR 1.7 million. Tangible and intangible assets showed a book value of EUR million at year-end 213. Fixed assets increased by EUR.2 million in comparison to previous year. Other assets amounted to EUR 87.7 million at yearend 213. The accrued income was EUR 2.1 million, an increase of EUR.6 million. Liabilities to credit institutions amounted to EUR 2.4 billion at year-end 213 and decreased by EUR million in comparison to previous year. Liabilities to customers (non-banks) decreased by EUR million or 1.8% to EUR 2.5 billion at year-end 213. The main reason for this development was a reduction of repurchase agreements. Securitised liabilities increased by EUR million to EUR 1.1 billion at year-end 213. Other liabilities decreased by EUR 4.9 million to EUR 73.6 million. Provisions amounted to EUR 7.3 million and remained unchanged compared to 212. Accruals and deferred income increased by EUR.8 million to EUR 4.2 million. Subordinated liabilities remained unchanged between years, at EUR 48.8 million. Equity grew by EUR 3.6 million to EUR million and was composed of subscribed capital, capital reserves, retained earnings, liability reserve, net profit for the year and the fund for general banking risks. Income statement Raiffeisenverband Salzburg dominated the Group income statement as well. Corresponding differences between income and expenses from transactions on a commission basis and other operating income in the parent s financial statements are due to consolidation. Net interest income increased year-on-year by EUR.9 million, or 1.6%, to EUR 58.8 million. Income from securities and participating interests grew by EUR 5.3 million to EUR 16.7 million due to higher dividend payments. Net commissions as a result of the commissions receivable and commissions payable decreased by EUR 2.2 million in 213 and amounted to EUR 39.6 million. Net profit on financial operations fell by EUR.7 million to EUR 3.2 million, mainly attributable to decrease in currency income related to a decline in foreign currency loans. Other operating income amounted to EUR 94.9 million and remained nearly constant. Total operating income amounted to EUR million in 213 resulting in an increase of EUR 3.8 million or 1.8%. The operating expenses of EUR million remained nearly unchanged in comparison to previous year. Included in other operating expenses are potential expenses related to the deconsolidation effects of the intended investment disposals in Raiffeisenverband Salzburg

26 MANAGEMENT REPORT The operating result as the balance of operating income and operating expenses increased by 6.8% or EUR 3.7 million, resulting in EUR 57.6 million at year-end 213. Valuation yield was reported at EUR 17.5 million in 213. Profit on ordinary activities amounted to EUR 4.1 million. This is an increase of EUR 1.2 million compared to 213. Salzburg München Bank AG Salzburg München Bank AG, located in Munich, is a financial institution focused on private banking. It primarily serves customers from Bavaria and Austria by offering them competent financial solutions. This successful model is the reason why Salzburg München Bank AG has been able to continue to expand the number of new and active customer relationships. The loans and advances to customers decreased slightly to EUR million at year-end 213, or down by.4% year-on-year. With profit on ordinary activities amounting to EUR 1.5 million the good performance and the positive development of 212 could be repeated. In December 213, all shares in Salzburg München Bank AG were sold to the Airbus Group. The transaction is subject to approvals from the bank supervision, the deposit protection and the German Federal Cartel Office (BKartA). The contract parties are optimistic that all necessary approvals will be received in 214. Heimat Österreich gemeinnützige Wohnungsund Siedlungsgesellschaft m.b.h. The Heimat Österreich gemeinnützige Wohnungsund Siedlungsges.m.b.H, together with its 1% daughter company Heimat Österreich gemeinnützige Wohnungsbau Gesellschaft m.b.h, which is responsible for the business operations in Lower Austria since 212, handed over 451 apartments, 2 private apartment buildings with 17 beds in Salzburg city and in Elixhausen, 1 municipal project, 1 police station in the community Hof and 1 students residence with 185 beds in Krems to its particular tenants in the federal states of Salzburg, Vienna and Lower Austria in 213. A tender, intended for architects and property developers, for a construction of a Caritas archdiocese Vienna nursing home in the area of the new main rail station in Vienna, together with 33 apartments, one kindergarten and office places was won. At year-end 213 there were17,66 units under management, thereof 11,54 apartments and the rest consisted mostly of business offices and garages. There were 196 employees at the Heimat Österreich gemeinnützige Wohnungs- und Siedlungsges.m.b.H, including the three daughter companies. FINANCIAL PERFORMANCE INDICATORS Capital resources and profitability At the end of 213, Raiffeisenverband Salzburg (RVS) once again reported capital resources well above the capital requirements pursuant to section 24 BWG (Austrian Banking Act). The total core capital after deductions was EUR million, which represented a year-on-year increase of EUR 25.1 million. The solvency index ratio remained strong at 1.4%. The increase is mainly attributable to the growth in retained earnings. As of 1 January 214, new regulatory standards BASEL III came into 213 Annual Report 26

27 effect. Among other things, banks must comply with considerable higher capital requirements as well as higher liquidity requirements. Accordingly, in 213, the RVS prepared itself for the new regulatory standards. The tier 1 capital, calculated according to the Capital Requirements Regulation (CRR), only marginally differentiates from the tier 1 capital in accordance with Basel II. Therefore, Raiffeisenverband Salzburg already met the capital requirements according to Basel III at year-end 213. Total own funds rose from EUR 615. million to EUR million. The total own funds ratio was thus strong at 15.%, and therefore above the minimum legal requirement of 8%. Development of own funds in million EUR Mio. EUR (+53%) The total own funds increased by 53% since 28 and reached an all-time high as per The cost-income-ratio (CIR) as a ratio of operating expenses to operating income (excluding the goods business, auditing and IT) was at 61.6% slightly lower than in the previous year. The return on equity (ROE) before tax, a key figure showing the relation of profit of ordinary activities to average equity in 213, for the year just ended was 9.1%. This represents a rise of 1.8 percentage points owed to a higher profit on ordinary activities. The targets for capital resources and profitability were more than met. NON-FINANCIAL PERFORMANCE INDICATORS Personnel On average 1,764 individuals were employed in the fully consolidated companies in 213, which corresponds to a decrease of 1 employees compared with the previous year. Emphasis is placed on continuous staff training throughout the Group. The principles of Raiffeisen, social solidarity and willingness to provide mutual assistance, find an expression not only in our interaction with customers, but also with our employees. These values are demonstrated in the numerous voluntary services of the Group s employees. Almost every second employee is active in voluntary services. According to a survey in 213, the Group s employees collectively volunteered around 125, hours to their community and therefore they personally made a significant contribution to the Group s social commitment. Consequently, this engagement brought Raiffeisenverband Salzburg an honorary award in 213. Environment Active climate protection and environmental responsibility are just as much a part of the Raiffeisen Salzburg philosophy as having branches throughout the city and state of Salzburg. Raiffeisenverband Salzburg is optimizing the use of energy at 27 Raiffeisenverband Salzburg

28 MANAGEMENT REPORT its places of business and also encourages employees to get involved with environmental issues. This employee programme aims at increasing environmental awareness and helping employees contribute to the reduction of CO2 by offering them incentives for participating. For example, employees of Raiffeisenverband Salzburg primarily use public transport for business trips and Raiffeisenverband Salzburg provides bicycles to be used by employees for business trips within the city of Salzburg. By the entry of the bio-compound feed plant of the goods business into the Salzburg climate alliance network, a further important step towards the climate protection was made. The future implementation and utilisation of an energy controlling system as well as waste heat recovery and waste heat utilisation measures will lead to a more energy efficient production. RISK MANAGEMENT An active risk management is an essential part of banks operations and its success, and hence for the long-term development of Raiffeisenverband Salzburg. In the interest of the customers and owners, Raiffeisenverband Salzburg assures security and profitability by applying modern methods and systems for risk management and risk controlling. Principles for risk management Based on the initial corporate policy, considering the risk bearing ability and the personnel and technical-organizational provisions, the Management Board determines the strategy of Raiffeisenverband Salzburg and its group companies. Furthermore, the strategy defines the individual business objectives and the necessary measures. The strategy is divided into partial strategies and includes the planned development of all essential business activities. Before engaging in new business activities especially new products, new transaction types or new markets the business-specific risks are analysed based upon a defined launch process. Risk strategy The risk strategy provides a basis for the risk culture of Raiffeisenverband Salzburg. The strategy is revised continuously and provided in a concerted fashion for all identified risk types. The risk strategy is supplemented by the risk manual which demonstrates detailed description of procedural and methodical rules. The risk manual outlines in particular the risk measurement methods for Raiffeisenverband Salzburg s relevant risk types. Furthermore, the operational and organizational structure in risk management is demonstrated. Raiffeisenverband Salzburg follows a conservative risk policy. This can be recognized by low volumes in the trading book, conservative managing of the loan and shareholding positions as well as by the small market price risk. Derivative financial instruments are generally only intended for hedging purposes within the predetermined limits of the strategy. The hedge strategy is documented in the application of the valuation guidelines for hedge accounting. Risk management organisation Risk management is accountable for the decentralised organisational structure of Raiffeisenverband Salzburg. In general, the overall responsibility for each risk type is attributed to a responsible ma- 213 Annual Report 28

29 nager. This overall responsibility is independent of organisational units which have the possibility to take such risks. To avoid conflicts of interest, the organisational separation of front- and back-office units is ensured up to senior management level. To detect any undesirable development in time and make appropriate decisions, the results of the ongoing risk monitoring are included in the risk reporting. In addition to daily risk reports, a central element of the reporting system is the monthly risk report. This monthly risk report demonstrates the risk bearing capacity as well as the risks and limits of the control units. Risk bearing capacity In addition to regulatory requirements and as part of the Group s overall bank management, risks are compared to both, an economic (intrinsic) as well as a going-concern risk coverage potential (going concern basis). complements the risk bearing capacity analytics. With risk capital not allocated in full, average risk utilization in 213 was 83.3%; the theoretical maximum actual risk was thus well below the allowable limits and the defined risk coverage potential. Nonquantifiable risks and other risks are subject to an additional buffer on the quantifiable risks. Material risk types Raiffeisenverband Salzburg defines risk as an unfavourable future development, which can adversely affect the financial, earning and liquidity position of the bank. In line with the risk strategy it is distinguished between default, investment, market, operational, liquidity and other risks. Proportional split of the Group s total indentified risk types per : 4.8% 5.7% All quantifiable risk types are limited in alignment with the risk strategy. This limitation takes into account the economic perspective (value-at-risk confidence level of 99.9%) of each control unit. Therefore, the going-concern perspective (valueat-risk confidence level of 95%) and the regulatory requirements are strict constraints. 6.7%.% 6.1% 1.7% 2.2% 42.8% Through ongoing monitoring in connection with the risk reporting it is assured that the actually incurred risks do not exceed the predetermined limit. Consequently, it is ensured that Raiffeisenverband Salzburg can bear the incurred risks at all times. An integrated stress test, related to the P&L developments and the effects on the core capital quota, 3.1% Credit risk Investment risk Currency and payment vehicle risk Market risk Operational risk Liquidity risk Real estate risk Macroeconomic risk Other risk 29 Raiffeisenverband Salzburg

30 MANAGEMENT REPORT Default risk Default risk is the primary risk factor and comprises credit risk, counterparty, issuer and country risk. Investment risk is defined within Raiffeisenverband Salzburg as a separate risk type. Credit risk is classified according to the relevant product groups, were credits are categorized into classical credit risk, derivatives to the counterparty risk and securities to the issuer risk. Another risk classification, included in the risk bearing ability calculation, is the currency- and repayment vehicle risk. Raiffeisenverband Salzburg follows a restrictive new credit granting and aims to reduce further the already low ratio of 1.% of the customer credit volume. Raiffeisenverband Salzburg system and procedures assure that a material default risks are identified early, registered, demonstrated, aggregated, scheduled, controlled, limited and monitored. Investment risk The investment risk is defined as potential losses due to provisions of equity capital in associated companies. Generally, the bank does not aim for further investment portfolio expansion. Attributable to the bank group s corporate policy, Raiffeisenverband Salzburg consider it self to be a sustainable and a strategic investor. In the foreground is the involvement in the Raiffeisen sector in Austria, including their strategic development, as well as selected investments in regional touristic infrastructure projects. Market risk Market risk is the prospective losses arising from adverse movements of market instruments, due to changes in interest-rates (interest risk), foreign exchange rates, (currency risk), as well as equity prices and index and fund prices (shares/fond risk). Operational risk Operational risk is the risk of direct and indirect losses resulting from inadequate or failed internal infrastructure, internal processes and employees or from external events. This definition of operational risk includes legal risk but not reputation risk, strategic risk and business risk. The risk identification and assessment is a basis for the definition and evaluation of essential controls, as part of an effective and efficient internal control. Thus, regarding the operational risks, risk assessment, recording of claims and complaints and business process analysis are of particular importance. Liquidity risk Raiffeisenverband divides the liquidity risk essentially into operative (insolvency risk) and structural liquidity risk (refinancing risk or liquidity maturity transformation risk). The liquidity risk management of RVS aims generally at avoiding a concentration on a refinancing with very short-term maturities. As a regional and universal bank, Raiffeisenverband Salzburg draws it s liquidity primary from customer deposits and is therefore only secondary dependent on the money and capital markets. The main objective is to secure solvency and refinancing capacity at all times. This applies both to a normal case as well as to defined stress scenarios. The RVS liquidity risk management focuses primarily on the operative liquidity risk, which is 213 Annual Report 3