2016 Annual Report Raiffeisenverband Salzburg

Transcription

1 216 Annual Report Raiffeisenverband Salzburg

2 216 Annual Report 2 KEY FIGURES OF THE GROUP

3 KEY FIGURES OF THE GROUP in TEUR Change Total assets 6,191,19 6,286,242 7,15, , % Loans and advances to customers 2,899,545 3,23,71 3,192, , % Liabilities to customers (excl. repo transactions) 2,149,49 2,331,421 2,678, , % Total core capital (CET 1) 462, , ,636 7, % Total core capital ratio (CET 1) 11.4% 11.4% 11.3% -.1% Total own funds 624,343 66,11 6,89-5, % Total own funds ratio (total risk) 15.4% 14.7% 14.2% -.5% Operating result 5,726 37,137 42,644 5, % Profit on ordinary activities 12,217 19,158 26,917 7, % Cost-Income-Ratio (adjusted for warehousing segment, auditing and ORG/IT) 62.8% 72.6% 68.8% -3.8% Return on Equity (RoE, before tax) 2.6% 3.9% 5.4% 1.5% 3 Raiffeisenverband Salzburg

4 216 Annual Report 4 CONSOLIDATED FIGURES 216

5 CONSOLIDATED BALANCE SHEET ASSETS (TEUR) Cash in hand, balances with central banks and post office banks 18,196 47,7 2. 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 629, , , , Loans and advances to credit institutions a) Repayable on demand b) Other loans and advances 2,183, ,5 1,365,159 1,678,54 649,783 1,28, Loans and advances to customers 3,192,586 3,23,71 5. Debt securities including fixed-income securities a) Issued by public bodies b) Issued by other borrowers showing separately: own debt securities 298, , ,791 2, , Shares and other variable-yield securities 28,194 3, Participating interests showing separately: Participating interests in credit institutions 8. Shares in affiliated undertakings showing separately: Shares in credit institutions 314,32 81,654 36,85 314,669 1,68 35, Intangible fixed assets 6,16 6, Tangible assets showing separately: Land and buildings occupied by a credit institution for its own activities 196, , , , Own shares as well as shares in a controlling company or in a company holding a majority of shares showing separately: Nominal value 12. Other assets 9,63 82, Subscribed capital called but not paid 14. Prepayments and accrued income 1,359 1, Deferred taxes 18,436 Total assets 7,15,583 6,286,242 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 2,63,48 1,321,157 1,39,251 2,678, , ,545 66,647 1,86,535 1,455,718 35, , ,587 2,26,382 1,12,298 1,158,84 2,331,421 8,65 23,5 597,555 1,53,815 1,28, ,837 1,23,86 1,23,86 4. Other liabilities 58,716 49,58 5. Accruals and deferred income 18,75 3,65 6. Provisions a) Provision for severance payments b) Provision for pensions c) Provision for taxation d) Other provisions 73,534 27,38 23,799 4,86 18,611 73,834 24,791 24,993 6,524 17,526 6a. Fund for general banking risks 16,756 16, Supplementary capital pursuant to part 2 titel I capital 4 of regulation (EU) 575/213 42,4 39,85 8. Additional core capital pursuant to part 2 titel I capitel 3 of regulation (EU) 575/213 showing separetely: Mandatory convertible bonds persuant to 26 BWG 8b. Instruments without voting rights pursuant to par. 26a BWG 9. Minority Interests Subscribed capital 54,396 54, Capital reserves a) Committed b) Uncommitted 12. Retained earnings a) Legal reserve b) Statutory reserve c) Other reserves 1,344 1, ,522 68,14 3,418 1,344 1, ,112 68,14 288,8 13. Liability reserve pursuant to Article 23 para. 6 BWG 72,58 72, Consolidated net profit for the year 3, 3, Total liabilities 7,15,583 6,286, Annual Report 6

7 AS OF 31 DECEMBER 216 OFF-BALANCE-SHEET-ITEMS (TEUR) ASSETS 1. Foreign assets 94, ,379 LIABILITIES 1. Contingent liabilities showing separately: a) Acceptances and endorsements b) Guarantees and assets pledged as collateral security 615,459 6,77 591, , Commitments showing separately: Commitments arising from repurchase transactions 631,45 647, Commitments arising from agency services 72,171 63,78 4. Eligible capital pursuant to part 2 of regulation (EU) 575/213 showing separately: Own funds pursuant to part 2 title I capital 4 of regulation (EU) 575/213 6,89 43,678 66,11 43, Capital requirement pursuant to Article 92 of regulation (EU) 575/213 showing separately: Capital requirement pursuant to Article 92 para. 1 nos. a of regulation (EU) 575/213 (Equity Tier 1 ratio in %) Capital requirement pursuant to Article 92 para. 1 nos. b of regulation (EU) 575/213 (Tier 1 capital ratio in %) Capital requirement pursuant to Article 92 para. 1 nos. c of regulation (EU) 575/213 (Total capital ratio in %) 4,244, % 11.25% 14.16% 4,131, % 11.37% 14.67% 6. Foreign liabilities 73,92 722,875 7 Raiffeisenverband Salzburg

8 CONSOLIDATED PROFIT AND LOSS ACCOUNT TEUR Interest receivable and similar income showing separately: From fixed-income securities 97,48 25,615 99,535 27, Interest payable and similar expenses -39,62-43,833 I. NET INTEREST INCOME 57,986 55,72 3. 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 companies stated as associates 6, , , , Commissions receivable 43,28 42, Commissions payable -8,14-7,35 6. Net profit on financial operations 3,55 3, Other operating income 87,139 85,519 II. OPERATING INCOME 189, ,21 8. 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 -132,36-96,378-69,695-19, ,166 1,193-4,66-35, ,972-95,634-68,591-19, ,186-1,17-2,763-36, Value adjustments in respect of asset items 9 and 1-1,555-11,7 1. Other operating expenses -4,137-3,31 III. OPERATING EXPENSES -146, ,74 IV. OPERATING RESULT 42,644 37, Annual Report 8

9 TEUR Value adjustments and re-adjustments in respect of loans and advances and provisions for contingent liabilities and for commitments -13,753-4, Value adjustments and re-adjustments in respect of transferable securities held as financial fixed assets, participating interests and shares in affiliated undertakings -1,974 22,447 V. PROFIT ON ORDINARY ACTIVITIES 26,917 19, 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 1,334-4, Other taxes not reported under item 18-13,418-5,273 VI. PROFIT FOR THE YEAR AFTER TAX 14,833 9, Minority interests 21. Changes in reserves showing separately: Allocation (-) / Reversal (+) liability reserve -11,833-6,586 VII. CONSOLIDATED NET INCOME FOR THE YEAR 3, 3, 22. Profit or loss brought forward VIII. CONSOLIDATED NET PROFIT FOR THE YEAR 3, 3, 9 Raiffeisenverband Salzburg

10 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS 216 Annual Report 1

11 EXTRACT OF THE 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. costs for the investments in subsidiaries charged against the respective proportionate equity at the time of initial inclusion. The initial consolidation took place on the effective date stated in the table on page 2. In 216 there were no initial consolidations. 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. 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, the provisions of the Austrian Banking Act and the regulation (EU) 575/213 (CRR) were applied. B. CONSOLIDATION PRINCIPLES AND METHODS a) Full consolidation Capital consolidation was conducted in accordance with 254(1) (1) UGB. Until the book value method was used, with the acquisition b) At-Equity consolidation At-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 of Heimat Österreich gemeinnützige Wohnungs- und Siedlungsgesellschaft m.b.h. took place on the effective date of December 31 st, 2, the initial inclusion of Bergbahnen Aktiengesellschaft Wagrain on June 3 th, 215. As of Aberg-Hinterthal Bergbahnen AG, Hobex AG and the sub group Techno-Z Verbund have been added to the at-equity consolidation. Consolidation according to the atequity method occurred based on the last available financial statement. Any variations in valuation methods of the parent company were not adjusted. 11 Raiffeisenverband Salzburg

12 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS C. SCOPE OF CONSOLIDATION 1. Change of the scope of consolidation In 216 the scope of fully consolidated companies has changed in comparison to 215 as follows: As of SABAG Garagen Projekterrichtungs- und Vermietungs-GmbH and as of West Consult Objekterrichtungs- und Verwaltungs-IV Gesellschaft m.b.h. were deconsolidated. Amongst companies subject to atequity consolidation Aberg-Hinterthal Bergbahnen, Hobex AG and the sub group Techno-Z Verbund were added to the scope of at-equity consolidation as of December 31 st, Disclosures on investments a) Fully consolidated companies The companies included in the Group are as follows (participation percentages from Raiffeisenverband Salzburg s perspective): Name and registered office Share of capital in % direct indirect Agroconsult Austria Gesellschaft m.b.h., Sbg. 1.% Initial consolidation Deconsolidation Industriebeteiligungs-GmbH, Sbg. 1.% Unternehmensbeteiligung GmbH, Sbg. Inclusion according to 3 (1) Z. 5 BWG Fremdenverkehrs GmbH, Sbg. 1.% West Consult Objekterrichtungs- und Verwaltungs II Gesellschaft m.b.h., Sbg. West Consult Objekterrichtungs- und Verwaltungs III Gesellschaft m.b.h., Sbg. West Consult Objekterrichtungs- und Verwaltungs-IV Gesellschaft m.b.h., Sbg. 99.% 1.% % 1.% % West Consult Leasing GmbH, Sbg. 99.% 1.% WECO FH Holztechnikum GmbH, Sbg. 1.% West Consult Revitalisierung Gesellschaft m.b.h., Sbg. 1.% WECO REHA Leasing GmbH 1.% Kienberg Panoramastraße Errichtungs-GmbH, Sbg. 1.% SABAG Garagen Projekterrichtungs- und Vermietungs-GmbH, Sbg. 99.% 1.% SABAG Schulen Errichtungs- und Vermietungs-GmbH, Sbg. 99.% 1.% SABAG Projekterrichtungs- und Vermietungs-GmbH GmbH, Sbg. 99.% 1.% Tinca-Beteiligungs-GmbH, Sbg. 1.% vis-vitalis Lizenz- und Handels GmbH 1.% PMN Beteiligungs- u. Finanzberatungs Gesellschaft m.b.h., Sbg. 1.% BVG Liegenschaftsverwaltung GmbH, Sbg. 1.% Annual Report 12

13 b) Companies consolidated at-equity In order to evaluate the materiality of the associated companies, a materiality calculation was carried out based on quantitative indicators (equity, operating result) as well as qualitative indicators (one-time effect, sustainability). Companies, which are not consolidated at equity due to immateriality, are shown in the Group s list of shareholdings. Resulting from the materiality calculation, as per December 31 st, 216, Aberg-Hinterthal Bergbahnen, Hobex AG and the sub group Techno-Z Verbund were added to the at-equity consoldiated companies, which now comprises of: Name and registered office Share of capital in % direct indirect Financial statements dated Heimat Österreich, Sbg. 25.% Bergbahnen Aktiengesellschaft Wagrain 2.1% 41.57% sub group Techno-Z Verbund, Sbg. 1.% Aberg-Hinterthal Bergbahnen, Maria Alm 26.82% 13.18% Hobex AG, Sbg % c) Other companies These are subsidiaries 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. Name and registered office Share of capital in % direct indirect Equity in TEUR Operating result in TEUR Balance sheet Value Holdings Vermögensmanagement GmbH, München Value-Holding Fondsvermittlung GmbH, München Raiffeisenverband Salzburg Anteils- und Beteiligungsverwaltung GmbH, Salzburg 67.5% / % /15 1.% 2, /16 13 Raiffeisenverband Salzburg

14 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS D. ACCOUNTING AND VALUATION PRINCIPLES General principles The consolidated financial statements were prepared according to the regulations of the Austrian Banking Act (BWG), the EU regulation No. 575/213 (CRR Capital Requirements Regulation) and the Corporate Code (UGB in its latest version). The consolidated financial statements were prepared under consideration of the principles of proper accounting and the general requirement to present a true and fair view of the company s assets as well as of its financial and earnings situation. The consolidated financial statements were compiled according to the principle of completeness and balance sheet continuity. The previous year s profit reserves were adjusted by reclassifying the deferred tax on valuation reserves (EUR 1,494 thousand) into tax provisions. In connection with the first-time application of AFRAC Statement 3 ( Deferred Taxes in the Financial Statements ), the temporary concept is now applied. 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. Securities Fixed Assets Regarding long-term fixed-income securities admitted to listing on a recognised stock exchange according to Article 4 clause 72 of Regulation (EU) No 575/213, the option of write-ups and writedowns according to 56(2-3) BWG was applied. Regarding long-term fixed-income securities not listed on a recognised stock exchange according to Article 4 clause 72 of Regulation (EU) No 575/213, the positive difference between the acquisition costs and the amount repayable at maturity was recognised as expense immediately. 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 the Austrian business law. Current Assets / Trading Positions Securities held for trading and listed at a recognised exchange pursuant to Article 4 clause 72 of Regulation (EU) No 575/213 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 UGB. Investment funds were valued at their calculated value. 216 Annual Report 14

15 Own stocks of subordinated own issues Own stocks of subordinated own issues reported on the asset side of the balance sheet amounted to TEUR 35 (PY TEUR 1,85) and are recognized at their nominal value. Risk provisions In the valuation of loans and advances to banks as well as loans and advances to customers, specific value adjustments and provisions were made for identifiable risks. As in the previous year, this occurred only in the event of a default event. For non-default claims on customers, as well as loans and advances to credit institutions, general loan loss provisions were made. In addition, an additional reserve within the framework of the assessment scope pursuant to section 57 para. 1 Austrian Banking Act was formed for claims on customers. Additional charges are recognised as income in the year of the credit allocation. The general loan loss provision is calculated on the basis of the expected loss approach. Individual customers are grouped into homogeneous pools and assessed on the basis of risk parameters (HDR, LGD). The horizon for the calculation is one year. These homogenous pools are based on the risk measurement systems used (rating models) and on the regulatory structure of customers (states, banks, corporates and retail). This method of calculation is applied to the entire credit-risk-bearing receivables portfolio and to open-ended maturities. Participations Investments and shares in affiliated companies are valued at acquisition costs, unless sustained losses or a reduced equity require a depreciation on the pro rata equity, the income value or the exchange rate. Write-ups up to a maximum of the acquisition costs are made when the reasons for the permanent impairment no longer exist. The value of the shares held at RZB AG was reviewed on the basis of an expert opinion on the objective company value, according to KFS / BW 1 with the aid of a discounting procedure based on the RZB Group planning. In so doing, the effects of the merger Raiffeisen Bank International AG and RZB AG were not taken into account. The book value of RZB AG is assessed as being of value as of December 31 st, 216. 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 1.67% and 2.%, 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. 15 Raiffeisenverband Salzburg

16 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS 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, 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 approach in the company s balance sheet has been made in accordance with the provisions of 198 and 211 of the Austrian Commercial Code (UGB) as amended by the Accounting Amendment Act 214 and taking account of the AFRAC Opinion 27 Provisions for pensions, severance payments, anniversary bonuses and similar long-term obligations according to the requirements of the company code of June 216. The partial value method was used as a method of financing the claims. The overall expense of an obligation is determined and distributed evenly over the entire period from the start up to the end of financing. The interest rate is based on the 7-year average rate as at , based on the German BilMoG; the interest rate is 3.8%. The average maturity of the portfolio at the current balance sheet date was assumed to be 11 years. The annual increase was based on the average of the past 7 years at 1.84%. A fluctuation margin was not applied. The AVÖ 28-P Basis of calculation for pension insurance Pagler & Pagler was used as a biometric basis for the employees. Overall, a net interest rate of 1.22% for value-protected and 3.8% for non-value-protected pensions were achieved. The difference between the first-time application of 211 UGB as amended by the RÄG 214 and the AFRAC Opinion 27 of June 216 was not distributed, but was immediately collected. The present value is set as a provision for those entitled to benefits with a dormant or current entitlement and for claimants who have already reached the imputed retirement age. For active employees the calculation is based on a calculable pension age of 62 to 65 years. The pension obligations are individually designed and partly value-protected. Severance Obligations Provisions for severance payments were calculated according to financial principles. The eligible pension age was 6 to 65 for women (6 born until and 65 born from ) and 65 for men in compliance with the provisions of AFRAC Opinion 27 Provisions for pensions, severance payments, anniversary bonuses and similar long-term obligations according to the requirements of the company code of June 216. The interest rate is based on the 7-year average rate as at , based on the German BilMog; The interest rate is 3.37%. The average maturity of the portfolio at the current balance sheet date was assumed to be 15 years. The annual valuation (1.95%), future increases (.82%) as well as fluctuations were calculated from the average of the previous years. Overall, the net interest rate is.58%. 216 Annual Report 16

17 Anniversary Bonuses Provisions for obligations to pay anniversary bonuses were calculated according to financial mathematical principles and by applying an interest rate of 3.37%, considering the life expectancy according to the Austrian General Mortality Table. 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) 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. No macro or cash flow hedges were used. The following interest rate swaps were 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 (portfolio hedge) 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. In the course of preparing the annual accounts, 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. The present value of the interest rate is additionally assessed with the counterparty risk. 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 swaps that are not used for hedging purposes were valued based on the imparity principle. Exchange rate risks are hedged with: currency swaps and forward exchange transactions 17 Raiffeisenverband Salzburg

18 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS E. NOTES TO THE CONSOLIDATED BALANCE SHEET 1. Assets and liabilities 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 628,962 25,483 more than 3 months to 1 year 26, ,152 more than 1 to 5 years 527,62 528,745 more than 5 years 1,899 3,377 Receivables from non-banks, not available on demand TEUR TEUR (PY) up to 3 months 254,52 197,56 more than 3 months to 1 year 37,754 38,43 more than 1 to 5 years 1,28, ,872 more than 5 years 1,156,95 1,57,696 Payables to banks, not available on demand TEUR TEUR (PY) up to 3 months 766, ,955 more than 3 months to 1 year 328, ,18 more than 1 to 5 years 2, ,2 more than 5 years 13,35 9,75 Payables to non-banks incl. savings deposits, not available on demand TEUR TEUR (PY) up to 3 months 293, ,119 more than 3 months to 1 year 567, ,384 more than 1 to 5 years 148,481 96,179 more than 5 years 1,481 8, Annual Report 18

19 Receivables from customers include notes receivable for TEUR 175 (PY TEUR 1,48). General allowances In the receivables from customers, a general allowance of TEUR 17,287 was made for the first time in 216 and TEUR 617 in the receivables from credit institutions. A provision for impairment losses in the amount of TEUR 1,247 was formed for unused credit lines and liabilities. 2. Securities The following bonds and other fixed-income securities on the assets side are due in 217: TEUR TEUR (PY) Fixed-income securities 126,49 15,3 The securities admitted to exchange trading that are included in the asset items bonds and other fixed-income securities, shares and other non-fixed-income securities, participations and shares in affiliated companies are divided into stock exchange-listed ones and unlisted securities as follows: a) stock exchange-listed securities TEUR TEUR (PY) Bonds / fixed-income securities 295, ,887 Shares / other securities b) unlisted securities TEUR TEUR (PY) Shares / other securities 25,74 28,53 Participations 314,32 314,669 Affiliated companies 36,85 35,978 The book value (including accrued interest) of the bonds including fixed-income securities admitted to exchange trading amounts to TEUR 298,786 (PY TEUR 292,791). Thereof securities with a nominal value of TEUR 295,25 (PY TEUR 288,875) were recognised as fixed assets. The allocation to the fixed assets was accomplished by intention of the Management Board. The book value (including accrued interest) of the shares and other non-fixedincome securities admitted to the exchange trading amounts to TEUR 193 (previous year TEUR 176). Securities with a nominal value of TEUR 2 (previ- 19 Raiffeisenverband Salzburg

20 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS ous year TEUR 2) were considered as fixed assets. The difference between the acquisition cost and the higher market value of the securities of the trading portfolio / current assets admitted to exchange trading amounted to TEUR 1 (previous year TEUR 9) as per December 31 st, 216. The securities trading book consists of the following positions: TEUR TEUR (PY) Bonds, convertible bonds 2 1,71 Investment certificates / Certificates Interest rate futures sales -632 In 216, three residential building bonds with a volume of TEUR 253 and a revaluation value of TEUR 25 and subordinated investment certificates with a volume of TEUR 1,18 were converted into the bank-book at nominal value from the trading portfolio. Information on securities in the inactive market Exchange rates or market prices in an active market are to be taken into account when determining market values. If no active market exists, the securities concerned are valued separately. Indicators for an inactive market are: Significant slump in trade volume or trade activities Available exchange rates or market prices vary substantially over time or between market participants Exchange rates or market prices are not up-to-date Significant increases in bid / ask spreads These indicators do not necessarily have to mean that a market is inactive. The following procedure was used for the assessment of the securities nostro portfolio according to the inactive market criterion: In the course of the assessment process, securities which, according to estimates by Raiffeisenverband Salzburg egen, provide evidence for an inactive market, are individually reviewed. Derivative financial instruments acc. 238 (1) Z 1 UGB and 64 (1) Z 3 BWG For purchased interest options, TEUR 544 (PY TEUR 513) was capitalized in the balance sheet item Other assets, while TEUR 633 (PY TEUR 736) were recorded as liabilities for sold interest options in the balance sheet item Other liabilities. The negative fair values of the interest rate swaps were not included in the profit and loss account because there is a hedging relationship with underlying transactions (valuation units). 216 Annual Report 2

21 The effectiveness of the hedging relationship was tested and confirmed by means of effectiveness tests. A provision for contingent losses of TEUR 391(PY TEUR 714) was formed for negative fair values from interest rate swaps that are not included in a hedge. Credit risk was taken into account in the model valuation of derivatives. Collateral agreement was concluded with the key counterparties. An insignificant credit value adjustment (CVA) was determined for the remaining customer derivative portfolio based on factors such as, in particular, residual term and counterparty default risk. Classification of book value/fair value pursuant to 238 (1) (2) UGB in TEUR Balance sheet item Market value 216 Book value 216 Market value 215 Book value 215 Treasury bills 13,734 14,834 21,919 22,5 Loans and advances to banks 29,811 3, Loans and advances to customers Debt securities / fixed-incomes securities 78,167 78,353 85,558 87,462 Total 211, ,187 17,477 19,512 The bonds and securities in the books come from issuers with good creditworthiness. Therefore, a full repayment according to schedule is anticipated. Subordinated liabilities pursuant to 64 (1) 5 BWG The securitised subordinated liabilities which amounted to more than 1% of all subordinated liabilities on the are: 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, the right of termination at rate 1 as of was not used. Fixed interest bond Salzburger Fixzinsanleihe /NR/6, TEUR 8,5 (PY TEUR ), due on , interest rate: 4,% fixed, no right of termination. In addition, there are two securitised subordinated bonds with an issuing volume of total TEUR 3,9 (due on 222 and 226), which do not exceed 1% of the sum of all subordinated liabilities. In the year under review, TEUR 695 (PY TEUR 1,14) was spent on subordinated liabilities. Ward Money The ward money at the reporting date amounted to TEUR 6,349 (PY TEUR 6,533). Gilt-edged securities with a total nominal value of TEUR 8,35 were attributed to backing. 21 Raiffeisenverband Salzburg

22 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS 3. Shareholdings and relationships with related parties The information on participations pursuant to Art. 238 (2) of the Austrian Commercial Code (UGB) are set out in the supplement to this appendix. On the basis of the Banking Act, the companies in which the parent company owns at least 2% of the shares are listed in the shareholding table. Raiffeisen Salzburg Vorsorge GmbH LGH Obertrum reg. GenmbH BVG Liegenschaftsverwaltung GmbH 4. Fixed Assets The land value of all developed properties is TEUR 92,329 (PY 92,656). 5. Other Assets Profit and loss transfer agreements exist for the following affiliated companies: Raiffeisen Immobilien Salzburg egen (formerly Raiffeisen Realitäten reg. GenmbH) 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. TEUR TEUR (PY) Receivables from goods business 2,285 17,71 Goods in stock 29,442 27,799 Accruals for swaps 4,166 5,775 Fiduciary claims State-IPS 5,555 2,932 Compensation RWS 2,8 2,275 Accrued taxes mainly result from differences in provisions for social capital, general provisions and value adjustments. The deferred taxes essentially result from differences in fixed and financial assets. No deferred tax was recorded for tax loss carry forwards. Deferred taxes are calculated using a tax rate of 25%. As of December 31, 215, the deferred tax portion of deferred tax liabilities from subsidiaries in the amount of TEUR 195, already recognized in previous years, was recorded under tax provisions. In accordance with RÄG 214, deferred tax assets are also reported in 216. The deferred taxes as of January 1, 216 amount to TEUR 18,264 (as a result of the netting TEUR 19,758 pursuant to 96 para. 34 UGB, which is distributed over 4 years, and the deferred tax liabilities of untaxed reserves of TEUR 1,494). 216 Annual Report 22

23 Accrued tax assets increased by TEUR 173 in the current year and amounted to TEUR 18,436 as of 31 December 216. Deferred tax liabilities amounted to TEUR 3 as of 31 December 216 and are reported under tax provisions. 6. Equity and equity-related liabilities The classification of the core capital and the additional own funds are as follows: TEUR TEUR (PY) Subscribed capital 48,951 49,52 Fund for banking risks 16,756 16,756 Retained earnings 339,2 331,422 Risk reserves 72,58 72,58 Capital reserves 1,344 1,344 Deductions from core tier 1 capital Common equity tier 1 capital 477, ,873 Additional tier 1 capital Core tier 1 capital 477, ,873 Additional tier 2 capital 123, ,23 Deductions from additional tier 2 capital -92 Total own funds 6,89 66,1 23 Raiffeisenverband Salzburg

24 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS 7. Disclosures concerning various items in the balance sheet a) List of assets, provided as collateral pursuant to 64 (1) No. 8 of the Austrian Banking Act: TEUR TEUR (PY) Covered bond stock 457,47 CreditClaims 347,327 EIB loans 5,35 36,28 Collateral Management 63,957 95,91 Raiffeisen Public Finance 33,786 4,783 Various bond depots 24,23 23,258 Bavarian subsidised loans 19,729 22,536 German state-aided loans 4,48 3,238 Export finance 3, Retaind bond at OeNB 85, b) The book-value of repos as of December 31 st, 216 amounted to TEUR 127,556 (PY 94,362 TEUR). c) Total amount of assets and liabilities in foreign currency: TEUR TEUR (PY) Foreign currency assets 439, ,818 Foreign currency liabilities 224,45 151, Annual Report 24

25 8. Off-Balance Sheet Items Among off-balance sheet transactions are information on positive fair values of derivative transactions. For negative fair values a provision for contingent losses was made, provided it is not part of hedging transactions. Furthermore, hedging transactions are entered into in the course of lending, that do not appear in the balance sheet. Mortgages, guarantees or rather loan guarantees, cash collaterals and other eligible assets mainly serve as collateral. In the disclosure report, according to Part 8 in the Regulation (EU) 575/213, information is presented on collaterals valued from the supervisory point of view. The disclosure report can be found on consolidated basis at (Investor Relations Offenlegung). F. NOTES TO THE CONSOLIDATED INCOME STATEMENT 1. Other operating income and expenses consist of the following significant individual items: TEUR TEUR (PY) Total amount operating income 87,139 85,519 - thereof net earnings from goods operations 48,635 47,473 - thereof income from the IT centre 1,279 1,19 TEUR TEUR (PY) Total amount operating expenses 4,137 3,31 - thereof allocation to deposit protection and winding-up funds 3,187 2, The total amount of income from administrative and agency services are TEUR 9,961 (PY TEUR 9,866). 3. The expenses for the auditor amount to TEUR 521 (PY TEUR 491). Breakdown of the auditors fees are as follows: 25 Raiffeisenverband Salzburg

26 EXTRACT OF THE NOTES TO THE CONSOLIDATED ACCOUNTS TEUR TEUR (PY) ÖRV KPMG others ÖRV KPMG others Audit of financial statements Other confirmation services Other services Total Profit and Loss item 3b shows earnings of TEUR 75 (PY TEUR 76), resulting from a participation with a guaranteed dividend. G. OTHER INFORMATION 2. Loans to members of the Supervisory Board amounted to TEUR 3,118 (PY TEUR 498) as of December 31 st, 216. Repayments to these loans totalling TEUR 46 (PY TEUR 42) were made during the 216 financial year. 1. In the 216 financial year the average number of staff employed was (PY 1,651). Thereof, 1,365 (PY 1,391) were employees and 257 (PY 26) workers. Included in these figures is an average of 64 (PY 66) persons employed at subsidiaries with profit and loss transfer agreements. Thereof, 6 (PY 62) were employees and 4 (VJ 4) workers. Staff costs of subsidiaries with profit and loss transfer agreements are reported under personnel expenses and charged separately. 3. Expenses for severance payments and pensions in the reporting year for directors and senior managers amounted to TEUR 1,438 (PY TEUR 3,574) and TEUR 5,141 (PY TEUR 3,544) for other employees. 4. There were no material or off-market transactions between related parties and Raiffeisenverband Salzburg egen pursuant to 28 Banking Act and 238(1) Z 12 and 266 Z 5 UGB. 216 Annual Report 26

27 MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS FOR 216, Raiffeisenverband Salzburg egen BUSINESS PERFORMANCE AND ECONOMIC ENVIRONMENT The financial year that 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 216 showed a continuous positive development of the past years. The development at Raiffeisenverband Salzburg egen (hereinafter called Raiffeisenverband Salzburg) played a major role in this trend, as it clearly dominated the consolidated financial statements in its position as the parent company. NOTES TO THE FINANCIAL AND EARNINGS POSITIONS Group structure The Raiffeisenverband Group comprises the parent company Raiffeisenverband Salzburg egen and 17 subsidiaries, thereof 16 financial institutions pursuant to Art. 4 para. 1 Z 26 CRR and a provider of ancillary services pursuant to Art. 4 para. 1 Z 18 CRR. These companies are included in the consolidated financial statement according to the full consolidation method. The investment in the nonprofit housing association Heimat Österreich and the participation in Bergbahnen Aktiengesellschaft Wagrain were accounted for by using the equity method. The investments in Aberg-Hinterthal Bergbahnen, Hobex AG and the sub group Techno-Z Verbund have been added in the reporting year 216 and are also taken into account at equity. Investments and shares in the affiliated companies that are neither fully consolidated nor included in the consolidated financial statements with measurement according to the equity method, were reported at the carrying amount from the individual financial statements of Raiffeisenverband Salzburg. Balance sheet development As of 31 December 216, Raiffeisenverband Salzburg s consolidated total assets amounted to EUR 7. billion. The Group s total assets are only EUR 23.2 million larger than the total assets of the Group s parent individual financial statements. Due to a lower cash balance at the Austrian National Bank, cash in hand decreased by EUR 29.5 million to EUR 18.2 million. The item treasury bills and other bills amounted to EUR million at yearend 216 and increased by about EUR 55.1 million. Loans and advances to banks increased by EUR 55.1 million to EUR 2,183.7 million at year-end 216. Loans and advances to customers increased by 5.6%, from EUR 3,23.1 million to EUR 3,192.6 million. Debt securities, including fixed-income securities, increased according to plan by 2.1% due to investments and amounted to EUR million. The balance sheet item shares and other variable-yield securities decreased by EUR 2.3 million to EUR 28.2 million. Participating interests and shares in affiliated undertakings amounted to EUR million. In total this means an increase of the portfolio 27 Raiffeisenverband Salzburg

28 MANAGEMENT REPORT of EUR.4 million. Tangible and intangible assets, held as fixed assets with a book value of EUR 22.7 million at year-end 216, showed a decrease of EUR 1.5 million in comparison to the previous year. Other assets amounted to EUR 9.6 million. The accrued income was EUR 1.4 million. Liabilities to credit institutions amounted to EUR 2.6 billion at year-end 216 and increased by EUR 37. million in comparison to the previous year. Liabilities to customers (non-banks) increased by EUR million or 14.9% to EUR 2.7 billion at yearend 216. The main reasons for this development were, amongst others, increases in savings deposits by EUR 71.6 million and in demand deposits. Securitised liabilities (incl. subordinated own issues) almost remained constant at EUR 1. billion. Other liabilities increased by EUR 9.2 million to EUR 58.7 million. Provisions amounted to EUR 73.5 million. Deferred income amounted to EUR 18.1 million and increased by EUR 14.4 million in comparison to the previous year. Supplementary capital, in accordance with Chapter 4 of Title I of Part 2 of Regulation (EU) No 575/213, increased slightly by EUR 2.6 million to EUR 42.4 million. Equity (not considering the reserves for the state IPS-fund) grew by EUR 9.6 million to EUR 51.2 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 s income statement as well. After consolidations, both cost and income wise, the operating result of the Group was only 1.8% lower than the result shown in the individual financial statement. Net interest income increased year-on-year by EUR 2.3 million to EUR 58. million. Income from securities and participating interests increased mainly due to higher distributions from participations by EUR 2.9 million to EUR 6. million. Net commissions, as a result of the commissions receivable and commissions payable, decreased slightly by EUR.2 million to EUR 35.2 million. Net profit on financial operations declined by EUR.4 million to EUR 3.1 million, mainly attributable to a decrease in treasury profits. Other operating income increased to EUR 87.1 million. Total operating income amounted to EUR million in 216, resulting in an increase of EUR 6.2 million or 3.4%. The operating expenses increased by EUR.7 million in comparison to the previous year and amounted to EUR million. The operating result as the balance of operating income and operating expenses increased by 14.8% or EUR 5.5 million, resulting in EUR 42.6 million for 216. The value adjustments in respect of accounts receivable, securities held as current assets as well as equity interests and securities held as fixed assets amounted to EUR 15.7 million, a decrease of EUR 2.3 million compared to Annual Report 28

29 Profit on ordinary activities increased considerably in 216 to EUR 26.9 million, mainly due to the aforementioned improvement of the valuation result. In addition to Raiffeisenverband Salzburg, which dominates the Group, the following four CRR-Financial Institutions are seen as significant for the Group. The operation of Agroconsult Austria Gesellschaft m.b.h. includes the shareholder activity towards RZB AG. The Industriebeteiligungs-GmbH has invested in the non-profit Residential- and Housing company. Participations in companies in the tourism and energy sector are held by Fremdenverkehrs GmbH as well as by Unternehmensbeteiligung GmbH. The Heimat Österreich gemeinnützige Wohnungs- und Siedlungsgesellschaft m.b.h, in which Raiffeisenverband Salzburg holds an at equity participation, develops residential projects. II-Capital due to the phase out of grandfathered capital instruments in Basel III that are no longer eligible as capital. The level of own funds was 14.2% (previous year 14.7%) and thus above the minimum legal requirement of 8,625% (inkl. capital maintenance buffer). Development of own funds in million EUR : +21 Mio. EUR (+3,6%) % % 15,4% 15,% 5 14,7% 14,2% 13,7% 13% ,8% % 39 11,4% 11,4% 11,3% 1,2% 9% 3 9,3% 8,6% 7% FINANCIAL PERFORMANCE INDICATORS Total own funds Total own funds ratio Total core capital (CET1) Total core capital ratio (CET1) Capital resources and profitability The total core capital (CET1) amounted to EUR million at the end of 216 (previous year EUR million), there is no additional core capital. Hence, the core capital amounted to EUR million and increased by EUR 7.7 million in comparison to the previous year. The increase is mainly attributable to the growth in retained earnings. The total core capital ratio (CET1) was at 11.3%. Total own funds amounted to EUR 6.9 million and decreased by EUR 5.1 million, which resulted from the decline of TIER The total own funds increased by 3.6% since 211. The cost-income-ratio (CIR) as a ratio of operating expenses to operating income (excluding the goods business, auditing and ORG/IT) was at 67.4% slightly lower than 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 216, for the year that just ended was 5.4%. This represents an increase of 1.5 percentage points, owed to the improved profit of ordinary activity. 29 Raiffeisenverband Salzburg

30 MANAGEMENT REPORT NON-FINANCIAL PERFORMANCE INDICATORS Personnel On average 1,622 individuals were employed in the fully consolidated companies in 216, which corresponds to a decrease of 29 employees compared with the previous year. Emphasis is placed on continuous staff training throughout the Group. 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 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 CO 2 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. Sustainability, which is one of the core values of Raiffeisenverband Salzburg, was an important aspect in the reconstruction of the Glasenbach branch. RISK MANAGEMENT An active risk management is the prerequisite of a sustainably successful bank and therefore of central importance for the long-term corporate development of Raiffeisenverband Salzburg. In the interests of customers and shareholders, Raiffeisenverband Salzburg ensures the security and stability of the bank by operating most modern methods and systems in the fields of risk management and risk controlling. Risk policy The management board determines the strategy of Raiffeisenverband Salzburg and its group members based on the business policy situation, considering the risk bearing capacity, the staffing and technical-organisational equipment. It defines the corporate goals and the requirements to reach them. The strategy includes all planned developments of all important business activities and is divided into partial strategies. Before starting with new business by this RVS understands especially new products, services, markets, business types, distribution channels and currencies or in case of substantial changes as well as in case of outsourcing of existing or new businesses a comprehensive analysis of all business-related risks takes place as part of the product introduction process. Risk strategy The risk strategy provides a basis for the risk culture of the group 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 group s relevant risk types. Furthermore, the operational and organizational structure in risk 216 Annual Report 3