Oldenburgische Landesbank Group Interim Financial Statements as of June 30, 2015

Transcription

1 Oldenburgische Landesbank Group Interim Financial Statements as of June 30, 2015

2 The OLB Group at a Glance as of June 30, 2015 EUR m Total assets Loans and advances to banks 6 / 30 / / 31 / 2014 Change (%) 13, , Total lendings 1 10, , Financial assets 2, , Due to banks 4, , Customer deposits 7, , Securitized liabilities Subordinated debt Equity Additional paid-in capital Retained earnings Other comprehensive income / 1 / / 30 / / 1 / / 30 / 2014 Change (%) Issued capital EUR m Net interest income Net commission income Net operating trading income > 100 Operating personnel expense Office expense Risk provisions Profit before taxes Profit after taxes Cost income ratio (%) / 30 / / 31 / 2014 Core capital ratio per Sec. 10 of the German Banking Act (%) Aggregate capital ratio per Sec. 10 of the German Banking Act (%) Number of employees 2,274 2,314 Full-time equivalents 1,837 1, Branches of Oldenburgische Landesbank AG 1 Net of risk provisions 2 See Note (21) to the financial statements; liable equity capital and capital ratios per Sec. 10 of the German Banking Act

3 Contents To Our Shareholders Letter to Our Shareholders Interim Management Report Economic Conditions 006 Business Performance Results of Operations Segment Results Net Assets and Financial Position Projected Developments 013 Interim Consolidated Financial Statements 014 Statement of Comprehensive Income 014 Statement of Financial Position (Balance Sheet) 016 Statement of Changes in Equity 018 Cash Flow Statement 019 Notes to the Financial Statements 020 Explanatory Notes to the Interim Financial Statements 020 Management s Statement of Responsibility 036 Additional Information 037 Governing Bodies 037 Production Information 039

4 004 Letter to Our Shareholders Letter to Our Shareholders In the first half of 2015, the German economy was able to maintain the slight uptrend that had begun the year before. While the DAX German Stock Index soared to a new record high of more than 12,350 points in April, interest rates reached a new low the same month. Toward the end of the half, the dramatic exacerbation of the financial situation in Greece absorbed market participants attention once again. The economy in Northwest Germany showed little impact from these developments, and remained in good condition. However, local businesses expectations were muted by practical issues, such as the increasingly evident shortage of skilled labor and rising labor costs. The entire banking industry is operating amid a challenging environment. The overall situation is causing a significant reduction in important sources of income, even as individual cost pools increase. Specifically, our own margins too are feeling the pressure of historically low market interest rates, as does our net interest income. On the other side, more stringent regulation is raising costs. Changing customer expectations as digitalization accelerates have necessitated investments in up-to-date multichannel service options. Our program to modernize our branch network and strengthen our digital presence is on schedule, and we intend to keep at it because it s important for our customers to be able to reach OLB, whether at an office, online, via mobile banking, or by phone. At our branches, we re concentrating on personal advice, while in parallel we re becoming more up-to-date, faster and more efficient in all our departments. All in all, your Bank did business successfully in the first half of We improved our pretax profit as of June 30, 2015, by EUR 4.8 million, to EUR 23.0 million. Following the prior-year figure of EUR 12.1 million, the profit for the period under review rose to EUR 14.8 million. We were largely able to compensate through systematic cost management for the impact of low interest rates on our net interest income. Net interest income decreased to EUR million (prior year: EUR million). The EUR 1.3 million decrease in net commission income to EUR 35.0 million was very largely a consequence of the fact that our profits no longer include the commission income from Münster ländische Bank Thie & Co. KG, of Münster, which has been sold. Despite a slight increase in the office expense, lower personnel expenses enabled us to reduce operating expenses to EUR million (prior year: EUR million). Our need for risk provisions decreased to EUR 2 million (prior year: EUR 12.6 million). Our capital base still remains sound. With a core capital ratio of 10.5 percent as of June 30, 2015, we were already well above the 8.5 percent minimum that Basel III regulations will require starting in 2019.

5 Letter to Our Shareholders We expect the rest of the year to be dominated by conditions as challenging as those in the past months. Market interest rates remain lower than originally expected. Looking at net interest income from our customer business, we must therefore expect that we will not be able to match last year s figures. Our investment portfolio is showing signs of improved opportunities for earnings. We expect our ongoing modernization program to enhance our efficiency. If the situation in the financial markets remains stable, we assume on the whole that the trend from the first half will continue and that therefore we will be able to improve earnings once again over the prior year for all of Sincerely yours, Patrick Tessmann Chairman of the Board of Managing Directors 005

6 006 Interim Management Report Economic Conditions Interim Management Report Economic Conditions Thanks to mild winter weather at the beginning of 2015 and moderate oil prices, during the first half of the year the German economy was able to maintain the uptrend it had begun in Significant impetus came from consumer spending, buoyed by a good job market and appreciable income increases. This was reflected in retail sales. The positive economic trend was reinforced by exports, which grew in the second quarter because of the downswing in the euro that began in Amid this positive economic environment, and driven by the European Central Bank s expansive monetary policy, the DAX German Stock Index rose from over 9,800 points at the beginning of the year to more than 12,350 in April. That same month, German interest rates, at well below percent for 10-year federal bonds, reached a new historic low. While interest rates had recovered slightly in the meantime, toward the end of the first half the dramatic exacerbation of Greece s financial problems drew attention. It remains to be seen whether the aid finally approved in return for reforms will be a viable solution, and whether Greece will be able to find a sustainable way out of the crisis. The Northwestern German economy remained in benign condition. As in the rest of the country, retail business did especially well here. Positive reports also came in from the construction industry, which profited from the ongoing strong demand for private building thanks to low construction interest rates. Industrial firms and wholesalers were less optimistic about their situation, for lack of an impetus for demand. The regional job market proved stable, although as elsewhere, local companies invested primarily in rationalization and in filling vacancies left by departing staff. The shortage of skilled labor in our region is also becoming an impediment to growth. More difficult conditions associated with such matters as minimum wage regulations, the level of labor costs, and retirement at age 63 have further muted expectations in the Northwest. Economic developments to date lead us to expect that growth in the real gross domestic product will settle in by year s end at roughly half the federal government s projection of 1.8 percent. Thanks to high employment and rising income, domestic demand will remain the mainstay of this development. Despite the slight recovery in interest rates that has become evident just lately, we must expect the low-interest phase to persist for a while longer, especially because the European Central Bank continues to demonstrate its resolve to maintain its bond buyback program, as announced, until at least September Business risks are especially posed by the foreign-trade environment. The sharp drop in the Chinese stock market may arouse more skeptical expectations about further economic growth. Geo political crises like those in Crimea and the Near East, which have been thrust into the background of the news by the Greek financial crisis, still remain a potential source of concern for market participants. These too could pose encumbrances for the economy.

7 Business Performance Business Performance Results of Operations Net interest income Net commission income Net operating trading income Other income 1 / 1 / / 30 / / 1 / / 30 / 2014 Change Change (%) > Operating personnel expense Office expense Operating income Other expenses Operating expenses Risk provisions for credit business Restructuring income Net profit from financial assets Profit before taxes Taxes Profit after taxes > > OLB maintained its uptrend in profits from the first quarter of We were largely able to compensate through active cost management for the impact that low interest rates have had on our net interest income. Net operating trading income and net investment income performed positively. Moreover, the need for risk provisions decreased because of the stable economic environment. Consequently, the first half closed out higher overall than last year s figure, with a profit before taxes of EUR 23.0 million (prior year: EUR 18.2 million). Business with clients remained stable at a high level. In the credit business, loan repayments were compensated with new business, and the unchangingly high level of deposits from retail customers safeguarded our ability to refinance our lending business without depending on the capital markets. In business with corporate customers, deposits decreased because of large individual withdrawals. Following record lows in long-term interest rates at the start of the second quarter, the markets showed movement in the other direction in subsequent months. Long-term interest rates recovered slightly. Nevertheless, short-term money-market interest rates, which are likewise very important to OLB s earnings situation, remained at very low levels. As a consequence of the evolution of interest rates, net interest income lagged behind last year s parallel figure, at EUR million (prior year: EUR million). Interim Management Report 007

8 008 Interim Management Report Business Performance The securities business with OLB clients expanded further in comparison to last year. We especially owe that success to our Private Banking & Independent Professionals unit, which offers clients comprehensive, customized advice with a special focus on investments. The business in accounts and cards is the second pillar of our net commission income. The resulting income from payment traffic remained stable. The principal cause for the decrease in net commission income to EUR 35.0 million (prior year: EUR 36.3 million) was the sale of Münsterländische Bank Thie & Co. KG, of Münster. Following the consent of the relevant regulatory authorities to the sale, for the first time that company is no longer included in the first-half financial statements for Income from client business in currencies and interest-rate hedging instruments is shown in the net trading income. By selectively approaching corporate customers and providing them with customized advice, we were especially able to increase our income from swaps to hedge interest rates. Another positive effect resulted from the measurement of proprietary interest rate hedges (hedge accounting). All in all, the contribution to earnings for the first half was EUR 4.2 million (prior year: EUR 1.9 million). Especially in light of the pressure on margins in the interest business, OLB gave consistent attention to costs in the first half. The modernization program that we began last year in the retail banking business remained on schedule. Investments in automation, optimizing procedures, and improving the Bank s digital services, as well as for implementing new regulatory requirements, caused an increase in office expenses compared to a year ago. This increase was compensated by reducing personnel expenses. Contributions here came from the first efficiency enhancements produced by the modernization program, together with a review of variable components of compensation. All in all, operating expenses decreased to EUR million (prior year: EUR million).

9 Business Performance Amid stable economic conditions, risk provisions in the first half developed as expected overall, and were below last year s figure, at EUR 2 million (prior year: EUR 21.6 million). Trading gains were realized in managing the liquidity reserve. They yielded a net income from financial investments of EUR 3.4 million (prior year: EUR 0.5 million). Segment Results OLB s management and reporting are based on three strategic lines of business, aligned with our target groups of Retail and Business Customers, Private Banking & Independent Professionals, and Corporate Customers. These lines of business represent the basis for the Bank s segment reporting. The Operations and management column refers to personnel and office expenses for centralized corporate operating, management and staff functions. The operating units provide centralized backoffice and processing services for the three strategic business lines. The management and staff units are responsible for running the Bank. The Bank expanded its internal cost transfers during the year. The prior-year figures have been adjusted accordingly. Corporate units costs that are incurred for providing services in business operations are reclassified to the strategic business areas that occasioned them, and recognized as Cost transfers operations. Non-reportable segments summarizes the contributions to earnings from the special funds held by the Bank, the wind-down portfolio for ships, and continuing customers from the former Allianz Bank. Interim Management Report 009

10 010 Interim Management Report Business Performance 1 / 1 / / 30 / 2015 Corporate and other Retail and Business Customers Private Banking & Independent Professionals Net interest income Net commission income and other income 16.2 Operating income 58.3 Operating personnel expense EUR m Office expense and other expenses Operations Corporate Customers and management Nonreportable segments OLB Group total Cost transfers operations Operating expenses Risk provisions for credit business Net restructuring income Operating profit Net profit from financial assets Segment profit Segment assets (EUR bn) Segment liabilities (EUR bn) Cost income ratio (%) Risk capital (average) Risk assets (average) , , , Net reversal of restructuring provisions in H The aggregate total for the Group is smaller than the total of the segments because the risk capital is not additive due to diversification effects.

11 Business Performance 1 / 1 / / 30 / 2014 Corporate and other Retail and Business Customers Private Banking & Independent Professionals Net interest income Net commission income and other income 16.5 Operating income 59.9 Operating personnel expense 23.3 EUR m Office expense and other expenses Operations Corporate Customers and management Nonreportable segments OLB Group total Cost transfers operations Operating expenses Risk provisions for credit business Net restructuring income Operating profit Net profit from financial assets Segment profit Segment assets (EUR bn) Segment liabilities (EUR bn) Cost income ratio (%) Risk capital (average) Risk assets (average) , , , The aggregate total for the Group is smaller than the total of the segments because the risk capital is not additive due to diversification effects. Interim Management Report 011

12 012 Interim Management Report Business Performance The three strategic lines of business were all subject to the same defining parameters. Because of the ongoing low level of interest rates, the net interest income for all segments was below last year s figure. Net commission and trading incomes for the Corporate Customers business and for the Retail and Business Customers line were at roughly the same level as a year ago. Private Banking & Independent Professionals significantly increased its net commission income through its successful securities business. On the costs end, the modernization of business with retail customers generated its first efficiency-based improvements in costs. Personnel expenses decreased significantly in this segment. The charge for the net expense for risk provisions also decreased at the Whole Bank level from last year. Last year, the Corporate Customers segment profited from exceptionally strong performance in the loan portfolio for small and medium enterprises; that result was not reproducible this year. The net profit for the Corporate Customers segment reflected the change. By contrast, risk provisions for the wind-down portfolio for ships in the Non-reportable segments line made a significantly better showing. Although liabilities for the Private Banking & Independent Professionals segment increased from the same date last year, the Corporate Customers segment saw a decrease in its liabilities because of the withdrawal of several large deposits. Net Assets and Financial Position The total assets of the OLB Group decreased 2.3 percent from December 31, 2014, to EUR 13.8 billion. This was largely the consequence of the decrease in amounts due to customers, from nearly EUR 8.0 billion to EUR 7.3 billion. The change particularly reflected large individual withdrawals in the business with corporate customers. Customer lendings, at EUR 10.2 billion, maintained roughly the same high level as at the beginning of the year (EUR 10.3 billion). The decrease is primarily the result of the deconsolidation of Münsterländische Bank Thie & Co. KG. With EUR 2.9 billion in financial assets, OLB has a comfortable liquidity reserve. That fact is also reflected in the liquidity ratio, which at 1.26 was well above the regulatory minimum of 1.0. OLB s capital base also remains sound. The core capital ratio 1 improved from the end of last year, from 10.3 percent to 10.5 percent, and is thus well above the minimum requirement of 8.5 percent that will be required starting in 2019 under the Basel III regulations. On-balance-sheet equity at the reporting date came to EUR million. 1 See Note (21) to the financial statements; liable equity capital and capital ratios per Sec. 10 of the German Banking Act

13 Projected Developments Projected Developments Despite the slight recovery in long-term market interest rates from the historic lows of this spring, interest rates remain well below the planning assumptions described in the combined m anagement report as of December 31, Consequently, net interest income performed less well than expected. The Bank expects this trend to continue. At the same time, opportunities are emerging for performance above expectations in potential income from equity investments and further efficiency enhancements as part of the ongoing modernization program. In terms of the other developments during the current year, OLB foresees no material changes from the risks and opportunities described in the report on anticipated developments, opportunities and risk. Assuming that the financial markets remain stable, OLB still expects to increase the pretax profit for 2015 as a whole in comparison to the prior year. Interim Management Report 013

14 014 Interim Consolidated Financial Statements Statement of Comprehensive Income Interim Consolidated Financial Statements Statement of Comprehensive Income Income statement 1 / 1 / / 30 / / 1 / / 30 / 2014 Change Net interest income Commission income Commission expense Net commission income / 022 Net operating trading income > / 023 Other income Operating personnel expense Office expense Other expenses > / / 024 Interest and similar income Interest expense and similar charges Operating income Operating expenses Risk provisions for credit business Change (%) Realized net gain / loss on financial assets >100 Net nonoperating trading income Net profit from financial assets > Profit after taxes Basic and diluted earnings per share (EUR) Taxes 02 / Restructuring income Profit before taxes Note / Page / / 024

15 Statement of Comprehensive Income Interim Consolidated Financial Statements 015 Other comprehensive income 1 / 1 / / 30 / / 1 / / 30 / 2014 Change Change (%) Tax recoveries (+) / expenses ( ) on unrealized changes in market value >100 Tax recoveries (+) / expenses ( ) on reclassification to income statement because of realization Gross change in scope of obligations Tax recoveries (+) / expenses ( ) on changes in scope of obligations EUR m Profit after taxes Other income from available-for-sale financial instruments (realizable or realized in profit or loss) Unrealized changes in market value (gross) Reclassification to income statement because of realization (gross) because of realized gains ( ) and losses (+) because of impairment Other income / expense from net pension obligations (not realizable in profit or loss) Other income from other changes in capital (not realizable in profit or loss) Other comprehensive income Total

16 016 Interim Consolidated Financial Statements Statement of Financial Position (Balance Sheet) Statement of Financial Position (Balance Sheet) Assets EUR m Cash and cash equivalents Trading assets Loans and advances to banks (net after risk provisions of EUR million; prior year: EUR million) Loans and advances to customers (net after risk provisions of EUR million; prior year: EUR million) Financial assets 6 / 30 / / 31 / 2014 Change Change (%) / / , , / / 026 2, , Property, plant and equipment Intangible assets Other assets Tax refund entitlements Deferred tax assets Assets of a group held for sale Total assets Note / Page , , / 027

17 Statement of Financial Position (Balance Sheet) Liabilities Interim Consolidated Financial Statements / 30 / / 31 / 2014 Change Due to banks 4, ,231.5 Due to customers 7, ,957.9 Securitized liabilities Provisions and other liabilities EUR m Trading liabilities Tax liabilities Subordinated debt Liabilities of a group held for sale Equity Issued capital Additional paid-in capital Change (%) / / / / / Retained earnings Other comprehensive income Other comprehensive income of a group held for sale , , Total equity and liabilities Note / Page

18 018 Interim Consolidated Financial Statements Statement of Changes in Equity Statement of Changes in Equity Issued capital Additional paid-in capital Retained earnings Other comprehensive income (OCI) OCI of a group held for sale Total equity Profit for period Other net income / loss from available-for-sale financial instruments Other net income / loss from net pension obligations Total net income / expense EUR m December 31, 2013 Dividend distribution from profit carried forward Profit for period Other net income / loss from available-for-sale financial instruments Other net income / loss from net pension obligations Total net income / expense Dividend distribution from profit carried forward December 31, 2014 June 30, 2015 Further information about regulatory capital is provided in Note (21) to the financial statements.

19 Cash Flow Statement Interim Consolidated Financial Statements 019 Cash Flow Statement Cash and cash equivalents as of January Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Cash and cash equivalents as of June 30

20 020 Notes to the Financial Statements Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements Explanatory Notes to the Interim Financial Statements 01 Basis of preparation The interim financial statements as of June 30, 2015, were prepared in accordance with International Financial Reporting Standards (IFRSs). In preparing the interim report, the Bank applied the IFRS and IAS 1 standards in effect up to December 31, 2014, as well as the clarifications issued by the IFRIC 2 and SIC 3 that have been authorized by the European Union in endorsement proceedings. These financial statements have not been examined by an independent auditor. The interim report as of June 30, 2015, is based fundamentally on the same accounting policies as the consolidated financial statements as of December 31, Because of the merger of W. Fortmann & Söhne KG into Oldenburgische Landesbank AG and the sale of Münsterländische Bank Thie & Co. KG (MLB) that took legal effect in the first half of 2015, other than Oldenburgische Landesbank AG only two special funds, AGI-Fonds Ammerland and AGI-Fonds Weser-Ems, are now consolidated under the German Commercial Code. Assets and liabilities of MLB, as a group held for sale, have been deconsolidated. Consequently, for the present interim financial statements, the regulatory reporting at the Group level under IFRS no longer applies, because the two special funds have always been excluded from the scope of consolidation for regulatory purposes. At the reporting date, the capital ratios under Sec. 10 of the German Banking Act were calculated for regulatory purposes at the individual bank level of OLB AG in the statements under the German Commercial Code. The comparable capital ratio as of December 31, 2014, was used as the prior-year figure. 1 IAS = International Accounting Standards 2 IFRIC = International Financial Reporting Interpretations Committee 3 SIC = Standing Interpretations Committee

21 EUR m Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements / 1 / / 30 / / 1 / / 30 / Net interest income Interest income from Lending and money market transactions Written-down financial assets Stocks and other non-fixed-income securities, equity interests of 50 percent or less, and investments in associates Other Fixed-income securities and book-entry securities Interest rate swaps Current income from Total interest income Interest expenses for Deposits Securitized liabilities Subordinated debt Interest rate swaps Other Total interest expenses Net interest income 1 Accrued per IAS 39 (unwinding)

22 022 Notes to the Financial Statements 03 Net commission income Explanatory Notes to the Interim Financial Statements 1 / 1 / / 30 / / 1 / / 30 / 2014 Securities business Income Expenses Asset management Income Expenses Payment traffic Income Expenses Foreign business Income Expenses Insurance, home loan and savings, real estate business Income Expenses Credit card business Income Expenses Other Income Expenses Net commission income Income Expenses

23 Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements / 1 / / 30 / / 1 / / 30 / 2014 Trading in interest rate products 0.6 Foreign-currency and precious-metals business EUR m Effect of hedged transactions and derivatives for management of the interest rate book Other Net operating trading income Wages and salaries / 1 / / 30 / / 1 / / 30 / Social security Bonuses Pensions and other post-retirement benefits IT expenses Occupancy expenses Advertising and representation expense Total operating personnel expenses Business and office equipment expense Other administrative expenses Office expense before current depreciation and amortization Current depreciation and amortization Other expenses Administrative expense Net operating trading income / expense 05 Administrative expenses

24 024 Notes to the Financial Statements 06 Risk provisions for credit business 07 Realized income from financial assets and net nonoperating trading income / expense Explanatory Notes to the Interim Financial Statements 1 / 1 / / 30 / / 1 / / 30 / 2014 Net result of impairment provisions Additions to impairment provisions Write-backs of impairment provisions Net results from provisions Additions to provisions Write-backs of provisions Direct write-downs 0.2 Receipts on written-off receivables Risk provisions for credit business / 1 / / 30 / / 1 / / 30 / Measurement gain / loss (net) Write-ups Write-downs Measurement gain / loss (net) 0.3 Write-ups 0.3 Realized income (net) Realized net gain / loss on financial assets Realized income (net) Write-downs Net nonoperating trading income / expense 0.3 Net profit from financial assets / 1 / / 30 / / 1 / / 30 / 2014 Profit () Average number of shares outstanding (million) Basic and diluted earnings per share (EUR) Basic and diluted earnings per share There are no dilution effects in the OLB Group. For that reason, no distinction is made in reporting the earnings per share.

25 Explanatory Notes to the Interim Financial Statements Positive market values from derivative financial instruments Positive market values from hedging of share-based payments Trading assets Market and payment transactions in course of settlement Receivable from reverse repo transactions Notes to the Financial Statements / 30 / / 31 / / 30 / / 31 / Cash collateral paid Other receivables Loans / 30 / / 31 / 2014 Corporate customers 4, ,177.5 Public-sector entities Loans and advances to banks less: risk provisions Loans and advances to banks (after risk provisions) Retail customers Loans and advances to customers less: risk provisions Loans and advances to customers (after risk provisions) 6, , , , , , Trading assets 10 Loans and advances to banks 11 Loans and advances to customers

26 026 Notes to the Financial Statements 12 Total lendings Explanatory Notes to the Interim Financial Statements Corporate customers Public-sector entities 12 / 31 / , , , , , ,516.3 Loans to banks Total lendings 10, , , ,300.4 EUR m At January Retail customers Customer lendings less: risk provisions Total lendings (after risk provisions) 13 Changes in risk provisioning 6 / 30 / 2015 Used Written back 1 Written back through unwinding 2 Additions Reclassifications At June / 30 / / 31 / , , Not including unwinding 2 In favor of interest income from impaired financial assets, accrued under IAS 39 (Unwinding) 14 Financial assets Bonds and other fixed-income securities Stocks Investment funds Total securities 2, ,864.3 Equity interests , ,865.4 Investments in unconsolidated subsidiaries Financial assets

27 Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements / 30 / / 31 / 2014 Deferred interest Positive market values of hedge derivatives under hedge accounting Miscellaneous other assets Other assets / 30 / / 31 / Negative market values from derivative financial instruments Negative market values from hedging of share-based payments Trading liabilities Demand deposits Liabilities from repurchase agreements Cash collateral received Borrower s note loans and registered mortgage bonds Market and payment transactions in course of settlement / 30 / / 31 / , , Other term liabilities 2, ,742.3 Due to banks 4, ,231.5 including: banks in Germany 4, , Term deposits including: banks outside Germany 15 Other assets 16 Trading liabilities 17 Amounts due to banks

28 028 Notes to the Financial Statements 18 Amounts due to customers Explanatory Notes to the Interim Financial Statements Demand deposits Liabilities from repurchase agreements Savings deposits Borrower s note loans and registered mortgage bonds Market and payment transactions in course of settlement Term deposits Other term liabilities 20 Provisions and other liabilities 12 / 31 / , , , , , , / 30 / / 31 / 2014 Bonds issued Securitized liabilities / 30 / / 31 / Other provisions Deferred interest Due to customers 19 Securitized liabilities 6 / 30 / 2015 Provisions for pensions and similar obligations Negative market values of hedge derivatives under hedge accounting Other liabilities Provisions and other liabilities

29 Explanatory Notes to the Interim Financial Statements EUR m Tier 1 capital including: deductions Notes to the Financial Statements / 30 / / 31 / Tier 2 capital including: subordinated debt including: additions 2 including: deductions 3 Share capital and reserves (Sec. 10 KWG) Risk assets for counterparty risks Risk assets for market risks Risk assets for operational risks , , , ,651.1 Core capital ratio (%) Aggregate capital ratio (%) Risk assets 1 Per Arts. 38 and 159 CRR and supplementary rules 2 Per Arts. 66d and 159 CRR 3 Per Arts. 62d CRR Because of the merger of W. Fortmann & Söhne KG into Oldenburgische Landesbank AG and the sale of Münsterländische Bank Thie & Co. KG, which took legal effect in the first half of 2015, regulatory reporting at the Group level under IFRS no longer applies for this interim report. At the reporting date, the capital ratios under Sec. 10 of the German Banking Act were calculated for regulatory purposes at the individual bank level of OLB AG in the statements under the German Commercial Code. The comparable capital ratio as of December 31, 2014, was used as the prior-year figure. 21 Liable equity capital and capital ratios under Sec. 10 of the German Banking Act (KWG)

30 030 Notes to the Financial Statements Explanatory Notes to the Interim Financial Statements 22 Contingent liabilities and other obligations 6 / 30 / / 31 / Obligations under suretyships and guarantees Credit suretyships Other suretyships and guarantees Documentary credits including: credit openings Current account credits Guarantee lines including: credit confirmations Contingent liabilities Committed credit facilities Mortgage loans / public-sector loans Other obligations

31 Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements Derivative transactions Maturity Total 6 / 30 / / 31 / , , , , including: foreign currency options puts Stock-related / index-related derivatives Credit derivatives Positive fair values Negative fair values 1 year or less Currency-related derivatives 2.6 including: foreign currency options calls Interest-related derivatives including: interest rate swaps for closed positions in the customer business including: interest rate swaps for management of the interest rate book Derivatives in share-based payments Over 1 year Over 5 years to 5 years Other derivatives Total derivatives , ,737.9 including: products in EUR , ,577.6 including: products in USD including: products in GBP including: products in JPY In compliance with the rules for hedge accounting under IAS 39 (Hedge Accounting), interest rate swaps used in managing the interest rate book underwent adjusted positive changes of EUR million in market value (prior year: EUR 1 million). Corresponding receivables from and payables to customers, as well as financial assets, underwent total adjusted negative changes of EUR 8.7 million in market value (prior year: EUR million). The net effect of EUR 0.2 million (prior year: EUR 1.4 million) is recognized in net operating trading income.

32 032 Notes to the Financial Statements Explanatory Notes to the Interim Financial Statements 24 Fair values and carrying amounts of financial instruments by measurement class and balance sheet item, and their placement in the fair-value hierarchy 6 / 30 / 2015 Assets Category Balance sheet item Carrying amount Cash and cash equivalents (at nominal value) LaR Trading assets 11.3 Stocks and other non-fixedincome securities Positive market values of interest-related derivatives Positive market values of currency-related derivatives Financial instruments at amortized cost Carrying amount Fair value Fair value Fair value Level 2 Level 3 Fair value Positive market values of stock / index-related derivatives Positive market values of other derivatives Positive market values from hedging of share-based payments Loans and advances to banks (net after risk provisions) LaR Loans and advances to customers (net after risk provisions) LaR , , ,981.6 Financial assets AfS 2, , , , Bonds from public issuers AfS 1, , , Other bonds AfS 1, , , ,327.7 Stocks AfS Investment funds AfS Equity interests AfS Investments in unconsolidated subsidiaries AfS Property, plant and equipment 81.6 Intangible assets 10.2 Other assets 82.7 Deferred interest LaR Positive market values of hedge derivatives under hedge accounting FVH Miscellaneous other assets 29.7 Tax refund entitlements 22.6 Deferred tax assets 49.4 Assets of a group held for sale 10, , Level Σ financial instruments Total on-balance-sheet assets Δ At fair value ,808.0 including: financial instruments 13, , , , , , , , , , ,350.7 Loans and receivables LaR Held for trading ,341.5 Available for sale AfS 2, , , , Fair-value hedging instruments FVH 25,0 25,0 25,0 25,0

33 Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements / 30 / 2015 Equity and liabilities Category Balance sheet item Carrying amount Financial instruments at amortized cost Carrying amount Δ Fair value At fair value Σ financial instruments Fair value Fair value Level 1 Level 2 Level 3 Fair value Trading liabilities Negative market values of interest-related derivatives Negative market values of currency-related derivatives Negative market values of stock / index-related derivatives Negative market values of other derivatives Negative market values from hedging of share-based payments Amounts due to banks ol 4, , , , Amounts due to customers ol 7, , , , ,487.7 Securitized liabilities ol Provisions and other liabilities Provisions for pensions and similar obligations Other provisions 48.2 Deferred interest ol Negative market values of hedge derivatives in hedge accounting FVH Other liabilities 27.8 Tax liabilities 2.5 Subordinated debt ol Liabilities of a group held for sale Equity , ,206.6 Total on-balance-sheet equity and liabilities ,808.0 including: financial instruments 12, ,759.4 Held for trading 7.2 Other liabilities ol Fair-value hedging instruments FVH Off-balance-sheet items (no category) Contingent liabilities Committed credit facilities 12, , , , , ,

34 034 Notes to the Financial Statements Explanatory Notes to the Interim Financial Statements 12 / 31 / 2014 Assets Category Balance sheet item Carrying amount Cash and cash equivalents (at nominal value) LaR Trading assets 14.9 Stocks and other non-fixedincome securities Positive market values of interest-related derivatives Positive market values of currency-related derivatives Financial instruments at amortized cost Carrying amount Fair value Fair value Fair value Level 2 Level 3 Fair value Positive market values of stock / index-related derivatives Positive market values of other derivatives Positive market values from hedging of share-based payments Loans and advances to banks (net after risk provisions) LaR Loans and advances to customers (net after risk provisions) LaR , , ,219.4 Financial assets AfS 2, , , , Bonds from public issuers AfS 1, , , Other bonds AfS 1, ,366.9 Stocks AfS Investment funds AfS Equity interests AfS Investments in unconsolidated subsidiaries AfS Property, plant and equipment 82.2 Intangible assets 10.0 Other assets 87.1 Deferred interest LaR Positive market values of hedge derivatives under hedge accounting FVH Miscellaneous other assets 26.1 Tax refund entitlements 21.8 Deferred tax assets 43.1 Assets of a group held for sale 10, , Level Σ financial instruments Total on-balance-sheet assets Δ At fair value ,135.7 including: financial instruments 13, , , , , , , , , , , , Loans and receivables LaR Held for trading 14.9 Available for sale AfS 2,865.4 Fair-value hedging instruments FVH , , ,684.2

35 Explanatory Notes to the Interim Financial Statements Notes to the Financial Statements / 31 / 2014 Equity and liabilities Category Balance sheet item Carrying amount Financial instruments at amortized cost Carrying amount Δ Fair value At fair value Σ financial instruments Fair value Fair value Level 1 Level 2 Level 3 Fair value Trading liabilities Negative market values of interest-related derivatives Negative market values of currency-related derivatives Negative market values of stock / index-related derivatives Negative market values of other derivatives Negative market values from hedging of share-based payments Amounts due to banks ol 4, , , , ,422.4 Amounts due to customers ol 7, , , , ,145.2 Securitized liabilities ol Provisions and other liabilities Provisions for pensions and similar obligations Other provisions 63.6 Deferred interest ol Negative market values of hedge derivatives in hedge accounting FVH Other liabilities 22.3 Tax liabilities 1.8 Subordinated debt ol Liabilities of a group held for sale Equity , ,535.3 Total on-balance-sheet equity and liabilities ,135.7 including: financial instruments 13, ,956.7 Held for trading 7.8 Other liabilities ol Fair-value hedging instruments FVH Off-balance-sheet items (no category) Contingent liabilities Committed credit facilities , , , , , ,398.5

36 036 Management s Statement of Responsibility Management s Statement of Responsibility To the best of our knowledge, and in accordance with the applicable interim reporting principles, the interim financial statements give a true and fair view of the Group s net assets, financial position, and results of operations, and the interim management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the Group s expected development for the remainder of the fiscal year. Oldenburg, August 13, 2015 Oldenburgische Landesbank AG The Board of Managing Directors Patrick Tessmann Chairman Dr. Thomas Bretzger Karin Katerbau Hilger Koenig

37 Additional Information Additional Information Governing Bodies of Oldenburgische Landesbank AG (as of July 1, 2015) Honorary Chairman of the Supervisory Board Dr. Bernd W. Voss Supervisory Board Andree Moschner Prof. Dr. Petra Pohlmann Chairman Member of the Board of Management of Allianz Deutschland AG, Munich Professor, University of Münster Uwe Schröder* Vice-Chair Banker and Chairman of the Corporate Employee Council, Oldenburg Horst Reglin* Union Secretary, Vereinte Dienstleistungsgewerkschaft, Oldenburg Rainer Schwarz Member of the Supervisory Board, Oldenburgische Landesbank AG, Munich Dr. Werner Brinker Chairman of the Board of Management, EWE Aktien gesellschaft, Oldenburg Carl-Ulfert Stegmann Prof. Dr. Andreas Georgi Gabriele Timpe* Member of diverse supervisory boards, Honorary Professor, University of Munich Customer Advisor, Lähden Sole Director, AG Reederei Norden-Frisia, Norderney Christine de Vries* Svenja-Marie Gnida* Organizer, Processes and Projects, Oldenburg Branch Manager, Osnabrück Dr. Peter Hemeling Stefan Lübbe* Director and Member of the Management Corporate Customers and Private Banking, Vechta Alternative member for shareholders representatives Senior Legal Counsel, Allianz SE, Munich Board of Managing Directors Patrick Tessmann Karin Katerbau Chairman of the Board of Managing Directors Member of the Board of Managing Directors Dr. Thomas Bretzger Hilger Koenig Member of the Board of Managing Directors Member of the Board of Managing Directors * Elected by the employees 037

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39 Production Information 039 Publisher Oldenburgische Landesbank AG Stau 15 / Oldenburg Germany Telephone: Telefax: olb@olb.de Contact Corporate Communications Release date August 13, 2015 This report is available in German and English. Both versions may be downloaded from the Internet.