Annual Report LGT Bank Ltd., Vaduz

Annual Report 2014 LGT Bank Ltd., Vaduz

Contents Organizational structure 4 The business year in comparison 5 Annual report 6 Balance sheet 7 Off-balance sheet transactions 8 Profit and loss account 9 Appropriation of net profit 10 Flow of funds statement 11 Appendix 12 Remuneration report 17 Notes on the balance sheet 21 Notes on off-balance sheet transactions 35 Notes to the profit and loss account 37 Additional information 39 Report of the statutory auditor 42 International presence of LGT 44

Organizational structure as of April 2015 Board of Directors Thomas Piske, Chairman H.S.H. Prince Max von und zu Liechtenstein Olivier de Perregaux Jacques Engeli Internal Audit Daniel Hauser Executive Management Board Norbert Biedermann, Chairman Ivo Klein Roland Schubert Markus Werner Statutory Auditor PricewaterhouseCoopers AG, Zürich 4 Organizational structure as of April 2015

The business year in comparison Balance sheet 2014 2013 Change absolute % Balance sheet total CHF m 30 692.7 25 130.8 5 561.9 22.1 Shareholders funds (after profit distribution) CHF m 2 616.2 2 124.1 492.1 23.2 Client deposit CHF m 16 795.1 14 809.7 1 985.4 13.4 Due from clients CHF m 11 825.9 10 018.1 1 807.8 18.0 Profit and loss account Net interest income CHF m 111.8 113.2-1.4-1.2 Net commission and fee income CHF m 229.9 218.2 11.7 5.3 Income from financial transactions CHF m 65.8 62.0 3.8 6.1 Gross operating income CHF m 438.7 423.4 15.3 3.6 Personnel expenses CHF m 191.4 172.2 19.2 11.1 Operating expenses CHF m 148.6 146.1 2.5 1.7 Result on ordinary business activity CHF m 87.5 92.9-5.4-5.8 Taxes CHF m 24.9 6.0 18.9 313.0 Profit for the year CHF m 492.1 301.9 190.2 63.0 Client assets under administration Client assets under administration CHF m 61 268.1 55 816.8 5 451.3 9.8 Personnel (full-time equivalents) Staff at year-end 771 713 58 8.1 The business year in comparison 5

Annual report 2014 was a successful year for LGT Bank Ltd., despite the difficult economic and regulatory environment. The bank reported good strategic and operational progress, and once again made a significant contribution to the Group s results. Higher income on commissions and lower interest income Continued low interest rates resulted in a slight reduction in net interest income of 1.2 percent to CHF 111.8 million compared to the previous year. In contrast, income from the commission and services business rose by 5.3 percent to CHF 229.9 million, driven by favorable stock market developments and higher assets under management. Income from financial transactions was CHF 65.8 million, up 6.1 percent. This is attributable to strong performance in the trading business which offset slightly weaker valuation gains of the high-grade bonds portfolio. On the expenditures side, the increase in business and office expenses was limited to 1.7 percent, despite rising levels of regulation. Personnel expenses rose 11.1 percent to CHF 191.4 million, which is primarily attributable to staff recruiting and performance-related compensation in accordance with the growth of the business. Income taxes increased by 313.0 percent to CHF 24.9 million due to an amendment to the tax law. While gross profit decreased by 6.1 percent, profit for the year rose 63 percent to CHF 492.1 million as a result of the full release of provisions for general banking risks. LGT Bank Ltd. remains extremely well capitalized. At 19.3 percent of risk-weighted positions, the bank s tier 1 ratio as at year-end 2014 was 141 percent above the 8 percent minimum required by law. Assets under management increased by 9.8 percent to CHF 61.3 billion. This rise is attributable to new asset inflows and performance-related increases. Ownership structure of LGT Bank Ltd. The shares of LGT Bank Ltd. are wholly owned by the LGT Group Foundation. No own shares were acquired or taken as pledge, either directly or indirectly. LGT Bank Ltd. is part of LGT Group (LGT), a global private banking and asset management group that takes an integrated approach to the management and development of the individual group companies. The LGT Annual Report contains more detailed information on the Group s financial strength, expertise and development. Accolades for quality of advisory services and HR management Our investments in the quality of our advice and services were recognized by a number of independent institutions in 2014. We were awarded Best Private Bank in Liechtenstein by the Financial Times publications Professional Wealth Management and The Banker. The Handelsblatt s Elite Report gave us the highest summa cum laude rating for the twelfth consecutive year. We are also proud to have been certified as Top Employer 2015 by the Top Employers Institute. The renowned institute was particularly impressed by our HR management and personnel strategy. Outlook We have gotten off to a good start in the current year and are well-positioned to make further progress. We do not expect the lifting of the minimum Swiss franc exchange rate to have a material effect on the 2015 results. A significant challenge, however, will certainly be posed by the negative interest rates introduced at the beginning of the year by the Swiss National bank. Our excellent strategic positioning comes as a result of our international presence in key markets, our high level of investment know-how, as well as our parent company s strong capital base and stable ownership structure. The further development of our investment expertise in traditional and alternative asset classes has been one of our main priorities for many years. This benefits us and our clients, particularly in the ongoing challenging investment environment. We aim to continue to stand side by side with our clients as partners in every market environment, and we thank them for the trust they place in us. We also thank our employees for their outstanding dedication throughout the course of the reporting year. Thomas Piske, Chairman of the Board of Directors Norbert Biedermann, Chairman of the Executive Management Board 6 Annual report

Balance sheet Assets (TCHF) Appendix 31.12.2014 31.12.2013 Change absolute % Cash and cash equivalents 8 301 781 7 335 362 966 419 13.2 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 3, 22 25 623 22 931 2 692 11.7 Due from banks 16 5 792 510 3 958 869 1 833 641 46.3 Due from clients 1, 16 11 825 886 10 018 096 1 807 790 18.0 of which mortgage loans 1, 16 2 929 830 2 587 115 342 715 13.2 Bonds and other fixed-interest bearing securities 2, 3, 4, 23, 38 2 516 272 2 283 836 232 436 10.2 Equities and other non-fixedinterest securities 2, 3, 4, 38 1 339 3 180-1 841-57.9 Participations 5, 7, 8, 38 166 166 0 0.0 Shares in affiliated companies 5, 6, 8, 21, 38 57 068 68 214-11 146-16.3 Intangible assets 9 23 50-27 -54.0 Tangible assets 8 83 281 88 394-5 113-5.8 Other assets 40 2 048 509 1 311 925 736 584 56.1 Accrued income and prepaid expenses 40 251 39 824 427 1.1 Total assets 30 692 709 25 130 847 5 561 862 22.1 Liabilities (TCHF) Due to banks 16 9 609 484 6 745 506 2 863 978 42.5 Due to clients 16, 24 15 278 901 13 564 448 1 714 453 12.6 Securitized liabilities 12, 25 1 515 953 1 244 745 271 208 21.8 Other liabilities 41 1 519 692 775 584 744 108 95.9 Accrued expenses and deferred income 78 165 70 248 7 917 11.3 Provisions 13, 26, 36 74 045 81 602-7 557-9.3 Subordinated liabilities 39 220 470-250 -53.2 Provisions for general banking risks 13 0 429 500-429 500-100.0 Share capital 14 291 201 291 201 0 0.0 Revenue reserves 15 1 624 500 1 624 500 0 0.0 Profit carried forward 208 403 1 169 207 234 17 727.5 Profit for the year 492 145 301 874 190 271 63.0 Total liabilities 30 692 709 25 130 847 5 561 862 22.1 Important This document is a non-binding English translation of the authoritative German annual report. Balance sheet 7

Off-balance sheet transactions Off-balance sheet (TCHF) Appendix 31.12.2014 31.12.2013 Change absolute % Contingent liabilities 1, 27 3 659 732 3 771 924-112 192-3.0 of which liabilities from guarantees and indemnity agreements as well as from the furnishing of collateral 1, 27 3 659 732 3 771 924-112 192-3.0 Credit risks 155 455 82 974 72 481 87.4 of which irrevocable commitments 1 116 611 69 877 46 734 66.9 of which commitments to subscribe additional contributions for shares or other equity securities 1 38 844 13 097 25 747 196.6 Derivative financial instruments Positive replacement values 30, 40 1 578 142 779 378 798 764 102.5 Negative replacement values 30, 41 1 418 090 703 373 714 717 101.6 Contract volume 30 99 526 910 86 497 170 13 029 740 15.1 Fiduciary transactions 29 194 462 305 239-110 777-36.3 Important This document is a non-binding English translation of the authoritative German annual report. 8 Off-balance sheet transactions

Profit and loss account Profit and loss account (TCHF) Appendix 2014 2013 Change absolute % Interest earned 32, 33 178 635 182 303-3 668-2.0 Interest paid -66 865-69 152 2 287-3.3 Net interest income 111 770 113 151-1 381-1.2 Equities and other non-fixed-interest securities 0 0 0 0.0 Participations 1 161 3 568-2 407-67.5 Shares in affiliated companies 64 29 35 120.7 Current income from securities 1 225 3 597-2 372-65.9 Commission income from lending business 5 405 6 123-718 -11.7 Commission income from securities and investment business 276 817 264 652 12 165 4.6 Commission from other services 15 860 16 651-791 -4.8 Income from commission business and services 298 082 287 426 10 656 3.7 Commission paid -68 225-69 224 999-1.4 Net commission and fee income 229 857 218 202 11 655 5.3 Income from financial transactions 65 805 62 018 3 787 6.1 of which from trading 33 61 337 53 904 7 433 13.8 Other ordinary income 42 30 027 26 405 3 622 13.7 Gross operating income 438 684 423 373 15 311 3.6 Personnel expenses 34-191 448-172 244-19 204 11.1 Operating expenses 35-148 569-146 056-2 513 1.7 Business expenses -340 017-318 300-21 717 6.8 Gross profit 98 667 105 073-6 406-6.1 Amortization of intangible assets and depreciation of tangible assets -7 883-8 347 464-5.6 Other ordinary expenses 36, 43-1 704-3 347 1 643-49.1 Value adjustments on receivables and funds allocated to provisions for contingent liabilities and credit risks -2 874-864 -2 010 232.6 Income from the release of value adjustments on receivables and from provisions for credit risks 1 328 385 943 244.9 Amortization of participations, shares in affiliated companies and securities held as non-current assets 0 0 0 0.0 Result on ordinary business activity 87 534 92 900-5 366-5.8 Income tax -24 889-6 026-18 863 313.0 Other taxes 0 0 0 0.0 Income from the release of provisions for general banking risks 429 500 215 000 214 500 99.8 Profit for the year 492 145 301 874 190 271 63.0 Important This document is a non-binding English translation of the authoritative German annual report. Profit and loss account 9

Appropriation of net profit Appropriation of net profit proposal of the Board of Directors 2014 2013 to the general meeting of shareholders (CHF) Profit for the year 492 145 459.30 301 873 658.13 Profit carried forward 208 402 704.21 1 169 306.08 Accumulated profit for the year 700 548 163.51 303 042 964.21 Profit distribution Allocation to legal reserves 0.00 0.00 Allocation to statutory reserves 0.00 0.00 Allocation to other reserves 0.00 0.00 Dividend on company capital 0.00 94 640 260.00 Other profit distribution 0.00 0.00 Profit carried forward 700 548 163.51 208 402 704.21 Important This document is a non-binding English translation of the authoritative German annual report. 10 Appropriation of net profit

Flow of funds statement Flow of funds statement (TCHF) 2014 2013 Source Application Source Application of funds of funds of funds of funds Flow of funds from operating result (internal financing) Profit for the year 492 145 301 874 Depreciation of non-current assets 7 883 8 347 Value adjustments and provisions 437 057 217 894 Accrued income and prepaid expenses 427 5 774 Accrued expenses and deferred income 7 917 6 840 Other items 0 Previous-year dividend 94 640 64 064 Balance 24 179 29 329 Flow of funds from changes to non-current assets Participations 0 0 Shares in affiliated companies 41 146 30 000 9 966 Securities and precious metals as non-current assets 45 162 0 Intangible assets 1 0 40 Properties 89 2 053 41 2 720 Other tangible assets 0 779 0 975 Balance 8 359-13 498 Flow of funds from banking operations Medium and long-term business (> 1 year) Due to banks 7 673 8 752 Due to clients 2 740 2 924 Bonds 529 931 15 708 Medium-term notes 7 919 15 861 Other liabilities 67 212 60 10 105 Due from banks 46 171 97 953 Due from clients (excl. mortgage loans) 95 645 43 411 Mortgage loans 19 453 14 906 Other receivables 84 395 9 281 Short-term business ( 1 year) Due to banks 2 856 305 103 199 Due to clients 1 711 713 892 493 Other liabilities 425 902 128 090 Due from banks 1 787 470 963 433 Due from clients 1 731 598 42 852 Trading positions in securities and precious metals 95 332 0 71 866 Securities and precious metals held as current assets (excl. trading positions) 256 893 291 682 Other receivables 723 871 422 Liquid funds Cash and cash equivalents -966 419-1 755 745 Balance 15 820-15 831 Total 24 179 24 179 0 0 Important This document is a non-binding English translation of the authoritative German annual report. Flow of funds statement 11

Appendix to the financial statement Notes on business activity General points LGT Bank Ltd. with its registered office in Vaduz operates as a universal bank and securities trader. The company has branch offices in Hong Kong and Vienna. The bank maintains representative offices in Bahrain, Chur, Davos, Geneva, Lugano, Zurich and Montevideo. At 31 December 2014, LGT Bank Ltd. employed 771 persons on a full-time equivalent basis (713 in the previous year). In 2014, the average headcount amounted to 739 persons (691). As a universal bank, LGT Bank is active in the fields of wealth management (commission business and services) and trading, as well as in money market and lending business. Wealth management LGT Bank Ltd. is one of the leading international names in traditional private banking. The bank offers a broad spectrum of products and services that enable clients to choose the best solution to suit their needs. Most earnings from commission business and services stem, among other things, from wealth management. The commission business and services also represents the bank s main source of revenue. Money market business Within the scope of money market business, money in the form of call money, time deposits and fiduciary investments is deposited with the bank. Insofar as these funds are not required for lending business, they are placed with first-class banks, predominantly in Western Europe. These investments are being made in the form of easily convertible money market paper (certificates of deposit, Euro commercial papers). Despite its focus on private banking, interest margin business represents an important earnings stream for the bank. Trading business LGT Bank Ltd. operates trading transactions for clients and for its own account in securities, foreign exchange and precious metals. The bank trades for its own account in accordance with conservative principles. Derivative instruments are used mostly for hedging purposes. Lending business Most lending takes the form of Lombard loans and mortgages on residential property. Mortgages are granted primarily for financing properties in Liechtenstein and in Switzerland. Property financing in selected other countries is offered as part of integrated wealth management. Statement regarding the correctness of the financial statements and the annual report We confirm that the financial statements have been prepared in conformance with the prevailing accounting policies and standards, and that to our knowledge they present a true and fair picture of the assets and liabilities, as well as the financial, earnings and profitability position of the bank. The annual report contains all the required information about the course of business, the results of operations and the position of the bank. It provides an accurate picture of the actual situation, and outlines the most important risks and uncertainties. Thomas Piske Chairman of the Board of Directors Olivier de Perregaux Member of the Board of Directors 12 Appendix to the financial statement

Accounting policies Basic principles The annual accounts are prepared in accordance with the act and ordinance on banks and investment firms (Banking Act, Bank Ordinance) and applicable provisions of the Law on Persons and Companies (PGR). Consolidation LGT Bank Ltd. does not prepare consolidated accounts because the parent company, the LGT Group Foundation, is itself subject to the Banking Act and prepares annual accounts at Group level. The consolidated accounts are available for inspection at LGT Marketing & Communications at the offices of LGT Bank Ltd., Herrengasse 12, FL-9490 Vaduz, and can be accessed on the internet under www.lgt.com. Recording and reporting of transactions All business transactions are recorded in the company s accounts on the date of the transaction, and are valued from this date for the calculation of earnings. Foreign currency conversions Assets and liabilities denominated in foreign currencies are converted at the rates applicable on the balance sheet date. For income and expenditure, the rates applicable at the time of the transaction are used. Futures contracts are valued at residual maturity rates. The balance sheet and income statement positions of foreign operations are converted at the rates prevailing on the balance sheet date. Cash and cash equivalents, debt instruments of public authorities and bills which are eligible for refinancing at central banks, and claims on banks Cash and cash equivalents and claims on banks are reported in the balance sheet at par value. Registered money market claims, rescriptions and treasury certificates are reported inclusive of amortized discounts. Due from clients Non-impaired claims against clients are reported in the balance sheet at nominal value. Impaired claims, i.e. claims where it appears unlikely that the debtor will be able to meet his future obligations, are valued on an individual basis and the decrease in value is covered by specific value adjustments. Loans are rated as impaired at the latest if the contractual payments for capital and/or interest have been outstanding for more than 90 days. Interest which has been outstan ding for more than 90 days is regarded as overdue. Overdue interest and interest which is in danger of not being received, is no longer recovered but is instead allocated to value adjustments. The decrease in value is measured according to the difference between the book value of the claim and the probable recoverable amount, taking account of the estimated net present value on the balance sheet date. The net present value calculation is based on the current interest rate of the claim and the expected dates of the future incoming payments. Specific value adjustments are deducted directly from the corresponding claims. Conversion rates 31.12.2014 31.12.2013 1 EUR 1.2024 1.2252 1 USD 0.9936 0.8891 1 GBP 1.5492 1.4724 1 SGD 0.7498 0.7042 1 HKD 0.1281 0.1147 100 JPY 0.8288 0.8459 In addition to the specific value adjustments, the bank makes portfolio value adjustments to cover any latent default risks present on the balance sheet date. In this connection, equivalent claims not entitled to specific value adjustments are grouped together (portfolios). A calculation model is then applied to each portfolio to determine the necessary portfolio value adjustments as soon as a latent credit risk is signaled by predetermined indicators. Portfolio value adjustments are offset against the corresponding claims. Changes to the portfolio value adjustments are entered in the profit and loss account. Impaired claims are reclassified as performing if the outstanding capital amounts and interest are again paid within the specified period under contractual agreements. Appendix to the financial statement 13

Trading positions comprising securities and precious metals Trading positions are valued at the market value on the balance sheet date. For positions which are not traded on a recognized exchange or for which there is no representative market, valuation is carried out at the lower of cost or market. Securities and precious metals held as current and non-current assets Current assets are valued at the lower of cost or market. Money market papers are measured at amortized cost. Fixed-interest bearing securities assigned to non-current assets are reported in the balance sheet at the repayment amount. Premiums and discounts which have not yet been amortized are reported as accrued items. Only those debt instruments which are kept until maturity are recorded as non-current assets. Precious metals held as current assets are valued at the market value on the balance sheet date. Precious metals held as non-current assets are reported at cost minus necessary value adjustments. Shares in affiliated companies and participations Shares in affiliated companies and participations are valued at cost, taking into account necessary value adjustments. Shares in infrastructure companies are also reported in the balance sheet under participations. These items are insignificant in capital and voting shares. Subordinated loans to affiliated companies are reported at the nominal value. Tangible assets Properties for the bank s own use are valued at cost, including any appreciating investments, less depreciation over a fixed useful life (generally 50 years). Any building work carried out in rented properties is depreciated over the term of the rental agreement. Other tangible assets such as machinery, furniture and vehicles are depreciated over their useful life (normally three to five years). Derivatives The positive and negative replacement values of all derivative financial instruments are reported under the positions other assets or other liabilities. The positive and negative replacement values are reported in the balance sheet as gross figures and valued at fair value. If interest rate business positions are hedged with derivatives, the difference between the fair value valuation and the accrual method is reported in the compensation account. Repurchase and reverse repurchase transactions (Repo transactions) Repo transactions are used to refinance and fund money market transactions. They are entered in the balance sheet as advances against collateral and cash contributions or with pledging of securities held on own account. Securities provided to serve as cover thus continue to be posted in the corresponding balance sheet positions securities received to serve as collateral are not reported in the balance sheet. Interest resulting from the transactions is posted as net interest income. Securities lending and borrowing transactions Securities lending is recorded at the value of cash deposits which have been received or made, including interest accrued. Securities which have been borrowed or accepted as collateral are only recorded in the balance sheet if the bank gains control of the contractual rights contained in these securities. Securities lent or provided as collateral are only taken off the balance sheet if the bank loses the contractual rights associated with these securities. The market values of the securities which have been either borrowed or lent are monitored daily so that additional collateral can be provided or requested where necessary. Fees arising from securities lending and repurchase transactions, which have been received or paid, are entered as interest earned and interest paid. 14 Appendix to the financial statement

Amounts due to banks and clients Amounts due to banks and clients are reported in the balance sheet at nominal values. Securitized liabilities Securitized liabilities in the form of certificates and medium-term notes are reported in the balance sheet at repayment amount. Bonds are reported at amortized cost using the effective interest method. Other liabilities Derivatives are reported at their fair value. The other items (settlement accounts, coupons etc.) are reported at their nominal value or the value of the repayment amount. Risk management The risk policy complies with internal requirements and guidelines, Liechtenstein Banking Law, FMA communiqué no. 10/2009 Risk-compatible capital adequacy requirements, risk management and control, the risk management guidelines of the Swiss Bankers Association and the principles of the Basel Committee on Banking Supervision. The Board of Directors has overall responsibility for implementing risk policy. Whereas the functions of risk management are allocated to operational units, the Executive Board is responsible for overall risk control. The independent Risk Controlling Department monitors compliance with the issued provisions. Subordinated debt Securitized subordinated debt is entered in the balance sheet at the value of the repayment amount. Non-securitized subordinated debt is reported at the nominal value. Value adjustments and provisions In accordance with prudent accounting practice, specific value adjustments and provisions are made for all identifiable risks. To cover latent default risks, which, as experience has shown, exist in a loan portfolio, portfolio value provisions are also made based on a systematic approach. Value adjustments are offset directly against the corresponding asset position. Provisions are formed for uncertain liabilities and for threatened losses which are likely or certain on the balance sheet reporting date, but whose level or date of occurrence is uncertain. Provisions are reported under the same name in the balance sheet. Taxes Taxes accruing to the result for the period under review are recorded as expenses in the accounting period in which the corresponding profit has occurred. Market risks The bank s business activities mean that it is mainly exposed to risks associated with interest rate changes and share price and foreign currency fluctuations. Whereas the Trading Committee is responsible for controlling risks resulting from trading activities, the Asset and Liability Committee is responsible for controlling the risks associated with changes in interest rates. These bodies restrict the risk positions by means of volume and sensitivity guideline limits. An analysis of the aggregate risks and the simulation of worst-case scenarios are carried out on a regular basis. Credit risks Lending activities are primarily carried out in the interbank market or in secured form in private client business. The bank pursues a conservative lending policy where the same guidelines are applied for both monetary loans and guarantee credits. By strict limitation of the default risks, the formation of cluster and country risks is also countered. An internal rating procedure is applied as an instrument for efficient risk management and risk-adjusted calculation of conditions. Detailed reporting ensures that the Executive Board is constantly informed about developing risks. Appendix to the financial statement 15

Operational risks The operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. LGT has established a Group-wide Operational Risk Committee which provides the Executive Board with support in the early identification of these risks and in implementing appropriate measures. These tasks are based on the principles stipulated in the Sound Practices for the Management and Supervision of Operational Risk issued by the Basel Committee on Banking Supervision. The set guidelines ensure that risk management takes suitable care of all risk categories. Derivative financial instruments Interest rate and currency swaps, forward rate agreements, futures and share options are regularly used to manage the bank s own risk positions. Within the framework of client business, foreign currency and precious metals options are used in addition to the aforesaid instruments. 16 Appendix to the financial statement

Remuneration report Remuneration principles LGT is a family-run company built on the values of long-term commitment, stability and independence. LGT relies on the achievements, ideas and dedication of its employees to meet the needs of its clients and implement its business strategy. An appropriate, sustainable and market-based remuneration model forms a central part of the attractive and inspirational working environment that LGT offers. The remuneration model of LGT and LGT Bank Ltd. (the bank) is based on the following principles: n The compensation model supports the implementation of LGT s corporate values and objectives and takes the risk elements into consideration. n Excellent performance, outstanding dedication and successes achieved with integrity will be rewarded. n The compensation model is focused on long-term business success. n Success is evaluated on a long-term basis. Failure on the part of employees in key positions can also result in salary deductions. The total amount of remuneration paid by the bank is approved by the HRCC on the basis of a recommendation from the Board of Directors of the bank/ccb. The remuneration of the Executive Board is decided in accordance with the following process: Beneficiary Recommended Approved by by CEO of the bank Board of Directors HRCC Norbert Biedermann of the bank/ccb Members of the CEO of the bank Board of Directors Executive Board of the bank/ccb Roland Schubert Ivo Klein Markus Werner LGT s fundamental salary policy guidelines are developed and monitored by the Human Resources Compensation Committee (HRCC) 1 of the Foundation Board. At bank level, the implementation of the guidelines is guaranteed by the Compensation Committee of the Bank (CCB) 2. The CCB evaluates the implementation of the guidelines and the growth, suitability and composition of the overall compensation. It also determines whether the remuneration is based on the remuneration principles. In addition, it ensures that the current national regulatory requirements are met. It reports annually to the HRCC and submits changes to the HRCC for approval. 1 Dr. Rodolfo Bogni, Dr. Dominik Koechlin, Dr. Phillip Colebatch 2 H.S.H. Prince Max von und zu Liechtenstein, Thomas Piske Remuneration report 17

Components of the remuneration The compensation model for all employees of the bank consists of a fixed basic salary, a variable remuneration component and benefits. The following table gives a summary of the individual components of the remuneration. Characteristics Element Plan participants Brief description Purpose Fixed Cash Basic salary Employees of the bank Monthly market-based remuneration paid in 13 installments in accordance with the position and the contract of employment Reflects abilities, skills and responsibility Variable Cash incentive Bonus Employees of the bank Granted and paid annually. Amount of bonus depends on business success and individual performance in the business year in question Rewarding excellent performance, outstanding dedication and successes achieved with integrity Options Deferred incentive LTIS 1 Senior Management and employees in key positions Options on LGT dividend right certificates granted annually. Three-year blocked period, followed by exercise of the options within four years Reinforcing the long-term links between the interests of the employees, owners and clients. Possibility for plan participants to share in the value created by the company Benefits Benefits/ Fringe benefits Employees of the bank Pension, insurance, discounts on bank products, right to a sabbatical Providing competitive benefits 1 Long Term Incentive Scheme Basic salary The fixed monthly basic salary is paid in cash in 13 installments to compensate employees for performing the tasks relating to their position, for their personal abilities and skills and for any management responsibility that they have taken on. LGT regularly checks the basic salaries against market benchmarking studies to ensure that they are compatible with the market and makes any necessary changes. LGT does not grant any automatic salary increases. Variable remuneration As a basic principle, the total variable remuneration is based on the business success of LGT and the bank and reflects the bank s risk profile. In order to take account of exceptional developments, the final decision about the total amount is made during the approval process at the discretion of the HRCC. The variable remuneration can be paid directly as an annual cash bonus or can take the form of options as part of the Long Term Incentive Scheme (LTIS). The relationship between the direct and the deferred remuneration (LTIS and cash incentive) is determined on the basis of the employee s risk profile. In the case of members of the Executive Board and risk takers, the proportion of deferred remuneration is in line with the regulatory requirements. 18 Remuneration report

Parts of the variable remuneration can be subject to a forfeiture clause. Where appropriate, claims to variable remuneration (the cash bonus) may be forfeited, for example, in the case of extraordinary dismissal, serious breaches of the law and significant financial losses made by the Group. Cash incentive (bonus) All bank employees can benefit from the cash incentive. The individual bonus amount is linked to performance based on quantitative and qualitative criteria. The quantitative criteria relate to performance at Group, bank, business sector and individual level, which is measured against predefined target values. The qualitative criteria include risk behavior, compliance with the code of conduct, specialist expertise, social skills, personality and management ability. These are assessed on the basis of the skills in the employee qualification system (BSC). This approach allows the bank to reward excellent performance, outstanding dedication and successes achieved with integrity. Deferred incentive (LTIS Long Term Incentive Scheme) In order to enable employees who have specifically promoted the growth of the company by means of their position, their knowledge or their abilities to participate in the company s long-term success, LGT has set up an internal Long Term Incentive Scheme (LTIS) based on options. This reinforces the links between the interests of the employees and those of the owners, which is an important aspect of LGT s philosophy. The long-term structure of the LTIS rewards loyalty to the company and, at the same time, encourages a conscious and cautious approach to opportunities and risks for the benefit of the entire company and the cohesion of the Group. The LTIS allows plan participants to take part in the development of the economic value added, which is measured using a predefined formula. The calculation is based on the operating profit, the performance of the Princely Portfolio and the Group s capital costs. The LTIS options are granted annually and can be exercised after a three-year blocked period up to and including the seventh year (see chart). Benefits/Fringe benefits Benefits are another component of the LGT compensation model. These can take the form, for example, of a pension, insurance, discounts on bank products and the right to a sabbatical. LGT works with different pension companies that make payments into insurance products or funds under trusteeship. Overview of the LGT remuneration structure LTIS Blocked period Exercise period Cash incentive Basic salary Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Time Remuneration report 19

Remuneration of the Executive Board The remuneration paid to the Executive Board is checked regularly by the CCB to ensure that it is appropriate. In order to reinforce the links between the interests of the management and the owners and to ensure that the management focuses on long-term added value, the members of the Executive Board receive variable remuneration, which is made up of the cash incentive and the LTIS. The conditions governing the cash incentive and the LTIS apply, while the bonus amount can be adjusted on a discretionary basis. Regulatory requirements The HRCC makes every effort to ensure that the remuneration policy of LGT and the bank and its practical application meet national and international requirements. For this purpose, the committee monitors developments and changes in the legal regulations that are relevant to LGT and the bank. The bank s remuneration system is subjected to an independent internal investigation by the CCB regularly, i.e. annually or as events dictate, to ensure that it fulfills all the regulations. Remuneration of the Executive Board Remuneration of the Executive Board 2014 (TCHF) Direct Deferred Cash payment Shares/sharelinked instruments Basic salary Bonus LTIS Entire EB 1 1 296 1 321 706 1 In 2014 there were four members of the Executive Board. 20 Remuneration report

Notes on the balance sheet 1 Overview of collateral (TCHF) Mortgage- Other Without Total backed collateral collateral Advances Due from clients (excl. mortgage loans) 6 780 7 857 549 1 031 727 8 896 056 Mortgage loans Residential properties 2 497 427 0 0 2 497 427 Office and business premises 240 365 0 0 240 365 Commercial and industrial premises 150 153 0 0 150 153 Other 41 885 0 0 41 885 Total 31.12.2014 2 936 610 7 857 549 1 031 727 11 825 886 31.12.2013 2 591 377 6 584 238 842 480 10 018 095 Off-balance sheet transactions Contingent liabilities 570 115 497 3 543 665 3 659 732 Irrevocable commitments 116 611 0 0 116 611 Commitments to subscribe additional contributions for shares or other equity securities 0 0 38 844 38 844 Total 31.12.2014 117 181 115 497 3 582 509 3 815 187 31.12.2013 70 199 127 263 3 657 436 3 854 898 Impaired due amounts (TCHF) Gross amount Estimated realization Net amount Specific value due value of collateral due adjustments 31.12.2014 10 898 3 585 7 313 7 313 31.12.2013 11 356 3 804 7 552 7 552 2 Trading positions (TCHF) Book value Cost Market value 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 Trading positions comprising securities and precious metals Debt instruments 46 983 68 748 47 464 69 299 46 983 68 748 listed (traded on a recognized exchange) 46 983 68 748 47 464 69 299 46 983 68 748 unlisted 0 0 0 0 0 0 of which own bonds and medium-term notes 435 25 207 431 25 542 435 25 207 Equity paper 1 339 3 180 1 323 3 318 1 339 3 180 of which own equity paper 0 0 0 0 0 0 Precious metals 436 092 507 818 436 092 507 818 436 092 507 818 Total 484 414 579 746 484 879 580 435 484 414 579 746 of which eligible as security for central bank borrowings 0 0 0 0 0 0 Notes on the balance sheet 21

3 Securities and precious metals Book value Cost Market value held as current assets 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 (excl. trading positions) (TCHF) Debt instruments 2 494 912 2 238 019 2 493 423 2 325 101 2 505 784 2 243 271 of which own bonds and medium-term notes 0 0 0 0 0 0 Equity paper 0 0 0 0 0 0 of which qualified participations (at least 10% of capital or votes) 0 0 0 0 0 0 Precious metals 0 0 0 0 0 0 Total 2 494 912 2 238 019 2 493 423 2 325 101 2 505 784 2 243 271 of which eligible as security for central bank borrowings 950 232 1 072 367 929 160 1 080 812 955 081 1 075 527 4 Securities and precious metals Book value Cost Market value held as non-current assets 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 (TCHF) Debt instruments 0 0 0 0 0 0 of which own bonds and medium-term notes 0 0 0 0 0 0 of which valued according to the accrual method 0 0 0 0 0 0 of which valued at the lower of cost or market 0 0 0 0 0 0 Equity paper 0 0 0 0 0 0 of which qualified participations (at least 10% of capital or votes) 0 0 0 0 0 0 Precious metals 837 792 1 791 1 791 837 792 Total 837 792 1 791 1 791 837 792 of which eligible as security for central bank borrowings 0 0 0 0 0 0 22 Notes on the balance sheet

5 Participations and shares in affiliated companies (TCHF) 31.12.2014 31.12.2013 Participations with market value 0 0 without market value 166 166 Total 166 166 Shares in affiliated companies with market value 0 0 without market value 37 068 17 067 Subordinated claims against affiliated companies 20 000 51 147 Total 57 068 68 214 6 Affiliated companies Business Share % share % share Business activity capital of votes of capital result TCHF Banks and investment firms LGT Bank (Cayman) Ltd., Grand Cayman bank USD 600 000 100 83 19 991 LGT Bank (Ireland) Ltd., Dublin bank USD 50 000 000 75 25 4 215 Other LGT Investment Portfolio Ltd., Grand Cayman investment company CHF 20 000 000 100 100 11 020 The capital of LGT Bank (Cayman) Ltd. is divided into 500 000 ordinary shares and 100 000 participating shares. Both categories of share have a par value of USD 1 per share. The participation comprises 100% of the ordinary shares, which have a preferential dividend. At 31 December 2014, the shares in banks and investment firms shown under the shares in affiliated companies item amounted to TCHF 17 068 (57 068 in the previous year). 7 Participations The companies listed under participations serve only as infrastructure and are insignificant in terms of the share of capital and votes. There are no shares in banks and investment firms under participations. Notes on the balance sheet 23

8 Statement of changes in non-current assets (TCHF) Cost Accumulated Book value depreciation/ 31.12.2013 write-ups Total participations (minority holdings) 166 0 166 Total shares in affiliated companies 68 214 0 68 214 Total securities and precious metals held as non-current assets 1 791-999 792 Total intangible assets 70-20 50 Properties Bank premises 197 216-111 590 85 626 Other properties 9 616-8 436 1 180 Other tangible assets 3 206-1 618 1 588 Total tangible assets 210 038-121 644 88 394 Fire insurance value of properties 202 299 Fire insurance value of other tangible assets 2 534 9 Intangible assets At 31 December 2014, this item included capitalized software licenses amounting to TCHF 23 and at 31 December 2013 amounting to TCHF 50. 10 Pledged or assigned assets and assets subject to reservation of ownership (TCHF) 31.12.2014 31.12.2013 Pledged or assigned assets and assets subject to reservation of ownership, without securities lending or repurchase transactions Book value of pledged or assigned (assigned as collateral) assets 466 763 364 435 Actual liabilities 170 429 52 975 There are no assets subject to reservation of ownership. Securities lending and repurchase transactions Receivables from cash deposits in connection with securities borrowing and reverse repurchase transactions 1 108 770 444 979 Liabilities from cash deposits in connection with securities lending and repurchase transactions 250 548 88 910 Own securities lent or provided as collateral within the scope of securities lending, borrowing transactions and transferred from repurchase transactions 158 727 26 649 of which capable of being resold or pledged without restrictions 158 727 26 649 Securities borrowed or accepted as collateral within the scope of securities lending, borrowing transactions and reverse repurchase agreements which are capable of being resold or further pledged without restrictions 2 125 203 1 888 878 of which resold or further pledged securities 602 988 786 920 24 Notes on the balance sheet

Investments Disinvestments Reclassifications Write-ups Depreciation Book value 31.12.2014 0 0 0 0 0 166 30 000-41 146 0 0 0 57 068 0 0 0 45 0 837 0-1 0 0-26 23 2 053-89 0 0-5 807 81 783 0 0 0 0-1 180 0 779 0 0 0-869 1 498 2 832-89 0 0-7 856 83 281 203 823 2 512 11 Liabilities in respect of own pension funds (TCHF) 31.12.2014 31.12.2013 Total liabilities 24 834 31 396 12 Outstanding bonds Interest Year of issue Earliest Currency Par value at 31.12.2014 rate % redemption date TCHF LGT GIM Index Certificates 0.0 up to 2004 28.02.2017 EUR 65 564 LGT GIM Index Certificates II 0.0 up to 2006 30.06.2019 EUR 143 174 LGT GIM Index Certificates II/2 0.0 2006 31.03.2016 EUR 31 896 LGT GIM Index Certificates III 0.0 up to 2008 31.07.2016 EUR 91 349 Crown Absolute Return Index Certificates 0.0 ongoing 30.11.2018 EUR 6 584 Crown Alternative SV Index Certificates 0.0 ongoing 30.06.2017 EUR 89 478 LGT GATS Index Certificates 0.0 ongoing 30.09.2019 EUR 43 699 LGT M-Smart Allocator Index Certificates 0.0 ongoing 31.08.2017 EUR 60 998 2% bond LGT Bank Ltd. 2012 2.7.2019 2.0 2012 02.07.2019 CHF 249 394 1.875% bond LGT Bank Ltd. 2013 8.2.2023 1.875 2013 08.02.2023 CHF 298 539 1.5% bond LGT Bank Ltd. 2014 10.5.2021 1.5 2014 10.05.2021 CHF 298 520 For product explanations see appendix 45 on page 41 Notes on the balance sheet 25

13 Value adjustments and provisions/ Status Application provisions for general banking risks (TCHF) 31.12.2013 Value adjustments for default risks Specific value adjustments 7 552-627 Flat-rate specific value adjustments (incl. such adjustments for country risks) 0 0 Portfolio value adjustments 6 984 0 Provisions for contingent liabilities and credit risks 368 0 Provisions for other business risks 2 054 0 Provisions for taxes and deferred taxes 77 719-32 067 Other provisions 1 461 0 Total value adjustments and provisions 96 138-32 694 less: Value adjustments -14 536 Total provisions as per the balance sheet 81 602 Provisions for general banking risks 429 500 See also Point 36 14 Share capital 31.12.2014 31.12.2013 (TCHF) Total Number Capital Total Number Capital nominal of shares entitled to nominal of shares entitled to value a dividend value a dividend Share capital 291 201 2 912 008 291 201 291 201 2 912 008 291 201 Total 291 201 2 912 008 291 201 291 201 2 912 008 291 201 No authorized capital or contingent capital exists. Major shareholders and groups of 31.12.2014 31.12.2013 shareholders linked by voting rights Nominal % Nominal % with voting right LGT Group Foundation 291 201 100.0 291 201 100.0 The economic beneficiary of LGT Group Foundation is the Prince of Liechtenstein Foundation in Vaduz. The main economic beneficiary of the Prince of Liechtenstein Foundation is the reigning prince of Liechtenstein, H.S.H. Prince Hans-Adam II von und zu Liechtenstein. 26 Notes on the balance sheet

Recoveries, overdue interest, New allocations out of Releases to Status currency differences P/L account P/L account 31.12.2014-232 1 587-967 7 313 0 0 0 0-40 1 287 0 8 231-6 0-362 0 209 0-276 1 987-34 71 136-46 247 70 507-4 94 0 1 551-107 74 104-47 852 89 589-15 544 74 045-429 500 0 15 Equity statement (TCHF) Equity capital at the start of the business year Total equity capital at the end of the Share capital paid in 291 201 business year (prior to profit distribution) 2 616 249 Capital reserves 0 of which Legal reserves 218 500 Share capital paid in 291 201 Reserves for own shares 0 Capital reserves 0 Statutory reserves 0 Legal reserves 218 500 Other reserves 1 406 000 Reserves for own shares 0 Provisions for general banking risks 429 500 Statutory reserves 0 Accumulated profit for the year 303 043 Other reserves 1 406 000 Total equity capital at the start of the Provisions for general banking risks 0 business year (prior to profit distribution) 2 648 244 Accumulated profit for the year 700 548 +/- capital increase/capital reduction 0 + premium 0 - Release of provisions for general banking risks -429 500 - dividend from the previous year s profit -94 640 + annual profit for the business year 492 145 Total equity capital at the end of the business year (prior to profit distribution) 2 616 249 Notes on the balance sheet 27

16 Maturity structure of assets, liabilities and provisions On demand Redeemable (TCHF) Assets Cash and cash equivalents 8 301 781 Debt instruments of public authorities and bills which are eligible for refinancing at central banks Due from banks 1 680 360 Due from clients 13 768 996 943 of which mortgage loans 2 254 91 913 Trading positions comprising securities and precious metals 484 414 Securities and precious metals held as current assets (excl. trading positions) 2 469 289 Securities and precious metals held as non-current assets 837 Other assets 144 945 4 999 Total assets 31.12.2014 13 095 394 1 001 942 31.12.2013 11 055 991 986 033 Liabilities and provisions Due to banks 7 730 412 1 554 Due to clients 8 476 111 5 808 818 Savings accounts 727 342 Other liabilities to clients 8 476 111 5 081 476 Securitized liabilities Issued bonds of which medium-term notes Other securitized liabilities Provisions (excl. provisions for general banking risks) 74 045 Subordinated liabilities Other liabilities 170 524 6 240 Total liabilities and provisions 31.12.2014 16 451 092 5 816 612 31.12.2013 12 611 851 5 035 176 Of the securities reported in the balance sheet under bonds and other fixed-interest bearing securities, instruments amounting to TCHF 1 116 583 (957 189 in the previous year) will become due in 2015. Issued bonds due in 2015 amount to TCHF 29 313 (280 117 in the previous year). 28 Notes on the balance sheet

Due within Due between Due between Due after Immobilized Total 3 months 3 to 12 months 12 months to 5 years 5 years 8 301 781 25 623 25 623 1 892 502 1 566 488 505 823 147 337 5 792 510 8 571 077 705 240 1 198 483 340 375 11 825 886 1 574 298 238 021 700 391 322 953 2 929 830 484 414 2 469 289 837 1 025 749 393 018 83 622 57 403 82 633 1 792 369 11 514 951 2 664 746 1 787 928 545 115 82 633 30 692 709 9 099 955 1 774 810 1 668 081 459 170 86 807 25 130 847 1 648 013 208 898 3 607 17 000 9 609 484 850 706 134 394 8 872 15 278 901 727 342 850 706 134 394 8 872 14 551 559 6 925 22 388 840 910 645 730 1 515 953 6 925 22 388 840 910 645 730 1 515 953 6 925 22 388 58 775 48 670 136 758 0 74 045 60 160 220 915 324 395 206 88 401 22 162 1 597 857 3 420 968 760 946 941 950 684 892 0 28 076 460 2 955 995 852 316 409 451 617 814 0 22 482 603 Notes on the balance sheet 29

17.1 Claims on affiliated companies (TCHF) 31.12.2014 31.12.2013 Due from banks 1 557 011 1 168 068 Due from clients 5 406 576 5 044 401 of which due from qualified participants (LGT Group Foundation) 569 200 540 500 Bonds and other fixed-interest bearing securities 44 305 67 038 Total 7 007 892 6 279 507 17.2 Liabilities to affiliated companies (TCHF) 31.12.2014 31.12.2013 Due to banks 8 560 062 5 811 182 Due to clients 534 430 469 353 of which due to qualified participants (LGT Group Foundation) 1 212 1 459 Securitized liabilities 0 0 Subordinated liabilities 0 0 Total 9 094 492 6 280 535 17.3 Loans to governing bodies (TCHF) 31.12.2014 31.12.2013 Members of the Board of Directors 5 389 7 059 Members of the Executive Board 4 577 4 577 Total 9 966 11 636 17.4 Transactions with closely associated persons Transactions with closely associated persons such as securities transactions, payment transactions, lending facilities and interest on deposits were made under the same terms and conditions as applicable to third parties. 30 Notes on the balance sheet

18 Breakdown of balance sheet according to domicile (TCHF) 31.12.2014 31.12.2013 Domestic Abroad Domestic Abroad Assets Cash and cash equivalents 8 287 324 14 457 7 325 423 9 939 Debt instruments of public authorities and bills which are eligible for refinancing at central banks 0 25 623 0 22 931 Due from banks 2 422 236 3 370 274 1 460 769 2 498 100 Due from clients (excl. mortgage loans) 1 548 411 7 347 645 1 035 604 6 395 377 Mortgage loans 2 523 107 406 723 2 361 905 225 210 Bonds and other fixed-interest bearing securities 2 648 2 513 624 25 207 2 258 629 Equities and other non-fixed-interest securities 570 769 3 180 0 Participations 66 100 66 100 Shares in affiliated companies 20 000 37 068 50 000 18 214 Intangible assets 0 23 0 50 Tangible assets 77 514 5 767 82 019 6 375 Other assets 1 185 347 863 162 770 287 541 638 Accrued income and prepaid expenses 12 560 27 691 12 632 27 192 Total assets 16 079 783 14 612 926 13 127 092 12 003 755 Liabilities Due to banks 7 792 278 1 817 206 4 815 758 1 929 748 Due to clients (excl. savings accounts) 6 353 032 8 198 527 5 630 701 7 169 680 Savings accounts 615 611 111 731 643 765 120 302 Securitized liabilities 1 515 953 0 1 244 745 0 Other liabilities 619 683 900 009 296 995 478 589 Accrued expenses and deferred income 44 401 33 764 41 825 28 423 Provisions 73 698 347 81 304 298 Subordinated liabilities 220 0 470 0 Provisions for general banking risks 0 0 429 500 0 Share capital 291 201 0 291 201 0 Legal reserves 218 500 0 218 500 0 Other reserves 1 406 000 0 1 406 000 0 Profit carried forward 208 403 0 1 169 0 Profit for the year 492 145 0 301 874 0 Total liabilities 19 631 125 11 061 584 15 403 807 9 727 040 Balance sheet items are broken down based on the client s domicile, mortgage loans by the location of the property. Notes on the balance sheet 31

19 Breakdown of assets according to 31.12.2014 country/country group TCHF % Country Liechtenstein 2 859 850 9.3 Switzerland 13 219 934 43.1 Europe excl. FL/CH 4 851 589 15.8 North America 718 421 2.3 Caribbean 6 176 309 20.1 Latin America 112 689 0.4 Africa 25 230 0.1 Asia 2 284 435 7.4 Oceania 444 252 1.5 Total assets 30 692 709 100.0 Breakdown of assets according to 31.12.2013 country/country group TCHF % Country Liechtenstein 2 530 209 10.1 Switzerland 10 596 883 42.2 Europe excl. FL/CH 3 905 581 15.5 North America 476 631 1.9 Caribbean 5 408 720 21.5 Latin America 133 747 0.5 Africa 26 333 0.1 Asia 1 629 257 6.5 Oceania 423 486 1.7 Total assets 25 130 847 100.0 20 Breakdown of balance sheet according to currencies (TCHF) Assets Cash and cash equivalents Debt instruments of public authorities and bills which are eligible for refinancing at central banks Due from banks Due from clients (excl. mortgage loans) Mortgage loans Bonds and other fixed-interest bearing securities Equities and other non-fixed-interest securities Participations Shares in affiliated companies Intangible assets Tangible assets Other assets Accrued income and prepaid expenses Total assets Delivery claims from forex spot, forex futures and forex options transactions Total assets Liabilities Due to banks Due to clients (excl. savings accounts) Savings accounts Securitized liabilities Other liabilities Accrued expenses and deferred income Provisions Subordinated liabilities Provisions for general banking risks Share capital Legal reserves Other reserves Profit carried forward Profit for the year Total liabilities Delivery liabilities from forex spot, forex futures and forex options transactions Total liabilities Net position per currency 32 Notes on the balance sheet

CHF EUR USD Other Total 8 281 667 18 693 712 709 8 301 781 0 0 0 25 623 25 623 2 041 010 1 185 938 1 920 529 645 033 5 792 510 5 088 456 1 678 759 1 309 846 818 995 8 896 056 2 530 263 134 922 47 196 217 449 2 929 830 454 846 357 686 377 176 1 326 564 2 516 272 327 770 242 0 1 339 166 0 0 0 166 57 068 0 0 0 57 068 0 23 0 0 23 77 514 4 286 0 1 481 83 281 1 585 572 3 501 515 458 921 2 048 509 13 433 4 319 5 833 16 666 40 251 20 130 322 3 388 897 3 662 049 3 511 441 30 692 709 14 486 856 20 674 819 40 858 921 15 223 354 91 243 950 34 617 178 24 063 716 44 520 970 18 734 795 121 936 659 1 149 852 2 431 210 4 787 243 1 241 179 9 609 484 3 791 641 3 802 241 5 249 167 1 708 510 14 551 559 693 738 27 717 5 887 0 727 342 965 249 550 704 0 0 1 515 953 1 493 356 4 798 558 20 980 1 519 692 51 115 5 024 11 961 10 065 78 165 71 711 293 1 987 54 74 045 220 0 0 0 220 0 0 0 0 0 291 201 0 0 0 291 201 218 500 0 0 0 218 500 1 406 000 0 0 0 1 406 000 208 403 0 0 0 208 403 492 145 0 0 0 492 145 10 833 131 6 821 987 10 056 803 2 980 788 30 692 709 23 611 310 17 238 071 34 448 932 15 751 177 91 049 490 34 444 441 24 060 058 44 505 735 18 731 965 121 742 199 172 737 3 658 15 235 2 830 194 460 Notes on the balance sheet 33

21 Subordinated assets (TCHF) 31.12.2014 31.12.2013 Balance sheet items Bonds and other fixed-interest bearing securities 0 5 902 Shares in affiliated companies 20 000 51 147 Total 20 000 57 049 22 Debt instruments of public authorities and bills which are eligible 31.12.2014 31.12.2013 for refinancing at central banks (TCHF) Debt instruments of public authorities 25 623 22 931 Bills 0 0 Total 25 623 22 931 23 Bonds and other fixed-interest bearing securities (TCHF) 31.12.2014 31.12.2013 Money market paper 405 768 291 588 of which from public sector issuers 0 0 of which from other issuers 405 768 291 588 Bonds 2 110 504 1 992 248 of which from public sector issuers 286 626 152 031 of which from other issuers 1 823 878 1 840 217 of which own bonds 435 25 207 Total 2 516 272 2 283 836 24 Due to clients (TCHF) 31.12.2014 31.12.2013 Savings accounts 727 342 764 067 Other liabilities 14 551 559 12 800 381 Total 15 278 901 13 564 448 25 Securitized liabilities (TCHF) 31.12.2014 31.12.2013 Issued bonds 1 515 953 1 244 745 of which medium-term notes 136 758 151 559 Other securitized liabilities 0 0 Total 1 515 953 1 244 745 26 Provisions (TCHF) 31.12.2014 31.12.2013 Provisions for pensions and similar liabilities 0 0 Tax provisions 70 507 77 719 Other provisions 3 538 3 883 Total 74 045 81 602 34 Notes on the balance sheet

Notes on off-balance sheet transactions 27 Contingent liabilities (TCHF) 31.12.2014 31.12.2013 Credit guarantees and similar instruments 406 512 454 252 of which for affiliated companies 294 895 361 135 Performance guarantees and similar instruments 3 244 008 3 312 096 of which for affiliated companies 3 203 731 3 261 549 Irrevocable commitments and other contingent liabilities 9 212 5 576 of which for affiliated companies 0 0 Total 3 659 732 3 771 924 28 Commitment credits Liabilities from deferred payments are reported in the balance sheet. There were no acceptance liabilities or other commitment credits at 31 December 2014 and 31 December 2013. 29 Fiduciary transactions (TCHF) 31.12.2014 31.12.2013 Fiduciary investments at third-party banks 194 462 305 239 Fiduciary investments at affiliated banks and investment firms 0 0 Fiduciary loans and other financial transactions in a fiduciary capacity 0 0 of which with affiliated companies 0 0 Total 194 462 305 239 Notes on off-balance sheet transactions 35

30 Open derivative Trading instruments Hedging instruments financial instruments positive negative Contract positive negative Contract (TCHF) replacement replacement volume replacement replacement volume values values values values Interest rate instruments Forward contracts incl. FRAs 0 0 0 0 0 0 Swaps 808 701 250 399 7 322 41 890 1 784 103 Futures 0 0 0 0 0 0 Options (OTC) 0 0 0 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Forex/precious metals Forward contracts 1 112 420 1 100 500 70 200 092 333 059 198 407 18 427 810 Swaps 0 0 0 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 99 706 51 765 7 421 313 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Equity securities/indices Forward contracts 0 0 0 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 10 042 10 042 242 271 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Credit derivatives Credit default swaps 1 166 1 166 51 868 0 0 0 Total return swaps 0 0 0 0 0 0 First to default swaps 0 0 0 0 0 0 Other credit derivatives 0 0 0 0 0 0 Other Forward contracts 0 0 0 0 0 0 Swaps 13 619 13 619 1 149 053 0 0 0 Futures 0 0 0 0 0 0 Options (OTC) 0 0 0 0 0 0 Options (exchange-traded) 0 0 0 0 0 0 Total before consideration of the netting contracts 31.12.2014 1 237 761 1 177 793 79 314 996 340 381 240 297 20 211 913 31.12.2013 580 224 547 018 69 126 382 199 154 156 355 17 370 788 Total after consideration of the netting contracts positive negative replacement values replacement values 31.12.2014 681 034 520 982 31.12.2013 430 682 354 677 36 Notes on off-balance sheet transactions

Notes to the profit and loss account 31 Offsetting of refinancing expenses with income from trading The refinancing expenses arising from trading positions are not offset against income from trading activities because this business activity does not have a significant influence on the bank s business result. 32 Interest income from fixed-interest securities (TCHF) 2014 2013 Interest income from bonds 45 908 39 109 Interest income from money market paper 9 962 2 457 Total 55 870 41 566 33 Income from trading transactions (TCHF) Reported in the P&L under 2014 2013 Interest income from fixed-interest securities Interest income 1 396 1 154 Interest income from credit derivatives Interest income -98 33 Trading in foreign exchange and precious metals Income from financial transactions 58 622 52 642 Securities trading Income from financial transactions 1 277-211 Structured products and other income Income from financial transactions 1 438 1 473 Total 62 635 55 091 34 Personnel expenses (TCHF) 2014 2013 Wages and salaries 138 648 130 900 Social security contributions, pensions and social assistance 20 320 18 613 of which for pensions 10 380 9 786 Other personnel expenses 9 475 7 537 Subtotal 168 443 157 050 Adjustment of liability for Long Term Incentive Scheme 23 005 15 194 Total 191 448 172 244 Emoluments to members of the Executive Board 3 323 2 476 35 Operating expenses (TCHF) 2014 2013 Occupancy expense 15 689 15 593 Expenses for IT, machinery, furniture, vehicles and other equipment 55 453 53 483 Other business expenses 77 427 76 980 Total 148 569 146 056 Notes to the profit and loss account 37

36 Losses, extraordinary items, provisions The losses reported under the item Other ordinary expenses were incurred mainly in connection with lending business and settlements (see also Point 43). No extraordinary items were recorded in the years 2014 and 2013. The item provisions contains mainly tax provisions, provisions for projects, as well as provisions for other business risks (see also Points 13 and 26). 37 Income and expenses broken down 2014 2013 according to office or branch (TCHF) FL Abroad FL Abroad Interest earned 170 418 8 217 178 742 3 561 Interest paid -64 407-2 458-66 998-2 154 Current income from securities 1 225 0 3 597 0 Income from commission business and services 230 376 67 706 232 765 54 661 Commission paid -58 572-9 653-61 641-7 583 Income from financial transactions 59 811 5 994 58 404 3 614 Other ordinary income 17 411 12 616 17 232 9 173 Operating expenses -237 959-102 058-223 924-94 376 Other ordinary expenses -1 610-94 -2 948-399 The break down is based on the domicile of the booking branch. 38 Notes to the profit and loss account

Additional information 38 Securities negotiable on the stock exchange (TCHF) 31.12.2014 31.12.2013 Bonds and other fixed-interest bearing securities 2 516 272 2 283 836 of which listed securities 2 012 515 1 884 960 of which listed and treated as current assets 2 012 515 1 884 960 of which listed and treated as non-current assets 0 0 of which unlisted securities 503 757 398 876 Equities and non-fixed-interest securities 1 339 3 180 of which listed securities 1 339 3 180 of which listed and treated as current assets 1 339 3 180 of which listed and treated as non-current assets 0 0 of which unlisted securities 0 0 Participations 166 166 of which listed securities 0 0 of which unlisted securities 166 166 Shares in affiliated companies 37 068 17 067 of which listed securities 0 0 of which unlisted securities 37 068 17 067 39 Subordinated liabilities at 31.12.2014 Interest rate % Maturity Currency TCHF Medium-term note 2.0625 2015 CHF 60 Medium-term note 2.3750 2016 CHF 40 Medium-term note 2.5625 2016 CHF 50 Medium-term note 2.9375 2016 CHF 50 Medium-term note 2.9375 2017 CHF 20 Total 220 Additional information 39

40 Other assets (TCHF) 31.12.2014 31.12.2013 Positive replacement values of derivatives 1 578 142 779 378 Compensation account 23 023 6 628 Physical holdings of precious metals 436 929 508 610 Other assets 10 415 17 309 Total 2 048 509 1 311 925 41 Other liabilities (TCHF) 31.12.2014 31.12.2013 Negative replacement values of derivatives 1 418 090 703 373 Coupons 105 105 LTIS liability 55 544 41 604 Clearing accounts 45 953 30 502 Total 1 519 692 775 584 42 Other ordinary income (TCHF) 2014 2013 Compensation from Group companies 24 113 18 774 Income from real estate 4 998 5 180 Income from the release of provisions 275 285 Remaining other income 641 2 166 Total 30 027 26 405 Compensation from the other Group companies forms the largest component of other ordinary income. This item comprises compensation for services, performed centrally by the bank on behalf of the Group companies. Income from real estate contains the net amounts (rent payments less maintenance costs) from the rental of bank-owned property to third parties and Group companies. 43 Other ordinary expenses (TCHF) 2014 2013 Losses from receivables and guarantees 743 670 Transaction losses 351 529 Remaining other expenses 610 2 148 Total 1 704 3 347 See also Point 36 44 Breakdown of client assets (TCHF) 31.12.2014 31.12.2013 Client assets Client assets in own-managed funds (investment undertakings) 14 980 857 15 362 485 Client assets under management 12 579 312 10 989 929 Other client assets under administration 33 707 923 29 464 337 Total client assets (including double counting) 61 268 092 55 816 751 of which double counting 8 050 634 9 490 098 40 Additional information

45 Outstanding bonds Product explanations for table 12 on page 25 The LGT GIM Index Certificates (EUR) are issued in the form of no-par-value promissory notes. These each relate to one of the LGT Premium Strategy GIM (EUR) indices compiled and administered by LGT Capital Partners (FL) Ltd. These indices reflect the value development of a global, diversified portfolio that invests in various asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. Both traditional and alternative asset classes are included. Both tranches of the Crown Absolute Return (EUR) Index Certificates are no-par-value. These each relate to one of the Crown Absolute Return (EUR) indices calculated and administered by LGT Capital Partners Ltd. The two indices show the value development of a global, diversified portfolio that invests in alternative asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The Crown Alternative SV (EUR) Index Certificates are no-par-value. They relate to the Crown Alternative SV (EUR) Index calculated and administered by LGT Capital Partners Ltd. This index shows the value development of a global, diversified portfolio that invests in various alternative asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The LGT GATS Index Certificates are no-par-value and are made out to the bearer. They relate to the LGT Premium Strategy GATS (EUR) Index compiled and administered by LGT Capital Partners (FL) Ltd. This index shows the value development of a global, diversified portfolio that invests in various asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. The LGT M-Smart Allocator (EUR) Index Certificates are no-par-value. They relate to the LGT M-Smart Allocator (EUR) Index calculated and administered by LGT Capital Partners Ltd. This index shows the value development of a global, diversified portfolio that invests in various asset classes, where exchange rate fluctuations of the components included in the index are largely hedged against the Euro. Additional information 41

Report of the statutory auditor 42 Report of the statutory auditor

International presence of LGT Australia Austria Bahrain China Hong Kong Ireland Japan Principality of Liechtenstein Singapore Switzerland United Arab Emirates United Kingdom United States of America Uruguay Sydney Salzburg Vienna Manama Beijing Hong Kong Dublin Tokyo Vaduz Singapore Basel Berne Chur Davos Geneva Lugano Pfäffikon Zurich Dubai London New York Montevideo Media relations Christof Buri Phone +423 235 23 03 christof.buri@lgt.com Legal services Jacques Engeli Dr. Urs Gähwiler Phone +423 235 28 72 jacques.engeli@lgt.com Dispatch Daniela Schaefle Phone +423 235 20 51 daniela.schaefle@lgt.com 44 International presence of LGT

The illustrations in this brochure are details from Johann Bernhard Fischer von Erlach (1656 1723) View of a Pleasure Garden Building in Vienna View of a Pleasure Garden Building in Vienna In 1687, Prince Johann Adam Andreas I of Liechtenstein purchased a large plot of land in what was then known as Lichtenthal (now Rossau) from the noble Auersperg family with plans for a comprehensive redevelopment. The Prince s first choice for his project was the famous Baroque architect Johann Bernhard Fischer von Erlach (1656 1723), who came up with the overall idea for the site. He produced several designs for the garden belvedere, which has unfortunately not been preserved, as well as for the central palace. Fischer von Erlach also created the basic outline for the extensive Baroque gardens. Ultimately, it was Italian architect Domenico Martinelli (1650 1718) who built the Garden Palace. The Prince had previously employed Martinelli in Feldsberg (now Valtice) from 1691 onward and also enlisted him to design and construct the Liechtenstein City Palace. Why Johann Adam Andreas I went on to entrust Martinelli with the completion of this project is unknown. LIECHTENSTEIN. The Princely Collections, Vaduz Vienna